Opposition Brief — Central Machinery Co. v. Arizona

cS Supreme Court, U.S,

oN wa FILED

No. 86-1546 | APR 26 1987

JOSEPH F. SPANIOL, JR,

UNITED STATES SUPREME} COURT cLERK a

maar

October Term, 1986

CENTRAL MACHINERY COMPANY,

an Arizona corporation,

Petitioner,

Vv.

STATE OF ARIZONA,

Respondent.

BRIEF IN OPPOSITION TO

PETITION FOR WRIT OF CERTIORARI

ROBERT K. CORBIN

Attorney General

State of of Arizona

ANTHONY B. CHING

Solicitor General

1275 West Washington Street

Phoenix, Arizona 85007

Attorneys for Respondents

QUESTIONS PRESENTED

WHETHER A NON-INDIAN' SELLER OF

MACHINERY TO INDIANS HAS STANDING TO

ASSERT AN INDIAN ENTITY'S’ RIGHTS,

PRIVILEGES AND IMMUNITIES UNDER 42

U.S.C. § 1983.

WHETHER THE INDIAN TRADER STATUTES,

25 U.S.C. §§ 261-264, WHICH PREEMPTED

STATE TAXATION OF MACHINERY BY A

NON-INDIAN SELLER TO AN INDIAN ENTITY

IN CENTRAL MACHINERY v. ARIZONA, 448

U.S. 160 (1980), ALSO CREATED A RIGHT

TO ACTION UNDER 42 U.S.C. § 1983 SO

AS TO ENTITLE THE NON-INDIAN SELLER

TO ATTORNEY'S FEES UNDER 42 U.S.C.

§ 1988.

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TABLE OF CONTENTS

QUESTION PRESENTED

TABLE OF AUTHORITIES

STATEMENT OF THE CASE

ARGUMENT

I. CENTRAL MACHINERY COMPANY, A NON-

INDIAN ARIZONA CORPORATION, LACKS

STANDING TO ASSERT A 42 U.S.C.

§ 1983 CLAIM

II. THERE IS NO CONFLICT BETWEEN THE

ARIZONA COURT'S DECISION AND

THIS COURT'S PRECEDENTS

III. THERE IS NO CONFLICT BETWEEN THE

ARIZONA SUPREME COURT'S OPINION

AND STATE COURT DECISIONS

CONCLUSION

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TABLE OF AUTHORITIES

Case law

Arizona v. Central Machinery

121 Ariz. 183, 589 P.2d 426 (1979),

reversed, 448 U.S. 160 (1980)

Barrow v. Jackson

346 U.S. 249 (1953)

Bateman v. Arizona

429 U.S. 1302 (1976)

Central Machinery Company v. Arizona

Ariz. , 730 P.2d 843 (1986)

Chapman v. Houston Welfare Rights

Organization

441 U.S. 600 (1979)

Consolidated Freightways v. Kassel

556 F.Supp. 740 (S.D.Iowa 1983),

aff‘d, 730 F.2d 1139 (8th Cir.),

cert. denied, 105 S.Ct. 126 (1984)

Doremus v. Board of Education

342 U.S. 429 (1952)

Eisenstadt v. Baird

405 U.S. 438 (1972)

affirmed on other grounds,

U.S. , 106 S.Ct. 1057 (1986)

J & J Anderson v. Town of Erie

767 F.2d 1469 (10th Cir. 1985)

Maine v. Thiboutot

448 U.S. 1 (1980)

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New York Airlines v. Dukes County

623 F.Supp. 1435 (D.Mass. 1985)

Pesticide Public Policy Foundation v.

Village of Wauconda

622 F.Supp. 423 (N.D. Ill.

1985)

Pirolo v. City of Clearwater

71l F.2d 1006, rehearing denied,

720 F.2d 688 (llth Cir. 1983)

Private Truck Council v. New

Hampshire

N.H. , 517 A.2d 1150 (1986)

Ramah Navajo School Board, Inc. v.

