# Amicus Curiae Brief — James B. Beam Distilling Co. v. Georgia

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Amicus Curiae Brief
- **Published:** January 1, 1991
- **Citation:** 501 U.S. 529

## Text

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Banna Rove SOLOMON
STAT® AND Loca LEGAL CENTER
444 North Capitol Street, N.W.

IN THE

Supreme Court of the United States

OCTOBER TERM, 1990

No. 89-680

JAMES B. BEAM DISTILLING Co.,
Petitioner,
v.

STATE OF GEORGIA, JOE FRANK HARrRIS, individually and
as Governor of the State of Georgia, Marcus E.
COLLINS, individually and as Georgia State Revenue
Commissioner, and CLAUDE I. VICKERS, individually
and as Director of the Fiscal Division of the Depart-
ment of Administrative Services,

Respondents.
any

On Writ of Certiorari to the Supreme Court of Georgia

MOTION FOR LEAVE TO FILE
BRIEF OF THE COUNCIL OF STATE GOVERNMENTS,
NATIONAL LEAGUE OF CITIES,
NATIONAL CONFERENCE OF STATE LEGISLATURES,
NATIONAL GOVERNORS’ ASSOCIATION,
NATIONAL ASSOCIATION OF COUNTIES,
U.S. CONFERENCE OF MAYORS, AND
INTERNATIONAL CITY MANAGEMENT ASSOCIATION
AS AMICI CURIAE SUPPORTING RESPONDENTS

Pursuant to Rule 37.2 of the Rules of this Court,
amici respectfully move for leave to file the attached
brief amicus curiae in support of respondents. Respond-
ents have consented to the filing of the brief. Petitioner
has denied consent.

The amici are organizations whose members include
state, county, and municipal governments and officials

throughout the United States. They have a compelling
and continuing interest in the -issue presented here:
whether retroactive monetary relief must be made avail-
able whenever a state tax is held unconstitutional. As
this Court itself has noted, its jurisprudence under the
Commerce Clause and other provisions of the Constitution
that may restrict state taxing authority is at times con-
fusing and unpredictable; that problem is compounded
by the changing nature of many state economies, which
poses novel problems for state and local taxing authori-
ties. These factors make it inevitable that state and
local taxing schemes, even when enacted in good faith
reliance on standing precedents of this Court, occasionally
will be held unconstitutional. If refunds are compelled
in such circumstances, state and local governments will
face not only revenue shortfalls but also unexpected and
potentially ruinous liability. At the same time, the
prospect of disruptive refund liability will discourage
States and local governments from tapping constitu-
tionally permissible suurces of funds.

Because the issues presented by this case are of excep-
tional importance to amici and their members, amici
respectfully move for leave to file the attached brief in
support of respondents.

Respectfully submitted,

CHARLES ROTHFELD *

Acting Chief Counsel
BENNA RUTH SOLOMON
STATE AND LOCAL LEGAL CENTER
444 North Capitol Street, N.W.
Suite 349

Washington, D.C. 20001
(202) 638-1445

+ Counsel of Record for the
August 29, 1990 Amici Curiae

QUESTION PRESENTED

Whether the rule set out in Bacchus Imports, Ltd. v.
Dias, 468 U.S. 263 (1984), should be applied retro-
actively.

(i)

TABLE OF CONTENTS

QUESTION PRESENTED ...........................2.----000+-s+00000+-

TABLE OF AUTHORITIES .........
INTEREST OF THE AMICI CURIAE

THE RULE ANNOUNCED BY BACCHUS
SHOULD NOT BE APPLIED RETROAC-
SSVI cde cet ne ratindinententmasrutainstnattetpaene

A. The Court Should Apply The Chevron Oil Test
In Determining Whether New Principles Of
Law Control The Case Before It .......0

B. Under The Chevron Oil Test, The Decision In
Bacchus Should Not Be Applied Retroactively..

pi a a ETT ANS PE

(iii)

Page

iv

16

26

iv

TABLE OF AUTHORITIES

CASES: Page

Aero Mayflower Transit Co. v. Board of Railroad

Comm’ rs, 332 U.S. 495 (1947) -................-.... 17, 19, 20
Aero Mayflower Transit Co. v. Georgia Public

Service Comm’n, 295 U.S. 285 (1985) ............. 17, 19, 20
American Trucking Ass’ns, Inc. v. Scheiner, 488

Ly aA ASSN Pa 10, 11, 16-17, 19, 23
American Trucking Ass’ ns, Ine. v. Smith, 110 §.Ct.

ee Cee oe passim
Arizona Governing Committee v. Norris, ‘468 U.S.

| SSNS Cc ey SSM. AF 14
Ashland Oil, Inc. v. Caryl, 110 S.Ct. 3202 (1990)... 8, 24
Bacchus Imports, Ltd. v. Dias, 468 U.S. 2638

I crecldoneteasndinscehsicachh te caosadheleorsiiel Gocdeeteniebacd anand a heeipeataed passim
Beers v. Arkansas, 61 U.S. (20 How.) 527

0 ee ees See ee ae 6
Blackston v. Georgia Dep’t of Natural Resources,

334 S.E.2d 679 (Ga. 1985) ..............22200 0. 2, 24
California v. LaRue, 409 U.S. 109 (1972) —........... 22
California Retail Liquor Dealers Ass’n v. Midcal

Aluminum, Inc., 445 U.S. 97 (1980) ....000000. 17, 22
Capital Cities Cable, Inc. v. Crisp, 467 U.S. 691

eRe Rina Ae ates ANNE et hab 8S aden el 17, 22, 23
Capitol Greyhound Lines v. Brice, 339 U.S. 542

ESR Merona Ns Woten Rey Ae. we annem 17
Chevron Oil Co. v. Huson, 404 U.S. 97 (1971)........ passim

Cipriano v. City of Houma, 395 U.S. 701 (1969)... 9
City of Newport v. Fact Concerts, Inc., 453 U.S.

LIES SASSI ETS CARO A SO A 16
Collins v. Yosemite Park & Curry Co., 304 U.S.

EES ES A ERS Ar ae ae ne 21
Complete Auto Transit Inc. v. Brady, 430 U.S.

— _REREE ST SC ERE ENE < 2 nn 23
Craig v. Boren, 429 U.S. 190 (1976) .....00 22
Cunningham v. Mason & Brunswick R.R., 109

I 6
Department of Revenue v. James B. Beam Dis-

tilling Co., 877 U.S. 841 (1964) 2.000. 21, 22
Finch & Co. v. McKittrick, 305 U.S. 395 (1939)... 2, 20,

21, 22, 23

a ee ee eee ae. eS

v
TABLE OF AUTHORITIES—Continued
Page
Flood v. Kuhn, 407 U.S. 258 (1972) -....................... 11
Great Northern Ry. v. Sunburst Oil & Refining
Co., 287 U.S. 358 (1932) . 10,11
Griffith v. Kentucky, 479 U.S. 314 (1987) -.............. 138
Heublein, Inc. v. Georgia, 351 S.E.2d 190 (Ga.),
app. dismissed, 483 U.S. 1013 (1987) ................. 2,8
Heublein, Inc. v. South Carolina Tax Comm’n, 404
4% 8, — os te 22
Hopkins v. Clemson Agricultural College, 221 U. S.
ESE TR SE reas 6
Hostetter v. Idlewild Bon Voyage Liquor Corp.,
87a U.S. 824 (1964) .............................. 17, 19, 21, 22, 23
Indianapolis Brewing Co. v. Liquor Control
Comm’n, 305 U.S. 391 (1989)...................... 2, 20, 21, 24
Jimmy Swaggart Ministries v. Board of Equaliza-
Odom, 110. B. Ge..GGB CIGOO) anne nnnncecrecceccenncnsn-no-ee 7
Joseph E. Seagram & Sons, Inc. v. Hostetter, 384
EE RE 22
Lemon v. Kurtzman, 411 U.S. 192 (1978) ............. 9,15
Linkletter v. Walker, 381 U.S. 618 (1965) ........... . 10,12
McKesson Corp. v. Division of Alcoholic Beverages
& Tobacco, 110 S.Ct. 2238 (1990) .......... 6, 7, 8, 9, 10, 13
Mackey v. United States, 401 U.S. 667 (1971) .....4, 12, 13
Mahoney v. Joseph Triner Corp., 804 U.S. 401
Ee Mihi aiachitiedctediediaddbias ties tncndintiladebditindhedmeneceocer 2

