Trailer Marine Transport Corp. v. Rivera Vazquez

• Citation: 977 F.2d 1
• Decision Date: 01 June 1992
• Docket Number: No. 91-2172,91-2172
• Parties: TRAILER MARINE TRANSPORT CORP., Plaintiff, Appellee, v. Carmen M. RIVERA VAZQUEZ, etc., et al., Defendants, Appellants. . Heard
• Court: United States Courts of Appeals. United States Court of Appeals (1st Circuit)

Page 1

977 F.2d 1

TRAILER MARINE TRANSPORT CORP., Plaintiff, Appellee, v. Carmen M. RIVERA VAZQUEZ, etc., et al., Defendants, Appellants.

No. 91-2172.

United States Court of Appeals,

First Circuit.

Heard June 1, 1992.

Decided Sept. 28, 1992.

Rehearing and Rehearing En Banc

Denied Oct. 28, 1992.

Carlos Del Valle with whom Ramirez & Ramirez, Hato Rey, P.R., was on brief for defendants, appellants.

Nicolas Jimenez with whom Manuel San Juan and Jimenez, Graffam & Lausell, San Juan, P.R., were on brief for plaintiff, appellee.

Before SELYA, O'SCANNLAIN, ^* and BOUDIN, Circuit Judges.

BOUDIN, Circuit Judge.

Trailer Marine Transport Corp. ("Trailer Marine"), the plaintiff-appellee, brought suit in the district court to challenge the constitutionality of a motor vehicle fee as it applies to trailers used in transporting goods to and from Puerto Rico. The district court held that the Commerce Clause of the Constitution, art. I, § 8, cl. 3, does apply to legislation and administrative measures enacted or adopted by Puerto Rico. The district court further held that the fee as applied to such trailers violates the Commerce Clause. The agency and officials defending the fee, who are defendant-appellants in this case, appeal. We affirm.

I. THE FACTS

Since 1968, Puerto Rico has had in force a compulsory, no-fault compensation plan to protect victims of motor vehicle accidents. Automobile Accident Social Protection Act, 9 L.P.R.A. § 2051 et seq. For anyone injured in a motor vehicle accident, the statute provides hospital and medical costs, and there are scheduled payments for death or disability. Id. § 2054. The plan supplants tort recovery up to the limits of the plan's benefits; above those limits a tort action is allowed. Id. § 2058. It is the fee charged to fund the plan that has given rise to this litigation.

A Puerto Rican governmental entity, the Automobile Accident Compensation Administration ("AACA"), administers the plan. ¹ Under the statute, the AACA establishes a fee, subject to the approval of the Puerto Rico Commissioner of Insurance, to be paid annually by owners of motor vehicles. Id. § 2064. The fee in question is distinct from the ordinary annual charge made for a motor vehicle registration and license. The fee is designed to cover the cost of compensation paid through the plan and the cost of administering the plan. From 1974 to the present, with one important qualification described below, the fee has been set at a flat $35 per year for every motor vehicle registered in Puerto Rico regardless of type, frequency of use or other factors. In the case of tractor-trailer units, the means of much commerce on U.S. highways, Puerto Rico treats the tractor (which contains the operator cab and the engine) and the trailer (which carries the freight) as separate vehicles, each of which is subject to the fee.

Trailer Marine is one of a number of companies that is engaged as a common carrier in transporting goods to and from the island of Puerto Rico. The method it uses, known as "roll-on-roll-off," is to transport goods by tractor-trailer on the U.S. mainland to a port of embarkation; to load the trailer on a sea-going barge, leaving the tractor behind; to tow the barge by tug to the port of San Juan in Puerto Rico; and there to roll the trailer into a marshalling yard where it is hitched to a local tractor for delivery within Puerto Rico. The trailers, which may stay in Puerto Rico for only a few days or for a longer period, ultimately make the reverse voyage back to the mainland in the same manner. In 1990, Trailer Marine transported over 100,000 trailers to Puerto Rico.

One other carrier, The Puerto Rico Maritime Shipping Authority, uses the roll-on-roll-off method of transporting trailers, although it carried only about 30 percent of its freight in this fashion at the outset of this case and is said to be reducing further its use of this method. All other carriers engaged in delivering trailer freight to Puerto Rico use a method known as "lift-on-lift-off." In this process, the freight-carrying "container" section of the trailer is separated, typically at the port of embarkation, from the chassis section comprising the wheels, trailer bed, and other apparatus. The container is lifted by crane into a ship, transported to Puerto Rico, and there lifted off by crane and deposited onto a waiting local chassis. The recombined container and chassis are then hitched to a local tractor for delivery, after which the process is reversed to send the container back to the mainland.

