Opposition — Limbach v. Hooven & Allison Co.

Case No. 83-96 AUG 15

ALEXAN

In THE

Supreme Court of the United States

October Term 1982

JOANNE LIMBACH,

TAX COMMISSIONER OF OHIO,

Petitioner,

v.

THE HOOVEN & ALLISON COMPANY,

Respondent.

On PETITION FOR Writ OF CERTIORARI TO

THE SUPREME CouRT OF OHIO

BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

MIcHAEL A. Nims

Counsel of Record

KENNETH E. Uppecrart, Jr.

CHARLES H. MOELLENBERG, JR.

Jones, Day, Reavis & PoGuE

1700 Union Commerce

Building

Cleveland, Ohio 44115

(216) 696-3939

Attorneys for Respondent

i

TABLE OF AUTHORITIES

PAGE

Commissioner of Internal Revenue v. Sunnen, 333 U.S.

US TREE TE UA Uae SA eee 3

Hooven & Allison Co. v. Evatt, 324 U.S. 652 (1945) ... passim

Low v. Austin, 80 U.S. (13 Wall.) 29 (1872)

Michelin Tire Corp. v. Wages, 423 U.S. 276 (1976) .... passim

Montana v. United States, 440 U.S. 147 (1979) ....... 3

1

ARGUMENT

In attempting to fashion an argument in support of

its position that this Court should issue its writ of cer-

tiorari, petitioner strives to characterize the opinion of

the Ohio Supreme Court as being somehow revolutionary.

In fact, the Supreme Court of Ohio simply followed a

proposition of law which is unassailable. The Supreme

Court of Ohio quite properly held that the decision of

this Court in Hooven & Allison Co. v. Evatt, 324 U.S. 652

(1945), is controlling until such time, if ever, as this Court

overrules that decision. Such deference by a state court

to the decision of this Court on a question of federal law

is hardly revolutionary and cannot possibly provide a

basis for the issuance of a writ of certiorari.

Petitioner is really arguing that this Court must have

intended to overrule its decision in Hooven when it de-

cided Michelin Tire Corp. v. Wages, 423 U.S. 276 (1976).

However, as the Supreme Court of Ohio correctly noted,

this Court very clearly indicated in Michelin that it was

overruling only its decision in Low vy, Austin, 80 U.S, (13

Wall.) 29 (1872). Michelin, 423 U.S. at 301. This Court

did not overrule its prior decision in Hooven, Indeed, this

Court in Michelin acknowledged its awareness of its deci-

sion in Hooven, but stated that the Hooven decision had

raised constitutional questions in another context. Michelin,

423 U.S. at 301, n. 13.

The issue before this Court in Michelin was limited

to the facts respecting imported tires held for sale. The

Court expressly stated that the issue of the right of a

state to tax imported tubes held for subsequent incorpora-

tion into tires was not before it. Michelin, 423 U.S. at 279,

n, 2. The issue in this case of state taxation of imported

raw materials held in inventory for use in manufacturing

was thus not decided in Michelin. This Court followed

2

traditional jurisprudential principles in limiting its analysis

to the issue which was in fact before it and did not resolve

different issues which were not factually developed and

which were not in fact before it.

The issues raised in this case with respect to a state's

attempt to tax imported raw materials which are yet to

be incorporated into a saleable product are very different

from the issues raised in Michelin by a tax on finished

goods, Hooven & Allison Company must import the fiber

materials, such as hemp, sisal and jute, used in its various

rope products. In doing so, it is compelled to pay a prem-

ium price in order to obtain these fibers, because the third

world countries which export fibers impose a_ pricing

structure that attempts to encourage rope manufacturers

to locate their production facilities in those third world

countries. Certain third world countries also sell finished

rope products for export at prices very close to the prices

set for exported fibers. In this manner, the third world

countries seek to discriminate against exported raw mate-

rials in favor of exported finished rope products.

Despite this economic premium which is exacted,

Hooven & Allison Company has resisted the pressure to

move its operations overseas and has maintained its manu-

facturing facilities in Ohio. The impact of a state property

tax in this situation is very different from the situation

presented in Michelin, in which Michelin Tire Company

was perceived to have an advantage over domestic tire

manufacturers when it was insulated from personal prop-

erty taxes on its inventory of finished goods held for sale.

