In 1983, petitioners brought suit in an Arkansas Chancery Court,
alleging that the flat tax portion of that State's Highway Use
Equalization (HUE) tax discriminated against interstate commerce in
violation of the Commerce Clause by imposing on out-of-state
truckers greater per-mile costs than those imposed on in-state
truckers, who are likely to drive many more miles on the State's
highways. Petitioners sought a refund of all HUE taxes paid. In
affirming the Chancery Court's ruling that the tax was
constitutional, the State Supreme Court relied on this Court's
decisions upholding flat taxes in
Capitol Greyhound Lines v.
Brice, 339 U. S. 542,
Aero Mayflower Transit Co. v. Board of Railroad Comm'rs of
Montana, 332 U. S. 495, and
Aero Mayflower Transit Co. v. Georgia Public Service
Comm'n, 295 U. S. 285, and
explicitly rejected petitioners' argument that
Complete Auto
Transit, Inc. v. Brady, 430 U. S. 274,
overruled the
Aero Mayflower line of cases. On June 23,
1987, this Court ruled, in
American Trucking Assns., Inc. v.
Scheiner, 483 U. S. 266,
that unapportioned flat highway use taxes penalize travel within a
free trade area among the States in violation of the Commerce
Clause. Subsequently, this Court vacated the Arkansas Supreme
Court's judgment and remanded the case for further consideration in
light of
Scheiner. After that court denied petitioners'
motion seeking,
inter alia, an order to escrow the HUE
taxes to be collected pending a final decision on the merits,
Justice BLACKMUN, as Circuit Justice, ordered such an escrow on
August 14, 1987. The State Supreme Court then reconsidered the HUE
tax in light of
Scheiner and ruled it unconstitutional.
However, the court declined to order refunds for taxes paid before
the August escrow order, holding that, under the test enunciated in
Chevron Oil Co. v. Huson, 404 U. S.
97,
404 U. S.
106-107,
Scheiner should not be applied
retroactively. The court nevertheless determined that the tax money
paid into escrow after the August order should be refunded.
Held: The judgment is affirmed in part and reversed in
part, and the case is remanded.
295 Ark. 43,
746 S.W.2d
377, affirmed in part, reversed in part, and remanded.
Page 496 U. S. 168
Justice O'CONNOR, joined by THE CHIEF JUSTICE, Justice WHITE,
and Justice KENNEDY, concluded that the Arkansas Supreme Court
misapplied
Chevron Oil in certain respects and, therefore,
Scheiner applies to some taxation of highway use pursuant
to the HUE tax. Thus, the case must be remanded to that court to
determine appropriate relief in light of
McKesson Corp. v.
Division of Alcoholic Beverages and Tobacco, Dept. of Business
Regulations of Fla., ante, p.
496 U. S. 18. Pp.
496 U. S.
176-200.
(a) Whether the State Supreme Court applied
Chevron Oil
correctly is a federal question. However, it is important to
distinguish that question from the distinct remedial question at
issue in
McKesson, ante. While the relief provided by the
State from a tax statute held invalid under the Commerce Clause
must be in accord with federal due process principles,
see
ante at
496 U. S. 36-43,
496 U. S. 51-52,
federal-state comity dictates that state courts have the initial
duty of determining appropriate relief. Pp.
496 U. S.
176-179.
(b) Under
Chevron Oil's three-factor nonretroactivity
test,
Scheiner does not apply to taxation of highway use
prior to the date it was decided, June 23, 1987, for the HUE tax
year ending June 30, 1987. First,
Scheiner clearly
established a new principle of law by expressly overruling those
aspects of the
Aero Mayflower line of cases on which
Arkansas relied in enacting and assessing the HUE tax. In its
original decision upholding the tax, the State Supreme Court
correctly followed the
Aero Mayflower cases rather than
Complete Auto Transit, since the latter case only
questioned the
Aero Mayflower line, and this Court cited
that line with approval in a decision subsequent to
Complete
Auto Transit, Massachusetts v. United States, 435 U.
S. 444,
435 U. S.
463-464. Second, the purpose of the Commerce Clause does
not dictate retroactive application of
Scheiner, since
such application would not tend to deter future free trade
violations by the States. The HUE tax when enacted was entirely
consistent with the
Aero Mayflower cases, and it is not
the Clause's purpose to prevent legitimate state taxation of
interstate commerce. Third, applying
Scheiner
retroactively would produce substantial inequitable results.
Especially in light of
McKesson's holding that a ruling
that a tax is unconstitutional under the Commerce Clause places
substantial obligations on the States to provide relief,
invalidating the HUE tax has the potential for severely burdening
the State's current operations and future plans. A refund, if
required, could deplete the state treasury and entail potentially
significant administrative costs, while retroactively increasing
taxes on the favored taxpayers would also entail such
administrative costs, and could at some point run afoul of the Due
Process Clause under
McKesson, ante, at
496 U. S. 40-41,
n. 23. Where a State can easily foresee the invalidation of its tax
statutes, the burden on state operations may merit little concern.
See McKesson,
Page 496 U. S. 169
ante, at
496 U. S. 44-46,
496 U. S. 50. It
is unjust, however, to impose this burden when the State relied on
valid existing precedent in enacting and implementing its tax. Pp.
496 U. S.
179-186.
(c) However, the conclusion that
Scheiner applies only
prospectively does not protect those HUE taxes paid to the State
for the tax year beginning July 1, 1987. The State Supreme Court's
refusal to order refunds for any 1987-1988 HUE taxes paid prior to
Justice BLACKMUN's escrow order arose from a misapprehension of the
force of
Chevron Oil. Scheiner applies prospectively to
the flat taxing of highway use after the date of that decision,
regardless of when the taxes for such use were actually collected.
Holding otherwise would result in similarly situated taxpayers
receiving different remedies depending solely and fortuitously on
the date they paid the tax. Pp.
496 U. S.
186-188.
(d) The dissent's criticisms of this decision lack merit. First,
the claim that this decision is unjust because it treats the
taxpayers in this case differently from those in
Scheiner
is unpersuasive, since this case resolves a retroactivity question
not considered in
Scheiner, which was concerned only with
a state court's ruling on the constitutionality of certain tax
statutes and remanded for a determination of retroactivity and
remedial issues. Second, the claim that this Court has consistently
applied new decisions retroactively to civil cases which are
pending on direct review is an inaccurate characterization, since a
review of the Court's decisions shows that it has consistently
applied the principles underlying the retroactivity doctrine
enunciated in
Chevron Oil rather than the approach
suggested by the dissent.
See, e.g., Cipriano v. City of
Houma, 395 U. S. 701.
Third, contrary to the dissent's assertion, this Court has never
equated its retroactivity principles with remedial principles, but
has instead considered nonretroactivity to be a doctrine for
determining when past precedent should be applied to a case before
the Court. As such, it is better understood as part of the doctrine
of
stare decisis, rather than part of the law of remedies.
See, e.g., Great Northern R. Co. v. Sunburst Oil & Refining
Co., 287 U. S. 358,
287 U. S. 364.
Finally, the reasons for adopting a
per se rule of
retroactivity in criminal cases,
see Griffith v. Kentucky,
479 U. S. 314 --
primarily, to provide expanded procedural protections to criminal
defendants -- are not applicable in the civil sphere, where
nonretroactivity functions to avoid injustice or hardship to civil
litigants who have justifiably relied on prior law,
see, e.g.,
Chevron Oil, supra, 404 U.S. at
404 U. S. 107.
These distinctions compel the rejection of the dissent's invitation
to abandon the nonretroactivity doctrine in the civil arena as the
Court did in the criminal arena. Pp.
496 U. S.
188-120.
Justice SCALIA concluded that prospective decisionmaking by the
Court cannot be reconciled with the scope of the judicial power
under
Page 496 U. S. 170
Article III. Nonetheless, because this Court's so-called
"negative" Commerce Clause jurisprudence has no basis in the text
of the Commerce Clause,
see, e.g., American Trucking Assns.,
Inc. v. Scheiner,
483 U. S. 266,
483 U. S.
303-306 (SCALIA, J., concurring in part and dissenting
in part), and because
Scheiner was therefore wrongly
decided, the only reason to apply
Scheiner is the doctrine
of
stare decisis. The purpose underlying that doctrine,
which is to protect settled expectations, justifies holding that
Arkansas violated the Constitution in imposing its HUE tax after
Scheiner was announced, but does not justify holding that
Arkansas violated the Constitution in imposing its HUE tax before
Scheiner overruled our earlier cases on which Arkansas
presumably relied. To apply
Scheiner retroactively, solely
in the name of
stare decisis, would turn the purpose of
stare decisis against itself. Accordingly, the decision
below should be affirmed with respect to the pre-
Scheiner
taxes, and reversed with respect to the post-
Scheiner
taxes. Pp.
496 U. S.
200-205.
O'CONNOR, J., announced the judgment of the Court and delivered
an opinion in which REHNQUIST, C.J., and WHITE and KENNEDY, JJ.,
joined. SCALIA, J., filed an opinion concurring in the judgment,
post, p.
496 U. S. 200.
STEVENS, J., filed a dissenting opinion in which BRENNAN, MARSHALL,
and BLACKMUN, JJ., joined,
post, p.
496 U. S.
205.
Page 496 U. S. 171
Justice O'CONNOR announced the judgment of the Court, and
delivered an opinion in which THE CHIEF JUSTICE, Justice WHITE, and
Justice KENNEDY join.
In this case, we decide whether our decision in
American
Trucking Assns, Inc. v. Scheiner, 483 U.
S. 266 (1987), applies retroactively to taxation of
highway use prior to the date of that decision.
I
In 1983, petitioners brought suit in the Chancery Court of
Pulaski County, Arkansas, challenging the constitutionality of the
newly enacted Arkansas Highway Use Equalization Tax Act (HUE), 1983
Ark.Gen. Acts, No. 685, Ark.Code Ann. §§ 27-35204, 27-35-205 (1987)
(formerly codified as Ark.Stat.Ann. §§ 75-817.2, 75-817.3 (Supp.
1985)), under the Commerce Clause of the Federal Constitution. Art.
I, § 8, cl. 3. The HUE tax required trucks operating on
Arkansas
Page 496 U. S. 172
highways with a gross weight between 73,281 and 80,000 pounds to
pay either an annual flat tax of $175 or a tax of 5c per mile
traveled in Arkansas or a trip permit fee of $8 per 100 miles.
Effectively, HUE taxed only the first 3,500 miles of annual highway
use by heavy trucks, that being the point at which it became
advantageous to pay the flat tax of $175. Because trucks based in
Arkansas were likely to travel many more miles on the State's
highways than heavy trucks based out of the State, petitioners
argued that HUE impermissibly discriminated against interstate
commerce by imposing on out-of-state truckers greater per-mile
costs than those imposed on in-state truckers. To remedy the
alleged federal constitutional violation, petitioners argued that
Art. 16, § 13 of the Arkansas Constitution required the State to
refund all HUE taxes petitioners had paid.
See App. 12-13,
22-23 (filed Mar. 6, 1989).
Pending determination on the merits of their constitutional
challenge, petitioners sought a preliminary injunction placing all
HUE tax revenues in escrow to prevent those revenues from being
deposited into the state treasury and being distributed to state
agencies. The Chancery Court's denial of petitioners' motion for
the preliminary injunction was affirmed on interlocutory appeal to
the Arkansas Supreme Court.
American Trucking Assns., Inc. v.
Gray, 280 Ark. 258,
657 S.W.2d
207 (1983). After further proceedings, the Chancery Court
upheld the constitutionality of HUE and the State Supreme Court
affirmed.
American Trucking Assns., Inc. v. Gray, 288 Ark.
488,
707 S.W.2d
759 (1986). That court relied on our decisions in
Capitol
Greyhound Lines v. Brice, 339 U. S. 542
(1950),
Aero Mayflower Transit Co. v. Board of Railroad Comm'rs
of Montana, 332 U. S. 495
(1947), and
Aero Mayflower Transit Co. v. Georgia Public
Service Comm'n, 295 U. S. 285
(1935), to hold that the flat tax portion of HUE was neither
excessive nor unreasonable and did not, therefore, violate the
Commerce Clause. In so doing, the Arkansas Supreme Court explicitly
rejected petitioners'
Page 496 U. S. 173
argument that our decision in
Complete Auto Transit, Inc. v.
Brady, 430 U. S. 274
(1977), had overruled the
Aero Mayflower line of
cases.
Petitioners appealed the Arkansas Supreme Court decision to this
Court and we held the case pending our decision in
Scheiner, which involved a similar constitutional
challenge to two flat highway use taxes enacted by the Commonwealth
of Pennsylvania. In
Scheiner, decided June 23, 1987, the
Court held that unapportioned flat taxes such as those imposed by
Pennsylvania penalize travel within a free trade area among the
States. The Court applied the "internal consistency" test,
see
Armco, Inc. v. Hardesty, 467 U. S. 638,
467 U. S. 644
(1984), and concluded that
"[i]f each State imposed flat taxes for the privilege of making
commercial entrances into its territory, there is no conceivable
doubt that commerce among the States would be deterred."
483 U.S. at
483 U. S. 284.
We recognized in
Scheiner that Arkansas, appearing as
amicus curiae in that case, was one of a number of States
that had enacted flat highway use taxes.
See id. at
483 U. S. 285,
n. 17;
id. at
483 U. S.
300-301 (dissenting opinion). Accordingly, three days
after deciding
Scheiner, we vacated the judgment of the
Arkansas Supreme Court in
Gray and remanded that case for
further consideration in light of
Scheiner. American
Trucking Assns., Inc. v. Gray, 483 U.S. 1014 (1987). On motion
by petitioners, who sought to expedite their efforts in the state
courts to obtain injunctive relief against further enforcement of
the HUE tax, and pursuant to this Court's former Rule 52.2, Justice
BLACKMUN shortened the time of issuance of our mandate to the
Arkansas Supreme Court and ordered that the mandate issue on July
16, 1987.
Petitioners thereupon sought to enjoin further collection of the
HUE tax or to order an escrow of the taxes to be collected pending
reconsideration of
Gray by the Arkansas Supreme Court.
Motions seeking to accomplish this end were denied by that court,
and petitioners returned here. In an opinion issued August 14,
1987, Justice BLACKMUN, acting
Page 496 U. S. 174
as Circuit Justice, concluded there was a significant
possibility that the Arkansas Supreme Court would find the HUE tax
unconstitutional under
Scheiner or, failing that, that
this Court would note probable jurisdiction and strike down the HUE
tax.