Metropolitan Life Insurance Co. v. Ward, 470 U.S.
ae iltenatpaiedanen 24
Michigan v. Long, 463 U.S. 1032 (1983) ................ 7
Michigan v. Tyler, 486 U.S. 499 (1978).................. 7
Minnesota v. Clover Leaf Creamery Co., 449 U.S.
RCSA ES SP 24
North Dakota v. United States, 110 S.Ct. 1986
EE GE A ARSE Se eT ee 23
Palmer v. Ohio, 248 U.S. 32 (1918) -...................... 6
Phoeniz v. Kolodziejski, 399 U.S. 204 (1970) -...... S
Railroad Co. v. Tennessee, 101 U.S. 337 (1880) __.... 6
Rodriguez de Quijas v. Shearson/American Ex-
press, Inc., 109 S.Ct. 1917 (1989) _....................... 14
San Antonio School District v. Rodriguez, 411 U.S.
it a era <I ee 15

vi
TABLE OF AUTHORITIES—Continued

Page
Sanders v. United States, 8378 U.S. 1 (1968) ........ 12
Scott v. Georgia, 2 8.E.2d 65 (Ga. 1989)... .2, 28-24, 24
Shea v. Louisiana, 470 U.S. 51 (1985)... 12, 13
Solem v. Stumes, 465 U.S. 688 (1984) 12
State Board of Equalization v. Young’s Market Co.,

299 U.S. 59 (1936) passim
Teague v. Lane, 109 S.Ct. 1060 (1989)... 12
United States v. Estate of Donnelly, 397 U.S. 286

(6 Bn meal etal Sch on bil RO delta 9
United States v. Johnson, 457 U.S. 587 (1982) _.... 10
Ward v. Love County, 258 U.S. 17 (1920)... 7
Williams v. United States, 401 U.S. 646 (1971)... 10

Wisconsin v. Constantineau, 400 U.S. 4883 (1971).. 22

CONSTITUTIONAL PROVISIONS:

Commerce Clause, U.S. eae ee al passi
U.S. Const. Amend. XXI “

STATUTES:

0.C.G.A. § 3-4-60 (Michie 1982) 0. 1,2
0.C.G.A. § 3-4-60 (Michie Supp. 1989) 2
0.C.G.A. § 48-2-35(a) (Michie 1982) 0 6
1
2

1937-38 Ga. Laws (Ex. Sess.) 108...
ee Se

MISCELLANEOUS:

Mishkin, The Supreme Court 1964 Term—Fore-
word: The High Court, the Great Writ, and the
Due Process of Time and Law, 79 Harv. L. Rev.
56 (1965) ............. ost

IN THE

Supreme Court of the United States

OcTOBER TERM, 1990

No. 89-680

JAMES B. BEAM DISTILLING Co.,

¢ Petitioner,
STATE OF GEORGIA, JOE FRANK HARRIS, individually and
as Governor of the State of Georgia, Marcus E.
COLLINS, individually and as Georgia State Revenue
Commissioner, and CLAUDE I. VICKERS, individually
and as Director of the Fiscal Division of the Depart-

ment of Administrative Services,
Respondents.

On Writ of Certiorari to the Supreme Court of Georgia

BRIEF OF
THE COUNCIL OF STATE GOVERNMENTS,
NATIONAL LEAGUE OF CITIES,
NATIONAL CONFERENCE OF STATE LEGISLATURES,
NATIONAL GOVERNORS’ ASSOCIATION,
NATIONAL ASSOCIATION OF COUNTIES,
U.S. CONFERENCE OF MAYORS, AND
INTERNATIONAL CITY MANAGEMENT ASSOCIATION
AS AMICI CURIAE SUPPORTING RESPONDENTS

INTEREST OF THE AMICI CURIAE
The interests of the amici are set forth in the motion
accompanying this brief.
STATEMENT

1. In 1938, shortly after ratification of the T enty-
first Amendment, Georgia adopted the predecessor to the
tax at issue in this case, O0.C.G.A. § 3-4-60 (Michie 1982).
See 1937-38 Ga. Laws (Ex. Sess.) 103. In relevant part,

2

the statute taxed alcoholic beverages imported from out-
of-state at higher rates than similar products manufac-
tured in-state. The tax immediately was challenged on
Commerce Clause grounds; it was upheld by the Georgia
Supreme Court, which relied on this Court’s interpreta-
tion of the Twenty-first Amendment. Scott v. Georgia,
2 S.E.2d 65, 66 (Ga. 1939) (citing Finch & Co. v. Me-
Kittrick, 305 U.S. 395 (1939) ; Indianapolis Brewing Co.
v. Liquor Control Comm'n, 305 U.S. 391 (1939); Ma-
honey v. Joseph Triner Corp., 304 U.S. 401 (1939) ; State
Board of Equalization v. Young’s Market Co., 299 U.S.
59 (1936)), overruled on other grounds, Blackston v.
Georgia Dep’t of Natural Resources, 334 S.E.2d 679 (Ga.
1985). In the form challenged here, the statute imposed
a tax of $1.00 per liter on distilled spirits, and $1.40 per
liter on alcohol, imported into the State; it imposed a
tax of $.50 per liter on distilled spirits, and $.70 per
liter on alcohol, manufactured in Georgia from Georgia-
grown products. 0.C.G.A. § 3-4-60 (Michie 1982).

In 1985, in response to this Court’s decision in Bacchus
Imports, Ltd. v. Dias, 468 U.S. 263 (1984), which invali-
dated a similar Hawaii liquor tax, Georgia repealed the
1982 version of 0.C.G.A. § 3-4-60 and replaced it with a
direct tax on the importation of liquor. 1985 Ga. Laws
665, O.C.G.A. § 3-4-60 (Michie Supp. 1989). This tax also
was challenged and upheld by the Georgia Supreme Court;
this Court dismissed the subsequent appeal for want of
a properly presented federal question. Heublein, Inc. v.
Georgia, 351 S.E.2d 190 (Ga.), app. dismissed, 483 U.S.
1013 (1987). The constitutionality of the post-Bacchus
tax is not at issue here.

2. In 1985, petitioner brought suit in state court,
challenging the constitutionality of the 1982 version of
0.C.G.A. § 3-4-60 under the Commerce and Equal Pro-
tection Clauses, and seeking refunds for taxes paid in
1982, 1983, and 1984. Applying Bacchus, the trial court
concluded that the statute had violated the Commerce

Clause because “the purpose of [the tax], as it existed

during the years in question, was economic protection-
ism.” Pet. App. Ex. C, at 9. The court went on to hold,
however, that its decision would be applied only prospec-
tively. Looking to the three-part test for retroactivity set
out by this Court in Chevron Oil Co. v. Huson, 404 U.S.
97 (1971), the trial court concluded that its decision
“establishes a new principle of law.” Pet. App. Ex. C,
at 14. The court also noted that “the offending statute
was amended in 1985 to remove its Constitutional in-
firmities and no effort will be made hereafter to assert
its validity by defendants”; the court added that retro-
active application of its decision would have “ ‘unjust
results.’” Ibid. (citation omitted). The court accord-
ingly found that petitioner was not entitled to a refund.
Id. at 15-16.

