Document: 440 U.S. 147 Montana et al.v.United States No. 77-1134 Argued December 4, 1978 Decided February 22, 1979 Syllabus levies a 1% gross receipts tax upon contractors of public, but not private, construction projects. A public contractor may credit against the its payments personal property, corporate income, and individual income taxes. Any remaining liability is customarily passed on in form increased costs to governmental unit financing project. In 1971, federal project brought suit state court contending that unconstitutionally discriminated Government companies with which it dealt. The litigation was directed financed by United States. Less than month later, this action Federal District Court challenging constitutionality tax. By stipulation, case continued pending resolution state-court litigation, concluded decision Supreme upholding Kiewit I. found distinction between private consistent mandates Supremacy Equal Protection Clauses. At Solicitor General's direction, abandoned request for review Court. then instituted second regarding certain different from those Court, finding claim essentially no first, invoked doctrines collateral estoppel res judicata affirm dismissal complaint. II. Thereafter heard instant merits, bound I violated Clause. Held: collaterally estopped prior judgment Pp. 973-979. (a) interests underlying related judicata—that "right, question or fact distinctly put issue directly determined competent jurisdiction . cannot be disputed subsequent same parties their privies .," Southern Pacific R. Co. v. States, 168 1, 48-49, 18 S.Ct. 18, 27, 42 L.Ed. 355—are similarly implicated when nonparties assume control over they have direct financial proprietary interest seek redetermine issues previously resolved. Here undisputed exercised sufficient actuate principles estoppel. 973-975. (b) precise constitutional advanced presented resolved 975-976. (c) factual legal context arise has materially changed since I, thus normal rules preclusion should operate relieve "redundant [over] identical statute's application taxpayer's status." Tait Western Maryland Co., 289 620, 624, 53 706, 707, 77 1405. Commissioner Internal Revenue Sunnen, 333 591, 68 715, 92 898, distinguished. 976-978. (d) Though inappropriate law successive actions involving unrelated subject matter, exception inapposite here Government's "demands" are closely aligned time Nor where party been compelled accept court's determination essential questions. Rather Government, "freely without reservation submitte[d] [its] claims COURTS AN[D] HAD THEM DECIDED THERE. " ENGLand medical Examiners, 375 411, 419, 84 461, 466, 11 L.Ed.2d 440. Since alleged unfairness inadequacy procedures voluntarily submitted, relitigating adjudicated. 978-979. 437 F.Supp. 354, reversed. Robert A. Poore, Butte, Mont., appellants. Stuart Smith, Washington, D. C., appellee. [Amicus Curiae Information 148-149 intentionally omitted] Mr. Justice MARSHALL delivered opinion 1 State imposes one percent Mont.Rev. Codes Ann. § 84-3505 (Supp.1977).1 taxes.2 project.3 appeal whether precludes contesting if not, discriminates violation 2 * Peter Sons' dam Montana, after filed, initiated challenge Montana. On stipulation parties, litigation. 3 That unanimous sustaining Board Equalization, 161 Mont. 140, 505 P.2d 102 (1973) (Kiewit ). Id., at 149-154, P.2d, 108-110. subsequently filed notice direction General. App. Juris. Statement 86-87. It seeking refund involved determining contractor's was, all material respects, Department Revenue, 166 260, 531 1327 (1975) II 4 After II, three-judge merits. divided opinion, decision, struck down as violative 354 (1977). majority began premise Clause immunizes only taxation also indirect operates discriminate whom transacts business. 359. See Detroit, 355 473, 78 474, 478, 424 (1958); Phillips Chemical Dumas Independent School Dist., 361 376, 387, 80 481, 384 (1960). Because were tax, reasoned statute impermissibly singled out dealt disparate treatment. applied municipal well did majority's view, negate discriminatory character. For although projects might pass amount higher costs, would recoup additional expenditure through revenue generated. contrast, shifted burden receive such offsetting revenues. Accordingly, encroached immunity enjoyed under F.Supp., 358-359. One judge argued dissent both statutory scheme, because encompassed contractors, within meaning supra, 365-366 (Kilkenny, J., dissenting). 5 We noted probable jurisdiction. 