Opposition Brief — Harper v. Virginia Department of Taxation

Y al ep 4

No. 90-1685 Ts 1m

In The ic OFFICE OF THE CLERK

Supreme Court of the United States

October Term, 1990

¢

HENRY HARPER, et al.,

Petitioners,

VIRGINIA DEPARTMENT OF TAXATION,

Respondent.

¢

Petition For A Writ Of Certiorari To The

Supreme Court Of Virginia

BRIEF IN OPPOSITION TO PETITION FOR

A WRIT\OF CERTIORARI

Sea

ay) Mary Sue TERRY

AX Attorney General of the -

es Commonwealth of Virginia

H. LANE KNEEDLER

Chief Deputy Attorney

General

Of Counsel: Gait STARLING MARSHALL”*

Peter W. Low, Esquire Deputy Attorney General

Professor of Law Grecory E. Lucyk

University of Virginia BarBaRA M. Rose

School of Law Senior Assistant

Charlottesville, Virginia Attorneys General

22901

BaRBARA H. VANN

Assistant Attorney General

101 North Eighth Street

Richmond, Virginia 23219

(804) 786-2071

*Counsel of Record for Respondent

—-

————

COCKLE LAW BRIEF PRINTING CO, 225-6964

OR CALL COLLECT (402) 342

74

QUESTIONS PRESENTED

The questions presented in this case turn on how this

Court decides another case that has been argued and on

which decision is pending:

1. If the decision in James Beam Distilling Co. v.

Georgia, No. 89-680, is that tax invalidating

decisions of this Court may be applied pro-

spectively only by following the analysis

outlined in Chevron Oil Co. v. Huson, 404 U.S.

97 (1971), the question presented is whether

the Supreme Court of Virginia properly

applied that analysis to the particular facts

and circumstances of this case.

2. If the dgcision in James Beam Distilling Co. v.

Georgia, No. 89-680, is that tax invalidating

decisions of this Court must always be

applied retrospectively, the question pre-

sented by this case is whether the decision

of the Supreme Court of Virginia that the

state remedy sought is unavailable for rea-

sons based entirely on state law is fully ade-

quate to support the judgment below.

li

TABLE OF CONTENTS

Page

QUESTIONS PRESGUGREE? 6 os seceneviesdansvensvinns i

TABLE OF ALPEPI Gee ioc tencceesdusvebarseanes ii

STATEMENT OF THEE CASE... ccc cccvenvedevecvaeee 1

REASONS FOR DENYING THE WRIT............. 2

I. The Asserted Federal Right................... 3

A. Application of CHOOTON, 6 ..4.5666s50000000% 5

B. Petitioners’ Efforts to Distinguish Chevron.... 10

Oe DT rt 11

D. Appropriate Disposition .................. 12

SE, “BO Se I kn oo ves eeeecuexanners ieee 13

III. Potential Due Process Issues.................. 16

IV. Even If Beam is Decided on Other Grounds, Cer-

tiorari Should Be Denied.............-00-000 17

COLLARED so asks newndadee shane eeeEeneee 17

iii

TABLE OF AUTHORITIES - Continued

Page

Cases

American Trucking Ass’ns, Inc. v. Smith, 110 S. Ct.

ge as ae nab ks 66 bed 0 bb 0 8 40's 4, 15, 16

Arizona Governing Comm. for Tax Deferred Annuity

and Deferred Compensation Plans v. Norris, 463

ee ag acu p so 6 54 ou 0 06 5 one eee ee 6-8. 10

Brown v. Board of Education, 347 U.S. 483 (1954) ...... 7

Capehart v. City of Chesapeake, No. 5459, Cir. Ct.

