Reply Brief — Walter Fleisher Co. v. County of Los Angeles

IN THE

SUPREME COURT

OF THE UNITED STATES

October Term, 197%

No. 79-700

WALTER FLEISHER CO., INC.,

a corporation,

Petitioner,

vs.

COUNTY OF LOS ANGELES and

CITY OF LOS ANGELES,

Respondents,

RESPONSE TO

PETITION FOR WRIT OF CERTIORARI

JOHN H. LARSON

County Counsel

JAMES DEXTER CLARK

Deputy County Counsel

648 Hall of Administration

Los Angeles, California 90012

(213) 974-1833

Attorneys for Respondents

TOPICAL INDEX

Table of Authorites

INTRODUCTION

THE RESPONDENTS' POSITION

REGARDING THE PETITION FOR

WRIT OF CERTIORARI

THE ISSUE

STATEMENT OF THE CASE

ARGU MENT

CONCLUSION

le

Page

to

TABLE OF AUTHORITIES

Cases Page

Boston Stock Exchange v.

State Tax Comm.,

429 U.S. 318 (1976) 5, 6

J. W. Hampton & Co, v. United States,

276 U.S. 394 (1928) 5

Hines v. Davidowitz,

312 U.S. 52 (1941) fs)

Michelin Tire Corp. v. Wages,

423 U.S. 276 (1976) 4

Sears, Roebuck & Co. v.

County of Los Angeles,

(Docket No. 76-1577) i as 2

& & 7

Constitution

U.S. Constitution, Art. I1$8 Cl ».

Statutes

California Revenue « Taxation Code

Section 225 as ae ©

a

19 U.S C. $$66, 1502(a) 7

19 U.S.C. $1202

il.

Miscellaneous

Calif. 1979 Stats. c. 1150 §7

La. Const. Art. 7 §21(D)

Fla. Tax & Fin. Code §196,001

Ga. Pub. Rev. Code §92-186

Miss. Ad Valorem Tax §27-31-13

ili.

oS) |

3)

IN THE

SUPREME COURT

OF THE UNITED STATES

October Term, 1979

No. 79-700

WALTER FLEISCHER CO., INC.,

a corporation,

Petitioner,

VS.

COUNTY OF LOS ANGELES and

CITY OF LOS ANGELES,

Respondents,

RESPONSE TO

PETITION FOR WRIT OF CERTIORARI

INTRODUCTION

This case involves essentially the same

issues as those presented in Sears, Roebuck & Co,

ve County of Los Angeles (Docket No. 78-1577).

A Writ of Certiorari has been granted in Sears,

This case presents some variation in the

Sears facts and will, therefore, provide the

Court with more facts from which to judge the

Re

constitutionality of California Revenue & Taxa-

tion Code §225.

THE RESPONDENTS! POSITION

REGARDING THE PETITION FOR

WRIT OF CERTIORARI

The Respondents desire that the Petition

for Writ of Certiorari be granted. As previously

indicated to the Couct, the Respondents believe

that this case should be consolidated with Sears,

Roebuck & Co, v. County, supra.

THE RESPONDENTS ALSO DESIRE A

SPEEDY RESOLUTION OF THESE MATTERS.

THE CLERK OF THIS COURT HAS INDICATED

THAT ORAL ARGUMENT IN SEARS IS TENTA-

TIVELY SCHEDULED FOR THE SECOND WEEK

OF ORAL ARGUMENT IN JANUARY. THE

RESPONDENTS DESIRE THAT THIS SCHEDULE

Bk MAINTAINED,

Toward that end, counsel for Petitioner

in this cause has stated that he has prepared his

legal arguments and can file the Petitioner's

Brief within a matter of days after the Court

grants the Writ of Certiorari, Respondents can

file their brief within days thereafter.

The Respondents therefore respectfully

urge this Court to grant the Petitioner's Writ

for Certiorari, consolidate this case with Sears,

Roebuck & Co. v. County (No. 78-1577) and _

order briefs to be submitted forthwith.

9

~e

Counsel for Respondents herein are also

counsel for Respondents in Sears, Roebuck.

Both Respondents desire consolidation and a

speedy determination of the issues herein,

In the alternative, if the Court believes that

oral argument cannot be set in January if the

cases are consolidated, then another possibility

would be to hold this case pending the outcome

in Sears.

THE ISSUE

The issue presented by both this case and

Sears, Roebuck & Co, v. County, supra, is

whether California Revenue & Taxation Code

§225 is unconstitutional under the commerce clause

(Art. I1§8 Cl. ), and Congress! statutory

scheme regarding tariffs (e.¢g., the Tariff Act of

1930, and the Trade Act of 1974).

STATEMENT OF ThE CASE

The California Court of Appeal decided this

case (see Appendix to the Petition for Certiorari).

