# Jurisdictional Statement — Alabama Department of Revenue v. Pilot Petroleum Corp. > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_2640%3A1 ## Record - **Collection:** Supreme Court brief - **Document type:** Jurisdictional Statement - **Published:** January 1, 1990 - **Citation:** 498 U.S. 897 ## Text a Supreme Court, U.S, a FILED & a’ » QYQ-2 D4 auG 8 (8 No. JOSEPH F. SPANIOL, JR. CLERK a ane a. As IN THE Supreme Court of the United States OCTOBER TERM, 1990 ALABAMA DEPARTMENT OF REVENUE, Petitioner versus PILOT PETROLEUM CORPORATION and THE LOUISIANA AND EXPLORATION COMPANY, Respondents PETITION FOR A WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FIFTH CIRCUIT JURISDICTIONAL STATEMENT Counsel of Record: Of Counsel John J. Breckenridge Don Siegelman 4116 Gordon Persons Bldg. Ron Bowden Montgomery, AL 36132 4116 Gordon Persons Bldg. Telephone: Montgomery, AL 36132 (205) 242-9690 Telephone: (205) 242-9690 COUNSEL FOR PETITIONER QUESTIONS PRESENTED FOR REVIEW 1. Whether Title 28, United States Code, Section 1341, deprived the district court of jurisdiction to decide the questions of state taxation sub judice raised by the Taxpayer? 2. Whether the district court’s decision to refrain from addressing questions concerning the consti- tutionality of an Alabama excise tax was proper under the doctrine of comity? 3. Whether the majority of the court of appeals correctly decided questions of Alabama law regarding an Alabama excise tax? 4. Whether a sale of gasoline by a distributor licensed by the State of Alabama to a distributor not licensed by the State of Alabama, which took place entirely within Alabama, was pre-empted from taxation by the State of Alabama due to the Export- Import Clause of the United States Constitution? 5. Whether the decisions of this Honorable Court referenced by the Court of Appeals in its decision were followed and properly applied by the majority of the court of appeals to the factual situation sub judice? LIST OF PARTIES TO PROCEEDINGS BELOW PLAINTIFF-APPELLEE Below: The Louisiana Land and Exploration Company, a corporation, DEFENDANT-APPELLANT Below: Pilot Petroleum Corporation, a corporation, INTERVENOR BELOW: State of Alabama, Department of Revenue. il TABLE OF CONTENTS SOT Te PTT eT Tee i RU UIE EW ccc ce cckewnes a il ed ye ie Cvs dss bese e' vi Ey ee 1 Jurisdictional Basis of Petition ............... 1 Constitutional Provisions And Statutes Involved ........2.......... 2 re 3 Ce xa vewee oe en 6 I. ‘Title 28, United States Code, §1341, de- prived the district court of jurisdiction to decide the questions of state taxation sub judice raised by the Taxpayer ... 6 Il. Thefederal courts should have refrained from addressing questions concerning the constitutionality of the Alabama excise tax under the doctrine of comity eae oe ke oe oka eee ese ws 10 III. The majority of the court of appeals incorrectly decided questions of Ala- bama law regarding Alabama’s gasoline es he ad ce nw 4e 64:9 0 16 IV: The sale of gasoline which took place entirely within Alabama was not an ili “export”, and was not pre-empted from state taxation by the Import-Emport Clause of the U.S. Constitution ...... The decisions of this Honorable Court referenced by the Court of Appeals in its decision were not followed and were not properly applied to the factual situation sub judice by the majority of the court GEE ccc vad ch oecevasGekeerese Ee os ceca aa use erca ae caeae ae Appendices A. Judgment of The United States Court of Appeals, Fifth Circuit, entered May 10, SE cd care dn eiie viasedne keke Opinion and judgment of The United States District Court for The Eastern District of Louisiana, entered August heen eee Pilot Petroleum’s “Exceptive Allegation SN oo ov css rcwe cen aioe LL&E’s Motion for Summary Judg- ment, Statement of Uncontested Facts, and Memorandum in Support of Motion for Summary Judgment. ........... iv 18 23 28 29 la lb le Pilot Petroleum’s memorandum in opposition to LL&E’s Motion for Sum- mary Judgment and in support of Pilot’s Motion for Summary Judgment, State- ment of Material Facts, Motion for Summary Judgment ............... LL&E’s memorandum in opposition to Motion for Summary Judgement of Pilot Petroleum Corporation ............. Verbatim of Article I, Section 10, Clause S US CORMIER nok kc cdc eavakanee Verbatim Text of Relevant Alabama ine ee ee ee le TABLE OF AUTHORITIES California v. Grace Brethren Church, 457 U.S. 393, 102 S.Ct. 2498, eRe 8 | eR errr eee ) Exxon Corp. v. Eagerton, 462 U.S. 176, 103 Sup. Ct. 2296 at 2305, 76 L.Ed.2d 497 (1983) ...............-. 22 Fair Assessment in Real Estate Association v. McNary, 454 U.S. 100, 102 S.Ct. 177, i PR E ft) ee 11, 12 Franchise Tax Board of California v. Alcan Aluminum Limited, v. , 110 S.Ct. 661, 107 L.Ed.2d 696 (decided January 10, 1990) .............. ) Lake Superior Consol. Iron Mines v. Lord, peek fk RR RERR rn. mee 22 Michelin Tire Corp. v. Wages, 423 U.S. 276, 96 S.Ct. 535 46 L.Ed.2d 495 (1976) ... 14, 21, 25, 26 Richfield Oil Corp. v. State Board of Equalization, 329 U.S. 69, 67 S.Ct. 156, en § ll er 23-25 vi a TABLE OF AUTHORITIES Page Rosewell v. LaSalle National Bank 450 U.S. 503, 101 S.Ct. 1221, 67 L.Ed. 2d 464, rehearing denied 451 U.S. 1011, 101 S.Ct. 2349, RR FC: eer 7,9 United States Trust Co. of New York v. New Jersey, St EE 5 ok cad dadebdaaucesecevaa 22 Washington Revenue Department v. Stevedoring Association, 435 U.S. 734, 98 S.Ct. 1388, 55 L.Ed.2d 682 (1978) ............... 14, 22, 26 Constitution and Statutes Article I, §10, CL.2, U.S. Constitution, ere passim Code of Alabama 1975, §40-12-191 ............. 20 Code of Alabama 1975, §40-17-31 .............. 18 Code of Alabama 1975, §40-17-32 ........... 13, 19 28 United States Code §1341 .............. passim vii OPINIONS BELOW The opinion of the United States Court of Appeals, Fifth Circuit, which is hereby sought to be reviewed was entered on May 10, 1990. This opinion appears in the Official Reports for the Fifth Circuit Court of Appeals at Volume 900, Federal Reporter, Second Series, at page 816 (900 F.2d 816 (5th Cir. 1990)), and is included herein as Appendix A. The opinion and judgment of the trial court, the United States District Court for the Eastern District of Louisiana, Section B, the Honorable Chief Judge Fredrick J. R. Heebe presiding, was entered on August 30, 1988. This opinion and judgment does not appear in any official or unofficial report, but is included herein as Appendix B. JURISDICTIONAL BASIS The majority judgment of the United States Court of Appeals, Fifth Circuit, reversing the previous judgment and order of the United States District Court for the Eastern District of Louisiana, was entered on May 10, 1990. This Petition for Writ of Certiorari is filed within 90 days from the aforesaid date. The jurisdiction of this Honorable Court is conferred and invoked pursuant to 28 U.S.C. §1254(1), which governs the review of decisions by the courts of appeals, specifically a civil case after rendition of judgment by the United States Court of Appeals, Fifth Circuit. The majority judgment of the United States Court of Appeals, Fifth Circuit, is either in direct conflict with or ignores the previous holdings of this Honorable Court in the cases of: Rosewell v. LaSalle National Bank, 450 U.S. 503, rehearing denied 451 U.S. 503, (1981); and, Fair Assessment in Real Estate Association v. McNary, 454 U.S. 100, (1981); so as to require an exercise of this Honorable Court’s power of supervision. Furthermore, the majority judgment of the Fifth Cir- cuit Court of Appeals has clearly and erroneously mis- applied the previous holdings of this Honorable Court in the cases of Richfield Oil Corporation v. State Board of Equalization, 329 U.S. 69, (1946); Michelin Tire Corpora- tion v. Wages, 423 U.S. 276, (1976); and Washington Revenue Department v. Stevedoring Association, 435 U.S. 734, (1978), to the undisputed facts involved herein so as to necessitate an exercise of this Honorable Court’s review of a decision of the Court of Appeals, Fifth Circuit. The decision which the Department of Revenue is urging this Honorable Court to review was conceded by the Court of Appeals to be a case of first impression concerning the Import Export Clause of the United States Constitution. CONSTITUTIONAL PROVISIONS AND STATUTES This petition involves the applicability of the Import Export Clause of the United States Constitution, article I, section 10, clause 2, to an excise tax imposed by the State of Alabama on the sale of gasoline (aviation jet fuel) by a distributor licensed to engage in such business by the State of Alabama to an unlicensed distributor, where the sale took place entirely within Alabama, but the gasoline was subsequently exported to Canada by the unlicensed dis- tributor. The text of the Import-Export Clause is set forth in Appendix G. The applicable Alabama statutes concern- ing the need for persons engaging in the business of selling or distributing gasoline in Alabama to first obtain a license from the state, and imposing an excise tax on such sales or distributions are: Sections 40-12-191; 40-17-31(a), (d)(1), (e); 40-17-32; 40-17-36; and 40-17-38, Code of Alabama 1975. The applicable Alabama statutes are set forth in their entirety at Appendix H. This petition also involves the applicability of 28 U.S.C. §1341, as it pertains to the jurisdiction of federal courts to determine questions regarding the collection of state taxes. The text of 28 U.S.C. §1341 is set forth at Appendix I. 2 ie STATEMENT OF THE FACTS This case was originally submitted to the trial court on cross-motions for summary judgment. The material facts are not in dispute, and are uncontroverted. For the purposes of this petition, the Court of Appeals recitation of the facts must be considered sufficient. “Pilot Petroleum Corporation (Pilot) contracted with the Louisiana Land & Exploration Company (LL&E) to purchase approximately 112,000 barrels of jet fuel oil (footnote omitted). On November 7, 1986, LL&E de- livered the fuel free on board the Liberian flagged tanker, MARYANN, while it was anchored in the port of Mobile, Alabama. The fuel was then exported to Halifax, Nova Scotia, Canada. Following delivery, Pilot received two invoices for the purchase price of the fuel. The first invoice totalled $201,929.78, including $5,390.78 which was attributable to fuel tax. The second invoice charged $50,400.00 for fuel tax out of a total bill of $1,772,400.00. Pilot paid LL&E, excluding the amounts attributable to the Alabamastate tax.” (Opinion of the Court of Appeals, 900 F.2d at 817). “In November, 1986, LL&E paid to the Alabama Department of Revenue the tax due as a result of its fuel sales to Pilot, despite the fact that it had not been paid the amount of the tax by Pilot. LL&E filed a petition for refund in August, 1987, which contended that Pilot was exempt from the tax under Alabama law because it was properly licensed and bonded. Alabama law provides that licensed distributors are exempt from the fuel excise tax (footnote omitted). Because Pilot did not become a licensed distributor until December 15, 1986, which was after the date of the fuel sale, the Department denied LL&E’s request for refund (footnote omitted).” (Opinion of the Court of Appeal, 900 F.2d at 817). “Pilot never reimbursed LL&E for the tax LL&E paid on its behalf. LL&E then filed this suit in the United 3 States District Court for the Eastern District of Louisiana. The district court concluded that the pur- chaser bears ultimate responsibility for the payment of taxes under both Alabama law and the LL&E-Pilot contract. The court further held that Pilot should first exhaust its administrative remedies by paying the tax and petitioning the Alabama Department of Revenue, and then file suit against the State of Alabama to challenge the constitutionality of the tax.” (Opinion of the Court of Appeals, 900 F.2d at p. 818). Pilot then appealed to the Fifth Circuit Court of Appeals. STATEMENT OF THE CASE The Respondents Pilot Petroleum Corporation and the Louisiana Land and Exploration Company are two cor- porations which are engaged inter alia in the buying and selling of gasoline. The Petitioner Alabama Department of Revenue is charged by Alabama law inter alia with the duty to collect state excise taxes due on sales of gasoline occurring within the jurisdiction of the State of Alabama. On March 4, 1988, Louisiana Land and Exploration Company (“LL&E”) filed a complaint in the United States District Court for the Eastern District of Louisiana against Pilot Petroleum Corporation (“Pilot”) for $55,790.78, plus interest, attorneys’ fees, and costs. The suit was based on two transactions between the parties whereby LL&E had sold to Pilot over 100,000 barrels of aviation jet fuel, which LL&E had delivered to Pilot Petroleum in Mobile, Ala- bama. Based on such sales to Pilot, LL&E reported and paid over te the Alabama Department of Revenue gasoline excise taxes, and according to the terms of the contract of sale, demanded reimbursement from Pilot Petroleum. On May 2, 1988, in response to LL&E’s complaint, Pilot filed an “Exceptive allegation and answer” averring inter alia that since “all allegations and claims asserted by 4 (LL&E) arise out of transactions in the State of Alabama and are subject to law of the State of Alabama” then “the Court is without personal jurisdiction over the claims asserted, and the Complaint should be dismissed for lack of jurisdiction ...” Pilot Petroleum’s answer also contained a genera! denial to the allegations stated or otherwise men- tioned in the complaint, but pointedly did not assert the Import Export Clause as a defense. (Pilot’s answer is setforth herein at the conclusion as Appendix C.) On July 12, 1988, LL&E filed a motion for summary judgment, and a memorandum in support of its motion with the U.S. District Court. (Setforth herein at the conclusion as Appendix D.) On July 26, 1988, Pilot filed a memorandum in opposition to LL&E’s motion for sum- mary judgment, as well as its own (cross) motion for summary judgment, along with a “statement of contested material facts.” (All of Pilot’s July 26, 1988, documents are setforth herein at the conclusion as Appendix E.) On August 2, 1988, LL&E filed a memorandum in opposition to Pilot’s motion for summary judgment, along with a response to Pilot’s statement of material facts. (Setforth herein at the conclusion as Appendix F.) On August 10, 1988, after considering the pleadings, memoranda and arguments of the parties, the district court granted LL&E’s motion for summary judgment and denied Pilot’s, and on August 30, 1988 entered written reasons for its decision (Appendix B.) On August 31, 1988, the district court entered a judgment in favor of LL&E and against Pilot Petroleum in the amount of $55,790.78, together with interest and reasonable attorneys’ fees. On September 12, 1988, Pilot