Document: 483 U.S. 232 107 S.Ct. 2810 97 L.Ed.2d 199 TYLER PIPE INDUSTRIES, INC., Appellantv.WASHINGTON STATE DEPARTMENT OF REVENUE. NATIONAL CAN CORPORATION, et al., Appellants v. WASHINGTON Nos. 85-1963, 85-2006. Argued March 2, 1987. Decided June 23, Syllabus Washington imposes a business and occupation (B & O) tax on the privilege of engaging in activities State, including manufacturing State making wholesale sales State. The measure is gross proceeds sales, value manufactured product. However, under B O tax's "multiple exemption," local manufacturers are exempted from for portion their output that subject to tax. Application exemption results manufacturers' paying only out-of-state Washington. same rate applicable both wholesaling activities. In cases review, which originated as state-court refund suits by appellants, who sold goods outside Washington, trial court held multiple did not discriminate against interstate commerce violation Commerce Clause. No. appellant Tyler Pipe Industries, Inc. (Tyler)—an manufacturer its products but had no property or employees whose solicitation was conducted an independent contractor located Washington—also asserted have sufficient nexus with justify collection there. upheld Supreme Court affirmed cases. Held: 1. Washington's discriminates Clause because, through operation exemption, assessed those customers. sell within has facially discriminatory consequences West Virginia invalidated Armco Hardesty, 467 638, 104 2620, 81 540, reasons invalidating case also apply facial unconstitutionality cannot be alleviated examining effect other States' legislation determine whether specific transactions taxation. Nor can imposition saved valid "compensating tax." Manufacturing "substantially equivalent events," id., at 643, S.Ct., 2623, such taxing manufacture said compensate State's inability impose goods. Henneford Silas Mason Co., 300 577, 57 524, L.Ed. 814, distinguished. To extent ruling here inconsistent General Motors Corp. 377 436, 84 1564, 12 430—where claims it unconstitutionally taxed unapportioned receipts bear reasonable relation taxpayer's in-state activities—that overruled. Pp. 239-248. 2. Tyler's representative adequately support jurisdiction showing defeated argument properly characterized rather than agent. Cf. Scripto, Carson, 362 207, 80 619, 4 660. there any merit contention does fairly apportion burden between States. Such rests erroneous assumption that, tax, unitary activity wholesaling. compensating taxes substantially events, and, thus, wholesaling—whether manufacturer—must viewed separate wholly 248-251. 3. Appellee's retroactive application adverse decision should considered, first instance, remand. Bacchus Imports, Ltd. Dias, 468 263, 3049, 82 200. 251-253. 105 Wash.2d 318, 715 P.2d 123, 327, 732 134 (1986), vacated remanded. STEVENS, J., delivered opinion Court, BRENNAN, WHITE, MARSHALL, BLACKMUN, O'CONNOR, JJ., joined, Part IV SCALIA, joined. filed concurring opinion, post, p. ----. part dissenting part, I REHNQUIST, C.J., POWELL, took consideration D. Michael Young, Seattle, Wash., appellants Neil J. O'Brien, Dallas, Tex., 85-1963. William Berggren Collins, Olympia, appellees. Justice STEVENS Court. 1 540 (1984), we Virginia's selling tangible discriminated because manufacturers. principal question these consolidated appeals similarly violates Constitution purchasers. We conclude our challenged here. 2 * For over half century imposed "the act activities" Wash.Rev.Code § 82.04.220 (1985). applies extracting raw materials State,1 State,2 State,3 retail State.4 typically applied rates different "gross sales," products. §§ 82.04.220, 82.04.240. 3 Prior 1950, contained provision persons were either extraction liability extracted State.5 Thus, 1948 this therefore violated Federal Constitution. Columbia Steel Co. 30 658, 192 976 (1948). rejected taxpayer suffered discrimination proved paid another State.6 dismissed if good seller would competitive advantage manufacturers: "[T]he situation obtaining state immaterial. must interpret statute passed legislature. marks levying upon engaged commerce, is, 8370-6, levied perform taxable act, Washington." Id., 664, P.2d, 979. 5 Two years later, Legislature responded turning scheme inside out. legislature removed replaced tax.7 result, before pay Local manufacturer-wholesalers continue one now manufacturing. Although changed years—it forty-four hundredths percent, 0.44%, relevant provisions today enacted 1950.8 6 constitutionality been several occasions,9 most strenuously 430 (1964). bare majority tax; BRENNAN Goldberg opinions. bulk Court's devoted rejecting At end declined reach burdens transactions, failed demonstrate "what definite burden, constitutional sense" laws placed identical shipments measures 449, 1572. Goldberg, joined Stewart dissented "[t]he dangers taxation" apparent face statute. 