Legal Document

112 S.Ct. 1904 504 U.S. 298 119 L.Ed.2d 91 QUILL CORPORATION, Petitionerv.NORTH DAKOTA By and Through its Tax Commissioner, Heidi HEITKAMP. No. 91-194. Argued Jan. 22, 1992 Decided May 26, 1992. Syllabus Respondent North Dakota filed an action in state court to require petitioner Quill Corporation—an out-of-state mail-order house with neither outlets nor sales representatives the State collect pay a use tax on goods purchased for State. The trial ruled Quill's favor. It found case indistinguishable from National Bellas Hess, Inc. v. Department of Revenue Ill., 386 753, 87 1389, 18 505, which, holding that similar Illinois statute violated Fourteenth Amendment's Due Process Clause created unconstitutional burden interstate commerce, concluded "seller whose only connection customers is by common carrier or . mail" lacked requisite minimum contacts Id., at 758, S.Ct., 1392. Supreme Court reversed, concluding, inter alia, that, pursuant Complete Auto Transit, Brady, 430 274, 97 1076, 51 326, progeny, Commerce no longer mandated sort physical-presence nexus suggested Hess; respect Clause, cases following Hess had not construed physical presence within as prerequisite legitimate exercise power. Held: 1. does bar enforcement State's against Quill. This Court's due process jurisprudence has evolved substantially since abandoning formalistic tests focused defendant's favor more flexible inquiry into whether forum made it reasonable, context federal system government, defend suit See, Shaffer Heitner, 433 186, 212, 2569, 2584, 53 683. Thus, extent this decisions have indicated clause requires State, they are overruled. In case, purposefully directed activities residents, magnitude those than sufficient purposes, related benefits receives access Pp. 305-308. 2. places commerce. 1911-1916. (a) was rendered obsolete subsequent decision Auto, supra, which set forth four-part test continues govern validity taxes under Clause. Although renounced analytical approach looked statute's formal language rather practical effect determining validity, did rely such formalism. Nor inconsistent Auto. concerns first part stands proposition vendor taxing mail lacks "substantial nexus" required 309-312. (b) Contrary argument, may "minimum contacts" yet lack These requirements identical animated different constitutional policies. fundamental fairness governmental activity, touchstone analysis often identified "notice" "fair warning." contrast, requirement informed structural about effects regulation national economy. 312-313. (c) evolution indicate repudiation rule. While concerning other types adopted bright-line, see, e.g., Standard Pressed Steel Co. Wash., 419 560, 95 706, 42 719, their reasoning compel rejection rule regarding taxes. To contrary, continuing value bright-line area doctrine principles stare decisis remains good law. 314-318. (d) underlying issue here one Congress be better qualified resolve ultimate power resolve. 470 N.W.2d 203 (N.D.1991), reversed remanded. STEVENS, J., delivered opinion unanimous Parts I, II, III, Part IV, REHNQUIST, C.J., BLACKMUN, O'CONNOR, SOUTER, JJ., joined. SCALIA, concurring judgment, KENNEDY THOMAS, WHITE, dissenting part. John E. Gaggini, Chicago, petitioner. Nicholas J. Spaeth, Bismark, N.D., Com'r, Heitkamp. Justice STEVENS Court. 1 like 505 (1967), involves attempt we held Amendment particular, United States 2 declined follow because "the tremendous social, economic, commercial, legal innovations" past quarter-century "obsole[te]." 203, 208 (1991). Having granted certiorari, 502 ----, 49, 116 27, must either reverse overrule Hess. agree much reasoning, take former course. 3 * Delaware corporation offices warehouses Illinois, California, Georgia. None employees work reside ownership tangible property insignificant nonexistent.1 sells office equipment supplies; solicits business through catalogs flyers, advertisements periodicals, telephone calls. Its annual exceed $200,000,000, almost $1,000,000 3,000 Dakota. sixth largest supplies delivers all merchandise locations. 4 As corollary tax, imposes upon storage, consumption every "retailer maintaining place in" consumer remit N.D.Cent.Code § 57-40.2-07 (Supp.1991). 