Petroleum filed a notice of appeal to the United States Court of Appeals for the Fifth Circuit. Both parties were allowed to file briefs according to the Federal Rules of Appellate Procedure, and did in fact file such appeallate briefs. The parties were also allowed an opportunity to orally argue their causes before a a | three-judge panel of the Fifth Circuit. It was after such oral argument was conducted that the Attorney General of the State of Alabama was notified by the Fifth Circuit Court of Appeals that the applicability of the Alabama excise tax on gasoline had been called into question. At the invitation of the Court of Appeals, the State of Alabama Department of Revenue filed an appearance and brief as intervenor on July 20, 1989. Pilot Petroleum filed its response to the intervenor’s brief on August 23, 1989. On May 10, 1990, the United States Court of Appeals, Fifth Circuit, in a split-two-to-one decision, reversed the decision of the district court. Each of the questions presented for review in this petition were presented to the Court of Appeals by the State of Alabama for consideration prior to the instant decision being reached by the Court of Appeals. ARGUMENT It is the position of the Alabama Departinent of Revenue that the majority decision of the three judge panel of the Fifth Circuit Court of Appeals is so obviously erroneous and contrary to all existant law regarding state taxation and the Import-Export Clause of the U.S. Constitution so as to require the exercise of this Honorable Court's super- visory and review powers. The questions raised by such 2 flawed decision, involving an issue which the Court of Appeals admitted was one of first impression, is of such wide spread importance so as to necessitate the attention of this Honorable Court. I WHETHER TITLE 28, UNITED STATES CODE, §1341, DEPRIVED THE DISTRICT COURT OF JURISDICTION TO DECIDE THE QUESTIONS OF STATE TAXATION SUB JUDICE RAISED BY THE TAX- PAYER? | | The majority decision of the Court of Appeals concluded: . “the Alabama Fuel Tax is an impost upon an export within the meaning of the Import-Export Clause, and is therefore unconstitutional.” It is the position of the Alabama Depart- ment of Revenue that the District Court properly refrained from addressing any questions raised by Pilot concerning the Alabama Excise Tax and its relationship to the Constitution, deciding instead to leave the resolution of such questions to the Alabama courts. Furthermore, 28 U.S.C. §1341 prohibited the District Court from enter- taining questions concerning the constitutionality and applicability of a state tax. 28 U.S.C. §1341 provides: The district court shall not enjein, suspend or restrain the assessment, levy or collection of any tax under state law where a plain, speedy and efficient remedy may be had in the courts of such state. The Department of Revenue submits that the language of 28 U.S.C. §1341, known as the Tax Injunction Act, is sufficiently clear in its meaning and should be easily understood. The Tax Injunction Act embodies a decision by Congress to transfer jurisdiction over a class of substanta- tive federal claims, from the federal district courts to the state courts, so long as the state court procedures are “plain, speedy and efficient”, and a final review of the substanta- tive federal claims can be obtained in the United States Supreme Court. Rosewell v. LaSalle National Bank, 450 U.S. 503, rehearing denied 451 U.S. 1011, (1981). As was pointed out to the Court of Appeals by the State of Alabama, the jurisdictional bar of 28 U.S.C. §1341 could not be avoided by challenging a state tax as being in violation of the U.S. Constitution. However, the Court of Appeals specifically rejected such arguments, and the Petitioner Alabama Department of Revenue would respect- fully refer this Honorable Court’s attention to the reasons given by the Court of Appeals in rejecting such jurisdic- Par D8 dA LiL) Rane eae ores ee ~ tional contentions. In its opinion, the Court of Appeals held: “In astrange twist, considering that the constitu- tionality of state laws or practices is a major part of the grist of federal district courts, the district court directed Pilot to pursue administrative remedies in the State of Alabama before raising any constitutional defense in the federal courts.” 900 F.2d at 818. The above expression of the rationale of the Court of Appeals is very revealing. It demonstrates that the ma- jority of the Court of Appeals did not understand the scope and effect of the prohibition contained in 28 U.S.C. §1341. The Department of Revenue does not believe that the logic of the district court was so “strange” when one considers that unlike “the vast majority of those situations where state laws or practices may be grist for the federal courts,” in the present instance there is a specific statutory prchibition, as well as an established long-standing policy, against the federal courts entertaining such actions. Fur- thermore, the “strange twist” observed by the Court of Appeals would seem positively bizarre, when one considers that it was Pilot itself who urged the federal district court that since “all allegations and claims asserted by (LL&E) in this action arise out of transactions in the State of Alabama and are subject to the law of the State of Alabama ... this action should be dismissed, for lack of subject matter jurisdiction over the claims asserted”. (Pilot’s Answer p. 1; Appendix C, p. Ic.) A further example of the fallacious reasoning used by the majority in the Court of Appeal’s decision on this point is found at 900 F.2d p. 818, wherein the majority held: The Tax Injunction Act does not bar federal court jurisdiction in this case, however, because this suit was filed to collect a state tax, rather than enjoin, suspend or restrain the collection of ari Oe Aha Wee MDa WES Lon > hore iD AIA PAR AA LAN Raa taxes. (Footnote omitted). Furthermore, LL&E chose to bring this suit in the Eastern District of Louisiana; and it cannot now limit Pilot’s defenses. The above statement by the majority of the Court of Appeals concerning the scope and effect of the Tax Injunction Act is directly contrary to numerous decisions of this Honorable Court which have repeatedly held that the principal motivating force behind the enactment of the Tax Injunction Act by Congress “was first and foremost a vehicle to limit drastically federal district court jurisdic- tion to interfere with so important a local concern as the collection of taxes.” Franchise Tax Board of California v. Alean Aluminum Limited, U.S. —___, 110 S.Ct. 661, 107 L.Ed.2d 696 (decided January 10, 1990); Califor- nia v. Grace Brethren Church, 457 U.S. 393, (1982); Rosewell v. LaSalle National Bank, 450 U.S. 503, (1981). If the decision of the Court of Appeals is to be followed, the prohibition of 28 U.SC. §1341 can now easily be avoided by a taxpayer simply refusing to pay the tax, and forcing the collector of the tax to sue for the recovery of the tax. Such suit will then be considered appropriate for federal jurisdic- tion because it is a “suit to collect a state tax, not a suit to enjoin, suspend or restrain the collection of a state tax.” The very statement by the Court of Appeals that the “Tax Injunction Act does not bar federal court jurisdiction in this case ... because this suit was filed to collect a state tax, rather than enjoin, suspend or restrain the collection of taxes” is nonsensical. It simply does not make sense. It is especially illogical if you accept the Court of Appeals’ repeated assertions that LL&E acted as an agent on behalf of the State of Alabama in the collection of the excise tax, and it was the State of Alabama’s excise tax that was ruled unconstitutional. It also must be emphasized that LL&E did not assert the Tax Injunction Act as a jurisdictional bar as the Court of Appeals stated in justification of its decision to exercise jurisdiction. It is.apparent the Court of Appeals was confused about the true posture of the case. It should have been evident that it would have been ridiculous for LL&E to have filed a complaint against Pilot and then to have asserted that the jurisdiction over its own complaint was barred by the Tax Injunction Act. It was not LL&E, but the Intervenor State of Alabama (who was brought into the action at the appellate level due to the insistence of Pilot) who asserted the Tax Injunction Act as a jurisdictional bar. However, the State of Alabama was not the only party who asserted the federal court’s lack of jurisdiction over the questions pertaining to the legality of the Alabama tax. In its answer, Pilot also asserted as its defense that the district court did not have jurisdiction over questions of Alabama law! The Department of Revenue submits that the language and intent of the Tax Injunction Act should be sufficiently clear so as to be readily understood. The prohibition contained in the Tax Injunction Act was intended to drastically limit the jurisdiction of federal courts to inter- fere with the assessment and collection of state taxes. It is apparent that the majority decision of the Circuit Court of Appeals has somehow misunderstood and avoided the clear congressional mandate intended by the adoption of the Act. Such an erroneous interpretation of the Tax Injunction Act should justify the granting of the Writ of Certiorari in the instant case. II WHETHER THE FEDERAL COURTS SHOULD HAVE REFRAINED FROM ADDRESSING QUESTIONS CONCERN- ING THE CONSTITUTIONALITY OF THE ALABAMA EXCISE TAX UNDER THE DOCTRINE OF COMITY? 10 wo cncleiabaaelllll Pe Cadi Prior to the Court of Appeals rendering its decision in the present case, the State of Alabama, as Intervenor, urged the Court of Appeals that it was not only proper for the District Court to have refrained from addressing the state tax questions raised by Pilot on the basis of the statutory prohibition contained in 28 U.S.C. §1341, but also urged the Court of Appeals to abstain from such action based upon the principles of comity. In the case of Fair Assessment in Real Estate Associa- tion v. McNary, 454 U.S. 100 (1981), the basic principles underlying the doctrine of comity as it relates to 28 U.S.C. §1341 and federal review of state tax administration were set forth. Justice Rehnquist, speaking for the majority of the Court in a unnanimous decision, held: Neither the legislative history of the Act nor that of its precursor, 28 U.S.C. §1342, suggests that Congress intended that federal court defference in state tax matters be limited to actions enu- merated in those sections. (Citation omitted). Thus, the principle of comity which predated the Act was not restricted by its passage. C The post-Act vitality of the comity principle is perhaps best demonstrated by our decision in Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293, 63 S.Ct. 1070, 87 L.Ed. 1407 (1948). Several Louisiana taxpayers brought an action in Federal District Court seeking a declaratory judgment that the state tax as applied to them was unconstitutional and void. Although §1341 was raised as a possible bar to the suit, as it has been raised in this case, “we [found] it unneces- sary to inquire whether the words of the statute may be so construed as to prohibit a declaration by federal courts concerning the invalidity of a 11 state tax.” 319 U.S., at 299, 63 S.Ct. at 1073. Instead, “we [were] of the opinion that those considerations which have led federal courts of equity to refuse to enjoin the collection of state taxes, save in exceptional cases, require[d]a like restraint in the use of the declaratory judgment procedure.” Ibid. Those considerations were, of course, principles of federalism: “The scrupulous regard for the rightful indepen- dence of state governments which should at all times actuate the federal courts, and a proper reluctance to interfere by injunction with their fiscal operations, require that such relief be denied in every case where the asserted federal right may be preserved without it.” ... Inter- ference with state internal economy and adminis- tration is inseparable from assaults in the federal courts on the validity of state taxation, and neces- sarily attends injunctions, interlocutory or final, restraining collection of state taxes. These are the considerations of moment which have persuaded federal courts of equity to deny relief to the taxpayer ...” Id., at 298, 63 S.Ct., at 1073 (Matthews v. Rodgers, 284 U.S. at 525, 52 S.Ct at 219). The Court’s reliance in Great Lakes upon the necessity of federal-court respect for state taxing schemes demonstrates not only the post-Act vitality of the comity principle, but also its applicability to actions seeking a remedy other than injunctive relief. The focus was not on the specific form of relief requested, but on the fact that “in every practical sense [it] operate[d] to suspend collection of the state taxes until the litigation [was] ended. (Citation omitted). Fair Assessment in Real Estate Association v. McNary, 454 U:S., at 110. 12 That the majority decision of the Court of Appeals in the present case is intrusive there can be little doubt. Alabama, like all other states, has imposed an excise tax on the sale and distribution of gasoline taking place within its borders. One exception to the imposition of this tax is where one ; licensed distributor sells gasoline to another licensed distributor. See: Section 40-17-32, Code of Alabama 1975. The Court of Appeals’ majority decision recognized this exception in the Alabama law in footnotes 5and 6of its : Opinion. It goes without saying that under the revenue powers, as well as the police powers of Alabama, the State is authorized to tax and regulate such a volatile and energy precious commodity as gaseline. The Court of Apneals did not reject the Alabama scheme of taxation requiring those persons who engage in the business of selling gasoline to obtain a license from the State prior to engaging in such business on the ground that such requirement was an unreasonable or unconstitutional exercise of state powers. Instead, the majority of the Court of Appeals has by its decision held that where a licensed distributor makes a sale of gasoline to an unlicensed distributor, such sale taking place entirely within Alabama, then the State of Alabama is prohibited from exercising any jurisdiction over such sale so long as the unlicensed distributor is buying the gasoline for export. This holding by the majority of the Court of Appeals will have a tremendous detrimental effect on the ability of the State of Alabama to regulate and tax the sale of gasoline. The effect of this decision is that so long as any person not licensed with the State of Alabama comes to Alabama and buys gasoline for export, then the unlicensed buyer would not have to observe any of Ala- bama’s laws regarding the sale of gasoline, relying instead upon the Import-Export Clause. This drastic intrusion is certainly the type situation which the doctrine of comity is intended to address, and the Department of Revenue submits that the failure of the majority of the Court of Appeals to observe the previous pronouncements of the 13 ———— Supreme Court regarding the doctrine of comity, and the necessity of federal courts to refrain from unduly intruding in state taxation, require the review of this Honorable Court. It is assumed that the previous decisions of the Supreme Court on the doctrine of comity were published for the purpose of providing guidelines to the various federal courts, and the Fifth Circuit Court of Appeals’ failure to observe such guidelines can only result in unequal protection and inconsistent treatment under the law. The Court of Appeals’ decision to ignore the arguments of the State of Alabama regarding the applicability of the doctrine of comity is especially puzzling when one con- siders the pronouncements in the decision itself that although the Supreme Court had in the past refused to address the issues considered by the majority of the Court of Appeals as being material, the majority would still insist upon presenting their view of the Import-Export Clause and its relationship to the Alabama excise tax on gasoline, and to use this opportunity to announce the Court of Appeals theory concerning “the export stream”. After a somewhat lengthy discussion of the case of Michelin Tire Corp. v. Wages, 423 U.S. 276, (1976), and the relationship of this case to the Import-Export Clause, the Court of Appeals concluded: “Therefore, the Michelin Court left open the question of whether a tax on goods in transit would constitute an “impost” or “duty” under the Import-Export Clause.” 