American Trucking Assns., Inc. v. Gray, 483 U.
S. 1306,
483 U. S.
1309 (1987) (in chambers). He further concluded that,
because "there is a substantial risk that [petitioners] will not be
able to obtain a refund if the [HUE] tax ultimately is declared
unconstitutional,"
ibid., petitioners would suffer
"irreparable injury absent injunctive relief."
Ibid.
Justice BLACKMUN therefore ordered Arkansas to "escrow the HUE
taxes to be collected, until a final decision on the merits in this
case is reached."
Id. at
483 U. S.
1310.
On October 9, 1987, the Arkansas Legislature met in special
session, repealed the HUE tax, and replaced it with a tax requiring
heavy trucks to pay 2.5 cents per mile of travel on Arkansas
highways.
See Ark. Code Ann. §§ 27-35-204, 27-35-205
(Supp. 1987). Subsequently, in an opinion delivered on March 14,
1988, the Arkansas Supreme Court reconsidered the HUE tax in light
of
Scheiner and ruled it unconstitutional.
American
Trucking Assns., Inc. v. Gray, 295 Ark. 43,
746 S.W.2d
377. The court, however, declined to order tax refunds to
petitioners for all HUE taxes paid prior to Justice BLACKMUN's
August 14, 1987, escrow order. The Arkansas Supreme Court reasoned
that petitioners would be entitled to refunds of all their HUE tax
payments only if that court were to apply our
Scheiner
decision retroactively. In order to determine whether it would so
treat
Scheiner, the State Supreme Court applied the
three-factor test we enunciated in
Chevron Oil Co. v.
Huson, 404 U. S. 97
(1971).
First, the Arkansas court ruled that
Scheiner
established a new rule of law with respect to flat highway use
taxes by overruling the
Aero Mayflower line of cases. The
Arkansas court concluded that it reasonably relied on those cases
in originally upholding the HUE tax against petitioners' Commerce
Clause challenge. Second, the court held that prospective
Page 496 U. S. 175
application of
Scheiner would effectuate the purpose of
the Commerce Clause "to secure equal treatment for inter- and
intrastate commerce and thus create an area of free trade among the
states." 295 Ark. at 46, 746 S.W.2d at 379. In this regard, the
Arkansas Supreme Court relied heavily on the decision of the
Washington Supreme Court denying tax refunds because of its
determination that our decision in
Tyler Pipe Industries, Inc.
v. Washington State Dept. of Revenue, 483 U.
S. 232 (1987), should not be applied retroactively.
See National Can Corp. v. Department of
Revenue, 109 Wash. 2d
878, 888,
749 P.2d
1286, 1291 (1988) (en banc) ("It is difficult to understand how
retroactive application would encourage free trade among the
states, since whatever chill was imposed on interstate trade is in
the past"),
app. dism'd, 486 U.S. 1040 (1988). Third, the
Arkansas Supreme Court held that it would be inequitable to order a
total refund of HUE taxes already paid by petitioners into the
state treasury. The court reasoned that, because petitioners had
driven their heavy trucks on Arkansas highways, a total refund
would
"allow them an unconscionable windfall far in excess of a fair
recovery for the discrimination they may have suffered due to the
tax. It would constitute unfair treatment of the Arkansas-based
truckers who have paid the tax and seek no refund."
295 Ark. at 47, 746 S.W.2d at 379. The Arkansas court
determined, however, that HUE tax money paid into escrow after
Justice BLACKMUN's August 14, 1987, order should be refunded to
petitioners, as that money, having not been placed into the state
treasury, had not been spent or budgeted for future expenditure.
Justice Hickman dissented, believing that petitioners were entitled
to refunds from the date
Scheiner was decided "or
certainly no later than when we were asked, in July 1987, to place
the funds in escrow." 295 Ark. at 47, 746 S.W.2d at 379. On
petition for rehearing, petitioners modified their remedial request
and urged the Arkansas court to refund HUE taxes paid in
Page 496 U. S. 176
excess of taxes petitioners would have paid had they been based
in the State. The petition for rehearing was denied.
Petitioners thereupon sought a writ of certiorari from this
Court. They presented the questions whether
Scheiner
should be applied retroactively and whether, even if the
Scheiner decision is not retroactive, they are still
entitled to refunds for taxes paid before we decided
Scheiner for the tax year that began after the
Scheiner decision or to refunds for taxes paid after the
Scheiner decision but before Justice BLACKMUN's escrow
order. We granted the petition for certiorari, 488 U.S. 954 (1988),
and consolidated the case with No. 88-192,
McKesson Corp. v.
Division of Alcoholic Beverages and Tobacco, Dept. of Business
Regulation of Fla., which we also decide today.
See
ante, p.
496 U. S. 18. We
now affirm in part, reverse in part, and remand for further
consideration.
II
When we have held state taxes unconstitutional in the past, it
has been our practice to abstain from deciding the remedial effects
of such a holding. While the relief provided by the State must be
in accord with federal constitutional requirements,
see
McKesson, ante, at
496 U. S. 36-43,
496 U. S. 51-52,
we have entrusted state courts with the initial duty of determining
appropriate relief.
See, e.g., Scheiner, 483 U.S. at
483 U. S.
297-298;
Tyler Pipe, supra, 483 U.S. at
483 U. S.
251-253;
Williams v. Vermont, 472 U. S.
14,
472 U. S. 28
(1985);
Bacchus Imports, Ltd. v. Dias, 468 U.
S. 263,
468 U. S.
276-277 (1984);
Exxon Corp. v. Eagerton,
462 U. S. 176,
462 U. S.
196-197 (1983). Our reasons for doing so have arisen
from a perception based in considerations of federal-state
comity:
"[T]his Court should not take it upon itself in this complex
area of state tax structures to determine how to apply its
holding:"
"These refund issues, which are essentially issues of remedy for
the imposition of a tax that unconstitutionally discriminated
against interstate commerce, were not addressed by the state
courts. Also, the federal constitutional
Page 496 U. S. 177
issues involved may well be intertwined with, or their
consideration obviated by, issues of state law. Also, resolution of
those issues, if required at all, may necessitate more of a record
than so far has been made in this case. We are reluctant,
therefore, to address them in the first instance."
Tyler Pipe, supra, 483 U.S. at
483 U. S. 252,
quoting
Bacchus, supra, 468 U.S. at
468 U. S.
277.
In a case such as this, where a state court has addressed the
refund issues, the same comity-based perception that has dictated
abstention in the first instance requires that we carefully
disentangle issues of federal law from those of state law and
refrain from deciding anything apart from questions of federal law
directly presented to us. By these means, we avoid interpreting
state laws with which we are generally unfamiliar and deciding
additional questions of federal law unnecessarily.
Cf. Michigan
v. Long, 463 U. S. 1032,
463 U. S.
1039-1042 (1983). In the present case, it is eminently
clear that the "state court decision fairly appears to rest
primarily on federal law, or to be interwoven with the federal law.
. . ."
Id. at
463 U. S.
1040. Specifically, the Arkansas Supreme Court took the
view that, whatever else Arkansas law might require, petitioners
could not receive tax refunds if
Scheiner is not
retroactive under the test of
Chevron Oil.
The determination whether a constitutional decision of this
Court is retroactive -- that is, whether the decision applies to
conduct or events that occurred before the date of the decision --
is a matter of federal law. When questions of state law are at
issue, state courts generally have the authority to determine the
retroactivity of their own decisions.
See Great Northern R. Co.
v. Sunburst Oil & Refining Co., 287 U.
S. 358,
287 U. S. 364
(1932) ("We think the federal constitution has no voice upon the
subject [of whether a state court may decline to give its decisions
retroactive effect]"). The retroactive applicability of a
constitutional decision of this Court, however, "is every bit as
much of a federal question as what particular federal
constitutional provisions themselves mean,
Page 496 U. S. 178
what they guarantee, and whether they have been denied."
Chapman v. California, 386 U. S. 18,
386 U. S. 21
(1967). In order to ensure the uniform application of decisions
construing constitutional requirements and to prevent States from
denying or curtailing federally protected rights, we have
consistently required that state courts adhere to our retroactivity
decisions.
See, e.g., Michigan v. Payne, 412 U. S.
47 (1973) (holding that the state court erred in
applying
North Carolina v. Pearce, 395 U.
S. 711 (1969), retroactively to invalidate a
resentencing proceeding occurring prior to the date of the decision
in
Pearce);
Arsenault v. Massachusetts,
393 U. S. 5 (1968)
(holding that the state court erred in determining that
White
v. Maryland, 373 U. S. 59
(1963), requiring an accused to be represented by counsel during a
preliminary hearing, did not apply retroactively to
petitioner).
Although the Court has recently determined that new rules of
criminal procedure must be applied retroactively to all cases
pending on direct review or not yet final,
see Griffith v.
Kentucky, 479 U. S. 314,
479 U. S. 328
(1987), retroactivity of decisions in the civil context "continues
to be governed by the standard announced in [
Chevron
Oil],"
id. at
479 U. S. 322,
n. 8;
see also United States v. Johnson, 457 U.
S. 537,
457 U. S. 550,
n. 12 (1982). In this case, the Arkansas Supreme Court decided
that, under
Chevron Oil, our decision in
Scheiner
need only apply prospectively. This decision presents a federal
question: Did the Arkansas Supreme Court apply
Chevron Oil
correctly? As petitioners properly observed at oral argument, this
is the only question before the Court in this case. Tr. of Oral
Arg. 7-10.
It is important to distinguish the question of retroactivity at
issue in this case from the distinct remedial question at issue in
McKesson, ante p.
496
U. S. 18. When taxpayers involuntarily pay a tax that is
unconstitutional under existing precedents, to what relief are
those affected taxpayers entitled as a matter of federal law? Our
decision in
McKesson indicates that federal law sets
certain minimum requirements that States
Page 496 U. S. 179
must meet but may exceed in providing appropriate relief.
Because we decide that, in certain respects, the Arkansas Supreme
Court misapplied
Chevron Oil and, therefore, that our
decision in
Scheiner applies to some taxation of highway
use pursuant to the HUE tax, we must remand this case to the
Arkansas Supreme Court to determine appropriate relief in light of
McKesson.
A
Using the
Chevron Oil test, we consider first the
application of
Scheiner to taxation of highway use prior
to June 23, 1987, the date we decided
Scheiner, for the
HUE tax year ending June 30, 1987. That test has three parts:
"First, the decision to be applied nonretroactively must
establish a new principle of law, either by overruling clear past
precedent on which litigants may have relied or by deciding an
issue of first impression whose resolution was not clearly
foreshadowed. Second, . . . we must . . . weigh the merits and
demerits in each case by looking to the prior history of the rule
in question, its purpose and effect, and whether retrospective
operation will further or retard its operation. Finally, we [must]
weig[h] the inequity imposed by retroactive application, for where
a decision of this Court could produce substantial inequitable
results if applied retroactively, there is ample basis in our cases
for avoiding the injustice or hardship by a holding of
nonretroactivity."
404 U.S. at
404 U. S.
106-107 (citations and internal quotations omitted).
We think it obvious that
Scheiner meets the first test
of nonretroactivity. Both the majority and dissent in that case
recognized that the Court's decision left very little of the
Aero Mayflower line of precedents standing. As the
majority observed,
"the precedents upholding flat taxes can no longer support the
broad proposition . . . that every flat tax for the privilege of
using a State's highways must be upheld even if it has a clearly
discriminatory effect on commerce by
Page 496 U. S. 180
reason of that commerce's interstate character."
483 U.S. at
483 U. S. 296.
These precedents retain vitality only when flat taxes "are the only
practicable means of collecting revenues from users,"
ibid. -- a situation no more present in Arkansas than it
was in Pennsylvania.
See also id. at
483 U. S. 298
(dissenting opinion) ("[T]he Court today directly overrules the
holdings of" the
Aero Mayflower precedents);
id.
at
483 U. S. 304
(SCALIA, J., dissenting). That the Court in
Scheiner
recognized that
Complete Auto Transit "called into
question the future vitality of earlier cases that had upheld
facially neutral flat taxes,"
id. at
483 U. S. 295,
does not alter our conclusion. As we observed last Term,
"[i]f a precedent of this Court has direct application in a
case, yet appears to rest on reasons rejected in some other line of
decisions, the [lower courts] should follow the case which directly
controls, leaving to this Court the prerogative of overruling its
own decisions."
Rodriguez de Quijas v. Shearson/American Express, Inc.,
490 U. S. 477,
490 U. S. 484
(1989). This is precisely what the State of Arkansas argued and
what the Arkansas Supreme Court did in its original decision
holding the HUE tax constitutional. Moreover, that court noted with
reliance that we cited the
Aero Mayflower cases with
approval in
Massachusetts v. United States, 435 U.
S. 444,
435 U. S.
463-464 (1978), one year after we decided
Complete
Auto Transit. 288 Ark. at 497, 707 S.W.2d at 762-763. The
Arkansas Supreme Court correctly concluded that
Scheiner
established a "new principle of law" by overruling those aspects of
the
Aero Mayflower cases on which the State of Arkansas
relied in enacting and assessing the HUE tax.
The conclusion that
Scheiner established a new
principle of law in the area of our dormant Commerce Clause
jurisprudence does not necessarily end the inquiry.
See Florida
v. Long, 487 U. S. 223,
487 U. S. 230
(1988);
Arizona Governing Committee for Tax Deferred Annuity
and Deferred Compensation Plans v. Norris, 463 U.
S. 1073,
463 U. S.
1109-1110 (1983) (concurring opinion). It is equally
clear to us, however, that the purpose
Page 496 U. S. 181
of the Commerce Clause does not dictate retroactive application
of
Scheiner and that equitable considerations tilt the
balance toward nonretroactive application. We observed in
Scheiner that the Commerce Clause "
by its own force
created an area of trade free from interference by the States.'"
483 U.S. at 483 U. S. 280,
quoting Boston Stock Exchange v. State Tax Comm'n,
429 U. S. 318,
429 U. S. 328
(1977). Petitioners argue that the retroactive application of
Scheiner will tend to deter future free trade violations
which the several States have strong parochial incentives to
commit. As we have just discussed, however, the HUE tax was
entirely consistent with the Aero Mayflower line of cases,
and it is not the purpose of the Commerce Clause to prevent
legitimate state taxation of interstate commerce. See Complete
Auto Transit, 430 U.S. at 430 U. S.
