Private Truck Council of America, Inc. v. Secretary of State

• Decision Date: 03 January 1986
• Citation: 503 A.2d 214
• Parties: PRIVATE TRUCK COUNCIL OF AMERICA, INC. et al. v. SECRETARY OF STATE.
• Court: Maine Supreme Court

Page 214

503 A.2d 214

54 USLW 2372

PRIVATE TRUCK COUNCIL OF AMERICA, INC. et al. v. SECRETARY OF STATE.

Supreme Judicial Court of Maine.

Argued Nov. 20, 1985.

Decided Jan. 3, 1986.

Billig, Sher & Jones, P.C., Jacob P. Billig (orally), Richard A. Allen, David F. Smith, Washington, D.C., Murray, Plumb & Murray, Thomas C. Newman, John C. Lightbody, Portland, for plaintiff.

James E. Tierney, Atty. Gen., Robert S. Frank (orally), Asst. Atty. Gen., Augusta, for defendant.

Before McKUSICK, C.J., and NICHOLS, ROBERTS, WATHEN and SCOLNIK, JJ.

McKUSICK, Chief Justice.

In this class action brought by and on behalf of certain out-of-state truckers, the Superior Court (Kennebec County) agreed with the plaintiff class that Maine's so-called reciprocal truck taxes violate the Commerce Clause of the United States Constitution. The court, however, refused to order any refund of amounts paid on those unconstitutional taxes, except to the extent that the plaintiff class had been protected by an escrow arrangement set up during the pendency of this action, and also denied plaintiffs' request for allowance of attorney fees. Both parties have appealed. Our review reveals no reversible error in any of those rulings.

The statute in question, 29 M.R.S.A. § 2243-C, ¹ went into effect on April 24, 1984. P.L. 1983, ch. 818, § 21. Section 2243-C imposes taxes or fees on all trucks coming into Maine that are registered in states that levy so-called third structure taxes ² on Maine-registered trucks operated in those states. On November 11, 1984, under the authority of section 2243-C, the Secretary of State and the Commissioner of Transportation, promulgated "Joint Rules Governing Collection of Reciprocal Taxation of Motor Vehicles." Those rules named 13 states whose registered vehicles on traveling into Maine become subject to tax under section 2243-C. ³ The actual tax or fee assessed under section 2243-C is determined on a state-by-state basis and is designed to mirror exactly the third structure tax that each of the 13 states would assess on a Maine-registered truck traveling within its jurisdiction. For example, since Nevada assesses a flat $20 trip fee on each Maine-registered truck that enters its jurisdiction, section 2243-C authorizes a $20 trip fee on each Nevada truck that enters Maine. Failure to pay the tax or fee imposed under section 2243-C is a Class E crime.

Plaintiffs Private Truck Council of America, Inc., and two out-of-state motor carriers brought the present action seeking declaratory and injunctive relief against enforcement of section 2243-C and refunds of all amounts paid under that section. ⁴ They named as defendants the Secretary of State and other officials of the State of Maine charged with enforcing the reciprocal truck taxes. For convenience, we will refer to defendants collectively as the State. On January 2, 1985, with the State's consent, the Superior Court ordered the State to place in escrow all moneys thereafter collected under the disputed statute. On June 17, 1985, the Superior Court entered a summary judgment declaring that section 2243-C violated the Commerce Clause of the United States Constitution ⁵ and therefore was unenforceable. The court, however, denied plaintiffs a refund of any back taxes paid, other than those deposited in the court-ordered escrow fund. Plaintiffs appeal the Superior Court's limitation of the tax refund and its denial of attorney fees. The State cross-appeals, challenging the court's finding of unconstitutionality of the reciprocal truck taxes.

I. Constitutionality of the "Reciprocal Truck Taxes"

Under the Commerce Clause a state tax on interstate commerce will pass muster only if the tax " is applied to an activity with a substantial nexus with the taxing State, is fairly apportioned, does not discriminate against interstate commerce, and is fairly related to the services provided by the State." American Trucking Associations, Inc. v. Quinn, 437 A.2d 623, 625-26 (Me.1981) (quoting Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 279, 97 S.Ct. 1076, 1079, 51 L.Ed.2d 326 (1977)); see also Maryland v. Louisiana, 451 U.S. 725, 754, 101 S.Ct. 2114, 2133, 68 L.Ed.2d 576 (1981). The Superior Court found that section 2243-C failed to pass the third aspect of this test because on its face it discriminates against interstate commerce.