The panel deciding this case was different than

that deciding Sears, Roebuck & Co, v. County,

but similarly ruled Revenue & Taxation Code

§225 to be unconstitutional.

California Revenue & Taxation Code §225

was cnacted before this Court's decision in

Se

Michelin Tire Corp. v. Wages, 423 U.S. 276

(1976). The legislative purpose was not to

take away from Congress the power it has to

adjust the difference between foreign and domestic

goods (see the record in Sears, Rocbuck & Co,

v. County at p. 219, last paragraph),

Revenue & Taxation Code §225 became

effective on January 1, 1976. The opinion in

Michelin Tire Corp. v. Wages, Supra, was

rendered on January 14, 1976. The California

tax lien date is March Ist. Asa result,

Revenue & Taxation Code §225 never operated

under ''pre-Michelin” conditions.

The Court of Appeal was faced with a

situation where (despite good intentions) « statute

regulated foreign commerce with the effect of

discriminating in favor of foreign goods and

against domestic goods passing through the state,

The Court of Appeal had a choice. It could have

cither ''redesigned’ the statute to prevent these

effects, or it could have told the legislature to

‘so back to the drawing board,” It took the

latter approach,

The Court of Appeal also held that the

County had the right to raise the issues involved

here and that it could not redraft Revenue 4

Taxation Code $225 so as to conform to the U.S.

Constitution and the “Tariff Acts. = Neither of

those questions are presented to this Court in

either this case or Sears, Roebuck « Co, v.

County, supra.

The legislature has now created an exemption

which does not cause discrimination but still has

the desired effect of encouraging the shipment of

goods into the state. In fact, the legislature

gave an exemption to all inventory. (Calif. 1979

Stats. c. 1150 §7.)

ARGUMENT

The Respondents believe that the Court of

Appeal was correct.

Both Hines v. Davidowitz, 312 U.S. 52

(1941) and Boston Stock Exchange v, State Tax

Comm., 429 U.S. 318 (1976) hold that state

regulations causing discrimination, especially

in foreign commerce, are within Congress'

exclusive authority to regulate commerce.

Congress has exerted that authority as

well. Over the history of this country, it has

established customs duties specifically designed

to regulate foreign commerce and portect domestic

industry (see J. W. Hampton & Co, v. United States,

276 U.S. 394 (152%) where this protectionist policy

was upheld). 30th the Constitution (Art. I §8

Cl. 1) and the Tariff Act of 1930 require that

those duties be uniform.

tevenue & Taxation Code $225 alters the

balance cstablished by Congress and invades

Congress' exclusive authority to regulate foreign

commerce,

Revenue & Taxation Code §225 causes

discrimination between out-of-state manufacturers

and out-of-state customers merely on the basis

that the goods are passing through the state.

Revenue & Taxation Code §225 is not a tax.

Like the statute in Boston Stock Exchange v.

State Tax Commission, supra, it creates a

regulation between forms of interstate and foreign

commerce,

No other state property tax exemption has

the effect of distinguishing between out-of-state

manufacturers and out-of-state customers on

the basis that the goods are temporarily in the

state, 1/

1/

~ Only four state statutes have anguage

which makes foreign-interstate distinctions.

They exempt goods as "in transit'’ however.

The Court of Appeal in this case and in Sears,

Rocbuck & Co. v. County, supra, relied heavily

on the fact that “in transit’ is parallel to the

commerce clause immunity for moving goods.

The interpretation of §225 and the three statutes

is very different (see Fla. Tax « Fin. Code

$196,001; Ga. Pub. Rev. Code §92-186;

Miss. Ad Valorem Tax §27-31-13, and La.

Const. Art. 7 §21(D) ). ven if those

statutes were interpreted in the same broad

manner as $225, their existence does not change

the constitutional objection.

6.

If many states enacted statutes favoring

foreign goods over interstate goods, on the basis

that they were moving through or temporarily

in the state, the tariff regulations of this country

would have no effect. In addition, the International

Trade Commission could not require uniformity

as it is required to do under the Tariff Act of

1930 (19 U.S.C. §§66, 1502(a)). Finally, this

country could not tell foreign manufacturers

and domestic businesses that American businesses

are to be protected by a duty of 1.5%, or 2%, or

2.5%, or more, as it has done (see 19 U.S.C.

§1202). This country could not make those

representations because 50 states could adjust

that level to suit their own interests,

CONCLUSION

The Respondents respectfully urge this

Court to grant the Petition for Writ of Certiorari,

consolidate this case with Sears, Roebuck & Co,

v. County, No. 78-1577 and set oral argument for

January 1980.

If argument cannot be set, then an alterna-

tive would be to hold this case until Sears, Roebuck

& Co. v. County is decided.

Respectfully submitted,

JOHN li, LARSON

County Counsel

JAMES DENTER CLARK

Deputy County Counsel

Attorneys for Respondents

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