288.
Finally, under the third prong of the
Chevron Oil test,
we consider the equities of retroactive application of
Scheiner. Our decision today in
McKesson makes
clear that, once a State's tax statute is held invalid under the
Commerce Clause, the State is obligated to provide relief
consistent with federal due.process principles.
See ante
at
496 U. S. 36-43.
When the State comes under such a constitutional obligation,
McKesson establishes that equitable considerations play
only the most limited role in delineating the scope of that relief.
Ante at
496 U. S. 44-51.
Of course, we had no occasion to consider the equities of
retroactive application of new law in
McKesson, because
that case involved only the application of settled Commerce Clause
precedent.
See ante at
496 U. S. 31, n.
15. In light of
McKesson's holding that a ruling that a
tax is unconstitutionally discriminatory under the Commerce Clause
places substantial obligations on the States to provide relief, the
threshold determination whether a new decision should apply
retroactively is a crucial one, requiring a hard look at whether
retroactive application would be unjust. At this initial stage, the
question is not whether equitable considerations outweigh the
obligation to provide relief for a
Page 496 U. S. 182
constitutional violation,
cf. ante at
496 U. S. 44-45,
496 U. S. 50,
but whether there is a constitutional violation in the first
place.
A careful consideration of the equities persuades us that
Scheiner should not apply retroactively. Unlike
McKesson, where the State enacted a tax scheme that "was
virtually identical to the Hawaii scheme invalidated in
Bacchus
Imports, Ltd. v. Dias, 468 U. S. 263
(1984),"
ante at
496 U. S. 46,
and thus the State could "hardly claim surprise at the Florida
courts' invalidation of the scheme,"
ibid., here the State
promulgated and implemented its tax scheme in reliance on the
Aero Mayflower precedents of this Court. In light of these
precedents, legislators would have good reason to suppose that
enactment of the HUE tax would not violate their oath to uphold the
United States Constitution, and a state supreme court would have
every reason to consider itself bound by those precedents to uphold
the tax against a constitutional challenge. Similarly, state tax
collection authorities would have been justified in relying on
state enactments valid under then-current precedents of this Court,
particularly where, as here, the enactments were upheld by the
State's highest court.
Where a State can easily foresee the invalidation of its tax
statutes, its reliance interests may merit little concern,
see
McKesson,
ante at
496 U. S. 44-46,
496 U. S. 50. By
contrast, because the State cannot be expected to foresee that a
decision of this Court would overturn established precedents, the
inequity of unsettling actions taken in reliance on those
precedents is apparent. Although at this point the burden that the
retroactive application of
Scheiner would place on
Arkansas cannot be precisely determined, it is clear that the
invalidation of the State's HUE tax would have potentially
disruptive consequences for the State and its citizens. A refund,
if required by state or federal law, could deplete the state
treasury, thus threatening the State's current operations and
future plans. Presumably, under
McKesson, the State would
be required to calculate and refund that portion of the tax that
would be
Page 496 U. S. 183
found under
Scheiner to discriminate against interstate
commerce, with the attendant potentially significant administrative
costs that would entail. As
McKesson makes clear, the
State could also attempt to provide relief by retroactively
increasing taxes on the favored taxpayers to cure any violation.
But this too would entail substantial administrative costs, and
could at some point run into independent constitutional
restrictions.
See ante at
496 U. S. 40, n.
23 ("[B]eyond some temporal point, the retroactive imposition of a
significant tax burden may be so harsh and oppressive as to
transgress the constitutional limitation."). Moreover, such an
approach would unfairly penalize favored taxpayers for the State's
failure to foresee that this Court would overrule established
precedent. Although
in the future States may be able to
protect their fiscal stability by imposing procedural requirements
on taxpayer actions,
see McKesson, ante, at
496 U. S. 45,
496 U. S. 50,
such prospective safeguards do not affect the inequities of
retroactive application of
Scheiner. Nor can Arkansas be
faulted for continuing to rely on its statute after its highest
state court upheld the constitutionality of the tax.
In sum, we conclude that applying
Scheiner
retroactively would "produce substantial inequitable results."
Chevron Oil, 404 U.S. at
404 U. S. 107.
The invalidation of the HUE tax has the potential for severely
burdening the State's operations. That burden may be largely
irrelevant when a State violates constitutional norms well
established under existing precedent.
See McKesson. But we
think it unjust to impose this burden when the State relied on
valid existing precedent in enacting and implementing its tax.
Accordingly, we conclude that
Scheiner does not apply to
HUE taxation for highway use prior to June 23, 1987, for the HUE
tax year ending June 30, 1987. [
Footnote 1]
Page 496 U. S. 184
The dissent suggests that federal courts should weigh equitable
considerations only in determining the scope of relief a federal
court should award. This is precisely backwards. As previously
discussed,
McKesson makes plain that equitable
considerations are of limited significance once a constitutional
violation is found. As the dissent's analysis ultimately makes
clear,
see, e.g., post at
496 U. S.
218-219, n. 8,
496 U.S.
224, its suggested approach would effectively eliminate
consideration of the equities entirely in a case such as this, when
the judicial decision invalidating the State's taxation scheme
represented a clear break from prior precedent. This is
inconsistent with our nonretroactivity doctrine, and would work
real and inequitable hardships in many cases.
Petitioners further argue that the equities always favor
applying decisions retroactively when those decisions would burden
only a governmental entity. They rely on
Owen v. City of
Independence, 445 U. S. 622,
445 U. S. 651
(1980), for the proposition that local governments should not be
permitted to "disavow liability for the injury it has begotten."
Owen is not applicable to our considerations here. That
case only addressed the question whether Congress intended a
municipality to have good faith immunity from actions brought under
42 U.S.C. § 1983. Our decision in
Owen simply construed
that statute through a consideration of its legislative history and
the immunity traditionally accorded municipalities in 1871, when
the forerunner of § 1983 was enacted.
Id. at
445 U. S.
635-650. Our delineation of the scope of liability under
a statute designed to permit suit against governmental entities and
officials provides little guidance for determining the fairest way
to apply our own decisions. Indeed,
Page 496 U. S. 185
the policy concerns involved are quite distinct. In
Owen, we discerned that according municipalities a special
immunity from liability for violations of constitutional rights
would not best serve the goals of § 1983, even if those rights had
not been clearly established when the violation occurred. Such a
determination merely makes municipalities, like private
individuals, responsible for anticipating developments in the law.
We noted that such liability would motivate each of the city's
elected officials to
"consider whether his decision comports with constitutional
mandates and . . . weigh the risk that a violation might result in
an award of damages from the public treasury."
Id. at
445 U. S. 656.
This analysis does not apply when a decision clearly breaks with
precedent, a type of departure which, by definition, public
officials could not anticipate nor have any responsibility to
anticipate.
See Rodriguez de Quijas v. Shearson/American
Express, Inc., 490 U.S. at
490 U. S.
485.
In determining whether a decision should be applied
retroactively, this Court has consistently given great weight to
the reliance interests of all parties affected by changes in the
law.
See, e.g., Cipriano v. City of Houma, 395 U.
S. 701,
395 U. S. 706
(1969) ("Significant hardships would be imposed on cities,
bondholders, and other connected with municipal utilities if our
decision today were given full retroactive effect"). To the extent
that retrospective application of a decision burdens a government's
ability to plan or carry out its programs, the application injures
all of the government's constituents. These concerns have long
informed the Court's retroactivity decisions. The Court has used
the technique of prospective overruling (accompanied by a stay of
judgment) to avoid disabling Congress' bankruptcy scheme,
see,
e.g., Northern Pipeline Construction Co. v. Marathon Pipe Line
Co., 458 U. S. 50,
458 U. S. 88
(1982), and has refused to invalidate retrospectively the
administrative actions and decisions of the Federal Election
Commission,
see Buckley v. Valeo, 424 U. S.
1,
424 U. S.
142-143 (1976). The Court has also declined to
provide
Page 496 U. S. 186
retrospective remedies which would substantially disrupt
governmental programs and functions.
See, e.g., Lemon v.
Kurtzman, 411 U. S. 192,
411 U. S. 209
(1973) (
Lemon II) ("[S]tate officials and those with whom
they deal are entitled to rely on a presumptively valid state
statute, enacted in good faith and by no means plainly unlawful")
(plurality opinion);
see also Reynolds v. Sims,
377 U. S. 533,
377 U.S. 585 (1964)
("[U]nder certain circumstances, such as where an impending
election is imminent and a State's election machinery is already in
progress, equitable considerations might justify a court in
withholding the granting of immediately effective relief in a
legislative apportionment case, even though the existing
apportionment scheme was found invalid");
Allen v. State Board
of Elections, 393 U. S. 544
(1969). The retrospective invalidation of a state tax that had been
lawful under then-current precedents of this Court threatens a
similar disruption of governmental operations. Therefore, our
refusal here to retroactively invalidate legislation that was
lawful when enacted is in accord with our previous determinations
of how best to give effect to new constitutional decisions.
B
Before and after the date of our
Scheiner decision,
some petitioners paid HUE taxes for the tax year beginning July 1,
1987. The Arkansas Supreme Court ruled that the State's collection
of these payments was constitutional until the date of Justice
BLACKMUN's escrow order. It therefore declined to order refunds for
any 1987-1988 HUE taxes not paid into escrow. Petitioners argue
that they are entitled to refunds of these payments even if
Scheiner is not to be applied retroactively, because these
HUE tax payments were made to secure the privilege of driving heavy
trucks on Arkansas highways between July 1, 1987, and June 30,
1988. Petitioners argue that the question whether
Scheiner
applies to the collection of 1987-1988 HUE taxes should depend on
the "occurrence of the taxed transaction or the enjoyment of the
taxed
Page 496 U. S. 187
benefit, not the remittance of the tax." Brief for Petitioners
47 (filed Jan. 18, 1989). Otherwise, petitioners contend, similarly
situated 1987-1988 HUE taxpayers will receive different remedies
depending solely and fortuitously on the date the individual
taxpayers remitted the tax. We agree.
It is, of course, a fundamental tenet of our retroactivity
doctrine that the prospective application of a new principle of law
begins on the date of the decision announcing the principle.
See, e.g., Florida v. Long, 487 U.S. at
487 U. S.
237-238;
Norris, 463 U.S. at 1111 (concurring
opinion);
Lemon v. Kurtzman, supra, (
Lemon II);
Chevron Oil, 404 U.S. at
404 U. S. 99;
Phoenix v. Kolodziejski, 399 U. S. 204,
399 U. S. 214
(1970). This tenet of retroactivity, however, does not define the
conduct to which
Scheiner prospectively applies: does it
apply to the flat taxing of highway use or to the
collection of taxes for highway use after the date of that
decision? We think it apparent that
Scheiner applies to
the flat taxation of highway use after the date of that decision.
This is true regardless when the taxes for such use were actually
collected. If Arkansas had collected HUE-like taxes for highway use
occurring
before the required tax payment date, a
prospective decision of this Court that such taxes were
unconstitutional would not preclude the State from collecting,
after the date of that decision, taxes for highway use
that occurred
before the decision was announced. The very
same principle applies where, as here, the converse is true.
Because we hold
Scheiner to apply only prospectively, flat
highway taxation was permissible for highway use that occurred
before the date of our decision, but not after. A contrary rule
would give States a perverse incentive to collect taxes far in
advance of the occurrence of the taxable transaction. It would also
penalize States that do not immediately collect taxes, but
nevertheless plan their operations on the assumption that they will
ultimately collect taxes that have accrued. In this case, the
taxpayer is advantaged in the sense that certain of its tax
payments were made under an unconstitutional statute and
Page 496 U. S. 188
remedies may be in order; in the hypothetical converse case, the
State is advantaged in the sense that it may continue to collect
taxes after the date of our decision finding its tax to be
prospectively unconstitutional. In both cases, as petitioners
correctly note, the critical event for prospectivity is "the
occurrence of the underlying transaction, and not the payment of
money therefor. . . . " Brief for Petitioners 47 (filed Jan. 18,
1989).
Cf. Lemon II, supra.
Thus petitioners are correct that those HUE taxes paid to the
State for the 1987-1988 tax year, regardless whether they were paid
before or after we announced
Scheiner, are not protected
by the conclusion that
Scheiner applies only
prospectively. In this regard, the Arkansas Supreme Court's holding
that petitioners were not entitled to refunds for the 1987-1988 HUE
taxes they paid arose from a misapplication of
Chevron
Oil. From the face of the State Supreme Court's opinion, we
can discern no reason apart from this misapprehension of the force
of
Chevron Oil that caused it to deny petitioners' request
for 1987-1988 HUE tax refunds. Accordingly, this aspect of the
Arkansas Supreme Court's opinion must be reversed.
III
The dissent claims that our decision today treats the
petitioners in this case less favorably than the taxpayers in
Scheiner, post at
496
U.S. 211-212, and challenges our retroactivity doctrine as
fundamentally inequitable. The dissent asserts that not only does
judicial integrity require the Court to apply new decisions to all
cases pending on direct review, but also that we have consistently
followed this practice in civil cases raising constitutional
claims.
Post at
496 U. S.
212-218. The dissent further insists that
Chevron
Oil does not enunciate principles of retroactivity; rather, it
is merely an exercise of our remedial powers.
Post at
496 U. S.
219-224. As we explain below, these arguments miss the
mark. First, as we today resolve an issue not considered in
Scheiner, we have neither
Page 496 U. S. 189
unfairly favored the litigants in
Scheiner nor
disfavored the litigants before us now. Second, a review of our
decisions shows that we have consistently applied the retroactivity
doctrine enunciated in
Chevron Oil rather than the
approach suggested by the dissent. The dissent's recharacterization
of our precedents disregards both the theoretical underpinnings of
the
Chevron Oil doctrine and the concerns that led the
Court to develop and retain this doctrine. Third, contrary to the
dissent's assertion, the Court has never equated its retroactivity
principles with remedial principles. Finally, the different
functions of our retroactivity doctrine in the criminal and civil
spheres lead us to reject the dissent's invitation to abandon our
nonretroactivity doctrine in the civil arena as we did in the
criminal arena.
The dissent's claim that today's decision is unjust because it
treats the taxpayers in this case differently from the taxpayers in
Scheiner, post at
496
U.S. 211-212, is unpersuasive. The taxpayers in
Scheiner challenged a state court's ruling on the
constitutionality of certain tax statutes; the taxpayers in this
case challenge a state court's ruling on the nonretroactivity of a
decision of this Court. This Court has done nothing more than
resolve the separate issues raised by each case.