459, 1577.10 Comparing current invalid predecessor, dissent concluded "amended seem essentially economic appearing nondiscriminatory." 460, 1577. Today squarely address claim commerce. II 7 us. (No. 85-2006), 71 commercial enterprises 53 actions refunds Thurston County Superior actions, found violate Clause, granted Department Revenue's motion summary judgment. second 85-1963), (Tyler), sought during 1976 1980 Again, (1986); 123 (1986). 8 appellants' arguments wholesaler-manufacturers, required invalidated. expressed view could justified substantial difference (.0088) (.0027), provide reduction when out reduce partly then requirement " 'what might called internal consistency—that [tax] every jurisdiction,' impermissible interference free trade," Armco, U.S., 644, dispositive merely relieved proving already demonstrated fact resulted taxpayers' apportioned reflect amount related services rendered 9 noted probable appeals, 479 810, 57, 93 17 reverse affirm part. consider taxpayers facilities market States; challenge directed apportioned. III 10 A person item item. This statutory Armco. 0.27% wholesale. exempt .88% Even though bore higher dollars cents, principle "a may transaction incident more heavily crosses lines occurs entirely State." 642, 2622. 11 explaining why face, expressly endorsed reasoning Goldberg's explained: "The provides two companies will treated differently depending conducts it. sale imposed. If imported sale, price. See 459 [84 1577, 430] (1964) (Goldberg, dissenting) (similar 'on purchasers intrastate locally made while competing sellers'); 976, 979 (1948) (invalidating tax)." 13 Our square reliance earlier especially significant dooms appellee's efforts limit precise structure issue case. distinction appellee attempts draw tax—as present Armco—and again 459-460, 1577-1578. holding requires agree conclusion us practical 1948. 14 controlling precedent. As noted, result depend resolution burdened reason passing "not what sense [the States] places decided, prove subjected taxation order advance discrimination. Standard Pressed Revenue Dept., 419 560, 563, 95 706, 709, 42 719 (1975) (rejecting risk taxation). however, categorically requirement. sister Moorman Mfg. Bair, 437 267, 276-278, 98 2340, 2346-2347, 197 (1978).11 15 reject Department's Maryland Louisiana, 451 725, 758, 101 2114, 2135, 68 576 (1981), "concept compensatory identification attempting compensate." arguably manufacturers; absent disadvantage afar justification thus fails precedents. extend ostensible benefit erase incentive engage instead commerce; affirmatively disadvantage. 16 common theme running sustained compensating" "[e]qual treatment commerce." Boston Stock Exchange Tax Comm'n, 429 331, 599, 608, 50 514 (1977). 759, 2135. Exchange, New York transfer securities involving sale. designed neutralize enjoyed stock exchanges York. concluded: "Because delivery York, escape he his obvious financial expense regional exchanges. Rather 'compensating' supposed resulting 270, amendment forecloses tax-neutral decisions creates States." 607. 18 Similarly, use Louisiana gas brought into "complement severance produced 642-643, citing 758-759, 2135-2136. relied observation equivalent" events mutually And wrote case: 19 deemed 'compensating tax' competitors. . Here, too, 'substantially events' heavy admittedly lighter wholesalers frequently entails say attributable manufacturing, sales." 2622-2623. 20 272, 3055, 200 (1984). light nature conclude, events" goods.12 21 Appellee contends similarities system upheld. personal used originally purchased elsewhere similar 814 (1937). aid cause. That addressed "privilege using article property." property" equal greater some 580-581, 525-526. context overall structure, purchase impact fortuity; guaranteed paid,13 regardless State.14 explained Halliburton Oil Well Cementing Reily, 373 64, 70, 83 1201, 1204, 202 (1963): 22 inescapable: situated condition precedent out-of-state." 23 parallel eliminating exposure credit just operates unified acts carried excludes conduct precedents "when unfairly exacting share activity." Dept. Association Stevedoring Cos., 435 734, 748, 1388, 1393, 55 682 (1978). 24 need confirmed examination States: 25 "Appellee suggests require actual pointing total Armco's competitors Virginia. test. Container America Franchise Board, 463 159, 169 [103 2933, 2942, 77 545] (1983), trade. case, discussing rule where allegation apportions income States form 170-171 2942-2943]. Any mean shifting complexities codes 49 States, validity each particular operated." 