Opposition Brief — National Amusements, Inc. v. City of Springdale

- 5

In the

Supreme Court of the United States

OCTOBER TERM, 1990

NATIONAL AMUSEMENTS, INC.,

Petitioner,

Vv.

CITY OF SPRINGDALE, et al.,,

Respondents.

ON WRIT OF CERTIORARI TO

THE OHIO SUPREME COURT

BRIEF IN OPPOSITION

TO PETITION FOR WRIT OF CERTIORARI

DAVID A. CALDWELL (Counsel of Record)

KENNETH J. SCHNEIDER

ALBERT H. NEMAN

2500 Cincinnati Commerce Center

600 Vine Street

Cincinnati, Ohio 45202

Telephone (513) 852-6031

Attorneys for Respondents

RONALD CULP, BOX 26, WORTHINGTON, OHIO 43085 (614) 846-7025

f =

COUNTER STATEMENT OF

QUESTIONS PRESENTED FOR REVIEW

1. Is a judgment upholding the constitutionality of a

cinema admissions tax res judicata so as to bar a second ac-

tion between the same parties challenging the same tax

where the taxpayer advances a different constitutional

ground in the second action?

2. Is a municipal admissions tax constitutionally im-

posed on cinemas when the result is to tax cinema admis-

sions in the same manner as other retail transactions and

there is substantial evidence that cinemas create an excep-

tional burden on municipal services?

II

TABLE OF CONTENTS

COUNTER STATEMENT OF THE CASE ...........c cece 1

REASON FOR DENYING CERTIORARL .............:ccceeeeees 5

SUMMARY OF ARGUMENT ......scscsscssssssessessesscsasecsnssscsseeess 5

Authorities:

Limbach v. Hooven & Allison Co., 466 US 353 (1984) ........ 5

PR GRFONTE, sevancsviusnsnsintonisisilieiietiaitianielsabijuunaiininibdiiaiasadaiaimaeais 5

A. Res judicata is an adequate state law ground sup-

porting the judgment of the court below and this

Court therefore lacks jurisdiction.

Authorities:

Fox Film Corporation v. Muller, 296 US 207 (1935) ............ 5

Utley v. St. Petersburg, 292 US 106 (1934) ........ eee 5

Wilson v. Loew’s Inc., 355 US 597 (1958) .........ecsceccseeseeteees 5

Henry v. Mississippi, 379 US 443 (1965) o......cceceeeeeseeseeeees 6

Federated Department Stores. Inc. v. Moitie, 452 US 394 ... 6

Postal Telegraph Cable Co. v. Newport, 247 US 464 (1918) 7

B. A judgment upholding the constitutionality of a°

cinema admissions tax is res judicata so as to

preclude a later action between the same parties

challenging the same tax, not withstanding the tax-

payer advances a different constitutional ground in

the second action.

Authorities:

Cincinnati, ex rel. Crotty, v. City of Cincinnati, 50 Ohio

BR E Be CII ED sccscsisnsctnsichcdacimsiimibiniiauiaiaaeaasmanmadaienaaiaa is 8

Il

Cincinnati v. Whitman, 44 Ohio St. 2d 58 (1975) ............0. 8

Canton v. Whitman, 44 Ohio St. 2d 62 (1975) ........ eee 8

Limbach v. Hooven & Allison Co., 466 US 353 (1984) ........ 8

Hooven & Allison Co. v. Evatt, 324 US 652 (1945) ............... 8

Michelin Tire Corp v. Wages, 423 US 276 (1976) ............00064 9

EOeo U. AMOI, GO UB BO, CIBTE) ...00.cccccseccsccsessccccsesccccesscscceecess Ae)

Minneapolis Star and Tribune Company v. Minnesota,

ath iceinitaanehlonnsinmnannnaivevaanonuesenees 9

Grosjean v. American Press Co., Inc., 297 US 233 (1936) .... 9

Commissioner of Internal Revenue v. Sunnen, 33 US

i sasscusotannesousoenennsacssens g

Helvering v. Clifford, 309 US 331 (1940) uo... eeeecteeeeee 10

Montana v. U.S., 440 US 147 (1979) .......ccccceccccessseseeseeseeeees 11

C. A municipal admissions tax is constitutionally

applied to cinemas when the result is to tax cinema

admissions in the same manner as other retail

transactions.