900 F.2d at 820. The majority of the Court of Appeals then considered the holding of this Honorable Court in the case of Washington Revenue Department v. Stevedoring Association, 435 U.S. 734, (1978), and concluded: The Court expressly refused to reach the issue now before us today: whether a state may directly tax imports or exports that are in transit. (900 F.2d at 820). 14 Since it is apparent the majority of the Court of Appeals recognized that the Supreme Court had previously re- frained and “refused to reach the issue” before the Court of Appeals, it is difficult to understand the majority of the Court of Appeals’ decision to ignore the doctrine of comity and to instead attempt to fathom “the contemporary view of the Supreme Court.” 900 F.2d at 820. The Department of Revenue submits that it is in just such instances as are involved in the present action that the doctrine of comity would be most applicable. Certainly those courts of appeal which recognize that this Supreme Court has in the past refused to address the very questions raised in the proceed- ing before the federal court should not, in spite of such recognition, engage in speculation as to the “contemporary view of the Supreme Court” with regard to the Import- Export Clause. The decision of the Court of Appeals in the present case establishes a radical precedent. In the present case a buyer of aviation fuel was allowed to challenge the constitu- tionality of an Alabama excise tax in federal court, rather than pursuing such remedy in state court as contemplated by both 28 U.S.C. §1341 and the doctrine of comity. This decision on the part of the majority of the Court of Appeals iseven more difficult to understand when it is realized that the Court of Appeals recognized throughout its decision that the true parties in interest were Pilot and the State of Alabama: Even if Pilot had alternative adequate means to challenge the constitutionality of the Alabama tax, this case should be viewed primarily as a dispute between the State of Alabama and Pilot ... Because LL&E acts as a mere agent for the State in the collection of taxes, this suit, in effect, is between the state of Alabama and Pilot Petroleum. (900 F.2d at 818.) 15 It is the position of the Department of Revenue that once the Court of Appeals recognized that the true parties in the dispute were Pilot and the Staie of Alabama, then such recognition was all the more reason for the Court of Appeals to have given effect to the prohibition contained in 28 U.S.C. §1341, as well as adherred to the policy considera- tions of comity enunciated by the Supreme Court in its previous decisions. The Department of Revenue respect- fully submits that this failure on the part of the Court of Appeals requires the exercise by this Honorable Court of its supervisory and review powers. IT] WHETHER THE COURT OF APPEALS CORRECTLY DECIDED QUESTIONS OF ALABAMA LAW REGARDING AN ALA- BAMA EXCISE TAX? In the majority opinion portion of its decision, the Court of Appeals held: Yet, the Alabama Code allows refunds only to taxpayers who pay taxes directly to the Alabama Department of Revenue. (Footnote omitted.) Therefore, because Pilot does not pay the tax to the State of Alabama, it has no standing to pursue a refund of the tax paid by LL&E supposedly on Pilot’s behalf. 900 F.2d at 818. Not only does the above-quoted portion of the majority opinion of the Court of Appeals disclose its misunderstand- ing of Alabama law, but the verbatim quotation of the statute involved, which was included as a footnote by the Court of Appeals in its decision, clearly omitted and failed to state the applicable portion of the Alabama refund statute. In its argument to the Court of Appeals, Pilot made this very same argument that Pilot lacked standing to raise the issues regarding the constitutionality of the Alabama tax in an Alabama court because it did not pay taxes 16 ee ee A tk se tl a al directly to the Alabama Department of Revenue. In its brief to the Court of Appeals as Intervenor, the Department of Revenue addressed this very same argument by Pilot as follows: The State would address this argument by asking the following question: “Who made the decision that Pilot had no standing under Alabama law to exhaust any administrative remedy?” No where in the record has it ever been shown that Pilot even attempted to exhaust any remedy in Alabama. Pilot made this decision on its own not to seek any remedy from Alabama. Pilot has chosen to simply ignore LL&E’s demand to be paid under its contract, and to offer as justifica- tion for such refusal the excuse that “the State of Alabama probably wouldn’t grant Pilot any relief anyway.” The State believes it is fair to say that until Pilot asks for administrative relief, none will be granted. For the record, it is the State of Alabama’s position that in fact Pilot could have been made a party to the adminis- trative proceeding before the Department of Revenue. The very statute upon which Pilot relies to support its position that it had no standing under Alabama law to petition for refund provides in part: Before any refund under this section can be made, the taxpayer, his heirs, successors, or assigns shall file in dupli- cate a petition directed to the Depart- ment of Revenue, ... (Emphasis sup- plied). §40-1-34 Code of Alabama 1975. Clearly Pilot could have requested LL&E to assign its rights to seek a refund to Pilot. 17 Furthermore, §40-17-3l(e), Code of Alabama 1975, provides that when the “distributor, re- finer, retail dealer or storer, or in the case of a licensed user, (collects the tax, it is) acting merely as an agent of the State for the collection and payment of the tax to the State”. Thus, if Pilot should pay LL&E the excise tax in question, it must be considered as paying the tax directly to the Department of Revenue, since it paid said tax to an agent of the Department. (Intervenor State of Alabama's Brief before the Court of Appeals, Fifth Circuit, pp. 28-29, emphasis in the original.) IV WHETHER A SALE OF GASOLINE BY A DISTRIBUTOR LICENSED BY THE STATE OF ALABAMA, TO A DISTRIBU- TOR NOT LICENSED BY THE STATE OF ALABAMA, WHICH TOOK PLACE ENTIRELY WITHIN ALABAMA, WAS PREEMPTED FROM TAXATION BY THE STATE OF ALABAMA DUE TO THE IMPORT-EXPORT CLAUSE OF THE UNITED STATES CONSTITUTION? At the outset it is crucial to understand that the Alabama excise tax at issue is not collected on an export! Based upon the undisputed facts, LL&E, an Alabama licensed distributor, withdrew from its inventory and sold aviation gasoline in Alabama to Pilot, an unlicensed distributor. This is the transaction which was subject to the Alabama tax! The gasoline was then exported by Pilot to Canada. The transaction which was subject to the Alabama tax occurred entirely within the borders of Alabama. In order to determine the true essence of the transaction, one simply has to ask the following questions: “Who was the exporter?” The answer is of course that Pilot was the 18 ee _ ee ee ee ee ee er exporter when Pilot delivered the gasoline in question to Canada to complete the sale to its customer. “Did LL&E export anything?” The answer is: “Of course not.” The sale from LL&E to Pilot was not an “export”. The fact that it was delivered toa foreign flagged vessel at Pilot’s direction would not make the sale by LL&E to Pilot an export. “When was the gasoline exported?’ The Department of Revenue submits that the answer to this question is: “When the gasoline was shipped by Pilot to its Canadian customer”. As such, Alabama’s taxation of the sale by LL&E to Pilot did not constitute an invalid exercise under the Import- Export Clause of a state’s power to tax. The Department of Revenue concedes, as it did to the Court of Appeals, that the sale by Pilot to its Canadian customer was not subject to any Alabama tax pursuant to the provisions of the Import- Export Clause. Under Alabama law sales between licensed distributors of gasoline are exempt from the excise tax on gasoline. Section 40-17-32, Code of Alabama 1975, manifests a clear intent on the part of the Legislature of Alabama that only sales between licensed distributors are exempt from the payment of the gasoline excise tax. Section 40-17-32 provides in part: The excise tax imposed by §40-17-31 shall be collected by persons, as defined in this article, storing gasoline or distributing the same or allowing the same to be withdrawn from storage, .. provided, that receipts by any licensed dis- tributors or storers from another licensed distributor or storer shall be treated on the same basis as gasoline received or distributed by such licensed distributors or storers in interstate commerce. (Emphasis supplied). There are numerous provisions within the Alabama Gasoline Excise Tax Law which indicate that only those persons who are licensed with the Alabama Revenue 19 Department as distributors are entitled to make purchases of gasoline tax free. Section 40-12-191, Code of Alabama 1975, provides in part: Every distributor before engaging in the busi- ness of selling, distributing or withdrawing from storage gasoline in this state, shall first make application to the Department of Revenue upon forms prepared by the department of revenue, for a license to engage in said busi- ness. (Emphasis supplied). Section 40-12-191 clearly requires every distributor to be licensed prior to engaging in the business of a dealer in gasoline in Alabama. In the instant case, Pilot, by failing to obtain a license as a gasoline distributor prior to engaging in the business of dealing in gasoline in Alabama failed to comply with the applicable provisions of the Alabama Gasoline Excise Tax Law. Therefore the withdrawal of gasoline from storage by LL&E, and the subsequent sale to Pilot, an unlicensed distributor, must be considered a taxable transaction which took place solely within Alabama. Under Alabama law, it was the transaction between LL&E and Pilot, and NOT between Pilot and Pilot’s Canadian customer, which must be considered the taxable transaction. No foreign customer was involved in the Alabama transaction. The transaction was completely an intrastate occurrence which took place entirely within the borders of Alabama. The Court of Appeals’ decision completely ignored this aspect of Alabama’s scheme of taxation. The very question the Court of Appeals chose to address in its decision reveals the basic flaw in the logic of the majority decision: The question this case presents is whether the state of Alabama may tax jet fuel, which is sold for export to a foreign country. (900 F.2d, at 817.) 20 Se Sik The Department of Revenue respectfully submits that the Court of Appeals, by framing the question as stated above, completely missed the mark with respect to whether the transaction in question was subject to an Alabama tax. The more proper question to ask would have been whether Alabama may tax a transaction which takes place entirely within its borders. “May the State of Alabama tax a sale of gasoline to an unlicensed distributor, where the gasoline is ultimately exported by the unlicensed distributor?” It is the position of the Department of Revenue that such taxation on the part of the State of Alabama is not prohibited or in any manner prevented by the Import-Export Clause. The majority decision of the Court of Appeals in the present case sets a new and radically different standard than any seen so far. Previously, it was determined that ata certain point and place in time a specific transaction could be considered an export. However, under the majority opinion of the Court of Appeals, goods are now to be considered “in the stream of export.” (900 F.2d, at 821.) Under the present decision of the Court of Appeals, the person making the sale to the person actually engaged in exporting the goods in question is now considered exempt from state taxation under the Import-Export Clause. One logically has to ask “Where does the ‘stream of export’ begin and end?” Is the person who sells goods to the person who sells the same goods to the person exporting the goods also exempt from taxation, since the goods themselves will ultimately be exported? The Department of Revenue sees no logical answer to the problems raised by the majority decision of the Court of Appeals. Certainly the adoption this new standard concerning the relationship between state taxation and the Import-Ex- port Clause would now become a matter of private contract, as is the situation presently under consideration, rather than applying the standards and tests previously followed by this Honorable Court in such cases as Michelin Tire 21 Corp. v. Wages, 423 U.S. 276, (1976) and Washington Revenue Department v. Stevedoring Association, 435 U.S. 734, (1978). The majority of the Court of Appeals tacitly recognized that this new standard would allow parties to a private contract to be able to call into question the constitutionality of a state tax: Although it was probably never in the con- templation of these parties that they were facing or were even close to a constitutional problem which goes back to the very formation of this new nation, the contract provides that Pilot must pay