United States v. King Mountain Tobacco Co., Inc., 081318 FED9, 16-35956

• Party Name: UNITED STATES OF AMERICA, Plaintiff-Appellee, v. KING MOUNTAIN TOBACCO COMPANY, INC., Defendant-Appellant.
• Judge Panel: Before: FERNANDEZ, McKEOWN, and FUENTES, Circuit Judges.
• Case Date: August 13, 2018
• Court: United States Courts of Appeals, U.S. Court of Appeals — Ninth Circuit

UNITED STATES OF AMERICA, Plaintiff-Appellee,

v.

KING MOUNTAIN TOBACCO COMPANY, INC., Defendant-Appellant.

No. 16-35956

United States Court of Appeals, Ninth Circuit

August 13, 2018

NOT FOR PUBLICATION

Argued and Submitted March 15, 2018 San Francisco, California

Appeal from the United States District Court No. 1:14-cv-03162-RMP for the Eastern District of Washington Rosanna Malouf Peterson, District Judge, Presiding

Before: FERNANDEZ, McKEOWN, and FUENTES, ^[**] Circuit Judges.

MEMORANDUM ^[*]

King Mountain Tobacco Company, Inc. ("King Mountain") appeals the district court's order granting summary judgment in favor of the United States in an action to collect $6, 425, 683 in overdue fees under the Fair and Equitable Tobacco Reform Act ("FETRA"), Pub. L. No. 108-357 §§ 611-612, 118 Stat. 1521, 1522-24 (2004), codified at 7 U.S.C. §§ 518-519. Because the parties are familiar with the facts, we do not repeat them here. We have jurisdiction under 28 U.S.C. § 1291, and we affirm.

A. The district court did not abuse its discretion by denying King Mountain discovery.

"Broad discretion is vested in the trial court to permit or deny discovery, and its decision to deny discovery will not be disturbed except upon the clearest showing that denial of discovery results in actual and substantial prejudice to the complaining litigant." Goehring v. Brophy, 94 F.3d 1294, 1305 (9th Cir. 1996). The district court denied discovery after holding that the administrative record demonstrates the accuracy of the agency's determinations of liabilities owed by King Mountain under FETRA. See Friends of the Earth v. Hintz, 800 F.2d 822, 828 (9th Cir. 1986) ("With a few exceptions . . . judicial review of agency action is limited to a review of the administrative record."). King Mountain did not contest the accuracy of those determinations before the agency, and indicated that it was "satisfied with the accounting of assessments provided by [the agency] and was not further challenging the accuracy of the FETRA assessments." The agency thus affirmed the amounts owed. The district court did not abuse its discretion when it denied King Mountain further discovery on judicial review.

B. The Treaty with the Yakamas does not prohibit the imposition of FETRA assessments.

Whether FETRA assessments are "taxes" or "fees," the test for King Mountain's exemption is the same. The "express exemptive language" test applies to federal laws generally, not just to federal taxes. King Mountain Tobacco Co., Inc. v. McKenna, 768 F.3d 989, 994 (9th Cir. 2014); see id. (describing "the 'express exemptive language' test for determining whether a federal law applies to [Indians]"). As we have explained, see United States v. King Mountain Tobacco Co., Inc., Nos. 14-36055 & 16-35607, - F.3d - (9th Cir. 2018), the Treaty with the Yakamas contains no "express exemptive language" that would entitle King Mountain to an exemption from a federal excise tax on tobacco products. For the same reasons, the Treaty does not entitle King Mountain to exemption from FETRA assessments.

C. The FETRA assessments imposed on King Mountain are constitutional.

1. FETRA assessments do not violate the Takings Clause.

The Takings Clause of the Fifth Amendment provides that "private property" shall not "be taken for public use, without just compensation." U.S. Const. amend. V. Because the Constitution "protects rather than creates...