In
Scheiner, the Court reversed the judgment of the
Supreme Court of Pennsylvania which had upheld the
constitutionality of two Pennsylvania tax statutes. After we
"decided the constitutional issue presented to us," 483 U.S. at
483 U. S. 298,
we then remanded the case to the Pennsylvania Supreme Court "to
consider whether our ruling should be applied retroactively and to
decide other remedial issues."
Id. at
483 U. S. 297.
We did not decide any issues of retroactivity or relief, nor did
our decision guarantee the taxpayers that the state court would
retroactively apply the Court's decision or provide any particular
relief. On remand of
Scheiner, the Pennsylvania Supreme
Court was free to consider the issue of retroactivity just as the
Arkansas state court did in this case.
Page 496 U. S. 190
As the Arkansas Supreme Court has already passed on the question
whether the Arkansas tax statutes are unconstitutional, that issue
is not before us. Petitioners' claim here involves the second,
distinct issue of the retroactivity of
Scheiner. In the
civil arena, we have generally considered the question of
retroactivity to be a separate problem, one that need not be
resolved in the law-changing decision itself.
See, e.g.,
Consolidated Foods Corp. v. Unger, 456 U.S. 1002, 1003 (1982)
(BLACKMUN, J., concurring) (Court properly vacated and remanded a
case for consideration in light of
Kremer v. Chemical
Construction Corp., 456 U. S. 461
(1982), but on remand, "respondent will be free to argue that
Kremer should not apply retroactively");
Simpson v.
Union Oil Co., 377 U. S. 13 (1964)
(reserving the question whether prospectlve-only application of the
rule announced in that opinion might be warranted). Thus, we had no
obligation to consider the retroactivity of
Scheiner in
that case. Today we consider and resolve that issue, which has been
properly raised and presented in this case.
The dissent's claim that this Court has consistently applied new
decisions retroactively to civil cases which are pending on direct
review is an inaccurate characterization of our cases. In fact, it
is little more than a proposal that we
sub silentio
overrule
Chevron Oil. The theory of retroactivity
identified by the dissent was formulated in Justice Harlan's
concurrence in
United States v. Estate of Donnelly,
397 U. S. 286,
397 U. S.
295-297 (1970).
Post at
496 U. S.
214-215. Justice Harlan urged the Court to adopt a rule
that a new decision would always apply to parties in cases pending
on direct review unless
"the transaction is beyond challenge either because the statute
of limitations has run or the rights of the parties have been fixed
by litigation and have become
res judicata."
397 U.S. at
397 U. S. 296.
Presumably, this rule of retroactivity would also constrain the
lower courts.
See Griffith v. Kentucky, 479 U.S. at
479 U. S. 315,
479 U. S. 323
(1987) ("As a practical matter, of course, we cannot hear each case
pending on direct review and apply the
Page 496 U. S. 191
new rule. But we fulfill our judicial responsibility by
instructing the lower courts to apply the new rule retroactively to
cases not yet final"). If the dissent's approach had prevailed in
the civil arena, no retroactivity question would ever arise: a
court would only have to determine whether a case was properly
before it and, if so, apply current law. However, a review of our
civil decisions reveals that this Court has followed a different
approach in determining when to apply decisions prospectively
only.
The principles underlying the Court's civil retroactivity
doctrine can be distilled from both criminal and civil cases
considering this issue. When the Court concludes that a
law-changing decision should not be applied retroactively, its
decision is usually based on its perception that such application
would have a harsh and disruptive effect on those who relied on
prior law.
See, e.g., Chevron Oil, 404 U.S. at
404 U. S. 107.
In order to protect such reliance interests, the Court first
identifies and defines the operative conduct or events that would
be affected by the new decision. Lower courts considering the
applicability of the new decision to pending cases are then
instructed as follows: If the operative conduct or events occurred
before the law-changing decision, a court should apply the law
prevailing at the time of the conduct. If the operative conduct or
events occurred after the decision, so that any reliance on old
precedent would be unjustified, a court should apply the new law.
See generally Schaefer, The Control of "Sunbursts":
Techniques of Prospective Overruling, 42 N.Y.U.L.Rev. 631 (1967)
(describing this technique).
The Court expressly relied on this doctrine in a criminal case,
Jenkins v. Delaware, 395 U. S. 213
(1969). As the Court observed, a number of decisions prior to
Jenkins had declined to apply a new rule retroactively when the
"point of initial reliance," that is, "the point at which law
enforcement officials relied upon practices not yet proscribed,"
id. at
395 U. S.
218-219, n. 7 (quotation omitted), occurred prior to the
date of the law-changing
Page 496 U. S. 192
decision.
See, e.g., Halliday v. United States,
394 U. S. 831,
394 U. S. 831
(1969) (new rule not applicable to guilty pleas accepted before
date of lawchanging decision);
Desist v. United States,
394 U. S. 244,
394 U. S. 254
(1969) (new rule not applicable to electronic surveillances
conducted before date of law-changing decision);
Fuller v.
Alaska, 393 U. S. 80 (1968)
(new rule not applicable to tainted evidence introduced before date
of law-changing decision).
Jenkins concluded that
"
focusing attention on the element of reliance'" in making
nonretroactivity decisions was "`more consistent with the
fundamental justification for not applying newly enunciated
constitutional principles retroactively.'" 395 U.S. at 395 U. S. 219,
n. 7, quoting Schaefer, supra at 646.
The Court has relied on the same reasoning in the civil arena.
In decisions invalidating state election provisions, the Court has
focused on the conduct or events that should not be invalidated by
its law-changing decisions. In
Cipriano v. City of Houma,
395 U. S. 701
(1969), for example, the Court struck down Louisiana's provisions
for bond-authorization elections as violative of the Equal
Protection Clause. However, to avoid frustrating the expectations
of parties who relied on prior law, the Court held that courts
should not invalidate a State's election or bonds if the bond
authorization process had been completed,
i.e., if the
election had not been timely challenged under state law and the
bonds were ready to be issued, before the date of the decision in
Cipriano. See 395 U.S. at
395 U. S. 706
("[W]e will apply our decision in this case prospectively. That is,
we will apply it only where, under state law, the time for
challenging the election result has not expired, or in cases
brought within the time specified by state law for challenging the
election and which are not yet final.
Thus, the decision will
not apply where the authorization to issue the securities is
legally complete on the date of this decision.") (emphasis
added). Although the Court looked to the state limitations period
to determine when the authorization process was complete, the Court
did not hold that this period
Page 496 U. S. 193
should be adopted as a time bar for raising equal protection
challenges to state elections in federal court. Rather, the Court
only held that bonds ready for issuance prior to the date of
Cipriano could not be invalidated under the rule
established in that decision. Similarly, in
Phoenix v.
Kolodziejski, 399 U.S. at
399 U. S.
213-215, the Court held that its ruling that the state
election laws at issue were unconstitutional should not be applied
retroactively where the bond authorization process had been
completed prior to the date of the Court's decision.
See
399 U.S. at
399 U. S. 214
("[O]ur decision in this case will apply only to authorizations for
general obligations bonds that are not final as of June 23, 1970,
the date of this decision").
See also Hill v. Stone,
421 U. S. 289,
421 U. S.
301-302 (1975) (holding that the law-changing decision
should not apply where the authorization to issue securities became
final prior to the date of the decision).
The Court's practice of focusing on the operative conduct or
events is implicit in our other retroactivity decisions. In
England v. Medical Examiners, 375 U.
S. 411 (1964), the Court established a new rule that a
party remitted to the state courts by a district court's abstention
order could not subsequently return to the district court if he had
voluntarily litigated his federal claims in state court. The Court
did not apply this rule to the case pending before it, because the
individuals there had relied on prior law in litigating their
federal claims in state court.
Id. at
375 U. S. 422.
In
Allen v. State Board of Elections, 393 U.
S. 544,
393 U. S.
571-572 (1969), the Court declined to set aside
elections conducted pursuant to invalid election laws, as the
operative event -- the elections -- had been valid under law
preceding the decision in
Allen. When considering the
retroactive applicability of decisions newly defining statutes of
limitations, the Court has focused on the action taken in reliance
on the old limitation period -- usually, the filing of an action.
Where a litigant filed a claim that would have been timely under
the prior limitation period, the Court has held that the new
statute of
Page 496 U. S. 194
limitation would not bar his suit.
See Saint Francis College
v. Al-Khazraji, 481 U. S. 604,
481 U. S.
608-609 (1987);
Chevron Oil, 404 U.S. at
404 U. S.
107-109.
As these cases indicate, the Court has not followed the
dissent's approach in the civil sphere. In none of the cases
discussed above did the Court indicate that the critical factor for
determining the retroactive applicability of a decision was the
time when principles of
res judicata or a time bar
precluded further litigation. Rather, the Court's retroactivity
doctrine obliged courts to apply old law to litigants before them
if the operative conduct or events had occurred prior to the new
decision. In this case, we merely apply these well established
principles of civil retroactivity. Here, we define the operative
conduct as Arkansas' flat taxation of highway use in reliance on
this Court's pre-
Scheiner cases.
Supra at
496 U. S.
186-187. We then decline to apply
Scheiner
retroactively to invalidate taxation on highway use prior to the
date of that decision.
In striving to recharacterize our precedents, the dissent makes
the error of equating a decision not to apply a rule retroactively
with the judicial choice of a remedy.
Post at
496 U. S.
219-220. As the Court makes plain in
McKesson,
there is an important difference. Once a constitutional decision
applies and renders a state tax invalid, due process, not equitable
considerations, will generally dictate the scope of relief offered.
Nor do this Court's retroactivity decisions, whether in the civil
or criminal sphere, support the dissent's assertion that our
retroactivity doctrine is a remedial principle. Indeed,
Lemon
v. Kurtzman, 411 U. S. 192
(1973) (
Lemon II), specifically recognized that the
Court's principles of retroactivity were helpful, but not
controlling, in deciding the scope of a federal remedy:
"Those guidelines [expressed in
Linkletter [v. Walker,
381 U. S.
618 (1965)] for applying our retroactivity doctrine] are
helpful, but the problem of
Linkletter and its progeny is
not precisely the same as that now before us. Here, we are not
considering whether we will apply a new constitutional rule of
criminal law in reviewing judgments
Page 496 U. S. 195
of conviction obtained under a prior standard; the problem of
the instant case is essentially one relating to the appropriate
scope of federal equitable remedies, a problem arising from
enforcement of a state statute during the period before it had been
declared unconstitutional. True, the temporal scope of the
injunction has brought the parties back to this Court, and their
dispute calls into play values not unlike those underlying
Linkletter and its progeny. But however we state the
issue, the fact remains that we are asked to reexamine the District
Court's evaluation of the proper means of implementing an equitable
decree."
Id. at
411 U. S.
199-200 (citation omitted) (opinion of Burger, C.J.)
While application of the principles of retroactivity may have
remedial effects, they are not themselves remedial principles. Any
judicial decision will affect the relief available to one of the
parties before the court; even an evidentiary ruling may have some
remedial effect. However, rules regarding retroactivity, like
decisions regarding the mechanics of procedure, are distinct from
remedial decisions which govern what a court "may do for the
plaintiff and conversely what it can do to the defendant." K. York,
J. Bauman, & D. Rendleman, Remedies 1 (4th ed. 1985);
see
also D. Dobbs, Law of Remedies 3 (1973) ("The substantive
questions whether the plaintiff has any right or the defendant has
any duty, and if so what it is, are very different questions from
the remedial questions whether this remedy or that is preferred,
and what the measure of the remedy is"). A decision defining the
operative conduct or events that will be adjudicated under old law
does not, in itself, specify an appropriate remedy.
Especially in light of today's holding in
McKesson, the
dissent's view that the doctrine of civil retroactivity is a
remedial principle would surprise the many commentators, [
Footnote 2] appellate
Page 496 U. S. 196
courts,
see Note, Confusion in Federal Courts:
Application of the
Chevron Test in Retroactive-Prospective
Decisions, 1985 U.Ill.L.Rev. 117, 128-136, and state courts that
have considered
Chevron Oil to be exactly what this Court
has always understood it to be: a doctrine or set of rules for
determining when past precedent should be applied to a case before
the court. As such,
Chevron Oil is better understood as
part of the doctrine of
stare decisis, rather than as part
of the law of remedies. This is how nonretroactivity was first
characterized by Justice Cardozo in
Great Northern R. Co. v.
Sunburst Oil & Refining Co., 287 U.
S. 358 (1932). Considering a state court's power to
apply its own decisions prospectively only, Justice Cardozo
asserted:
"We have no occasion to consider whether this division in time
of the effects of a decision is a sound or an unsound application
of the doctrine of
stare decisis as known to the common
law. Sound or unsound, there is involved in it no denial of a right
protected by the federal constitution. . . . A state in defining
the limits of adherence to precedent may make a choice for itself
between the principle of forward operation and that of relation
backward. It may say that decisions of its highest court, though
later overruled, are law none the less for intermediate
transactions."
Id. at
287 U. S. 364.
See also United States v. Estate of Donnelly, 397 U.S. at
397 U. S. 295
(Harlan, J., concurring). In those relatively rare circumstances
where established precedent is overruled, the doctrine of
nonretroactivity allows a court to adhere to past precedent in a
limited number of cases in order to avoid "jolting the expectations
of parties to a transaction."
Ibid. See also Justice
SCALIA's opinion,
post at
496 U. S.
204-205. Although Justice SCALIA declines
Page 496 U. S. 197
to rely on our doctrine of nonretroactivity, his understanding
of
stare decisis leads him to conclude that a judge who
disagrees with a decision overruling prior precedent must vote to
uphold the validity of "action taken [in reliance on that
precedent] before the overruling occurred."
Post at
496 U. S. 205.
As Justice Cardozo discerned, prospective overruling allows courts
to respect the principle of
stare decisis even when they
are impelled to change the law in light of new understanding.
In proposing that we extend the retroactivity doctrine recently
adopted in the criminal sphere to our civil cases, the dissent
assumes that the Court's reasons for adopting a
per se
rule of retroactivity in
Griffith v. Kentucky,
479 U. S. 314
(1987), are equally applicable in the civil context. But there are
important distinctions between the retroactive application of civil
and criminal decisions that make the
Griffith rationale
far less compelling in the civil sphere.