644-645, 2623 (footnote omitted).15 26 struck down exposes exempt. "has nondiscriminatory," see Corp., 1577 dissenting), save invalidation. overruled.16 27 manufacturer-wholesaler disposes issues raised National Can them well Compliance issue, necessarily preclude continued assessment Either repeal expansion presumably cure alternative advanced 28 seeks customers period January 1, 1976, September 30, 1980. These argues sales. sells large volume cast iron, pressure plastic pipe fittings, drainage all maintains office, owns property, residing Its executives maintain offices Seattle. 29 helped establish findings supported evidence, summarized follows: representatives acted daily behalf calling soliciting orders. They long-established valuable relationships Pipe's Through contacts, improve name recognition, share, goodwill, individual customer relations Pipe. 31 "Tyler very virtually information regarding market, including: product performance; products; pricing, conditions trends; existing upcoming construction liability; critical concerning market. special relationship corporation. agents substantial." Wash.2d, 325, 127. 32 matter law, analysis. 660 (1960), Georgia corporation, office regular Florida, employed jobbers solicit Florida. Florida solicitors collect "salesmen" determined "such fine without significance." 211, 621. consistent recent Geographic Society California Equalization 551, 556-558, 1386, 1390-1391, 51 631 33 determined, crucial factor governing performed significantly associated ability 323, 126. standard satisfied "sales necessary maintenance protection interests. ." 321, 125. Tyler. 34 asserts Complete Auto Transit, Brady, 274, 285, 1076, 1082, 326 full manufacturing; even plainly activity. apportionment exemption. 280-281, 2348-2349 (gross "plainly valid"); 564, 709 (selling measured "apportioned exactly taxed"). V 35 retroactively prior clearly foreshadowed Chevron Huson, 404 97, 106-107, 92 349, 355-356, 296 (1971) (factors deciding prospectively only). Hawaii 276-277, 3058. urged payment taxpayers. resolve merits concluding take itself complex area structures how holding: 36 "These issues, remedy courts. Also, federal involved intertwined with, obviated by, law. all, necessitate record so far reluctant, therefore, instance. Accordingly, judgment remand further proceedings opinion." 277, 3058 omitted). 37 followed approach Williams Vermont, 472 14, 2465, 86 (1985), residency restriction availability appropriate remedy, remanding Vermont "in action pleadings, given possible relevance 277 [104 3058, 200] 28, 2474. Hooper Bernalillo Assessor, 612, 622-623, 2862, 2868, 487 likewise instance rulings VI 38 hold fair challenges partial invalidation raises remedial better vacate judgments opinion. 39 It ordered. 40 POWELL 41 concurring. join "[i]n ante, 224, 756-757, 2134-2135, "by Ante, 247. do read extending "internal consistency" test described 2623-2624, discriminatory, contra, 257—258 (SCALIA, part), nor American Trucking Assns., Scheiner, 266, 298, 2829, 2848, 226 (1987) (O'CONNOR, dissenting). 43 whom THE CHIEF JUSTICE joins I, 44 upholding give jurisdiction. dissent, remainder adopted drastically limits discretion systems, basis Constitution, past decisions. 45 Implicitly cases, 245-248, explicitly 284, 2481, (1987), consistency," demanding they 'be trade." (1984) (quoting 169, 103 545 (1983)).1 clear, 246-247, So flat multistate activities, axle marker fee 226. equally clear me, consistency nowhere Indeed, consistencyrule compelled overrule lengthy list decisions, Hinson Lott, Wall. 148, 387 (1869), (1964), including, explicit 226, Capitol Greyhound Lines Brice, 339 542, 70 806, 94 1053 (1950), Aero Mayflower Transit Board Railroad Comm'rs, 332 495, 167, 99 (1947), Public Service 295 79 1439 (1935). Moreover, implicitly repudiate approval dicta ago York's pre-1968 securities. 330, 607, (1977).2 Finally, Terms ago—and Term after supra, decided—that never own 21-22, 2471, Southern Pacific Gallagher, 306 172, 59 389, 391, 586 (1939). time, mathematical necessity. presumed creating now, 198 adoption 2840. my view, dictum, reject. insists viewing holding, conflicting decades internally taxes, seems me numerous ought 46 net businesses 169-171, 2942-2943, cited rule, automatically contexts. course earn figure. Hence, enterprise, 100% firm's income. Where, discrete manufacture, delivery, occur single applicable; simply figure event apportion. traditionally amply (openly tacitly) Scheiner. 