City of Chesapeake, petition for appeal denied,

215 Va. xlvii, cert. denied, 423 U.S. 875 (1975)...... 14

Chevron Oil Co. v. Huson, 404 U.S. 97 (1971)..... passim

Davis v. Michigan Dept. of Treasury, 489 U.S. 803

ee ae edb ee es ere dedss ie bees passim

James B. Beam Distilling Co. v. State, 259 Ga. 363,

382 S.E.2d 95 (1989), cert. granted, 110 S. Ct. 2616

(1990) (No. 89-680, argued Oct. 30, 1990)...... passim

McKesson Corp. v. Division of Alcoholic Beverage and

Se Be a A, Be CAPO) 2 ww ec eens 2, 16

Michigan v. Long, 463 U.S. 1032 (1983)............... 15

Northern Pipeline Construction Co. v. Marathon Pipe

Se ee I OP ROME). ced tere vesees 7

Perkins v. Albemarle County, 214 Va. 240, 198 S.E.2d

626, aff'd and 1.odified on rehearing, 214 Va. 416,

ee 14

Sutherland v. Swannanoa Corp., 189 Va. 149, 52

ED scp had kow seek doe cee nekesncesiens 14

iv

TABLE OF AUTHORITIES - Continued

Page

STATUTES

te re ry ee a ee Oe ore. Pat oe 10

Va. Code Ann. § 58.1-1826 (Supp. 1990).............. 1

MISCELLANEOUS

ee I Ns ie eo tas opr at os ery ee nc aces i]

Ch. 325, 1942 Va. Acts 481 (Reg. Sess.)............... 2

STATEMENT OF THE CASE

The question in this case is whether the Common-

wealth of Virginia is obligated under state or federal law

to provide a potential tax refund now exceeding $440

million. Petitioners are retired federal employees who

receive federal pension benefits and retirees from military

service who receive military retired pay. There are over

192,000 such federal and military retirees in Virginia,

more than in any other state. In May 1989, Petitioners

filed suits in state court against the Virginia Department

of Taxation (hereafter “Commonwealth”), seeking

refunds for state income taxes paid for taxable years 1985,

1986, 1987 and 1988. Petitioners claimed entitlement to

refunds under Va. Code Ann. § 58.1-1826 (Supp. 1990),

which provides that “[i]f the court is satisfied that the

applicant is erroneously or improperly assessed with any

taxes, the court may order [refunds].” Petitioners alleged

that this Court’s March 28, 1989 decision in Davis v.

Michigan Department of Treasury, 489 U.S. 803 (1989)

(“Davis”), applied retroactively to state income taxes

imposed on their federal pension income prior to that

decision, and that the taxes therefore were “erroneously

and improperly assessed” under state law.

The circuit court and, on appeal, the Supreme Court

of Virginia, disagreed with both contentions. In an opin-

ion published at 241 Va. 232, 401 S.E.2d 868 (1991), the

Virginia Supreme Court held that, as a matter of state law,

Petitioners had no entitlement to relief under the refund

statute because “state law does not require tax refunds,

but to the contrary, grants prospective only application to

decisions that invalidate a state taxing scheme... . ”

Petition for Certiorari, App. B at 12a. As to the federal

question, the Court applied the analysis of Chevron Oil

Co. v. Huson, 404 U.S. 97 (1971) (“Chevron”), to conclude

that the Davis decision would be applied prospectively

only in any event.

There is no issue in tk +. case of sufficient importance

or generality to warrant the grant of certiorari. Contrary

to Petitioners’ assertions, this is not a case like McKesson

Corp. v. Division of Alcoholic Beverages and Tobacco, 110 S.

Ct. 2238 (1990) (“McKesson”), where a blatantly uncon-

stitutional state tax levy was inconsistent with settled law

at the time it was enacted and imposed. Here, the Com-

monwealth’s good faith clearly is undisputed in the

record below. The state tax policy at issue in this case was

originally established in 1942 (Ch. 325, 1942 Va. Acts 481,

500 (Reg. Sess.)), was never challenged or protested by

any taxpayer for nearly 50 years until this Court’s deci-

sion in Davis, and was promptly repéaled by the legisla-

ture in a Special Session called after Davis was decided.

The record in this case also clearly establishes that a $440

million refund liability would impose extreme hardship

on the people and government of Virginia by forcing

either a tax increase or the reduction of essential state

services and impeding legislative budget planning.

The analysis of potential issues in a case such as the

one presented by the Petition for Certiorari advances in

three successive steps.

First, there is the question whether Petitioners have

an assertable federal right. This question turns at the

outset on whether the decision of this Court in Davis

—EI_eaeewwt)tw

applies retroactively to taxes assessed by the Common-

wealth of Virginia before the effective date of that deci-

sion. The relevance of this question to a grant of the writ

of certiorari, as well as questions derivative from it, is

addressed in Part I below.

Second, if Petitioners have an assertable federal right,

there is the question whether state law authorizes the

remedy they have sought in this action. Since this suit

was fited under the Virginia state refund statute, it is a

question of state law, to be determined in the first

instance by the Virginia Supreme Court, whether an

action lies under this remedial state legislation. The rele-

vance of this question to a grant of the writ of certiorari is

addressed in Part II below.