In adopting a
per se rule of retroactivity for criminal
cases,
Griffith relied on what, in essence, was a single
justification: that it was unfair to apply different rules of
criminal procedure to two defendants whose cases were pending on
direct review at the same time.
See id. at
479 U. S.
322-323. In expounding this theory, the Court did not
explain why the pendency of a defendant's case on direct review was
the critical factor for determining the applicability of new
decisions. It is at least arguable, as Justice WHITE pointed out in
dissent, that the speed at which cases proceed through the criminal
justice system should not be the key factor for determining whether
"otherwise identically situated defendants may be subject to
different constitutional rules."
Id. at
479 U. S. 331
(WHITE, J., dissenting) (quotation omitted). Nor did the Court
consider whether the reliance interests of law enforcement
officials would make the retroactive application of new decisions
inequitable, although this factor had been a key consideration in
prior cases.
See, e.g., Jenkins v. Delaware, 395 U.
S. 213,
395 U. S. 220
(1969);
Stovall v. Denno, 388 U.
S. 293,
388 U. S.
299-301 (1967). In focusing solely on the pendency of a
case before the court
Page 496 U. S. 198
rather than on the reliance interests of either the defendant or
the government,
Griffith implicitly rejected the rationale
of our prior retroactivity doctrine: that new decisions should not
be applied retroactively so as to frustrate the expectations of
parties who had justifiably relied on prior law.
The Court's analysis in
Griffith must be understood in
context. During the period in which much of our retroactivity
doctrine evolved, most of the Court's new rules of criminal
procedure had expanded the protections available to criminal
defendants.
See generally Beytagh,
supra.
Therefore, whenever the Court determined that retroactive
application of a new rule would be inequitable, the Court was, in
effect, according the government's reliance interests more weight
than the defendant's interests in receiving the benefit of the
rule.
See, e.g., United States v. United States Coin &
Currency, 401 U. S. 715,
401 U. S. 726
(1971) (BRENNAN, J., concurring) ("[W]hen a new procedural rule has
cast no substantial doubt upon the reliability of determinations of
guilt in criminal cases, we have denied the rule retroactive effect
where a contrary decision would
impose a substantial burden . .
. upon the . . . judicial system. . . .'") (quoting Williams v.
United States, 401 U. S. 646,
401 U. S. 664
(1971)). Griffith's adoption of a per se rule of
retroactivity can thus be understood as a rejection of this
approach in favor of providing expanded procedural protections to
criminal defendants. Under this new theory, any defendant whose
conviction had not yet become final should be given the benefit of
a new
Page 496 U. S. 199
decision regardless of the additional burden this might place on
law enforcement authorities.
There are no analogous reasons for adopting a
per se
rule of retroactivity in the civil context. Either party before a
court may benefit from the application of the
Chevron Oil
rule. New decisions are not likely to favor civil defendants over
civil plaintiffs, nor is there any policy reason for protecting one
class of litigants over another. Moreover, even a party who is
deprived of the full retroactive benefit of a new decision may
receive some relief. In this case, for example, petitioner is
benefited by the prospective invalidation of the Arkansas tax and a
ruling that
Scheiner is applicable to taxation of highway
use after the date of decision in that case. The criminal
defendant, on the other hand, is generally interested in only one
remedy: the reversal of his conviction. The prospective
invalidation of a rule relied on in securing his conviction will
not assist the criminal defendant in any way. Nor does
Griffith's criticism that nonretroactivity gives the
benefit of a new rule to a "chance beneficiary" but then "permit[s]
a stream of similar cases subsequently to flow by unaffected by
that new rule," 479 U.S. at
479 U. S. 323
(citation omitted), have force in the civil context. Although the
dissent echoes this criticism,
post at
496 U.S. 211-212, it may fairly be
aimed only at those cases in which the Court reversed the
conviction of the defendant in the law-changing decision and later
determined that the rule would not be applicable retroactively,
see, e.g., Desist v. United States, 394 U.
S. 244,
394 U. S.
254-255, n. 24 (1969);
Stovall v. Denno,
388 U. S. 293,
399 U. S.
300-301 (1967). The dissent has failed to cite a single
civil case in which comparable inequitable treatment has occurred.
In this case, for example, the Court did not provide a benefit to
the litigants in
Scheiner that was denied the petitioners
here.
See supra at
496 U. S.
188-190. Contrary to the dissent's assertions,
post at
496 U.S.
211-212, our use of the civil retroactivity principles does
not result in the unequal treatment of similarly situated
litigants. As
Chevron Oil makes clear, the purpose of the
doctrine is to avoid "
injustice or hardship'" to civil
litigants who have justifiably relied on prior law. 404 U.S. at
404 U. S. 107
(quoting Cipriano v. City of Houma, 395 U.S. at
395 U. S.
706). In light of this aim, two parties are similarly
situated if both relied on the old law before the date of the
law-changing decision. A litigant who has not relied on the old law
is not similarly situated in a relevant way to one who has,
regardless of whether both cases are pending on direct
review.
As
Griffith's rationale is unpersuasive in the civil
context, we see no reason to abandon the
Chevron Oil test.
The Constitution
Page 496 U. S. 200
does not prohibit the application of decisions prospectively
only,
see, e.g., Solem v. Stumes, 465 U.
S. 638,
465 U. S. 642
(1984);
Williams v. United States, 401 U.
S. 646,
401 U. S. 651
(1971) (opinion of WHITE, J.); nor has this Court ever held that
nonretroactivity violates the Article III requirement that this
Court adjudicate only cases or controversies.
Compare Stovall
v. Denno, supra, 388 U.S. at
388 U. S. 301
with Linkletter v. Walker, 381 U.
S. 618,
381 U. S. 622,
n. 3 (1965),
and Desist v. United States,supra, 394 U.S.
at
394 U. S. 256
(Douglas, J., dissenting). The utility of our retroactivity
doctrine in cushioning the sometimes inequitable and disruptive
effects of law-changing decisions is clear. The "inequities" the
dissent alleges are caused by the doctrine are illusory. For these
reasons, we decline the dissent's invitation to abandon our
longstanding precedent.
Accordingly, in all respects apart from its disposition of
1987-1988 HUE tax payments, we affirm the judgment of the Arkansas
Supreme Court. [
Footnote 3]
We are not, however, in a position to determine precisely the
nature and extent of the relief to which petitioners are entitled
for their 1987-1988 HUE tax payments. That determination, as we
have already observed, lies with the state courts in the first
instance. We therefore remand this aspect of the case to the
Arkansas Supreme Court in order to permit it to determine the
appropriate relief, not inconsistent with our decision today in
McKesson, for petitioners' payment of 1987-1988 HUE taxes
whether made before or after the date of our
Scheiner
decision.
So ordered.
[
Footnote 1]
Justice SCALIA indicates that the inequitable effects of
retroactively applying
Scheiner are a sign that our
dormant Commerce Clause doctrine is "inherently unstable" and
should not be applied to "new matters coming before us,"
post at
496 U. S.
203-204, rather than a factor weighing in favor of
non-retroactivity. As the parties do not raise, and this case does
not present, any question regarding the continued vitality of our
dormant Commerce Clause jurisprudence, which the Court has
developed and applied for nearly a century and a half,
See Cooley v. Board of Wardens of
Port of Philadelphia, 12 How. 299 (1852), we
decline to address that suggestion here.
[
Footnote 2]
See, e.g., Corr, Retroactivity: A Study in Supreme
Court Doctrine
As Applied,' 61 N.C.L. Rev. 745 (1983); Traynor,
Quo Vadis, Prospective Overruling: A Question of Judicial
Responsibility, 28 Hastings L.J. 533 (1977); Beytagh, Ten Years of
Non-Retroactivity: A Critique and a Proposal, 61 Va.L.Rev. 1557
(1975); Schaefer, The Control of "Sunbursts": Techniques of
Prospective Overruling, 42 N.Y.U.L.Rev. 631 (1967).
[
Footnote 3]
As we state in
McKesson, ante, at
496 U. S. 29-31,
the Court's appellate jurisdiction in a case such as this one is
not barred by the Eleventh Amendment.
Justice SCALIA, concurring in the judgment.
I agree with Justice O'CONNOR that Arkansas should not be held
to have violated the Constitution in imposing its Arkansas Highway
Use Equalization Tax (HUE) before our decision in
American
Trucking Assns., Inc. v. Scheiner, 483
Page 496 U. S. 201
U.S. 266 (1987), yet should be held to have violated the
Constitution in imposing that tax after
Scheiner was
announced. My reasons, however, diverge from hers in a fundamental
way, which requires some explanation.
I share Justice STEVENS' perception that prospective
decisionmaking is incompatible with the judicial role, which is to
say what the law is, not to prescribe what it shall be. The very
framing of the issue that we purport to decide today -- whether our
decision in
Scheiner shall "apply" retroactively --
presupposes a view of our decisions as
creating the law,
as opposed to
declaring what the law already is. Such a
view is contrary to that understanding of "the judicial Power,"
U.S. Const., Art. III, § 2, cl. 1, which is not only the common and
traditional one, but which is the only one that can justify courts
in denying force and effect to the unconstitutional enactments of
duly elected legislatures,
See Marbury v.
Madison, 1 Cranch 137 (1803) -- the very exercise
of judicial power asserted in
Scheiner. To hold a
governmental act to be unconstitutional is not to announce that
we forbid it, but that the
Constitution forbids
it; and when, as in this case, the constitutionality of a state
statute is placed in issue, the question is not whether some
decision of ours "applies" in the way that a law applies; the
question is whether the Constitution, as interpreted in that
decision, invalidates the statute. Since the Constitution does not
change from year to year; since it does not conform to our
decisions, but our decisions are supposed to conform to it; the
notion that our interpretation of the Constitution in a particular
decision could take prospective form does not make sense. Either
enforcement of the statute at issue in
Scheiner (which
occurred before our decision there) was unconstitutional, or it was
not; if it was, then so is enforcement of all identical statutes in
other States, whether occurring before or after our decision; and
if it was not, then
Scheiner was wrong, and the issue of
whether to "apply" that decision needs no further attention.
Page 496 U. S. 202
I dissented in
Scheiner, and in that case and elsewhere
have registered my disagreement with the so-called "negative"
Commerce Clause jurisprudence of which it is but one, typically
destabilizing, instance.
See Scheiner, supra, at
483 U. S.
303-306 (SCALIA, J., dissenting);
Tyler Pipe
Industries, Inc. v. Washington State Dept. of Revenue,
483 U. S. 232,
483 U. S.
259-265 (1987) (SCALIA, J., concurring in part and
dissenting in part). This disagreement rests on more than my view
(by no means mine alone) that that jurisprudence is a
"
quagmire,'" Tyler Pipe Industries, supra, at
483 U. S. 259,
quoting Northwestern States Portland Cement Co. v.
Minnesota, 358 U. S. 450,
358 U. S. 458
(1959), that it has been "`arbitrary, conclusory, and
irreconcilable with the constitutional text,'" since its inception
in the last century, 483 U.S. at 483 U. S. 260,
n. 3, quoting D. Currie, The Constitution in the Supreme Court: The
First Hundred Years 1789-1888, p. 234 (1985), and that it has only
worsened with age. I believe that this jurisprudence takes us,
self-consciously and avowedly, beyond the judicial role itself. The
text from which we take our authority to act in this field provides
only that "Congress shall have Power . . . To regulate Commerce . .
. among the several States," U.S. Const., Art. I, § 8, cl. 3. It is
nothing more than a grant of power to Congress, not the courts; and
that grant to Congress cannot be read as being exclusive of the
States, as even a casual comparison with other provisions of
Article I will reveal. See Tyler Pipe Industries, supra,
at 483 U. S. 261.
The Commerce Clause, therefore, may properly be thought to prohibit
state regulation of commerce only indirectly -- that is, to the
extent that Congress' exercise of its Commerce Clause powers
preempts state legislation under the Supremacy Clause, Art. VI, cl.
2. When we prohibit a certain form of state regulation that does
not conflict with any federal statute, we are saying, in effect,
that we presume from Congress' silence that, in the exercise of its
commerce-regulating function, it means to prohibit state
regulation. 483 U.S. at 483 U. S.
262-263. There is no other way to explain how state
legislation that would (according to
Page 496 U. S. 203
our "negative" Commerce Clause jurisprudence) violate the
Constitution can nonetheless be authorized by a federal statute if
Congress "disagree[s]" with our appraisal of the appropriate role
of the States in the relevant field.
See Scheiner, supra,
at
483 U. S. 289,
n. 23.
Presuming law from congressional silence is quite different from
the normal judicial task of interpreting and applying text, or
determining and applying common law tradition. The principal
question to be asked, of course, is what would a reasonable federal
regulator of commerce intend -- which is no different from the
question a legislator himself must ask. That explains, I think, why
no body of our decisional law has changed as regularly as our
"negative" Commerce Clause jurisprudence. Change is almost its
natural state, as it is the natural state of legislation in a
constantly changing national economy. That also explains why our
exercise of the "negative" Commerce Clause function has ultimately
cast us in the essentially legislative role of weighing the
imponderable -- balancing the importance of the State's interest in
this or that (an importance that different citizens would assess
differently) against the degree of impairment of commerce.
See,
e.g., CTS Corp. v. Dynamics Corp. of America, 481 U. S.
69,
481 U. S. 89-94
(1987);
Edgar v. MITE Corp., 457 U.
S. 624 (1982);
Pike v. Bruce Church, Inc.,
397 U. S. 137
(1970). The "negative" Commerce Clause is inherently unpredictable
-- unpredictable not just because we have applied its standards
poorly or inconsistently, but because it requires us and the lower
courts to accommodate, like a legislature, the inevitably shifting
variables of a national economy. Whatever it is that we are
expounding in this area, it is not a Constitution.
Because our "negative" Commerce Clause jurisprudence is
inherently unstable, it will repeatedly result in the upsetting of
settled expectations. My fellow dissenters in
Scheiner
seek to avoid this consequence in the present case -- or, more
precisely, seek to avoid extending this consequence beyond
Page 496 U. S. 204
the unfortunate State before the Court in
Scheiner, to
all other States that had similar laws -- by embracing a rule of
prospective decisionmaking. There is some appeal to that approach
in the "negative" Commerce Clause field: If we are making
essentially legislative judgments, why not make them in legislative
fashion,
i.e., prospectively (subject, of course, to the
limitation of the Case or Controversy requirement of Article III, §
2, cl. 1, which surely requires retroactivity with respect to the
parties immediately before the Court)? I decline to adopt that
solution because, as I have discussed above, such a mode of action
is fundamentally beyond judicial power -- and although "negative"
Commerce Clause decisionmaking is as well, two wrongs do not make a
right.