On appeal, the Georgia Supreme Court agreed both
that the tax had been unconstitutional (Pet. App. Ex. A,
at 2) and that the holding of unconstitutionality should
be given only prospective effect. The court noted that it
had adopted the Chevron Oil test for retroactivity. bid.
The first prong of the test was satisfied here, the court
explained, because a decision striking down the tax in
1984 “would certainly have overruled past precedent”;
the court added that, “[{d]uring the time that the taxes
at issue here were collected, the State had no reason to
believe that the import taxes were unconstitutional.” Jd.
at 8. The Court found that there was no need to address
the second prong of the Chevron Oil test because the
challenged statute had been repealed in 1985. Ibid. Fi-
nally, the court concluded that the equities made retro-
active application of its decision inappropriate, explaining
that the State had collected the taxes “in good faith under
an unchallenged and presumptively valid statute.” The
court also noted that “[p]rospective application would
avoid imposing a severe financial burden on the State and
its citizens.” Id. at 4.’

1 Justice Smith dissented from the retroactivity holding on state
law grounds, criticizing the majority for “rely[ing] on United

4

SUMMARY OF ARGUMENT

1. This case presents the issue that divided the Court
in American Trucking Ass’ns, Inc. v. Smith, 110 S.Ct.
2323 (1990) (“ATA”); the dispositive question here is
whether to follow the approach to retroactivity pro-
pounded by the ATA plurality or the ATA dissent. In
our view, the plurality’s analysis—which uses the test
of Chevron Oil Co. v. Huson, 404 U.S. 97 (1971), to
determine the retroactive applicability of decisions an-
nouncing new rules—is preferable. That approach ac-
cords with what had been the general understanding of
the Court’s retroactivity decisions, and is derived from
longstanding principles of stare decisis. The plurality’s
conclusion also draws substantial support from the Court’s
refusal to apply new constitutional decisions in habeas
corpus proceedings, which involves a recognition that
the policies of finality and reliance may justify disregard
of “current constitutional law.” Mackey v. United States,
401 U.S. 667, 686 (1971) (opinion of Harlan, J.).

Similar considerations militate against the retroactive
application of new constitutional principles in cases in-
volving state taxation. Requiring refunds when the in-
validated tax had seemed consistent with this Court’s
precedents could have profoundly disruptive effects on
States and the public. It also would subject state courts
and taxing officials to extraordinarily awkward and con-
flicting obligations. State courts are obligated to apply
this Court’s decisions until the Court itself sets them
aside, while state officials typically are bound to enforce
presumptively valid laws until directed otherwise by the
courts; if States may be forced to surrender funds col-
lected pursuant to such statutes, the ability of govern-
ments to plan and carry out their operations will be
seriously compromised.

States Supreme Court decisions that are not on point and in which
the Georgia Constitution was never discussed or considered.” Pet.
App. Ex. A, at 12.

5

2. Under the Chevron Oil test, the decision in Bacchus
Imports, Ltd. v. Dias, 468 U.S. 263 (1984), should not
be applied retroactively. The Court in Bacchus noted
early decisions under the Twenty-first Amendment that
supported the constitutionality of the challenged tax (see
id. at 274-275 & n.13); the Court’s decision left very
little of those precedents standing. Indeed, three Justices
were of the view that the Court’s decision in Bacchus was
inconsistent with a “square[]” contrary holding and
rested on “a totally novel approach” to the Twenty-first
Amendment. Jd. at 282, 286-287 (Stevens, J., dissent-
ing). That is enough to dispose of this case: if three
Justices believe that a decision of the Court departs from
longstanding precedent, state legislators and taxing offi-
cials hardly can be faulted for failing to anticipate that
decision.

In any event, a review of this Court’s holdings makes
clear that Bacchus did set out a new principle of law
within the meaning of the first prong of the Chevron Oil
test. The Court’s earliest Twenty-first Amendment opin-
ions squarely held that Commerce Clause restrictions do
not apply to state taxation or regulation of liquor that
is destined for consumption within the taxing State’s
borders. Until the time of the decision in Bacchus, the
Court continued to affirm that principle, and repeatedly
cited its early decisions with apparent approval. Georgia
accordingly was entitled to rely on those decisions—which
were, of course, the basis for the state Supreme Court’s
1939 holding that the challenged tax was constitutional.
The outcome under the second and third prongs of the
Chevron Oil test is equally clear. As the ATA plurality
explained, constitutional policies are not advanced by
retroactively invalidating a tax that, when enacted and
enforced, was consistent with this Court’s precedents.
Similarly, the equities cut powerfully against unsettling
actions taken in good faith reliance on this Court’s deci-
sions.

6

ARGUMENT

THE RULE ANNOUNCED BY BACCHUS SHOULD
NOT BE APPLIED RETROACTIVELY.

At the outset, it is useful to bear in mind the issues that
are not involved in this case. First, the Court need not
address the extent to which States may assert sovereign
immunity to bar constitutional claims brought against
them in their own courts under state causes of action.
Despite petitioner’s hints to the contrary, however, it is
worth noting that the Constitution never has been under-
stood to guarantee monetary relief as a remedy for all
constitutional violations. From its inception, our system
has recognized sovereign and implied immunities—some
created by this Court—that may make it impossible for
injured parties to obtain money damages.? This under-
standing plainly survives the Court’s decision in McKes-
son Corp. v. Division of Alcoholic Beverages & Tobacco,
110 S.Ct. 2238 (1990), which held that the Due Process
Clause obligates States to provide a remedy for the col-
lection of unconstitutional taxes; because the State had
waived its immunity, the Court in McKesson specifically
declined to address the extent to which restrictions on
such waivers may limit the relief available. See id. at
2257 n.34. Given Georgia’s broad waiver of immunity,
the issue similarly is not present here. See 0O.C.G.A.
§ 48-2-35 (a).

Second, this case does not involve any challenge to the
established understanding that refunds are unavailable

2 While the specific question whether a State’s sovereign im-
munity may bar federal constitutional claims advanced against it
in state court has been infrequently litigated, on those occasions
when the Court has reached the issue it consistently has indicated
that “without [a State’s] consent it cannot be sued in any court,
by any person, for any cause of action whatever.” Hopkins v.
Clemson Agricultural College, 221 U.S. 636, 642 (1911). See also,
e.g., Palmer v. Ohio, 248 U.S. 32, 34 (1918); Cunningham v. Mason
& Brunswick R.R., 109 U.S. 446, 451 (1883); Railroad Co. v.
Tennessee, 101 U.S. 337, 339 (1880); Beers v. Arkansas, 61 U.S.
(20 How.) 527, 529 (1858).

7

to taxpayers who fail to comply with state statutes of
limitations or rules requiring notice, payment under pro-
test, or exhaustion of administrative remedies. Petitioner
seemingly acknowledges the force of this principle (Br.
41-42), which was reaffirmed in McKesson. 110 S.Ct. at
2254-2255 & n.28. See also, e.g., Jimmy Swaggart Minis-
tries v. Board of Equalization, 110 S.Ct. 688, 700 (1990) ;
Ward v. Love County, 253 U.S. 17, 22-23, 25 (1920).*
There is no novelty to this conclusion: the Court has
made clear in a variety of settings that preservation of
a federal constitutional claim may be conditioned on com-
pliance with nondiscriminatory state procedural rules.
See, e.g., Swaggart, 110 S.Ct. at 700; Michigan v. Tyler,
436 U.S. 499, 512 n.7 (1978). Similarly, this case does
not pose the question whether a State must provide a
refund remedy if it allows taxpayers to contest the im-
position of a tax prior to payment. See McKesson, 110
S.Ct. at 2250-2251 & n.21.