Payment of the annual fee required by the Puerto Rican accident-compensation statute is normally made when the owner obtains or renews registration for the motor vehicle in Puerto Rico. The trailers hauled by Trailer Marine are virtually all registered in individual states rather than in Puerto Rico, but during the period 1968-1984, it appears that Trailer Marine obtained each year a block of 300 to 500 trailer registrations and license plates from the Puerto Rican authorities, paying at the same time the compensation plan fee for each registration. Trailer Marine then affixed a license plate to each incoming trailer, leaving it there during the trailer's stay in Puerto Rico and removing it when the trailer left (in order to affix it to a newly entering trailer). Whether this was a voluntary gesture by Trailer Marine or an evasion of Puerto Rican law, the fact is that in 1983 or 1984, the authorities in Puerto Rico declined to issue any more license plates to Trailer Marine for transfer from one trailer to another.

Instead, the AACA sought legislation in Puerto Rico directed at the so-called "transitory" trailers utilized by Trailer Marine as well as by the Puerto Rico Maritime Shipping Authority. The outcome of this effort were two companion laws, Laws No. 26 and 27, enacted December 12, 1989. 9 L.P.R.A. § 2064(2); 9 L.P.R.A. § 541, 1852. Law No. 26, which is the subject of this case, amended the 1968 compensation statute for the express purpose of establishing fees for transitory trailers under the accident-compensation statute. The companion amendment, Law No. 27, explicitly obligated transitory trailers to register and pay Puerto Rico an annual fee for registration and licensing. Law No. 26 effectively imposes the compensation plan fee--currently $35 a year--on each transitory trailer, subject to one exception: in lieu of the annual fee, the company responsible for the transitory trailer may instead opt to pay a special premium in an amount fixed by the AACA board of directors and approved by the Commissioner of Insurance. 9 L.P.R.A. § 2064.

In February 1990, the AACA board of directors set, and the Commissioner of Insurance approved, the special transitory-trailer fee called for by Law No. 26. The amount was set at $15, which is payable on the entry to Puerto Rico of a transitory trailer and is to be paid for each entry unless and until the trailer operator chooses to pay the annual $35 fee for the trailer. The $15 fee entitles the trailer to remain in Puerto Rico for up to 30 days; if the trailer overstays this period, the full $35 annual fee must be paid (with no reduction on account of a prior $15 payment). A somewhat different option and process was enacted by Law No. 27 for payment of the registration and license fee by transitory trailers, but with that statute we are not directly concerned.

Calculating that the fees payable under Laws No. 26 and 27 would cost it several million dollars a year, Trailer Marine filed two suits in the district court on March 14, 1990, challenging these statutes on constitutional grounds. On March 22, 1990, the district court denied a temporary restraining order, Trailer Marine Transport Corp. v. Ortiz, 733 F.Supp. 490 (D.P.R.1990), and on October 25, 1990, the district court dismissed the challenge to Law No. 26 on Burford abstention grounds. Trailer Marine Transport Corp. v. Rivera Vazquez, 749 F.Supp. 376 (D.P.R.1990), vacated, 931 F.2d 961 (1st Cir.1991). On appeal, this court reversed the latter order and remanded, holding that the Burford doctrine did not bar the claims in this case. ²

On remand, the district court received cross-motions for summary judgment, buttressed by discovery, addressed to the claim that Law No. 26 was unconstitutional under the Commerce Clause. In an unpublished opinion, the district court on September 25, 1991, held that the fee on transient trailers did violate the dormant Commerce Clause doctrine and was invalid. The district court determined that the fee had no demonstrated connection to the harm caused by transient trailers, discriminated against them in favor of shippers using lift-on-lift-off containers, and unduly burdened and discriminated against interstate commerce both in purpose and effect. This appeal followed.

II. DISCUSSION

This case, which might have been contrived as an examination essay, presents four issues which we discuss in turn: the potential role of the Tax Injunction and Butler Acts; the applicability of the dormant Commerce Clause doctrine to Puerto Rico; the validity of the Puerto Rico fee structure for transitory trailers under the Commerce Clause; and the possible impact of the McCarran-Ferguson Act to shield any constitutional violation.

A. Jurisdiction

The threshold question is whether the statutory ban limiting injunctions against tax collection, which precluded the challenge to Law No. 27, also precludes the present suit. The issue was apparently not raised by AACA in the district court or in this court, and we discuss the point solely because the bar in question is deemed "jurisdictional" and is not subject to waiver. See California v. Grace Brethren Church, 457 U.S. 393, 418-19, 102 S.Ct. 2498, 2513, 73 L.Ed.2d 93 (1982). The Tax Injunction Act of 1937, 28 U.S.C. § 1341, prevents district courts, with an exception not here invoked, from enjoining collection of "any tax under State law" and this bar extends equally to...