But it does not follow that I must conclude that the
pre-
Scheiner Arkansas HUE taxes were unconstitutional.
Given my disagreement with this Court's "negative" Commerce Clause
jurisprudence, the only thing that could possibly lead me to such a
conclusion would be
Scheiner's status as precedent.
Although I will not apply "negative" Commerce Clause decisional
theories to new matters coming before us,
stare decisis --
that is to say, a respect for the needs of stability in our legal
system -- would normally cause me to adhere to a decision of this
Court already rendered as to the unconstitutionality of a
particular type of state law. The law here is indistinguishable
from that in
Scheiner, so I would normally suppress my
earlier view of the matter and acquiesce in the Court's opinion
that it is unconstitutional. Something is wrong, however, if I must
take that position with respect to the pre-
Scheiner taxes
at issue in the present case. Believing that Arkansas was fully
entitled to impose the taxes, I would nonetheless make the fifth
vote to penalize it for having done so even during the period
(pre-
Scheiner) when our opinions announced it could
lawfully do so -- and I would impose this injustice in the name of
stare decisis, that is, in the interest of protecting
settled expectations. That would be
Page 496 U. S. 205
absurd. Though I do not believe I have the option of suspending
the principle of retroactive judicial decisionmaking, the doctrine
of
stare decisis is a flexible command. I do not think
that a sensible understanding of it requires me to vote contrary to
my view of the law where such a vote would not only impose upon a
litigant liability I think to be wrong,
but would also upset
that litigant's settled expectations because the earlier
decision for which
stare decisis effect is claimed
(
Scheiner) overruled prior law. That would turn the
doctrine of
stare decisis against the very purpose for
which it exists. I think it appropriate, in other words -- indeed,
I think it necessary -- for a judge whose view of the law causes
him to dissent from an overruling to persist in that position (at
least where his vote is necessary to the disposition of the case)
with respect to action taken before the overruling occurred.
Accordingly, I would affirm the decision below with respect to
Arkansas' HUE taxes imposed pre-
Scheiner, because in my
view they were constitutional. I would reverse the decision below
with respect to Arkansas' HUE taxes imposed post-
Scheiner
because they were unlawful by virtue of that decision. I thus
concur in the judgment of the Court.
Justice STEVENS, with whom Justice BRENNAN, Justice MARSHALL,
and Justice BLACKMUN join, dissenting.
This case presents two issues: whether the flat tax features of
the Arkansas HUE tax violate the Commerce Clause of the Federal
Constitution and, if so, whether petitioners are entitled to a tax
refund. The former is ordinarily a pure question of federal law,
our resolution of which should be applied uniformly throughout the
Nation, while the latter is a mixed question of state and federal
law. The plurality today, however, inverts that analysis. With
deceptive simplicity, the plurality rules that the
constitutionality
vel non of the flat tax turns on whether
state officials in a particular State could have anticipated that
such a tax would violate the Constitution,
Page 496 U. S. 206
ante at
496 U. S.
181-182, [
Footnote 2/1]
but that the availability of a refund, even if otherwise required
under state law,
ante at
496 U. S. 177,
rests on our own determination, as a matter of federal law, whether
retrospective relief would threaten a disruption of governmental
operations.
Ante at
496 U. S.
185-186. That analysis is wrong on both counts.
Petitioners are entitled to an adjudication of the
constitutionality of the Arkansas tax under our best current
understanding of federal law, regardless of the good faith of the
Arkansas legislators. The question of remedy or refund, on the
other hand, addressed today in
McKesson Corp. v. Division of
Alcoholic Beverages & Tobacco, Dept. of Business Regulation of
Fla., ante, p.
496 U. S. 18,
should be decided not by us, but by the state court in the first
instance. [
Footnote 2/2] The
plurality's contrary conclusion is supported by nothing more than a
misreading of the Court's opinion in
Chevron Oil Co. v.
Huson, 404 U. S. 97
(1971).
I
Arkansas enacted the Highway Use Equalization Tax Act (HUE),
1983 Ark.Gen. Acts, No. 685, Ark.Code Ann. §§ 27-35204, 27-35-205
(1987), in March 1983. The Act, which became effective on July 1,
1983, discriminated against interstate carriers by taxing them at a
higher effective tax rate than carriers which operated intrastate.
Vehicles of the weight class covered by the Act were required to
display a certificate evidencing compliance with the tax. Operation
of
Page 496 U. S. 207
a vehicle in violation of the Act subjected the user to criminal
sanctions and to a graduated scale of fines. Ark.Code Ann. §
27-35-205(k) (1987). The Act contained no method for challenging
tax assessments or making payment under protest.
On May 27, 1983, before the effective date of the HUE Act but
after some $1,775,000 in tax revenues had been collected, [
Footnote 2/3] petitioners filed suit in the
Pulaski County Chancery Court challenging the constitutionality of
the Act under state law and the Commerce Clause of the Federal
Constitution. Art. 1, § 8, cl. 3. Arkansas adheres to the common
law rule that taxes voluntarily paid cannot be recovered.
See
County of Searcy v. Stephenson, 244 Ark. 54,
424 S.W.2d
369 (1968);
Brunson v. Board of Directors of Crawford
County, 107 Ark. 24, 153 S.W. 828 (1913). Petitioners,
however, invoked the Arkansas constitutional provision governing
illegal exactions, Ark. Const., Art. 16, § 13, arguing that, as a
matter of state law, under the State Supreme Court's recent ruling
in
Little Rock v. Cash, 277 Ark. 494,
644 S.W.2d
229 (1982),
cert. denied, 462 U.S. 1111 (1983),
taxpayers who paid their taxes after the date of the complaint
should "be deemed to have paid their taxes involuntarily." 277 Ark.
at 506, 644 S.W.2d at 234. Their substantive constitutional claims
tracked those that had been raised by truckers to a similar
Pennsylvania tax enacted in 1980.
See American Trucking Assns.,
Inc. v. Bloom, 77 Pa. Commonw. 575, 466 A.2d 755 (1983).
The Chancery Court denied petitioner's motion for a preliminary
injunction, concluding that the tax was constitutional. R. 764.
After a trial on the merits, the court ruled in the State's favor.
In an opinion delivered in April, 1986, the State Supreme Court
affirmed, holding that the tax was constitutional under our
decisions in
Aero Mayflower Transit Co. v.
Georgia Public Serv. Comm'n, 295 U.
S. 285
Page 496 U. S. 208
(1935), and
Aero Mayflower Transit Co. v. Board of R.R.
Comm'rs of Montana, 332 U. S. 495
(1947).
American Trucking Assn., Inc. v. Gray, 288 Ark.
488,
707 S.W.2d
759 (1986). Simultaneously, the Pennsylvania Supreme Court
reached a similar conclusion with respect to that State's statute.
American Trucking Assns., Inc. v. Scheiner, 510 Pa. 430,
509 A.2d
838 (1986).
We noted probable jurisdiction in the Pennsylvania case,
see
American Trucking Assns., Inc. v. Scheiner, 479 U.S. 947
(1986), and held the Arkansas case pending our decision in
Scheiner. In June, 1987, we reversed the judgment of the
State Supreme Court in
Scheiner, concluding that that
court erred in upholding the constitutionality of Pennsylvania's
unapportioned marker fee and axle tax.
American Trucking
Assns., Inc. v. Scheiner, 483 U. S. 266,
483 U. S. 297
(1987);
see also id. at
483 U. S. 298
(O'CONNOR, J., dissenting). We reasoned that the flat taxes
violated the Commerce Clause because they
"exert[ed] an inexorable hydraulic pressure on interstate
businesses to ply their trade within the State that enacted the
measure rather than 'among the several States.'"
Id. at
483 U. S.
286-287 (quoting U.S. Const., Art. I, § 8, cl. 3). We
rejected the argument that considerations of
stare decisis
required adherence to a series of cases that appeared to support
the flat tax. Insofar as the
Aero Mayflower cases -- the
cases upon which the Arkansas Supreme Court had relied -- provided
authority for the judgment of the Pennsylvania Supreme Court, we
held that those precedents could
"no longer support the broad proposition . . . that every flat
tax for the privilege of using a State's highways must be upheld
even if it has a clearly discriminatory effect on commerce by
reason of that commerce's interstate character."
483 U.S. at
483 U. S. 296.
We therefore remanded for consideration of various remedial
issues.
Because our resolution of
Scheiner bore on the
constitutionality of the taxes challenged in this case, we remanded
it to the Arkansas Supreme Court for reconsideration in light
Page 496 U. S. 209
of that opinion.
American Trucking Assns., Inc. v.
Gray, 483 U.S. 1014 (1987). On remand, the Arkansas Supreme
Court did not reconsider the constitutionality of the taxes
assessed prior to
Scheiner. Rather, it held that, as a
matter of federal law, our ruling in
Scheiner was not
retroactive and did not apply to taxes assessed and applied to
highway use prior to the date of decision.
American Trucking
Assns., Inc. v. Gray, 295 Ark. 43,
746 S.W.2d
377 (1988). Only as to the taxes assessed after the date of
Scheiner, and indeed after the date of Justice BLACKMUN's
order, taxes which the State had continued to collect, did the
State Supreme Court hold that petitioners presented a meritorious
constitutional challenge. As the plurality today explains, the
judgment of the Arkansas Supreme Court constituted a decision
that
"whatever else Arkansas law might require, petitioners could not
receive tax refunds if
Scheiner is not retroactive under
the test of
Chevron Oil."
Ante at
496 U. S. 177.
The HUE tax simply was not unlawful until the date of Justice
BLACKMUN's order. Under the State Supreme Court's theory, if the
State had repealed the statute on the date
Scheiner was
decided, the State would have never violated the Constitution and
petitioners would have never obtained an adjudication that the
taxes were unconstitutional.
II
In numerous civil cases over the past several decades, we have
declined to give "retroactive effect" to decisions announcing "new"
rules of law. Those cases, arising from federal court and involving
the application of statutes of limitations and the scope of
equitable relief, have not required us to distinguish the two
senses in which retroactivity may be used. A decision may be denied
"retroactive effect" in the sense that conduct occurring prior to
the date of decision is not judged under current law, or it may be
denied "retroactive effect " in the sense that independent
principles of law limit the relief that a court may provide under
current law.
Page 496 U. S. 210
Since, in a case arising from federal courts, both the
substantive law applicable to a course of conduct and the scope of
permissible relief present federal questions, it has been
unnecessary to distinguish the two senses of retroactivity.
This case, which comes to us from state court, requires us for
the first time to expressly distinguish between retroactivity as a
choice of law rule and retroactivity as a remedial principle.
Whereas, in cases arising from federal court, both the applicable
law and the type of relief are subject to plenary review, in cases
from state court, our mandate is more limited.
See Fox Film
Corp. v. Muller, 296 U. S. 207,
296 U. S. 210
(1935);
Murdock v. City of
Memphis, 20 Wall. 590 (1874). The decision of a
state court on a substantive matter of federal law presents a pure
federal question,
See Martin v. Hunter's
Lessee, 1 Wheat. 304,
14 U. S. 345
(1816); a decision as to the appropriate remedy presents a mixed
question of state and federal law. Although the Federal
Constitution constrains the minimum remedy a State may provide,
see McKesson, ante; Arsenault v. Massachusetts,
393 U. S. 5 (1968);
Chapman v. California, 386 U. S. 18,
386 U. S. 21
(1967), and gives this Court authority to review a decision that a
particular remedy is constitutionally compelled,
see Delaware
v. Van Arsdall, 475 U. S. 673
(1986);
Michigan v. Payne, 412 U. S.
47 (1973), [
Footnote
2/4] it does not ordinarily limit the State's power to give a
decision remedial effect greater than that which a federal court
would provide.
See, e.g., Bacchus Imports, supra, 468 U.S.
at
468 U. S. 277,
n. 14;
City of Los Angeles v. Lyons, 461 U. S.
95 (1983);
Chapman, 386 U.S. at
386 U. S. 48
(Harlan, J., dissenting);
Iowa-Des Moines National Bank
v.
Page 496 U. S. 211
Bennett, 284 U. S. 239
(1931). The remedial effect a decision of federal constitutional
law should be given is in the first instance a matter of state law.
See ante at
496 U. S. 176
(citing
Scheiner, 483 U.S. at
483 U. S.
297-298;
Tyler Pipe Industries, Inc. v. Washington
State Dept. of Revenue, 483 U. S. 232,
483 U. S. 251,
483 U. S. 253
(1987);
Williams v. Vermont, 472 U. S.
14,
472 U. S. 28
(1985);
Bacchus Imports, Ltd. v. Dias, 468 U.
S. 263,
468 U. S.
276-277 (1984);
Exxon Corp. v. Eagerton,
462 U. S. 176,
462 U. S.
196-197 (1983)).
Those principles elucidate the disposition of
Scheiner
and explain why a similar result is appropriate here. In
Scheiner, we held that a flat tax substantially similar to
the Arkansas HUE tax violated the Commerce Clause. That decision
resolved the only question then before us -- the lawfulness of a
flat tax assessed for the years 1980 to 1986. Since no federal
constitutional challenge was presented to the state remedy, and
since the State had not had the opportunity to determine the
appropriate relief under federal and state law, we reversed the
state court's determination on the merits and remanded the case for
it "to consider whether our ruling should be
applied
retroactively and to decide
other remedial issues." 483
U.S. at
483 U. S. 297
(emphasis added). Our disposition left the state court room to
apply its own remedy in the first instance, but not to avoid the
force of our mandate and declare the taxes under challenge
constitutional "in the first place."
Ante at
496 U. S.
182.
A similar disposition is appropriate here. Our judgment in
Scheiner leaves no doubt that the Arkansas HUE tax is
unconstitutional. As Justice BLACKMUN concluded in ruling on
petitioners' application for establishment of an escrow account,
the taxes challenged by petitioner are "substantially similar" in
effect "to that of the Pennsylvania unapportioned flat taxes
invalidated in
Scheiner," and work "to deter interstate
commerce."
American Trucking Assns., Inc. v. Gray,
483 U. S. 1306,
483 U. S.
1308-1309 (1987). The State Supreme Court held, and the
plurality today acknowledges, that the Arkansas HUE tax, like the
Pennsylvania flat taxes, violates the
Page 496 U. S. 212
command of the Commerce Clause by exerting a pressure on
interstate businesses to ply their trade within state
boundaries.
