Harper v. Virginia Department of Taxation

• Decision Date: 18 June 1993
• Docket Number: No. 91-794,91-794
• Citation: Harper v. Virginia Department of Taxation, 509 U.S. 86, 113 S.Ct. 2510, 125 L.Ed.2d 74 (1993)
• Parties: Henry HARPER, et al., Petitioners, v. VIRGINIA DEPARTMENT OF TAXATION
• Court: U.S. Supreme Court

509 U.S. 86

113 S. Ct. 2510

HENRY HARPER, ET AL., PETITIONERS

v.

VIRGINIA DEPARTMENT OF TAXATION

No. 91-794

SUPREME COURT OF THE UNITED STATES

December 2, 1992, Argued

June 18, 1993, Decided

Syllabus

In Davis v. Michigan Dept. of Treasury, 489 U.S. 803, 103 L. Ed. 2d 891, 109 S. Ct. 1500, this Court invalidated Michigan's practice of taxing retirement benefits paid by the Federal Government while exempting retirement benefits paid by the State or its political subdivisions. Because Michigan conceded that a refund to federal retirees was the appropriate remedy, the Court remanded for entry of judgment against the State. Virginia subsequently amended a similar statute that taxed federal retirees while exempting state and local retirees. Petitioners, federal civil service and military retirees, sought a refund of taxes assessed by Virginia before the revision of this statute. Applying the factors set forth in Chevron Oil Co. v. Huson, 404 U.S. 97, 106-107, 30 L. Ed. 2d 296, 92 S. Ct. 349, a state trial court denied relief to petitioners as to all taxable events occurring before Davis was decided. In affirming, the Virginia Supreme Court concluded that Davis should not be applied retroactively under Chevron Oil and American Trucking Assns., Inc. v. Smith, 496 U.S. 167, 110 L. Ed. 2d 148, 110 S. Ct. 2323 (plurality opinion). It also held, as matters of state law, that the assessments were neither erroneous nor improper and that a decision declaring a tax scheme unconstitutional has solely prospective effect. In James B. Beam Distilling Co. v. Georgia, 501 U.S. 529, 115 L. Ed. 2d 481, 111 S. Ct. 2439, however, six Members of this Court required the retroactive application of Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 82 L. Ed. 2d 200, 104 S. Ct. 3049 -- which prohibited States from imposing higher excise taxes on imported alcoholic beverages than on locally produced beverages -- to claims arising from facts predating that decision. Those Justices disagreed with the Georgia Supreme Court's use of Chevron Oil's retroactivity analysis. After this Court ordered reevaluation of petitioners' suit in light of Beam, the Virginia Supreme Court reaffirmed its decision in all respects. It held that Beam did not foreclose the use of Chevron Oil's analysis because Davis did not decide whether its rule applied retroactively.

Held:

1. When this Court applies a rule of federal law to the parties before it, that rule is the controlling interpretation of federal law and must be given full retroactive effect in all cases still open on direct review and as to all events, regardless of whether such events predate or postdate the announcement of the rule. Pp. 94-99.

(a) This rule fairly reflects the position of a majority of Justices in Beam and extends to civil cases the ban against "selective application of new rules" in criminal cases. Griffith v. Kentucky, 479 U.S. 314, 323, 93 L. Ed. 2d 649, 107 S. Ct. 708. Mindful of the "basic norms of constitutional adjudication" animating the Court's view of retroactivity in criminal cases, id., at 322 -- that the nature of judicial review strips the Court of the quintessentially legislative prerogative to make rules of law retroactive or prospective as it sees fit and that selective application of new rules violates the principle of treating similarly situated parties the same, id., at 322, 323 -- the Court prohibits the erection of selective temporal barriers to the application of federal law in noncriminal cases. When the Court does not reserve the question whether its holding should be applied to the parties before it, the opinion is properly understood to have followed the normal rule of retroactive application, Beam, 501 U.S. at 540 (opinion of SOUTER, J.), and the legal imperative to apply such a rule prevails "over any claim based on a Chevron Oil analysis," ibid. Pp. 94-98.

(b) This Court applied the rule of law announced in Davis to the parties before the Court. The Court's response to Michigan's concession that a refund would be appropriate in Davis, far from reserving the retroactivity question, constituted a retroactive application of the rule. A decision to accord solely prospective effect to Davis would have foreclosed any discussion of remedial issues. Pp. 98-99.

2. The decision below does not rest on independent and adequate state-law grounds. In holding that state-law retroactivity doctrine permitted the solely prospective application of the ruling, the State Supreme Court simply incorporated into state law the analysis of Chevron Oil and criminal retroactivity cases overruled by Griffith. The Supremacy Clause, however, does not allow federal retroactivity doctrine to be supplanted by the invocation of a contrary approach to retroactivity under state law. Similarly, the state court's conclusion that the challenged assessments were not erroneous or improper under state law rested solely on its determination that Davis did not apply retroactively. Pp. 99-100.