Third, this case is not controlled by McKesson. The
Florida tax there at issue was enacted after this Court’s
decision in Bacchus, see 110 S.Ct. at 2243, and the levy
accordingly was inconsistent with settled law from the
outset. See id. at 2247 n.15; American Trucking Ass’ns,
Inc. v. Smith, 110 S.Ct. 2328, 2332 (1990) (“ATA”).
Although petitioner struggles mightily to confuse the
issue (see Br. 5-8, 15, 18), this case, in contrast, involves
a statute enacted prior to the decision in Bacchus. See
Pet. Br. 32-33. Petitioner’s attacks on Georgia’s post-
Bacchus statute—the constitutionality of which already

8 Similariy, there is no need to address the question whether
a Stete’s retroactivity rule ever may be viewed as a limit on its
waiver of sovereign immunity that is defined by state law. The
Georgia Supreme Court here expressly applied the retroactivity rule
set out in Chevron Oil Co. v. Huson, 404 U.S. 97 (1971), see Pet.
App. Ex. A, at 2, and it therefore “is eminently clear that the ‘state
court decision fairly appears to rest primarily on federal law, or to
be interwoven with the federal law.’”’ American Trucking Ass’ns,
Ine. v. Smith, 110 S.Ct. 2323, 2330 (1990) (plurality opinion),
quoting Michigan v. Long, 463 U.S. 1032, 1040 (1983).

8

has, in any event, been settled (see Heublein, Inc. v.
Georgia, 351 S.E.2d 190 (Ga.), app. dismissed, 483 U.S.
1013 (1987) )—therefore are beside the point.

In fact, the controlling precedent here is AJA rather
than McKesson, and the dispositive question is whether
to apply the approach to retroactivity taken by the ATA
plurality or the ATA dissent. The plurality, of course,
was of the view that decisions announcing new rules do
not “appl[y] to conduct or events that occurred before
the date of the decision” (110 S.Ct. at 2330 (plurality
opinion) ), explaining that retroactivity in such circum-
stances is governed by “the Chevron Oil test.” See id.
at 2331, referring to Chevron Oil Co. v. Huson, 404 U.S.
97 (1971). The dissent concluded that the Court must
apply its current understanding of the law in every case,
but that the relief available under that law may be
limited. See ATA, 110 S.Ct. at 2347-2848 (Stevens, J.,
dissenting).

In many cases this disagreement is of only theoretical
importance, since a decision to withhold relief will have
the same effect on the parties regardless of the under-
lying rationale. See ATA, 110 S.Ct. at 2347-2348
(Stevens, J., dissenting). That is not so here, however,
for under McKesson, “[{o|nce a constitutional decision
applies and renders a state tax invalid, due process, not
equitable considerations, will generally dictate the scope
of relief offered.” Jd. at 2339 (plurality opinion). See
McKesson, 110 S.Ct. at 2247. Similarly, the disagree-
ment between the ATA plurality and dissent is of rela-
tively little practical importance—even in tax cases where
McKesson applies—when the plurality’s test leads to
retroactive application of the decision at issue. See Ash-
land Oil, Inc. v. Caryl, 110 S.Ct. 3202, 3204 (1990) (per
curiam). Again, however, that is not the case here; as
we explain below, Bacchus plainly set out a new princi-
ple of law within the meaning of the ATA plurality opin-
ion. As a consequence, the ATA plurality’s approach
would not require the State to offer a retroactive remedy

9

here, while the dissent’s rule would “obligate[] the State
to provide meaningful backward-looking relief.” McKes-
son, 110 S.Ct. at 2247. We therefore turn to the con-
trolling question in this case: whether to view retro-
activity “as a choice of law rule [or] * * * as a remedial
principle.” ATA, 110 S.Ct. at 2348 (Stevens, J., dis-
senting).

A. The Court Should Apply The Chevron Oil Test In
Determining Whether New Principles Of Law Control
The Case Before It.

Not surprisingly, we are of the view that the ATA
plurality’s approach better accords both with this Court’s
precedents and with the general understanding of retro-
activity. The issues were addressed at length by the
Court in ATA, and we will not rehearse the arguments
here. In our view, however, several points bear special
emphasis.

1. As an initial matter, whether or not the ATA dis-
sent’s characterization of retroactivity is, strictly speak-
ing, consistent with the Court’s prior holdings, that char-
acterization does not appear to accord with the Court’s
past understanding of its decisions. The Court’s civil
retroactivity rulings typically contain language indicat-
ing that “the decision will not apply” to past conduct, or
that “we will apply our decision in this case prospec-
tively.” Cipriano v. City of Houma, 395 U.S. 701, 706
(1969). See also, e.g., Chevron Oil, 404 U.S. at 106-107
(“‘a holding of nonretroactivity’”); Phoenix v. Kolod-
ziejski, 399 U.S. 204, 214 (1970) (“[{ojur decision in
this case will apply only to” specified conduct) ; Lemon v.
Kurtzman, 411 U.S. 192, 199-200 (1973) (“Lemoa II’)
(plurality opinion) (contrasting retroactivity with rem-
edy). This sort of language—stating that “a decision
will not apply” to past conduct— surely is most naturally
read as meaning that the rule announced in that decision
will not apply. Indeed, Justice Harlan wrote separately
in United States v. Estate of Donnelly, 397 U.S. 286, 295-
297 (1970) (Harlan, J., concurring), precisely because

10

he was concerned that the Court’s opinion pointed in the
direction taken by the ATA plurality. See id. at 295.
The lower courts, practitioners,‘ and commentators there-
fore uniformly have understood the Court’s retroactivity
decisions to be “a doctrine or set of rules for determin-
ing when past precedent should be applied to a case
before the court.” ATA, 110 S.Ct. at 2340 (plurality
opinion). See id. at 2340 & n.2 (citing commentary).
There is no compelling reason to depart from this long-
settled understanding.

2. This is particularly so because there is no Article
III or other constitutional defect in the ATA plurality’s
approach. Perhaps the Court’s most oft-quoted state-
ment on the subject is its declaration that “ ‘the federal
constitution has no voice upon the subject’ of retrospec-
tivity” (United States v. Johnson, 457 U.S. 537, 542
(1982), quoting Great Northern Ry. v. Sunburst Oil &
Refining Co., 287 U.S. 358 (1932)), and the Court has
“firmly rejected the idea that all new interpretations of
the Constitution must be considered always to have been
the law and that prior constructions to the contrary must
always be ignored.” Williams v. United States, 401 US.
646, 651 (1971) (plurality opinion). See also, e.g., Link-
letter v. Walker, 381 U.S. 618, 622 n.3 (1965). There
undeniably is, moreover, a real controversy between the
parties in a case such as this one. And a holding of non-
retroactivity is hardly advisory; the Court’s opinion in
such a case simply explains its rationale for choosing a

4 The petitioners in ATA and McKesson, for example, grounded
virtually their entire arguments on the assumption that the Chevron
Oil test controlled the retroactive applicability of American Truck-
ing Ass’ns, Inc. v. Scheiner, 483 U.S. 266 (1987), and Bacchus,
respectively. See ATA, No. 88-325, Pet. Br.; McKesson, No. 88-192,
Pet. Br. They repeated these arguments in their briefs on reargu-
ment in McKesson. While the ATA petitioners briefly suggested
that a departure from Chevron Oil was possible, they did so by
offering a policy-based standard that would require governmental
entities always to make full recompense for constitutional viola-
tions; they did not advocate the analysis subsequently adopted by
the ATA dissent. See No. 88-325, Pet. Br. 12-13.

