Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca9-13-17358/USCOURTS-ca9-13-17358-0/pdf.json

Parties Involved:
Charlton H. Bonham
Appellant
Kevin Marilley
Appellee
Salvatore Papetti
Appellee
Savior Papetti
Appellee

Document Text:

FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

KEVIN MARILLEY; SALVATORE

PAPETTI; SAVIOR PAPETTI,

individually and on behalf of all

others similarly situated,

Plaintiffs-Appellees,

v.

CHARLTON H. BONHAM, in his

official capacity as Director of the

California Department of Fish and

Game,

Defendant-Appellant.

No. 13-17358

D.C. No.

4:11-cv-02418-

DMR

OPINION

Appeal from the United States District Court

for the Northern District of California

Donna M. Ryu, Magistrate Judge, Presiding

Argued and Submitted

July 7, 2015—San Francisco, California

Filed September 18, 2015

Before: Susan P. Graber and Paul J. Watford, Circuit

Judges, and Paul L. Friedman, District Judge.*

* The Honorable Paul L. Friedman, United States District Judge for the

District of Columbia, sitting by designation.

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2 MARILLEY V. BONHAM

Opinion by Judge Friedman;

Dissent by Judge Graber

SUMMARY**

Constitutional Law

The panel affirmed the district court’s summary judgment

in favor of a plaintiff class of non-resident commercial fishers

who contended that California’s discriminatory fishing fees

violated the Privileges and Immunities Clause of the United

States Constitution.

The panel held that California’s differential commercial

fishing license fees, Cal. Fish & Game Code §§ 7852, 7881,

8550.5, and 8280.6, which charged non-residents two or

three times more in fees than residents, violated the Privileges

and Immunities Clause because California failed to offer a

closely related justification for its discrimination against nonresidents.

Judge Graber dissented because she would hold that

further evidentiary development is necessary to determine

whether the differential fees are permissible under the

Privileges and Immunities Clause, and she would reverse the

summary judgment and remand for further proceedings.

** This summary constitutes no part of the opinion of the court. It has

been prepared by court staff for the convenience of the reader.

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MARILLEY V. BONHAM 3

COUNSEL

Kamala D. Harris, Attorney General, Robert W. Byrne,

Senior Assistant Attorney General, Annadel A. Almendras,

Supervising Deputy Attorney General, Gary Alexander and

M. Elaine Meckenstock (argued), Deputy Attorneys General,

Office of the Attorney General, Oakland, California, for

Defendant-Appellant.

Stuart G. Gross (argued) and Jared M. Galanis, Gross Law,

P.C., San Francisco, California; Todd R. Gregorian and Tyler

A. Baker, Fenwick & West LLP, Mountain View, California,

for Plaintiffs-Appellees.

OPINION

FRIEDMAN, District Judge:

Commercial fishers in California are subject to a bevy of

fees. For certain fees, however, non-residents are charged

two to three times more than residents. Plaintiffs represent a

class of non-resident commercial fishers who contend that

California’s discriminatory fees violate the Privileges and

Immunities Clause of the United States Constitution. 

Because California has failed to offer a closely related

justification for its discrimination against non-residents, we

agree with plaintiffs and therefore affirm the district court’s

grant of summary judgment to the plaintiff class.

BACKGROUND

The named plaintiffs are commercial fishers residing

outside California. They represent a class of non-residents

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4 MARILLEY V. BONHAM

who, since 2009, have purchased commercial fishing licenses,

registrations, or permits from California and paid higher fees

than residents. Plaintiffs sued Charlton Bonham, in his

official capacity as the Director of the California Department

of Fish and Game, alleging that the differential fees violate

the Privileges and Immunities and Equal Protection Clauses

of the United States Constitution.

Plaintiffs challenge fourspecific fees: general commercial

fishing license fees, commercial fishing vessel registration

fees, Herring Gill net permit fees, and Dungeness Crab vessel

permit fees. See Cal. Fish & Game Code §§ 7852, 7881,

8550.5, 8280.6. While the parties dispute the prevalence of

Herring Gill and Dungeness Crab permits, it is undisputed

that, at a minimum, non-resident commercial fishers must

purchase the general license to fish in California waters and

a vessel registration to do so from a boat they own or operate. 

See id. §§ 7852, 7881. In 2012–13, the relevant fees were as

follows:

• Commercial fishing license: $130.03 for

residents; $385.75 for non-residents;

• Commercial fishing vessel registration:

$338.75 for residents; $1,002.25 for nonresidents;

• Herring Gill net permit: $359.00 for

residents; $1,334.25 for non-residents;

• Dungeness Crab vessel permit: $273.00

for residents; $538.00 for non-residents.

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MARILLEY V. BONHAM 5

All four licenses would set a resident back $1,100.78, but a

non-resident $3,260.25.

