Opposition — Argentine Airlines v. Ross

IN THE

Supreme Court of the United States

OCTOBER TERM 1978

No. 77-366

ARGENTINE AIRLINES,

Petitioner,

against

Puiu Ross, as Industrial Commissioner

of the State of New York,

Respondent.

BRIEF IN OPPOSITION TO PETITION

FOR CERTIORARI

Rospert ABRAMS

Attorney General of the

State of New York

Attorney for Respondent

Office and P.O. Address

2 World Trade Center—Rm. 7129

New York, New York 10047

Tel. No. (212) 488-5443

SHIRLEY ADELSON SIEGEL

Solicitor General

Pau S. SHEMIN

Iris A. STEEL

Assistant Attorneys General

of Counsel

TABLE OF CONTENTS

Opinions Below .............eeeeeeeeecesccceecers

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Question Presented .........cceeeeeeecreeeceeeeee

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Argentine Airlines v. Ross, 64 AD2d 994, 408 N.Y.S.

2d S31 (Srd Dept. 1978) ........ccccccccvseees

Automobile Club of Michigan v. Commissioner, 353

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Barrett v. United States, 423 U.S. 212 ..............

Calbeck v. Travelers Insurance Company, 370 U.S.

EOE Le eee ee

Central Illinois Public Service Co. v. United States,

I Ce kn cde segue cdesecccceee

Dizon v. United States, 381 U.S. 68 (1965) .........

Fribourg Navigation Co. v. C.I.R., 383 U.S. 272

COURT ED SRUGe cn erne ek ee les hvesvavncvescocccces

Irish International Airlines v. Levine, 41 NY2d 819

(1977) affg. 48 AD2d 202 (3rd Dept. 1975) .....

STATUTES

N.Y. Labor Law §576(1) ........ccceccceccecceecs

3, 4

IN THE

Supreme Court of the United States

OCTOBER TERM 1978

No. 77- 366

As.

¥

ARGENTINE AIRLINES,

Petitioner,

agamst

Pur Ross, as Industrial Commissioner

of the State of New York,

Respondent.

a

~

BRIEF IN OPPOSITION TO PETITION

FOR CERTIORARI

Opinions Below

The Court of Appeals for the State of New York denied

petitioner’s motion for leave to appeal to that Court. A

copy of the Court’s order is annexed to the petition for

certiorari at Appendix “1a”. The opinion of the Supreme

Court of the State of New York, Appellate Division, Third

Department is reported at 64 A D 2d 994, 408 N.Y.S.2d

831 and appears in the appendix to the petition at “6a”.

A copy of the decision of the Unemployment Insurance

Appeal Board appears in the appendix to the petition at

‘Og’,

2

Jurisdiction

Petitioner alleges that jurisdiction of this Court is in-

voked pursuant to 28 U.S.C. $1257!(3).

Question Presented

Where, as here, the Industrial Commissioner in 1974

reversed an erroneous prior determination exempting peti-

tioner from the Unemployment Insurance Law and deter-

mined that petitioner was a covered employer liable for

contributions retroactive to 1971 and the statute permitted

such tax assessments within three years after payment of

the wages on which liability was based, is there any con-

stitutional violation warranting exercise of this Court’s

jurisdiction?

Statement

The petitioner is an airline organized under the laws of

Argentina as a decentralized public organization to ren-

der service in the field of commercial aviation; it operates

as a subdivision of a government ministry. The airline

carries passengers and cargo on scheduled flights from

Argentina to and from points in the United States, includ-

ing New York. It employs in excess of 110 employees in

New York State, of whom approximately one-half are

Argentine nationals on assignment and one-half are United

States citizens or residents.

In a determination issued December 30, 1974 the Indus-

trial Commissioner assessed the petitioner the sum of

$14,130 as contributions due for the audit period from

January 1, 1971 through December 31, 1971. The assess-

ment was based upon remuneration paid to the employees

of Argentine Airlines performing services in New York

State. Prior to the determination imposing liability as of

b

3

January 1, 1971, the petitioner had been held exempt from

the requirements of New York’s Unemployment Insurance

Law.

Following a hearing on December 18, 1975, a referee of

the New York State Department of Labor sustained the

assessment determination in a decision dated January 16,

1976 (Petitioner’s Appendix 15a). The Unemployment In-

surance Appeal Board modified and affirmed the decision

of the Referee and sustained the Industrial Commissioner’s

determination in a decision dated January 25, 1977 (Peti-

tioner’s Appendix 9a).

On appeal to the Appellate Division of the State Su-

preme Court, that Court unanimously affirmed the Board’s

decision. Argentine Airlines v. Ross, 64 A D 2d 994, 408

N.Y.S.2d 831 (3d Dept. 1978) (Petitioner’s Appendix 4a).

Denial of petitioner’s motion for leave to appeal to the

Court of Appeals was ordered by the Appellate Division

on March 8, 1979 and by the Court of Appeals on June 5,

1979 (Petitioner’s Appendix 1a, 2a).