Bureau of Revenue

104 N.M. 302, 720 P.2d 1243 (App.

1986)

Segundo v. City of Rancho Mirage

F.2d = (9th Cir. 4/2/87)

Singleton v. Wulff

428 U.S. 106 (1976)

Tileston v. Ullman

318 U.S. 44 (1943)

United Nuclear Corp. v. Cannon

564 F.Supp. 581 (D.R.I. 1983)

White Mountain Apache Tribe v.

Williams

798 F.2d 1205 (9th Cir. 1986),

cert. denied sub nom White Mountain

Apache Tribe v. Arizona Transporta-

tion Board, U.S. ‘s 6 3

940 (1987), rehearing denied,

os (March 23, 1987); amended,

810 F.2d 844 (9th Cir. 2/10/87)

iv

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Page

White Mountain Apache Tribe v.

Williams “aa

448 U.S. 136 (1980)

Worth v. Seldin 4

422 U.S. 490 (1975)

Wright v. Roanoke Redevelopment and

Housing Authority 7, &

U.S. , 107 S.Ct. 766 (1987)

Yakima Indian Nation v. Whiteside 13

— 617 F.Supp. 735 (E.D. Wash. 1985)

United States Constitution —

Article III a, 36

United States Code

42 U.S.C. § 1983 he Be Be Gp Fz

26, Bhs O20 B38,

6, 32:

42 U.S.C. § 1988 he De B20 S27 SS

Arizona Revised Statutes

A.R.S. § 42-1339

Other Authorities

J. Chover, Judicial Review in the

—_— —— ll

National Political Process (1980)

9, 10

STATEMENT OF THE CASE

This case originated as a state tax

case. The lawsuit was commenced in the

Arizona Superior Court in 1974 pursuant to

A.R.S. § 42-1339, providing for a taxpay-

er's suit for refund of state taxes paid.

The Arizona Supreme Court held that the

non-Indian seller's sale of tractors to an

Indian entity was subject to Arizona's

transaction privilege tax. Arizona v.

Central Machinery, 121 Ariz. 183, 589 P.2d

426 (1979). This Court reversed. 448

U.8. i360 1986). Upon remand, Central

Machinery attempted to convert its state

tax refund action to a 42 U.S.C. § 1983

action in order to obtain attorney's fees

under 42 U.S.C. § 1988. That attempt was

ultimately rejected by the Arizona Supreme

Court. Central Machinery Company v. State

Of Azigons, . <Afis. ., 30 P26 843

(1986).

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ARGUMENT

I

CENTRAL MACHINERY COMPANY, A NON-INDIAN

ARIZONA CORPORATION, LACKS STANDING

TO ASSERT A 42 U.S.C. § 1983 CLAIM

Arizona does not deny that Central

Machinery, as an Arizona corporation and

a taxpayer, has standing under state law

to challenge its payment of transaction

privilege taxes and was entitled to sue

for a refund of taxes paid under protest.

However, standing under state law to sue

for a tax refund does not transmute into

standing under 42 U.S.C. § 1983 for the

redress of rights, privileges and immuni-

ties protected under federal laws and fed-

eral constitution.

Although the Arizona Supreme Court

found that Central Machinery has standing

to raise the § 1983 issue, a state court's

finding of standing does not ipso facto

confer standing in this Court. In review-

ing a state court judgment, this Court is

inte

bound by the Article III requirement of

case and controversy. Doremus v. Board of

Education, 342 U.S. 429, 434 (1952); Tile-

ston v. Ullman, 318 U.S. 44 (1943); Bate-

man v. Arizona, 429 U.S. 1302 (1976)

(opinion of Mr. Justice Rehnquist).

The Arizona Supreme Court -found that

Central Machinery had standing to raise

ies eon on behalf of the Indian en-

tity because it agreed, through its attor-

ney, that any award of attorney's fees

would be disbursed to Giia River Farms

(the Indian entity). Such a voluntary

agreement cannot confer standing which

will satisfy the Artteie III requirement

of case or controversy.