Authorities:

Minneapolis Star and Tribune v. Minnesota Commission-

er of Revenue, 460 US 575 (1983) 0... ceeeceesteesteeseeees 11, 123

Ohio Constitution, Article XVIII, Section 3.0.0.0... 12

Ohio Constitution, Article XVIII, Section 13 ................000 12

Haefner v. City of Youngstown, 147 Ohio St. 58, (1946) .... 12

EET 1s MIE vsntcovrsesacnanesssenensocesorecnsovesecocesnesese 12

115 Ohio Laws Pt. 2 V. 342 ou... esessssssseseeseees saisetenmainsnntn 12

ERLE IM TORRE D LN PN CEN RST

Estelle Realty, Inc. v. Mayfield Heights, 176 Ohio St.

Pe TIT Li tsiccilsciiedhdeiaiceasdichlapbdiechabanseabieaneimiapibibiananieewees

Festival Enterprises, Inc. v. City of Pleasant Hill, 182

Se I IID veiisncinisinninsnssnssnnnbetnmntsnsdaseatdicasarncneesve

United Artists Communications, Inc. v. City of Mont-

clair, 209 Cal. App. 3d 245 (1989) oo... ccsssssseeeteeseeeeeees

PTET seitisicsiiinnniosndenviisiimenisnlnninianinniesinaiiiasiviininiensinntgees

Vv

TABLE OF AUTHORITIES

Cases

Canton v. Whitman, 44 Ohio St. 2d 62 (1975) oes 8

Cincinnati, ex rel. Crotty, v. City of Cincinnati, 50 Ohio

Se, SR eee OD ciciesnsd esis eipinsiniiienenaeinnanntiinlinaiiniamaniednes 8

Cincinnati v. Whitman, 44 Ohio St. 2d 58 (1975) «0... 8

Commissioner of Internal Revenue v. Sunnen, 33 US

Be RITE éccuciesiiecsvcannetposidieseenseditinscclanicssaaoninensiinenmniiiiabsamaiianetiis 9

Estelle Realty, Inc. v. Mayfield Heights, 176 Ohio St.

Ses SAID icuivebnscsscusiecunindeiehtleeesisdelinisipasiassibteiianiaiadidadiiiiinddies 12

Federated Department Stores. Inc. v. Moitie, 452 US 394 ... 6

Festival Enterprises, Inc. v. City of Pleasant Hill, 182

Cath, ett SE I Ge saiienintnirinesenssieasenntianiiesiaiainiiaiiibietianiinissnn 14

Fox Film Corporation v. Muller, 296 US 207 (1935) ............ 5

Grosjean v. American Press Co., Inc., 297 US 233 (1936) .... 9

Haefner v. City of Youngstown, 147 Ohio St. 58, (1946) .... 12

Helvering v. Clifford, 309 US 331 (1940) wn eeeeeeeeees 10

Henry v. Mississippi, 379 US 443 (1965) wo... eeeeeeeseees 6

Hooven & Allison Co. v. Evatt, 324 US 652 (1945) oe. 8

Limbach v. Hooven & Allison Co., 466 US 353 (1984) .... 5, 8

Low v. Austin, 80 US 29, (1872) cece euaeaslaniibisieieninaba 9

Michelin Tire Corp v. Wages, 423 US 276 (1976) ...........000 9

Minneapolis Star and Tribune Company v. Minnesota,

a CD ittieninininniibe 9,11, 13

BGomsae DB. CU... BEB WB TET CUBE) socconeservsscvesscncecosacscensoesse 11

VI

Postal Telegraph Cable Co. v. Newport, 247 US 464 (1918) 7

United Artists Communications, Inc. v. City of Mont-

clair, 209 Cal. App. 3d 246 (1989) vcs 14

Utley v. St. Petersburg, 292 US 106 (1934) ccc 5

Wilson v. Loew’s Inc., 355 US 597 (1958) oo... cesses 5

Constitutional Provisions

I tc OF 0s TD cscsnnencncessncecessevesnnesscccsczssensessnssnes 12

118 Ginid LewWe Pb. BV. GAB ccscccescsssccrccccescsssssscscccscccsccsesnsese0es 12

enema MUIR ARID... scnsasnsnunbisndstnnenssndbasnanpibaduiohennpesonennnnenhs 12

Statutes

Ohio Constitution, Article XVIII, Section 3 wu... 12

Ohio Constitution, Article XVIII, Section 13 0.0... 12

No. 90-1047

In the

Supreme Court of the United States

OCTOBER TERM, 1990

NATIONAL AMUSEMENTS, INC.,

Petitioner,

v.