436 916, 98 2260, 56 756 (1978). we find adversely proceeding, reverse grounds reaching 6 fundamental precept common-law adjudication, embodied judicata, .." (1897). Under final merits bars further based cause action. Cromwell County Sac, 94 351, 352, 24 195 (1877); Lawlor National Screen Service Corp., 349 322, 326, 75 865, 867, 99 1122 (1955); 1B J. Moore, Practice ¶ 0.405[1], pp. 621-624 (2d ed. 1974) (hereinafter Moore); Restatement (Second) Judgments 47 (Tent. Draft Mar. 28, 1973) (merger); id., 48 (bar). estoppel, once an actually necessarily jurisdiction, conclusive suits Parklane Hosiery Shore, 439 326 n. 5, 645, 649, 58 552 (1979); Scott, Collateral Estoppel Judgment, Harv.L.Rev. 2-3 (1942); Apr. 15, 1977) (issue preclusion). Application central purpose civil courts established, disputes jurisdictions. U.S., 49, S.Ct., 27; Hart Steel Railroad Supply 244 294, 299, 37 506, 507, 61 1148 (1917). To preclude matters had full fair opportunity litigate protects adversaries expense vexation attending multiple lawsuits, conserves judicial resources, fosters reliance minimizing possibility inconsistent decisions.4 7 These resolved.5 As observed Souffront Compagnie des Sucreries, 217 475, 486-487, 30 608, 612, 54 846 (1910), persons whose benefit litigated said "strangers cause. [O]ne who prosecutes defends name another establish protect his own right, assists prosecution defense aid some much he record." Schnell Eckrich & Sons, Inc., 365 262, 81 557, 559, 540 (1961); cf. Zenith Radio Corp. Hazeltine Research, 395 100, 111, 89 1562, 1570, 23 129 (1969). Preclusion falls rubric rather latter doctrine presupposes identity causes And nonparty vicariously asserted differs definition seeks right. G. C. Merriam Saalfield, 241 29, 36 477, 480, 60 868 (1916); 83, comment b, p. 51 2, 1975); Moore 0.411[6], 1553-1554; Note, Developments Law—Res Judicata, 65 818, 862 (1952). 8 dispute. stipulated it: 9 (1) required lawsuit filed; 10 (2) reviewed approved complaint; (3) paid attorneys' fees costs; 12 (4) Court; 13 (5) appeared submitted brief amicus 14 (6) filing 15 (7) effectuated Kiewit's abandonment advice 16 Thus, party, plainly "laboring oar" conduct Drummond 324 316, 318, 659, 660, 969 (1945). 559 4; 612; Watts Swiss Bank 27 N.Y.2d 270, 277-278, 317 N.Y.S.2d 315, 320-321, 265 N.E.2d 739, 743-744 (1970). III 17 determine appropriate necessitates three inquiries: substance ; second, controlling facts significantly judgment; finally, other special circumstances warrant preclusion. record dispels any doubt plaintiff there raised decided advances here. complaint accompanying regulations unconstitutional they, inter alia : 19 "(a) illegally Plaintiff, agencies instrumentalities, does business, deny them due process equal protection laws; 20 "(b) impose Plaintiff uniform class subjects; 21 "(c) improperly interfere power select schedule conflict policy regulating procurement; 22 "(d) violate instruments (including Plaintiff) performance functions; [and] "(f) frustrate selecting lowest possible bidder ." 37. 25 rejected contentions theory that: 26 "The government being treated manner treats itself subdivisions municipalities. discrimination can paying contractors. However, according [Phillips (1960), Moses Lake Homes Grant County, 744, 870, 66 (1961),] [that is] give treatment received government. Act deal part government." 152, 109. No Indeed, States' amended tracks almost verbatim language plaintiff's alleging provisions: 28 "(1) plaintiff, business Clause, Article VI, Fourteenth Amendment; 29 "(2) subcontractors subjects "(3) force America pay more corporation Art. Cl. 2; 31 32 "(5) interfer[e] free choice choose frustrat[e] choosing procurement IV [sic], 2." 67. 33 "question expressly definitely adjudged" court. Moser, 266 236, 242, 45 66, 67, 69 262 (1924). Absent significant changes circumstances, Court's these B 34 Relying 898 (1948), argues extends contexts "the applicable remain unchanged." 600, 720. stasis missing contract contained critical provision contracts do not. 35 Army Corps Engineers, unable take advantage provisions tax.6 however, altered available refunds credits. 358; 91. reads proceeded assumption able avail property credits, "total washout" liability. 145, 106. holding where, contractual arrangement, impact. Brief 35-36. uncontroverted evidence establishes taking credits available, still one-half percent, 90, submits absent disagree.7 is, course, true will render inapplicable raising issues. See, e. g., Certain Land Irving Place 16th Street, 415 F.2d 265, 269 (CA2 1969); Metcalf 343 67-68 (CA1 1965); Alexander 224 788, 792-793 (CA5 1955); 0.448, 4232-4233, 0.422[4], 3412-3413. But construe predicated cancel took adverted washout discussing origin revenue-enforcing revenue-generating measure. Prior enactment statute, evaded assessment local taxes shifting equipment site another, returns fairly reflect profit attributable State. 143-145, 104-105.8 establishing flat percentage receipts, payments, Legislature sought remove incentive dissemble about location taxable source substantial might, claiming effectively 105. practice, resulted total offset contracts. Ibid., Significantly, rely potential absence analysis challenge. even allude course discussion. 