# Respondents Brief — Limbach v. Hooven & Allison Co. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385011_0099%3A5 ## Record - **Collection:** Supreme Court brief - **Document type:** Respondents Brief - **Published:** January 1, 1984 - **Citation:** 466 U.S. 353 ## Text No. $3-96 IN THE Supreme Court of the United States October Term, 1983 JOANNE LIMBACH, TAX COMMISSIONER OF OHIO. Petitioner V, THRE HOOVEN & ALLISON COMPANY, Respondent On Writ OF CERTIORARI TO THE SUPREME Court OF Onto MEICHAEL A. NIMS Counsel of Record KENNETH E. UPDEGRAFT, JR. CHARLES H. MOELLENBERG, JR. Jones, Day, REAvIs & POGUE 1700 Huntington Building Cleveland, Ohio 44115 (216) 696-3939 Attorneys for Respondent I]. QUESTIONS PRESENTED FOR REVIEW Whether the Supreme Court of Ohio correctly held under Ohio law that the Tax Commissioner of Ohio was collaterally estopped from assessing Ohio's ad val- orem personal property tax against respondent Hoo- ven & Allison Company's inventory of imported raw materials held for future use in manufacturing, on the basis of this Court's decision in Hooven & Allison Co. v. Evatt, 324 U.S. 652 (1945). Whether this Court should decide the federal consti- tutional issues presented for review in the absence of a factual record and a decision by the court below on these issues. Whether Ohio's assessment of its ad valorem personal property tax against respondent Hooven & Allison Company's inventory of imported raw materials held for future use in manufacturing violates the Foreign Commerce Clause or Import-Export Clause of the United States Constitution. ii PARTIES Respondent The Hooven and Allison Company changed its name in January, 1983 to H & A Industries, Inc. Respondent has one subsidiary, Bolen Leather Products, Inc. TABLE OF CONTENTS QUESTIONS PRESENTED FOR REVIEW ........ PME 4b heedd cece eee Rd oD ed eR E Ree er eho es py oF al pe 8 ly +. Re ae CONSTITUTIONAL AND STATUTORY ce ag fe es 3) STATEMENT OF THE CASE ...............005.. SUMMARY OF THE ARGUMENT ............... | 5 A Se EA ae aE TNS I. This Court In Michelin Tire Did Not Overrule Il. Ill. Hooven |. Therefore, The Supreme Court Of Ohio Correctly Applied State Law Principles Of Col- lateral Estoppel To Bar The Tax Commissioner From Assessing The State Personal Property Tax Against Hooven & Allison’s Inventory Of Imported Raw Materials Held For Future Use In Manu- RE hci tin chk coy PORE DA eee Ulal> Ubinas This Court Lacks An Adequate Factual Record To Decide The Federal Constitutional Issues And Should Dismiss Its Writ Of Certiorari As Im- UCU THMMMNNEE 5 os dios Sab 03 keds 2 oleesal The Imposition Of The Ohio Personal Property Tax On Hooven & Allison's Inventory Of Imported Raw Materials Held For Future Use In Manufacturing Violates The Foreign Commerce Clause And The eB Pe ee rere Terry rere A. Ohio Personal Property Taxation Of Hooven & Allison's Inventories Of Imported Fibers Would Subject Those Fibers To International Multiple EN Gos Whe GRa/ COR cer Oe td PERT CLE Cien B. State Personal Property Taxation Of Imported Raw Materials Would Conflict With Federal Regulation Of Foreign Commerce .......... C. State Personal Property Taxation Of Manu- facturers Inventories Of Imported Raw Materials Would Create Interstate Commercial ME rc et ie US ans Cy Ly tia ta hed I Sa coal are 17k Sak gn atin g's 0 one wae ka CERTIFICATE OF SERVICE .......... 2c cccccens APPENDICES Agidavit of Jolin P. Back 2.5.05. 0 eve cc ceee: Ohio Supreme Court Rule VII, §7 ......... 33 36 35 39 A-] B-1] Vv TABLE OF AUTHORITIES Cases PAGE A & P Tea Co. v. Cottrell, 424 U.S. 366 (1976) ....... 36 Adams Mfg. Co. v. Storen, 304 U.S. 307 (1938) ...... 29 Arkansas Electric Cooperative Corp. v. Arkansas Public Comm'n, 103 S.Ct. 1905 (1983) ............0.005 19 Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511 (1935) .. 25, 30 Best & Co. v. Maxwell, 311 U.S. 454 (1940) .. 0.000... 16 Boston Stock Exchange v. State Tax Commission, 429 a EET a Oa CN e 5 kab eR eta cckes Cues dt 14, 36 Brown v. Maryland, 25 U.S. (12 Wheat.) 419 (1827) .. 7, 13, 15, 35 City of Columbus v. Union Cemetery Ass'n, 45 Ohio St. OS Si, eee Me OU IGM... . ids ccswnaceceret 10 Commissioner of Internal Revenue v. Sunnen, 333 U.S. Re Tat ee Noe a'cin ys. vip hw Wea NS 10, 11 Commonwealth rdison Co. v. Montana, 453 U.S. 609 Ne i gd Se gt ae Cee. o' a a niks 14 Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 ee GCs er aw ah We eae Saws > b6e es 19, 22 Dean Milk Co. v. Madison, 340 U.S. 349 (1951) ...... 36 Department of Revenue of Washington v. Ass'n of Washington Stevedoring Cos., 435 U.S. 734 (1978) . 14,19 Gwin, White & Prince, Inc. v. Henneford , 305 U.S. 434 a Faint hind vice nie wv igh p ree Cara Oe e.o% vs 21, 29 Halliburton Oil Well Co. v. Reily, 373 U.S. 64 (1963) . 27 Henneford v. Silas Mason Co. , 300 U.S. 577 (1937)... 27 Hercules Powder Co. v. United States , 337 F.2d 643 (Ct. SRT os ahs aly cb Ln CAR ER WER eA 6 ones 12 vi PAGE International Harvest. rCo.v. Department of Treasury, Se RN oF 6a cae hein Pa eRe 27, 29, 30 Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434 CRTs Mane cA ehiae's chee whine Rekiene eo trae passim Johnson v. Massachusetts , 390 U.S. 511 (1968) ....... 17 Low v. Austin, 80 U.S. (13 Wall.) 29 (1872) .......... 6, 8, 11, 13 Maryland v. Louisiana, 451 U.S. 725 (1981) ......... 16 McGoldrick v. Gulf Oil Corp., 309 U.S. 414 (1940)... 34 McLeod v. J]. E. Dilworth Co., 322 U.S. 327 (1944)... 36 Michelin Tire Corp. v. Wages, 423 U.S. 276 (1976) ... passim Minnesota v. Blasius, 290 U.S. 1 (1933) ..........0.. 30 Mitchell v. Oregon Frozen Foods Co., 361 U.S. 231 SE hie WON en had eaten de vine One eis. een 17 Montana v. United States, 440 U.S. 147 (1979) ....... 1] Nippert v. City of Richmond, 327 U.S. 416 (1946) .... 28,31, 3! Norwood v. McDonald, 142 Ohio St. 299, 52 N.E.2d 67 SR aia aee ahiee aes ated And oo wwe e Rie eee 10 Richfield Oil Corp. v. State Board of Equalization , 329 Bt | ear array ce eer ay Pree he a ee 28 Rowland v. Collins , 48 Ohio St.2d 311, 358 N.E.2d 582 CUEUNE d eeca ck ee er een es oe Os av WIG Sloe er acess 5 S.S. Kresge Co. v. Bowers, 170 Ohio St. 405, 166 N.E.2d 139 (1960), appeal dism'd, 365 U.S. 466 (1961) ..... 5, 23 Tait v. Western Maryland R. Co., 289 U.S. 620 (1933) 1] Wainwright v. City of New Orleans , 392 U.S. 598 (1968) 17 Western Live Stock v. Bureau of Revenue , 303 U.S. 250 fo BPI ert Anne ae Pree Dr ane ry et eee 21 PAGE Whitehead v. General Telephone Co. , 20 Ohio St.2d 108, ee CUO 6 Sa iae hs ceded apie eeaciaxes 10 Wolf v. Weinstein, 372 U.S. 633 (1963) ....... eawnes 17 Zee Toys, Inc. v. County of Los Angeles , 85 Cal. App. 3d 763, 149 Cal. Rptr. 750 (1975), affd sub nom., Sears, Roebuck & Co. v. County of Los Angeles, 449 U.S. AUER Fc ara es Cost esc s eon Lee hae AS, 37 Constitutional and Statutory Provisions Roe UN WERE OS i nt hore eas Sihe RAN Ss 6, 23 Tariff Schedules of the United States Annotated (1982 §§304.02-.58, 315.25, 315.35, 315.40, 315.50 ..... 34, 36 United States Code, Title 19, §2411 ..............4. 25 United States Constitution, Article I, §8, cl. 3......... l Books and Periodicals Belassa, The Process of Industrial Development and Al- ternative Development Strategies, (World Bank Staff Working Paper No. 438, October, 1980) ........... 26 Belassa, The Tokyo Round and the Developing Coun- tries, 14 JOURNAL OF WORLD TRADE Law 93 (1980). 26 Dam, Tit GATT: LAW AND INTERNATIONAL ECONOMIC Ea ee err a Pier ee 26 Froomkin, Some Problems of Tax Policy in Latin Ameri- ca, LO NATIONAL TAN JOURNAL 370 (1958) 0000, 26 Grilli, The Future for Hard Fibers and Competition from Synthetics (World Bank Staff Occasional Papers No. garth SRO Are aot ee mee ir ibe Repine Site a eae OF 24-25, viii Hellerstein, State Taxation and The Supreme Court: To- ward A More Unified Approach To Constitutional Ad- judication? , 75 Micu. L. Rev. 1426 (1977) ........ King, Tax Conventions to Which United States is a Party in Proceedings of the 1960 Institute on Private Invest- pets AA. ok aa a ice ha eee eae uee Latin America Commodities Report, March 18, 1977 .. Latin America Commodities Report, February 17, 1978 Manners, The Changing World Market for Iron Ore FREED | seid wid aera Capen wind cds elec ucae le OECD Model Convention For The Avoidance Of Double Taxation With Respect To Taxes On Income And Capi- tal, Chapter II, Article 2, reprinted in 1 Tax Treaties (CAset) WEE CEE cs cba ekackhvasdakeoceeiens Price, Waterhouse & Co., Information Guide: Doing ee re rar Price, Waterhouse & Co., Information Guide: Doing Deminned Gs TERMS LITRE) ias k aké ccinecses vers Ross, Foreign Governments’ Tax Incentives for In- vestment in Proceedings of the 1959 Institute on Private PPP re ree ye ree Stern, The Export Tax on Malayan Rubber , 16 NATIONAL pot 8 I eer rere rer eae Te United Nations Model Double Taxation Convention Be- tween Developed And Developing Countries, Chap- ter I, Article 2, reprinted in | Tax Treaties (CCH) 9171 CE ors. 5 3 acbon ¢ ae 6 Pes eee RE Gordo Be United Nations Food and Agriculture Organization, Re- view of Oilseeds, Oils and Oilmeals Policies: Brazil I, CRD 5-4. ripieh hgh inal 5, Feeaeaed aes dade s 24 24 26 United States General Accounting Office, Report To The Secretary of Commerce And The United States Trade Representative: Benefits Of-International Agreement On Trade-Distorting Subsidies Not Yet Realized ES United States International Trade Commission, Sum- mary of Trade and Tariff Information: Cotton Linters, Waste, Thread, and Yarn; Vegetable Fibers (Except Cotton and Yarns) (September, 1982) ............. The World Bank, Bangladesh; Current Trends and Development Issues (1979) ............ 000 eevee es The World Bank, Brazil: Industrial Policies and Manu- DNUEPUD CRIES sce ccc ccc ees eseecees The World Bank, Brazil: A Review of Agricultural Poli- TG LEGENDS yrs seccecccccececess The World Bank, Export Promotion Policies (World Bank Staff Working Paper No. 313, 1979) .............. The World Bank, A Dynamic Simulation Model of the World Jute Economy (World Bank Staff Working Paper CCC C ES gobs scceeccccccccccs Developments in the Law — Federal Limitations on State Taxation of Interstate Business, 75 Harv. L. Rev. 953 EGE cabs ecescccccccccce ss Note, Limitations on State Taxation of Foreign Com- merce: The Contemporary Vitality of the Home-Port Doctrine , 127 U. Penn. L. Rev. 817 (1979) ........ Recent Decisions, 47 Miss. L. J. 789 (1976) .......... Miscellaneous 48 Fed. Reg. 23047 (May 27, 1983) ................. 