Third, if state law does not authorize the particular

remedy asserted by these Petitioners, the only question

which may be remaining for the Petitioners is whether

some other remedy is now available to them and, if not,

whether the Commonwealth has denied the Petitioners

due process in the remedial structure it has provided for

the collection of taxes that violated federal law when

collected. The relevance of this question to a grant of the

writ of certiorari is addressed in Part III below.

+

REASONS FOR DENYING THE WRIT

I. The Asserted Federal Right

It is common ground that the Virginia tax imposed on

the civil service Petitioners prior to the Davis decision

could not now be imposed upon them because of that

decision. The Virginia General Assembly prompily

repealed that tax and replaced it with an approach to the

taxation of retirement benefits that is not challenged in

this suit and that, all parties agree, is fully in compliance

with the Davis mandate.

Thus, the first issue is whether, as a matter of federal

law, Davis applies retroactively to taxable events occur-

ring before the effective date of that decision. If it does

not, Petitioners have no federal right to assert, and this

litigation is terminated. The Supreme Court of Virginia

held that it does not, and, accordingly, rendered the judg-

ment from which this petition for a writ of certiorari has

been filed.

Whether this aspect of the judgment of the Virginia

Supreme Court is correct turns, first, on whether it is ever

permissible to apply to a decision such as Davis the

criteria first developed in Chevron and both elaborated

upon and applied in this context by the plurality in

American Trucking Associations, Inc. v. Smith, 110 S. Ct.

2323 (1990) (“ATA”). If it 1s permissible, the question then

is whether the Virginia Supreme Court was correct in its

application of that analysis to the facts of this particular

case.

This first issue — whether it is ever permissible to

apply the Chevron analysis to a decision of this Court

invalidating a state tax — is already before the Court in a

case on which argument has been heard and decision is

pending. If the decision in James B. Beam Distilling Co. v.

State, 259 Ga. 363, 382 S.E.2d 95 (1989), cert. granted, 1105S.

Ct. 2616 (1990) (No. 89-680, argued Oct. 30, 1990)

(“Beam”), is that it is permissible to apply a constitutional

decision of this Court invalidating a state tax only to

taxable events occurring after the date of decision, this

writ of certiorari should be denied. There is no other

issue in the case of sufficient importance or generality to

warrant the grant of certiorari. And, there is no reason to

grant certiorari in this case to determine a question

already before the Court in an argued and pending case.

If this Court decides in Beam that a Chevron analysis

is appropriate in this class of cases, the only remaining

federal question properly raised by this petition is

whether the Supreme Court of Virginia correctly applied

that analysis to the facts and circumstances of this case.

This question does not warrant a grant of certiorari both

because the decision below was plainly correct and

because the question is in any event of insufficient signif-

icance and generality to justify veview by this Court.

A. Application of Chevron

Part I of the decision below by the Supreme Court of

Virginia is an unremarkable and plainly correct applica-

tion of the Chevron analysis to this case. Petitioners’ ques-

tion-begging assertion that there was nothing “new” in

this Court’s decision in Davis is belied by the fact that

thousands of taxpayers had paid this tax in Virginia from

its enactment in 1942 until the Davis litigation (as had

taxpayers Over approximately the same period of time in

22 other states) without any suggestion that there might

be a constitutional problem or any other legal difficulty

with its imposition. It defies common sense to believe, as

Petitioners assert, that “not a single new principle of law

was estadlished in Davis.” Petition for Certiorari at 13. If

this is so, why did thousands of taxpayers in 23 states,

some of whom — no doubt -~ were tax experts or attorneys,

and many of whom — no doubt — sought expert help in

the preparation of their tax returns, continue to pay the

tax for 50 years without a whimper of protest? One can

search the litigated cases, applicable administrative pro-

ceedings, and the relevant literature in vain for any warn-

ing or prediction that what is now argued by Petitioners

to be so plain was understood by either the tax-imposing

or the tax-paying communities in 23 states before the

Davis litigation.

As the Virginia Supreme Court held, there is nothing

in the facts or background of this case to suggest “that the

Commonwealth acted other than in good faith reliance

upon a presumptively valid taxing statute.” Petition for

Certiorari, App. B at 5a. The ultimate question in this

case, then, is who should bear the costs for not having

foreseen the invalidating decision in Davis.