1987 amended statutory definition term "retailer" include "every person who engages regular systematic solicitation market th[e] state." 57-40.2-01(6). regulations turn define "regular solicitation" mean three 12-month period. N.D.Admin.Code 81-04.1-01-03.1 (1988). 1987, companies engage been subject even if maintain personnel 5 taken position customers. Consequently, (as well interest penalties) after July 1, 1987. favor, finding specifically, shown spent revenues benefit business, there "nexus allow retailer manner chose." App. Pet. Cert. A41. 6 concluding "wholesale changes" both economy law inappropriate today. N.W.2d, 213. principal economic change noted remarkable growth "from relatively inconsequential niche" 1967 "goliath" reached staggering figure $183.3 billion 1989." 208, 209. Moreover, observed, advances computer technology greatly eased compliance " 'welter complicated obligations' imposed local authorities. 215 (quoting U.S., 759-760, 1393). 7 Equally important, court's view, were changes "legal landscape." With emphasized 326 (1977), rejected line direct taxation commerce impermissible instead "consistent rational method [that on] [the] challenged tax." Mobil Oil Corp. Commissioner Taxes Vt., 445 425, 443, 100 1223, 1234, 63 510 (1980). rulings, maintained, 8 Similarly, observed then 'minimal connection' establish encompassed test" relevant latter provided some protection, opportunities, can expect return." 216. 9 Turning hand, "an climate fosters demand for" products, maintained infrastructure protected market, disposed 24 tons flyers mailed year. 218-219. Based these facts, "economic presence" depended services therefore generated "a constitutionally justify imposition purely administrative duty collecting remitting 219.2 II 10 number involving application statutes sellers, our relied "two claims closely related," 756, 1391, clauses pose distinct limits powers States. Accordingly, while may, consistent authority particular taxpayer, nonetheless violate Tyler Pipe Industries, Washington Dept. Revenue, 483 232, 107 2810, 199 (1987). 11 two differ fundamentally, several ways. discussed greater length below, see infra, reflect concerns. plenary regulate among thus authorize actions International Shoe Washington, 310, 315, 66 154, 157, 90 L.Ed. (1945), similarly violations 12 although always precise distinguishing between two, analytically distinct. 13 'Due process' 'commerce clause' conceptions sharply separable dealing problems. overlap. If want sustain fact alone any states becomes 'undue.' But, though overlapping, identical. There factual connections, effects, transaction objections. Yet fall burdening And, notions cannot separated, clarity consideration would promoted issues approached, where presented, least tentatively separate distinct, intermingled ones." Harvester Treasury, 322 340, 353, 64 1019, 1032-1033, 88 1313 (1944) (Rutledge, part). 14 Heeding Rutledge's counsel, consider each limit turn. III 15 "requires definite link, connection, person, seeks tax," Miller Bros. Maryland, 347 344-345, 74 535, 539, 98 744 (1954), "income attributed purposes rationally 'values connected State.' Moorman Mfg. Bair, 437 267, 273, 2340, 2344, 57 197 (1978) (citation omitted). Here, concerned primarily requirements. Prior satisfied variety circumstances For example, State,3 maintenance retail stores State,4 justified seller's "plainly accorded protection State." 757, 1391. furthest extension recognized Scripto, Carson, 362 207, 80 619, 660 (1960), upheld despite in-state performed independent contractors. involved jurisdiction but also necessary. We expressly obliterate "sharp distinction order sellers outlets, solicitors, do communicate general business." 16 Our 25 years particularly judicial jurisdiction. Building seminal framed defendant "such offend 'traditional fair play substantial justice.' 316, 158 Milliken Meyer, 311 457, 463, 61 339, 343, 85 278 (1940)). spirit, abandoned "presence" 683 extended prescribed personam rem jurisdiction, "all assertions state-court evaluated according standards progeny." 