Following discovery, the parties filed cross-motions for

summary judgment. The district court concluded that

California had failed to demonstrate a genuine issue of

material fact and granted summary judgment to the plaintiff

class on its Privileges and Immunities Clause claim. The

district court then entered final judgment as to plaintiffs’

Privileges and Immunities Clause claim pursuant to Rule

54(b) of the Federal Rules of Civil Procedure.1

STANDARD OF REVIEW

We have jurisdiction under 28 U.S.C. § 1291. We review

a grant of summary judgment de novo. See Pac. Shore

Props., LLC v. City of Newport Beach, 730 F.3d 1142, 1156

(9th Cir. 2013). Viewing the evidence in the light most

favorable to the State, we must decide whether there are any

genuine disputes of material fact and whether the district

court correctly applied the substantive law. See Olsen v.

Idaho St. Bd. Of Med., 363 F.3d 916, 922 (9th Cir. 2004).

DISCUSSION

The Privileges and Immunities Clause providesthat “[t]he

Citizens of each State shall be entitled to all Privileges and

Immunities of Citizens in the several States.” U.S. Consti.

art. IV, § 2, cl. 1. This clause “was designed ‘to place the

citizens of each State upon the same footing with citizens of

1 The district court expressly did not reach or enter final judgment on

plaintiffs’ Equal Protection Clause claim. We therefore lack jurisdiction

over that claim. See 28 U.S.C. § 1291.

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other States, so far as the advantages resulting from

citizenship in those States are concerned.’” Sup. Ct. of Va. v.

Friedman, 487 U.S. 59, 64 (1988) (quoting Paul v. Virginia,

75 U.S. (8 Wall.) 168, 180 (1869)); see also Toomer v.

Witsell, 334 U.S. 385, 395 (1948) (The Clause “was designed

to insure to a citizen of State A who ventures into State B the

same privileges which the citizens of State B enjoy.”). The

Clause thus “establishes a norm of comity” between residents

and non-residents of a State, Austin v. New Hampshire,

420 U.S. 656, 660 (1975), to create “a national economic

union,” Council of Ins. Agents & Brokers v. Molasky-Arman,

522 F.3d 925, 934 (9th Cir. 2008) (quoting Sup. Ct. of N.H.

v. Piper, 470 U.S. 274, 280 (1985)).2

The Clause, however, “is not an absolute.” MolaskyArman, 522 F.3d at 934 (quoting Toomer, 334 U.S. at 396). 

“While it bars ‘discrimination against citizens of other States

where there is no substantial reason for the discrimination

beyond the mere fact that they are citizens of other States . . .

it does not preclude disparity of treatment in the many

situations where there are perfectlyvalid independent reasons

for it.” Id. (quoting Toomer, 334 U.S. at 396). We therefore

employ a two-part test to determine whether disparate

treatment violates the Clause. “First, the activity in question

must be ‘sufficiently basic to the livelihood of the Nation’ . . .

as to fall within the purview of the Privileges and Immunities

Clause.” Friedman, 487 U.S. at 64 (quoting United Bldg. &

Constr. Trades Council v. Mayor and Council of Camden,

465 U.S. 208, 221–22 (1984)). “Second, if the challenged

restriction deprives nonresidents of a protected privilege, we

2

“While the Privileges and Immunities Clause cites the term ‘Citizens,’

for analytic purposes citizenship and residency are essentially

interchangeable.” Friedman, 487 U.S. at 64.

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MARILLEY V. BONHAM 7

will invalidate it only if we conclude that the restriction is not

closely related to the advancement of a substantial state

interest.” Id. at 65 (citing Piper, 470 U.S. at 284). California

contends that the differential license fees pass muster under

both parts of this test. We disagree.

A

California does not dispute that plaintiffs’ right to pursue

“a common calling is one of the most fundamental of those

privileges protected by the Clause.” Camden, 465 U.S. at

219; see also Toomer, 334 U.S. at 403 (“Thus we hold that

commercial shrimping in the marginal sea, like other

common callings, is within the purview of the privileges and

immunities clause.”). It instead argues that, in addition to

demonstrating that the affected activity is protected, plaintiffs

must make two additional showings.

First, California argues that our decision in International

Organization of Masters, Mates, & Pilots v. Andrews,

831 F.2d 843 (9th Cir. 1987), requires plaintiffs to show that

the differential fees exclude them, in whole or in part, from

commercial fishing. This showing cannot be made,

California claims, because the percentage of non-resident

commercialfishers in California has increased, not decreased. 

In Andrews, we held that the Clause was not violated by a

statute regarding cost of living wage adjustments because the

statute was “designed to provide equity between the wages of

[citizen] and non-[citizen] workers.” Andrews, 831 F.3d at

846. The statute in Andrews thus created equality, not

inequality, and therefore did not run afoul of the Privileges

and Immunities Clause because, we said, “the appellants

ha[d] not shown that they are prevented or discouraged by the

State from pursuing employment.” Id.