47 requiring contexts, assuredly so. dealt 0.88% discussed finding "[o]n face," 2622, it." Ibid. Combined producers "compensate" producer/sellers, 2622-2623, enough invalidate went response shown "actual Virginia." 2623. After reciting "[a] commerce," ibid., 645, 2624. establishes occurred. expand brief discussion always required, thereby revolutionize law taxation, remarkable. 48 isolated language, written evident potential significance general overturn settled think scope language. few indicate, invalidates host methods long left unhampered Congress. shaky ground invoke self-operative check legislation, II, infra, develop rules unconstrained text Prudence counsels favor least intrusive possible. Applying traditional tests, valid. discriminatory. Unlike goods, out-of-state. No (or be) manufacturers, possible) All relieve producer/sellers double declining assess respect paid. arrangement, notwithstanding nondiscriminatory appearance, effects itself. An pays Washington; collects involved. considered consults doing (a case-by-case inquiry one, ----) unless adopts doing. latter adopts, assuming purposes determination scrutiny. earlier, tradition cases; little logic well. Specifically, adopting cause dissimilar produce result. latter, course, suffice simplest example: (without wholesaling) manufacturing)—for company former taxes. When objection replied unlike itself, arise discriminatory; not. adhere judging terms, less striking assumptions do. lawful own. increase operating interstate—just effect. Framers gave Congress power regulate Evaluating gives eliminate discrimination, time leaving degree freedom revenue measures. Finer tuning particularly inappropriate leap restrictive since platform launch unstable structure. takes opinions Term, number overrule, educed so-called "negative" rock "quagmire," Northwestern Portland Cement Minnesota, 358 450, 458, 357, 362, 421 (1959). liquefaction. 114 doctrine negative formally Case Freight Tax, 232, 146 (1873), alluded various Cooley Wardens, How. 299, 319, 996 (1852); Gibbons Ogden, Wheat. 209, (1824); 226-229, 235-239 (Johnson, judgment), applications have, put too point matter, sense. generally Currie, Court: First Hundred Years 1789-1888, pp. 168-181, 222-236, 330-342, 403-416 (1985).3 52 uncertainty small lack theoretical underpinning judicial "enforcement" states "Congress shall Power foreign Nations, among Indian Tribes." Art. 8, cl. On charter Congress, courts, ensure "an trade 328, 606. pre-emption follow, grant exclusive, Charles Pinckney's draft constitution provided, Abel, Constitutional Convention Contemporary Comment, Minn.L.Rev. 432, 434 (1941), John Marshall seemed believe was. 209. District empowers "To exercise exclusive Legislation," 17, language indication exclusivity. License Cases, 504, 579, 256 (1847) (opinion Taney, C.J.). assume Congress' Article powers exclusive; many coexist concurrent authority Kewanee Bicron 416 470, 479, 1879, 1885, 315 (1974) (patent power); Goldstein California, 412 546, 2303, 2311, 163 (1973) (copyright Houston Moore, 25, (1820) (court-martial militia); Sturges Crowninshield, 122, 193-196, 529 (1819) (bankruptcy power). Furthermore, correlative denial 10, example, coin money make treaties. assumed date ratification regulating 580-581. exclusivity rationale infinitely attractive 1847. Now know embraces growing wheat home consumption, Wickard Filburn, 317 111, 63 82, 87 122 (1942), loan sharking, Perez United 402 146, 91 1357, 686 (1971), difficult imagine survive precluded. Another enforcement assert, Curtis "[w]hatever subjects national, admit uniform system, plan regulation, justly Congress." perhaps wise adopt (though hard judges legislators fit areas nature" national regulation), misfortune conceivable treats "Commerce States" subject. Clause's pre-emptive intended (as opposed intended, promote health), 203, textually phrase "regulate Commerce," unlikely one. Distinguishing purpose "police power" statutes Taney 582-583, interesting metaphysical useful technique marking sovereigns. 54 plausible idea enforcing applying command interpreting silence certain fields (but others) taken prohibition regulation. There congressional inaction accorded action. There, elsewhere, "Congress' that—silence. Alaska Airlines, Brock, 480 678, 686, 1476, 1481, 661 (1987). supra n. 3, 334 (noting recurring fallacy undefined permissive prohibitory legislation—though makes affirmative vote Houses" (footnotes omitted)).4 historical grounds reading says—an authorization strongest evidence Clause—that version renders exclusive—is Madison's comment Convention: "Whether restrained laying tonnage duties depends 'to commerce.' terms vague exclude M. Farrand, Records 1787, 625 comment, came became 3: "No shall, Consent lay Duty Tonnage. conceive include duties; despite coverage, prohibiting approval; suggest ill shared. 