There are no domestic producers of those types of fibers

imported by Hooven & Allison Company, and thus the

economic issues are very different. These economic differ-

ences underscore the wisdom with which this Court acted

in limiting its decision in Michelin to the facts in that case,

’

3

and in deciding not to overrule its prior decision in

Hooven,

The other arguments advanced by petitioner are also

unpersuasive. Petitioner argues that the Supreme Court of

Ohio ignored the decision of this Court in Commissioner

of Internal Revenue v. Sunnen, 333 U.S. 591 (1948). The

Sunnen decision was not ignored; it was simply not ap-

plicable. Sunnen stands for nothing more than the proposi-

tion that tax issues can change in different tax years. Sun-

nen does not indicate that controlling principles of federal

constitutional law enunciated by this Court should be

ignored by a state court. Thus, this Court in Montana v.

United States, 440 U.S. 147 (1979), limited the Sunnen

doctrine to situations in which the controlling law or the

relevant facts had changed materially. Otherwise, a prior

decision on the identical tax issue was held to be disposi-

tive in any attempt to relitigate the same issue. In this

case, the facts and the law have not changed materially

since this Court decided Hooven. Therefore, Sunnen is not

pertinent to this case.

Petitioner also argues that the impact of the decision

by the Supreme Court of Ohio is unfair because it some-

how extends a protection to Hooven & Allison Company

hich no other company enjoys. This argument is ridicu-

. The Supreme Court of Ohio held only that this Court

has not overruled Hooven. Consequently, any taxpayer

who believes that Hooven articulates the controlling prin-

ciple of law in its case can rely on Hooven. Its impact is

in no way limited to respondent. Indeed, petitioner con-

tradicts its own argument by also attempting to attribute

importance to this case by claiming that other companies

are placing reliance on the decision. Since Hooven con-

tinues to express the controlling principles of law as enun-

ciated by this Court, it is hardly surprising that other tax-

payers are citing the decision.

4

In the final analysis, petitioner is really arguing only

that this Court should re-examine its decision in Hooven.

However, petitioner advances no reason in support of such

re-examination. Petitioner ignores the economic differences

between the competitive advantage at issue in Michelin

and the competitive disadvantage which Hooven & Allison

Company would suffer in relation to domestic manufactur-

ers of synthetic cordage and foreign manufacturers of

natural fiber cordage if its imported raw materials were

subject to state property tax when there is no domestic

source for such raw materials. Rather than stating any

reasons in support of a need to re-examine Hooven, peti-

tioner tries to convince the Court that it has somehow al-

ready implicitly overruled Hooven even though it refrained

from doing so expressly. The fact is that the issues in this

case are very different from those considered in Michelin.

Therefore, petitioner has not established any reason for

this Court to re-examine Hooven.

Moreover, this case would provide a very poor vehicle

for any re-examination of Hooven because of the absence

of any factual record. Since petitioner chose to argue below

that Hooven had already been overruled, petitioner made

no attempt to develop a factual record as to why the case

should be overruled. The Supreme Court of Ohio quite

properly held that Hooven had not been overruled. Ac-

cordingly, the Supreme Court of Ohio did not attempt to

develop or review a factual record. Hence, even if Hooven

were to be re-examined, this case would provide no basis

for any meaningful review, because petitioner did not de-

velop a factual record in the Ohio litigation. Therefore,

this case does not provide the factual record necessary for

proper consideration of the constitutional questions pre-

sented by state taxation of imported raw materials held

for use in manufacturing.

5

CONCLUSION

The Supreme Court of Ohio did nothing more than

follow an unassailable proposition of law: A state court

must follow a controlling decision of this Court on an issue

of federal law. Petitioner tried to argue before the

Supreme Court of Ohio that the Hooven decision had been

implicitly overruled, but this argument was properly

rejected. This Court has never overruled Hooven. Further,

because petitioner did not develop a factual record on the

constitutional issues, this case would totally fail to provide

any meaningful basis for re-examining Hooven, even if

such re-examination were thought to be desirable. Finally,

no need whatsoever has been shown for any such re-exam-

ination of Hooven. Therefore, the petition for writ of cer-

tiorari should be denied.

Respectfully submitted,

MICHAEL A, NIMS

Counsel of Record

KENNETH E, UppecrarFT, JR.

CHARLES H, MOELLENBERG, JR.

Jones, Day, REAvis & PocuE

1700 Union Commerce

Building

Cleveland, Ohio 44115

(216) 696-3939

Attorneys for Respondent

The Hooven & Allison Company

6

CERTIFICATE OF SERVICE

I hereby certify that the requisite number of copies

of the foregoing Brief in Opposition to Petition for Writ of

Certiorari have been served on petitioner by forwarding

such copies to Richard C. Farrin, 30 East Broad Street,

Columbus, Ohio 43215, Counsel for petitioner, by United

States mail, this 17th day of August, 1983. I further testify

that all parties required to be served have been served.

Michael A. Nims

Attorney for Respondent