35 26, 27 26, 27 24 26, 27 35 21, 25 No. 83-96 IN THE Supreme Court of the United States October Term, 1983 JOANNE LIMBACH, TAX COMMISSIONER OF OHIO, Petitioner Vv. THE HOOVEN & ALLISON COMPANY, Respondent On Wait OF CERTIORARI TO THE SUPREME Court OF OHIO BRIEF FOR RESPONDENT CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED In addition to the constitutional and statutory pro- visions cited by petitioner, this case involves the Foreign Commerce Clause, which is contained within Article I, §5, cl. 3 of the United States Constitution. Article I, §8, cl. 3 of the United States Constitution provides, in pertinent part: The Congress shall have Power... To regulate Commerce with foreign Nations and among the several States . . STATEMENT OF THE CASE Respondent The Hooven and Allison Company (“Hooven & Allison’) is a manufacturer of cordage products made from natural fibers. These natural fibers are not grown in the United States and must be imported. This case concerns a personal property tax assessment issued by petitioner Tax Commissioner of Ohio on Hooven & Alli- son's inventory of imported raw materials held for future use in manufacturing cordage. The Tax Commissioner in- creased the assessed value of personal property for the tax years 1976 and 1977 by including as part of Hooven & Allison’s taxable manufacturing inventory the average value of its imported raw materials inventory held for future use in manufacturing. In its tax returns, Hooven & Allison had deducted the value of such imported raw materials from its manufacturing inventory on the authority of this Court's decision in Hooven & Allison Co. v. Evatt, 324 U.S. 652 (1945) (hereinafter “Hooven I”).' Upon application for review, the Tax Commissioner sustained the increased assessments, disregarding Hooven & Allison's collateral estoppel and federal constitutional arguments. Pet. App. A-11. The Tax Commissioner relied on Michelin Tire Corp. v. Wages, 423 U.S. 276 (1976) (hereinafter “Michelin Tire”), in which this Court held that the Import-Export Clause did not proscribe the imposition by the State of Georgia of a nondiscriminatory ad valorem personal property tax on imported finished goods sorted, arranged and held strictly for resale. Though the Tax Com- In Hooven 1, this Court held, on the same facts, that Hooven & Allison's imported raw materials stored in their original packages and held for future use in manufacturing were immune under the Import- Export Clause of the United States Constitution from Ohio's personal property tax. 3 missioner recognized that this Court had not overruled Hooven | in its Michelin Tire decision, the Tax Commis- sioner reasoned that the “rationale” of the Michelin Tire decision was “equally persuasive” in the context of Hooven & Allison's imported raw materials stored for later use in manufacturing. Pet. App. A-15. Hooven & Allison appealed to the Ohio Board of Tax Appeals. Hooven & Allison raised again the collateral es- toppel and federal constitutional issues presented here.” The Board of Tax Appeals adopted the essential facts, as stated in the Tax Commissioner's Certificate of Deter- mination: The applicant is a manufacturer of cordage, importing certain quantities of raw materials (hemp, sisal, jute, manila, ete.) each year from Tanzania, Ec- uador, Kenya, Thailand, Bangladesh, et al. Such im- ported manufacturing inventory is ordered on credit from foreign producers and shippers through their brokers in various U.S. coastal cities, who then ar- range for its transport by ocean-going vessel to the United States. Upon arrival in this country, the im- ports are transported overland by rail to the applicant's Xenia plant. At the Xenia plant, the bales of raw mate- rials are placed in a warehouse and inspected, with payment then being made to the broker by pro forma invoice; any weight variations or quality grade differ- ences discovered upon inspection result in a claim for partial refund. (However, whether the materials are subsequently approved as inspected or a claim for damage or misgrading is filed, Hooven & Allison takes title to all the bales of materials when they are boarded * Decision and Order of Board of Tax Appeals, entered March 19, 1982. Pet. App. A-10. 4 overseas on the ocean-going vessels.)' After complete tagging and inspection, the imported bales of raw ma- terials are then stored in a dry area in their original packages until placed into production. Pet. App. at A-11, A-12. Upon the record and briefs submitted by the parties, the Board of Tax Appeals held: The evidence before the Board of Tax Appeals establishes that the parties involved in this matter are identical to those involved in Hooven 1. The taxability of raw materials issue involved in the case at bar was also an issue in Hooven 1, The raw materials and the type of taxation involved in this cause are identical to those involved in Hooven 1, Hooven 1 has not been reversed by the U.S. Supreme Court and thus, has the force and effect of law. Under the doctrine of collateral estoppel, litigation of the instant [taxability of the in- volved raw materials] [sic] issue is barred in’ this matter and the exemption from taxation was im- properly held to be unavailable. The Board of Tax Appeals rejected the Tax Commis- sioner’s argument that this Court in Michelin Tire had over- ruled Hooven 1. Accordingly, the Board of Tax Appeals reversed the Tax Commissioner. ’ Due to a misunderstanding, representatives of Hooven & Alli- son advised the Tax Commissioner erroneously that Hooven & Allison took title to the imported fibers at the time they were boarded on vessels in foreign ports. In fact, Hooven & Allison's contracts for the purchase of fibers provided, as did the contracts considered by this Court in Hooven 1, that title passed to Hooven & Allison upon payment of the purchase price. Hooven & Allison informed the Board of Tax Appeals of this factual error in its brief at page ten, but apparently the Board of Tax Appeals overlooked the correction. In any event, this factual error is inconsequential. This Court stated in Hooven I that “the time when title passes to [Hooven & Allison] is immaterial to decision. ” 324 U.S. at 662 n.3. 2 The Board of Tax Appeals decided only the collateral estoppel issue. Because the Tax Commissioner took the position that this Court in Michelin Tire had overruled Hooven I, the Tax Commissioner deliberately chose to present no evidence regarding the constitutional issues. Furthermore, as the Tax Commissioner also contended be- fore the Board of Tax Appeals, the Board of Tax Appeals lacked jurisdiction under Ohio law to consider the federal constitutional issues. 8. S. Kresyre Co. v. Bowers, 170 Ohio St. 405, 407, 166 N.E.2d 139, 141 (1960), appeal dism'd, 365 U.S. 466 (1961). Therefore, Hooven & Allison also did not present, and was not required to present, any evidence concerning the constitutional issues to the Board of Tax Appeals. Hooven & Allison filed a Notice of Appeal to the Su- preme Court of Ohio in order to raise the constitutional issues, which the Board of Tax Appeals could not consider, and to preserve its right to have the Supreme Court of Ohio consider alternative grounds for affirming the Decision and Order of the Board of Tax Appeals. Rowland v. Collins, 48 Ohio St.2d 311, 312, 358 N.E.2d 582 (1976). The Tax Commissioner of Ohio filed subsequently a Notice of Cross-Appeal to the Supreme Court of Ohio. The Tax Commissioner's Notice of Cross-Appeal raised only a question of state law—whether the Board of Tax Appeals had correctly applied the state law principles of collateral estoppel: The Board erred in holding that the Tax Commis- sioner is collaterally estopped by the decision of the United States Supreme Court in Hooven and Allison Co. v. Evatt, 324 U.S. 652 (1945), from assessing the personal property tax for tax years 1976 and 1977 on taxpayer's imported raw materials inventory retained in its original packages on tax listing day and, based on such holding, deciding that the final determinations of the Tax Commissioner in issue in BTA Case Nos. 79-C-637 and 79-C-638 should be reversed. 6 As before the Board of Tax Appeals, the Tax Commis- sioner again chose not to present any evidence relating to the federal constitutional questions raised in Hooven & Allison's appeal, though those questions arose within the original jurisdiction of the Ohio Supreme Court. Hooven & Allison sought to invoke the original jurisdiction of the court and, pursuant to Ohio Supreme Court Rule VIII, §7, presented certain facts pertaining to the constitutional is- sues by means of an affidavit of John P. Buck, its Vice President and Treasurer.’ It further requested an evi- dentiary hearing, if the Ohio Supreme Court preferred to ascertain the facts through a factual hearing. Reply Brief of Appellant and Cross-Appellee, at 11. Because the Ohio Supreme Court did not reach the federal constitutional issues raised only in Hooven & Allison's appeal, the court did not undertake any fact-finding and did not request the parties to develop a factual record on those issues. The Ohio Supreme Court affirmed the Board of Tax Appeals. The court held that under Ohio law the principles of collateral estoppel prohibited the Tax Commissioner from assessing Ohio's personal property tax against Hooven & Allison's imported raw materials held for future use in manufacturing. It carefully considered the effect of this Court's decision in Michelin Tire. It found that this Court had not overruled Hooven I in Michelin Tire. Though this Court had discussed Hooven I in Michelin Tire, this Court explicitly overruled only Low v. Austin, 80 U.S. (13 Wall.) 29 (1872). Therefore, the Ohio Supreme Court held that this “[C Jourt’s action—or inaction— must be accorded con- clusive effect, at least in regard to its intent in reapprais- * Counsel for the Tax Commissioner refused to include the Affi- davit of John P. Buck in the Joint Appendix. Despite respondent's designation of this affidavit, counsel for the Tax Commissioner im- properly arrogated to himself the judicial power to determine that this affidavit was not a part of the record below. This affidavit is therefore included as Appendix A to this brief. ~ ing its earlier ruling in Hooven 1.” 4 Ohio St.3d at 172; 447 N.E.2d at 1298; Pet. App. at A-6. Contrary to the Tax Commissioner's unjustified claim that the Ohio Supreme Court resurrected the original pack- age doctrine buried in Michelin Tire, the court recognized that Michelin Tire sounded the “death knell” of the original package doctrine. Id. But, it found ample distinguishing facts between the imported finished goods held for resale in Michelin Tire and the imported raw materials held for fu- ture use in manufacturing in Hooven I (and this case), Id. This distinction was found to be particularly significant be- cause this Court reserved judgment in Michelin Tire on the constitutionality of the state personal property tax imposed on imported tubes, which are more akin to the imported raw materials of Hooven & Allison than Michelin Tire’s finished tires held for resale. Id.; Pet. App. at A-7, Noting that this Court, since Brown v, Maryland, 25 U.S. (12 Wheat.) 419 (1827), has disdained “an inflexible rule” re- garding the constitutionality of state taxation of foreign commerce, the Ohio Supreme Court aptly reasoned: Finally, it has been suggested that we ignore the dictates of Hooven | as Michelin indicates at the very least the United States Supreme Court's intention presently to abandon the principles embodied in the former action. Were this court to comply with such a request, we would be guilty of overreaching. 