17 Applying principles, foreign avails itself explained Burger King Rudzewicz, 471 462, 105 2174, 528 (1985): "Jurisdiction avoided merely physically enter territorial frequently will enhance potential affiliation reinforce reasonable foreseeability there, inescapable modern commercial life amount transacted solely wire communications across lines, obviating need conducted. So long actor's efforts 'purposefully directed' toward residents another consistently notion absence defeat personal there." 476, 2184 (emphasis original). 19 Comparable justifies collection engaged continuous widespread Such clearly warning [its] activity [it] sovereign." 218, 2587 (Stevens, judgment). "modern life" matters little accomplished deluge phalanx drummers: met irrespective corporation's holdings superseded developments process. 20 question conclusion IV 21 Article 8, cl. Constitution authorizes "regulate Nations, States." says nothing Congress. Nevertheless, Johnson his Gibbons Ogden, Wheat. 231-232, 239, 23 (1824), affirmative grant power; negative sweep well. clause, Stone's phrasing, "by own force" prohibits certain interfere South Carolina Highway Barnwell Bros., Inc., 303 177, 185, 58 510, 514, 82 734 (1938). 22 interpretation "negative" "dormant" over years, limitations powers. See generally, P. Hartman, Federal Limitations Local Taxation §§ 2:9-2:17 (1981). early cases, beginning Brown 419, 678 (1827), swept broadly, Leloup Port Mobile, 127 640, 648, 1380, 1384, 32 (1888), declared "no right lay form." later narrowed distinguished burdens prohibited, indirect burdens, generally not. Sanford Poe, 69 F. 546 (CA6 1895), aff'd sub nom. Adams Express Ohio Auditor, 165 194, 220, 305, 308, 41 (1897). Western Live Stock Bureau 250, 256-258, 546, 549-550, 823 (1938), formal, categorical "multiple-taxation doctrine" "direct" "indirect" subjected risk multiple taxation. However, Freeman Hewit, 329 249, 256, 67 278, 265 (1946), embraced again taxation, invalidating Indiana's gross receipts "impos[e] sales." Most recently, 285, 1082, "attaching significance semantic difference." overruled Freeman's Spector Motor Service, O'Connor, 340 602, 71 508, 573 (1951), privilege doing business" unconstitutional, recognizing differently denominated same unconstitutional. Spector, Railway Agency, Virginia, 358 434, 441, 79 411, 416, 450 (1959), situation "magic words labels" could "disable otherwise levy." importance looking [to] effect," 279, 1079, Clause.5 decided 1967, middle latest rally formalism pragmatism. suggestion Court, timing "obsolete." Spector's allowed hinge terminology," "draftsmanship phraseology." 281, 1080. labeling automatically progeny. contemporary might dictate result arise time today, recent cases. Under test, challenge so "tax [1] applied [2] fairly apportioned, [3] discriminate [4] 1079. weeks handed down, cited length. Geographic Society California Bd. Equalization, 551, 559, 1386, 1392, 631 affirmed vitality ' [a taxing] continued cite approval ever since. Goldberg Sweet, 488 252, 263, 109 582, 589, 102 607 (1989), expressed "doubt termination call, itself, provides enough call. (receipt insufficient nexus)." D.H. Holmes McNamara, 486 24, 33, 108 1619, 1624, (1988); Commonwealth Edison Montana, 453 609, 626, 101 2946, 2958, 884 (1981); Taxes, 437, 1231; Society, reasons, disagree undercut 26 relies less jurisprudence. contends Clauses equivalent if, above, satisfies meets test. disagree. Despite similarity 27 centrally activity. most level, ask individual's connections him. have, therefore, warning" analytic analysis. requirement, individual Articles Confederation, duties hindered suppressed commerce; Framers intended cure ills. Federalist Nos. 7, (A. Hamilton). light interpreted implication discrimination Philadelphia New Jersey, 617, 2531, 475 (1978), bars unduly Kassel Consolidated Freightways Del., 662, 1309, 580 28 reflects second third parts analysis, apportionment non-discrimination, prohibit pass unfair share onto fourth prongs, relationship State-provided services, reach ensure commerce.6 "substantial-nexus" not, "minimum-contacts" proxy notice, means limiting contrary suggestion, Clause.7 29 reviewed rulings signalled "retreat constrictions stringent substantive approach" supported apply 214 (citing 719 (1975), (1987)). assessment indicates ruling 30 First, noted, 214, taxpayers directly conflict Second, importantly, now favors balancing analyses, never intimated desire reject established "bright-line" tests. review taxes, articulated silence imply 31 true, progeny "formalistic." But alike. 