Legal Document

526 U.S. 160119 S.Ct. 1180143 L.Ed.2d 258 711 So. 2d 1005, reversed and remanded. SUPREME COURT OF THE UNITED STATES119 No. 97 2045 SOUTH CENTRAL BELL TELEPHONE COMPANY, et al., PETITIONERS v. ALABAMA al. ON WRIT CERTIORARI TO [March 23, 1999] Justice Breyer delivered the opinion of Court. 1 The basic question in this case is whether franchise tax Alabama assesses on foreign corporations violates Commerce Clause. We conclude that it does. 2 * requires each corporation doing business State to pay a based upon firm's capital. A domestic firm, organized under laws Alabama, must an amount equal 1% par value stock. Ala. Const., Art. XII, §229; Code §40 14 40 (1993); App. Pet. for Cert. 50a, 52a, 61a (Stipulated Facts). other than 0.3% "the actual capital employed" Alabama. §232; 41(a) (Supp. 1998). law grants firms considerable leeway controlling their own base liability, as firm may set its stock's at level well below book or market value. 52a 53a does not grant similar control base, however, "actual" which calculates includes only stock but also accounting items (e.g., long-term debt, surplus), depends financial status. Id., 54a; §§40 41(b)(1) (5), (c). 3 In 1986, Reynolds Metals Company three sued Alabama's authorities, seeking refund they had paid ground discriminated against corporations. Although favored some respects (granting them lower rate excluding any employed Alabama), favorable treatment was more offset by fact unlike could shrink significantly simply setting low level. As result, said, burden borne much higher corporations, consequently violated both Equal Protection Clauses. I, §8, cl. 3, Amdt. 14, §1. 4 Supreme Court rejected these claims. White Co., 558 373 (1989). Without denying imposed special court nonetheless thought different exclusively "domestic shares tax." This latter property stock; assessed shareholders hold, practice normally itself. 386 388 (citing, e.g., Gregg Dyeing Co. Query, 286 472 (1932) (permitting taxes discriminate interstate commerce when compensate burdens placed uniquely commerce)). Any remaining discrimination, concluded, constitutionally insignificant. 2d, 390. 5 While courts were considering Metals, corporation, South Central Bell Telephone Company, brought lawsuit now before us. asserted same Clause claims though respect years. initially agreed hold suit abeyance pending resolution Metals's Then, after decided taxpayers (joined with claims) went trial. 6 plaintiffs introduced evidence designed show empirical premises underlay wrong: Despite differences rates, scheme discriminates substantially discrimination tax. trial evidence, taken together Court's recent cases, "clearly abundantly demonstrates no reason state incorporation." Memorandum Opinion 21a 22a (hereinafter Mem. Op.) (citing Oregon Waste Systems, Inc. Department Environmental Quality Ore., 511 93 (1994); Associated Industries Mo. Lohman, 641 Fulton Corp. Faulkner, 516 325 (1996)). But dismissed reason, namely, given decision Taxpayer[s'] [in case] are barred res judicata." Op. 17a. 7 affirmed vote 4. majority's cited procedural rule regarding summary dispositions "PER CURIAM. AFFIRMED. NO OPINION." 1005 (1998). One justice concurred specially say requesting be held until resolved, bound Metals. 1007 (opinion Maddox, J.). Three dissenters wrote between years, plaintiffs), judicata bind plaintiffs. 1008 See, On merits, concluded See id., 1011. (One dissented without opinion.) 8 granted plaintiffs' petition certiorari, agreeing decide (1) courts' refusal permit raise constitutional because "deprived" "of due process guaranteed Fourteenth Amendment," (i); see Richards Jefferson County, 517 793 (1996); (2) "impermissibly commerce, violation Clause," (i). questions favor II 9 At outset, respondents Revenue (collectively, State) argue lacks "appellate jurisdiction over case." Brief Respondents 15. points Eleventh Amendment, provides: 10 "The Judicial power United States shall construed extend equity, commenced prosecuted one Citizens another . ." 11 Amendment's literal language applies here began State, citizens another; we, hearing case, would exercising "Judicial States"; has waived right object our exercise power. 