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California contends that our choice of the words

“prevented or discouraged” upset decades of precedent and

added an exclusion requirement to the first part of the test. 

We disagree. As we recited in Andrews just two paragraphs

before, the first step requires only that “we determine first

whether [the statute] burdens” rights protected under the

Clause. Id. at 845. An exclusion requirement would

undermine the purpose of the Clause because permitting a

State to freely discriminate against non-residents up to the

point they are driven out would not “place the citizens of each

State upon the same footing with citizens of other States.” 

Lunding v. N.Y. Tax Appeals Tribunal, 522 U.S. 287, 296

(1998) (quoting Paul, 75 U.S. (8 Wall.) at 180). And, to any

extent that Andrews may have implied that a plaintiff must

demonstrate exclusion from pursuing their common calling,

the Supreme Court’s subsequent statement in Friedman

makes clear that “[n]othing in [its] precedents . . . supports

the contention that the Privileges and Immunities Clause does

not reach a State’s discrimination against nonresidents when

such discrimination does not result in their total exclusion

from the State.” 487 U.S. at 66.3

Second, California argues that McBurney v. Young, 133

S. Ct. 1709 (2013), the Supreme Court’s most recent

Privileges and Immunities Clause decision, requires that

plaintiffs show that the differential fees were enacted for a

“protectionist purpose.” The Supreme Court in McBurney

did note that prior cases “struck laws down as violating the

3 Our conclusion is supported by the fact that, as the district court noted,

our “most recent Privileges and Immunities Clause decision, MolaskyArman, contains no discussion at all — at either step of the inquiry — of

the extent to which the challenged law’s increased burden on nonresidents

led to any deterrence or exclusion.”

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MARILLEY V. BONHAM 9

privilege of pursuing a common calling only when those laws

were enacted for the protectionist purpose of burdening outof-state citizens.” Id. at 1715. California urges us to read

that statement to mean that proof of a protectionist purpose

always is required to meet step one of our privileges and

immunities inquiry. We cannot accept that interpretation of

McBurney.

When the Court determines that the Privileges and

Immunities Clause does not apply at all, it says so. For

example, in Baldwin v. Fish & Game Commission, 436 U.S.

371, 388 (1978), the Court held that, because elk hunting was

“not basic to the maintenance or well-being of the Union,”

the state’s decision to charge non-residents more than

residents for elk-hunting licenses “simply [did] not fall within

the purview of the Privileges and Immunities Clause.” In

McBurney, the Court rejected one of McBurney’s arguments

— that Virginia’s law denied them “the right to access public

information on equal terms with citizens” of Virginia — for

similar reasons, holding that the Privileges and Immunities

Clause did not “cover[] this broad right.” 133 S. Ct. at 1718.

By contrast, with respect to McBurney’s common calling

argument, the Court held that the Virginia law at issue did not

“abridge [non-residents’] ability to engage in a common

calling in the sense prohibited by the Privileges and

Immunities Clause.” Id. at 1715 (emphasis added). The

Court reached that conclusion because the statute had only an

“incidental effect” on the pursuit of a common calling, and

because the distinction it made between citizens and

non-citizens had a “distinctly nonprotectionist aim.” Id. at

1716. This reasoning, along with the Court’s discussion of

earlier cases involving statutes with protectionist purposes, is

a part of step two of the inquiry, which requires the state to

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point to a “substantial reason[]” for the discrimination. 

Friedman, 487 U.S. at 67. “Part and parcel to this analysis is

determining whether [the state has] demonstrated a

substantial factor unrelated to economic protectionism to

justify the discrimination.” Connecticut ex rel. Blumenthal v.

Crotty, 346 F.3d 84, 97 (2d Cir. 2003).

Requiring proof of a legislature’s protectionist purpose at

the first step of the inquiry, as California urges, would negate

the second step’s burden on the state to provide a valid

justification for the discrimination against non-residents. 

Moreover, an intent requirement would undermine the

Clause’s purpose to “plac[e] the citizens of each State upon

the same footing with citizens of other States,” Lunding,

522 U.S. at 296 (quoting Paul, 75 U.S. (8 Wall.) at 180), by

mandating different outcomes depending upon a State’s

motive. We therefore reject California’s invitation to read

McBurney as a dramatic overhaul of the first step of the

settled two-step inquiry.