In my opinion, the Arkansas HUE tax also violated the
Constitution before our decision in
Scheiner, and
petitioners are entitled to a decision to that effect. Like the
taxpayers in
Scheiner itself, petitioners timely
challenged the constitutionality of the state flat tax. Petitioners
would have prevailed if the Pennsylvania tax invalidated in the
Scheiner case had never been enacted, or if that
litigation had not reached our Court until after their litigation
did. They should not lose simply because we decided
Scheiner first. In
Scheiner, we applied our
understanding of the Commerce Clause retroactively, reversing the
Pennsylvania Supreme Court's judgment that a similar flat highway
tax was unconstitutional and remanding the case for further
consideration of the remedial issues. 483 U.S. at
483 U. S.
297-298. We should follow the same course here. The
accidental timing of our decisions in two timely filed and
currently pending cases should not, and has not in the past,
produced such a difference in the law applicable to the respective
litigants.
III
Fundamental notions of fairness and legal process dictate that
the same rules should be applied to all similar cases on direct
review. Considerations of finality and the justifiable expectations
that have grown up surrounding a rule are ordinarily and properly
given expression in our rules of
res judicata and
stare decisis. When the legal rights of parties have been
finally determined, principles "
of public policy and of private
peace'" dictate that the matter not be open to relitigation every
time there is a change in the law. Federated Department Stores,
Inc. v. Moitie, 452 U. S. 394,
452 U. S. 401
(1981) (quoting Hart Steel Co. v. Railroad Supply Co.,
244 U. S. 294,
244 U. S. 299
(1917)). At the same time, however, when the legal rights of the
parties have not been finally determined
Page 496 U. S. 213
by a court of law, "simple justice," 452 U.S. at
452 U. S. 401,
requires that a rule of law, even a "new" rule, be even-handedly
applied. As Justice BLACKMUN explained in
Griffith v.
Kentucky, 479 U. S. 314
(1987), when we endorsed Justice Harlan's views on the subject of
retroactivity:
"In Justice Harlan's view, and now in ours, failure to apply a
newly declared constitutional rule to criminal cases pending on
direct review violates basic norms of constitutional adjudication.
First, it is a settled principle that this Court adjudicates only
'cases' and 'controversies.'
See U.S. Const., Art. III, §
2. Unlike a legislature, we do not promulgate new rules of
constitutional criminal procedure on a broad basis. Rather, the
nature of judicial review requires that we adjudicate specific
cases, and each case usually becomes the vehicle for announcement
of a new rule. But after we have decided a new rule in the case
selected, the integrity of judicial review requires that we apply
that rule to all similar cases pending on direct review. Justice
Harlan observed:"
" If we do not resolve all cases before us on direct review in
light of our best understanding of governing constitutional
principles, it is difficult to see why we should so adjudicate any
case at all. . . . In truth, the Court's assertion of power to
disregard current law in adjudicating cases before us that have not
already run the full course of appellate review is quite simply an
assertion that our constitutional function is not one of
adjudication, but, in effect, of legislation."
"
Mackey v. United States, 401 U.S. at
401 U. S.
679 (opinion concurring in judgment)."
"
* * * *"
"Second, selective application of new rules violates the
principle of treating similarly situated defendants the same.
See Desist v. United States, 394 U.S.
394 U. S.
258-259 (Harlan, J., dissenting). As we pointed
Page 496 U. S. 214
out in
United States v. Johnson, the problem with not
applying new rules to cases pending on direct review is 'the
actual inequity that results when the Court chooses which
of many similarly situated defendants should be the chance
beneficiary' of a new rule. 457 U.S. at
457 U. S.
556, n. 16 (emphasis in original). Although the Court
had tolerated this inequity for a time by not applying new rules
retroactively to cases on direct review, we noted: 'The time for
toleration has come to an end.'
Ibid."
Id. 479 U.S. at
479 U. S.
322-323.
Griffith was a criminal case, but the force of its
reasoning cannot properly be so limited. The Court has no more
constitutional authority in civil cases than in criminal cases to
disregard current law or to treat similarly situated litigants
differently. In both, adherence to legal principle requires that we
determine the rights of litigants in accordance with our best
current understanding of the law. That current understanding may
include judicial principles of
res judicata and
stare
decisis and legislatively prescribed statutes of limitations
that protect interests in reliance and repose. It may also include
a law of damages that recognizes reliance interests. But once a
determination has been made that a party is properly before the
Court and a new decisional rule properly states the law, interests
of repose should play no role in determining the substantive legal
rights of parties. Justice Harlan explained the distinction between
retroactivity as a choice of law principle and the recognition of
reliance as an element of the damages determination after a new
principle of law has been applied:
"The impulse to make a new decisional rule nonretroactive rests,
in civil cases at least, upon the same considerations that lie at
the core of
stare decisis, namely, to avoid jolting the
expectations of parties to a transaction. Yet once the decision to
abandon precedent is made, I see no justification for applying
principles determined to be wrong, be they constitutional or
otherwise, to litigants
Page 496 U. S. 215
who are in or may still come to court. The critical factor in
determining when a new decisional rule should be applied to a
transaction consummated prior to the decision's announcement is, in
my view, the point at which the transaction has acquired such a
degree of finality that the rights of the parties should be
considered frozen. Just as in the criminal field the crucial moment
is, for most cases, the time when a conviction has become final,
see my
Desist dissent,
supra, so, in the
civil area, that moment should be when the transaction is beyond
challenge, either because the statute of limitations has run or the
rights of the parties have been fixed by litigation and have become
res judicata. Any uncertainty engendered by this approach
should, I think, be deemed part of the risks of life."
"
* * * *"
"To the extent that equitable considerations, for example,
'reliance,' are relevant, I would take this into account in the
determination of what relief is appropriate in any given case.
There are, of course, circumstances when a change in the law will
jeopardize an edifice which was reasonably constructed on the
foundation of prevailing legal doctrine. Thus, it may be that the
law of remedies would permit rescission, for example, but not an
award of damages to a party who finds himself able to avoid a
once-valid contract under new notions of public policy.
Cf.
Simpson v. Union Oil Co., 377 U. S. 13,
377 U. S.
25 (1964). . . . The essential point is that, while
there is flexibility in the law of remedies, this does not affect
the underlying substantive principle that, short of a bar of
res judicata or statute of limitations, courts should
apply the prevailing decisional rule to the cases before them."
United States v. Estate of Donnelly, 397 U.
S. 286,
397 U. S.
295-297 (1970) (concurring opinion).
Until today, we have consistently applied these principles in
civil cases where a litigant has challenged the
constitutionality
Page 496 U. S. 216
of a state or local law. [
Footnote
2/5] In
Cipriano v. City of Houma, 395 U.
S. 701 (1969), for example, we struck down a Louisiana
law which gave only property taxpayers the right to vote in
elections called to approve the issuance of revenue bonds by a
municipal utility. The Louisiana legislators who enacted the
provision had "good reason to suppose,"
ante at
496 U. S. 182,
that it was constitutional when it was first adopted in 1880 and
reenacted in 1910 and 1921, but a string of subsequent decisions
the preceding five Terms had effected a sea change in election law
no less substantial than this Court's decisions in
Complete
Auto Transit, Inc. v. Brady, 430 U. S. 274
(1977), and
Scheiner effected with respect to the
understanding of the Commerce Clause. [
Footnote 2/6] The good faith of the legislators and the
reliance interests of the State, nonetheless, did not convince us
that a different rule of constitutional law should be applied to
the Louisiana statute than that which we understood to be the rule
on the date of decision. Although "retroactive" application of our
decision might
Page 496 U. S. 217
produce "
injustice or hardship,'" 395 U.S. at 395 U. S. 706
(quoting Great Northern R. Co. v. Sunburst Oil & Refining
Co., 287 U. S. 358,
287 U. S. 364
(1932)), those concerns were sufficiently protected by holding
that, as a matter of federal law, the decision need not apply
"where the authorization to issue the securities is legally
complete on the date of this decision." 395 U.S. at 395 U. S. 706.
We ruled that the lower court which had rejected the plaintiff's
timely-filed challenge was in error, and that our decision would
apply
"where, under state law, the time for challenging the election
result has not expired, or in cases brought within the time
specified by state law for challenging the election and which are
not yet final."
Ibid.
In
Phoenix v. Kolodziejski, 399 U.
S. 204 (1970), over the dissent of Justice Stewart,
Justice Harlan, and Chief Justice Burger, the Court invalidated an
Arizona statute limiting the franchise to real property taxpayers
in elections to authorize general obligation bonds. Again, the
legislators would have had little reason to believe that the
provisions were unconstitutional when enacted in 1930. Justice
WHITE, in a portion of the opinion joined by Justice Harlan,
reaffirmed the retroactivity approach of
Cipriano. The
decision would "apply only to authorizations for general obligation
bonds that are not final as of . . . the date of this decision."
399 U.S. at
399 U. S. 214.
Since the plaintiff's challenge was timely filed, the case would
apply "retroactively" to her.
Id. at
399 U. S.
214-215. Moreover,
"[i]n the case of States authorizing challenges to bond
elections within a definite period, all elections held prior to the
date of this decision will not be affected by this decision unless
a challenge on the grounds sustained by this decision has been or
is brought within the period specified by state law."
Id. at
399 U. S. 214.
[
Footnote 2/7]
See also Hill v.
Stone, 421 U. S. 289,
421 U. S.
301-302 (1975).
Page 496 U. S. 218
Under
Cipriano and
Kolodziejski, petitioners
are plainly entitled to an adjudication that the Arkansas HUE tax
violated the Constitution both before and after our decision in
Scheiner. Their lawsuit was timely filed and, as the case
comes to us, the assessment of the taxes is not yet final. The
even-handed administration of justice requires that we give them
the benefit of the same decisional rule that we applied in favor of
the taxpayers in
Scheiner.
IV
The plurality rejects this analysis and, by implication, our
decisions in
Cipriano and
Kolodziejski, and
instead applies the approach that we took with respect to federal
statutes of limitations in
Chevron Oil Co. v. Huson,
404 U. S. 97
(1971). The plurality states that,
"[i]f the operative conduct or events occurred before the
law-changing decision, a court should apply the law prevailing at
the time of the conduct,"
ante at
496 U. S. 191,
and that "[e]ither party before a court may benefit from the
approach of the
Chevron Oil rule."
Ante at
496 U. S. 198.
The assessment of HUE taxes was constitutional,
ante at
496 U. S. 182,
because, at the time it was enacted, the state legislators would
have had good reason to believe it to be constitutional and, at the
time it was collected, state authorities were justified in relying
on then-current precedents of the Court.
Ante at
496 U. S.
181-182. [
Footnote 2/8]
Under the same logic, if the tax was considered
Page 496 U. S. 219
unconstitutional prior to a law-changing decision such as
James v. Dravo Contracting Co., 302 U.
S. 134 (1937), or
Complete Auto Transit v.
Brady, 430 U. S. 274
(1977), presumably the State would still be held liable even
though, under our better understanding of the Constitution, its
conduct was entirely lawful. If the plurality's proffered
distinction of
Griffith is to be accepted, the same
retroactivity rules must apply to civil defendants as apply to
civil plaintiffs.
Ante at
496 U. S.
198-199.
The plurality's sole support for this anomalous approach -- that
the law applicable to a particular case is that law which the
parties believe in good faith to be applicable to the case -- is
citation to a single footnote in
Griffith that states
that
"the area of civil retroactivity . . . continues to be governed
by the standard announced in
Chevron Oil Co. v. Huson,
404 U. S.
97,
404 U. S. 106-107
(1971)."
479 U.S. at
479 U. S. 322,
n. 8. [
Footnote 2/9] The footnote
in
Griffith, however, does not support the majority's
reading. [
Footnote 2/10] Close
examination of
Chevron Oil and its progeny reveals
Page 496 U. S. 220
that those cases establish a remedial principle for the exercise
of equitable discretion by federal courts, and not, as the
plurality states, a choice of law principle applicable to all cases
on direct review.
Ante at
496 U. S.
191.
Chevron Oil involved a controversy between two private
litigants over application of the statute of limitations for
actions under the Outer Continental Shelf Lands Act. At the time
the lawsuit was initiated, there was a long line of federal court
decisions holding that the admiralty law doctrine of laches applied
to personal injury suits under the Act, 404 U.S. at
404 U. S. 107,
and the defendant did not initially challenge the timeliness of the
action.
Id. at
404 U. S. 99. In
those special circumstances, we ruled that our interpretation that
the Act did not incorporate the admiralty doctrine would not apply
retroactively to bar the plaintiff's suit. Remedial considerations
were dispositive to our analysis. We stressed that a court
considering the retroactive effect of a decision establishing a new
principle of law should consider remedial issues such as the
purpose and effect of the rule in question and the inequity imposed
by retroactive application,
id. at
404 U. S.
106-107, and held that
"devotion to the underlying purpose of the Land Act's absorption
of state law and a weighing of the equities requires nonretroactive
application of the state statute of limitations."
Id. at
404 U. S. 109;
see also Goodman v. Lukens Steel Co., 482 U.
S. 656,
482 U. S.
662-664 (1987) (applying new limitations rule
retroactively when there was no previous law on which party was
entitled to rely). It would have been most inequitable to have held
that the plaintiff had "
slept on his rights'" during a period
in which neither he nor the defendant could have known the time
limitation that applied to the case. 404 U.S. at 404 U. S.
108.
Insofar as the Court in
Chevron Oil did not apply its
interpretation of federal law to the parties before the Court, and
affirmed the lower court's decision adopting a contrary
understanding of federal law, that case does not even address the
problem which is presented by this case, and was addressed
Page 496 U. S. 221
by Justice Harlan, of disparate treatment of similarly situated
parties. It is one thing for a court to address issues that are not
indispensable to its judgment or to delay the issuance of a
judgment; [
Footnote 2/11] it is
quite another for it to refuse to apply reasoning in one case that
is necessary to its judgment in a virtually identical case.
More fundamentally, however,
Chevron Oil involved the
application of a statute of limitations, an area over which the
federal courts historically have asserted equitable discretion to
craft rules of tolling, laches, and waiver.
See Bowen v. City
of New York, 476 U. S. 467,
476 U. S. 479
(1986);
Zipes v. Trans World Airlines, Inc., 455 U.
