Stone Container Co. v. U. S.

• Decision Date: 12 October 2000
• Citation: 229 F.3d 1345
• Parties: (Fed. Cir. 2000) STONE CONTAINER CORPORATION, STONE CONTAINER INTERNATIONAL and STONE CONTAINER SAVANNAH RIVER PULP & PAPER, Plaintiffs-Cross Appellants, v. UNITED STATES, Defendant-Appellant. 99-1333, -1334 DECIDED:
• Court: U.S. Court of Appeals — Federal Circuit

Page 1345

229 F.3d 1345 (Fed. Cir. 2000)

STONE CONTAINER CORPORATION, STONE CONTAINER INTERNATIONAL and STONE CONTAINER SAVANNAH RIVER PULP & PAPER, Plaintiffs-Cross Appellants, v. UNITED STATES, Defendant-Appellant.

99-1333, -1334

United States Court of Appeals for the Federal Circuit

DECIDED: October 12, 2000

Appealed from: United States Court of International Trade

Judge Jane A. Restani

[Copyrighted Material Omitted] Kirk T. Hartley, Katten Muchin & Zavis, of Chicago, Illinois, argued for plaintiffs-cross appellants. With him on the brief were Mark S. Zolno, and Michael E. Roll.

Todd M. Hughes, Attorney, Commercial Litigation Branch, Civil Division, Department of Justice, of Washington, DC, argued for defendant-appellant. With him on the brief were David W. Ogden, Assistant Attorney General; David M. Cohen, Director; Jeanne E. Davidson, Deputy Director; and Lara Levinson, Attorney.

Munford Page Hall, II, Dorsey & Whitney LLP, of Washington, DC, for amicus curiae New Holland North America, Inc.

Robert T. Wray, Holland & Knight, LLP, of Washington, DC, for amici curiae Steelmet, Inc., et al.

Nicholas J. DiMichael, Thompson, Hine and Flory, of Washington, DC, for amicus curiae The National Industrial Transportation League.

Todd C. Fineberg, Carlos Rodriguez & Associates, of Washington, DC, for amici curiae Addison Wesley Longman, et al.

Before, BRYSON, LINN, and DYK Circuit Judges.

DYK, Circuit Judge.

DECISION

In United States v. United States Shoe Corp., 523 U.S. 360 (1998), the Supreme Court held that the Harbor Maintenance Tax ("HMT"), 26 U.S.C. 4461(a), violated the Export Clause of the Constitution. Exporters have filed thousands of refund claims seeking recovery of HMT payments. Many of these refund suits were filed some years after the taxes were paid. This case was designated as a test case by the Court of International Trade to determine the applicable limitations period for these suits. We hold that the two-year statute of limitations of 28 U.S.C. 2636(i) governs such suits; that the limitations period was tolled by the filing of the class action in Baxter Healthcare Corp. v. United States, 925 F. Supp. 794 (Ct. Int'l Trade 1996); but that the tolling period expired when the class action was dismissed by the district court in Baxter. Accordingly, we affirm.

I

The facts are undisputed. Stone Container Corporation, Stone Container International, and Stone Container Savannah River Pulp & Paper (collectively, "Stone") made regular HMT payments from 1987 through 1998, and the United States and Stone have stipulated to the amount, quarter, and date for each payment made. In United States Shoe, the Supreme Court held that the Court of International Trade has exclusive jurisdiction over suits for refund under 28 U.S.C. 1581(i). ¹ See United States Shoe, 118 S. Ct. at 1294 n.3. On October 15, 1996, Stone filed suit in the Court of International Trade under 28 U.S.C. 1581(i) seeking recovery of all of its HMT payments.

The limitations period for suits brought under 1581(i) is specified by 28 U.S.C. 2636(i):

A civil action of which the Court of International Trade has jurisdiction under section 1581 of this title, other than an action specified in subsections (a) - (h) of this section, is barred unless commenced in accordance with the rules of the court within two years after the cause of action first accrues.

The parties agreed that the statute of limitations, if applicable, ran from the date of payment of the tax, but they disputed whether the statute of limitations had been tolled by the filing of a class action in Baxter. If not tolled, a two-year limitations period would bar recovery of a substantial portion of the payments made by Stone.

Baxter was filed on October 27, 1994, and sought certification of a class which would have comprised all persons who had paid the HMT in connection with the export of commercial cargo. On May 7, 1996, the Court of International Trade ruled that because of the particular posture of cases seeking HMT refunds, a class action did not provide a superior mechanism for resolution of those disputes, and the Court of International Trade therefore denied class certification. See Baxter Healthcare Corp., 925 F. Supp. at 800. While Stone was not a named party in Baxter, it was a member of the putative class. Stone argued that the filing of the Baxter class action tolled the statute of limitations from the date of the filing through the present and that the tolling would continue until the class action issue was no longer appealable. At oral argument, counsel for Stone (who is also counsel for the taxpayers in Baxter) represented that a portion of Baxter remained pending and that, after a final judgment in the trial court, taxpayers could still file an appeal seeking review of the 1996 denial of class certification by the Baxter trial court.