11

particular rule and applying that rule (or failing to
apply it) to particular facts. A ruling of that sort is
similar in principle to, and relies upon the same con-
siderations of policy as, a conclusion that a prior holding
was wrongly decided but should not be overruled so as
to protect the litigants’ (and the public’s) reliance in-
terests. See, e.g., Flood v. Kuhn, 407 U.S. 258, 282-284
(1972).

In fact, as the ATA plurality explained, principles of
nonretroactivity long have been understood to be an ele-
ment of the doctrine of stare decisis. 110 S.Ct. at 2340-
2341, citing Sunburst, 287 U.S. at 364 (Cardozo, J.),
Certainly, if it is appropriate for the Court to protect
the public’s expectation interests by declining to overrule
a decision that is thought to have been wrongly decided,
it is equally proper to allow courts, by means of prospec-
tive overruling, “to respect the principle of stare decisis
even when they are impelled to change the law in light
of new understanding.” ATA, 110 S.Ct. at 2341 (plu-
rality opinion). Justice Scalia offered a related analysis
in ATA, where he concluded that a Justice who disagrees
with a decision that overruled precedent may decline to
apply that decision to conduct that had been undertaken
in reliance on the precedent; in such circumstances, stare
decisis principles permit a departure from the more
recent decision so as not to “upset * * * settled expecta-
tions.” Id. at 2345 (Scalia, J., concurring in the judg-
ment) (emphasis omitted). We add only that, if Justice
Sealia’s understanding, of stare decisis is correct—and
we believe it is—it is not at all clear why it should be
inconsistent with the judicial role for a judge who agrees
with a decision to decline to apply that decision’s rule so
as to protect those same expectation interests.*

5 As in ATA, use here of “civil retroactivity principles does not
result in the unequal treatment of similarly situated litigants.”
110 S.Ct. at 2342 (plurality opinion). As also was true in American
Trucking Ass’ns, Inc. v. Scheiner, 483 U.S. 266 (1987), see ATA,
110 S.Ct. at 2337, 2342 (plurality opinion), the Court in Bacchus
simply held the challenged tax unconstitutional and remanded the

12

This conclusion draws substantial support from the
Court’s application of retroactivity in habeas corpus pro-
ceedings. Prior to the Court’s decision in Linkletter, “the
criteria applied in federal habeas corpus proceedings were
uniformly the constitutional standards in effect at the time
of those proceedings, regardless of when the conviction
was actually entered.” Mishkin, The Supreme Court
1964 Term—Foreword: The High Court, the Great Writ,
and the Due Process of Time and Law, 79 Harv. L. Rev.
56, 78 (1965). See, e.g., Sanders v. United States, 373
U.S. 1, 17 (1963). But the Court has since seemingly
adopted an approach, first propounded by Justice Harlan
in Mackey v. United States, 401 U.S. 667, 675 (1971)
(opinion of Harlan, J.), that accords most constitutional
decisions nonretroactive effect in habeas proceedings.
Teague v. Lane, 109 S.Ct. 1060, 1075 (1989) (plurality
opinion). See id. at 1079 (White, J., concurring in part
and concurring in the judgment); ibid. (Blackmun, J.,
concurring in part and concurring in the judgment) ; id.
at 1079-1080 (Stevens, J., concurring in part and con-
curring in the judgment).

This approach rests, in part, on the purposes of habeas.
See Teague, 109 S.Ct. at 1072 (plurality opinion) ;
Mackey, 401 U.S. at 682 (opinion of Harlan, J.). But

any suggestion that the Court’s analysis was compelled

by congressional intent plainly would be a fiction. In-
stead, the Court avowedly has relied on the policies of
finality and reliance, concluding that they “ ‘outweigh * * *
the competing interest in readjudicating convictions ac-
cording to all legal standards in effect when a habeas
petition is filed.’” Teague, 109 S.Ct. at 1072 (plurality
opinion), quoting Mackey, 401 U.S. at 682-683 (opinion
of Harlan, J.). See Teague, 109 S.Ct. at 1073-1075; Shea
v. Louisiana, 470 U.S. 51, 58-60 (1985) ; Solem v. Stumes,
465 U.S. 638, 651-653 (1984) (opinion of Powell, J.).
Indeed, these policies have been held to justify the con-

case for a determination whether retroactive relief would be appro-
priate. See 468 U.S. at 277.

13

clusion that “otherwise identically situated defendants
may be subject to different constitutional rules.” Shea,
470 U.S. at 63-64 (White, J., dissenting). See Griffith
v. Kentucky, 479 U.S. 314, 329-332 (1987) (White, J.,
dissenting) . Again, if such considerations may justify
disregard of “current constitutional law” in habeas pro-
ceedings (Mackey, 401 U.S. at 686 (opinion of Harlan,
J.)), there is no reason to find it inconsistent with the
judicial function for a judge, looking to similar policies,
to decline to apply current law in a case such as this
one.

3. In fact, there are compelling considerations that
militate against retroactive application of new constitu-
tional principles in cases involving state taxation. The
ATA plurality properly noted that retroactivity may
“have potential disruptive consequences for the State and
its citizens. A refund, if required by state or federal
law, could deplete the state treasury, thus threatening
the State’s current operations and future plans.” 110
S.Ct. at 2333. Petitioner therefore demonstrates a pro-
found misunderstanding of the fiscal realities facing state
and local governments by cavalierly suggesting that Geor-
gia finds it “inconvenient” to pay refunds and “could
simply issue ‘credit memos’ to those with valid refund
claims.” Br. 42. In a time of almost universal budget
deficits, it is hardly a simple matter for a state or local
government suddenly to make unexpected outlays (or

make up for unexpected revenue shortfalls) of many mil-
lions of dollars.*

* Not surprisingly, petitioner fails to acknowledge that, in cases
involving discrimination under the Commerce Clause, McKesson
gives States the option of retroactively raising the taxes of tax-
payers who received unconstitutionally favorable treatment in lieu
of paying a refund to the disfavored group. See McKesson, 110
S.Ct. at 2252. But this is not a complete answer to concerns about
the disruptive consequences of retroactive liability. In many cases
retroactive tax increases will be impracticable; in others, refunds
will be mandatory because the invalidated tax “was beyond the
State’s power to impose” or the taxpayers were “absolutely immune
from the tax.” Jd. at 2251. And even when practical and permis-

14

Pointing to just this consideration, Justice Powell,
writing for five Justices in Arizona Governing Committee
v. Norris, 463 U.S. 1073, 1106-1107 (1983), explained
the untoward consequences of imposing retroactive mone-
tary liability on a State. Noting that “the cost [of retro-
active relief in Norris] would fall on the State of Ari-
zona,” and that “[p]resumably other state and local gov-
ernments also would be affected directly” by the Court’s
decision, the Court concluded: “Imposing such unantici-
pated financial burdens would come at a time when many
States and local governments are struggling to meet sub-
stantial fiscal deficits. Income, excise, and property taxes
are being increased.” Because the illegality of Arizona’s
conduct had not been settled until the decision in Norris
itself, the Court saw “no justification * * * to impose
this magnitude of burden retroactively on the public.”
Ibid. See id. at 1110 (O’Connor, J., concurring).