To determine whether section 2243-C passes the third prong of the Complete Auto Transit test, we must assess it "in light of its actual effect considered in conjunction with other provisions of the State's tax scheme," and we must decide whether section 2243-C "will in its practical operation work discrimination against interstate commerce." Maryland v. Louisiana, 451 U.S. at 756, 101 S.Ct. at 2134. A statute's discriminatory effect on interstate commerce may be offset by complementary or offsetting taxes on domestic commerce. American Trucking, 437 A.2d at 626-27. In the present case, section 2243-C on its face discriminates against interstate commerce because it levies on certain foreign-registered trucks taxes that Maine does not assess against Maine-registered trucks. Since we are not referred to any statute by which Maine imposes a complementary or compensating tax on its domestic trucks to offset the inherently discriminatory effect of section 2243-C, ⁶ the reciprocal truck taxes must be struck down as a violation of the Commerce Clause of the United States Constitution. We read the decisions of the Supreme Court of the United States ⁷ to require nothing less, if our nation is to avoid " 'a multiplication of preferential trade areas destructive' of the free trade which the Clause protects." Boston Stock Exchange v. State Tax Commission, 429 U.S. 318, 329, 97 S.Ct. 599, 606, 50 L.Ed.2d 514 (1977) (quoting Dean Milk Co. v. Madison, 340 U.S. 349, 356, 71 S.Ct. 295, 298, 95 L.Ed. 329 (1951)).

The State urges that section 2243-C does not violate the Commerce Clause because the Maine Legislature had no discriminatory purpose in its enactment, but rather intended to promote interstate commerce by attempting "to make treatment of [foreign-registered] motor vehicles in Maine comparable with treatment of similar Maine-registered motor vehicles traveling in those [foreign] vehicles' jurisdictions of registration." L.D. 2412 Statement of Fact (111th Legis.1984). In other words, section 2243-C had as its candid purpose coercive retaliation to force the 13 "offending" states to drop the extra tax burdens they impose on Maine trucks. This type of legislative purpose has not, however, met with approval before the United States Supreme Court. To the extent, if any, that the 13 states whose vehicles are currently subject to Maine's reciprocal truck tax are themselves unconstitutionally burdening interstate commerce with their third structure taxes, "the Commerce Clause itself creates the necessary reciprocity: [Maine and its truckers] may pursue their constitutional remedy by suit in state or federal court challenging [those 13 states'] actions as violative of the Commerce Clause," instead of enacting retaliatory taxes. Great Atlantic & Pacific Tea Co. v. Cottrell, 424 U.S. 366, 380, 96 S.Ct. 923, 932, 47 L.Ed.2d 55 (1976). A state may not violate the Commerce Clause in an attempt through self-help to coerce another state into desisting from a Commerce Clause violation.

There also is no merit in the State's argument that section 2243-C is valid since it discriminates against only some, not all, foreign-registered trucks, i.e., only those trucks registered in those 13 jurisdictions imposing third structure taxes on Maine-registered vehicles that may go into those states. The Supreme Court rejected such an argument in Lewis v. B T Investment Managers, Inc., 447 U.S. 27, 100 S.Ct. 2009, 64 L.Ed.2d 702 (1980), when it struck down a Florida statute as violative of the Commerce Clause even though the statute discriminated against only certain types of out-of-state financial institutions. Id. at 40-43, 100 S.Ct. at 2017-19. Nothing in the present case suggests a different analysis. Balkanization, even though only partial, is still Balkanization.

Because section 2243-C is discriminatory on its face and the State's scheme for taxing trucks lacks any complementary or offsetting taxes on domestic truckers, the statute must fall as offensive to the Commerce Clause. The Superior Court found no need to reach the alternative grounds upon which plaintiffs argue that the taxes imposed by section 2243-C are unconstitutional, and neither do we.

II. Plaintiffs' Claim for Refund of All Taxes Paid under the Unconstitutional Statute.

Having succeeded in getting the reciprocal truck taxes declared unconstitutional, plaintiffs assert that they are entitled to a refund of all moneys paid to the State on those unconstitutional taxes, including those paid prior to the establishment of the court-ordered escrow account on January 2, 1985. The Superior Court, however, limited their relief to reimbursement of the funds in the escrow account. We agree with the Superior Court's rejection of plaintiffs' claim to any refund of the pre-escrow payments.

Plaintiffs first rely on Maine common law to support their claim for a full refund. Recognizing at least for the purposes of the present case that under Maine common law they are entitled to a refund of previously paid taxes only if they paid them under duress, see Berry v. Daigle, 322 A.2d 320, 326 (Me.1974), plaintiffs contend that the facts here satisfy that duress requirement. They urge that the mere fact that failure to pay the reciprocal truck tax constitutes a Class E crime is enough to invoke the "implied duress" doctrine. See Atchison, T. & S.F. Ry. v. O'Connor, 223 U.S. 280, 286, 32 S.Ct. 216, 217, 56 L.Ed. 436 (1912). Maine, however, has never adopted that doctrine, although it was noted in Berry, 322 A.2d at 326 n. 4. In Maine, without a refund statute, "in the context of taxation, duress arises only in those...