To reiterate, contrary to California’s arguments, the first

step of the Privileges and Immunities Clause inquiry asks

only whether the challenged statute directly burdens a

protected activity. It is undisputed that California’s

commercial fishing license fees are significantly higher for

non-resident fishers than for residents. And it is common

sense that commercial fishing license fees directly affect

commercial fishing. Those facts alone satisfy plaintiffs’

burden at the first step of the inquiry. See Toomer, 334 U.S.

at 396 (a statute that charged $25 to residents for commercial

shrimping licenses, but charged $2,500 to non-residents

“plainly and frankly discriminate[d] against non-residents”

and thus satisfied the first step); Mullaney v. Anderson,

342 U.S. 415, 417–18 (1952) (holding that the Privileges and

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MARILLEY V. BONHAM 11

Immunities Clause “would bar anyState from imposing” a $5

license fee on resident fishers and a $50 fee on non-residents

unless a State offered a substantial, closely related

justification at the second step of the inquiry).

B

At the second step, the burden shifts to the State to

demonstrate that “substantial reasons exist for the

discrimination and [that] the degree of discrimination bears

a close relation to such reasons.” Friedman, 487 U.S. at 67.4

To determine whether the State’s proffered justifications bear

a close relation to the discrimination, we must “consider[]

whether, within the full panoply of legislative choices

otherwise available to the State, there exist alternative means

of furthering the State’s purpose without implicating

constitutional concerns.” Id.

The Supreme Court has noted that “[t]he State is not

without power . . . to charge non-residents a differential

which would merely compensate the State . . . for any

conservation expenditures from taxes which only residents

pay.” Toomer, 334 U.S. at 398–99. California argues that it

is doing just that — merely compensating itself for

4 California argues that the district court applied a purportedly different

rule taken from the Supreme Court’s “tax” cases, as opposed to its

“common calling” cases, and failed to consider California’s justifications

for the discrimination. The Supreme Court, however, has employed the

same two-step inquiry for both “tax” and “common calling” cases. 

Compare Friedman, 487 U.S. at 64–65 (challenge to a residency

requirement for admission to the State bar), with Lunding, 522 U.S. at

296–98 (challenge to a differential income tax deduction). The district

court applied the correct test and properly consideredCalifornia’s asserted

State objectives.

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expenditures on conservation and enforcement efforts from

which non-residents benefit. But California claims that

Toomer allows for inequality at step two and therefore any

fee differential is permissible so long as the State does not

“overcompensate” itself in the aggregate, which, according

to California, means only that the amount collected from nonresidents cannot exceed their collective “fair share” of the

State’s expenditures. These differential fees thus are

permissible, according to California, because the total

additional amount collected from non-residents

(approximately $400,000) constitutes a mere 3% of the

budget shortfall between costs and revenues (approximately

$14.6 million) but non-residents comprise approximately

11% of the commercial fishers in California.

We are unpersuaded. Although we agree that obtaining

compensation for expenditures the State makes for

conservation or enforcement is a permissible state objective,

the additional fees charged to non-residents must bear a close

relation to the “taxes which only residents pay.” Toomer,

334 U.S. at 399; see also Molasky-Arman, 522 F.3d at 934

(noting that “a ‘substantial reason’ for discrimination does

not exist ‘unless there is something to indicate that noncitizens constitute a peculiar source of the evil at which the

statute is aimed’”) (quoting Toomer, 334 U.S. at 398). In

other words, a State may justify a differential fee by showing

either that it is closely related to the costs of addressing a

burden non-residents uniquely impose or that it approximates

the amount in “taxes which only residents pay” towards the

relevant State expenditures from which non-residents also

benefit. Toomer, 334 U.S. at 399; see also Tangier Sound

Waterman’s Ass’n v. Pruitt, 4 F.3d 264, 267 (4th Cir. 1993)

(Toomer permits state to discriminate against non-residents

where state “establishes an ‘advancement of a substantial

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MARILLEY V. BONHAM 13

state interest’ as a reason for the disparate treatment, and, in

the facts of this case, evenly or approximately evenly

distributes the costs imposed on residents and nonresidents to

support those programs benefiting both groups.”). Such a

differential would “bear[] a close relation to the achievement

of [a]substantial state objective[],” Friedman, 487 U.S. at 70,

because it would address the particular evil non-residents

present, unfairly benefiting from residents’ tax expenditures. 

It also would place non-residents “upon the same footing

with,” id. at 64, or at least in “substantial equality” with

California residents, Toomer, 334 U.S. at 396, by forcing an

individual non-resident who benefits from the State’s

expenditures to contribute an amount substantially equal to

that which an individual resident contributes across all fees

and related taxes.

California does not claim, however — nor has it presented

any evidence that shows — that the fee differential

approximates the amount in taxes a resident contributes to the

State’s expenditures related to commercial fishing. Mullaney,

342 U.S. at 418; see also Hicklin v. Orbeck, 437 U.S. 518,

527 (1978) (“[T]he discrimination the [statute] works against

nonresidents does not bear a substantial relationship to the

particular ‘evil’ they are said to present.”). California alone

bore the step two “burden of showing that the discrimination

is warranted by a substantial state objective and closely

drawn to its achievement.” Friedman, 487 U.S. at 68. It

failed to carry that burden, despite ample opportunity to

develop and support its offered justification and “all the facts

. . . in [its] possession.” Mullaney, 342 U.S. at 418–19.

