Opinion ID: 1235947
Heading Depth: 2
Heading Rank: 2

Heading: effect of beam decision

Text: As we noted earlier, our decision rests primarily on an independent and adequate state ground. However, we discuss the effect of the Beam decision on our prior opinion as this was the basis of the remand from the Supreme Court. The Georgia tax statute at issue in Beam imposed an excise tax on imported liquor at a rate double that imposed on liquor manufactured from Georgia-grown products. In 1984, the Supreme Court, in Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 104 S.Ct. 3049, 82 L.Ed. (2d) 200 (1984), held that a similar Hawaii statute violated the Commerce Clause. Thereafter, James B. Beam Distilling Company, a manufacturer of Kentucky bourbon, filed an action in Georgia state court claiming that the Georgia statute also violated the Commerce Clause, and seeking a refund of taxes it paid under the Georgia statute for the years 1982-1984. The Court declared the statute unconstitutional under Bacchus, but refused to apply its ruling retroactively, thereby denying the requested refund. In so holding, the Court relied on Chevron Oil Co. v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed. (2d) 296 (1971), which held that a decision will be applied prospectively where it displaces a principle of law on which reliance may reasonably have been placed, and where prospectivity is on balance warranted by its effect on the operation of the new rule and by the inequities that might otherwise result from retroactive application. The Georgia Supreme Court affirmed. The parties then appealed to the United States Supreme Court, which reversed the judgment and remanded the case. The only question presented in the Beam case was whether the Court's ruling in Bacchus should apply retroactively to claims arising on facts antedating that decision. Although it was a plurality opinion, a majority of the Court held that the application of the rule to the parties in Bacchus mandated the application of the rule retroactively in later cases. Justice Souter, joined by Justice Stevens, determined that retroactivity was a matter of choice of law, a choice ... between the principle of forward operation and that of relation backward. Beam, 501 U.S. at ___, 111 S.Ct. at 2443, 115 L. Ed. (2d) at 487 (citing Great Northern R. Co. v. Sunburst Oil & Refining Co., 287 U.S. 358, 364, 53 S.Ct. 145, 148, 77 L.Ed. 360, 366 (1932)). Justice Souter noted that there were three ways in which the choice of law problem could be resolved. First, a decision could be fully retroactive, applying both to the parties before the Court and to all others by and against whom claims are made without regard to when such claims arise. Second, a decision could be purely prospective, applying only to cases arising on facts postdating the pronouncement. Third, the new rule could be applied in the case in which it is pronounced, but not to other cases arising on facts predating the pronouncement. [3] Justice Souter concluded that principles of equality and stare decisis required that when the Court has applied a rule of law to the litigants in one case it must do so with respect to all others not barred by procedural requirements or res judicata. Id. 501 U.S. at ___, 111 S.Ct. at 2448, 115 L.Ed. (2d) at 493. Thus, Justice Souter specifically rejected the notion of modified, or selective prospectivity. Justice Souter left open the question of the propriety of pure prospectivity. Justice White concurred in the judgment, but specifically did not reject pure prospectivity, finding that the propriety of pure prospectivity was settled by prior cases. Justices Blackmun, Marshall, and Scalia, also concurred in the judgment, but these justices would apply every new rule announced retroactively. Finally, Justices O'Connor, Rehnquist, and Kennedy dissented, holding that in order to determine whether a rule should be applied retroactively, the Court must undertake a Chevron Oil inquiry. Since six of the justices concurred in the judgment, we know that a majority of the Court agrees that if a rule is applied to the litigants in the case on appeal, this rule must then be applied retroactively in all subsequent cases, thus precluding a Chevron Oil analysis. Consequently, the question in this case is whether the rule announced in Davis was applied to the parties in that case such that retroactive application of Davis is mandated by Beam. We hold that the rule announced in Davis was not applied to the parties in that case, and thus, that Davis can be applied prospectively. Davis differs from Bacchus in that the retroactivity issue was not presented in Davis, while this issue was before the Court in Bacchus. Further, in Bacchus, the Supreme Court applied its rule retroactively to the litigants in that case. Conversely, in Davis, the retroactivity issue was not before the Court because Michigan conceded that the refunds were due to Davis under state law if the statute were held unconstitutional. Because Davis did not rule upon the issue of retroactivity, the doctrine of stare decisis does not apply. United States v. L.A. Tucker Truck Lines, 344 U.S. 33, 73 S.Ct. 67, 97 L.Ed. 54 (1952) (in order for a case to be a precedent for another case, the court in the first case must have decided the issue presented in the second case). Furthermore, the principle of equality or equal treatment to similarly situated litigants does not require that all future litigants, including the litigants in the present case, are bound by the stipulation of the State of Michigan in Davis. This conclusion is supported by Michigan's own interpretation of Davis. In Fonger v. Dept. of Treasury, 1990 WL 96942 (Mich. Tax Tribunal June 11, 1990) (WESTLAW), the court stated: The Court in Davis made no specific determination as to whether its decision shall apply prospectively or retroactively. Therefore the Court did not mandate refunds to any or all federal retirees who paid Michigan income tax. Any inquiry involving the application of refunds was apparently extinguished by the Department's concession that refunds would retroactively apply based upon an unfavorable ruling by the Court.... In addition, several other courts which have been faced with this issue have also held that Beam does not mandate retroactive application of Davis. See Swanson v. North Carolina, 329 N.C. 576, 407 S.E. (2d) 791 (1991); Sheehy v. Montana, 820 P. (2d) 1257 (Mo. Sup. Ct. 1991); Harper v. Virginia Dept. of Taxation, ___ Va. ___, 410 S.E. (2d) 629 (1991). Therefore, because we find that the retroactivity issue was not decided in Davis, we are not foreclosed by precedent from applying the three-pronged Chevron Oil test in deciding the retroactivity issue in the present case. [4] Accord, Swanson, supra ; Sheehy, supra ; and Harper, supra ; Thus, we adhere to our Chevron Oil analysis articulated in Bass I.