Even beyond the immediate fiscal impact, retroactive
application of new rules in such circumstances would
subject state officials to extraordinarily awkward and
conflicting obligations. State legislators hardly can be
expected to repeal tax statutes that are consistent with
standing precedents of this Court. And even if those
precedents have been called into question by subsequent
decisions, the Court has made clear that “the [lower
courts] should follow the case which directly controls,
leaving to this Court the prerogative of overruling its
own decisions.” Rodriguez de Quijas v. Shearson/Ameri-
can Express, Inc., 109 8.Ct. 1917, 1921-1922 (1989). As
a consequence, in a case such as this one

a state supreme court would have every reason to
consider itself bound by [this Court’s] precedents to
uphold the tax against a constitutional challenge.
Similarly, state tax collection authorities would have
been justified in relying on state enactments valid
under then-current precedents of this Court, par-

sible, retroactive taxes disrupt the expectations of the taxpayers
who are forced to pay them.

15

ticularly where, as here, the enactments were upheld
by the State’s highest court.

ATA, 110 S.Ct. at 2333 (plurality opinion). Indeed,
state officials typically are bound under state law to en-
force presumptively valid statutes until directed other-
wise by the courts. If States may be forced te surrender
funds collected pursuant to such statutes, “a government’s
ability to plan or carry out its programs” will be seri-
ously compromised. Jd. at 2335.

Other, related considerations reinforce the conclusion
that retroactive application of new rules may lead to sub-
stantial public harm. In Lemon II, the Court rejected a
constitutional challenge that

would have [had] state officials stay their hands un-
til newly enacted state programs are ‘ratified’ by the
federal courts, or risk draconian, retrospective de-
crees should the legislation fall. In our view, [this]
position could seriously undermine the initiative of
state legislators and executive officials alike. Until
judges say otherwise, state officers * * * have the
power to carry forward the directives of the state
legislature.

411 U.S. at 207-208 (plurality opinion). In the absence
of compelling constitutional considerations mandating ret-
roactivity (see id. at 201-203), the plurality added that
“[wle do not engage lightly in post hoc evaluation of
such political judgment, founded as it is on ‘une of the
first principles of constitutional adjudication—the basic
presumption of the constitutional validity of a duly en-
acted state or federal law.’” Id. at 208, quoting San
Antonio School District v. Rodriguez, 411 U.S. 1, 60
(1973). While the Court in Lemon II was specifically
addressing questions of remedy rather than retroactivity,
its underlying premise is equally applicable here: “ab-
sent contrary direction, state officials and those with
whom they deal are entitled to rely on a presumptively
valid state statute, enacted in good faith and by no means
plainly unlawful.” Lemon II, 411 U.S. at 208-209 (plu-
rality opinion).

16

It is worth adding that, when a state or local govern-
ment is held liable, the ultimate burden falls not on a
wrongdoer but on “the shoulders of blameless or unknow-
ing taxpayers” (City of Newport v. Fact Concerts, Inc.,
453 U.S. 247, 267 (1981)) in the form of higher taxes
or reduced benefits—-or, given strapped state treasuries,
both. When the government has acted in disregard of
clearly established law, that outcome may be appropriate.
But “because the State cannot be expected to foresee that
a decision of this Court would overturn established prece-
dents, the inequity of unsettling actions taken in reliance
on those precedents is apparent.” ATA, 110 S.Ct. at
2333 (plurality opinion).

B. Under The Chevron Oil Test, The Decision In Bacchus
Should Not Be Applied Retroactively.

If the Court follows the approach set out by the A7'A
plurality, it must apply the Chevron Oil test to its hold-
ing in Bacchus. The test’s three parts have become
familiar:

First, the decision to be applied nonretroactively
must establish a new principle of law, either by
overruling clear past precedent on which litigants
may have relied, or by deciding an issue of first
impression whose resolution was not clearly fore-
shadowed. Second, * * * we must * * * weigh the
merits and demerits in each case by looking to the
prior history of the rule in question, its purpose and
effect, and whether retrospective application will fur-
ther or retard its operation. Finally, we [must]
weigh|] the inequity imposed by retroactive opera-
tion, for where a decision of this Court could pro-
duce substantial inequitable results if applied retro-
actively, there is ample basis in our cases for avoid-
ing the injustice or hardship by a holding of non-
retroactivity.

404 U.S. at 106-107 (citations and internal quotation
marks omitted). See ATA, 110 S.Ct. at 2331 (plurality
opinion). Applying this test, the ATA plurality con-
cluded that the Court’s decision in American Trucking

17

Ass’ns, Inc. v. Scheiner, 483 U.S. 366 (1987)—which had
wegely overruled the so-called Aero Mayflower line of
cases ‘“—should not be applied retroactively. See 110 S.Ct.
at 2332-2334. Application of the test to Bacchus should
lead to the same result.

1. Bacchus involved a challenge to a Hawaii statute
that gave preferential tax treatment to certain locally
produced alcoholic beverages. See 468 U.S. at 265-266.
The five Justices in the majority concluded that the stat-
ute was inconsistent with the Commerce Clause because
it discriminated against out-of-state products. Id. at 268-
273. More important for present purposes, the Court also
held that the state law was not saved by the Twenty-
first Amendment. The Court did note “broad language
in some of the opinions of this Court written shortly af-
ter ratification of the Amendment” that precluded ap-
plication of the Commerce Clause to state liquor regula-
tions. Id. at 247; see id. at 274 n.13, citing State Board
of Equalization v. Younc , Market Co., 299 U.S. 59
(1936). But citing Hos.etter v. Idlewild Bon Voyage
Liquor Corp., 377 U.S. 324 (1964), California Retail
Liquor Dealers Ass’n v. Midcal Aluminum, Inc., 445 U.S.
97 (1980), and Capital Cities Cable, Inc. v. Crisp, 467
U.S. 691 (1984), the Court concluded that “the Amend-
ment did not entirely remove state regulation of alcoholic
beverages from the ambit of the Commerce Clause.”
Bacchus, 468 U.S. at 275; see id. at 275-276.

The Court therefore held that,

[djoubts about the scope of the Amendment’s au-
thorization notwithstanding, one thing is certain:
The central purpose of the provision was not to em-
power States to favor local liquor industries by
erecting barriers to competition. * * * State laws
that constitute mere economic protectionism are

7 Aero Mayflower Transit Co. v. Georgia Public Service Comm'n,
295 U.S. 285 (1935); Aero Mayflower Transit Co. v. Board of
Railroad Comm’ rs, 332 U.S. 495 (1947); Capitol Greyhound Lines
v. Brice, 339 U.S. 542 (1950).

18

therefore not entitled to the same deference as laws
enacted to combat the perceived evils of an un-
restricted traffic in liquor. Here, the State does not
seek to justify its tax on the ground that it was
designed to promote temperance or to carry out any
other purpose of the Twenty-first Amendment, but

instead acknowledges that the purpose was “to pro-
mote a local industry.”

468 U.S. at 276 (citation omitted). The Court accord-
ingly invalidated the tax because it was inconsistent with
th. Commerce Clause and was “not supported by any
clea ‘ concern of the Twenty-first Amendment.” /bid.

Justice Stevens, joined by then-Justice Rehnquist and
Justice O’Connor,* issued a vigorous dissent, suggesting
that the constitutionality of the Hawaii law was
“squarely” settled by this Court’s precedents. 468 U.S.
at 282. Noting that the State in Bacchus did not contest
Congress’s authority to regulate liquor (see id. at 279),
Justice Stevens explained that the Court’s early opinions
“immediately recognized that [the Amendment’s] broad
language confers power upon the States to regulate com-
merce in intoxicating liquors unconfined by ordinary lim-
itations imposed on state regulation of interstate goods
by the Commerce Clause and other constitutional provi-
sions.” Id. at 281 (citing cases). Justice Stevens added
that the Court has “consistently reaffirmed that under-
standing of the Amendment.” Jd. at 282.