only taxes that are legally required to be paid’. This language necessarily calls into question the constitutionality of the Alabama tax. 900 F.2d, at 819. The Supreme Court has time and again held that the parties to a private contract cannot limit a state’s ability to levy taxes or to select upon whom these taxes shall fall. Lake Superior Consol. Iron Mines v. Lord, 271 U.S. 577 (1926); United States Trust Co. of New York v. New Jersey, 431 U.S. 1 (1977). One whose rights, are subject to state restrictions, cannot remove them from the power of the State by making a contract about them. The contract will carry with it the infirmity of the subject matter. Exxon Corp. v. Eagerton, 462 U.S. 1976, (1983). Admittedly, these cases deal with an interpretation of the Contract Clause contained in the U.S. Constitution. How- ever, it is also clear that if the majority opinion of the Court of Appeals is adopted, then such parties as a seller of gasoline and a buyer of gasoline could restrict the State’s power to tax a sale of gasoline taking place entirely within its own borders by simply “contracting” that such goods would ultimately be exported and therefore removed from State taxation. This radical new concept with regard to sales taking place entirely within a state, which were previously within the subject matter jurisdiction of the 22 State itself, and the power of private parties to contract away a State’s soverign power to tax such transactions must of necessity require the review of this Honorable Court. V WHETHER THE DECISIONS OF THIS HONORABLE COURT REFERENCED BY THE COURT OF APPEALS IN ITS OPIN- ION WERE PROPERLY APPLIED BY THE MAJORITY OF THE COURT OF APPEALS TO THE FACTUAL SITUA- TION SUB JUDICE? The decision of the Court of Appeals, which the Alabama Department of Revenue is petitioning this Honorable Court to review, mentions only three cases to support its holding that the Alabama excise tax in question violates the Import-Export Clause of the Constituticn. It will be ‘obvious from a reading of not only the Court of Appeals’ citation of these cases, but also the cases themselves, that none of these decisions relied upon by the majority of the Court of Appeals to support its conclusion are in fact applicable to the factual situation involved herein. RICHFIELD CASE The first case mentioned by the Court of Appeals in its opinion is the case of Richfield Oil Corp. v. State Board of Equalization, 329 U.S. 69, (1946). As stated in the Court of Appeals’ opinion, this very same decision was relied upon by Pilot in its appearance before the Court of Appeals. As the State argued to the Court of Appeals, an examination of the facts contained in the Richfield case, clearly demon- strates that the facts of the case are not analogous to the facts involved in the present action. It is clear that the transaction under consideration in Richfield was the sale between Richfield and its foreign New Zealand customer. 23 However, as the undisputed facts involved herein estab- lished, the transaction which causes the Alabama excise tax to be due in the situation presently under consideration is the withdrawal of untaxed jet fuel by LL&E, a licensed distributor, from its inventory located in Alabama, and the subsequent distribution of said gasoline in Alabama by sale to Pilot, an unlicensed distributor. In other words, in the present situation, the sale between LL&E and Pilot is “one- step back up the line” from the factual situation contained in Richfield. By way of analogy, Alabama could be considered as collecting the tax from the distributor who sold the fuel to Richfield, assuming Richfield was an unlicensed distributor in Alabama. In the Richfield case, California attempted to place its tax upon the exportation of the fuel itself. In fact the transaction in Richfield involved a sale by Richfield to New Zealand, f.o.b. Los Angeles; whereas in the present situation, the excise tax was based upon the transaction between LL&E and Pilot, f.o.b. Mobile, Alabama. In the Richfield case, the foreign customer, New Zealand, took title to the fuel in Los Angeles. In the present factual situation, Pilot took title from LL&E in Mobile, Alabama. Furthermore, in Richfield, title passed to the foreign customer when it was delivered to the customer by Richfield in Los Angeles. However, under the factual situation involved herein, title passed from LL&E to Pilot in Mobile, Alabama. Title to the jet fuel did not pass from Pilot to its foreign customer until the fuel was delivered at the Canadian ports. The title to the fuel in question passed from LL&E, not toa foreign customer, but to Pilot. The sale by LL&E was not in foreign commerce, and as such, cannot be considered to be an export by LL&E. It is important to remember that title passed from LL&E to Pilot entirely within Alabama, and as such, was subject to the applicable Alabama excise tax laws. 24 MICHELIN CASE The majority on the Court of Appeals never specifically held that the decision in the Richfield case, supra, was controlling with regard to the factual situations involved herein, the Court of Appeals simply stated: “Richfield has never been overruled by the United States Supreme Court.” The Appellate Court then began a discussion of the case of Michelin Tire Corp. v. Wages, 423 U.S. 276, (1976). The discussion of the Michelin case by the Court of Appeals begins at 900 F.2d, p. 819. It is difficult to understand exactly why the Court of Appeals even mentioned the Michelin case, since admittedly the factual situation involved herein would pass the three-prong Michelin test. Furthermore, the Court of Appeals specifi- cally ruled that the holding of the Michelin case “left open the question of whether a tax on goods in transit would constitute an “impost” or “duty” under the Import-Export Clause. (900 F.2d at 820). The Department of Revenue has speculated as to the reasons the Court of Appeals even referred to the Michelin case, since the Alabama excise tax so clearly passes all of the requirements of the Michelin test. The question remains: “If the Michelin test was not applicable to the fact situation involved in the present case, then why did the majority of the Court of Appeals choose to cite it?” The only answer that comes readily to mind is that the Michelin case was cited for the purpose of explaining the evolution of the Import-Export Clause in order to explain the Court of Appeals’ subsequent conclusion with regard to the “con- temporary view of the Supreme Court” on a matter “that has never been previously addressed.” 900 F.2d at 820. WASHINGTON STEVEDORING CASE The final case relied upon by the Court of Appeals was the case of Department of Revenue of the State of 25 Washington v. Association of Washington Stevedoring Co., 435 U.S. 734, (1978). (900 F.2d at 820). The Court of Appeals recognized that the Supreme Court in the Wash- ington Stevedoring case held that a tax on income received from stevedoring activities did not violate the prohibition contained in the Import-Export Clause, using the Michelin three-prong policy test. However, the Court of Appeals held: Although the Court found that the Washington tax did not disturb any of the three policies of the Clause, it still had to address the fact that the stevedoring activities were taxed while the ex- ported and imported goods were in transit. Thus, the U.S. Supreme Court was faced with the question of whether a business and occupation tax on activities related to in-transit imports and exports violates the Import-Export Clause. Because of the indirect nature of the tax, i.e., the tax did not relate to the value of the goods, the Court refused to discard the Michelin approach merely because the goods were in-transit. The Court expressly refused to reach the issue now before us today: whether a state may directly tax imports or exports that are in transit. (Citation omitted). 900 F.2d, at 820. Thus the Court of Appeals recognized that in the past the Supreme Court has expressly refused to reach the issue which the Court of Appeals chose to address. The Court of Appeals instead held that under its “contemporary view” of the Supreme Court, this Honorable Court would in fact hold the Alabama tax as being violative of the Import- Export Clause. COURT OF APPEALS CONCLUSION IS ERRONEOUS The Court of Appeals concluded that the Alabama excise tax would be in violation of the Import-Export 26 Clause because: (1) Alabama’s excise tax on fuel adversely effects United States foreign commerce with respect to a very important commodity; (2) coastal states which possess ports like the Port of Mobile, Alabama, derive significant amounts of revenue from this tax, since they are able to tax the large quantitites of fuel that are pumped from their port into tankers; and (3) the Alabama Fuel Tax in this case is a tax that is levied on the goods themselves while they are in transit. The Department of Revenue is confident that upon closer examination, this Honorable Court will deter- mine that each of the reasons offered by the Court of Appeals in support of its conclusions are in fact illogical and contrary to reality. As stated above, there has been no explanation whatsoever offered by anyone, including the Court of Appeals, to explain how Alabama’s excise tax adversely affects United States foreign commerce. It has repeatedly been conceded that if Pilot had in fact complied with the applicable Alabama laws prior to engaging in the business of a dealer in Alabama, then the sales from LL&E to Pilot would have been exempt. The fact that Pilot chose “to put the cart before the horse” and not comply with Alabama laws could not be considered as having any more of an adverse effect on foreign commerce than requiring other business entities to comply with applicable state laws before engaging in any business regulated by an individual _ state. Furthermore, the fact that Alabama has a port and is a coastal state could in no way be considered as being the cause for Pilot not having complied with the laws of Alabama prior to engaging in the business of a gasoline dealer in Alabama. No “significant amounts of revenues from this tax are realized simply because Alabama is a coastal state.” Finally, the fuel tax in this case is not a tax on the goods themselves while they are in transit. This conclusion is at the heart of the Court of Appeals’ majority decision. When LL&E delivered the gasoline in question into the tanks of a foreign flagged tanker at Pilot’s direction, the goods were not “in transit in foreign com- 27 merce.” The gasoline was not the subject of foreign export at the time of taxation. CONCLUSION For the reasons stated, and because the Court of Appeals decided this case of first impression in conflict with previous decisions of this Honorable Court, the questions presented are so substantial as to require plenary consideration, with briefs on the merits, and oral argument, for their resolution. Don Ltgabaar— DON SIEGELMAN, Attorney General State of Alabama Kon. Bonnben RON BOWDEN, Acting Chief Counsel] Department of Revenue and Assistant Attorney General, State of Alabama . BRECKENRI , Assistant Counsel Defartment of Revenue and Assistant Attorney General, State of Alabama P.O. Box 320001 Montgomery, AL 36132-0001 Telephone: (205) 242-9690 COUNSEL FOR PETITIONER ALABAMA DEPARTMENT OF REVENUE 28 No. In The SUPREME COURT OF THE UNITED STATES October Term, 1990 ALABAMA DEPARTMENT OF REVENUE, Petitioner versus PILOT PETROLEUM CORPORATION AND THE LOUISIANA LAND AND EXPLORATION COMPANY, Respondents. PETITION FOR WRIT OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT PROOF OF SERVICE I, John J. Breckenridge, an attorney for the Alabama Department of Revenue, Petitioner herein, and a member of the Bar of the Supreme Court of the United States, hereby certify that on the 7th day of August, 1990, I served copies of the foregoing Jurisdictional Statement on all parties required to be served, as follows: 1. On Respondent herein, Pilot Petroleum Corpora- tion, by depositing a copy in the United States mail, properly addressed and with first-class postage prepaid addressed to their attorneys of record, as follows: Robert B. Dean, Esq. and Douglas L. Grundmeyer, Esq. of CHAFFE, MCCALL, PHILLIPS, TOLAR & SARPY, 2300 Energy Center, 1100 Poydras Street, New Orleans, 29 Louisiana, 70163-2300; and 2. On Respondent herein, Lousisiana Land and Ex- ploration Company by depositing a copy in the United States mail, with first-class postage prepaid, addressed to Katherine Goldman, Esq. and John F. Landrum, Esq., of MILLING, BENSON, WOODWARD, HILLYER, PIER- SON & MILLER, Suite 2300, 909 Poydras Street, New Orleans, Louisiana 70112, by depositing same in the United States mail, properly addressed and with first-class postage prepaid on the 7th day of August, 1990. J. BRECKENRI , Assistant Counsel Department of Revenue and Assistant Attorney General, State of Alabama P.O. Box 320001 Montgomery, AL 36132-0001 Telephone: (205) 242-9690 COUNSEL FOR PETITIONER ALABAMA DEPARTMENT OF REVENUE 30 APPENDIX APPENDIX A THE LOUISIANA LAND AND EXPLORATION COMPANY, Plaintiff-Appellee, v. PILOT PETROLEUM CORPORATION, Defendant- Appellant. No. 88-3662. United States Court of Appeals, Fifth Circuit. May 10. 1990. Appeal from the United States District Court for the Eastern District of Louisiana. Before BROWN, WILLIAMS, and JOLLY, Cir- cuit Judges. BROWN, Circuit Judge: The question this case presents is whether the state of Alabama may tax jet fuel, which is sold for export to a foreign country. Pilot Petroleum Corporation argues that the Alabama tax! violates the Import-Export Clause’ of the United States Constitution. The district ‘Alabama law provides: Every distributor, refiner, retail dealer, storer or user of gasoline or any substitute or device therefor sold for use as a fuel to propel aircraft shall collect and pay over to the state department of revenue an excise tax in accordance with the following schedule upon the selling, use or consumption, distributing, storing or withdrawing from storage in this state for use as a fuel to propel aircraft: .. b. Any fuel used to propel aircrat powered by jet or turbine engines shal! be taxed at the rate of nine-tenths one cent per gallon. ALA. CODE § 40-17-31(d)(1) (1975). *The Import Export Clause states: “No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing its inspection Laws ...” U.S. CONST. Art. I, § 10, el. 2. la court granted the Lousisiana Land & Exploration Company’s motion for summary judgment. After this court certified to Alabama’s attorney general that the constitutionality of its excise fuel tax had been drawn in question,? in response to which we sought and obtained extensive briefs, the state of Alabama intervened. We hold that the tax is unconstitutional and we reverse the decision below. How It Ali Came About Pilot Petroleum Corporation (Pilot) contracted with the Louisiana Land & Exploration Company (LL&E) to purchase approximately 112,000 barrels of jet fuel oil.4 On November 7, 1986, LL&E delivered the fuel free on board the Liberian flagged tanker, MARYANN, while it was anchored in the port of Mobile, Alabama. The fuel was then exported to Halifax, Nova Scotia, Canada. Following delivery, Pilot received two invoices for the purchase price of the fuel. The first invoice totalled $201,929.78, includ- ing $5,390.78 which was attributable to fuel tax. The second invoice charged $50,400.00 for fuel tax out of a total bill of $1,772,400.00. Pilot paid LL&E, excluding the amounts attributable to the Alabama state tax. ’Pursuant to federal law: In any action, suit, or proceeding in a court of the United States to which a State ... is not a party, wherein the constitutionality of any statute of that State affecting the public interest is drawn in question, the court shall certify such fact to the attorney general of the State, and shall permit the State to intervene for presentation of evidence, if evidence is otherwise admissible in the case, and for argument on the question of constitutionality. 