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CONCLUSION

For the above reasons, we hold that California’s

differential commercial fishing license fees, Cal. Fish &

Game Code §§ 7852, 7881, 8550.5, and 8280.6, violate the

Privileges and Immunities Clause. Charging non-residents

two to three times the amount charged to residents plainly

burdens non-residents’ right to pursue a common calling, in

this case commercial fishing. Such discrimination violates

the Privileges and Immunities Clause unless the State carries

its burden to show “that such discrimination bears a close

relation to the achievement of substantial state objectives.” 

Friedman, 487 U.S. at 70. Although its stated objective,

compensation for State expenditures for conservation or

enforcement, is valid, California has failed to show that the

differential fee charged to a non-resident is closely related to

a resident’s share of the State’s expenditures.

AFFIRMED.

GRABER, Circuit Judge, dissenting:

I respectfully dissent. Although I agree fully with the

majority’s analysis at step one of the inquiry, I would hold, at

step two, that the differential fees survive summaryjudgment. 

Further evidentiary development is necessary to determine

whether the nonresident fees “merely compensate the State

for anyadded enforcement burden [nonresidents]mayimpose

or for any conservation expenditures from taxes which only

residents pay.” Toomer v. Witsell, 334 U.S. 385, 399 (1948).

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We have little guidance to assist us in determining what

the United States Supreme Court meant in the foregoing

passage from Toomer. Only twice since Toomer has the

Court quoted the phrase “taxes which only residents pay” in

a privileges and immunities context, and in neither case did

it explain the meaning of those words. Baldwin v. Fish &

Game Comm’n , 436 U.S. 371, 401 (1978); Mullaney v.

Anderson, 342 U.S. 415, 417 (1952). As I explain in more

detail below, two state supreme courts have reached different

conclusions about the proper interpretation of that phrase. 

But we do not know which (if either) of those courts got it

right, because the Supreme Court denied certiorari in both

cases. Carlson v. Alaska Commercial Fisheries Entry

Comm’n, 519 U.S. 1101 (1997); Glaser v. Salorio, 449 U.S.

874 (1980). Further complicating our interpretive task, the

Privileges and Immunities Clause of Article IV “is not one

the contours of which have been precisely shaped by the

process and wear of constant litigation and judicial

interpretation over the years since 1789.” Baldwin, 436 U.S.

at 379.

Acknowledging those limitations, we must decide how to

interpret the phrase “taxes which only residents pay.” 

Toomer, 334 U.S. at 399. On the one hand, as the State urges,

the phrase could be read to refer to residents’ aggregate tax

contribution to commercial fishing. Under that reading,

California permissibly could charge differential fees to

nonresidents so long as those fees do not exceed the

nonresidents’ fair share of the portion of commercial fisheries

management costs that California residents’ tax dollars fund.

The New Jersey Supreme Court has interpreted Toomer

in this way. In Salorio v. Glaser, 414 A.2d 943 (N.J. 1980),

the plaintiffs challenged New Jersey’s imposition of an

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Emergency Transportation Tax, which applied only to

nonresident users of the state highway system. Although it

found the record insufficiently developed to render a final

decision, the New Jersey Supreme Court held that a tax that

applied only to nonresidents could, in theory, pass

constitutional muster, because “[t]he Constitution does not

entitle nonresident commuters to a ‘free ride.’ The State may

exact from them a fair share of the cost of adequate

transportation facilities without violating the Privileges and

Immunities Clause.” Id. at 954. The court read Toomer and

other Supreme Court cases to authorize a state to “impose

upon non-residents the additional expenses occasioned by

their activities within the state, or the reasonable costs of

benefits which they receive from the state.” Id. at 953.

Applying the Salorio court’s reasoning here, nonresidents

are on “equal footing” with residents so long as they are not

charged more than their “fair share” of commercial fisheries

management expenses that residents’ tax dollars fund. 

California introduced evidence that nonresidents purchased

11% of commercial fishing licenses, while the differential

fees for out-of-state licenses equaled only 3% of the net

general fund contributions to the Department of Fish and

Wildlife (“DFW”) budget. The State asserts that it

constitutionally could charge differential fees that total up to

11% of the DFW’s general fund-supported commercial

fishing expenditures, so the smaller fee that California

actually charges is—a fortiori— permissible.

On the other hand, Plaintiffs read “taxes which only

residents pay,” Toomer, 334 U.S. at 399, very differently. 