4 Ohio St.3d at 173; 447 N.E.2d at 1299; Pet. App. at A-9. Therefore, on the basis of distinguishing character- istics between the possible effect of state taxation on foreign commerce in Hooven I (and this case) in contrast to Mi- chelin Tire, the Ohio Supreme Court rejected the Tax Commissioner's argument of the implicit overruling of Hooven I and held under Ohio law that collateral estoppel applied to bar state taxation of Hooven & Allison's imported raw materials. Accordingly, it did not address the federal 5 constitutional issues raised solely by Hooven & Allison, not by the Tax Commissioner, in its appeal. The Ohio Supreme Court decided only the issue of collateral estoppel under applicable principles of state law. SUMMARY OF ARGUMENT 1. Before the Supreme Court of Ohio, the Tax Com- missioner deliberately chose to argue only that Michelin Tire overruled Hooven | as a matter of law, Consistent with this conscious strategy, the Tax Commissioner chose not to present any factual evidence concerning whether Hooven I had been overruled or should be overruled on the authority of Michelin Tire. Consequently, the Tax Commissioner raised below only a narrow issue of law. The Supreme Court of Ohio correctly decided this issue of law by holding that this Court in Michelin Tire had not overruled Hooven 1. Though this Court discussed Hooven 1 in Michelin Tire, it overruled only Low v. Austin, 80 U.S, (13 Wall.) 29 (1872). The different factual context of Hooven I from Mi- chelin Tire provided good reason for the Michelin Tire Court not to decide whether to overrule Hooven I before examining the practical effect on foreign commerce of Ohio's personal property tax as applied to Hooven & Alli- son's inventory of imported raw materials held for future use in manufacturing, Because the Tax Commissioner presented no factual evidence, once the Ohio Supreme Court correctly held that Michelin Tire had not overruled Hooven | as a matter of law, it indisputably followed that state law principles of collateral estoppel barred state per- sonal property taxation of Hooven & Allison's raw materials inventory, 2. This Court should dismiss its writ of certiorari as improvidently granted. The Tax Commissioner failed to develop any factual record below concerning the federal constitutional questions. This Court, therefore, lacks an 7) adequate factual record on which to consider the practical effect of the state personal property tax on foreign com- merce as applied to Hooven & Allison's importation of raw materials, Without a factual record, this Court should not decide the important federal constitutional issues. The re- maining collateral estoppel issue raises primarily a question of state law and therefore does not warrant review by writ of certiorari. 3. Ohio personal property taxation of Hooven & Alli- son's imported raw materials inventory would violate the Foreign Commerce Clause and the policies underlying the Import-Export Clause, by subjecting Hooven & Allison to unduly burdensome multiple taxation solely because of the foreign origin of its raw materials, by interfering with na- tional foreign policy on international trade, and by likely causing interstate commercial conflict. ARGUMENT I, THIS COURT IN MICHELIN TIRE DID NOT OVERRULE HOOVEN I, THEREFORE, THE SU- PREME COURT OF OHIO CORRECTLY APPLIED STATE LAW PRINCIPLES OF COLLATERAL ESTOP- PEL TO BAR THE TAX COMMISSIONER FROM AS- SESSING THE STATE PERSONAL PROPERTY TAX AGAINST HOOVEN & ALLISON'S INVENTORY OF IMPORTED RAW MATERIALS HELD FOR FUTURE USE IN MANUFACTURING, The Tax Commissioner took the position below that this Court's opinion in Michelin Tire had the effect as a matter of law of overruling Hooven 1, Consequently, the Tax Commissioner deliberately chose not to establish a factual record that would show why Hooven I should either be held to have been overruled in Michelin Tire or should now be overruled, The conscious decision of the Tax Com- missioner to choose as his battleground the one argument 10 that Michelin Tire had overruled Hooven I and that facts were not necessary to this determination left the Supreme Court of Ohio with a very narrow issue — whether this Court had overruled Hooven I as a matter of law. Plainly this Court in Michelin Tire did not intend to overrule Hoo- ven 1, Once the Supreme Court of Ohio decided this issue, as it did correctly, its application of state law collateral estoppel principles followed as a matter of course. This Court held in Hooven I that the Import-Export Clause prohibited the State of Ohio from assessing its per- sonal property tax against Hooven & Allison's inventory of imported raw materials held for future use in) manu- facturing. It is undisputed that the facts surrounding Hoo- ven & Allison's purchase, importation, storage and use of the raw materials, on which the Tax Commissioner assessed personal property taxes in tax years 1976 and 1977, were identical in every material respect to the facts which this Court considered in its 1945 opinion. Further, the present litigation involved the same parties and raised the same legal issues below as in Hooven 1, Therefore, the Supreme Court of Ohio properly applied the principles of collateral estoppel under Ohio law to prohibit the Tax Commissioner from relitigating against Hooven & Allison the precise is- sues Which this Court had previously decided in favor of Hooven & Allison, City of Columbus ve. Union Cemetery Ass'n, 45 Ohio St.2d 47, 341 N.E.2d 298 (1976) (Syllabus 1), approving and following Whitehead v, General Telephone Co,, 20 Ohio St.2d 108, 254 NE. 2d 10 (1969) and Norwood v. McDonald, 142 Ohio St. 299, 52 N.E.2d 67 (1943), The Tax Commissioner has argued, relying on Com- missioner of Internal Revenue v, Sunnen, 333 U.S, 591 (1948), that a change in the legal atmosphere since Hooven I makes collateral estoppel inappropriate. However, be- cause Sunnen is a federal decision concerning federal tax- ation, it is not controlling on the Ohio Supreme Court's application of collateral estoppel principles, 1] Moreover, the Tax Commissioner has read Sunnen much too broadly. The decision in Sunnen stands for the accepted proposition that collateral estoppel does not oper- ate in the event of a major change in the controlling facts or a reversal in the applicable legal principles. Id. at 599. Sun- nen does not hold, as the Tax Commissioner has contended, that every change in the legal atmosphere surrounding a prior decision of this Court empowers an inferior tribunal to ignore the collateral estoppel effect of that decision. Collateral estoppel must apply unless this Court has overruled its prior decision. As this Court stated in Montana vu. United States, 440 U.S. 147, 161 (1979), “unless there have been major changes in the law governing inter- governmental tax immunity since Kiewit 1, the Govern- ments reliance on Commissioner v. Sunnen, 333 U.S. 59] (1945), is misplaced.” This Court concluded in Montana v. United States: “Because the factual and legal context in which the issues of this case arise has not materially altered since Kiewit 1, normal rules of preclusion should operate to relieve the parties of redundant litigation [over] the identi- cal question of the statute's application to the taxpayer's sta- tus. Tait v. Western Maryland R. Co., 289 U.S. 620, 624 (1933)." 440 U.S. at 162. The principles of collateral estop- pel, therefore, are applicable to this case, because neither a major change in the controlling facts nor a reversal of legal principles has occurred. No relevant change in the controlling legal principles and facts has occurred since Hooven I was decided. The controlling facts in this case are indisputably identical to the facts in Hooven 1. Likewise, the controlling principles of law have not been reversed. This Court did not overrule in Mi- chelin Tire its prior decision in Hooven 1. Though explicitly referring to Hooven I in its opinion in Michelin Tire, this Court overruled only Low v. Austin, 80 U.S. (13 Wall.) 29 (1872). 423 U.S. at 301. The Tax Commissioner has con- ceded, therefore, as she must, that this Court has not ex- pressly overruled Hooven I. Brief for the Petitioner, at 16. Further, the controlling facts in Hooven I (and this case) are distinguishable from the facts in Michelin Tire. The Ohio tax in Hooven I was imposed on imported raw materi- als held for later use in manufacturing. The Georgia tax in Michelin Tire fell on imported finished goods arranged and held strictly for resale. Michelin Tire did not address the constitutionality of state taxation of imported raw materials inventories and did not consider the fundamental economic differences between taxation of finished goods held for re- sale and raw materials stored for future manufacturing use. This Court in Michelin Tire explicitly declined to decide the constitutionality of the Georgia tax as applied to imported tubes. 423 U.S. at 279. Before the decision in Michelin Tire could be found to have caused a change in the legal atmo- sphere sufficient to nullify the collateral estoppel effect of Hooven I, the Tax Commissioner was required to demon- strate that Michelin Tire involved facts “materially the same’ as the facts in Hooven 1. See Hercules Powder Co. v. United States, 337 F.2d 643, 646 (Ct. Cl. 1964). Because the facts in Hooven I are not materially the same as the facts involved in Michelin Tire, no change in the controlling facts or law has occurred since Hooven I. The fact that this Court in Michelin Tire referred ex- pressly to Hooven I, but did not overrule it, forecloses the Tax Commissioner's argument that Hooven | was overruled by implication.” The only plausible conclusion is that this Court decided deliberately not to overrule Hooven I. This conclusion is strengthened by the fact that Hooven I is the only decision of this Court to address directly the consti- tutionality of state personal property taxation on imported raw materials held for future use in manufacturing. > This fact also demonstrates the lack of merit to the Tax Commis- sioner s argument that this Court is ordinarily unable to give a complete listing of every prior case which a new decision has the effect of over- ruling. In this case, the Court was well aware of Hooven | and chose not to overrule it. 13 The Tax Commissioner has argued that Hooven I has been overruled because it is premised on the reasoning of Low v. Austin, which this Court overruled in Michelin Tire. This argument is both mistaken and immaterial. The deci- sion of this Court in Hooven I was not based on Low v. Austin. In fact, the majority opinion in Hooven I mentioned Low v. Austin only twice,” and never relied on Low v. Aus- tin as authority for its decision. This Court noted that Hoo- ven 1 was decided “|i}n another context” from Low v. Austin, 423 U.S. at 301 n.13. Instead of Low v. Austin, the decision in Hooven I is grounded firmly in the opinion of Chief Justice John Mar- shall in Brown v. Maryland, 25 U.S. (12 Wheat.) 419 (1827), which relied on the Foreign Commerce Claw © in addition to the Import-Export Clause to strike down a state tax. Like Hooven 1, Brown v. Maryland was not overruled in Mi- chelin Tire. The Court recognized in Hooven I that state personal property taxation could also violate the Foreign Commerce Clause, whether or not the imported raw mate- rials were retained in their original packages. 