American Trucking Associations, Inc. v. Conway

• Citation: 152 Vt. 363,566 A.2d 1323
• Decision Date: 25 August 1989
• Docket Number: No. 87-300,87-300
• Parties: AMERICAN TRUCKING ASSOCIATIONS, INC., Fort Edward Express Co., Inc., and J.A. Carman Trucking Co., Inc., Individually and On Behalf of All Others Similarly Situated. v. William H. CONWAY, Jr., Vermont Commissioner of Motor Vehicles, Madeleine M. Kunin, Governor of the State of Vermont, Susan C. Crampton, Secretary of the Vermont Agency of Transportation, Charles A. Bristow, Vermont Commissioner of Public Safety, and Emory A. Hebard, Vermont State Treasurer, Each Individually and In Their Official Capacities.
• Court: Vermont Supreme Court

Page 1323

566 A.2d 1323

152 Vt. 363

AMERICAN TRUCKING ASSOCIATIONS, INC., Fort Edward Express Co., Inc., and J.A. Carman Trucking Co., Inc. Individually and On Behalf of All Others Similarly Situated. v. William H. CONWAY, Jr., Vermont Commissioner of Motor Vehicles, Madeleine M. Kunin, Governor of the State of Vermont, Susan C. Crampton, Secretary of the Vermont Agency of Transportation, Charles A. Bristow, Vermont Commissioner of Public Safety, and Emory A. Hebard, Vermont State Treasurer, Each Individually and In Their Official Capacities.

No. 87-300.

Supreme Court of Vermont.

Aug. 25, 1989.

Ralph A. Foote and Robert H. Moyer of Conley & Foote, Middlebury, Daniel R. Barney and Robert Digges, Jr., ATA Litigation Center, and William S. Busker, Vice President, Legal Affairs, American Trucking Associations, Inc., of counsel, Alexandria, Va., for plaintiffs-appellees.

Jeffrey L. Amestoy, Atty. Gen., and Thomas R. Viall, Asst. Atty. Gen., Montpelier, for defendants-appellants.

Before ALLEN, C.J., PECK and GIBSON, JJ., and BARNEY, C.J. (Ret.) and KEYSER, J. (Ret.), Specially Assigned.

GIBSON, Justice.

Defendants appeal from a decision of the Washington Superior Court declaring 23 V.S.A. § 417(a) unconstitutional and ordering defendants to refund to plaintiffs the taxes collected and reserved by them in a court-ordered escrow account. We affirm.

In the case before us, plaintiffs ¹ challenge a reciprocal fee imposed on certain trucks registered in states other than Vermont. The provision at issue, 23 V.S.A. § 417, was first adopted in 1951, No. 210, § 3, and assessed a $3 fee on the entry into Vermont of trucks from states which imposed taxes on Vermont trucks in addition to fuel taxes. Section 417 was amended in 1961 and 1972 to raise the fee first to five, and then to ten, dollars. 1961, No. 286, § 3 and 1971, No. 226 (Adj. Sess.), § 3.

In 1981, the Legislature passed Act 87, which, inter alia, amended § 417 to require a $15 trip fee for each entry of a truck registered in another jurisdiction, plus a $10 entry fee for each entry of a truck registered in a state imposing "more than one tax, fee or toll" on vehicle usage within that state. 1981, No. 87, § 19, codified at 23 V.S.A. § 417(a). American Trucking Associations, together with two other named plaintiffs, immediately commenced a class action challenging the entry fees imposed by Act 87 on the ground that they discriminated against interstate commerce. After the superior court dismissed their complaint, this Court on appeal remanded the matter for further findings of fact. American Trucking Associations, Inc. v. Conway, 142 Vt. 17, 23, 451 A.2d 42, 45 (1982) (American Trucking 1 ).

On remand, the superior court concluded that the challenged entry fees were constitutional. On appeal, we reversed, concluding that "Act 87 on its face discriminates against interstate commerce and violates the Commerce Clause." American Trucking Assns, Inc. v. Conway, 146 Vt. 574, 577, 508 A.2d 405, 407 (1986), cert. denied, 483 U.S. 1020, 107 S.Ct. 3262, 97 L.Ed.2d 761 (1987) (American Trucking 2 ).

While the appeal in American Trucking 1 was pending, the Legislature again amended the fee system for foreign trucks, including § 417(a). 1981, No. 172 (Adj. Sess.). American Trucking Associations, joined by two other named plaintiffs, again initiated a class action which challenged the constitutionality of certain provisions of Act 172, codified at 23 V.S.A. §§ 415, 3007, and 3010. They did not challenge § 417(a) as amended. In American Trucking Associations, Inc. v. Conway, 146 Vt. 579, 586, 508 A.2d 408, 413 (1986), cert. denied, 483 U.S. 1019-20, 107 S.Ct. 3262, 97 L.Ed.2d 761 (1987) (American Trucking 3 ), this Court struck down those three provisions as unconstitutional.

In both American Trucking 2 and American Trucking 3, plaintiffs' claims for monetary relief were denied on the grounds that actions to recover moneys payable out of state funds are barred by the doctrine of sovereign immunity as a suit against the state. 146 Vt. at 579, 508 A.2d at 408, and 146 Vt. at 587-88, 508 A.2d at 413-14.