The Court of International Trade held that the two-year limitations period applied and that the filing of Baxter tolled the statute of limitations for Stone. The Court of International Trade relied upon American Pipe & Construction Co. v. Utah, 414 U.S. 538 (1974), for the proposition that filing a class action under Rule 23 of the Court of International Trade stops the statute of limitations from running for all claims covered by the representative action. Relying on Irwin v. Department of Veterans Affairs, 498 U.S. 89, 95-96 (1990), the Court of International Trade also held that such tolling applied in suits against the United States under 2636. However, citing the reasoning of Armstrong v. Martin Marietta Corp., 138 F.3d 1374 (11th Cir. 1998) (en banc), the Court of International Trade held that tolling ended when the district court in Baxter denied class certification. The Court of International Trade rejected Stone's additional contentions, such as Stone's argument that the government cannot create statutes of limitations for claims based on unconstitutional taxes. The United States appealed, and Stone cross-appealed.

II

The issues raised in these appeals are all questions of law, which we review de novo. See Medline Indus., Inc. v. United States, 62 F.3d 1407, 1409 (Fed. Cir. 1995).

At the outset, relying on Justice Scalia's concurring opinion in Reynoldsville Casket Co. v. Hyde, 514 U.S. 749, 760 (1995), Stone argues that it is unconstitutional to apply any statute of limitations to refund claims with respect to an unconstitutional tax. Stone does not explain why unconstitutional taxes, unlike other constitutional violations, should be free of statutes of limitations. In any event, Stone's argument is directly foreclosed by the Supreme Court's decision in McKesson Corp. v. Division of Alcoholic Beverages and Tobacco, 496 U.S. 18 (1990). In McKesson, the Florida Supreme Court struck down a tax that unconstitutionally discriminated against interstate commerce, but it refused to provide taxpayers with a refund. The United States Supreme Court reversed, holding that when a state requires payment of a tax and relegates challenges to the tax to postpayment refund actions, "the Due Process Clause of the Fourteenth Amendment obligates the State to provide meaningful backward-looking relief." McKesson, 496 U.S. at 31. Although McKesson is based on the Due Process Clause of the Fourteenth Amendment, its principles are equally applicable to the federal government through the Due Process Clause of the Fifth Amendment. ²

However, the Supreme Court in McKesson also stated explicitly that a state was free to impose various procedural requirements on actions for postdeprivation relief, including "enforc[ing] relatively short statutes of limitations applicable to such actions." See id. at 45. Thus, the Supreme Court has rejected Stone's argument that it is unconstitutional to apply a statute of limitations to an unconstitutional tax.

Stone invites this court to disregard the Supreme Court's statements that it is permissible to enforce a statute of limitations in suits to recover payment of unconstitutional taxes. According to Stone, those statements are mere dicta, and we are free to disregard them. We are required to decline Stone's invitation. As a subordinate federal court, we do not share the Supreme Court's latitude in disregarding the language in its own prior opinions. As the Supreme Court cautioned in Rivers v. Roadway Express, Inc., 511 U.S. 298, 312 (1994), "once the [Supreme] Court has spoken, it is the duty of other courts to respect that understanding of the governing rule of law." ³ The Supreme Court can accept for review only a limited number of cases, and it must give guidance to the lower federal and state courts in broad language. Here, the Court's statements are both explicit and carefully considered, and we must follow them. ⁴

Moreover, the right to a refund of unconstitutional taxes collected under compulsion is, in effect, a claim for deprivation of property without due process. See McKesson, 496 U.S. at 36. Both the Supreme Court and this court have repeatedly held that the federal government may apply statutes of limitations to just compensation claims. See, e.g., Block v. North Dakota, 461 U.S. 273, 292 (1983); Boling v. United States, 220 F.3d 1365, 1375 (Fed. Cir. 2000). As the Supreme Court ruled in Block, a "constitutional claim can become time barred just as any other claim can." Block, 461 U.S. at 292; see also United States v. Dalm, 494 U.S. 596, 602 (1990) (holding that a statute of limitations barred an untimely claim for a federal income tax refund, "regardless of whether the tax is alleged to have been 'erroneously,' 'illegally,' or 'wrongfully collected'" (citations omitted)).

III

Stone also argues that a tax refund remedy must be "clear and certain" and that the remedy here under 1581(i) was not "clear and certain" before the Supreme Court's decision in United States Shoe. Stone urges that in view of the confusion surrounding the remedy, taxpayers at a minimum should have the benefit of...