Specifically addressing the argument that Hawaii’s tax
was unconstitutional because it imposed a burden on
liquor produced out-of-state, Justice Stevens concluded
that, “{a]s I read the text of the [Twenty-first] Amend-
ment, it expressly authorizes this sort of burden. More-
over, as I read Justice Brandeis’ opinion for the Court
in the seminal case of State Board of Equalization v.
Young’s Market Co., * * * the Court has squarely so de-
cided.” 468 U.S. at 282. Justice Stevens also noted that

8 Justice Brennan did not participate in the consideration or de-
cision of the case. 468 U.S. at 277.

19

the decision in Idlewild, which the Court s

qualified the reasoning of Young’s Wald gansta om
jected the broad proposition that the Twenty-first Amend-
ment had entirely divested Congress of all regulato
power over interstate or foreign commerce in Satbadeating
liquors. Id. at 284. Justice Stevens added that the
Court’s conclusion—that state laws are not protected by
the Amendment when they are unrelated to temperance
or the perceived evils of traffic in liquor—involves “a

totally novel approach “
Id. at 286-287. PP to the Twenty-first Amendment.

2. In our view, the same facto
rality found decisive are at work rig Bug heny “hl gal
far as is relevant here, Bacchus and Scheiner are te
markably similar. In both, the Court noted longstanding
reese that supported the constitutionality of the
allenged state tax. See Scheiner, 483 U.S. at 293-295:
Bacchus, 468 U.S, at 274-275 & n.13. In both, the Cour

-

pointed to more recent decisions that, it suggested, had-~_

called into question the vitality of those a
Scheiner, 483 U.S. at 295; enhes: 468 ea
In both, the Court’s decision left very littl (or nothin )
of those precedents standing.° See. génerally ATA 110
S.Ct. at 2331 ( plurality opinion). And in both three
dissenting Justices argued that the Court’s holding was
a marked and unwarranted departure from its prece-
dents. See Scheiner, 483 U.S. at 298-303 (O’Connor, J
dissenting) ; Bacchus, 468 U.S. at 282-283 (Stevens, J.
dissenting) . That is enough to dispose of this case: if
three Justices of this Court are of the view that a deci-
sion is Inconsistent with “square[]” contrary holdings
( Bacchus, 468 U.S. at 282 ( Stevens, J., dissenting) ) ih
rests on “a totally novel approach” (id. at 286), state

9
In both, the Court also made rather unenthusiastic attempts to

‘distinguish those precedents. See Scheiner, 483 U.S. at 296 & n 26

(noting practical impossibilit i j
y of precise apportionment in A
tort Prmsced Bacchus, 468 U.S. at 274 n.13 (noting “Shee
et’s observatio i i id i ici
leis “1 n that a high import fee may aid in policing

an

-

,

20

legislators and taxing officials hardly can be faulted for
failing to anticipate that decision.

3. In any event, a review of this Court’s holdings
makes clear that Bacchus did set out a new principle of
law. The Court’s earliest opinions in cases involving the
Twenty-first Amendment flatly held that Commerce
Clause restrictions do not apply to state taxation or regu-
lation of liquor. Thus in Young’s Market—decided, co-
incidentally, one year after the first of the Aero May-
flower line of cases—the Court upheld a fee on liquor
imported from other States, explaining that the taxing
State’s motivation in enacting the fee was irrelevant.
299 U.S. at 63. See Bacchus, 468 U.S. at 282-283

(Stevens, J., dissenting).

Subsequent decisions repeatedly and expressly rejected
the contention that state laws motivated by economic pro-
tectionism are not saved by the Amendment. In Finch &
Co. v. McKittrick, 305 U.S. 395, 397-398 (1939) (Bran-
deis, J.), for example, a Commerce Clause challenge to
the retaliatory exclusion of out-of-state liquor was
grounded on the contention that “the [state] law does not
relate to protection of the health, safety and morality,
or the protection of their social welfare, but is merely an
economic weapon of retaliation; and that, hence, the
Twenty-first Amendment should not be interpreted as
granting power to enact it.” The Court gave the argu-
ment short shrift: “[s]ince that amendment, the right of
a State to prohibit or regulate the importation of intoxi-
cating liquor is not limited by the commerce clause.”
Ibid. See also, ¢.g., Indianapolis Brewing Co. v. Liquor
Control Comm’n, 305 U.S. 391, 394 (1939) (Brandeis,
J.) (“{s]inee the Twenty-first Amendment, as made clear
in the Young case, the right of a state to prohibit or
regulate the importation of intoxicating liquor is not
limited by the commerce clause”). These statements were
hardly dicta, as petitioner repeatedly asserts (Br. 26,
29) ; they were essential to the resolution of the only is-
sues presented.

21

Petitioner suggests (Br. 26, 28-29) that this under-
standing was disturbed by the decision in Idlewild, point-
ing to the Court’s statement that to “draw a conclusion
from [the early decisions] that the Twenty-first Amend-
ment has somehow operated to ‘repeal’ the Commerce
Clause whenever regulation of intoxicating liquors is con-
cerned would * * * be an absurd oversimplification.” 377
USS. at 331-332. The Court made this statement, how-
ever, in support of its observation that the Amendment
did not divest Congress of its power to regulate liquor;
the Court immediately added that, “[i]f the Commerce
Clause had been pro tanto ‘repealed,’ then Congress would
be left with no regulatory power over interstate or for-
eign commerce in intoxicating liquor. Such a conclusion

would be patently bizarre and d i ”
Id. at 889. emonstrably incorrect.

The Court accordingly held that a State’s attempt to
a with rg aied approved shipments of liquor
verseas were not supported by the Amendment. 3
US. at 333-334."° At the same time, however, the al
citing Young’s Market, made clear that “by virtue of
[the Amendment’s] provisions a State is totally uncon-
fined by traditional Commerce Clause limitations when
it restricts the importation of intoxicants destined for
use, distribution, or consumption within its borders.” Id.
at 330. The Court added that “[t]his view of the scope
of the Twenty-first Amendment with respect to a State’s
power to restrict, regulate, or prevent the traffic and
distribution of intoxicants within its borders has re-

mained unquestioned.” Ibid."

1 The Court’s holding in Jdlewild actually turned on a principl
that predated—and that was entirely consistent with—its A amon a
McKittrick and Indianapolis Brewing: that a State may not pro-
hibit the transportation through its territory of liquor that is
destined for consumption elsewhere. See 377 U.S. at 332, citing
Collins v. Yosemite Park & Curry Co., 304 U.S. 518 (1938).

1 Indeed, in Department of Revenue v. James B. Beam Dis-
tilling Co., 377 U.S. 341 (1964), a decision issued the same day

22

In subsequent decisions the Court reaffirmed congres-
sional authority to regulate liquor,” and suggested that,
“lolnce passing beyond consideration of the Commerce
Clause, the relevance of the Twenty-first Amendment
to other constitutional provisions becomes increasingly
doubtful.” Craig v. Boren, 429 U.S. 190, 206 (1976)
(emphasis added). But the Court consistently continued
to hold that the “importation of intoxicants [is] a regu-
latory area where the State’s authority under the
Twenty-first Amendment is transparently clear.” Id. at
206-207. It therefore several times affirmed Idlewild’s
observation that “a State is totally unconfined by tradi-
tional Commerce Clause limitations” when restricting
the importation of liquor for use within its borders. See
California v. LaRue, 409 U.S. 109, 114 (1972); Joseph
E. Seagram & Sons, Inc. v. Hostetter, 384 U.S. 35, 42
(1966). And the Court repeatedly cited cases like
Young’s Market '* and McKittrick’ with apparent ap-

as Idlewild, the Court quoted Idlewild’s observation that States
are “totally unconfined by traditional Commerce Clause limitations

in restricting the importation of intoxicants for use or distribu-
tion within their borders.. 377 U.S. at 344. See id. at 344 n4
(citing Young’s Market). The Court held in Beam that a state
tax on foreign liquor transactions was inconsistent with the Export-
Import Clause, and was not saved by the Twenty-first Amendment,
precisely because “what is involved in the present case * * * is not
the generalized authority given to Congress by the Commerce
Clause, but a constitutional provision which flatly prohibits any
State from imposing a tax upon imports from abroad.” Ibid.