One month after we handed down our decisions in American Trucking 2 and American Trucking 3, American Trucking Associations, together with two other named plaintiffs, commenced a third class action suit to challenge the constitutionality of 23 V.S.A. § 417(a) as amended by Act 172. Accompanying the original complaint was a motion for a preliminary injunction or for the escrowing of tax proceeds pending the resolution of the challenge. In April of 1986, the superior court granted the motion and ordered that the proceeds of the tax collected pursuant to § 417(a) be escrowed by the State Treasurer so that "at no time shall such monies become a part of or deposited in the State Treasury." Defendants filed a petition for extraordinary relief alleging that the superior court's escrow order was unlawful and contrary to the public interest; the petition was summarily denied by this Court in an unpublished order issued April 9, 1987.

In the meantime, the case was argued on the parties' competing motions for summary judgment in October of 1986. A memorandum of decision and order, issued May 4, 1987, concluded that 23 V.S.A. § 417(a) was unconstitutional, and on June 22, 1987 the superior court issued a judgment order permanently enjoining defendants from the continued collection of the § 417(a) taxes, denying plaintiffs' claim for taxes paid prior to the establishment of the escrow, and ordering that the proceeds in the escrow account plus accrued interest be refunded to the plaintiffs. Defendants appeal all these decisions, including the establishment of the escrow.

Defendants raise numerous arguments in support of their appeal: (1) that the instant litigation is barred by principles of issue and claim preclusion; (2) that 23 V.S.A. § 417(a) is constitutional under previous decisions of this Court; (3) that the escrow order is invalid as procedurally defective; (4) that the escrow order violates the doctrine of sovereign immunity; (5) that no refund should be allowed because any finding of unconstitutionality should be applied prospectively only; (6) that plaintiffs were unqualified to bring suit in Vermont as unregistered foreign corporations; and (7) that plaintiffs are precluded from any recovery on various equitable principles.

I.

Defendants contend that plaintiffs are barred from litigating the validity of this tax by the doctrines of res judicata or collateral estoppel. We note that these doctrines involve separate and distinct concepts, although the umbrella term res judicata is often applied to the use of both theories of estoppel. For ease of discussion in this opinion, we will refer to the two doctrines by the more descriptive terms of claim preclusion and issue preclusion. See 18 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 4402 (1981) (discussing res judicata in context of Federal Rules of Civil Procedure); Restatement (Second) of Judgments ch. 3, Introductory Note (1982). In essence, defendants argue that both issue and claim preclusion bar the instant litigation.

Defendants first contend that § 417(a) was declared constitutional in American Trucking 2, and that, therefore, the doctrine of issue preclusion renders this lawsuit repetitive and unnecessary: "This Court has already disposed of [plaintiffs'] challenge to the constitutionality of 23 V.S.A. § 417, albeit in its form adopted in 1981." The trial court rejected this contention, stating that "while the Court [in American Trucking 2 ] did not expressly single out section 417(a) as unconstitutional, it did clearly hold unconstitutional the scheme" of which that section was a part.

The doctrine of issue preclusion bars the subsequent relitigation of an issue which was actually litigated and decided in a prior case between the same parties resulting in a final judgment on the merits, where that issue was necessary to the resolution of the action. See 18 C. Wright, A. Miller & E. Cooper, Federal Practice and Procedure § 4416, at 137-38 (1981); see also Berisha v. Hardy, 144 Vt. 136, 138, 474 A.2d 90, 91 (1984) (collateral estoppel, which is more limited than res judicata, bars relitigation of issues " 'necessarily and essentially determined' " in prior action) (quoting Land Investment, Inc. v. Battleground Associates, 138 Vt. 316, 326, 415 A.2d 753, 759 (1980)).

It is clear that what was at issue in American Trucking 2 was not the same § 417(a) that is before us today. As we noted above, the § 417(a) struck down in American Trucking 2 was that enacted into law by Act 87 in 1981. The current version of 23 V.S.A. § 417(a) derives from Act 172, passed into law in 1982. Although minimal, the changes between the two provisions are significant enough to render them outside the scope of issue preclusion's requirement of identical issues. ² Thus, it was neither actually litigated nor decided, and no preclusive effect will attach to our decision as to § 417 in the prior litigation. ³ See Berisha v. Hardy, 144 Vt. at 138, 474 A.2d at 91.

Defendants also contend that because certain provisions of Act 172 were constitutionally challenged in American Trucking 3, plaintiffs' claim must be barred by the doctrine of claim preclusion. Under this theory of estoppel, parties are barred from litigating claims or causes of action which were or should have been raised in previous litigation, Hill v. Grandey, 132 Vt. 460, 463, 321 A.2d 28, 30 (1974), where the parties, subject matter and causes of action are identical or substantially identical. Berisha v. Hardy, 144 Vt. at 138, 474 A.2d at 91.

American Trucking 3 involved a constitutional attack on three provisions of Act 172, codified at §§ 415, 3007 and 3010 of 23 V.S.A., under which trucks over 18,000 pounds operating on Vermont highways were required either to pay a $50 annual licensing fee, acquire a $50 "single trip permit," or acquire...