S. 385,
455 U. S. 398
(1982);
Burnett v. New York Central R. Co., 380 U.
S. 424 (1965);
Braun v.
Sauerwein, 10 Wall. 218,
77 U. S. 223
(1870) ("It seems, therefore, to be established, that the running
of a statute of limitation may be suspended by causes not mentioned
in the statute itself"). Statutes of limitations proceed upon
the
"presumption that claims are extinguished whenever they are not
litigated in the proper forum within the prescribed period, and
they take away all solid ground of complaint, because they rest on
the negligence or laches of the party himself,"
Hanger v.
Abbott, 6 Wall. 532,
73 U. S. 538
(1868); when "none of the reasons on which the statute is founded
can possibly apply,"
id. at
73 U. S.
539-540, the federal courts have exercised equitable
discretion to suspend the running of a limitations period in
conformity with the "policy underlying [the] statute of
limitations."
Burnett, supra, 380 U.S. at
380 U. S. 434.
The author of
Chevron Oil later explained,
"the mere fact that a federal statute providing for
substantive
Page 496 U. S. 222
liability also sets a time limitation upon the institution of
suit does not restrict the power of the federal courts to hold that
the statute of limitations is tolled under certain circumstances
not inconsistent with the legislative purpose."
American Pipe & Construction Co. v. Utah,
414 U. S. 538,
414 U. S. 559
(1974) (Stewart, J.). When the federal courts have no equitable
discretion, we have held a federal court has no authority to refuse
to apply a law retroactively.
See Firestone Tire & Rubber
Co. v. Risjord, 449 U. S. 368,
449 U. S. 379
(1981).
The remainder of our "retroactivity" cases fit into a similar
mold. In
Saint Francis College v. Al-Khazraji,
481 U. S. 604
(1987), we once again recognized that "[t]he usual rule is that
federal cases should be decided in accordance with the law existing
at the time of decision,"
id. at
481 U. S. 608
(citing
Gulf Offshore Co. v. Mobil Oil Corp., 453 U.
S. 473,
453 U. S. 486,
n. 16 (1981);
Thorpe v. Durham Housing Authority,
393 U. S. 268,
393 U. S. 281
(1969);
United States v. Schooner
Peggy, 1 Cranch 103,
5
U. S. 110 (1801)), but found that
Chevron Oil
"counsel[ed] against retroactive application
of statute of
limitations decisions in certain circumstances." 481 U.S. at
481 U. S. 608
(emphasis added). Without deciding the correct statute of
limitations period ourselves, we held that the respondent's claim
was not time-barred, because it was timely filed under clearly
established law in the Circuit. By contrast, in
Goodman v.
Lukens Steel Co., 482 U. S. 656
(1987), we gave retroactive effect to our decision on the statute
of limitations for suits under 42 U.S.C. § 1981 -- which overruled
clearly established law in the Circuit -- because, at the time the
complaining party brought suit, there was no clear Circuit
precedent on which it was entitled to rely.
Id. at
482 U. S.
662-663.
Saint Francis College and
Lukens
Steel Co. make clear that
Chevron Oil does not alter
the principle that consummated transactions are analyzed under the
best current understanding of the law at the time of decision, but
rather establishes a principle particular to the exercise of
equitable discretion.
Page 496 U. S. 223
The civil cases upon which
Chevron Oil relied,
Allen v. State Board of Elections, 393 U.
S. 544 (1969),
Hanover Shoe, Inc. v. United Shoe
Machinery Corp., 392 U. S. 481
(1968),
Reynolds v. Sims, 377 U.
S. 533,
377 U.S.
585 (1964), and
Simpson v. Union Oil Co.,
377 U. S. 13
(1964), as well as those cases which have relied upon it,
Florida v. Long, 487 U. S. 223
(1988),
Arizona Governing Committee for Tax Deferred Annuity
& Deferred Compensation Plan v. Norris, 463 U.
S. 1073 (1983), and
Lemon v. Kurtzman,
411 U. S. 192
(1973) (
Lemon II), have concerned not the application of a
new constitutional or statutory rule,
id. at
411 U. S. 199,
but rather the relief that a federal court should award when
applying the new law. [
Footnote
2/12]
See also Caban v. Mohammed, 441 U.
S. 380,
441 U. S. 416
(1979) (STEVENS, J., dissenting). These cases are all remedy cases
in which, as Justice Harlan explained, consideration of reliance
might be appropriate.
See United
Page 496 U. S. 224
States v. Estate of Donnelly, 397 U.
S. 286,
397 U. S.
296-297 (1970) (concurring opinion). As the plurality
stated in
Lemon II, the problem of "the appropriate scope
of
federal equitable remedies," is distinct from the
choice of law issue implicated by this case. 411 U.S. at
411 U. S. 199
(plurality opinion) (emphasis added).
"In equity, as nowhere else, courts eschew rigid absolutes and
look to the practical realities and necessities inescapably
involved in reconciling competing interests, notwithstanding that
those interests have constitutional roots."
Id. at
411 U. S. 201;
see also id. at
411 U. S.
199-200 (citing
Estate of Donnelly, 397 U.S. at
397 U. S.
296-297 (Harlan, J., concurring)).
The Arkansas HUE tax unquestionably violates the Commerce
Clause. Two results might follow from that conclusion. If the
retention of taxes assessed violates the Due Process Clause under
our decision today in
McKesson Corp. v. Florida Alcohol &
Tobacco Division, Dept. of Business Regulation of Fla., ante,
at
496 U. S. 36-43,
petitioners are entitled to a remedy. The State's freedom to impose
various procedural requirements on the refund mechanism
sufficiently meets any state interest in sound fiscal planning.
Ante at
496 U. S. 44-45.
If the retention of the taxes does not violate the Due Process
Clause, but does violate the state constitutional provision
governing illegal exactions, petitioners are entitled to relief as
a matter of state law. The State has the right to provide relief
for illegally exacted taxes and make its own judgment as to the
equities free from this Court's determination that such relief
would be unduly burdensome. In either event -- whether we think
relief from a violation of fundamental fairness to be unfair or the
State's choice of remedy unjust to the State -- we have no warrant
to substitute our judgment for what the Due Process Clause or state
law would require.
V
I would hold that our decision in
Scheiner need apply
only where, under state law, the time for challenging the tax has
not expired, or in cases brought within the time specified by
Page 496 U. S. 225
state law for challenging the tax, the decisions are not yet
final. The Arkansas Supreme Court did not reach the issue whether a
refund remedy was available under state law because of its
erroneous view that federal law prevented retroactive application
of our decision in
Scheiner to taxes paid prior to the
date of Justice BLACKMUN's escrow order. I would therefore remand
the case to the Arkansas Supreme Court for consideration whether
petitioners are entitled to relief under state law or under our
decision today in
McKesson Corp. v. Division of Alcoholic
Beverages & Tobacco, ante, p.
496 U. S. 18.
I respectfully dissent.
[
Footnote 2/1]
Justice SCALIA, by contrast, agrees that the constitutionality
of a state statute must be analyzed in light of our current
understanding of the Constitution.
Ante at
496 U. S.
200-201.
[
Footnote 2/2]
Our opinion today in
McKesson Corp. v. Division of Alcoholic
Beverages & Tobacco, ante, p.
496 U. S. 39-40,
makes clear that the Federal Constitution does not require the
State to refund the entire tax that was unconstitutionally exacted
from petitioners, but only to refund the discriminatory portion or
otherwise adjust the tax to render it nondiscriminatory.
Petitioners do not contend here that they are entitled to any
greater relief as a matter of federal law.
See Brief for
Petitioners 38-39.
[
Footnote 2/3]
Petitioners do not contend that they are entitled to a tax
refund for these taxes which were paid voluntarily prior to the
institution of this lawsuit.
[
Footnote 2/4]
The plurality's assertion to the contrary notwithstanding,
see ante at
496 U. S. 178,
Payne does not stand for the expansive proposition that
federal law limits the relief a State may provide, but only for the
more narrow proposition that a state court's decision that a
particular remedy is constitutionally required is itself a federal
question. In this case, of course, petitioner complains that the
state court erroneously decided that federal law prevented the
court from applying its own retroactivity and remedial
principles.
[
Footnote 2/5]
Indeed, our whole law of qualified immunity predicated on the
assumption that even "new" law decisions apply retroactively. In
Owen v. City of Independence, 445 U.
S. 622 (1980), for example, we held a municipality
liable for violating principles of due process established, weeks
after its conduct, in
Board of Regents of State Colleges v.
Roth, 408 U. S. 564
(1972), and rejected the municipality's claim to qualified
immunity. Our decision in
Owen is necessarily predicated
upon the view that a court should apply the law in effect at the
time of decision in considering whether the State has violated the
Constitution. Although the plurality is technically correct that
Owen did not hold that constitutional decisions should
always apply "retroactively,"
ante at
496 U. S.
184-185, that case, and the Congress that enacted §
1983, surely did not contemplate that state actors could achieve,
through the judicially crafted doctrine of retroactivity, the
immunity not only from damages but also from liability denied them
on the floors of Congress.
Cf. Rudovsky, the Qualified
Immunity Doctrine in the Supreme Court: Judicial Activism and the
Restriction of Constitutional Rights, 138 U.Pa.L.Rev. 23, 79-80
(1989).
[
Footnote 2/6]
The decisions were
Avery v. Midland County,
390 U. S. 474,
390 U. S. 486
(1968);
Harper v. Virginia Board of Elections,
383 U. S. 663,
383 U. S. 680
(1966); and
Reynolds v. Sims, 377 U.
S. 533,
377 U.S.
589 (1964).
[
Footnote 2/7]
The Court also stated that, as a remedial matter, in States with
no well-defined period for challenging bond elections, bonds issued
prior to the commencement of an action would not be open to
challenge on the basis of its decision. 399 U.S. at
399 U. S. 214.
Justice Harlan, who joined this portion of the opinion, did not
understand it to express any views contrary to those which he had
expressed in
United States v. Estate of Donnelly,
397 U. S. 286,
397 U. S. 295
(1970). In addition, as this case comes to us, it is conceded that
petitioners' challenge was timely filed pursuant to a state
provision for challenging tax payments.
[
Footnote 2/8]
Although the plurality makes much of the potential liability to
which the State might be subject under the Due Process Clause or
state law, it admits in the end that the "initial duty of
determining appropriate relief" lies with the state courts,
ante at
496 U. S. 176,
and that, as the case comes to us, "the burden that the retroactive
application of
Scheiner would place on Arkansas cannot be
precisely determined."
Ante at
496 U. S. 182.
In any event, even if the State were to be held liable under the
Due Process Clause or state law, the plurality should not absolve
the State of that liability through the back door of determining
its conduct to be lawful.
[
Footnote 2/9]
Although one would not surmise it from the plurality's treatment
of the issue, the applicability of
Chevron Oil has been
challenged both by the parties,
see Brief for Petitioners
12; Brief for Respondents 23-24, and by
amici on both
sides of the case,
see, e.g., Brief of the National
Conference of State Legislatures,
et al., as
Amici
Curiae 6, 11; Brief of National Private Truck Council, Inc. as
Amicus Curiae 6.
[
Footnote 2/10]
Nor do
Chapman v. California, 386 U. S.
18 (1967),
Michigan v. Payne, 412 U. S.
47 (1973), and
Arsenault v. Massachusetts,
393 U. S. 5 (1968),
provide any support for the plurality's approach.
Chapman
involved a remedy for a constitutional violation, and thus
undermines, rather than supports, the plurality's analysis. What we
said presented a federal question in the passage quoted
incompletely by the plurality,
ante at
496 U. S.
177-178, was "[w]hether a conviction for a crime should
stand when a State has failed to accord federal constitutionally
guaranteed rights." 386 U.S. at
386 U. S. 21.
Arsenault presented a similar situation. The state court,
under the guise of retroactivity, denied a remedy that was
constitutionally required. Finally, in
Payne, the state
court was unclear as to whether a particular remedy was required by
the Federal Constitution.
[
Footnote 2/11]
In that respect,
Chevron Oil Co. v. Huson, 404 U. S.
97 (1971), is one in a line of cases in which the Court
has announced new rules for the future only, refusing to apply them
even to the parties before the Court.
See also Buckley v.
Valeo, 424 U. S. 1,
424 U. S.
142-143 (1976);
England v. Louisiana State Board of
Medical Examiners, 375 U. S. 411,
375 U. S. 422
(1964). In
Northern Pipeline Construction Co. v. Marathon Pipe
Line Co., 458 U. S. 50,
458 U. S. 88
(1982), the Court held that its decision should not be applied
retroactively, but only in the sense that judgments entered prior
to the date of decision would not be upset.
[
Footnote 2/12]
Chevron Oil also relied upon the criminal cases that
were overruled in
Griffith v. Kentucky, 479 U.
S. 314 (1987). The other civil cases relied on by the
Court in
Chevron Oil -- Cipriano v. City of Houma,
395 U. S. 701
(1969),
Chicot County Drainage District v. Baxter State
Bank, 308 U. S. 371
(1940),
Great Northern R. Co. v. Sunburst Oil & Refining
Co., 287 U. S. 358
(1932), and the municipal bond cases,
Gelpcke v.
City of Dubuque, 1 Wall. 175 (1864);
Havemeyer v. Iowa
County, 3 Wall. 294 (1866); and
Railroad
Co. v. McClure, 10 Wall. 511 (1871), provide no
support for the judgment here. On
Cipriano, see supra at
496 U. S.
215-217. As to the other civil cases cited by
Chevron Oil, Justice Harlan has explained why none of them
supports the result reached by the Court today:
"
Gelpcke v. City of Dubuque,
1 Wall. 175 (1864), holds only that state courts may be compelled
in some situations by particular provisions of the Federal
Constitution to apply certain new rules prospectively only. . . .
Great Northern R. Co. v. Sunburst Oil & Refining Co.,
287 U. S.
358 (1932), merely holds that the Federal Constitution
imposes no barrier to a state court's decision to apply a new state
common law rule prospectively only. Is it not sufficient answer to
the dissenters' final assertion of precedential support to point
out that
Chicot County Drainage District v. Baxter State
Bank, 308 U. S. 371 (1940), was a
collateral attack on a civil judgment already otherwise final and
entitled to
res judicata effect?"
Mackey v. United States, 401 U.
S. 667,
401 U. S. 698
(1971) (opinion concurring in judgment in part and dissenting in
part).