A decision by this Court that Chevron permits the

prospective-only application of Davis would be a decision

that the costs should be allocated on the basis of equitable

considerations. As the Commonwealth argued below and

as the Virginia Supreme Court held, there can be no

doubt about where the equities lie in this case. The citi-

zens Of Virginia should not be required to suffer an

additional $440 million tax increase or reduction in such

essential state services as education, police protection,

social services, and corrections so that a group of tax-

payers who slept on their rights for 50 years can enjoy an

unexpected and undeserved financial windfall. The wind-

fall is unexpected because Davis was a surprise to these

taxpayers as well as to the government that imposed the

tax. It is undeserved both because of the nature of the

harm to Petitioners and the very real harm that will be

caused to the other citizens of Virginia by remedying it in

the manner Petitioners seek. These taxpayers were not

harmed as the result of the deprivation of a personal

constitutional right, such as freedom of speech or the

freedom from unreasonable search or arrest. They were

“harmed” because the Commonwealth of Virginia and 22

other states innocently failed to interpret correctly an

abstract principle of intergovernmental tax immunity

designed to order the relationship between federal and

state governments, not the relation between state govern-

ment and its citizens. That “harm” is adequately

remedied by the prospective invalidation of the tax

already accomplished by the Davis litigation.1 The true

harm in this case will be suffered by the innocent citizens

of Virginia if they are required, in these recessionary

times, to pay $440 million in additional taxes or to forego

$440 million in state services.

1 It is important, indeed, to put the “harm” alleged by

petitioners in perspective. Not all constitutional “harms” are

remedied by compensatory relief. For example, in the school

litigation inaugurated by Brown v. Board of Education, 347 U.S.

483 (1954), there was no retrospective compensatory relief and

indeed prospective relief was in many cases substantially

delayed. The same was true in Northern Pipeline Construction

Co. v. Marathon Pipe Line Co., 458 U.S. 50 (1982) (decision

declaring Bankruptcy Act of 1978 unconstitutional applied pro-

spectively only). In the present context, no one is contending

that relief should be fully retroactive past the point where, in

(Continued on following page)

It could be argued, as Petitioners do, that the best

way to remedy Virginia’s innocent misinterpretation is to

give these Petitioners and other similarly situated tax-

payers refunds and to spread the cost of those refunds

through the entire taxpaying community. It is quite

another thing, however, to take a realistic look at where

the money will come from. It will have to come either

from increased taxes or from decreased state services. In

either case, there will be proportionally less of either

(Continued from previous page)

effect, state statutes of limitation preclude a refund remedy.

There thus will not be “full” retroactive compensatory relief

under any view of the present litigation. Once it is recognized,

moreover, that some state interests (statutes of limitation, for

example) can serve to cut off an asserted right to compensatory

relief, one is tempted to ask why the repose interest of a statute

of limitations should be distinguished from the repose interests

recognized by the Chevron analysis. Purely prospective relief in

the present context, in other words, does not deprive the

Petitioners in this case of all relief for the underlying constitu-

tional violation, and the extent to which they are entitled to

more will in any event — assuming the recognition of statutes

of limitation - represent a compromise between the state’s

interest in settled expectations and the compensatory argu-

ments of the claimants.

There is in any event —- as the Commonwealth argued in its

amicus brief in Beam — a substantial argument, whether looked

at through the lens of retroactivity analysis or through the lens

of remedial doctrine, that the relief to be granted for the kinds

of harm recognized in a case like Davis should reflect equitable

considerations that take into account the relative positions of

the parties. This, at bottom, is all the Commonwealth seeks in

this litigation.

existing resources or any necessary tax increase to pro-

vide much needed State support for state-financed pro-

grams. This means proportionally less money for the

state’s public school system, from kindergarten to gradu-

ate education in its publicly supported universities. It

means less money for law enforcement. It means less

money for social services. It means less money, to one

degree or another, for a wide variety of state services.