56 Against mere shadow overwhelming reality broad outlines, major controversy, neither debates ratifying conventions. Instead, "nearly universal agreement government Minn.L.Rev., 443-444, much provided. records disclose constructive criticisms clause proposed them." F. Frankfurter, Marshall, Waite Federalist, Madison Hamilton discourses virtues uniformity control Federalist 7, 62-63 (C. Rossiter ed. 1961); 11, 89-90; 22, 143-145; 42, 267-269; 53, 333, substance specifically about Clause—and primarily 470-474. exaggerated addition Government "which oppose apprehensions entertained." 45, 293. beyond "apprehensions" "entertained" supporters hinted assumed. Frankfurter pungently it: limitations finds community [is] audacious doctrine, which, sure, hardly publicly avowed Constitution." 19. sum, gone guarding rank citizens States—which regulated Privileges Immunities Const., IV, ("The Citizens entitled States")—the enterprise unable textual coherent nontextual theory, almost certainly undertake, undertaken astonishing expanding beachhead impoverished territory, being acquired sort intellectual possession. 82.04.230 82.04.270. 82.04.250. provided: 'Every purview paragraphs (a), (b), (c), (d), (e), (f) (g) section [§ 8370-4], paragraph in: Provided, (a) (b) (c) (e) persons.' (Italics ours)." 661, 977-978 'The immunities implicit depend, world affairs, incidence varying moment. Courts possessed instruments delicate enable weigh factors complicated setting mitigate created direct 663, 978 Freeman Hewit, 329 249, 256, 67 278, 265 (1946)). revised B.F. Goodrich 231 cert. denied, 342 876, 72 96 659 (1951). provides: "(1) [E]very sections RCW 82.04.290, inclusive, in. "(2) Persons 82.04.250 [tax retailers] 82.04.270 distributors] extractors], 82.04.240 manufacturers] subsection (2), (3), (4), (5), (7) 82.04.260 food processing activities] sold. "(3) (4) ingredients manufactured." 82.04.440 See, e.g., supra; (1964); Revenue, (1975); Chicago Bridge Iron 463, appeal dism'd, 464 1013, 78 718 (1983). functional equivalency pre-1950 successor: considering provisions. involved—the 'tax wholesalers'—provides 'engaging wholesale' 'equal multiplied one-quarter per cent.' Rev.Code Wash. 82.04.270; Wash.Laws 1949, c. 228, 1(e). chapter manufacturer' manufactured, 82.04.240; 1(b). Then 'Persons activities' endeavors insure wholesalers.' 82.04.440; 2-A. 1950 exemptive 'multiple provision, sellers. amended, reversing then, thereunder, (special session), 5, McDonnell 62 553, 557, 383 905, 908 (1963). amended (dissenting opinion). quoted following sentence (1946): moment." 2624, 8. Hewit 2d, 978. attempt Many credits alleviate sovereigns parts chain events. three although reciprocity required. CCH Guide 6013-6014 74-75, 1206-1207, Cardozo carefully 2% "tax sales" Title 1935 code tax" use. excess 2%, difference. Explaining wrote: "Equality runs use, offset thing. true offsetting payable state. uses buying enjoyment except somewhere. Every anywhere, or, accurately, state, "When account up, stranger consequence ownership dweller gates. incident, another, sum reckoning closed." 583-584, 527 (emphasis added). solitary proposition discerned referring itself: "It plain lower wholesaling, wholesaler manufacturer-wholesaler." 646, 2624 (REHNQUIST, argued scheme, entirety, exacted manufacturer. markets liabilities "excludes 246—247. exclusion, assumes Washington's. taxed, inter alia, occurred 603, While reducing nonresidents placing cap declared "was neutral neutrality: place Jersey, Professor Currie's summed up leading decision: "Taken [v. (1852),] appear arbitrary, conclusory, irreconcilable text. Nevertheless, anyone slogged Augean agglomeration preceding Curtis's labors find scarcely impressive old stable-cleaner himself." 234 He concludes Chase jurisprudence noting: "In doctrinal field disaster." receives testimonial: relief Bowman [Bowman R. 125 465, 689, 700 (1888),] reached period, elevating reading." Future commentators likely treat eras tenderly. Unfortunately, "legislation inaction" theory 289, 2843, authorize enact otherwise Prudential Ins. Benjamin, 328 408, 66 1142, 90 1342 (1946). Nothing else explain Benjamin "congressional consent." surely permit (1852), Curtis, inaction, "If divested legislate Act confer legislate. excluded regrant, manner reconvey power." 318.

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