324 U.S. at 665-66. Thus, the original package doctrine is not the only basis on which the result in Hooven I can now be sustained, contrary to the Tax Commissioner's contention. In any event, the Tax Commissioner's argument is simply imma- terial for the reason that this Court chose deliberately in Michelin Tire not to overrule Hooven I, and only to overrule Low v. Austin. The Tax Commissioner has also argued incorrectly that the new mode of analysis adopted in Michelin Tire has the consequence of overruling Hooven. Again, this contention is mistaken for the reason that this Court did not apply the reasoning of Michelin Tire to the different context found in Hooven I. Furthermore, this Court has made clear in determining the constitutionality of state taxation under the Commerce Clause that its disapproval of the method of See 324 U.S. at 657, 666. l4 analysis of a prior decision does not mandate overruling the result of that decision without further consideration. Com- monwealth Edison Co. v. Montana, 453 U.S. 609, 617 (1981). This Court has emphasized its need to have the ben- efit of a complete factual record and full argument before considering any overruling of a prior case. Department of Revenue of Washington v. Ass'n of Washington Stevedoring Cos., 435 U.S. 734, 757 (1975). This judicious restraint is particularly warranted in considering the constitutionality of state taxation, because this Court has consistently followed a pragmatic approach to applying the Import-Export and Foreign Commerce Clauses, as demonstrated in both Hooven I and Michelin Tire.’ 423 U.S. at 285-89; 324 U.S. at 66S. It reached differ- ent conclusions in these cases based on the divergent impact of the taxes. This Court was well aware in Hooven I of “the exclusive power of the national government to tax imports,” “the burden of unequal local taxation by the seaboard, at the expense of the interior states,” and “the national concern in protecting national commercial relations’ — factors all uti- lized in Michelin Tire. 324 U.S. at 656, 664, 675. The thor- oughness of Mr. Justice Black's analysis of these concerns in ~ More recently the Court has said On various occasions when called upon to make the delicate adjustment between the national interest in free and open trade and the legitimate interest of the individual States in exercising their taxing powers, the Court has counseled that the result turns on the unique characteristics of the statute at issue and the partic- ular circumstances in each case. Boston Stock Exchange v. State Tax Commission, 429 U.S. 315, 329 (1977). Since Michelin Tire, the Court has struck down under the Commerce Clause a state transfer tax on interstate securities trans- actions, Boston Stock Exchange, supra, and a state ad valorem property tax on foreign-owned containers used exclusively in international com- merce, Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434 (1979). In each case the Court's decision turned on the specific tax at issue and the specific context in which it was levied. 15 his dissent in Hooven I demonstrates the depth of consid- eration which the Court gave these factors. The impact of Ohio's personal property tax on Hooven & Allison's raw ma- terials inventory rendered the tax unconstitutional. In con- trast, the impact of the state tax in Michelin Tire passed the Court's scrutiny. Michelin Tire did not hold that all forms of facially non- discriminatory state personal property taxation are permit- ted. In Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434 (1979), this Court struck down a state nondiscriminatory ad valorem personal property tax as applied. Consequently, the constitutionality of state personal property taxation, even if facially neutral, must be evaluated in a specific fac- tual context. Therefore, the Ohio Supreme Court was en- tirely correct in holding that Michelin Tire had not over- ruled Hooven I as a matter of law and that, accordingly, the Tax Commissioner was collaterally estopped from taxing Hooven & Allison's imported raw materials. In the absence of a factual record, it could properly reach no other result. Il. THIS COURT LACKS AN ADEQUATE FACTUAL RECORD TO DECIDE THE FEDERAL CONSTI- TUTIONAL ISSUES AND SHOULD DISMISS ITS WRIT OF CERTIORARI AS IMPROVIDENTLY GRANTED. Resolution of the important federal constitutional is- sues in this case requires consideration of the practical effect of Ohio's personal property tax on foreign commerce. This Court concluded in Hoeven 1: “As was emphasized in Brown v. Maryland, supra, the reconciliation of the competing de- mands of the constitutional immunity and of the state's pow- er to tax, is an extremely practical matter.” 324 U.S. at 668.” A state tax must be assessed in light of its actual effect considered in conjunction with other provisions of the * See also pages 20-21, 27-31 infra. 16 State's tax scheme. “In each case it is our duty to deter- mine whether the statute under attack, whatever its name may be, will in its practical operation work dis- crimination against interstate commerce. Best & Co. vu. Maxwell, 311 U.S. 454, 455-56 (1940). Maryland v. Louisiana, 451 U.S. 725, 756 (1981) (emphasis added). This practical effect cannot be determined by a super- ficial look at the face of the taxing statute, as the Tax Com- missioner contends. However, except for the affidavit of John P. Buck, the record is barren of any facts relating to the federal constitutional issues. The record is empty because the Tax Commissioner has taken the position throughout this litigation that Michelin Tire had overruled Hooven I and because the Tax Commissioner further contended that the Ohio Board of Tax Appeals lacked jurisdiction to consider the federal constitutional issues. The Tax Commissioner has even contended before this Court that the affidavit of John P. Buck is not a part of the record. Because the Ohio Board of Tax Appeals decided only the collateral estoppel issue, the Tax Commissioner presented only this state law question in its appeal to the Ohio Supreme Court. Since the Ohio Supreme Court affir- med the Board of Tax Appeals on the basis of collateral es- toppel, it did not address the federal constitutional issues and had no need to exercise its original jurisdiction over these issues to hear evidence and to make findings of fact. Consequently, through no fault of Hooven & Allison, the record is devoid of the facts necessary to resolve the federal constitutional issues. This Court should not, and indeed cannot consistently with its prior case law, decide this case in the absence of a factual record. Therefore, on the basis of its judicious prac- tice of not deciding important constitutional questions in 17 cases in which “the facts necessary for evaluation of the dis- positive constitutional issues . . . are not adequately presented by the record,” this Court should dismiss its writ of certiorari as improvidently granted. Wainwright v. City of New Orleans, 392 U.S. 598, 599 (1968) (per curiam) (For- tas, J., concurring). See also Johnson v. Massachusetts, 390 U.S. 511 (1968) (per curiam); Mitchell v. Oregon Frozen Foods Co., 361 U.S. 231 (1960) (per curiam), Furthermore, the remaining collateral estoppel issue raises primarily a question of state law. The Ohio Supreme Court's application of collateral estoppel as a matter of state law was indisputably proper, once it had correctly deter- mined that the Michelin Tire Court had not overruled Hooven 1. Because the court below decided only the issue of state law raised by the Tax Commissioner and expressly de- clined to decide the federal constitutional issues raised by Hooven & Allison, no federal constitutional questions are properly before this Court. It is indeed anomalous that the Tax Commissioner has sought to have this Court decide fed- eral constitutional issues which she did not raise below and which the Ohio Supreme Court did not address because of its decision based on the primarily state law issue of col- lateral estoppel. Whether or not the Ohio Supreme Court correctly decided the collateral estoppel issue does not present a federal constitutional isswe and does not raise an issue of such importance as to merit this Court's review by writ of certiorari. For this reason, too, the writ of certiorari should be dismissed as improvidently granted. Wolf v Weinstein, 372 U.S. 633 (1963). 18 Ill. THE IMPOSITION OF THE OHIO PERSONAL PROPERTY TAX ON HOOVEN & ALLISON'S IN- VENTORY OF IMPORTED RAW MATERIALS HELD FOR FUTURE USE IN MANUFACTURING VIOLATES THE FOREIGN COMMERCE CLAUSE AND IMPORT-EXPORT CLAUSE. The Tax Commissioner has not advanced any argu- ments of fact to support her contention that Ohio may constitutionally assess its personal property tax against Hoo- ven & Allison's imported fibers inventory. Instead, consis- tent with her deliberate litigation strategy below, the Tax Commissioner has cavalierly dismissed the need for any fac- tual analysis by making the bald and unsupported claim that “{t]here is no logical or legal justification which would sup- port a retention of the ‘original package’ doctrine in cases involving imported manufacturing inventory while ap- plying the fundamentally different analysis of Michelin in cases involving imported goods held for resale.” Brief for Petitioner, at 21. Though the only issue properly before this Court is whether the Supreme Court of Ohio correctly de- termined the issue of collateral estoppel, it is important for the resolution of that issue that the need for a factual record on which to decide the constitutional issues is clear. Accord- ingly, the factual framework, which demonstrates the un- constitutionality of the state personal property tax in this case and the error of the Tax Commissioner's argument, is set forth below. The Tax Commissioner's argument is premised on several fundamental misconceptions. The Tax Commis- sioner has contended that this Court should examine only the label of the tax at issue in this case and that because this case involves an ad valorem personal property tax as in Michelin Tire, this Court should hold without further anal- ysis that the Ohio tax automatically satisfies the Import- Export Clause. The Tax Commissioner would have this 19 Court simply substitute the magical litany of “non- discriminatory ad valorem personal property tax” in place of “original package.” The Tax Commissioner's argument in- vites the Court to undertake the same kind of formalistic, mechanical analysis which this Court has condemned in its recent state taxation decisions. E.g., Arkansas Electric Co- operative Corp. v. Arkansas Rubber Comm'n, 103 S.Ct. 1905, 1916 (1983); Japan Line, Ltd. v. County of Los Angeles, 441 U.S. 434, 443 (1979); Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 279 (1977). In so arguing, the Tax Commissioner has completely ignored the Foreign Commerce Clause,” as well as the pol- icies underlying the Import-Export Clause, as enunciated in Michelin Tire. Hooven & Allison is definitely not at- tempting to resurrect the “original package” doctrine, as the Tax Commissioner has claimed. Rather, Hooven & Allison is contending that the cumulative tax burden resulting from the assessment of the Ohio personal property tax con- travenes the Foreign Commerce Clause and Import-Export Clause. In Japan Line, Ltd., supra, this Court struck down a state nondiscriminatory ad valorem personal property tax as violating the Foreign Commerce Clause. Thus, the Tax Commissioner has improperly asked this Court to engage in hasty overgeneralization by deciding this case without con- sideration of the practical effect of the Ohio personal proper- ty tax on foreign commerce as applied to Hooven & Allison's * This Court has recently acknowledged the different inquiry re- quired by the Foreign Commerce Clause from the Import-Export Clause. Department of Revenue of Washington v. Ass'n of Washington Stevedoring Cos., 435 U.S. 734, 751 (1975). Therefore, a state personal property tax may satisfy the Import-Export Clause, but run afoul of the Foreign Commerce Clause. Compare Michelin Tire with Japan Line Ltd., supra. 