Owner Operator Indep. Drivers Ass'n v. N.Y. State Dep't of Taxation & Fin.

• Decision Date: 22 January 2016
• Citation: 34 N.Y.S.3d 332,2016 N.Y. Slip Op. 26183,52 Misc.3d 855
• Parties: OWNER OPERATOR INDEPENDENT DRIVERS ASSOCIATION, Bryan Spoon, d/b/a Spoon Trucking, Steve Bixler, Jack McComb and Lewie Pugh, Plaintiffs, v. NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, Thomas H. Mattox, Individually and in his Official Capacity as Commissioner of the New York State Department of Taxation and Finance, The State of New York and Andrew Cuomo, Individually and in his Official Capacity as the Governor of the State of New York, Defendants.
• Court: New York Supreme Court

52 Misc.3d 855

34 N.Y.S.3d 332

2016 N.Y. Slip Op. 26183

OWNER OPERATOR INDEPENDENT DRIVERS ASSOCIATION, Bryan Spoon, d/b/a Spoon Trucking, Steve Bixler, Jack McComb and Lewie Pugh, Plaintiffs,

v.NEW YORK STATE DEPARTMENT OF TAXATION AND FINANCE, Thomas H. Mattox, Individually and in his Official Capacity as Commissioner of the New York State Department of Taxation and Finance, The State of New York and Andrew Cuomo, Individually and in his Official Capacity as the Governor of the State of New York, Defendants.

Supreme Court, Albany County, New York.

Jan. 22, 2016.

The Cullen Law Firm, PLLC, by Paul D. Cullen, Sr., Esq., Daniel E. Cohen, Esq., Joseph A. Black, Esq., Attorney for Plaintiffs.

Tabner, Ryan & Keniry, LLP, Thomas R. Fallati, Esq., Albany, Attorney for Plaintiffs.

Eric T. Schneiderman, Esq., Attorney General of the State of New York, Helena Lynch, Esq., AAG, Albany, Attorney for Defendants, The Capitol.

JAMES H. FERREIRA, J.

In this class action, plaintiffs challenge the constitutionality of two provisions of Tax Law § 502 requiring the payment of fees by certain vehicles operating on public highways in New York State. Specifically, plaintiffs challenge the $15.00 fee charged for a certificate of registration (hereinafter registration fee) (see Tax Law § 502[1][a] ), and the $4.00 fee charged for a decal (hereinafter decal fee) (see Tax Law § 502[6][a] ). Plaintiffs allege that the challenged fees “impose a higher per mile tax rate on out-of-state trucks, and thus constitute an undue burden on interstate commerce” in violation of the Commerce Clause of the U.S. Constitution (Affirmation in Support of Plaintiffs' Motion, Exhibit A ¶ 1). Plaintiffs also allege that, by depriving them of their rights, privileges and immunities under the Commerce Clause, defendants have violated 42 U.S.C. § 1983.¹ Plaintiffs seek injunctive and declaratory relief, as well as a refund of fee payments and attorneys' fees.²

Plaintiffs now move for summary judgment on their complaint. Defendants oppose the motion and also move for summary judgment dismissing the complaint. The Court heard oral argument on the motions on September 8, 2015.³

Summary Judgment

Summary judgment is a drastic remedy which should only be granted where there are no doubts as to the existence of a triable issue of fact (see Rotuba Extruders v. Ceppos, 46 N.Y.2d 223, 231, 413 N.Y.S.2d 141, 385 N.E.2d 1068 [1978] ; Andre v. Pomeroy, 35 N.Y.2d 361, 364, 362 N.Y.S.2d 131, 320 N.E.2d 853 [1974] ; Black v. Kohl's Dept. Stores, Inc., 80 A.D.3d 958, 959, 914 N.Y.S.2d 469 [3d Dept.2011] ). “[T]he proponent of a summary judgment motion must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact” (Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 [1986] ; see Smalls v. AJI Indus., Inc., 10 N.Y.3d 733, 735, 853 N.Y.S.2d 526, 883 N.E.2d 350 [2008] ; Baird v. Gormley, 116 A.D.3d 1121, 1122, 983 N.Y.S.2d 662 [3d Dept.2014] ). If the proponent's burden is met, “the burden shifts to the party opposing the motion for summary judgment to produce evidentiary proof in admissible form sufficient to establish the existence of material issues of fact which require a trial of the action” (Alvarez v. Prospect Hosp., 68 N.Y.2d at 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 ; Town of Kirkwood v. Ritter, 80 A.D.3d 944, 945–946, 915 N.Y.S.2d 683 [3d Dept.2011] ). In considering a summary judgment motion, the Court “must view the evidence in a light most favorable to the nonmoving party and accord that party the benefit of every reasonable inference from the record proof, without making any credibility determinations” (Black v. Kohl's Dept. Stores, Inc., 80 A.D.3d at 959, 914 N.Y.S.2d 469 ; see Winne v. Town of Duanesburg, 86 A.D.3d 779, 780–781, 927 N.Y.S.2d 209 [3d Dept.2011] ).