Under Article III analysis, there is

no case or controversy between Arizona and

Central Machinery because Central Machin-

ery has suffered no injury whatsoever as a

result of the imposition of the State's

transaction privilege taxes. The tax was

passed on to the purchaser, Gila River

Farms. Lacking any direct injury, Central

Machinery has no standing to challenge the

validity of the Arizona tax. Worth v.

Seldin, 422 U.S. 490 (1975). Admittedly,

this Court, in Central Machinery v. Ari-

zona, 448 U.S. 160 (1980), reached the

merits of the preemption issue and inval-

idated the tax on the sale of the trac-

tors. However, the standing issue in that

case is vastly different from the case

here. In its opinion this Court referred

to the fact that, in the state court pro-

ceeding, it was stipulated that Central

Machinery would pay over any tax refund to

Gila River Farms, the Indian entity. 448

U.S. at 162, n. 2. That reference simply

stands for the proposition that standing

existed for tax refund purposes. Standing

existed there because only the payer of

the tax, Central Machinery, could have

filed a tax protest under Arizona law.

~~

Accordingly, under jus tertii principles,

Central Machinery had standing to raise

the preemption issue since no one else

could do so. Barrow v. Jackson, 346 U.S.

249 (1953); Eisenstadt v. Baird, 405 U.S.

438 (1972). That standing analysis, how-

ever, does not apply in the case of a 42

U.S.C. § 1983 action. Section 1983 clear-

ly permits the Indian entity, Gila River

Farms, in its own name to sue state tax

officials, asserting the deprivation of

its rights, privileges and immunities.

Accordingly, since Gila River Farms could

have brought its own § 1983 action or in-

tervened in the state court proceeding,

Central Machinery cannot act as a proxy

for Gila River Farms in asserting a § 1983

claim for the purpose of obtaining 42

U.S.C. § 1988 attorney's fees. Indeed,

this case presents the very danger that

this Court noted ‘in Singleton v. Wulff,

428 U.S. 106 (1976):

{T]hird parties themselves usually

will be the best proponents of

their own rights. The courts de-

pend on effective advocacy, and

therefore shold prefer to construe

legal rights only when the most ef-

fective advocates of those rights

are before them. The holders of

the rights may have a like prefer-

ence, to the extent they will be

bound by the courts’ decisions un-

der the doctrine of stare decisis.

Id. at 114.

To confer standing via a voluntary

agreement would also trivialize § 1983.

To permit standing by agreement, an insur-

er of a motor vehicle or other personal

property could claim a § 1983 violation

against a creditor who unconstitutionally

repossessed and damaged the motor vehicle

Or personal property insured. In such

cases, instead of protecting important

personal and civil rights, 42 U.S.C.

§ 1983 would become a vehicle for finan-

cial institutions to reach a deep pocket

for the purpose of obtaining financial

satisfaction and little else.

II

THERE IS NO CONFLICT BETWEEN

THE ARIZONA COURT'S DECISION

AND THIS COURT'S PRECEDENTS

Central Machinery argues that the

Arizona Court's decision is in conflict

with Wright v. Roanoke Redevelopment and

Housing Authority, U.s. » 267 3.6.

766 (January 14, 1987). That argument is

wrong.

Wright is a pure vanilla entitlement

case such as Maine v. Thiboutot, 448 U.S.

1 (1980). in Wright the Brooke Amendment

required that public housing tenants pay

only a reasonable sum for utilities. The

Housing Authority allegedly charged an ex-

cessive amount for utilities which was in-

cluded in the rent charged, resulting in

overpayments of rent by the tenants. The

tenants were therefore deprived of the

protection accorded them by the Brooke

Amendment. This Court held that a claim

under 42 U.S.C. § 1983 existed under these

ates

facts. It is clear that, in Wright, tan-

gible monetary benefits, to which the ten-

ants were entitled, were denied to them

by the action of the Housing Authority.

This case is different from Wright.

It is not an entitlement case. The State

of Arizona had nct traded with the Indians

in contravention of the Indian trader stat-

utes. The transaction privilege tax which

was imposed on all such transactions with-

in the State of Arizona was merely held by

this Court in its decision to have been

preempted by the Indian trader statutes

and invalid under the Supremacy Clause.