20 inventory of imported raw materials held for future use in manufacturing. Examination of the practical effect of the state taxation will demonstrate that Hooven & Allison is not seeking pref- erential tax treatment, as the Tax Commissioner has myop- ically contended; instead, it is seeking to survive as an American company by removing the undue burden of mul- tiple taxation. Contrary to the Tax Commissioner's con- tention, Hooven & Allison is not asking this Court to grant ita competitive advantage over manufacturers using domes- tically produced raw materials. Nor would tax immunity in this case cause manufacturers to switch from domestically produced fibers to foreign grown fibers. As the Tax Com- missioner well knows, Hooven & Allison’s raw materials, consisting of natural fibers, such as jute, sisal, henequen, and manila, are not produced domestically. Its raw materi- als must be imported. Therefore, its choice is whether to keep its manufacturing facilities in the United States or in- stead to surrender to the Third World economic pressures to locate its manufacturing plant overseas. Examination of the facts shows that state personal prop- erty taxation of Hooven & Allison's inventories of imported raw materials violates the Foreign Commerce and Import- Export Clauses of the United States Constitution on three grounds. First, it would subject Hooven & Allison to inter- national multiple taxation. '” Second, it would interfere with federal regulation of foreign commerce and it could reduce federal tariff revenues significantly. Third, it is likely to pro- voke interstate commercial conflict. In taking a pragmatic and case-specific approach to these constitutional pro- visions, this Court has found that the Import-Export and This possibility was not considered by this Court in Michelin Tire, but has been a major factor in subsequent decisions. E.g., Japan Line, Ltd., 441 U.S. at 446. Foreign Commerce Clauses reflect these overlapping con- cerns. Japan Line, Ltd., 441 U.S. at 446-50. A. Ohio Personal Property Taxation Of Hooven & Alli- son's Inventories Of Imported Fibers Would Subject Those Fibers To International Multiple Taxation. State property taxation of Hooven & Allison's imported raw materials would burden those raw materials with dou- ble taxation in violation of the Foreign Commerce Clause. When goods of foreign origin which move in foreign com- merce are taxed by several jurisdictions, the resulting cu- mulative tax burden discriminates against such commerce. State taxation which results in double taxation “in its prac- tical operation discriminates against interstate commerce, since it imposes upon it, merely because interstate com- merce is being done, the risk of a multiple tax burden to which local commerce is not exposed.” Gwin, White & Prince, Inc. v. Henneford, 305 U.S. 434, 439 (1939). It could, indeed, “spell the destruction of interstate com- merce and renew the barriers to interstate trade which it was the object of the commerce clause to remove.” Western Live Stock v. Bureau of Revenue , 303 U.S, 250, 256 (1938), Accordingly, it is a “commonplace of constitutional jurisprudence’ that multiple taxation of foreign commerce, like interstate commerce, is constitutionally prohibited. Japan Line, Ltd., 441 U.S, at 446. In the case of foreign commerce, the mere risk of inter- national multiple taxation makes a state tax constitutionally suspect. Japan Line, Ltd., 441 U.S. at 448, 451. See Devel- opments in the Law — Federal Limitations on State Tax- ation of Interstate Business, 75 Harv. L. Rev. 953, 965-68 (1962). This strict standard is necessary because the extent of a foreign tax burden may be disguised and therefore diffi- cult to document. Foreign taxes may not be denominated as such, or may actually be concealed for commercial or politi- cal reasons. A state-run enterprise can easily conceal an ex- 22 port tax in its export price, Or, a change in the exchange rate may have the same effect as an export tax. Moreover, a merchant in foreign commerce, unlike his counterpart in interstate commerce, does not have the judi- cial remedy of apportionment for multiple taxation, He can- not come to this Court to force several taxing jurisdictions to apportion their respective tax burdens, and thus avoid mul- tiple taxation, “|N Jeither this Court nor this Nation can en- sure full apportionment when one of the taxing entities isa foreign sovereign.” Japan Line, Ltd., 441 U.S. at 447, Therefore, this Court has held that, “|wihen construing Congress’ power to ‘regulate Commerce with foreign Na- tions, a more extensive constitutional inquiry is required,” Id. at 446, “This case concerns foreign commerce, Even a slight overlapping of tax — a problem that might be deemed de minimis in a domestic context — assumes importance when sensitive matters of foreign relations and national sov- ereignty are concerned,” Id. at 456, Accordingly, this Court has set forth a stringent test of constitutionality under the Foreign Commerce Clause: In addition to answering the nexus, apportion- ment, and nondiscrimination questions posed in Com- plete Auto, acourt must also inquire, first, whether the tax, notwithstanding apportionment, creates a substan- tial risk of international multiple taxation, and, second, whether the tax prevents the Federal Government from “speaking with one voice when regulating com- mercial relations with foreign governments.” Ifa state tax contravenes either of these precepts, it is uncon- stitutional under the Commerce Clause. Japan Line, Ltd., 441 U.S. at 451, Ohio's personal property tax subjects Hooven & Alli- son not just to the risk of multiple taxation, but to multiple taxation in fact. Some of Hooven & Allison's imported fibers are taxed abroad by the exporting countries because they are destined for export. The foreign suppliers. from which Hooven & Allison purchases raw fibers and assemblages of fibers include firms which are state-owned, — state- controlled, or subject to state regulation as to quantity of output, price, or ownership. Affidavit of John P. Buck, ©4"'; Latin America Commodities Report, March 18, 1977, at 42. In a number of instances, Hooven & Allison has paid and continues to pay these suppliers, per pound of fibers, prices which actually are greater than the prevailing prices that those suppliers charge their export customers, per pound, for the rope that these suppliers manufacture from such fi- bers. Affidavit of John P. Buck, at 7. In other instances, state-owned suppliers from which Hooven & Allison has purchased fibers are offering fibers for sale at prices which are only slightly lower than the prices which they charge export customers for rope. Id. at ©"5-6. This small price differential is far less than the $.28 per pound that it costs Hooven & Allison to manufacture rope from these fibers. Id. at 4 5. Obviously these foreign suppliers are charging Hooven & Allison a price for fibers far higher than the price that they charge for fibers consumed in domestic manufacturing. Such price discrimination, when practiced by a state enter- prise, or by a firm subject to state regulation of its export prices, is the functional equivalent of an export tax, * This Court should consider the facts stated in the appended affidavit of John P. Buck, which was presented to the Ohio Supreme Court. The constitutionality of Ohio personal property taxation of Hoo- ven & Allison's inventories of imported raw materials was an issue which arose originally before the Ohio Supreme Court. “|T}he Board of Tax Appeals, being an administrative agency and not a court, was without jurisdiction to consider and determine a question of consti- tutional validity.” S. 8. Kresge Co. v. Bowers, 170 Ohio St. at 407, 166 N.E. 2d at 141. Because the constitutional issue was raised pursuant to the original jurisdiction of that Court, Hooven & Allison was permitted to present additional facts related to the constitutional issues in order to facilitate the court's consideration of these issues. Ohio Sup. Ct. Rule VIII, §7 (set forth in Appendix B). Moreover, even if Mr. Buck's affidavit is not considered to be a part of the record, it shows the kinds of facts which must be in the record before this Court can meaningfully address the constitutional issues. 24 It is an export tax, moreover, that is designed to place foreign manufacturers, like Hooven & Allison, at a com- petitive disadvantage in relation to native industry. Devel- oping nations frequently employ discriminatory taxation as an aid or incentive to capital formation, See, e.g., Ross, Foreign Governments’ Tax Incentives for Investment, in Proceedings of the 1959 Institute on Private Investments Abroad, at 285-336, Price discrimination against export customers for raw materials, in part accomplished through export tax incentives granted for exported manufactured goods, but not for exported raw materials, has been docu- mented in the case of countries from which Hooven & Alli- son must purchase fibers. United Nations Food and Agricul- ture Organization, Review of Oilseeds, Oils and Oilmeals Policies; Brazil (January, 1982), at 6; Price, Waterhouse & Co., Information Guide; Doing Business In Mexico (1981), at 37; Price, Waterhouse & Co., Information Guide: Doing Business in Brazil (1980), at 18, 88-89; The World Bank, Brazil: A Review of Agricultural Policies (1982), at 78. See Manners, The Changing World Market for Lron Ore (1971), at 265. Such price discrimination exists in the case of the fibers imported by Hooven & Allison. Brazil and Mexico, two pri- mary suppliers of sisal fibers of the type imported by Hoo- ven & Allison, together control 40% of the world export market for sisal and henequen, Latin America Commodities Report, March 18, 1977, at 42. In both countries, govern- ment agencies strictly control the export sale of fibers. E. Grilli, The Future for Hard Fibers and Competition from Synthetics (World Bank Staff Occasional Papers No. 19, 1975), at 43 (hereinafter “Grilli’), In| Mexico, COR- DOMEX,"* a government agency, has sole internal and ex- ternal marketing rights for raw fiber and manufactured cor- dage products. Id. Consequently, the Mexican govern- ment, through its agency CORDOMEX, establishes the ex- " The official name of the agency is Cordeleros de Mexico. 25 port price of fibers. In Brazil, the Sisal Chambers of Com- merce of the producing states, with the approval of the Foreign Trade Department of the Bank of Brazil (CACEX) issue licenses, which regulate the size of shipments, and impose strict quality and price controls, including a min- imum export price.'’ Id. The governments of both coun- tries are encouraging internal cordage production and are seeking to divert raw fibers from export sale to use in domestic manufacturing. Latin America Commodities Re- port, March 18, 1977, at 42. “Brazil seems likely to follow the trend of exporting a minimum of fibre and concen- trating on competing in twine markets,” while most Mex- ican henequen now is “{clonsumed or processed inter- nally.” Id. To implement these policies apparently, COR- DOMEX and CACEX have engaged in discriminatory ex- port pricing practices that result in an insignificant export price differential, if any, between raw fiber and assem- blages of fiber, on the one hand, and domestically manu- factured rope, on the other hand. These discriminatory export pricing practices have the effect of imposing a levy on exported raw fibers and assemblages of fibers of these two countries. Hooven & Allison must pay this export levy as part of the price of importing its raw materials.'* '* This Court has recognized that a minimum price has the equiv- alent effect on commerce as an export tax or tariff. Baldwin v. G.A.F. Seelig, Inc., 294 U.S. 511, 521 (1935) '* In addition, there may be no remedy available to Hooven & Allison for such discriminatory practices, other than this Court. The National Soybean Processor Association attacked, pursuant to the Tariff Act of 1974, 19 U.S.C. § 2411 et seq., the differential and discrimi- natory export taxes levied by Brazil, Malaysia, and Argentina. As part of these countries policies to encourage domestic manufacturing, they imposed export taxes which favored the export of processed soybean oils over the export of unprocessed soybeans. The United States Trade Representative determined that such differential export taxes did not constitute an export subsidy and, accordingly, declined to initiate an investigation. 45 Fed. Reg. 23947 (May 27, 1983). 26 On numerous occasions, the exporting countries, from which Hooven & Allison acquires its raw materials, have imposed an explicit export tax on their raw materials. India, Mexico, Brazil, Bangladesh and the Philippines have all from time to time levied an export tax on their exports of raw fibers. The World Bank, Brazil: Industrial Policies and Manufactured Exports (1983), at 32, 46, 51; The World Bank, Export Promotion Policies (World Bank Staff Work- ing Paper No. 313, 1979), at 46, 68; The World Bank, Bangladesh: Current Trends and Development Issues (1979), at 56. Therefore, Hooven & Allison has paid multi- ple taxes on its imported raw materials to which domestic manufacturers of synthetic rope have not been subject." It is also possible for the cost of the exporting coun- tries’ internal taxes to be passed by the seller to the pur- chaser, such as Hooven & Allison, resulting in a multiple tax burden. For example, Mexico taxes inventories held for sale, and a seller may reflect this tax in the price charged to a purchaser.'” The similar effect of tariffs and internal taxes on trade is apparent. K. Dam, THE GATT: Law anp INTERNATIONAL ECONOMIC ORGANIZATION (1970), at 115. Cf. Belassa, The Tokyo Round and the Developing Coun- tries, 14 JOURNAL OF WorRLD TRADE Law 93 (1980) (domes- tic subsidies have the same effect on exports as direct ex- port subsidies). However, only tariffs are regulated at this time under the General Agreement on Tariffs and Trade. Id. Therefore, the mu!tiple tax burdens resulting from in- ternal taxes assessed in the exporting countries remains unchecked. '* Export taxes on other raw materials have also been imposed in the past, such as Malaysian rubber, Argentinian caustic soda, and Ghanaian cocoa. Belassa, The Process of Industrial Development and Alternative Development Strategies (World Bank Staff Working Paper No. 438, October, 1980), at 7, 14, Stern, The Export Tax on Malayan Rubber, 16 NaTIONAL TAX J. 51 (1962). The practice is not rare. © See Froomkin, Some Problems of Tax Policy in Latin America , 10 NATIONAL TAX J. 370, 377 (1958). 27 The exporting countries have also used a variety of measures to promote the export sales of their manufactured cordage products, such as export subsidies, tax and duty concessions, preferential financing, and devaluation. United States General Accounting Office, Report To The Secretary Of Commerce And The United States Trade Rep- resentative: Benefits Of International Agreement On Trade-Distorting Subsidies Not Yet Realized (August 15, 1983), at Appendix II, 66-67; The World Bank, Brazil: Industrial Policies and Manufactured Exports (1983), at 67; The World Bank, Bangladesh: Current Trends and Devel- opment Issues (1979), at 10, 52, 56; The World Bank, Ex- port Promotion Policies, at 9, 24, 45-46, 52 (World Bank Staff Working Paper No. 313, 1979). By increasing the cost of Hooven & Allison's cordage products relative to those exporting countries’ products, these measures have the equivalent effect of a tax. The Ohio personal property tax would duplicate the export levy that Hooven & Allison now pays on its imported raw fibers and cause a constitutionally impermissible multi- ple tax burden. This Court has held that, in determining whether two taxes create a multiple tax burden, the prac- tical effect and not the name of a tax is controlling. “[Wle are dealing in this field,” this Court has stated, “with matters of substance, not with dialectics.” International Harvester Co. v. Department of Treasury, 322 U.S. 340, 347 (1944). In Henneford v. Silas Mason Co., 300 U.S. 577, 586 (1937), this Court noted explicitly that a use tax was “equivalent” to a “tax upon property after importation is over. This Court has similarly held a sales tax paid by the buyer in an interstate transaction to be equivalent to a gross receipts tax paid by the seller in a like transaction. “There is the same practical equivalence whether the tax is on the selling or the buying phase of the transaction.” Inter- national Harvester , 322 U.S. at 348. In short, “equality for the purposes of competition and the flow of commerce is measured in dollars and cents, not legal abstractions.” Hall- iburton Oil Well Co. v. Reily, 373 U.S. 64, 70 (1963). 28 This Court, therefore, has often made clear that the facial neutrality of a state tax statute is not determinative.’ E.g., Japan Lines, Ltd., 441 U.S. at 446-51. In Nippert v. City of Richmond, 327 U.S. 416, 431 (1946), this Court said: It is no answer, as appellee contends, that the tax is neither prohibitive nor discriminatory on the face of the ordinance; or that it applies to all local distributors doing business as appellant has done. Not the tax in a vacuum of words, but its practical consequences for the doing of interstate commerce in applications to concrete facts are our concern. To ignore the variations in effect which follow from application of the tax, uni- form on the face of the ordinance, to highly different fact situations is only to ignore those practical con- sequences. In that blindness lies the vice of the tax and of appellee's position. The Foreign Commerce Clause thus prohibits multi- ple tax burdens, which have the effect of discriminating against foreign commerce, regardless of the names given to the various taxes. “That issue turns not on the character- ization which the state has given the tax, but on its oper- ation and effect.” Richfield Oil Corp. v. State Board of Equalization , 329 U.S. 69, $4 (1946). See Developments in the Law — Federal Limitations on State Taxation of Inter- state Business, 75 Harv. L. Rev. 953, 967-65 (1962) (non- repetitive state taxes may cause a discriminatory multiple tax burden). By carving a possible exception in Michelin Tire for taxation of imported goods in transit, this Court " This Court's decision in Michelin Tire is not authority for the proposition that the Ohio personal property tax as applied to Hooven & Allison's imported raw materials is not discriminatory because the tax does not fall on imports as such because of their place of origin. The Michelin Tire Court did not examine the practical effect of a personal property tax as applied to imported raw materials held for future use in manufacturing. The burdens of double taxation were not discussed in Michelin Tire. 29 recognized that a multiple tax burden may render uncon- stitutional an otherwise nondiscriminatory state personal property tax. 423 U.S. at 290. See W. Hellerstein, State Taxation and The Supreme Court: Toward A More Unified Approach To Constitutional Adjudication? , 75 Micu. L. Rev. 1426, 1447 (1977) (hereinafter “Hellerstein’) (“Michelin qualified the nondiscrimination doctrine by dis- approving even nondiscriminatory taxes on goods in tran- sit. for such a tax would threaten to saddle imports with burdens not necessarily borne by domestic products.) “The [Foreign Commerce] clause would thus forbid a tax that threatened to impose a special burden upon im- ports, even though the levy did not explicitly discriminate against them.” Id. at 1431-32. The prohibition against cu- mulative tax burdens was well stated by Justice Rutledge, concurring in International Harvester: Again, the state may not impose cumulative bur- dens upon interstate trade or commerce. Gwin, White & Prince v. Henneford , 305 U.S. 434; Adams Mfg. Co. v. Storen, 304 U.S. 307. Thus, the state may not im- pose certain taxes on interstate commerce, its inci- dents or instrumentalities, which are no more. in amount or burden than it places on its local business, not because this of itself is discriminatory, cumulative or special or would violate due process, but because other states also may have the right constitutionally, apart from the commerce clause, to tax the same thing and either the actuality or the risk of their doing so makes the total burden cumulative, discriminatory or special. 322 U.S. at 355 (footnote deleted). Therefore, consistent with Michelin Tire, this Court must investigate the burden which a state personal property tax imposes on foreign commerce and forbid any tax which imposes a multiple tax burden: 30 By reexamining the underlying policies of the clause and the seminal decision construing it, the Court shifted the focus of the analysis away from the intricacies of the “original package” test to the more tractable question of the character of the tax. And in so doing, the Court made clear that the crux of the consti- tutional inquiry was whether the exaction at issue dis- criminated against or imposed a special burden upon imported goods. Hellerstein, 75 MICH. L. Rev. at 1434. Unduly burdensome taxation would result from the Ohio personal property tax and the explicit or de facto export taxes to which portions of Hooven & Allison's im- ported fibers frequently are subject. Both the Ohio tax and the export levy would be imposed cumulatively on fibers that Hooven & Allison imports from particular foreign countries. While it is true that one tax would be assessed against the exporting phase, and the other following the importing phase of the transaction, this is a matter of form and not substance. The practical effect on foreign com- merce is the same in either case. The two taxes here are no more different than the taxes on the buying and selling phases of the interstate transaction at issue in International Harvester. When both are paid by Hooven & Allison, it is truly taxed twice. It is no answer to the substantial risk of multiple tax- ation that the imported raw materials have come to rest, before future use in manufacturing, in a warehouse located in Ohio. Though the imported raw materials have come to rest in Ohio, the state still may