They contend that the phrase requires a per capita calculation

of a California resident’s tax burden related to DFW’s

commercial fishing budget. The Alaska Supreme Court

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MARILLEY V. BONHAM 17

adopted this alternative interpretation in Carlson v. State,

798 P.2d 1269 (Alaska 1990). There, the plaintiffs

challenged Alaska’s commercial fishing fees, which were

three times higher for nonresidents than for residents. The

state urged the court to follow Salorio. But the Alaska

Supreme Court rejected the New Jersey Supreme Court’s

interpretation of Toomer:

Implicit in Salorio is the notion that it is

permissible to require nonresidents to pay up

to 100% of their pro rata share of

expenditures regardless of what percentage of

their pro rata share residents are in fact

paying. In other words, Salorio, as applied to

this case, seems to add up to a general

proposition that the state may subsidize its

own residents in the pursuit of their business

activities and not similarly situated

nonresidents, even though this results in

substantial inequality of treatment.

Carlson, 798 P.2d at 1278. The court held that the proper

inquiry was “whether all fees and taxes which must be paid

to the state by a nonresident to enjoy the state-provided

benefit are substantially equal to those which must be paid by

similarly situated residents when the residents’ pro rata

shares of state revenues to which nonresidents make no

contributions are taken into account.” Id.

Under the Carlson court’s approach, the state would have

to divide general fund expenditures for commercial fishing

management by the total number of California taxpayers; the

quotient would represent the maximum permissible

differential fee. The State introduced evidence that net

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annual general fund outlays for commercial fisheries

management total at least $12 million. Thus, for instance, if

there were 12 million taxpayers in California, the per capita

formula would limit the permissible differential fee to $1 per

nonresident fisher.1 According to Plaintiffs, this formula puts

residents and nonresidents on “equal footing” because their

out-of-pocket costs to support commercial fisheries are the

same.

I would reject the per capita formula. The purpose of the

Privileges and Immunities Clause is to “place the citizens of

each State upon the same footing with citizens of other States,

so far as the advantages resulting from citizenship in those

States are concerned.” Paul v. Virginia, 75 U.S. (8 Wall.)

168, 180 (1868). In my view, the per capita approach does

not advance that goal. The per capita formula attributes to

each resident a pro rata contribution to every program and

activity supported by a state’s general fund expenditures. But

that sort of rigid across-the-board calculation does not

accurately reflect the real benefit that a taxpayer obtains

through his or her tax dollars. Taxpayer dollars support a

large number of state-funded programs. Education, natural

resources management, healthcare services, corrections and

rehabilitation, infrastructure, and transportation all are at least

partially funded with state tax revenues in California. In a

given year, an individual taxpayer likely receives no direct

benefit from some of those programs, but a benefit that far

1 This illustrative example likely is a generous estimate, as the

population of California was nearly 39 million in 2014. U.S. Census

Bureau, State & County QuickFacts, http://quickfacts.census.gov/qfd/

states/06000.html. Thus, the permissible differential likely would be less

than $1 under the per capita formula, even though a substantial number of

California residents—for example, minor children—are not taxpayers.

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MARILLEY V. BONHAM 19

exceeds his or her pro rata contribution from others. This is

the deal that we make when we pay taxes: We all put a

portion of our income into a big pot and it is spent in a variety

of ways, some of which benefit us directly and some of which

do not.

California residents subsidize each other with their taxes. 

For example, suppose that each taxpayer’s share of state

support for secondary schools is $1 per year. A certain

California taxpayer has a teenager who attends public high

school. That taxpayer’s per capita “payment” for the

educational benefit is $1, but the benefit to the taxpaying

parent is worth much more than that. The parent agrees to

subsidize a number of other activities in the state, including

commercial fishing. In exchange, taxpayers without schoolage children subsidize public education.2 The per capita

formula permits a nonresident fisher to obtain the same

benefit as a resident fisher, but the nonresident does not have

to subsidize any other programs or activities in California in

exchange. The per capita formula thus systematically

disadvantages the resident vis-à-vis the nonresident.

Instead of using a per capita formula, I would adopt the

Salorio court’s “fair share” approach. At step two of the

privileges and immunities inquiry, the state must show that

the discrimination against nonresidents is “closely related to

2 Of course, some commercial fishers are parents whose children attend

public school. But that fact just demonstrates that each taxpayer benefits

directly from a different set of state programs supported by his or her tax

dollars. The value of the taxpayer-funded investment in a given program

to each individual taxpayer who benefits from that program varies. The

value is less than the taxpayer’s total tax bill, but more—generally,

significantly more—than the taxpayer’s strict pro rata contribution to the

program.