28 U.S.C. § 2403(b). ‘Pilot first contacted Karbon Corporation, a petroleum products broker, for the purpose of purchasing jet fuel. On November 4, 1986, Karbon transmitted to LL&E a telex confirming the sale by LL&E to Pilot of approximately 100,000 barrels of jet fuel at the price of .4100 cents per gallon. On November 7, Karbon sent a second telex confirming the sale of approximately 12,000 barrels at .4375 cents per barrel. 2a In November, 1986, LL&E paid to the Alabama Department of Revenue the tax due as a result of its fuel sale to Pilot, despite the fact that it had not been paid the amount of the tax by Pilot. LL&E filed a petition for refund in August, 1987, which contended that Pilot was exempt from the tax under Alabama law because it was properly licensed and bonded. Alabama law provides that licensed distributors are exempt from the excise fuel tax.’ Because Pilot did not become a licensed distributor until December 15, 1986, which was after the date of the fuel sale, the Department denied LL&E’s request for refund.® Pilot never reimbursed LL&E for the tax LL&E paid on its behalf. LL&E then filed this suit in the United States District Court for the Eastern District of Louisiana. The district court concluded that the 5Section 40-17-32 provides in part: The excise tax imposed by 40-17- 31 shall be collected by persons, as defined in this article, storing gasoline or distributing the same ... provided, that receipts by any licensed distributors ... shall be treated on the same basis as gasoline received or distributed by such licensed distributors in interestate commerce. ALA. CODE § 40-17-32 (1975). ‘Prior to delivery, Pilot contacted the Alabama Department of Revenue to obtain information regarding the requirements imposed by Alabama law which would apply to the sale. Pilot obtained a bond as required by the Revenue Department on December 3, 1986. Pilot also applied to obtain a gasoline license per the Department’s directives. However, Pilot was later informed by the Department that the license application was defective. Pilot filed a corrected application and received its license on December 15, 1986. Alabama law provides that sales between licensed distributors are exempt from the fuel excise tax. LL&E was licensed by the state of Alabama to sell and export gasoline products from Alabama. Had Pilot obtained its license before or on the date of the sale in question, the issue of the constitutionality of the state fuel tax would not be before us today. purchaser bears ultimate responsibility for the pay- ment of taxes under both Alabama law and the LL&E-Pilot contract. The court further held that Pilot should first exhaust its administrative remedies by paying the tax and petitioning the Alabama Department of Revenue, and then file suit against the state of Alabama to challenge the constitutionality of the tax. Pilot appeals. District Court Had Jurisdiction to Examine Constitutionality In a strange twist, considering that the constitu- tionality of state laws or practices is a major part of the grist of federal district courts, the district court directed Pilot to pursue administrative remedies in the state of Alabama before raising any constitutional defense in the federal courts. Yet, the Alabama Code allows refunds only to taxpayers who pay taxes directly to the Alabama Department of Revenue.’ Therefore, because Pilot does not pay the tax to the state of Alabama, it has nostanding to pursue a refund of the tax paid by LL&E supposedly on Pilot’s behalf. In addition, LL&E claims that the district court was barred from deciding the tax’s constitutionality based on the Tax Injunction Act.2 The Act forbids federal district courts from “enjoining, suspending or restraining the assessment, levy or collection” of any ’The Alabama Code provides: Where any taxpayer in the payment of taxes or licenses which are paid directly to the Department of Revenue, by a mistake of fact or law has paid an amount in excess of the amount due or has made an erroneous payment ... the treasurer is authorized to pay such warrant for the amount of such overpayments or erroneous payment. ALA. CODE § 401-34 (1975). ®Tax Injunction Act, 28 U.S.C. § 1341. 4a state tax when that state offers a plain, efficient, and speedy remedy. The Tax Injunction Act does not bar federal court jurisdiction in this case, however, because this suit was filed to collect a state tax, rather than enjoin, suspend, or restrain the collection of taxes.? Furthermore, LL&E chose to bring this suit in the Eastern District Court of Louisiana; and it can not now limit Pilot’s defenses. Even if Pilot had alternative adequate means to challenge the constitutionality of the Alabama tax, this case should be viewed primarily as a dispute between the state of Alabama and Pilot. Pursuant to section 40-17-31(e) of the Alabama Code, the retailer or distributor is required to add the amount of the excise tax to the price of the fuel.!° Although the code places responsibility for the collection of taxes on the delivering party, it specifically provides that the tax ‘is in fact a levy on the consumer or user with distributor ... acting merely as an agent of the state for the collection and payment of the tax to the state.” Because LL&E acts as a mere agent for the state in the ce@llection of taxes, this suit, in effect, is between the state of Alabama and Pilot Petroleum. Down to Basics: Constitutionality of the Tax The LL&E-Pilot contract clearly places responsi- _ bility for payment of the tax on Pilot. Section 5 of the General Provisions of the contract mandates that the receiving party [Pilot reimburse the delivering party 9See Hargrave v. McKinney, 413 F.2d 320 (5th Cir. 1969). WALA. CODE § 40-17-31(e) (1975). 11], [LL&E] for all taxes “legally required to be paid”, which are paid by the delivering party on behalf of the receiving party. Although it was probably never in the contemplation of these parties that they were facing or were even close to a constitutional problem which goes back to the very formation of this new nation, the contract provides that Pilot must pay only taxes that are “legally required to be paid”. This language necessarily calls into question the con- stitutionality of the Alabama tax. A. Evolution of the Import-Export Clause The Import-Export Clause of the United States Constititon states that “No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports.” Pilot relies on Richfield Oil Corp. v. State Bd. of Equalization, 329 U.S. 69, 67 S.Ct. 156, 91 L.Ed. 80 (1946), to support its claim that the Alabama excise tax is a tax on exports and therefore violates the Import-Export Clause. In Richfield, the Richfield Oil Company entered into a contract with the New Zealand government for the sale of oil f.o.b. Los Angeles. Richfield delivered the oil by pipeline from its refinery in California to its storage tanks at the harbor where the naval tanker, R.F.A. Nucula, received the oil from the shore tanks into its ship tanks. The oil was then transported to Auckland, New Zealand. No portion of the oil was used in the United States. California assessed a retail sales tax against Richfield measured by the gross receipts of the transaction. The Court reasoned that when the oil was pumped into the ship’s tanks, the movement of the oi] 6a abroad had commenced since the parties were certain that the oil would not be diverted for domestic use. Thus, the Court concluded that the sales tax con- stituted an impost upon an export within the meaning of the Import-Export Clause of the United States Constitution. Richfield has never been overruled by the United States Supreme Court. However, in Michelin Tire Corp. v. Wages, 423 U.S. 276, 96 S.Ct. 535, 46 L.Ed.2d 495 (1976), the Court initiated a new approach to the Import-Export Clause. In Michelin,the Georgia tax commissioner assessed ad valorem property taxes against tires and tubes imported by Michelin from .France and Nova Scotia. Instead of attempting to determine whether the tires and tubes were in fact imports under the Import-Export Clause, the Miche- lin court focused on the nature of the Georgia tax. Specifically, the Court outlined three policies that were to be served by the Clause. First, the Federal Government must speak with one voice when regulating commercial relations with foreign governments. For example, tariffs which might affect foreign relations could not be imple- mented by the States consistently with that exclusive power. Second, import revenues were to be the major source of revenue for the Federal Government and should not be diverted to the States. Finally, harmony among the States might be disturbed unless seaboard States, with their crucial ports of entry, were pro- hibited from levying taxes on citizens of other States by taxing goods merely flowing through their ports to the other States not situated as favorably geograph- ically. Michelin, 423 U.S. at 285-86, 96 S.Ct. at 540-41, 46 L.Ed.2d at 503. 7a The Court decided that the ad valorem property tax did not offend any of these policies. First, the tax had no impact upon the federal government’s exclu- sive regulation of foreign commerce because, “by definition, such a tax does not fall on imports as such because of their place of origin.” It could not be used to create special protective tariffs or preferences for certain domestic goods; nor could it be applied selectively to encourage or discourage importation in a manner inconsistent with federal regulation. Second, the tax did not deprive the federal govern- ment of any revenues to which it was entitled. Property taxes are taxes by which a state apportions the cost of police and fire protection, which was supplied by the local government. Importers should bear these costs, as well. Although the tax may havea minimal effect on the cost of imports to consumers, the court recognized that the resulting variance in demand for imports would not be large enough to significantly diminish the number of imports upon which the federal government could levy duties so as not to indirectly deprive it of income. Finally, harmony among the states was not disturbed by such a property tax because inland states would be paying only for protective services rendered by coastal states. Because prohibition of a nondiscriminatory ad valorem property tax did not further any of these objectives of the Import-Export Clause, the Court held that the Georgia tax was not an “impost” or “duty” within the meaning of the Import-Export Clause. However, the Court limited its holding to taxes levied on goods no longer in transit. Michelin, 423 U.S. at 302, 96 S.Ct. at 548, 46 L.Ed.2d at 512. It concluded that nothing in the history of the Clause “even remotely 8a ee ee eee ae ne ee eee Oeaeeeeerreeeoeeeereerrrrr suggests that a nondiscriminatory ad valorem property tax which is also imposed on imported goods that are no longer in import transit was the type of tax that was regarded as objectionable by the Framers.” Michelin, 423 U.S. at 286, 96 S.Ct. at 541, 46 L.Ed.2d at 503. Therefore, the Michelin court left open the question of whether a tax on goods in transit would constitute an “impost” or “duty” under the Import- Export Clause. In Washington Revenue Dep't v. Stevedoring Ass'n, 435 U.S. 734, 98 S.Ct. 1388, 55 L.Ed. 2d 682 (1978), the state of Washington applied a tax to income received from stevedoring” activities. Using the Michelin three-prong policy test, the Court found that none of the policies were threatened by Washington’s business tax. 1) The Federal Governement’s ability to conduct foreign policy was not affected. Because all businesses were taxed, special protective tariffs would not be created. Additionally, a foreign business or vessel was not being taxed. 2) Federal import revenues were not affected for the same reasons as in Michelin. In fact, the tax’s effect on the demand for imported goods was even less substantial than as in Michelin because Washington taxed only the value of the loading and unloading of the goods, not the value of the goods themselves. 