not subject them to a cumulative tax burden. Baldwin v.G.A.F. Seelig, Inc., 294 U.S. 511, 526 (1934); Minnesota v. Blasius, 290 U.S. 1, 8-9 (1933). As this Court has observed, If the only thing necessary to sustain a state tax bearing upon interstate commerce were to discover some local incident which might be regarded as sepa- 31 rate and distinct from ‘the transportation or inter- course which is’ the commerce itself and then to lay the tax on that incident, all interstate commerce could be subjected to state taxation and without regard to the substantial economic effects of the tax upon the com- merce . . Nippert v. City of Richmond, 327 U.S. at 423. Under the Foreign Commerce Clause, the Court must focus not on the due process nexus question, but “the substantial ef- fects, actual or potential, of the particular tax in suppressing or burdening unduly the commerce.” Id. at 424. Accord, Japan Line, Ltd., 441 U.S. at 451. The Tax Commissioner cannot argue that Hooven & Allison does not face at least a substantial risk of, if not actual, multiple taxation solely because it must rely on imported raw materials. If Hooven & Allison were able to acquire its raw materials from domestic sources, in all like- lihood the only tax burden to which these raw materials would be exposed is the Ohio personal property tax. Yet, the identical raw materials obtained in foreign commerce are exposed to both the foreign export taxes and Ohio per- sonal property tax. The double taxation results solely be- cause of the foreign origin of the raw materials. This cumulative tax burden could jeopardize Hooven & Allison's business and eventually force it to discontinue all manufacture in this country of cordage products made from natural fibers. Because of discriminatory foreign pric- ing and taxing practices, it is already possible to purchase imported rope on the American market at approximately the same price per pound as Hooven & Allison must pay for imported fibers. In other cases, as noted above, the export price differential between fibers and rope is so slight that it is nearly impossible for an American manufacturer to con- vert imported fibers into rope at a competitive price. Since the raw materials that Hooven & Allison requires can be grown only abroad in a few parts of the world, moreover, Hooven & Allison cannot obtain its raw materials from domestic producers. Consequently, if the Tax Commis- sioner’s position were sustained, Hooven & Allison would be required to bear a cumulative tax burden on its raw materials solely by virtue of its involvement in foreign com- merce. Thus, contrary to the Tax Commissioner's contention, Hooven & Allison is obviously not seeking preferential tax treatment. Hooven & Allison already pays substantial per- sonal property taxation on its goods in process and finished goods inventories. Hooven & Allison is seeking merely to avoid the heavy burden of double taxation, which does not fall on its foreign competitors or its domestic competitors that use domestically available synthetic fibers. Hooven & Allison asks only to be able to compete on an equal basis, as protected by the Foreign Commerce Clause and the Import-Export Clause. Because of foreign export taxation, Hooven & Allison gains no competitive advantage through immunity from Ohio's personal property taxation. Note, Limitations on State Taxation of Foreign Commerce: The Contemporary Vitality of the Home-Port Doctrine, 127 U. PENN. L. Rev. 817, 852-53 (1979). Because of the unduly burdensome impact of the Ohio state personal property tax as applied to Hooven & Allison, it is apparent that the Tax Commissioner has framed the wrong question in this case: The problem comes down therefore to whether the state or municipal legislative bodies in framing their taxing measures to reach interstate commerce shall be at pains to do so in a manner which avoids the evils forbidden by the commerce clause and puts that commerce actually upon a plane of equality with local trade in local taxation, not as is said to a question of whether interstate trade shall bear its fair share of the cost of local government, the benefit and protection of which it enjoys on a par with local business. 33 Nippert, 327 U.S. at 434. Accord, Japan Line, Ltd., 441 U.S. at 456-47. Indeed, the Tax Commissioner's narrow- minded focus on foreign commerce paying its share of the state's general tax burden proves too much — the adoption of the Tax Commissioner's argument would immunize all state taxation from judicial review. Furthermore, as the personal property tax, unlike an income or real property tax, bears no relationship to Hooven & Allison's actual use of or benefit from state services, much closer scrutiny than the Tax Commissioner has suggested is required to sustain the tax on the ground that Hooven & Allison is receiving from the state benefits for which it has not paid. Note, Limitations on State Taxation of Foreign Commerce: The Contemporary Vitality of the Home-Port Doctrine, 127 U,. PENN. L. Rev. 817, 847-48 (1979). In sum, the imposition of Ohio's personal property tax on Hooven & Allison's imported fibers results, in certain cases, in actual international multiple taxation of its imports and, in other cases, in the substantial risk of international multiple taxation of these imports. The Foreign Commerce Clause forbids Ohio from engaging in this multiple tax- ation. B. State Personal Property Taxation Of Imported Raw Materials Would Conflict With Federal Regulation Of Foreign Commerce. International multiple taxation is preeminently a matter for exclusive federal regulation and an area in which national uniformity is essential. Japan Lines Ltd., 441 U.S. at 448. Only through international negotiation and agree- ment can the problem of international multiple taxation be resolved. The United States is party to a large number of international tax and trade conventions designed, in part, to address this problem. See, e.g., King, Tax Conventions to Which United States is a Party, in Proceedings of the 1960 Institute on Private Investments Abroad, at 479-492. 34 The need for tederal uniformity is demonstrated in the model tax treaties of the Organization For Economic Coop- eration and Development and the United Nations. These treaties state that negotiated tax rates include any state taxes. OECD Model Convention For The Avoidance Of Double Taxation With Respect To Taxes On Income And Capital, Chapter II, Article 2, reprinted in 1 Tax Treaties (CCH), ©151, at 208 (1980); United Nations Model Double Taxation Convention Between Developed And Developing Countries, Chapter I, Article 2, reprinted in 1 Tax Treaties (CCH), ©171, at 282 (1980), Ohio's taxation of imported raw materials would seri- ously impair federal regulation of foreign commerce in several significant respects. State taxation could nullify the effect of trade and tax concessions that the federal govern- ment has granted in return for foreign concessions and thus disrupt foreign trade patterns. For example, the United States has granted tariff preferences to a number of devel- oping countries, including Brazil, Mexico, India, Ban- gladesh, the Philippines, and Tanzania, for their exports of hard fibers and cordage. See Tariff Schedules of the United States Annotated (1982), §§$304.02-.58. A’ state personal property tax could negate this tariff advantage and hence defeat national foreign policy goals. See McGoldrick v. Gulf Oil Corp., 309 U.S, 414, 429 (1940), The need for the federal government to speak with one voice also arises from the continuing negotiations among producer nations concerning price stabilization for hard fibers exports. In past years, the producer nations have acted pursuant to an informal agreement, setting export quotas and a minimum price. Grilli, supra at 3, 24-31. Negotiations are continuing under the auspices of the United Nations Food and Agriculture Organization and also the United Nations Conference on Trade and Devel- opment. Latin America Commodities Report, February 17, 1978. Because of the fierce price competition arising from synthetic fibers, a small change in price caused by the effect 35 of state personal property taxation on imported natural fi- bers could cause substantial trade distortion and thus com- plicate international trade and price stabilization nego- tiations. ' Therefore, because of the need for the federal govern- ment to speak with one voice in matters of international trade and commodity negotiations, this Court should hold that the Foreign Commerce Clause does not permit the State of Ohio to impose its personal property tax against Hooven & Allison's unused, imported raw materials."” ' See United States International Trade Commission, Summary of Trade and Tariff Information; Cotton Linters, Waste, Thread, and Yarn; Vegetable Fibers (Except Cotton and Yarns) September, 1952), at 28-29, The World Bank, A Dynamic Simulation Model of the World Jute Economy (World Bank Staff Working Paper No. 391, 1980), at 5. Grilli, supra at 32, 65. The Import-Export Clause is also designed to protect imports and duties as a source of federal revenue. Brown v. Maryland, 25 U.S. (12 Wheat.) at 439. As noted above, an Ohio personal property tax levied against Hooven & Allison's inventories of imported fibers could risk pricing Hooven & Allison out of the market. As a result, the imposition of Ohio's personal property tax on Hooven & Allison's heamerted fibers risks de- priving the federal government of tariff revenues The potential loss of tariff revenues may be illustrated by the following example involving sisal. Unless imported from a foreign country desig- nated as a “beneficiary developing country” with respect to the material imported, assemblages of sisal fiber are subject to a duty of 13.7% of the’ price prevailing on the date of importation (Tariff Schedules of the United States Annotated (1982), Schedule 3, Part 2, item No. 315.25) (hereinafter “TSUS?), sisal rope of less than ¥4" diameter is subject to a duty of |S cents per pound plus 7.4% of the price prevailing on the date of importation for small size rope (TSUS item No. 315.40), and sisal rope of more than diameter is subject to a duty of .95 cents per pound (TSUS item no. 315.55). A similar pattern exists with respect to manila (TSUS items No. 315.25, 315.35 and 315.50), Mexico is one example of a fiber and rope exporting country which is not currently eligible for “beneficiary developing country” status (TSUS, p. 4). As of July, 1982, CORDOMEX, a state-run Mexican concern, sold sisal assemblages of fibers (varn) for export at 55 cents per pound, and sisal rope at 58 cents per pound. Affidavit of John P. Buck, at ©. At then current rates, the United States tariff on imported CORDOMEX yarn was thus 7.5 cents per pound, while the tariff on imported CORDOMEX rope was only 5.1 cents per pound for small-sized rope, and .95 cents per pound for rope of larger size. Consequently, the loss in federal tariff revenues would be substantial, were imports of sisal yarn displaced by imports of sisal rope. 36 C. State Personal Property Taxation Of Manu- facturers’ Inventories Of Imported Raw Materials Would Create Interstate Commercial Conflict. The overriding purpose of the Commerce Clause is to create a free trade area among the states. Boston Stock