Court Opinion

ID: 9731358
Source: CourtListenerOpinion
Date Created: 2023-08-26 15:43:05.906807+00
Date Added: 2024-06-11T18:26:17.219874
License: Public Domain

PAPADAKOS, Justice,
dissenting.
I disagree with the decision of the majority in choosing a purely prospective application of the constitutional decision in the instant litigation such that the Appellees will not be beneficially affected by the change in law they successfully championed. In my judgment, the majority decision improperly ignores the recent U.S. Supreme Court decision in McKesson Corp. v. Division of Alcoholic Beverages and Tobacco, Dept. of Business Regulations of Fla., 496 U.S. *22918, 110 S.Ct. 2238, 110 L.Ed.2d 17 (1990) (hereafter “McKesson”).
Previously in the course of the instant litigation (that is, in this very case), the U.S. Supreme Court decided that the fees or taxes challenged by Appellees violated the Commerce Clause of the United States Constitution. The matter was remanded to this Court at the request of the Appellants for further proceedings to determine whether the ruling should be applied retroactively or not. American Trucking Associations, Inc. v. Scheiner, 483 U.S. 266, 107 S.Ct. 2829, 97 L.Ed.2d 226 (decided June 23, 1987) (hereafter “Scheiner”). It is now before us.
In the meantime, an Arkansas highway use tax (similar to the fees or taxes involved herein) was upheld in that state’s courts, but the U.S. Supreme Court vacated the Arkansas decision, and remanded the case to the Arkansas courts for further consideration in light of Scheiner. American Trucking Associations, Inc. v. Gray, 483 U.S. 1014, 107 S.Ct. 3252, 97 L.Ed.2d 752 (1987). Following remand, the Arkansas Supreme Court denied motions by the truckers to enjoin further collection of the tax and to order an escrow of the taxes to be collected pending that court’s reconsideration of the case. The truckers then made an application for an injunction to Justice Blackman requesting that he order an escrow of the taxes to be collected pending final disposition of the case. The application was granted. American Trucking Associations, Inc. v. Gray, 483 U.S. 1306, 108 S.Ct. 2, 97 L.Ed.2d 790 (1987). Subsequently, the Arkansas Supreme Court ruled that the taxes at issue in that case were unconstitutional in light of Scheiner; but that Scheiner should not be applied retroactively in favor of the taxpayers in that case. It must be borne in mind that the taxpayers in the Arkansas case were not the identical parties who had brought the challenge in this state that resulted in the Scheiner decision. The Arkansas Supreme Court also ruled that the truckers would be allowed a refund only of the tax monies paid into escrow pursuant to Justice Blackman’s order (295 Ark. 43, 746 S.W.2d 377 *230(1988)). The Arkansas case was again appealed to the U.S. Supreme Court who decided the matter in what is now known as American Trucking Associations, Inc. v. Smith, 496 U.S. 167, 110 S.Ct. 2323, 110 L.Ed.2d 148 (1990) (hereafter “Smith”). In Smith, the U.S. Supreme Court affirmed in part, reversed in part, and remanded. Although unable to agree on an opinion, five members of the Court agreed that Arkansas was not required to refund the tax payments at issue that were paid with respect to circumstances occurring prior to the date of the Scheiner decision (June 23, 1987), but that the nature and extent of relief available on the basis of Scheiner should be determined by the Arkansas courts with respect to circumstances occurring after the date of the Scheiner decision and before the date of Justice Blackman’s escrow order. The four justice plurality opinion in Smith (authored by Justice O’Connor) expressly remands the case to the Arkansas Supreme Court in order to permit them “to determine the appropriate relief, not inconsistent with our decision today in McKesson, ...”. 496 U.S. at 200, 110 S.Ct. at 2343, 110 L.Ed.2d at 174. We must now turn, therefore, to a consideration of McKesson.
McKesson is a unanimous U.S. Supreme Court decision authored by Justice Brennan. In McKesson, the Florida Supreme Court affirmed a trial court decision that found a Florida excise tax scheme unconstitutional under the U.S. Constitution, but limited the challenging taxpayer’s remedy to prospective relief only by refusing to order a refund for taxes previously paid. The U.S. Supreme Court reversed and remanded holding that the due process clause of the Federal Constitution’s Fourteenth Amendment requires that, if a state penalizes its taxpayers for failure to remit their taxes in a timely fashion, and thus relegates the taxpayers to postpayment refund actions in which they could challenge the legality of the tax, the state must afford taxpayers meaningful retrospective relief for taxes already paid pursuant to a tax scheme ultimately found unconstitutional, which means that in refund actions, the *231state must provide taxpayers not only with a fair opportunity to challenge the accuracy and legal validity of their tax obligation, but also a clear and certain remedy for any erroneous or unlawful tax collection, so as to insure that the opportunity to contest the tax was a meaningful one.
It is clear from Smith that Scheiner may be applied prospectively. To the extent that state court discretion enters into that determination, I agree with the majority that in applying the tests enunciated in Chevron Oil v. Huson, 404 U.S. 97, 92 S.Ct. 349, 30 L.Ed.2d 296 (1971), we should reach that very conclusion. But I believe that Scheiner cannot be applied in a purely prospective way here to the detriment of Appellees themselves because McKesson requires us to consider the due process requirement of providing these taxpayers (who procured, as it were, the decision in Scheiner) with a meaningful remedy; and that in doing so the scales are unavoidably tipped against a purely prospective application of Scheiner. I would refund to Appellees all of the taxes they paid and for which they sought refunds in this litigation.
In short, as to the Arkansas taxpayers, for the period prior to the Scheiner decision (that is, prior to June 23, 1987), the determination on the unconstitutionality of the tax could but need not be applied retroactively — refunds could but need not be given based on balancing test enunciated in Chevron Oil; for the period between Scheiner and Justice Blackman’s escrow order dated August 14, 1987, prospectivity could not apply and refunds must be given based on McKesson; and for the period after the escrow order, refunds would be required based on that order. As to the taxpayers in the instant case, McKesson would apply from the beginning of this litigation because Appellees instigated the decision in which the instant tax was declared unconstitutional and hence Appellees are entitled to refunds from the beginning.
This, after all, is in accord with the expressed agreement of the parties for on February 25, 1982, and February 9, 1983, the parties entered into stipulations approved by the *232Commonwealth Court (see pp. 4 and 9 of Appellees’ Application for Relief) dealing, respectively, with the marker fee tax and the axle tax at issue here, to the effect that:
Within ninety (90) days after final decision on the merits in which [the tax] shall have been declared unconstitutional or its enforcement enjoined and all appeals have been exhausted or abandoned, respondents [the Commonwealth] shall refund all ... payments ... for the year beginning....
These stipulations were renewed annually and, in my judgment, the Commonwealth is bound by them.1
In the stipulations, the parties themselves gave definition to the term “merits” as involving the constitutionality of the taxes at issue without regard to prospective or retroactive application. After all, the refunds promised to be made by the Commonwealth could only be made on a retroactive basis since the taxes herein were not paid prospectively. There has been a “final decision on the merits.” The stipulations of the parties themselves, as well as constitutional doctrines of fairness and due process, obligate us to give Appellees the full refunds to which they are entitled.
LARSEN, J., joins this dissenting opinion.

. A review of the record shows that this is a class action. The stipulations entered into with the Commonwealth expressly promise refunds to “all affected motor carriers” if Appellees were to be successful in challenging the taxes at issue. (See Exhibits F through J of Appellees’ Application for Relief — at paragraph 1 of each Stipulation.)