3) Since the tax only compensated the government for providing protective services, it would not upset harmony among the states. Although the Court found that the Washington tax did not disturb any of the three policies of the Clause, it still had to address the fact that the stevedoring '2Stevedoring is the business of loading and unloading cargo from ships. activities were taxed while the exported and imported goods were in transit. Thus, the U.S. Supreme Court was faced with the question of whether a business and occupation tax on activities related to in-transit imports and exports violates the Import-Export Clause. Because of the indirect nature of the tax, i.e., the tax did not relate to the value of the goods, the Court refused to discard the Michelin approach merely because the goods were in transit. The Court expressly refused to reach the issue now before us today: whether a state may directly tax imports or exports that are in transit. Washington Stevedoring, 435 U.S. at 757 n. 23, 98 S.Ct. at 1403 n. 23, 55 L.Ed.2d at 702 n. 23. B. In-Transit Exports Are Still Within the Clause It is true that the Import-Export Clause no longer forbids states from taxing all imports and exports without the consent of Congress. The broad prohibi- tion against any and all taxation upon imports and exports has been discarded. However, we believe, consistent with the contemporary view of the Supreme Court, that the Import-Export Clause was specifically. intended to prevent the type of taxation involved in this case. One of the primary reasons for calling the Constitu- tional Convention of 1787 was to prevent states for inhibiting commerce among themselves and with foreign countries. Before the Convention, coastal states taxed imported goods that were destined for inland states. Inlands states, or states having no convenient ports, were subject to unfair taxation by their neighboring states. As one of the serious con- 10a troversies before them, the Framers sought to alle- viate the problem with the enactment of the Com- merce and Import-Export Clause. See Michelin, 423 U.S. at 283-84, 96 S.Ct. at 539-40, 46 L.Ed.2d at 502 (quoting 3 M. Farrand, The Records of the Federal Convention of 1787 542 (1911)). Thus, the policies animating both Clauses are the same. Where the protections of the Commerce Clause have been invoked, the Supreme Court has stated that “laws which concern the exterior relations of the United States with other nations and governments are general in their nature, and should proceed exclusive- ly from the legislative authority of the nation.” Bowman v. Chicago & N.R. Co., 125 U.S. 465, 482, 8 S.Ct. 689, 697, 31 L.Ed. 700, 706 (1888). Stated another : way, the United States Government must speak with one voice when regulating commercial relations with foreign governments. Michelin, 423 U.S. at 285, 96 : S.Ct. at 540, 46 L.Ed.2d at 503. To permit any and every state to impose a direct tax on goods in the ) export stream would circumvent this objective. : In this case, the jet fuel was delivered aboard a foreign vessel which was bound for Nova Scotia, Canada. No question existed about its destination. Alabama’s excise tax on fuel adversely affects United States’ foreign commerce with respect to this very important commodity. The foreign shipment of oil is accomplished primarily through the use of oil tankers. This type of tax discourages foreign parties, who purchase oil from U.S. companies and refineries, from using U.S. ports to transport fuel from the United States into foreign countries. Additionally, coastal states which possess ports like the Port of lla ee naneell Mobile, Alabama derive significant amounts of reve- nue from this tax, since they are able to tax the large quantities of fuel that is pumped from their port into the tankers. The Alabama excise fuel tax is not 2.n indirect tax like the taxes levied in Michelin and Washington Stevedoring: it is not an assessment imposed on stored inventory which includes imported or exported prod- ucts, nor is it a tax on a business or occupation which is related to the importation or exportation process. Rather, the Alabama fuel tax in this case is a tax that is levied on the goods themselves while they are in transit. As in Richfield, the fuel was delivered f.o.b. into the tanks of a foreign flagged tanker for export to a foreign country. Without contradiction, the oil was in transit. It was the subject of foreign export at the time of taxation. We conclude that the Alabama fuel tax is an impost upon an export within the meaning of the Import- Export Clause, and is therefore unconstitutional. The decision of the district court in in error. REVERSED. E. GRADY JOLLY, Circuit Judge, dissenting: With respect for the majority’s view, I dissent, because, first, the contract in this case does not call into question the constitutionality of Alabama’s jet fuel tax. Second, even if we must consider the constitu- tionality of this tax, a non-discriminatory property tax that applies equally to sales, consumption and storage of all jet fuel is plainly not prohibited by the constitu- 12a tion’s Import-Export Clause simply because some of the taxed fuel is exported. The majority opinion summarily concludes that the language of the contract at issue “necessarily calls into question the constitutionality of the Alabama tax.” The majority reads the provision “legally required to be paid” to mean duly or properly imposed in accordance with law. It reaches this interpretation although admitting that “it was probably never in the contemplation of these parties that they were facing or were even close to a constitutional problem.” Slip op.., 3844, —. The phrase “legally required to be paid” should be read as simply an awkward expression for “payable by law.” This reading would effect the parties’ stated intent to shift “product taxes, fees or charges imposed [by government entities] on the Delivering Party [LL&E]’ to the receiving party, Pilot, without also passing on extra-legal charges arbitrarily imposed by port authorities. Because the jet fuel tax was required by a duly enacted law of the state of Alabama, the contract clearly placed the cost on Pilot. In short, the majority gives the contract an artificial reading to reach the constitutional question, which is contrary to the general proposition that we should avoid constitutional issues when there are non- constitutional grounds upon which the case can be decided. Matter of Hipp, Inc., 895 F.2d 1503, 1509 (5th Cir. 1990) (cases cited therein). Even if the contract requires that we consider the constitutionality of the tax, the majority erred in concluding that “the Import-Export Clause was specifically intended to prevent the type of taxation 13a involved in this case.” Slip op., 3846, —. In reaching its conclusion, the majority reviews the past and recent history of the Clause and observes that the Supreme Court has not explicitly addressed the Clause’s applica- tion to direct taxes on goods “in transit.” The Court’s recent decisions, however, make clear that even a tax operating directly on goods “in transit” is not pro- hibited if it is non-discriminatory and does not frustrate the policies underlying the Clause. Ala- bama’s tax is unquestionably non-discriminatory; it applies equally to all fuel sold or handled for use by anyone, domestically or for export. “Failure to assess the tax would shift the tax burden from [the exporter ] and the ultimate consumers of its ...products to the local taxpayers of [Alabama ]}—a result completely at odds with Michelin.” RJ. Reynolds Tobacco Co. v. Durham County, N.C., 479 U.S. 130, 107 S.Ct. 499, 514, 93 L.Ed.2d 449 (1986) (nondiscriminatory ad valorem tax that applied to imported tobacco not prohibited by Clause because it “is nothing more than a means ‘by which a State apportions the cost of such services as police and fire protection among the beneficiaries according to their respective wealth.””) Id., citing Michelin, 423 U.S. 276, 287, 96 S.Ct. 535, 541, 46 L.Ed.2d 495 (1976). Contrary to the majority’s conclusion, Alabama's tax does not frustrate the three policies underlying the Import-Export Clause: federal revenue collection, unitary federal foreign economic policy and interstate commercial harmony. There can be no interference with federal revenue collection because the federal government may not tax exports. U.S. Const., Art. I, § 9. Although all property or excise taxes that fall on l4a imports and exports in some sense affect foreign economic policy, it is obvious that such nondiscriminatory property taxation can have no impact whatsoever on the Federal Government’s exclusive regulation of foreign commerce, probably the most important purpose of the Clause’s prohibition. By definition, such a tax does not fall on [exports]as such because of their place of [destination]. It cannot be used to create special protective tariffs or particular preferences for certain domestic goods, and it cannot be applied selectively to encourage or dis- courage any [exportation ]in a manner inconsistent with federal regulation. Michelin Tire Corp. v. Wages, 423 U.S. 276, 286, 96 S.Ct. 535, 541, 46 L.Ed.2d 495 (1976). Finally, although “allowance of nondiscriminatory ad valorem property taxation may increase the cost of goods purchased by ‘inland consumers ... such taxa- tion is the quid pro quo for benefits actually conferred by the taxing state.” Michelin, 423 U.S. at 288-89, 96 S.Ct. at 542. The majority is surely correct that most oil exports are by tanker and that only coastal states can tax this form of commerce; by the same token it is only coastal states that bear the regulatory, admini- strative and, increasingly, environmental, costs of this commerce. The Framers did not intend such states to bear all these costs, and this nondiscriminatory tax imposed at the Mobile, Alabama port on fuel, which happened to be exported, is not unconstitutional. I therefore respectfully dissent. 15a APPENDIX B UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA THE LOUISIANA LAND & EXPLORATION COMPANY v. PILOT PETROLEUM CORPORATION, CIVIL ACTION No. 88-945 SECTION “B” This cause came on for hearing on a previous day on the motion of plaintiff, the Louisiana Land & Explora- tion Company (LL&E), for summary judgment, and the motion of defendant, Pilot Petroleum Corporation (Pilot), for summary judgment. The Court, having heard the arguments of counsel and having studied the legal memoranda submitted by the parties, granted the motion of plaintiff, LL&E, for summary judgment and denied the motion of defendant, Pilot, for summary judgment. Upon request of counsel for the defendant, the Court now provides these written reasons. REASONS LL&E isa Maryland corporation with its principal place of business in Orleans Parish, Louisiana. It is engaged in the exploration, production, refining, and marketing of hydrocarbons. Pilot is a Delaware cor- poration, headquartered in California, and qualified to do business in Louisiana, which purchases aviation fuel. lb Pilot contacted Karbon Corporation (Karbon), a petroleum products broker, for purposes of purchas- ing a quantity of jet fuel oil to be exported to ports on the east coast of Canada. Karbon arranged the pur- chase from LL&E for delivery Free On Board the Liberian M/T MARY ANN at Mobile, Alabama. LL&E had a gasoline license from the Alabama Department of Revenue which permitted it to sell and export gasoline products from Alabama. Pilot, which had never made any purchases of products in Alabama, contacted the Alabama State Department of Revenue to inquire whether it had to meet any requirements. Pilot was told that it should obtain a gasoline license from that department. There- after Pilot submitted the application and supporting documents to the Alabama Department of Revenue. On November 7, 1986 LL&E delivered on board the Liberian flag M/T MARY ANN in the port of Mobile, Alabama a quantity of jet fuel for delivery to the east coast of Canada. Thereafter the MARY ANN proceeded to Halifax, Nova Scotia where said cargo was discharged and delivered. Subsequent to the departure of the MARY ANN for Canada, LL&E submitted to Pilot two invoices. The first invoice was in the amount of $1,722,000 for jet fuel and $50,400 for Alabama state tax, totalling $1,772,400. The second invoice was in the amount of $196,539 for jet fuel and $5,390.78 for Alabama state tax, for a total of $201,929.78. Pilot notified LL&E that Alabama state tax was not chargeable against this consignment because it was exported to a foreign country, and subtracted the 2b state tax from the two invoices. Pilot paid the invoices in full, excluding the Alabama state tax. After consultation with Marvin Schram, Revenue Examiner of the Alabama Department of Revenue, LL&E reported and paid the fuel taxes attributable to these sales in connection with its November 1986 Aviation Fuels Excise Tax return. Mr. Schram advised LL&E that Pilot had failed to obtain a bond until December 3, 1986, and that Pilot’s license was not actually issued until December 15, 1986. Mr. Schram told LL&E that a license could operate retroactively to the date of the bond, but not earlier. + LL&E filed a petition for refund with the Alabama Department of Revenue on August 24, 1987. On August 31, 1987 the Alabama Department of Revenue notified LL&E that the petition was denied in full, because Pilot had not been properly licensed in Alabama as a distributor of gasoline at the time of the sales. This notice of denial of request for refund contained incorrect inforyoation. It stated that Pilot “arranged for this fuel to be shipped to another state.” On September 4, 1987 LL&E contacted Pilot to advise that the petition for refund had been denied. By letter dated September 10, 1987, Fred Smith, on behalf of LL&E, transmitted to Pilot a copy of the notice of denial of request for refund. Stapled to the notice of denial enclosed in Mr. Smith’s letter was a statement of appeal rights setting forth the procedures for review of the denial. It stated that “[p]etitions for refund may be reviewed by requesting a conference with the examiner’s supervisor or field examiner’s supervisor. If agreernent is not reached, an informal 3b hearing may be requested in Montgomery with the Division’s Hearings Officer. Ii agreement is still not reached, a request for a hearing before the Admini- strative Law Judge may be requested within 15 days of the Department’s written denial.” Neither LL&E nor Pilot appealed the denial of the request for a refund. On January 19, 1988 LL&E repeated its demand upon Pilot for reimbursement of the taxes which LL&E had paid to the Alabama Department of Revenue. Pilot did not reimburse LL&E for the taxes. LL&E then filed this suit. The contract documents signed by Pilot and LL&E set forth the mutual obligations of Pilot and LL&E with respect to gas sales. Section 5 of the General Provisions deals with taxes: 5. TAXES:... Should any product taxes, fees or charges be imposed on the Delivering Party by any federal, state, or municipal agency as a direct result of this sale or the manufacture, storage, delivery, receipt, or inspection thereof, the Receiv- ing Party will reimburse the Delivering Party for all such taxes, duties, or fees legally required to be paid and paid in respect of the product delivered by it. Should the Receiving Part fail to reimburse Delivering Party, Delivering Party will be entitled to collect reimbursement, damages incurred as a result of non-payment, and reasonable attorney’s fees incurred in collection thereof from the Receiv- ing Party. Under Alabama law, LL&E as the delivering party is liable to the Alabama Department of Revenue for the 4b collection of excise taxes from Pilot. Ala. Code §40-17- 31(1979). LL&E was “acting merely as an agent of the state for the collection and payment of the tax to the state.” §40-17-31(e). The statute reads that it is “the purpose and intent of this provision that the tax levied is in fact a levy on the consumer or user....” Id. (Emphasis added). The parties are in agreement that the bond and license were not issued by the State of Alabama until after the sale was made. If the bond and license had been issued timely, that is before the sale, there is no dispute that no tax would have been due to the State of Alabama. However, Pilot is now arguing that Ala- bama had no right to levy the sales tax on its cargo at all because the cargo was on a foreign vessel destined for a foreign port. Pilot refers this Court to 46 U.S.C. §883 which prohibits the interstate carriage of