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20 MARILLEY V. BONHAM

the advancement of a substantial state interest.” Supreme

Court of Va. v. Friedman, 487 U.S. 59, 65 (1988). We

recently reiterated that “[a] ‘substantial reason’ for

discrimination does not exist ‘unless there is something to

indicate that non-citizens constitute a peculiar source of the

evil at which the statute is aimed.’” Council of Ins. Agents &

Brokers v. Molasky-Arman, 522 F.3d 925, 934 (9th Cir. 2008)

(quoting Toomer, 334 U.S. at 398)). Nonresidents increase

the amount of commercial fishing activity in California’s

coastal waters. That increased activity, in turn, requires the

state to spend more money than it otherwise would spend on

commercial fisheries management, including enforcement

and conservation. Because nonresidents are a “peculiar

source” of those additional costs, I would hold that not

subsidizing nonresident participation in an activity funded

with residents’ tax dollars is a substantial reason for

discrimination. See Tangier Sound Waterman’s Ass’n v.

Pruitt, 4 F.3d 264, 268 (4th Cir. 1993) (assuming, without

deciding, that such an interest is permissible under the

Privileges and Immunities Clause).

Turning to the “close relationship” requirement, I would

hold that the State has the burden to show three things. First,

it must isolate the state expenditures that benefit only the

licensees.3See id. (rejecting Virginia’s differential license

fee in part because it unfairly charged nonresident

3 These expenditures would include any costs associated with programs

or activities in which only licensees participate—for example, the cost of

enforcing rules such as size of fish or season limits. They also would

include conservation expenditures made necessary bylicensees’ activities. 

If the state engages in conservation activities designed to keep fish stocks

at a certain level, some of those activities benefit only licensees. To count

those costs, the state must separate general conservation activities from

conservation activities directed to the effect of commercial fishing.

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MARILLEY V. BONHAM 21

commercial fishers “for programs funded by all taxpayers to

benefit all fishermen, whether commercial or sport

fishermen”). Second, it must determine what portion of those

expenditures fairly may be characterized as deriving “from

taxes which only residents pay.” Toomer, 334 U.S. at 399;

see Tangier, 4 F.3d at 267 (striking down Virginia’s

differential commercial fishing license fees in part because

the state calculated the fee without considering nonresident

fishers’ payment of state sales and use taxes); Salorio,

414 A.2d at 955 (discussing whether property and sales taxes

are “taxes imposed upon residents alone” in light of the fact

that some nonresidents pay them). And third, it must assess

what portion of qualifying expenditures is fairly allocable to

the nonresidents as “the additional expenses occasioned by

their activities within the state.”

4

Salorio, 414 A.2d at 953;

see also Tangier, 4 F.3d at 267 (holding that “the record does

not disclose that the Commonwealth of Virginia has shown

that it created any credible method of allocating costs as

between residents and nonresidents”).

I would hold that the “close relationship” requirement of

step two is satisfied so long as the state charges a differential

4

It may be, as the State asserts, that multiplying the qualifying

expenditures by the percentage of commercial fishers who are

nonresidents is the appropriate way to calculate those nonresidents’ fair

share, but that is not necessarily the case. See Salorio v. Glaser, 461 A.2d

1100, 1106 (N.J. 1983) (“Although the State has not shown that NewYork

commuters cause higher average costs per commuter than New Jersey

commuters, the New York commuter does exacerbate the peak load. 

Accordingly, both incremental and average costs are pertinent factors in

determining the costs attributable to the New York commuter.”); Salorio,

414 A.2d at 955 (questioning a “strict percentage computation” that

assumed equal transportation costs for nonresident and resident

commuters).

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22 MARILLEY V. BONHAM

fee that, in the aggregate, does not exceed

5

the amount that

the state spends that (1) benefits only licensees, (2) derives

from taxes that only residents pay, and (3) is fairly allocable

to nonresidents.6 This test puts residents and nonresidents on

“substantially equal footing” with respect to commercial

fishing: Residents reap the benefit of the tax dollars that they

alone pay, and nonresidents cannot be required to pay more

than their “fair share” of the benefits they enjoy that are

subsidized by those resident-paid tax dollars.

This fair share approach accurately reflects the relative

benefit that residents and nonresidents obtain from a state’s

general fund expenditures. Suppose that a state charges a $50

license fee to resident commercial fishers. Over and above

the revenue collected from those fees, the state spends $1

million in tax-supported funds on commercial fisheries

management. If 10,000 people per year obtain licenses, the

benefit of the $1 million subsidy to each fisher is $100. Thus,

a nonresident may be charged the $50 fee that residents pay,

plus a $100 differential. If only 5,000 people obtain licenses,

5 Because the Privileges and Immunities Clause neither bars the

residents of a state from deciding to use their tax dollars to subsidize the

activities of nonresidents nor precludes a state from providing a greater

benefit to nonresidents than it provides to residents, it is permissible for

a state to charge less than the maximum allowable differential.