Accordingly, Arizona did not violate any

of the Indian trader statutes and did not

deprive any Indians of any benefits they

were entitled to under the Indian trader

statutes.

This Court's decision in Central Ma-

Chinery was a recognition that, in this

field of taxation, Congress has allocated

-~

authority between national and state gov-

ernments and, in that allocation, Arizona

taxation of the sale of tractors by a non-

Indian to an Indian entity is invalid be-

cause such taxation intrudes into the

sphere allocated solely to the national

government.

When a litigant contends that the

mational government (usually the

Congress, but occasionally the ex-

ecutive, either alone or in concert

with the Senate) has engaged in ac-

tivity beyond its delegated author-

ity, or when it is alleged that an

attempted state regulation intrudes

into an area of exclusively nation-

al concern, the constitutional is-

sue is wholly different from that

posed by an assertion that certain

government action abridges a per-

sonal liberty secured by the Con-

stitution. The essence of a claim

of the latter type--which falls in-

to the individual rights category

of constitutional issues ... --is

that no organ of government, na-

tional or state, may undertake the

Challenged activity. In contrast,

when a person alleges that one of

the federalism provisions of the

constitution has been violated, he

implicitly concedes that one of the

two levels of government--national

Or state--has the power to engage

in the questioned conduct. The

core of the argument is simply that

the particular government that has

a.

acted is the constitutionally im-

proper one. To put it another way,

a federalism attack on conduct of

the national government contends

that only the states may so act; a

federalism challenge to a state

practice asserts that only the cen-

tral government possesses the ex-

erted power; neither claim denies

government power altogether.

J. Choper, Judicial Review in the National

Political Process, 174-75 (1980), quoted

with approval in the following cases:

United Nuclear Corp. v. Cannon, 564 F.Supp.

581, 586-7, (D.R.I. 1983); Consolidated

Freightways v. Kassel, 556 F.Supp. 740,

746 (S.D.Iowa 1983), aff'd, 730 F.2d 1139

(8th Cir.), cert. denied, 105 S.Ct. 126

(1984); and White Mountain Apache Tribe v.

Williams, 798 F.2d 1205, 1209 (9th Cir.

1986), cert. denied sub nom White Mountain

Apache Tribe v. Arizona _ Transportation

Board, U.S. » 207 S.Ct. 940 (i967),

rehearing denied, 0.8. (March 23,

1987), amended, 810 F.2d 844 (9th Cir. Feb-

ruary i0, 1987).

io Yin

In White Mountain Apache Tribe v.

Williams, id.,- based on facts’ very

Similar tc those in this case, the Nintn

Circuit Court of Appeals held that this

Court's invalidation of the Arizona motor

— carrier license tax and a use fuel tax un-

der the Supremacy Clause, based on the pre-

emption by federal Indian timber laws, did

not implicate a 42 U.S.C. § 1983 claim and

reversed the award of § 1988 attorney's

fees by the district court.

In the White Mountain opinion, the

Court of Appeals carefully examined the

underpinnings of the Supremacy Clause and

concluded that it was essentially a power-

conferring peuwision that protects indi-

viduals against government intrusion.”

1. The White Mountain Apache Tribe case

was a companion case to the Central Ma-

chinery case in this Court in 1980.

See White Mountain Apache Tribe v. Wil-

liams, 448 U.S. 136 (1980).

2. The White Mountain Apache Tribe case

was followed in Segundo v. City of Ran-

cho Mirage, F.ce.- (9Gm Cit.

4/2/87).

= se

, 2

See Chapman v. Houston Welfare Rights Or-

ganization, 441 U.S. 600 (1979) (the Su-

premacy Clause is not a substantive con-

stitutional provision that creates rights

within the meaning of 28 U.S.C. § 1343(3)).