And it puts an unwarranted burden on the more than 2.5

million innocent taxpayers in the Commonwealth. At the

margins, those who will suffer the most will be those who

are most in need of the kinds of assistance government

provides to its citizenry. If equitable considerations are to

govern the outcome of this case, there is precious little to

be said for the kind of income redistribution sought by

the Petitioners in this litigation.2

2 Moreover, what petitioners ask is out of all proportion to

the burden placed upon them. The economic cost they incurred

is a small one when measured by the amount of tax they paid

and the taxes they would have paid in the absence of the

exemption for state and local retirees. Of four categories of

income (federal pensions, private pensions, state and local

pensions, and all other individual income), Virginia exempted

only one — the modest retirement benefits of only some 66,000

state and local retirees in a state with some 2.56 million indi-

vidual income tax returns. Had Virginia received tax revenues

from state and local pensions, it could have met its tax revenue

needs by imposing marginally lower taxes on all taxpaying

citizens. Every taxpayer thus would have benefited. Jmplicit in

Petitioners’ refund demand is that only they should benefit and

that the other citizens of the Commonwealth should bear the

entire burden on their behalf.

»

10

B. Petitioners’ Efforts to Distinguish Chevron

Petitioners make two arguments to the effect that,

even if generally applicable to decisions by this Court

that invalidate state taxes, Chevron nonetheless cannot

apply here. The first is that Davis was a statutory decision

and that the Chevron analysis applies only to constitutional

decisions. This argument ignores the plain language of

Davis itself: “[T]he dispositive question in this case is

whether the tax imposed on appellant is barred by the

doctrine of intergovernmental tax immunity.” 489 U.S. at

814. The rationale of Davis was that it did not matter

whether 4 U.S.C. § 111 “provide|[d] an independent basis

for finding immunity or merely preserve[d] the tradi-

tional constitutional prohibition against discriminatory

taxes.” Id. at 813. “In either case,” this Court continued,

“the scope of the immunity” claimed by the appellants “is

to be determined by reference to the constitutional doc-

trine.” Id. at 814. Petitioners also ignore tiie prospective-

only application of this Court’s Title VII statutory inter-

pretation decisions. See, e.g., Arizona Governing Comm. for

Tax Deferred Annuity and Deferred Compensation Plans v.

Norris, 463 U.S. 1073, 1095, 1105-07 (1983) (Powell, J.,

concurring) (the imposition of massive retroactive mone-

tary liability against the state would be inappropriate,

although the state was found to have violated Title VII).

Petitioners’ second argument appears to be that this

case is different because there is an available remedy

under state law for the refunds sought here. This argu-

ment conveniently ignores the fact that the Virginia

11

Supreme Court, which is the authoritative source in this

context on questions of state law, explicitly held to the

contrary in Part II of the opinion below.

It is plain that neither of these arguments indepen-

dently or together justifies the grant of certiorari in this

case. Neither raises the kinds of “special and important

reasons” that warrant this Court’s review. See U.S. Sup.

ct. B. ta:

C. Military Retirees

Petitioners also devote two pages of their argument

to the question whether there is a relevant difference in

the application of Davis to civil service retirees on the one

hand and retirees of the Armed Forces on the other. Why

they believe this is a ground on which this Court should

grant certiorari is not clear. They admit, as is the case,

that “[t}he court below did not reach this argument... . ”

Petition for Certiorari at 19. They do not acknowledge, as

is also the case, that they did not raise in the Virginia

Supreme Court the argument they make now. It is true, as

they assert, that the Commonwealth argued to the Virginia

Supreme Court that such a distinction ought to be drawn

in the event that Davis was to be applied retroactively. It

is surely novel to assert that this Court should grant

certiorari to reject an argument made by the prevailing

party below, which was not raised below by the Peti-

tioners, which was neither adverted to nor passed upon

by the court below, which was in no sense necessary to

12

the decision reached below, and which was in fact made

irrelevant by the basis for the decision below.

D. Appropriate Disposition

On the assumption that Beam holds that the Chevron

factors are applicable to this class of cases, Petitioners’

argument that certiorari should be granted comes down

to the proposition that this Court should hear the case

because the Virginia Supreme Court misapplied the Chev-

ron factors to its particular facts and circumstances.

There are three reasons why this argument is

unavailing. First, it is wrong. The application of the Chev-

ron factors to this case exactly tracks application of the

same factors to the analogous situation by the plurality in

ATA. Second, Petitioners’ argument misconceives the cri-

teria used by this Court in determining when to exercise

its certiorari power. Even if the application of Chevron to

the facts of this case were arguable, the issues presented

are not of sufficient generality or importance so as to

justify plenary consideration by this Court. And third, as

the analysis in Part II will demonstrate, there is in any

event an adequate and independent state ground of

3 In addition, Petitioners misstate Virginia law in this por-

tion of their petition. Virginia is not, as they assert, a “source

tax” state. Unlike some other states, Virginia does not impose a

“source” tax on nonresidents who have retirement income

from previous employment in the State. Individuals who

change their domicile to another state and maintain a place of

abode in Virginia for less than 183 days during the taxable year

are not taxed by Virginia on any retirement income received

while a nonresident.

