Legislature of State v. Settelmeyer

• Decision Date: 13 May 2021
• Docket Number: No. 81924,81924
• Parties: The LEGISLATURE OF the STATE of Nevada; The State of Nevada Department of Taxation; The State of Nevada Department of Motor Vehicles; The Honorable Nicole Cannizzaro, in Her Official Capacity as Senate Majority Leader; The Honorable Kate Marshall, in Her Official Capacity as President of the Senate; Claire J. Clift, in Her Official Capacity as Secretary of the Senate; and the Honorable Steve Sisolak, in His Official Capacity as Governor of the State of Nevada, Appellants/Cross-Respondents, v. The Honorable James A. SETTELMEYER, the Honorable Joe Hardy, the Honorable Heidi Seevers Gansert, the Honorable Scott T. Hammond, the Honorable Pete Goicoechea, the Honorable Ben Kieckhefer, the Honorable Ira D. Hansen, and the Honorable Keith F. Pickard, in Their Official Capacities as Members of the Senate of the State of Nevada and Individually; Great Basin Engineering Contractors, LLC, a Nevada Limited Liability Company; Goodfellow Corporation, a Utah Corporation Qualified to do Business in the State of Nevada; Kimmie Candy Company, a Nevada Corporation; Keystone Corp., a Nevada Nonprofit Corporation; National Federation of Independent Business, a California Nonprofit Corporation Qualified to do Business in the State of Nevada; Nevada Franchised Auto Dealers Association, a Nevada Nonprofit Corporation; Nevada Trucking Association, Inc., a Nevada Nonprofit Corporation; and Retail Association of Nevada, a Nevada Nonprofit Corporation, Respondents/Cross-Appellants.
• Court: Nevada Supreme Court

486 P.3d 1276

The LEGISLATURE OF the STATE of Nevada; The State of Nevada Department of Taxation; The State of Nevada Department of Motor Vehicles; The Honorable Nicole Cannizzaro, in Her Official Capacity as Senate Majority Leader; The Honorable Kate Marshall, in Her Official Capacity as President of the Senate; Claire J. Clift, in Her Official Capacity as Secretary of the Senate; and the Honorable Steve Sisolak, in His Official Capacity as Governor of the State of Nevada, Appellants/Cross-Respondents,

v.The Honorable James A. SETTELMEYER, the Honorable Joe Hardy, the Honorable Heidi Seevers Gansert, the Honorable Scott T. Hammond, the Honorable Pete Goicoechea, the Honorable Ben Kieckhefer, the Honorable Ira D. Hansen, and the Honorable Keith F. Pickard, in Their Official Capacities as Members of the Senate of the State of Nevada and Individually; Great Basin Engineering Contractors, LLC, a Nevada Limited Liability Company; Goodfellow Corporation, a Utah Corporation Qualified to do Business in the State of Nevada; Kimmie Candy Company, a Nevada Corporation; Keystone Corp., a Nevada Nonprofit Corporation; National Federation of Independent Business, a California Nonprofit Corporation Qualified to do Business in the State of Nevada; Nevada Franchised Auto Dealers Association, a Nevada Nonprofit Corporation; Nevada Trucking Association, Inc., a Nevada Nonprofit Corporation; and Retail Association of Nevada, a Nevada Nonprofit Corporation, Respondents/Cross-Appellants.

No. 81924

Supreme Court of Nevada.

FILED MAY 13, 2021

Aaron D. Ford, Attorney General, and Craig A. Newby, Deputy Solicitor General, Carson City, for Appellants/Cross-Respondents the State of Nevada Department of Taxation, the State of Nevada Department of Motor Vehicles, Kate Marshall, and Steve Sisolak.

Legislative Counsel Bureau, Legal Division, and Kevin C. Powers, General Counsel, Carson City, for Appellants/Cross-Respondents the Legislature of the State of Nevada, Nicole Cannizzaro, and Claire J. Clift.

Allison MacKenzie, Ltd., and Karen A. Peterson and Justin M. Townsend, Carson City, for Respondents/Cross-Appellants.

BEFORE THE SUPREME COURT, EN BANC.

OPINION

By the Court, HARDESTY, C.J.:

Article 4, Section 18(2) of the Nevada Constitution requires the agreement of at least two-thirds of the members of each house of the Nevada Legislature to pass any bill "which creates, generates, or increases any public revenue in any form, including but not limited to taxes, fees, assessments and rates, or changes in the computation bases for taxes, fees, assessments and rates." In this case, the parties ask us to determine whether this supermajority provision applies to two bills passed in 2019 during the 80th session of the Nevada Legislature. Based on the plain language of the supermajority provision, we conclude that it applies to the subject bills because they create, generate, or increase public revenue. Because the bills did not pass by a two-thirds majority in the Senate, those portions of the bills that would require a supermajority vote are unconstitutional. We further conclude that the individual defendants are protected by legislative immunity under NRS 41.071 because the actions they performed were within the sphere of legitimate legislative activity. Because the district court correctly found the bills were unconstitutional and rejected the claims against the immune defendants, we affirm the district court's judgment in whole.