See also Consolidated Freightwavs v. Kas-

sel, 730 F.2d 1139 (8th “Cir. 1984), cert.

denied, 105 S.Ct. 126 (1984), (a Commerce

Clause claim does not come within the

meaning of 42 U.S.C. § 1983). The Seventh,

Tenth and Eleventh Circuit Courts of Ap-

peal have all decided that federal preemp-

tion claims do not come within the meaning

of § 1983. Gould, Inc. v. Wisconsin, 750

F.2d 608 (7th Cir. 1984), affirmed on

other grounds, U.S. » meas 3.08.

1057 (1986) (claim of preemption of state

labor laws by the federal National Labor

Relations Act does not come within § 1983

so as to authorize § 1988 attorney's fees);

J & J Anderson v. Town of Erie, 767 F.2d

1469 (10th Cir. 1985) (claim of preemption

atiw

of town ordinance by Federal Aviation Act

does not come under § 1983). Pirolo v.

City of Clearwater, 711] F.2d 1006, rehear-

ing denied, 720 F.2d 688 (llth Cir. 1983)

(preemption of city ordinance by Federal

Aviation Act does not come within § 1983).

A number of district courts have

come to the same conclusion. Yakima Indi-

an Nation v. Whiteside, 617 F.Supp. 735

(E.D. Wash. 1985) (federal preemption

claim asserted by the Indian tribe does

not come within the meaning of § 1983);

Pesticide Public Policy Foundation v. Vil-

lage of Wauconda, 622 F.Supp. 423 (N.D.

Ill. 1985) (alleged conflict between vil-

lage ordinance and Federal Fungicide and

Rodencide Act does not come within § 1983);

United Nuclear Corp. v. Cannon, 564 F.Supp.

581 (D.R.I. 1983) (preemption of state law

by the Federal Atomic Energy Act does not

fall within § 1983); New York Airlines,

Inc. wv. Dukes County, 623 F.Supp. 1435

—t™

\

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(D.Mass. 1985) (preemption of county ordi-

nance by the Federal Aviation Act does not

come within § 1983).

III

THERE IS NO CONFLICT BETWEEN THE

ARIZONA SUPREME COURT'S OPINION

AND STATE COURT DECISIONS

In addition to the four circuit

courts of appeal and the four district

court decisions cited, supra, the New Hamp-

shire Supreme Court concluded that a Su-

premacy Clause challenge does not impli-

cate § 1983. Private Truck Council v. New

Hampshire, N.H. » 517 A.2d 1150

(1986).

Arrayed against this overwhelming

weight of authority is one state court de-

cision cited by the petitioner to be in

conflict with the Arizona decision here.

It can be easily distinguished.

The New Mexico decision, Ramah Nava-

30 School Board, Inc. v. Bureau of Revenue,

aide

104 N.M. 302, 720 P.2d 1243 (Ct.App. 1986),

is not in direct conflict with the Arizona

decision here. The New Mexico court agrees

that the Supremacy Clause does not create

§ 1983 rights. 720 P.2d at 1255. It

found, however, that the Indian Self-

Determination and Educational Assistance

Act granted to the Indians the right to

education, and that the New Mexico law, in

taxing the building of the school, violat-

ed that right. It is noteworthy that the

Ramah lawsuit originally proceeded in New

Mexico on two claims: (1) that the state

tax violated the Indian Self-Determination

and Education Act, and (2) the preemption

claim under the Supremacy Clause. See Ra-

mah, 720 P.2d at 1252. Unlike Ramah, Cen-

tral Machinery never asserted any claim

other than the preemption claim throughout

the litigation on its tax claim. This

stands in sharp contrast to Ramah, where

the New Mexico state court awarded attor-

athe

ney's fees under § 1988 on the non-preemp-

tion claim.

CONCLUSION

The petition or writ of certiorari

should be dismissed, since Central Machin-

ery lacks standing under Article III's case

or controversy requirement.

The petition for writ of certiorari

should also be denied. The Arizona Supreme

Court's decision follows all controlling

decisions of this Court. It is consistent-

with all other federal circuit and district

court cases on the issue of whether pre-

emption claims under the Supremacy Clause

come within the meaning of § 1983.

Respectfully submitted,

ROBERT K. CORBIN

Attorney General

ANTHONY B. CHING

Solicitor General

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