13

decision in the present case that, under accepted princi-

ples long followed by this Court, forecloses a grant of the

writ.

It therefore foilows that, if Beam holds the Chevron

analysis appropriate to determine the retroactivity of this

Court’s state-tax-invalidation decisions, certiorari should

be denied in the present case.

II. The State Remedy

The arguments made above are premised on the

assumption that the outcome in Beam will be that it is

permissible to apply constitutional decisions of this Court

invalidating a state tax only to taxable events occurring

after the date of decision. Should this not be the Beam

result, a wholly different line of analysis would apply to

this case.

The first issue to be determined in that event would

be whether the remedy sought by these Petitioners is

available to them under state law.

The Virginia Supreme Court held that the remedy

sought by these Petitioners was not available to them

under state law. It did so in two passages in its opinion.

The first occurs at the end of Part II:

Harper’s state-law contention also fails for

another reason. We previously have held that

this Court’s ruling declaring a taxing scheme

unconstitutional is to be applied prospectively

only. . . . We adhere to our holding. .. .

Petition for Certiorari, App. B at 10a-11a.

14

The second occurs in the Court’s summary in the last

paragraph of its opinion:

In sum, we hold that. . . state law does not

require tax refunds, but to the contrary, grants

prospective-only application to decisions that

invalidate a taxing scheme... .

Id. at 12a.

These statements are in response to the Common-

wealth’s argument below, that, even if Davis is to be

applied retroactively, state law provides no remedy to

these Petitioners. The Virginia Supreme Court held that

the state law refund remedy is limited to refunds based

on previously established law, and is not available based

on “new” decisions establishing “new” taxpayer rights

irrespective of whether they find their source in state or

federal law. Decisions announcing and applying this limit

on the state refund remedy were part of the Virginia legal

landscape long before Davis was decided. See Perkins v.

Albermarle County, 214 Va. 240, 198 S.E.2d 626, aff’d and

modified on rehearing, 214 Va. 416, 200 S.E.2d 566 (1973),

and Capehart v. City of Chesapeake, No. 5459, Cir. Ct. City

of Chesapeake, petition for appeal denied, 215 Va. xlvii, cert.

denied, 423 U.S. 875 (1975).4 Virginia taxpayers during the

time frame relevant to this litigation were therefore on

notice that, once a tax was paid, refunds were not avail-

able under state law on legal grounds not clearly estab-

lished by prior law.

4 This denial of the petition for appeal by the Virginia

Supreme Court was a decision on the merits. Sutherland v.

Swannanoa Corp., 189 Va. 149, 154, 52 S.E.2d 92, 95 (1949).

15

As recognized by both the plurality and the dissent

in ATA, the scope of the state refund remedy is a question

of state law. ATA, 110 S.Ct. at 2330; and 110 S.Ct. at 2346

(Stevens, Brennan, Marshall, Blackmun, JJ., dissenting).

The Virginia Supreme Court held that these Petitioners

did not meet, purely as a matter of state law, the Virginia

standards for the state refund remedy. Accordingly, the

proper disposition of this petition is to deny certiorari.

Under long-settled principles, it is not the practice of this

Court to disturb dispositive determinations of state law

for which there is a reasonable basis in prior state deci-

sions, particularly in a case where the Fetition for Cer-

tiorari makes no argument that the state ground for

decision is inappropriate or invalid. Moreover, whatever

the outcome may be on the issues mooted in Beam, the

judgment below in this case rests on an adequate and

independent state ground, neither the adequacy nor the

independence of which has been challenged in the Peti-

tion for Certiorari. As a general matter, this Court will

not grant certiorari to consider federal questions that will

make no difference to the outcome of the case. Michigan v.

Long, 463 U.S. 1032 (1983). There is no reason to do so

here.