12 Court, recently considered very argument makes. McKesson Division Alcoholic Beverages Tobacco, Fla. Dept. Business Regulation, 496 18 (1990), we unanimously "[t]he Amendment constrain appellate cases arising from courts." 31. explained: 13 "[I]t 'inherent plan' takes cognizance assents review federal issues raised 'whoever parties original suit, private persons, itself.' " 30 (quoting Principality Monaco Mississippi, 292 313, 329 (1934); Proprietors Charles River Bridge Warren Bridge, 420, 585 (1837) (Story, J., dissenting)). Our holding confirmed long-established uniform reviewing state-court decisions matters, regardless plaintiff defendant court. U.S., 28; accord, General Oil Crain, 209 211, 233 (1908) (Harlan, concurring) ("[I]t long ago settled" bar "a writ error final judgment court"). 15 asks us "overrule McKesson," 27, provide convincing why should revisit relatively precedent, do so. Cf. Planned Parenthood Southeastern Pa. Casey, 505 833, 854 855 (1992) (considerations relevant overruling precedent include workability prior relation changes law, reliance). B 16 opposing Bell's argued rested adequate ground, state-law principles judicata. It believes, merits relied stare decisis, 3. For "offer[s] defense valid application doctrine Ibid. Nor believe made. supra. 17 Richards, prevented certain bringing (which I will call Case Two) challenge grounds upheld earlier (Case One) taxpayers. forbade "extreme" preclusion (res judicata) principles, 797, Two "strangers" judgment, 802. cannot distinguish pointed out "did sue behalf class; pleadings did purport assert claim nonparties; received who nonparties." 801. added understand "to of" involved Two, nor make effort protect interests" far aware, can said circumstances two involve Neither class action, there "privity" relationship sets Hence, One, reasons explained judgment. 19 tried those pointing aware litigation lawyers represented 18a 19a. These circumstances, created representational later facts have led expect precluded, matter judicata, itself, even expected announced way binds every citizen. 20 concurring "agreed controlling" when, letter court, "specifically requested [their] decided." 1006 That if 'either party desires proceed date, permission activated.' 1006. Given statement, routine request continuance. Richards. 21 sum, rests issue collateral estoppel), inconsistent guarantee. C 22 Turning unconstitutional. defines corporation's including item whatever chooses. hand, contains many additional balance sheet valued accordance generally accepted rather arbitrary assignment corporation. Accordingly, admitted, gives ability reduce liability reducing stock, while denies ability. And rates difference base. therefore facially unconstitutional unless offer sufficient justification it. (1996) (state requiring out-of-state percentage share operating solely within Clause). practice, record, undisputed here, shows average pays one-fifth treated 36a (plaintiffs' statement facts); 21a, n. (adopting facts). 23 justify "complementary" "compensatory" offsets imposes E.g., Henneford Silas Mason 300 577 (1937) (upholding discriminatory use sales tax). proves "roughly approximate" enough "in substance" serve "mutually exclusive" proxies another. 103; Fulton, supra, 332 333. 24 approximate." 37a facts, showing exceeds combined); cf. 1011 (See, dissenting) (in face State's "indefinite assertion," offered "substantial intrastate burden" through made persuade otherwise. 25 substance. State; ownership form property, Compare 41 70 (1993 Supp. No how seen "proxy" other. 26 Rather dispute instead says, "respect merits," flaw petitioners' lies corporate negative cases; themselves." adds "formally reconsider" "abando[n]" jurisprudence." 28. entertain invitation reconsider longstanding doctrine, clear intended filed brief merits. notice intent so far-reaching respondent's opposition Rule 15.2, thereby assuring preparation time likely affected wishing participate. depart case. 27 reasons, reversed, remanded further proceedings opinion. 28 ordered. O'Connor, STATES 29 31 32 concurring. 33 join agree failure properly jurisprudence supports pass claim. Ante, 10. note, nothing me abandon well-established body jurisprudence. Thomas, 34 35 36 37 38 inappropriate take up merits."

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