3. Virginia is free to choose the form of relief it will provide, so long as that relief is consistent with federal due process principles. A State retains flexibility in responding to the determination that it has imposed an impermissibly discriminatory tax. The availability of a predeprivation hearing constitutes a procedural safeguard sufficient to satisfy due process, but if no such relief exists, the State must provide meaningful backward-looking relief either by awarding full refunds or by issuing some other order that creates in hindsight a nondiscriminatory scheme. Since any remedy's constitutional sufficiency turns (at least initially) on whether Virginia law provides an adequate form of predeprivation process, and since that issue has not been properly presented, this question and the performance of other tasks pertaining to the crafting of an appropriate remedy are left to the Virginia courts. Pp. 100-102.

Michael J. Kator argued the cause and filed the briefs for petitioners.

Gail Starling Marshall argued the cause for respondent. With her on the brief were Mary Sue Terry, Attorney General of Virginia, Stephen D. Rosenthal, Chief Deputy Attorney General, Gregory E. Lucyk and N. Pendleton Rogers, Senior Assistant Attorneys General, Barbara H. Vann, Assistant Attorney General, and Peter W. Low. *

* Briefs of amici curiae urging affirmance were filed for the State of Arkansas by Winston Bryant, Attorney General of Arkansas, and Joyce Kinkead; for the State of Georgia by Michael J. Bowers, Attorney General of Georgia, and Warren R. Calvert and Daniel M. Formby, Senior Assistant Attorneys General; for the State of North Carolina et al. by Lacy H. Thornburg, Attorney General of North Carolina, Edwin M. Speas, Jr., Senior Deputy Attorney General, H. Jefferson Powell, Norma S. Harrell and Thomas F. Moffitt, Special Deputy Attorney General, Marilyn R. Mudge, Assistant Attorney General, Grant Woods, Attorney General of Arizona, Rebecca White Berch, and Gail H. Boyd, Assistant Attorney General; for the State of Utah et al. by Paul Van Dam, Attorney General of Utah, Leon A. Dever, Assistant Attorney General, James H. Evans, Attorney General of Alabama, Charles E. Cole, Attorney General of Alaska, Tautai A. F. Fa'Alevao, Attorney General of American Samoa, Daniel E. Lungren, Attorney General of California, Richard Blumenthal, Attorney General of Connecticut, Charles M. Oberly III, Attorney General of Delaware, John Payton, Corporate Counsel of the District of Columbia, Warren Price III, Attorney General of Hawaii, Larry EchoHawk, Attorney General of Idaho, Roland W. Burris, Attorney General of Illinois, Linley E. Pearson, Attorney General of Indiana, Bonnie J. Campbell, Attorney General of Iowa, Chris Gorman, Attorney General of Kentucky, Michael E. Carpenter, Attorney General of Maine, J. Joseph Curran, Jr., Attorney General of Maryland, Scott Harshbarger, Attorney General of Massachusetts, Frank J. Kelley, Attorney General of Michigan, Hubert H. Humphrey III, Attorney General of Minnesota, Michael C. Moore, Attorney General of Mississippi, Marc Racicot, Attorney General of Montana, Don Stenberg, Attorney General of Nebraska, Frankie Sue Del Papa, Attorney General of Nevada, John P. Arnold, Attorney General of New Hampshire, Robert J. Del Tufo, Attorney General of New Jersey, Tom Udall, Attorney General of New Mexico, Robert Abrams, Attorney General of New York, Lee Fisher, Attorney General of Ohio, Susan B. Loving, Attorney General of Oklahoma, Charles S. Crookham, Attorney General of Oregon, Ernest D. Preate, Jr., Attorney General of Pennsylvania, Jorge Perez-Diaz, Attorney General of Puerto Rico, James E. O'Neil, Attorney General of Rhode Island, A. Crawford Clarkson, Jr., Mark Barnett, Attorney General of South Dakota, Charles W. Burson, Attorney General of Tennessee, Dan Morales, Attorney General of Texas, Jeffrey L. Amestoy, Attorney General of Vermont, Rosalie Simmonds Ballentine, Attorney General of the Virgin Islands, Kenneth O. Eikenberry, Attorney General of Washington, Mario J. Palumbo, Attorney General of West Virginia, Joseph B. Meyer, Attorney General of Wyoming, and James E. Doyle, Jr., Attorney General of Wisconsin; for the city of New York by O. Peter Sherwood, Edward F. X. Hart, and Stanley Buchsbaum; and for the National Governors' Association et al. by Richard Ruda and Charles Rothfeld.

Briefs of amici curiae were filed for Designated Federal Retirees in Kansas et al. by John C. Frieden, Kevin M. Fowler, Kenton C. Granger, Roger M. Theis, Carrold E. Ray, G. Eugene Boyce, Donald L. Smith, Edmund F. Sheehy, Jr., Brian A. Luscher, Gene M. Connell, Jr., and J. Doyle Fuller; for James B. Beam Distilling Co. by Morton Siegel, Michael A. Moses, Richard G. Schoenstadt, James L. Webster, and John L. Taylor, Jr.; for the Military Coalition by Eugene O. Duffy; and for the Virginia Manufacturers Association by Walter A. Smith, Jr.

THOMAS, J., delivered the opinion of the Court, in which BLACKMUN...