goods on foreign flag vessels on penalty of forfeiture of all of the cargo carried on the vessel. Even had LL&E not been advised in advance that this cargo was for export toa foreign country, Pilot argues that the fact that it was loaded aboard a foreign flag vessel was notice to the world that the product had to go to a foreign country and not to another state. With respect to goods or products imported to or exported from states of the United States, the U.S. Constitution, §10, Clause 2, provides: No state shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for execut- ing its inspection Laws: and the net Produce of all 5b Duties and Imposts, laid by any State on Imports or Exports shall be for the Use of the Treasury of the United States; and all such Laws shall be subject to the Revision and Control of the Congress. This Court has before it the question of who owes the tax to the State of Alabama, LL&E or Pilot. According to both the contract executed by the parties and the Alabama statutes, the purchaser bears ulti- mate responsibility for the payment of any sales tax. The seller is only to act as the agent of the state in the collection of the taxes. As between LL&E and Pilot, Pilot owes the taxes to the State of Alabama. Pilot should take up any constitutional arguments with the State of Alabama through the proper procedural channels. After these administrative remedies are exhausted is the proper time to file suit against the State of Alabama challeng- ing the constitutionality of the Alabama tax. Accordingly, IT IS THE ORDER OF THE COURT that there be judgment in favor of the plaintiff, the Louisiana Land and Exploration Company, and against the defendant, Pilot Petroleum Corporation, in the amount of $55,790.78, together with interest thereon at the rate of nine and three/quarters (9.75%) percent per annum from September 10, 1987 until paid, and reasonable attorneys’ fees incurred in collection of the foregoing. New Orleans, Louisiana, this 29th day of August, 1988. /s/Fredrick J.R. Heebe FREDRICK J.R. HEEBE UNITED STATES DISTRICT JUDGE APPENDIX B UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA THE LOUISIANA LAND & EXPLORATION COMPANY v. PILOT PETROLEUM CORPORATION, CIVIL ACTION No. 88-945 SECTION “B” JUDGMENT This cause came on for hearing on a previous day on the motion of plaintiff, the Louisiana Land & Explora- tion Company, for summary judgment and the Court having granted same; accordingly, IT IS ORDERED, ADJUDGED AND DE- CREED that there be judgment in favor of plaintiff, the Lousiana Land and Exploration Company, and against the defendant, Pilot Petroleum Corporation, in the amount of $55,790.78, together with interest thereon at the rate of nine and three/quarters (9.75%) percent per annum from September 10, 1987 until paid, and reasonable attorney’s fees incurred in collec- tion of the foregoing. Dated at New Orleans, Louisiana on this 31st day of August 1988. /s/Fredrick J.R. Heebe FREDRICK J.R HEEBE UNITED STATES DISTRICT JUDGE APPENDIX C UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA THE LOUISIANA LAND & EXPLORATION COMPANY v. PILOT PETROLEUM CORPORATION, CIVIL ACTiON No. 88-945 EXCEPTIVE ALLEGATION AND ANSWER The Exceptive Allegation and Answer of Pilot ‘Petroleum Corporation to the Complaint of Louisiana Land and Exploration Company, with respect represents: EXCEPTIVE ALLEGATION The Court is without personal jurisdiction over Defendant or subject matter jurisdiction over the claims asserted, and the Complaint should be dis- missed for lack of jurisdiction and service upon Pilot Petroleum Corporation should be quashed as invalid. FIRST DEFENSE All allegations and claims asserted by Plaintiff in this action arise out of transactions in the State of Alabama and are subject to law of the State of Alabama. Accordingly, this is an improper or in- convenient forum and this action should be dismissed, or alternatively transferred to the U.S. District Court in Alabama. le SECOND DEFENSE Reserving the foregoing jurisdictional exceptions and defenses, Defendant answers the allegations of fact of the articles of the Complaint as foliows: 1. Admits Article 1. 2. Admits Defendant is a Delaware corporation having its principal place of business in California and denies the remaining allegations of Article 2. 3. Denies Article 3. 4. Denies Article 4except it admits that the exhibit is authentic and the best evidence of its contents. 5. Denies Article 5except it admits that the exhibit is authentic and contains the best evidence of its contents. 6. Denies Article 6 except it admits that the exhibits referred to are authentic and are the best evidence of their contents. ts A Denies Article 7 and the validity of Exhibit E. 2c Denies Article 8. 9. Denies Article 9 and applicability of Exhibit E to the transaction which is the subject of this suit. 10. Admits that said jet fuel was delivered FOB the M/V MARYANNE, a Liberian flag vessel, and denies that said transaction gave rise to any liability for payment of taxes to the State of Alabama by Defendant or Plaintiff. 11. Denies Article 11. 12. Admits the authenticity of Exhibit F and that it was sent to Defendant, but denies the validity of Exhibit F or the accuracy of its contents. 13. Admits that Defendant received Exhibit G, but denies the validity of Exhibit G or theaccuracy of its contents. 14. Denies Article 14and further avers that if Plaintiff paid said taxes as alleged, Plaintiff voluntarily paid them for Plaintiff's own account, and Plaintiff is in no way entitled to claim reimbursement of said taxes from Defendant. 15. Defendant avers that it is a properly licensed and bonded distributor of gasoline with the Alabama Department of Revenue and denies the remainder of Article 15. 16. Denies Article 16. 17. Denies Article 17 for lack of sufficient information to justify a belief. 18. Admits that demand was made, but denies the validity or enforceability of any claims or demands made therein. 19. Defendant avers that it does not owe the taxes claimed and therefore had no reason to pay or reimburse same to Plaintiff. 20. Denies Article 20. WHEREFORE, Petitioner prays that service on it be quashed and dismissed for lack of personal and subject matter jurisdiction; alternatively that the Complaint be transferred to the U.S. District Court in Alabama. If this Honorable Court retains jurisdiction, 4c Defendant prays that after due proceedings had, there be judgment against Plaintiff and in favor of Defendant, dismissing the Complaint at Plaintiff's costs, and for all general and equitable relief. /s/Robert B. Deane ROBERT B. DEANE CHAFFE, MCCALL, PHILLIPS, TOLER & SARPY CERTIFICATE OF SERVICE I certify that a copy of the above and foregoing pleading has been served upon counsel of record by hand and/or U.S. Mail, postage prepaid and properly addressed, this 2nd day of May, 19838. /s/Robert B. Deane ROBERT B. DEANE CHAFFE, MCCALL, PHILLIPS, TOLER & SARPY APPENDIX D UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA THE LOUISIANA LAND & EXPLORATION COMPANY v. PILOT PETROLEUM CORPORATION, CIVIL ACTION No. 88-945 MOTION OF PLAINTIFF, THE LOUISIANA LAND AND EXPLORATION COMPANY, FOR SUMMARY JUDGMENT Plaintiff, The Louisiana Land and Exploration Company, through undersigned counsel, pursuant to Rule 56 of the Federal Rules of Civil Procedure, respectfully moves for summary judgment in its favor and against defendant, Pilot Petroleum Corporation. As set forth in the accompanying memorandum, the affidavits of Bob Cooper and Fred Smith, and attached exhibits, there is no genuine dispute as to any material fact. /s/John F. Landrum JOHN F. LANDRUM TRIAL COUNSEL CERTIFICATE I hereby certify that a copy of the foregoing Motion for Summary Judgment Memorandum in Support, Notice of Motion, and Statement of Uncontested Id Material Facts, have been served upon all counsel of record by hand delivery or by depositing same in the United States mail, postage prepaid and properly addressed, this 17th day of July, 1988. /s/John F. Landrum JOHN F. LANDRUM TRIAL COUNSEL STATEMENT OF UNCONTESTED MATERIAL FACTS SUBMITTED BY PLAINTIFF, THE LOUISIANA LAND AND EXPLORATION COMPANY Plaintiff, The Louisiana Land and Exploration Company (“LL&E”), pursuant to Rule 3.9 of the Local Rules for the United States District Court, Eastern District of Louisiana, submits the following Statement of Uncontested Material Facts. 1. On November 4, 1986, Karbon Corporation, as broker, transmitted to LL&E, in New Orleans, Louisiana, a telex confirming the sale by LL&E to Pilot of approximately One Hundred Thousand (100,000) barrels of jet fuel oil at the price of .4100 cents per gallon, FOB Mobile, Alabama. 2. On November 7, 1986, Karbon Corporation as broker transmitted to LL&E in New Orleans, Louisiana, a second telex confirming the sale by LL&E to Pilot of approximately Twelve Thousand (12,000) barrels of jet fuel oil at the price of .4375cents per gallon, FOB Mobile, Alabama. 2d 3. LL&E also sent to Pilot telex copies of formal agreenients pertaining to the sale of jet fuel called for by the telexes above described. Both formal agree- ments incorporate by reference the terms of LL&E’s standard General Provisions. Through the course of prior dealings between LL&E and Pilot, Pilot also had possession of and familiarity with the terms of LL&E’s standard General Provisions before entering the sales agreements, and before accepting the jet fuel from LL&E. 4. The General Provisions provide in pertinent part as follows: 5. TAXES: ... Should any product taxes, fees or charges be imposed on the Delivering Party by any federal, state, or municipal agency as a direct result of this sale or the manufacture, storage, delivery, receipt, or inspection thereof, the Receiv- ing Party will reimburse the Delivering Party for all such taxes, duties, or fees legally required to be paid and paid in respect of the product delivered by it. Should the Receiving Party fail to reimburse Delivering Party, Delivering Party will be entitled to collect reimbursement, damages incurred as a result of non-payment, and reasonable attorney’s fees incurred in collection thereof from the Receiv- ing Party. 5. As called for in the telexes, and in the correspond- ing formal agreements, on or about November 9, 1986, 3d LL&E delivered the jet fuel oil at the Port of Mobile, FOB the MARYANNE, a tanker flying the Liberian. flag. Pilot accepted the jet fuel so delivered, without objection. 6. LL&E has performed all of its obligations under the jet fuel sales agreements. rf On November 13, 1986, LL&E issued to Pilot an invoice in the amount of $201,929.78, representing $196,539.00 due for jet fuel called for in the November 4, 1986 telex, together with Alabama jet fuel tax in the amount of $5,390.78. 8. On November 21, 1986, LL&E issued to Pilot an invoice in the amount of $1,772,400.00, representing $1,722,000.00 due for jet fuel called for in the Novem- ber 7, 1986 telex, together with Alabama jet fuel tax in the amount of $50,400.00. 9. Pilot paid the purchase price of the jet fuel, but did not pay LL&E the Alabama jet fuel taxes. Pilot represented to LL&E that Pilot was properly licensed and bonded as a distributor of gasoline with the Alabama Department of Revenue at the time Pilot purchased the jet fuel in question. Pilot represented that it was accordingly exempt from payment of the fuel taxes under the Alabama state law exemption for sales in interestate commerce to licensed distributors. 4d 10. In compliance with Alabama law, LL&E had reported and paid the fuel taxes in connection with its November 1986 Aviation Fuels Excise Tax return. 11. LL&E filed a petition for refund with the Alabama Department of Revenue on August 24, 1987. 12. On August 31, 1987, the Alabama Department of Revenue notified LL&E that the petition for refund , was denied in full. 13. Fred Smith, on behalf of LL&E, called Ed Wilson, controller for Pilot, on September 4, 1987, to advise that the Petition for Refund had been denied. 14. By letter dated September 10, 1987, Mr. Smith transmitted a copy of the Notice of Denial of Request for Refund to Pilot. Stapled to the Notice of Denial enclosed in Mr. Smith’s letter was a statement of Appeal Rights clearly setting forth the procedures for review of the denial. 15. On January 19, 1988, LL&E repeated its demand upon Pilot for reimbursement of the taxes which LL&E had paid to the Alabama Department of Revenue. 16. Despite the lapse of several months, Pilot has never reimbursed LL&E for the subject taxes. /s/John F. Landrum JOHN F. LANDRUM TRIAL COUNSEL MEMORANDUM IN SUPPORT OF MOTION FOR SUMMARY JUDGMENT Plaintiff, The Lousiana Land and Exploration Company (“LL&E”) has sued defendant, Pilot Petroleum Corporation (“Pilot”) for reimbursement of jet fuel excise tax which plaintiff paid to the Alabama Department of Revenue. LL&E also seeks interest and attorneys’ fees. STATEMENT OF FACTS LL&E isa Maryland corporation with its principal place of business in Orleans Parish, Louisiana, and engaged in the exploration, production, refining and marketing of hydrocarbons. Pilot is a Delaware corporation, headquartered in California, and quali- fied to do business in Louisiana, which purchases aviation fuel. As set forth in the Affidavits of Bob Cooper and the exhibits identified in the affidavit, LL&E entered into two agreements to sell jet fuel to Pilot and delivered the jet fuel on or about November 9, 1987 in Mobile, Alabama. At issue is Pilot’s failure to pay to LL&E the Alabama jet fuel excise taxes of $55,790.78 attribut- able to the two sales. As set forth in the Affidavit of Fred Smith and the exhibits identified therein, in compliance with Ala- bama law, LL&E had reported and paid the fuel taxes attributable to these sales in connection with its November 1986 Aviation Fuels Excise Tax return. When LL&E invoiced Pilot for the fuel sales, Pilot represented and warranted to LL&E that Pilot was properly licensed and bonded as a distributor of gasoline with the Alabama Department of Revenue at the time Pilot purchased the jet fuel, and accordingly exempt from payment of the fuel taxes under the Alabama state law exemption for sales in interestate commerce to licensed distributors. LL&E accordingly filed a petition for refund with the Alabama Department of Revenue on August 24, 1987. On August 31, 1987, the Alabama Department of Revenue notified LL&E that the petition for refund was denied in full. Contrary to Pilot’s representations, Pilot had not been properly licensed in Alabama as a distributor of gasoline at the time of the sales, and the fuel sales were subject to the taxes. Fred Smith, on behalf of LL&E, called Ed Wilson, controller for Pilot, on September 4, 1987, to advise that the Petition for Refund had been denied. By letter dated September 10, 1987, Mr. Smith transmitted to Pilot a copy of the Notice of Denial of Request for Refund. Stapled to the Notice of Denial enclosed in Mr. Smith’s letter was a statement of Appeal Rights clearly setting forth the procedures for review of the denial. On January 19, 1988, LL&E repeated its demand upon Pilot for reimbursement of the taxes which LL&E had paid to the Alabama Department of Revenue. Despite the lapse of several months, Pilot has never reimbursed LL&E. LL&E accordingly filed this suit. RESPONSIVE PLEADINGS OF PILOT Pilot entered an appearance and filed an “Excep- tive Allegation and Answer.” The “Exceptive Allega- tion” contested jurisdiction and service. Pilot also asserted in its First Defense that the Eastern District of Louisiana is an inconvient forum and, without filing a motion of any kind, requested a transfer to the United States District Court in Alabama. See “Excep- tive Allegation and Answer,” p. i. On the merits, Pilot denied the “validity” of Exhibit E. Pilot asserted that LL&E “voluntarily” paid the taxes. Pilot also asserted that Pilot is a properly licensed and bonded distributor of gasoline with the Alabama Department of Revenue. (Pilot did not assert that it was properly licensed and bonded at the time of the fuel sales.) ARGUMENT A. This Court has Personal Jursidiction Over Pilot. _According to the records of the Louisiana Secretary of State, Pilot is qualified to do business in Louisiana. It maintains an office at the Maritime Building, Suite 700, New Orleans, Louisiana 70130. Its registered agent for service of process is the Prentice-Hall 8d Cerporation System, 1006 Hibernia Bank Building, New Orleans, Louisiana 70112. A copy of the certifi- cate from the Louisiana Secretary of State is attached hereto as Exhibit K. Accordingly, Pilot is subject to the jurisdiction of this Court. L.S.A.