147-154, 106-110. focused rationality classification parity Ibid. 38 Our conclusion significance reinforced There, exceeded basis" "if properly enforced result 'washout.' 1328. reading "much too narro[w]." 263, 1329. materialized "inconsequential" relitigation constitutionality. 264, So here, view altering 39 unless major governing intergovernmental misplaced. Sunnen status generated license agreement during particular period. Although previous settled earlier years, declined effect "change climate." 606, 723. Underlying concern modifications "controlling principles," 599, 720, could prevailing doctrine, 40 "[i]f perpetuated each succeeding year taxpayer original accorded given taxpayers class. result, inequalities administration laws, distinctions liability, fertile basis litigious confusion. [Collateral estoppel] meant create vested rights decisions become obsolete erroneous time, thereby causing inequities among taxpayers." (citations omitted). 41 considerations obtain contend change occurred suit. replicates argument suggests doctrinal shifts decision.9 1405 (1933). Russel Mfg. 13, 18-19 1965). C 43 sole justify general Of relevance obtains "unmixed questions law" substantially claims. recognized Moser 44 "Where, example, deciding enunciated rule law, demand insisting otherwise, merely cases. fact, right adjudged action, though reached law." (emphasis added). inappropriate. 68.1, Reporter's 43-44 1977); 4235; Harv.L.Rev., 10. This importance adjudication. Unreflective invocation ongoing freeze areas responsiveness changing patterns social mores critical. sure, scope difficult delineate, particularly partial congruence matter disputes. poses conceptual difficulties. Rather, preceding discussion indicates, 46 implicate litigant "properly consider claims," "compelled, consent ., claims." England Medical 415, 464, (1964) (footnote held England, abstention serve vehicle depriving individuals otherwise cognizable make determinations 417, 465. NAACP Button, 371 427, 83 328, 335, 405 (1963). submit[ted] ha[d] 467.10 Considerations comity repose militate redetermination forum behest chosen Finally, submitted.11 must conclude therefore press challenges contrary Reversed. 49 REHNQUIST, concurring. 50 join customary understanding references articles drafts finally adopted versions intended bind views expressed therein case. WHITE, dissenting. 52 disagree litigating virtue think constitutionally infirm. below. basic principle "must confined situations respects first proceeding 599-600, (1948). dispute this, maintains discrepancies moment. clear, assumed scrutiny enforcing, collecting, supposition, my refuted neither nor pronouncements lost undisputed. requiring forgo law. accordingly availed themselves allowable [net] percent." Ante, 976. developed before cast wholly light, decide uninhibited outset labored demonstrate tax-enforcing measure, funds collected pursuant thereto applied, credited, due. understood practice attributed prohibiting contractors—such itself—from ignorance of, indifference to, maintained that, aside aberrations, "operate enforcing measure." 146, 102, 106 55 surmises extensive characterization irrelevant analysis. relegates dicta careful appraisal operation impact inspecting independently evaluation nature assumes adjudication vacuo. logic extend revenue-raising say persuasive authority score adjudicated issue. Moreover, immateriality "washout" recognize regarded attack—launched restrictions removed Government—as foreclosed addressing objection raise revenue, acknowledged "it entitled administrative remedy." 1327, 1328 (1975). contemplates remedy, affirmatively authorize one.1 Yet remark leaves unclear whether, persist constitutional. statement underscores device correlatively condone imposition unmitigated positive solely contractors.2 unsound inferring ruling insensitive then-presumed character 57 see it, then, "modification facts" rendered "determination least future purposes," 720; below sustained. There nothing wrong, applicability incidentally applies increasing costs. Fresno, 429 452, 460, 97 699, 703, 683 (1977); James Dravo Contracting 302 134, 160, 208, 221, 82 155 (1937). "So long laid valid nondiscriminatory until Congress declares otherwise." 704. 59 stressed requirement "imposed equally situated constituents State." 462, Such 'returns intent M'Culloch [, Wheat. 579 (1819)]." 462-463, 705. "[t]he political check abuse taxing lacking present artificially owned entities; foresaw forcing exempt beneficial imposed similar others property." survive foregoing principles. generally embracing doing sectors. While mandating collection transact entities, passes parties. "political check" provided private-sector "against [is] lacking." Appellants maintain enterprises bodies. They point problems associated enforcement laws prone move pursuit large measure necessary, argued, order facilitate Concededly, exist respect contractors; assuming differentiation public-sector warranted measures, appellants' representations provide discriminating regard raising. 