's "privilege served purpose jurisprudence, stood "only trap unwary draftsman." furthers ends dormant Undue case-by-case evaluation actual also, situations, demarcation discrete realm free followed safe harbor vendors "whose [taxing] mail." state-imposed taxes.8 Like tests, appears artificial edges: small force, plant, office. Cf. (1977); (1960). artificiality, however, offset clear firmly establishes boundaries impose reduces litigation something "quagmire" "application specific leaves room controversy confusion way guides indispensable taxation." Northwestern Portland Cement Minnesota, 450, 457-458, 357, 362, 421 (1959). 33 encourages settled expectations and, so, investment businesses individuals.9 Indeed, unlikely industry's dramatic last exemption 34 Notwithstanding replace contextual inquiries. Arkansas Electric Cooperative Pub. Serv. Comm'n, 461 375, 103 1905, 76 (1983), reconsidered Public Utilities Comm'n R.I. Attleboro Steam & Co., 273 83, 47 294, 54 (1927). wholesale electricity, "direct regulation" Electric, considered "follow mechanical out Attleboro, balance-of-interests cases." Corp., 390-391, 1916. principle counsels us, elsewhere, lightly aside guidance find Attleboro." 391, deciding influenced "mechanical "anachronistic," rarely "see strong reliance interests" upset 391-392, factors obtains case. "anachronistic" distinctions (and regulatory counterparts cases); turned logic remained sound repudiated analogous unlike rule, decisions, 311, unsound. Finally, engendered become basic framework sizeable industry. "interest stability orderly development law" undergirds decisis, Runyon McCrary, 427 160, 190-191, 96 2586, 2604-2605, 49 415 (1976) (STEVENS, concurring), adherence precedent. 35 sum, come renounce 36 aspect easier resolve,10 No matter how evaluate conclusions. Prudential Insurance Benjamin, 328 408, 1142, 1342 (1946). legislation "overrule" rule.11 direction course, dictated imposing today put problem rest. decide whether, when, what 37 convinced "this very [might] giv[e us] pause counse[l] withholding now. protect intolerable undesirable burdens." 637, 2964, (1981) (WHITE, concurring). situation, wisdom valor judgment branches Government." 638, 2964. 38 remanded further proceedings opinion. 39 ordered. 40 whom THOMAS join, judgment. use-tax payment seller mail. I should Even before held, correctly think, asserted basis Travelers Health Assn. Virginia ex rel. 339 643, 646-650, 70 927, 928-931, 94 1154 (1950) (Blue Sky laws). difficult discern principled tax. original matter, possible distinguish agent that. Soc. 558, 211, 621, moreover, abandonment compelled "[c]omparable" contained post-1967 adjudicate. Ante, 308. understand adjudicative legislative (or prescriptive) necessarily identical; join Compare Asahi Metal Industry Superior 480 102, 1026, 92 (1987) American Neill, 380 451, 1130, (1965). Unlike revisit merits holding, adhere decisis. Trucking Assns., Smith, 496 167, 204, 110 2323, 2345, 148 (1990) (SCALIA, final say simply saying so. "special "Congress alter done." Patterson McLean Credit Union, 491 164, 172-173, 2363, 2370, 132 (1989). Hilton Railways 564, 560 (1991); Brick 431 720, 736, 2061, 2069, 52 707 (1977). demands "at acme interests involved," Payne Tennessee, 501 111 2597, 2610, 115 720 notes, industry," ante, 317. 43 WHITE's view disregard unreasonable post, 331-332. assuming sake argument (I point) areas rested, acknowledged carefully facts. Soc., seems me important retain ability—and, comes thing, public confidence ability—sometimes adopt new resolution without contradict. seemed area. affirmatively "physical reconciled ought visit hardship took us word. recently told lower courts "[i]f precedent rest reasons [they] controls, leaving prerogative overruling decisions." Rodriguez de Quijas Shearson/American Express, 490 477, 484, 1917, 1921, 104 526 strangely incompatible private parties anticipate overrulings. my short, square, unabandoned justifiable (though carry day). "unworkable," Patterson, supra 173, whatever else pros cons regime establishes, 314, unqualifiedly concern reaffirmance lead flurry meaning presence," contradicted experience decision. 