FACTS

Senate Bill 542: The Department of Motor Vehicles technology fee

In 2015, the Legislature approved a bill adding a $1 technology fee to every Department of Motor Vehicles (DMV) transaction that was already subject to a fee. See 2015 Nev. Stat., ch. 394, § 3 at 2211; see also NRS 481.064 (2015) (codification of the bill). The bill had a sunset provision, such that the additional $1 fee would expire on June 30, 2020. See 2015 Nev. Stat., ch. 394, § 3 at 2213. Senate Bill 542, proposed during the 2019 legislative session, extended the sunset provision to June 30, 2022. The DMV would collect an estimated additional $6.9 million for each year of the extension. The Legislature did not subject the bill to a supermajority vote, and the Senate passed it by a 13 to 8 vote—1 vote short of a supermajority. 2019 Nev. Stat., ch. 400, § 1 at 2502.

Senate Bill 551: Payroll tax computation under the modified business tax

In 2015, the Legislature also approved a bill that reduces the rate of payroll taxes under Nevada's modified business tax (MBT) if tax revenues exceed fiscal projections by a certain amount. 2015 Nev. Stat., ch. 487, § 62 at 2896-97. The bill went into effect on July 1, 2015, codified at NRS 360.203. On October 11, 2018, the Department of Taxation published a news release stating that 2018 tax revenues exceeded the stated threshold and therefore the reduced payroll tax rates would go into effect on July 1, 2019.

In 2019, Senate Bill 551 proposed to repeal NRS 360.203 in its entirety, allowing the Department of Taxation to collect an estimated $98.2 million during the following biennium. When initially considered by the Senate, certain sections of the bill—2, 3, 37, and 39—required a supermajority vote to pass. After the Senate fell one vote short of a supermajority, the bill was reconsidered without the supermajority requirement. The votes remained the same, 13 to 8, and it therefore passed with less than a supermajority. See 2019 Nev. Stat., ch. 537, § 39 at 3294.

Proceedings in the district court

After the Legislature declared Senate Bills 542 and 551 passed and the Governor signed them, all the senators who voted against the bills, along with businesses and other entities (collectively, the Senators), sued Senate Majority Leader Nicole Cannizzaro, Senate President Kate Marshall, Senate Secretary Claire J. Clift, and Governor Steve Sisolak (all in their official capacities); the Nevada Department of Taxation; and the DMV.¹ The Senators sought declarations that the supermajority provision applied to the bills and asked the district court to invalidate the bills because they did not receive a supermajority vote in the Senate. They also sought injunctive relief preventing the Department of Taxation and the DMV from collecting money pursuant to the bills. The complaint included requests for attorney fees and costs for each cause of action and in the prayer for relief.

The State moved to dismiss, arguing that the supermajority provision did not apply. To support its argument, it relied on a 2019 Legislative Counsel Bureau memorandum coming to the same conclusion. The Senators opposed the motion and moved for summary judgment. The parties briefed competing summary judgment motions, and Senator Cannizzaro and Senate Secretary Clift argued they were protected by legislative immunity.

After a hearing, the district court's final order found both bills generated revenue and therefore were subject to the state constitution's supermajority provision. The district court reasoned that, "[b]ut for" the bills, the State would not have realized an additional approximate $14 million through the extended DMV fee and $98.2 million after removing the reduced computation rates under the MBT. As to the MBT bill, the district court granted the State's unopposed request for severance and invalidated only those sections subject to a supermajority vote. The DMV bill was fully invalidated. The district court denied the Senators’ request for an award of attorney fees as special damages. The district court also dismissed the attorney fees and costs claim against the Legislature. It denied all of the Senators’ claims as against Senator Cannizzaro, Senate President Marshall, Senate Secretary Clift, and Governor Sisolak (collectively, the individual defendants) and dismissed them from the action. The order allowed the Senators to move for a postjudgment award of attorney fees and costs against the Department of Taxation and/or the DMV, however.

The State contests the district court's conclusion that the supermajority provision applies to the subject bills and that they are therefore unconstitutional. In their cross-appeal, the Senators challenge the district court's denial of their requests for attorney fees and costs and other claims as against the individual defendants, as well as the dismissal of those defendants below. The district court stayed enforcement of its order and any proceedings on postjudgment requests for fees and costs pending the outcome of this appeal.

DISCUSSION

The supermajority provision applies based on its plain language

The State's appeal centers on the interpretation of the supermajority provision as applied to Senate Bills 542 and 551, an issue we review de novo. See Ramsey v . City of N. Las Vegas , 133 Nev. 96, 98, 392 P.3d 614, 616 (2017) ("This court reviews questions of constitutional interpretation de novo."). Because we presume that statutes are constitutional, the Senators, as the parties challenging the bills’ constitutionality, "bear[ ] the burden of making a clear showing of invalidity." Sheriff of Washoe Cty. v. Martin, 99 Nev. 336, 340, 662 P.2d 634, 637 (1983) (internal quotation marks omitted); see also Citizens for Honest & Responsible Gov't v. Sec'y of State, 116 Nev. 939, 946, 11 P.3d 121, 125 (2000) (citing Martin with approval).

Consonant with the axiomatic principle that "[i]t is emphatically the province and duty of the judicial department to say what the law is," Marbury v. Madison, 5 U.S. 137, 177, 1 Cranch 137, 2 L.Ed. 60 (1803), Nevada courts are the "ultimate interpreter" of the Nevada Constitution, see Baker v. Carr , 369 U.S. 186, 211, 82 S.Ct. 691, 7 L.Ed.2d 663 (1962) (discussing the United States Supreme Court and the United States Constitution); see also MDC Rests., LLC v. Eighth Judicial Dist. Court, 134 Nev. 315, 320-21, 419 P.3d 148, 152-53 (2018) (addressing this court's duty to resolve constitutional questions without deference to others). When interpreting a constitutional provision, our...