62 defended purposes submitting public's stake safety building projects, hence qualifications treating differently counterparts. considerations, like appellants, fail explain why former latter.3 sustainable assault, indulgent standard used area supremacy threatened. 383-385, 479-480, justified differences two classes"; "considerations provid[ing] solid support classification." 383-384, 479 seems plain, 63 contend, nonetheless, enough reaches dealing entities—state federal. root contention 385, "treat deals itself." (Emphasis added.) furnishes position. scheme lessees severely property. Even issue, ascertained "no 381, 478. evinced connected sector, just sector. 64 event, whatsoever extracting favor proposition so working bodies taxed. Fresno sustained assuring rented worse off California work employers rent houses sector." 465, 706. broadly across sectors, characteristic E. Detroit Murray 489, 458, 441 Alabama King Boozer, 314 43, 86 (1941); (1937); Silas Mason Tax Comm'n, 186, 233, 187 good reason insist equally" "similarly State," 704, sector private. Broad necessary guarantee efficacious potentially abusive taxation. limited provides little assurance. Taxation affords safeguard contracting deal. increase along borne fully agency corresponding revenues State; State's perspective washout. Municipalities districts, true, enjoy advantage, resist increases would, successfully enforced, alike. But, potentially, secure assistance indirection,4 diminish oppose hikes. assuming, share restraining taxes, escapes me acquiesce enhanced ensue extension constituents. indicated, notion M'Culloch, itself, condoned "in common description throughout Maryland, 436, (1819) escalation destroy impair function forestalled "on residents voters 463, 705 11. counsel nice leverage group simple derivable inclusion 67 suggested oral comprises relatively small argue exclusion ambit excusable. appellants seriously de minimis, assertion record.5 Private subjected power. Exempting Constitution. believe claim, reversal Section 84-3505(5), (Supp.1977), part: "each shall fee sum per cent (1%) issued defines include: person proposal enters into performing government, board, commission, department thereof board county commissioners city town council body, authorized let award cost, value, price exceeds $1,000. undertaking perform covered thereof, $1,000." 84-3501 (Supp.1977). Gross encompass: "all sources state, money, valuable consideration, from, engaging in, conducting deduction account cost sold, materials used, labor service paid, losses, whatsoever. 'gross receipts' include cash discounts allowed taken sales refunds, either credit, uncollectible accounts written liquidation included return made person." 84-3501(3). §§ 84-3513 84-3514 98-108, 112-117, 164. Hazard, Res Nova S.Cal.L.Rev. 1036, 1042-1043 (1971); Vestal, Preclusion/Res Judicata Variables: Adjudicating Bodies, Geo.L.J. 857, 858 (1966); 820 term "privies" occasion denominate see, 479, (1942), usage criticized conclusory analytically unsound. 1553; 856. nomenclature section Second Edition Restatement. 1975). enumerated Contractor, turn credits." 145-146, policy. Tr. Oral Arg. 35. threshold difficulty barring longer litigation." 14. enacted 1967, relief 1971 discontinued. contrary, less statute. 68-69. concerning refusal invoke pre-1971 Apparently problem arisen appreciable extent 5-6. 975. distinguish ground technically abstain, rather, parties' request, "pending Montana." 49-50. Further, arises freely courts. 34. agree characterized continuance nonparties. 974-975. availing dispose apply nonparties, ibid., simply dispel inference forced reserved claim. Redetermination quality, extensiveness, fairness followed 68.1(c) Preclusive Effect Subsequent 1983 Actions, Colum.L.Rev. 610, 640-653 Cf. Gibson Berryhill, 411 564, 93 1689, 488 (1973); Trainor Hernandez, 431 434, 469-470, 1911, 1931, 486 (1977) (STEVENS, Administrator Miscellaneous Division testified proceedings remedy existed none contemplated. Deposition Madison, Record Doc. 68, 16. indicated reasonable distinguishing purposes. differentiating alluded addressed 146-151, 106-109 (1973). extensively regulated jobs mandatory supervision inspection. "federal [are] standards, supervision, [does State] suspend license, [State] selection bidders Government." 79. posited Government. payment entities contexts. Mont.Rev.Codes 50-1802 50-1810 (Supp.1977) (funding highway improvements expansion services coal development); 11-1834 (state municipalities police departments); 11-1919 fire associations). anything, nonnegligible. 108-109, 166-167, 179, 183. Bureau Census, 1972 Census Construction Industries 39-2, 39-4, 39-7

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