44 concur 45 46 Today repudiates restricts, Amendment, responsibilities outof-state stops giving complete burial justly deserves. respectfully dissent IV. opinion, majority goes lengths am unpersuaded placed great weight quality sales, stating "it conceive transactions exclusively character involved." 759, observes, idea prohibiting "exclusively interstate" many decades, ranging intermittently Case Freight Tax, Wall. 146 (1873), (1951). recognizes amidst upheaval began hold proper drafting, create forbidden Clause," draws entirely wrong period ferment. 48 attempts paint hue "did rely" 310. concludes, progeny" id., 11. 288-289, n. 15, 1084, 15. What disavowed just "formal 'direct' 'indirect' commerce," whole rule—that "interstate immune 288, 1083. compounds misreading attempting show "is 311. news commentators, rightly criticized Hess.1 displays audacity claiming reaffirmed 50 opposite. liable California. conducted addition, solicited Magazine. argued unrelated Bel- las imposed. "requisite requiring [the Society] relates carried facts demonstrate 'some (the and) tax.' 561, 1393 decoupling transactional inquiry, trade rationale majority. Instead, process-type examined link existed wholly apart being taxed. Citations notwithstanding, adopting politely brushing aside. embodied Hess' prior majority's opening premise underpinning cases.2 next launches uncharted treacherous foray differentiating "nexus" Clauses. explains, "[d]espite policies." 312. nexus, properly holds "concerns activity." "informed economy." Ibid. Citing explains "like 'minimum-contacts' commerce." 313. curious, nondiscrimination burdened, appear animating features prong inquiry. freely acknowledges novel found, 313-314, 6. disavow opinions acknowledging unpersuasive. Trinova Michigan 498 818, 828, (1991)). Instead explaining doctrinal origins breezily announces moves matters. 313-314. resting assertion mandates readily requirements, seem prudent traditionally value. 55 derived convince really sources heavily comprehensively disavowing. functionalist Rutledge Freeman. 280-281, 1079-1080. conducting used familiar, arguing give "jurisdiction Freeman, 271, 286; discriminated burdens. 276-277, 289-290. refined Memphis Natural Gas Stone, 335 80, 68 1475, 1832 (1948), he described adopt: "[I]t state's insofar limitation 'jurisdiction tax' sense concerned; nondiscriminatory .; duly apportioned repeated 96-97, 1483-1484 (concurring opinion) (footnotes 56 grounded decisively adopted. rejecting challenges based Clauses, stated "[t]he levied portion taxpayer's net income arises form 'nexus exaction.' 464, 366 went observe "[i]t strains reality say, terms corporations sufficiently events forge satisfy requirements." 464-465, 538-539, (1954)). When announced synthesis definitely traceable discussion antecedents clear. 281-282, 1080-1081, 1082. assert supports explanation. presence/nexus retains considerations allegedly it. Perhaps ago condition presence. today's economy, seek Wire transfers money billions dollars occur day; purchasers orders fax, phone, linkup; ship air, road, sea sundry delivery business. certainly true days door-to-door salesperson gone. marketer derives numerous advantages laws establishing banking institutions support credit transactions; insure purchase price customers; waste disposal garbage solicitations; creation laws, buyers alike, ensuring ready protecting fraud, creating inures reputable dealers transactions. create, time, thing; anachronistic quite another. illogic retaining palpable. Geographic, entire salesperson's efforts. neighboring dominant putative greatest undercutting home comparative advantage selling products clings logical relation supposed convenience having impressed unfairness produces. way. 289, 1084 ("We believe, justification 'interstate way' "). 59 Also questionable rationality perpetuating creates shelter business—mail sellers—but countervailing competitors. playing field, hardly achieve goal. arguably explanation "Commerce retailers marketers account. 312 (stating addresses "structural economy"). think protectionist rules favoring $180 billion-a-year industry scope concerns." Brief Jersey Amicus Curiae 4. 