Taxing Scheme

Tax Law article 21, Highway Use Tax (hereinafter HUT), imposes “a highway use tax for the privilege of operating any vehicular unit upon the public highways of this state and for the purpose of recompensing the state for the public expenditures incurred by reason of the operations of such vehicular units on the public highways” (Tax Law § 503[1] ). The HUT rate is assessed “based upon the gross weight of each motor vehicle and the number of miles it is operated” on New York highways (Tax Law § 503[1] ). For purposes of the statute, a “vehicular unit” means “a motor vehicle alone or in combination with any other motor vehicle, trailer, semi-trailer, dolly, or other device drawn thereby” (Tax Law § 501[3] ). In turn, “motor vehicle” is defined, for purposes of the statute, as including

“any automobile, truck, tractor or other self-propelled device, having a gross weight in excess of eighteen thousand pounds, or any truck having an unloaded weight in excess of eight thousand pounds, or any tractor, having an unloaded weight in excess of four thousand pounds, which is used upon the public highways otherwise than upon fixed rails or tracks” (Tax Law § 501[2][a] ).

In addition, Tax Law § 502, entitled “Highway use registration,” requires each “carrier” to apply for a certificate of registration “for each motor vehicle operated or to be operated by him on the public highways” in New York and requires each application for a certificate of registration to be accompanied by a $15.00 fee (Tax Law § 502[1][a] ). A “carrier” is defined as including “any person having the lawful use or control, or the right to the use or control of any vehicular unit” in New York (Tax Law § 501[5] ). The statute also authorizes defendant Commissioner of the New York State Department of Taxation and Finance (hereinafter the Commissioner) to “require the use of decals as evidence that a carrier has a valid certificate of registration for each motor vehicle operated or to be operated on the public highways of this state,” the fee for which is $4.00 (Tax Law § 502[6][a] ). It is undisputed that neither the registration fee nor the decal fee are apportioned based upon a carrier's actual use of New York's highways.

Tax Law § 509(8) authorizes the Commissioner to issue replacement certificates of registration or decals “not more often than once every year.” Defendants have submitted evidence—which is not disputed by plaintiffs—that, in practice, carriers are not required to pay the $15.00 registration fee and $4.00 decal fee on an annual basis. Rather, certificates of registration are issued in series, each of which is typically a three-year period (and which has never been shorter than three years). For example, the series that was in effect at the time of the filing of these motions was Series 21, which began on January 1, 2013 and ended on December 31, 2015. For each new series, carriers seeking to register a new vehicle and carriers with registered vehicles who wish to renew their registration for those vehicles are required to pay the registration fee and decal fee. Defendants have submitted evidence that the purpose of the registration fee and decal fee is to enforce and ensure compliance with the HUT.

Analysis

“Legislative enactments enjoy a strong presumption of constitutionality [and] parties challenging a duly enacted statute face the initial burden of demonstrating the statute's invalidity beyond a reasonable doubt” (LaValle v. Hayden, 98 N.Y.2d 155, 161, 746 N.Y.S.2d 125, 773 N.E.2d 490 [2002] [internal citations and quotations omitted]; see Paterson v. University of State of N.Y., 14 N.Y.2d 432, 438, 252 N.Y.S.2d 452, 201 N.E.2d 27 [1964] ; Schulz v. State of N.Y. Exec., 134 A.D.3d 52, 19 N.Y.S.3d 92 [3d Dept.2015] ). The Commerce Clause provides that “[t]he Congress shall have Power [t]o regulate Commerce ... among the several States” (U.S. Const., art. I, § 8[3] ). “Though phrased as a grant of regulatory power to Congress, the Clause has long been understood to have a negative aspect that denies the States the power unjustifiably to discriminate against or burden the interstate flow of articles of commerce” (Oregon Waste Sys. v. Dept. of Envtl. Quality, 511 U.S. 93, 98, 114 S.Ct. 1345, 128 L.Ed.2d 13 [1994] [internal quotations omitted]; see Gen. Motors Corp. v. Tracy, 519 U.S. 278, 287, 117 S.Ct. 811, 136 L.Ed.2d 761 [1997] ). “[T]he first step in analyzing any law subject to judicial scrutiny under the negative Commerce Clause is to determine whether it regulates evenhandedly with only incidental effects on interstate commerce, or discriminates against interstate commerce” (Oregon Waste Sys. v. Dept. of Envtl. Quality, 511 U.S. at 99, 114 S.Ct. 1345 [internal quotations and citation omitted] ). In this context, “[d]iscrimination means differential treatment on in-State and out-of-State economic interests that benefits the former and burdens the latter” (City of New York v. State of New York, 94 N.Y.2d 577, 596–597, 709 N.Y.S.2d 122, 730 N.E.2d 920 [2000] ; see Oregon Waste Sys. v. Dept. of Envtl. Quality, 511 U.S. at 99, 114 S.Ct. 1345 ] ). A state tax survives a Commerce Clause challenge “when 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” (Complete Auto Tr. v. Brady, 430 U.S. 274, 279, 97 S.Ct. 1076, 51 L.Ed.2d 326 [1977] ; see American Trucking Assns., Inc. v. Scheiner, 483 U.S. 266, 295, 107 S.Ct. 2829, 97 L.Ed.2d 226 [1987] ).

Plaintiffs principally rely on American Trucking Assns., Inc. v. Scheiner, supra, in support of their assertion that the challenged fees are unconstitutional.⁴ In that case, the U.S. Supreme Court struck down, as violative of the Commerce Clause, two Pennsylvania statutes which imposed lump sum, annual taxes on commercial users of Pennsylvania's highways. Specifically, the Court addressed the constitutionality of two flat taxes: (1) an annual $25.00 fee for an identification marker...