ARGUMENT

Petitioner has presented no valid reasons for this

Court to exercise its discretion in granting certiorari.

Petitioner asks that this Court grant certiorari to review

the retroactive assessment by the Industrial Commissioner

of unemployment insurance taxes against it, although the

assessment is specifically provided for by statute. New

York Labor Law §576(1) states that:

Determinations of liability for contributions. No de-

termination of liability for contributions pursuant to

section five hundred sixty of this article shall be made

more than three years after the last day of the calen-

dar year in which the wages on’which such liability is

based were paid. (emphasis added).

4

The determination at issue was validly issued in 1974 for

the calendar year 1971.

Moreover, it is well established that the Commissioner

may change an interpretation of a statute which was clear

error, even when this results in a distinct reversal of a

previous position and the taxpayer had relied upon the

previous position. Dizon v. United States, 381 U.S. 68

(1965) ; Calbeck v. Travelers Insurance Company, 370 U.S.

114, 127 fn. 15 (1962); Automobile Club of Michigan v.

Commissioner, 353 U.S. 180 (1957); Irish International

Airlines v. Levine, 41 NY2d 819, affg. 48 A D 2d 202 (3d

Dept. 1975). See Barrett v. United States, 423 U.S. 212,

222 fn. 6 (1979); Fribourg Navigation Co. v. C.I.R., 383

U.S. 272, 297 (dissenting opinion) (1977).

In this case the Commissioner, validly exercising his

administrative powers,* reversed his position exempting

Argentine Airlines from the operation of the Unemploy-

ment Insurance Law because it is a foreign government.

The reversal followed a similar reversal involving Irish

International Airlines, which determination was ultimately

ruled on by the Court of Appeals, unanimously affirming

and adopting the opinion of the Appellate Division. As

that Court stated:

“The facts, circumstances and law pertaining to the

controversy were the same in 1965 as they were in 1971

when respondent reversed the prior determination.

Initially the Industrial Commissioner concluded appel-

lant was wholly owned by the government of Ireland

and therefore.exempt from the Unemployment Insur-

ance Law (Labor Law, art. 18). Subsequently, how-

ever, in interpreting the same statute, the commis-

*The New York State Unemployment Insurance Law extends

no express exemption from taxation to a foreign government or

its operations. Argentine Airlines v. Ross, 64 A D 2d 994, 408

N.Y.S.2d 831.

5

sioner concluded that an airline was a civil instrumen-

tality and not governmental and therefore, appellant

did not come within the exemption. We agree with

respondent’s contention that the 1965 determination

was erroneous as a matter of law and respondent had

the obligation to correct it. To hold that there was no

such obligation would result in.exempting appellant

from the tax, while at the same time obligating others

similarly situated to contribute.” Jrish International

Airlines v. Levine, 48 AD2d 202, 203 affd 41 NY2d 819

for reasons stated in the Appellate Division opinion

(emphasis added).

The Commissioner in the instant case was merely being

consistent and acting in accordance with New York,law in

holding a foreign airline to be liable for contributions under

the Unemployment Insurance Law.

Petitioner’s assertion that Central Illinois Public Service

Co. v. United States, 435 U.S. 21 (1978) (‘Central Ilr

nois”), is controlling in this case misstates that ruling.

Central Illinios, ruling that lunch reimbursement of em-

ployees by the employer did not qualify as “wages”

within the withholding provisions of the Internal Revenue

Code, is neither controlling nor relevant to the assess-

ment issued by the Industrial Commissioner. The pro-

posed retroactive application of that ruling was disturbing

to the concurring justices, but even they did not opine that

a taxing authority could not tax retroactively. Indeed,

they cited with approval both Dixon v. United States,

supra and Automobile Club of Michigan v. Commissioner

of Internal Revenue, supra, for the proposition that the

Commissioner is authorized to correct “mistakes of law”.

Moreover, the conditions present there which concerned

the concurring justices are not present in this case. E.g.,

here there is statutory authority to impose retroactive lia-

bility for up to three years, a period which was not ex-

ceeded. New York Labor Law $576(1). Furthermore,

EE OT ae ee eT ee en nT

6

the assessment here involves an employer’s responsibility

for its own tax liability, not that of its employees, as in

Central Illinois. The imposition of the tax in this case

does serve the function of ensuring that similarly situated

entities (i.e. commercial airlines) are assessed equally.

Finally, there is not present here the peculiar legislative me

history concerning withholding taxes and the particular

facts and interpretations related thereto which played

such a large part in the justices’ conclusions.

The decision of the New York courts in this case not

only fails to raise any question of law of sufficient import-

ance to warrant review by the Court, but is in complete

harmony with this Court’s decisions.

CONCLUSION

For the reasons set forth above this Court should

not exercise certiorari jurisdiction here.

Dated: New York, New York

November 2 , 1979

Respectfully submitted,

Rosert ABRAMS

Attorney General of the

State of New York

Attorney for Respondent

Surrtey ADELSON SIEGEL

Solicitor General

Pau 8, SHEMIN y

Tris A. STEEL

Assistant Attorneys General }

of Counsel

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