60 "artificial" 315. asserts "firmly doubtful, aims. Certainly follow: State; 560-562, 1392-1393. Between narrow lines lies constitutes responsibilities. confronting head-on, offers cursory briefing point State.3 45-47. reaffirm concedes owns software sent customers, suggests nexus. close cast doubt propounding truly Reasonable minds surely can, will, showing make adequate collection. And given estimated loss revenue $3.2 year alone, 9, sure bet vagaries tested fullest courts. 62 "settled expectations" investment. 316. Though certainty promotes confidence, grown exponentially post-Bellas precedents demise requirement. seeming inadequate encouraging connotes detriment retailers. justifying quarter-century," effectively preferences invitation legislate signals immutable, instances deferred legislatures when enacted obligations (1989); accords far itself. demonstrates, averse decisions. 1083-1084. One typically invoked decisis—an unwillingness expectations—is weak invoke expectation" affairs Neither amici suggest overturning costs technology, nominal. Respondents 40; 18. developed old submit failure comply legislature. rewarding ignoring studied judgments duly-elected officials, insist appropriate escrow) sue declaratory refund.4 refusal determination reasonable. hints, directly, invocation fear retroactive liability. 317, 318, 10. James B. Beam Distilling Georgia, 2439, 481 thought fears groundless "sensibly automatic retroactivity system." 2449 Since specifically limited certiorari believe leave day. indeed driving served, address permit them infect formulation applicable 65 law, decision, however reason justified. along court, gave unconditional 90-day guarantee, retained title during delivery. passed purchaser received. A40-A41. assumed correct. 217, 13. licensed program enabled check current inventories prices directly. 216-217. shall explain, affect comprise infra 8. "touchstone fairness" "very object" discriminatory practices, ironic exempt thereby enjoy significant competitive 214-215. Felt Tarrant Gallagher, 306 62, 376, 83 (1939). Nelson Sears, Roebuck 359, 586, 888 (1941). "with restrictions, taxes." 31, 1623, 623-624, 2957, ("[i]t relieve increases cost business") (internal quotation citation Dakota's illustrates On face, advertises times single absent publisher included subscription card magazine, radio heard occasions, force calls duty. significant, Nation's 6,000-plus jurisdictions. 1393, (1967) (noting "many variations rates allowable exemptions, record-keeping entangle house] virtual welter obligations") omitted); Shaviro, An Economic Political Look Federalism Taxation, Mich.L.Rev. 895, 925-926 (1992). sometimes "Complete responsive dictates, encompasses requirement[s]." comments passes valid converse true: addition common-carrier clients. "concedes existence few floppy diskettes slender thread base nexus." 46. agree. diskettes" present constitute minimal 556, 1390, 'slightest presence' standard conclude licensing meet worth noting has, occasion, response indication 452, taxpayer "net operations taxation," Pub.L. 86-272, codified U.S.C. 381. That person's [involve] [approved] outside [and] filled Heublein, 409 275, 280, 93 483, 487, 472 (1972), enacting 381, attempted allay apprehension businessmen 'mere solicitation' Section 381 designed tax]. Clarity remove uncertainty Congress' primary goal." (Emphasis supplied.) Many Direct Marketing Association Curiae. raise thorny questions trigger unanticipated liability houses. allocation resolved H.R. 2230, 101st Cong., 1st Sess. S. 480, 2368, 100th 2d 3521, (1987); 1099, 3549, 99th (1985); 983, 96th (1979); 282, 93d (1973). 10.8 Collection Use Out-of-State Mail-Order Sales, Vand.L.Rev. 993, 1006-1015 (1986); Hellerstein, Significant Sales Developments During Past Half Century, 961, 984-985 McCray, Overturning Hess: Considerations, 1985 B.Y.U.L.Rev. 265, 288-290; Rothfeld, Mail Order Jurisdiction Notes 1405, 1414-1418 unconvinced (1988), company's "significant Louisiana, Louisiana note presented id. 33-34, 1624-1625. (1981), revalidate exist finally, 1231, (1980), necessary citations signal persuasive. remanding concludes doing, rebuffs setting affording opportunity remand develop argue sufficient. Flora States, 357 63, 78 1165 (1958); Mertens, Law Income 58A.05 principle. First Bank Buffalo Conrad, 350 580, 586 (N.D.1984) 72 Am.Jur.2d 1087).

Classification Label: 7