-R.S. 12:306 states: Effect of certificate of authority A foreign corporation which before January 1, 1969 has received a certificate of authority which is still valid, or which shall on or after January 1, 1969 receive a certifi- cate of authority, shall, until a certificate of revocation or of withdrawal shall have been issued as provided in this Chapter: (1) Be authorized to transact business in this state, subject to such limitations as may be recited in the certificate of authority; (2) Enjoy the same, but no greater, rights and privileges as a business or nonprofit corporation organized under the laws of this state to transact the business which such foreign corporation is authorized to transact in this state; and (3) Except as in this Chapter otherwise provided, be subject to the same duties, restrictions, penalties and liabilities imposed on or after January 1, 1969 upon a business or nonprofit corporation of like character organ- ized under the laws of this state. This statute gives Pilot the same rights, privileges and liabilities as a Louisiana corporation, including amen- ability to suit in Louisiana. 9d Pilot became subject to this Court’s jurisdiction when service was made upon Pilot’s registered agent in New Orleans according to the requirements of law. Compare Exhibit K and Return of Process Server, attached as Exhibit L. Pilot’s Exceptive Allegation is not well grounded in fact and must have been filed to cause unnecessary delay and needless increase in the cost of this litigation. B. Pilot Owes LL&E the Amount Sought in the Complaint. After the exchange of telexes confirming the sales contracts (Exhibits A and B), LL&E sent to Pilot formal sales agreements (Exhibits C and D). These formal agreements incorporate by reference LL&E’s standard General Provisions (Exhibit E). The contract documents attached as Exhibit A through E, and authenticated by the Affidavit of Bob Cooper, un- ambiguously set forth the mutal obligations of LL&E and Pilot with respect to the subject gas sales. Section 5of the General Provisions clearly makes Pilot respon- sible to LL&E for the excise taxes sued upon: 5. TAXES:... Should any product taxes, fees or charges be imposed on the Delivering Party by any federal, state, or municipal agency as a direct result of this sale or the manufacture, storage, delivery, receipt, or inspection thereof, the Receiv- ing Party will reimburse the Delivering Party for all such taxes, duties, or fees legally required to be paid and paid in respect of the product delivered by it. Should the Receiving Party fail to reimburse Delivering Party, Delivering Party will be entitled to collect reimbursement, damages incurred as a result of non-payment, and reasonable attorney’s 10d fees incurred in collection thereof from the Receiving Party. Even if Section 5 of the General Provisions did not clearly control, LL&E would be entitled to recover from Pilot. Under Alabama law, LL&E as the deliver- ing party is liable to the Alabama Department of Revenue for the collection of excise taxes from Pilot. Ala. Code §40-17-31 (1979). A copy of the Alabama statute is attached. This statute refutes Pilot’s claim that LL&E paid the fuel tax “voluntarily”. More importantly, the Alabama statute defines LL&E’s _ obligation as one to “collect.” The tax is levied by law on Pilot. See §40-17-31(e). The language of the statute clearly established LL&E’s right to reimbursement from Pilot, independently of the General Provisions. F ‘nally, Pilot’s assertion that it is properly licensed and bonded in Alabama and exempt from the taxes is meaningless because the question is whether Pilot was properly licensed and bonded in November, 1986. Pilot has not even asserted in this lawsuit that it was licensed and bonded at that time. Any contention that Pilot was properly licensed and bonded at the pertinent time frame has been formally rejected by the Alabama Department of Revenue (Exhibit H). Pilot had every opportunity to present its arguments to the Department of Revenue, and to appeal the Department’s denial. Pilot failed to avail itself of any such opportunity. lid C. LL&E is Entitled to Interest and Attorney's Fees. After the Alabama Department of Revenue noti- fied LL&E that its Petition for Refund had been denied, LL&E demanded reimbursement from Pilot on September 10, 1987. Because Pilot's obligation was to pay LL&E a sum certain, LL&E is entitled to legal interest at the rate of twelve percent (12%) per annum from September 10, 1987, to January 1, 1988, and thereafter at the rate of twelve (12%) until paid. La.C.C. Arts. 2000, 2924B(4). Additionally, Pilot must pay LL&E’s attorneys’ fees. Section 5of the General Provision attached to the - sales agreement (Exhibit E), quoted above, provides that if Pilot fails to reimburse LL&E, LL&E will be entitled to recover reasonable attorneys’ fees incurred in collection. Independently of the General Provisions, it is apparent that some of all of Pilot’s defenses have been asserted merely to delay collection, in violation of the Federal Rules of Civil Procedure. LL&E accordingly requests a hearing after the resolution of this motion, so that LL&E may present evidence of the attorneys’ fees it has incurred. D. This Case is Appropriate for Summary Judgment. Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, the pleadings, Affidavits of Bob Cooper and Fred Smith, and the Exhibits authenticated thereby and attached hereto, show that there is no genuine issue as to any material fact and that LL&E is 12d C. LL&E is Entitled to Interest and Attorney’s Fees. : After the Alabama Department of Revenue noti- fied LL&E that its Petition for Refund had been denied, LL&E demanded reimbursement from Pilot on September 10, 1987. Because Pilot’s obligation was to pay LL&E asum certain, LL&E is entitled to legal interest at the rate of twelve percent (12%) per annum from September 10, 1987, to January 1, 1988, and thereafter at the rate of twelve (12%) until paid. La.C.C. Arts. 2000, 2924B(4). Additionally, Pilot must pay LL&E’s attorneys’ _ fees. Section 5of the General Provision attached to the sales agreement (Exhibit E), quoted above, provides that if Pilot fails to reimburse LL&E, LL&E will be entitled to recover reasonable attorneys’ fees incurred in collection. Independently of the General Provisions, it is apparent that some of all of Pilot’s defenses have been asserted merely to delay collection, in violation of the Federal! Rules of Civil Procedure. LL&E accordingly requests a hearing after the resolution of this motion, so that LL&E may present evidence of the attorneys’ fees it has incurred. D. This Case is Appropriate for Summary Judgment. Pursuant to Rule 56(c) of the Federal Rules of Civil Procedure, the pleadings, Affidavits of Bob Cooper and Fred Smith, and the Exhibits authenticated thereby and attached hereto, show that there is no genuine issue as to any material fact and that LL&E is 13d entitled to judgment as a matter of law. Pilot can now avoid summary judgment only by producing serious evidence in support of its “exceptive allegations” and puported defenses: When the moving party has carried its burden under Rule 56(c) its opponent must do more than show that there is some meta- physical doubt as to the material facts. Matsushita Electrical Industrial Co. v. Zenith Radio Corp., 475 U.S. 574, 106 S.Ct. 1348, 1356, 89 L.Ed.2d 538 (1986). In this respect, LL&E need not produce evidence to negate every aspect of Pilot’s case: Instead, as we have explained, the burden on the moving party may be discharged by “showing”—that is, by pointing out to the District Court—that there is an absence of evidence to support the non-moving party’s case. Celotex Corp. v. Catrett, 106 S.Ct. 2548, 2554, 91 L.Ed.2d 265 (1986). To date, Pilot has produced no evidence whatsoever supporting any contention raised in the Exceptive Allegations and Answer. Further still is Pilot from producing evidence with sufficient legal meaning to prevent summary judgment. CONCLUSION For these reasons, LL&E respectfully requests entry of summary judgment as set forth in the foregoing motion. /s/John F. Landrum JOHN F. LANDRUM TRIAL COUNSEL 14d APPENDIX E UNITED STATES DISTRICT COURT EASTERN DISTRICT OF LOUISIANA THE LOUISIANA LAND & EXPLORATION COMPANY v. PILOT PETROLEUM CORPORATION, CIVIL ACTION No. 88-945 SECTION “B” (1) MEMORANDUM IN OPPOSITION TO LL&E’S MOTION FOR SUMMARY JUDGMENT AND IN SUPPORT OF PILOTS MOTION FOR SUMMARY JUDGMENT Pilot Petroleum Corp. (“Pilot”) respectfully sub- mits that Louisiana Land and Exploration Company (“LL&E”) has no cause or right of action against Pilot for amounts erroneously paid by LL&E to the Ala- bama Department of Revenue purporting to be state tax imposed upon goods exported to a foreign country, which payments were made by LL&E despite advices _ by Pilot that said taxes were not due. The statements of fact of Plaintiff and Defendant establish the following. Pilot contacted Karbon Corporation, a petroleum products broker, for purposes of purchasing a quan- tity of jet fuel oil to be exported to ports on the East coast of Canada. Karbon Corporation arranged the purchase from LL&E for delivery Free On Board the Liberian M/T MARY ANN at Mobile, Alabama. (See le LL&E Exhibits A & B). LL&E had a gasoline license from the Alabama Department of Revenue which permitted it to sell and export gasoline products from Alabama. Pilot, which had never made any purchases of products originating in Alabama, contacted the Ala- bama State Department of Revenue to learn whether it had to meet any requirements, and was told that it should obtain a gasoline license from that department. Pilot submitted the necessary applications for this purpose and the license was approved, but apparently it was not issued until after the export took place. In the interim, Pilot arranged for the Liberian M/T MARY ANN to receive said cargo at Mobile and carry same to Canada. The MARY ANN presented itself at Mobile where the cargo was delivered in accordance with the terms of the purchase agreement, Free on Board the M/V MARY ANN. According to the terms of the contract and as a matter of fact, Pilot did not take possession or ownership of the product until it had passed from the shore hoses into the ship’s manifold (pipe connection with several apertures, valves and lines for distribution to the tanks of the MARY ANN). The MARY ANN proceeded to Halifax, Nova Scotia, where said consignment was discharged and delivered (Bill of Lading, Ex. Pilot » It is possible that there were several misunder- standings of fact giving rise to this suit, but they should not militate against Pilot. First, there is a serious question as to whether Pilot needed an Ala- bama gasoline license to purchase from LL&E 2e gasoline for export to a foreign country. Second, LL&E had absolutely no obligation to pay this tax to the State of Alabama and did so contrary to advices of Pilot. Third, the Alabama Department of Revenue was apparently under the impression that this con- signment was exported to another state within the United States, not toa foreign country, and LL&E did nothing to correct this mistake although it was patent- ly obvious that the cargo was destined for a foreign port. Having voluntarily and unnecessarily paid the tax against Pilot’s advices, LL&E submitted a token petition for refund to the Alabama Department of Revenue which apparently did not recall that this cargo was exported toa foreign country, and when the Petition was denied, LL&E failed to follow up on its appeal rights and now seeks to collect amounts equal to the so called taxes from Pilot. Anyone engaged in the commercial movement of dry or bulk cargo on vessels, including petroleum products, knows of the statutory prohibition against interstate carriage of goods on foreign flag vessels on penalty of forfeiture of all of cargo so carried on the vessel, 46 U.S.C. §883. Even had LL&E not been advised in advance that this cargo was for export toa foreign country, the fact that it was loaded abeard a foreign flag vessel was notice to the world that the product had to go foreign.’ No merchandise shall be transported by water or land and water, on penalty of forfeiture thereof, between points in the United States ... either directly or via a foreign port, or for any part of the transportation in any other vessel than a vessel built in an documented under the laws of the United States and owned by ... citizens of the United States ...” 46 U.S.C. §883. With respect to goods or products exported to or from states of the United States, the U.S. Constitution, Section 10, Clause 2, provides: “No State shall, without the Consent of the Congress, lay any Imposts or Duties on Imports or Exports, except what may be absolutely necessary for executing its inspec- tion Laws: and the net Produce of all Duties and Imposts, laid by any State on Imports or Exports, shall be for the Use of the Treasury of the United States; and all such Laws shal [Text truncated at 120,000 characters. The full text is on the page linked above.] --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385020_2640%3A1. Public record. Not legal advice.