6 The test here is one of “substantial equality of treatment,” not absolute

equality. Austin v. New Hampshire, 420 U.S. 656, 665 (1975). So long

as the state “fairly attempts to distribute the burdens and costs of

government to those receiving its benefits” pursuant to a reasonable

methodology, I would hold that the requirements of the Privileges and

Immunities Clause are met. Salorio, 414 A.2d at 952; see also Travelers’

Ins. Co. v. Connecticut, 185 U.S. 364, 371 (1902) (“It is enough that the

state has secured a reasonably fair distribution of burdens, and that no

intentional discrimination has been made against nonresidents.”).

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MARILLEY V. BONHAM 23

each nonresident may be charged a $200 differential. This

variance makes sense, because the benefit to each fisher of

the tax-supported outlay decreases as more people use the

resource. The per capita approach makes less sense because

it is unresponsive to such changes; so long as a state’s tax rate

and general fund outlay on the commercial fisheries program

remain unchanged, the permissible differential is fixed. It is

the same whether 10 or 10,000 people obtain licenses and use

the resource.

Plaintiffs raise the specter of a year in which only one

nonresident purchases a commercial fishing license. They

argue that the state’s approach would permit California to

collect hundreds of thousands of dollars from that single

licensee. Not so. The fair share formula accounts for this

possibility. Assuming the scenario described above, in a year

in which a single nonresident and 4,999 residents obtain

licenses the permissible differential for that nonresident

would remain $200.7

Finally, Plaintiffs challenge the “fair share” approach

because, using it, the state could set nonresident license fees

ten, twenty, or even a hundred times higher than resident

license fees. They point out that the Supreme Court has

rejected nonresident fees at such ratios before. See Mullaney,

342 U.S. at 418 (invalidating nonresident fees ten times

7 The only way the permissible differential charged to a nonresident

would skyrocket is if the overall number of fishers obtaining licenses

plunged to single digits. But if that happened, the state likely would slash

its commercial fisheries management spending. And if it did not cut

spending, it is hard to see how the State could prove that the full $1

million in my example benefitted just a handful of fishers, because it is not

reasonable to attribute hundreds of thousands of dollars in enforcement

and conservation costs to a single fisher.

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24 MARILLEY V. BONHAM

higher than resident fees); Toomer, 334 U.S. at 389 (striking

down nonresident fees one hundred times higher than resident

fees). And they urge us to rely on the ratio of nonresident to

resident fees here (roughly three to one)8to reject the “fair

share” analysis. Plaintiffs’ argument is flawed for two

reasons.

First, the Supreme Court did not reject the differential

fees because of the size of the ratio. Rather, it rejected the

nonresident fees because Alaska and South Carolina had

failed to show any connection between the differential and

state spending on services to the nonresidents. See Mullaney,

342 U.S. at 418 & n.1 (rejecting the state’s argument that the

differential fees merely compensated the state for

enforcement against nonresidents because the state had not

calculated the cost of that enforcement and the total amount

of differential fees collected “may easily have exceeded the

entire amount available for administration” of the office in

charge of enforcement); Toomer, 334 U.S. at 398 (noting that

“[n]othing in the record indicate[d] . . . that any substantial

amount of the State’s general funds [was] devoted to shrimp

conservation” and that, even if there had been such evidence,

it “would not necessarily support a remedy so drastic as to be

a near equivalent of total exclusion”).

Second, focusing on the size of the ratio requires

consideration of fees in a vacuum. That isolation makes little

sense in light of the Supreme Court’s statement that a state

may charge a fee designed to “compensate [it] for any added

8 The ratio of nonresident fees to resident fees for commercial fishing

licenses and commercial boat registrations is three to one. For dungeness

crab vessel permits, the ratio is lower (two to one); and for herring gill net

permits, the ratio is higher (nearly four to one).

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MARILLEY V. BONHAM 25

enforcement burden [nonresidents] may impose or for any

conservation expenditures from taxes which only residents

pay.” Toomer, 334 U.S. at 399. In Salorio, the tax at issue

applied only to nonresidents. On appeal after remand, the

New Jersey Supreme Court ultimately invalidated the

tax—but not because the nonresident-to-resident ratio was too

high. The problem was that, during a period of two decades,

the revenues collected by the state through the tax had

exceeded the costs attributable to nonresidents by a factor of

more than two. Salorio v. Glaser, 461 A.2d 1100, 1107 (N.J.

1983). Focus on the size of the ratio per se is misplaced; the

privileges and immunities inquiry requires consideration of

all taxes and fees paid by residents and nonresidents in

support of commercial fishing.

Because it applied a different test, the district court did

not address whether the net general fund outlay benefits only

licensees, whether that outlay derives solely from taxes that

only residents pay, or what portion of qualifying costs is 

properly allocable to nonresident fishers. Thus, on the

current record, I would hold that we cannot determine

whether the differential fees are permissible under the

Privileges and Immunities Clause. Accordingly, I would

reverse the summary judgment of the district court and

remand for further proceedings.

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