Exchange, 429 U.S. at 317; A & P Tea Co. v. Cottrell, 424 U.S. 366 (1976); McLeod v. J.E. Dilworth Co., 322 U.S. 327, 330 (1944). Any form of state taxation which might provoke a “multiplication of preferential trade areas” would be destructive of this purpose. Dean Milk Co. v. Madison, 340 U.S. 349, 356 (1951). State taxation of manufacturers’ inventories of imported raw materials is likely to provoke such interstate commercial rivalry and, therefore, should be prohibited.” Manufacturers, like Hooven & Allison, who are de- pendent on imported raw materials must maintain large inventories of such materials. They are forced to stockpile raw materials to guard against an uncertain world market, disruption in transportation, and similar factors. In the case of Hooven & Allison, certain of its raw materials are avail- able only seasonally, so that an entire year's supply must be purchased from a supplier at one time and stored in inven- tory.”' State property taxation of such inventories repre- sents for Hooven & Allison and other cordage manu- facturers a significant cost of doing business. Whether a state imposes a tax on inventories of raw materials is obviously a major factor in a manufacturer's *” Hooven & Allison does not intend to suggest that all forms of tax exemption, which states regularly use to attract interstate, domestic business, should be constitutionally prohibited. It is only because the likelihood of preferential trade areas would adversely distort the pat- tern of foreign commerce that Hooven & Allison contends that Ohio's taxation of imported commodities would contravene the Foreign Com- merce and Import-Export Clauses. *! The seasonal nature of Hooven & Allison's import purchases of fibers is reflected in the variations of the dollar values of its monthly raw material inventories. 37 decision on where to locate. States use property tax conces- sions currently to attract importers and exporters of fin- ished goods. Until recently, for instance, California had a “free port statute” designed for this purpose.” The poten- tial for conflict is demonstrated by the brief for amicus curiae, The International Association of Assessing Officers, which indicates that perhaps only eighteen states levy taxes on raw materials, like Ohio. Motion for Leave to File Brief Amicus Curiae of The International Association of Assess- ing Officers, at 3. Given the large amount of economic activity and taxable revenue that manufacturing generates, states would have great incentive to use property tax con- cessions to lure manufacturers to locate or relocate within their boundaries. The decision in Michelin Tire, for this reason, had doubtful value to New York City, which disap- proved the assessment of a personal property tax on im- ports out of fear that it would precipitate a mass exodus of importers to neighboring states. Recent Decisions, 47 Miss. L. J. 789, 798 (1976). Thus, it was predicted that “Michelin Tire will induce even greater competition be- tween seaport cities for the rich foreign trade which has shown dramatic increases in recent years.” Id. Such a mul- tiplication of preferential trade areas would conflict with the most basic aim of the Foreign Commerce Clause by fostering interstate commercial conflict and distorting the flow of foreign commerce. For this reason, too, the imposi- tion of a state personal property tax on imported raw mate- rials should be held unconstitutional. = The California Supreme Court has struck down this statute as violating the federal Commerce Clause. Zee Toys, Inc. ve. County of Los Angeles, 85 Cal. App. 3d 763, 149 Cal. Rptr. 750 (1975) aff'd sub nom., Sears, Roebuck and Co. v. County of Los Angeles, 449 U.S. 1119 19S1). However, because this Court was evenly divided, its summary affirmance of this case lacks precedential force. Thus, while the Com- merce Clause has been construed to bar state taxes which discriminate against foreign commerce, this Court has not held that it bars taxation which discriminates selectively in favor of such commerce. 38 CONCLUSION For the foregoing reasons, this Court is urged to dis- miss its writ of certiorari as improvidently granted. If the Court should reach the merits of this case, the judgment of the Supreme Court of Ohio should be affirmed. Respectfully submitted, MICHAEL A, NIMS Counsel of Record KENNETH E,. UPDEGRAFT, JR. CHARLES H. MOELLENBERG, JR. JONES, Day, REAVIS & POGUE 1700 Huntington Building Cleveland, Ohio 44115 (216) 696-3939 Attorneys for Respondent The Hooven and Allison Company 39 CERTIFICATE OF SERVICE I hereby certify that the requisite number of copies of the foregoing Brief for Respondent 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, postage paid, this 19th day of December, 1953. I further certify that all parties required to be served have been served. MICHAEL A. NIMS Attorney for Respondent APPENDIX A IN THE SUPREME COURT OF OHIO Appeal From The Ohio Board of Tax Appeals THE HOOVEN & ALLISON — | _— Case No. 82-559 COMPANY, Appellant and Cross-Appellee, Affidavit of John P. Buck v. > in Support of the Brief of EDGAR L. LINDSEY, Cross-Appellee, Tax Commissioner of Ohio, The Hooven & Appellee and Cross-Appellant | — Allison Company STATE OF OHIO ss COUNTY OF GREENE John P. Buck, being first duly sworn, says: 1. Lam the Vice President and Treasurer of the Hoo- ven & Allison Company (“Hooven’). I have been Treasurer of Hooven since 1965, and Vice President and Treasurer since 1974. 2. I have personal knowledge of all the facts set forth herein, which facts were compiled by me or for me by persons under my supervision from records maintained as part of Hooven’s regularly conducted business activity. 3. Hooven imports raw fibers and assemblages of fi- bers, which in the trade are commonly referred to as “yarns, consisting of sisal, jute and manila, which it pro- cesses into rope and cordage products that it sells in its business. Hooven imports, and in prior years has imported, these fibers from a number of foreign countries, including Portugal, Brazil, Bangladesh, Thailand, Ecuador, the Phil- ippines, Haiti, Mexico, Kenya, and Tanzania. A-2 4. Several of the suppliers from which Hooven pur- chases fibers are foreign corporations that are subject to varying degrees of foreign government regulation as to their ownership, the annual quantity of fibers that they may harvest and sell in export transactions, or the price at which they may sell such fibers and the finished products that they manufacture from them. Foreign corporations oper- ating in the Philippines, from which Hooven regularly pur- chases manila yarns of Philippine origin, and in Brazil, from which Hooven purchases sisal yarns of Brazilian origin, are subject to government imposed restrictions of one or more of these types. Hooven has also made purchases of fibers from foreign suppliers which are either state-owned or state-controlled entities, such as Cordomex, a Mexican cor- poration, from which Hooven has acquired sisal fibers of Mexican origin. 5. During the years 1975 and 1976, and for a number of preceding years, as well as for years subsequent to 1976, Hooven has experienced situations in which the price that it pays its suppliers in particular foreign countries for fibers is less by only an insignificant amount than the prices that those suppliers are then charging for rope or other finished cordage products manufactured from the same fiber mate- rials. Currently, Hooven is experiencing this situation in Thailand, where it purchases jute yarn of Thai origin from C.P. Textile. This supplier currently is selling jute yarn for 40.5 cents per pound F.O.B. Baltimore, and two ply jute twine at the price of 41 cents per pound, F.O.B. Baltimore. Hooven is also experiencing this situation currently in Brazil, where it purchases sisal yarn at 48 cents per pound, F.O.B. Baltimore, from Brascorda. This same supplier cur- rently is selling sisal rope at 54 cents per pound, F.O.B. Baltimore. Hooven is also experiencing the same situation currently with respect to sisal products of Mexico origin that Cordomex offers for sale. Cordomex currently is offering sisal yarn for sale at 55 cents per pound, F.O.B., A-3 7 Laredo, Texas, and sisal rope at the price of 55 cents per pound, F.O.B. Laredo, Texas. At the present time, it costs Hooven approximately 28 cents per pound to process sisal yarns into a rope product of the same grade that Brascorda and Cordomex are selling for 54 cents per pound and 55 cents per pound, respectively. 6. Hooven has also experienced the same situation as that described in paragraph 3 above in earlier periods. In 19758, for example, Hooven paid 34 cents per pound for jute yarn that it purchased F.O.B. Baltimore from foreign sup- pliers in Thailand, which at the same time were selling three ply twine manufactured from the same materials for 34.5 cents per pound, F.O.B. Baltimore. 7. In recent years, Hooven has experienced situations in which the price that it pays its suppliers in particular foreign countries for certain grades and sizes of fiber mate- rials equals or exceeds the price which those suppliers are then charging for rope and other finished cordage products manufactured from the same fiber materials. Currently, Hooven is experiencing this situation in the Philippines, where, with respect to the manila yarn that it imports from that source, it must pay its Philippine suppliers 50.5 cents per pound, F.O.B. Manila, for manila yarn. These same suppliers currently are offering finished manila rope for sale at the following prices: Grade of Price Per Pound Manila Rope F.O.B. Manila Heavy 45 cents Medium 50 cents Sinall 53 cents 8. Hooven has also experienced the same situation as that described in paragraph 5 above in earlier periods. In 1978 and 1979, for example, African sisal fibers of Por- tuguese East African origin were selling for 43 cents per A-4 pound, F.O.B. Baltimore. In those same years, Hooven paid 40.75 cents per pound, F.O.B. Baltimore, for two and three ply sisal twine of Portuguese East African origin that it purchased from Sicor. 9. The examples of pricing and the price differentials referred to in paragraphs 3, 4 and 5 above do not reflect the universal practice of all foreign suppliers which sell fibers and cordage products in export transactions. The instances in which Hooven has experienced such pricing practices, however, have occurred frequently in connection with its purchases of fibers from foreign suppliers. John P. Buck Sworn to before me and subscribed in my presence this 12th day of July, 1982. Anne C. Buettner Notary Public APPENDIX B Ohio Supreme Court Rule VIII, §7 provides: To facilitate the consideration and disposition of origi- nal actions, counsel should, whenever possible, file an agreed statement of facts. Where a case has not been submitted by the parties to the Court for final determination at the time of or for filing of a reply, it shall be referred to the Clerk of the Supreme Court, and the parties shall appear before such Clerk at such reasonable time and place as he may designate on not less than ten days notice and shall there present or make arrangements for presenting all evidence which they desire to offer. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385011_0099%3A5. Public record. Not legal advice.