12 See Crisp; Midcal. See also Heublein, Inc. v. South Carolina
Tax Comm'n, 409 U.S. 275, 282 n.9 (1972).

13 See Wisconsin v. Constantineau, 400 U.S. 433 (1971). Cf. Cali-
fornia v. LaRue, 409 U.S. 109, 116 (1972).

14 See Midcal, 445 U.S. at 107; Craig, 429 U.S. at 206-207;
LaRue, 409 U.S. at 114; Seagram, 384 U.S. at 42; Beam, 377 U.S.
at 344; Idlewild, 377 U.S. at 330.

15 See Midcal, 445 U.S. at 108; Craig, 429 U.S. at 206; Beam, 377
U.S. at 344 n.4; Idlewild, 377 U.S. at 330.

proval. Indeed, it did so just eleven days prior to the
decision in Bacchus, stating that

“This Court’s decisions . . . have confirmed that the
Amendment primarily created an exception to the
normal operation of the Commerce Clause.” Craig,
[429 U.S. at 206]. Thus, as the Court explained in
[Idlewild], § 2 [of the Amendment] reserves to the
States power to impose burdens on interstate com-
merce in intoxicating liquor that, absent the Amend-
— would clearly be invalid under the Commerce
ause.

Crisp, 467 U.S. at 712-713, citing Idlewild, 377 U.S. at
330, and Young’s Market, 299 U.S. at 62-63.

Against this background, Georgia plainly was entitled
to rely on this Court’s pre-Bacchus Twenty-first Amend-
ment decisions. Prior to Bacchus the Court never had sug-
gested that holdings such as Young’s Market and McKit-
trick no longer were good law insofar as they authorized
state taxation or regulation of liquor intended for do-
mestic use. And the Court never had so much as hinted
that protectionist state statutes were outside the scope
of the Amendment. Even if the outcome in Bacchus had
been implicitly foreshadowed by language in some of
the Court’s earlier decisions—and in our view it had not
been—that would not distinguish Bacchus from Scheiner:
the holding in the latter case arguably had been suggested
by decisions such as Complete Auto Transit, Inc. v.
Brady, 430 U.S. 274 (1977). See Scheiner, 483 U.S. at
294-295. Indeed, in one significant respect the State’s
expectation of continuity in the law was considerably
stronger here than in AJA: taxes such as the one at
issue here seemingly were, as Justice Stevens noted in
Bacchus, “expressly authorize{d]” by the text of the
Twenty-first Amendment. 468 U.S. at 282. Cf. North
Dakota v. United States, 110 S.Ct. 1986, 2001 (1990)
(Scalia, J., concurring in the judgment).

Here, the Georgia tax long ago had been challenged
and upheld by the Georgia Supreme Court. Scott v.

24

Georgia, 2 S.E.2d 65 (Ga. 1939), overruled on other
grounds, Blackston v. Georgia Dep’t of Natural Re-
sources, 334 S.E.2d 679 (Ga. 1985). That decision ex-
pressly relied on holdings of this Court. See Scott, 2
S.E.2d at 66, citing Youwng’s Market and Indianapolis
Brewing Co. Those holdings never had been called into
question and repeatedly had been cited with approval
by this Court. See ATA, 110 S.Ct. at 2332 (plurality
opinion) ; compare Ashland Oil, 110 S.Ct. at 3205 (retro-
activity in order where decision “did not overrule clear
past precedent nor decide a wholly new issue of first im-
pression”). In fact, petitioner’s assertion (Pet. Br. 33)
that the limited scope of the Twenty-first Amendment had
long been clear is belied by its own notable failure to
challenge Georgia’s tax until after the decision in Bac-
chus.° Bacchus accordingly established a new principle
of law within the meaning of the first prong of the
Chevron Oil test. See ATA, 110 S.Ct. at 2332 (plurality
opinion).

4. The results of the second element of the Chevron
Oil test are equally clear. As we have just noted, when
enacted and enforced Georgia’s tax was consistent with
this Court’s Twenty-first Amendment doctrine; in such a
case, as the ATA plurality explained, “it is not the pur-
pose of the Commerce Clause to prevent legitimate state
taxation of interstate commerce.” 110 S.Ct. at 2332.
Indeed, the adequacy of prospective relief is particularly
apparent in the Commerce Clause setting, because that
provision was designed to protect the interstate market
rather than individual participants in the market. See,
e.g., Metropolitan Life Insurance Co. v. Ward, 470 U.S.
869, 881 (1985) ; Minnesota v. Clover Leaf Creamery Co.,
449 U.S. 456, 475 (1981). We argue this issue at length

16 Petitioner’s failure to challenge the tax was not a consequence
of its inability to discover the protectionist purposes of the state
statute; as the trial court explained, those purposes were announced
in the legislative history. Pet. App. Ex. C, at 8-9.

25

in our brief in Dennis v. Higgins, No. 89-1555, now pend-
ing before the Court, and do not repeat our discussion
of the issue here.”

Petitioner’s principal response on this point is its
assertion that retroactive application of Bacchus is neces-
sary as a deterrent to improper state conduct, a conten-
tion grounded on the argument that Georgia’s post-
Bacchus statute remains unconstitutional. Br. 38-39. If
petitioner were correct in its assessment of that statute,
a successful challenge to the new tax might well require
a retroactive remedy. As we note above, however, peti-
tioner’s challenge to the post-Bacchus statute was re-
jected by the state courts, and this Court denied review.
In any event, the constitutionality of the new tax is be-
side the point here; it remains true that constitutional
values are not advanced by punishing States for actions
that, at the time they were taken, were entirely con-
sistent with this Court’s dicates.

For reasons that we explain above, the equities also
cut powerfully against retroactive application of Bacchus.
As in ATA, “here the State promulgated and impie-
mented its tax scheme in reliance on * * * precedents of
this Court.” 110 S.Ct. at 2333 (plurality opinion). In
such circumstances, “the inequity of unsettling actions
taken in reliance on those precedents is apparent.” Ibid.
Petitioner’s argument to the contrary (Br. 41-42) turns
largely on the wholly insupportable assertion that pay-
ing refunds would not be burdensome to the State. The
ATA plurality rejected an identical contention, and that
should dispose of this case. See 110 S.Ct. at 2333-2335.

17 Copies of our brief in Dennis have been served on the parties
along with this brief.

26

CONCLUSION
The judgment of the Georgia Supreme Court should be

affirmed.
Respectfully submitted,

CHARLES ROTHFELD *
Acting Chief Counsel
BENNA RUTH SOLOMON
STATE AND LOCAL LEGAL CENTER
444 North Capitol Street, N.W.
Suite 349
Washington, D.C. 20001
(202) 688-1445

* Counsel of Record for the
August 29, 1990 Amici Curiae

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385012_0688%3A10. Public record. Not legal advice.