If there be any doubt about the meaning of the Vir-

ginia Supreme Court decision, moreover, this Court is not

the place to clear things up. The proper disposition in

that event would, at most, be a remand in light of Beam to

enable the Virginia Supreme Court to make its state law

premises clear. But the Petitioners have not sought this

relief; and the Virginia Supreme Court decision is clear

and forecloses any necessity for such a disposition.

16

It is plain that the Virginia Supreme Court, not this

Court, is the forum in which to determine whether the

remedy sought by these Petitioners is available to them.

Thus, there is no case for a grant of the writ of certiorari

at this stage of the proceedings in order for this Court to

consider issues related to the scope of the state remedy.

III. Potential Due Process Issues

If the result in Beam is that Davis must be applied

retroactively to the tax years in litigation in this case, and

if the particular remedy chosen by these Petitioners is not

available to them under state law, other questions might,

in an appropriate case, arise. They would include other

questions of state law such as whether there is some other

remedy presently available and whether pre-payment

remedies would have been available if sought. The Com-

monwealth argued below that Petitioners could have pur-

sued other pre-payment remedies and that their failure to

do so should preclude them from retief in this refund

suit. Depending on the resolution of these questions, it

may be that, under the analysis of McKesson and the AJA

dissent, further federal due process issues would arise.

But this is not the stage of this litigation where such

questions should be entertained by this Court. In the first

place, the Petition for Certiorari makes no due process

arguments. Secondly, no such questions were passed

upon by the Virginia Supreme Court. Such questions can

be addressed when they are properly presented in a case

in which they have been properly litigated and decided

in the lower courts. But it is clear that now is not that

17

time and this is not that case. Certiorari shou!d not be

granted by this Court to consider such speculative ques-

tions now.

IV. Even If Beam \s Decided on Other Grounds, Cer-

tiorari Should Be Denied

Parts I and II, above, state the Commonweal!th’s posi-

tion on the assumption that this Court’s decision in Beam

resolves the merits of the application of the Chevron-

retroactivity analysis to cases of-the type now before the

Court. If Beam does not resolve that question, it may be

thought that the present case would be an appropriate

vehicle for the resolution of that important issue.

The analysis in Part Il above, however, reveals that it

would not. There is in this case an adequate and indepen-

dent state ground of decision that predetermines the out-

come of this case no matter how Beam ultimately is

resolved. For the Court to grant certiorari in this case,

therefore, would be for it to render the kind of advisory

opinion from which it wisely has refrained in the past.

¢

CONCLUSION

In the end, there is only one federal question pre-

sented by this Petition for Certiorari that is of sufficient

importance as a general matter to warrant a grant of the

writ. That question - whether the Chevron analysis may

be applied to determine the application of a state-tax-

invalidating decision to taxable events occurring before

the decision — has already been argued and presented to

18

the Court for decision in Beam. As the foregoing analysis

demonstrates, no matter how this issue is resolved, cer-

tiorari should be denied in this case.

Presumably Beam will resolve the merits of the issue.

If the resolution is in favor of application of the Chevron

analysis, the petition should be denied. The remaining

questions decided by the Virginia Supreme Court were

correctly determined on that premise, and in any event

are not of sufficient generality and importance to warrant

a grant of the writ. If, on the other hand, the resolution in

Beam is that such an analysis is always inappropriate,

certiorari still should be denied because of the adequate

and independent ground of decision beiow that the state

remedy sought by the Petitioners is unavailable to them.

They have raised no argument premised on federal law,

here or before the Virginia Supreme Court, that would

invalidate that ground of decision. And even if Beam does

not resolve the merits of the application of the Chevron

analysis, this case would not be an appropriate vehicle

for doing so because of the presence of this adequate and

independent state ground of decision.

19

For the foregoing reasons, therefore, the Petition for a

Writ of Certiorari to the Supreme Court of Virginia

should be denied.

Respectfully submitted,

VIRGINIA DEPARTMENT OF TAXATION

Mary Sue TERRY

Attorney General of Virginia

H. Lane KNEEDLER

Chief Deputy Attorney General

Gait STARLING MARSHALL*

Deputy Attorney General

Grecory E. Lucyk

BARBARA M. Rose

Senior Assistant Attorneys

General |

BaRBARA H. VANN

Assistant Attorney Genera!

101 North Eighth Street

Richmond, Virginia 23219

(804) 786-2071

Of Counsel:

Perrer W. Low, Esquire

Professor of Law

University of Virginia

School of Law

Charlottesville, Virginia 22901

*Counsel of Record for Respon-

dent