CITY OF SPRINGDALE, et al.,,

Respondents.

A MLE

ON WRIT OF CERTIORARI TO

THE OHIO SUPREME COURT

BRIEF IN OPPOSITION |

TO PETITION FOR WRIT OF CERTIORARI

COUNTER STATEMENT OF THE CASE

On November 15, 1978, the Council of the City of

Springdale, Ohio, enacted Ordinance No. 67-1978 imposing

a 3% tax on the admission price to any cinema in the city.

National Amusements, Inc., the petitioner, is the owner and

operator of Showcase Cinema, one of the three multi-screen

cinemas located in the City.

Although Springdale is a relatively smal) suburb of Cin-

cinnati, by reason of its location at the intersection of two

interstate highways, it is a major retail area with a regional

shopping center and several smaller shopping centers.

2

Other than the three cinemas, the only other place of

entertainment charging admission, in 1978 and now, is the

Boulevard Night Club. It has existed in Springdale since ap-

proximately 1972. Pursuant to Chapter 113 of the Spring-

dale Code of Ordinances, the Boulevard has paid an annual

license tax of $1000.00 every year since opening.

On December 28, 1978, plaintiff filed an action against

Springdale and Doyle H. Webster, Clerk, in the Court of

Common Pieas of Hamilton County, Ohio, under Docket

No. A7811145. The complaint demanded declaratory judg-

ment and injunctive relief alleging the unconstitutionality

of the Springdale cinema admissions tax. The allegations

made in the 1978 litigation were identical to those set forth

in the complaint filed herein with the exception that the

1978 complaint did not allege that there existed in Spring-

dale any untaxed places of entertainment charging admis-

sion, nor did it allege a violation of the First Amendment

under the U.S. Constitution.

On November 13, 1980 the trial court entered sum-

mary judgment in favor of Springdale and granting Spring-

dale’s counterclaim, declared the cinema admissions tax to

be valid, lawful and enforceable.

The Court of Appeals, First Appellate District, affirmed

the trial court’s judgment under Docket No. 800842, (3

Ohio App. 3d 70, 1981) holding that a taxing authority may

discriminate between trades and activities selected for taxa-

tion, providing the classification rests upon some difference

having a reasonable relation to the object of the legislation.

Judge Black, writing for the Court concluded:

"In our judgment, the attraction of large masses of

people who use cinemas can reasonably be con-

ceived of as requiring such additional governmen-

tal services... that a tax designed to offset the cost

thereof is substantially related to a governmental

purpose. We find no denial of equal protection."

3

governmental purpose. We find no denial of equal

protection."

The Ohio Supreme Court overruled a motion to certify

(No. 82-42, February 17, 1982).

On July 10, 1984, National Amusements filed the

present action making the same allegations as those alleged

in the 1978 complaint and also alleging that the admissions

tax violates National’s First Amendment rights.

Thereafter the city enacted, effective October 1, 1984,

Chapter 98 of its Code of Ordinances which imposed a tax

of 3% on the admission price of all forms of entertainment

other than cinemas. The Ordinance provided that the

$1000.00 anual night club license tax would be applied as a

credit against admissions taxes otherwise payable. During

the year 1985 the Boulevard Night Club paid $77.00 in

admissions tax and in 1986 similarly paid $38.00.

During the period between November 15, 1978, and

October 1, 1984, National Amtisemetits had collected and

remitted to Springdale a total of $535,139.14 in tax.

National’s witnesses further testified that, based on its cost

of borrowed finds, it had incurred interest expenses

totaling $258,695.00 on the tax money thus remitted.

During the trial, Springdale presented substantial

evidence demonstrating the financial burden imposed upon

the city by the operation of the cinemas. Because of the fact

that the cinemas attract great numbers of automobiles, all

arriving at the same time, it was necessary to make various

highway improvements to accommodate the traffic. These

direct expenses amounted to approximately $48,000.00. In

addition the city demonstrated a substantial amount of

indirect expenses resulting from the operation of the

cinemas. These indirect expenses consisting largely of

additional fire and police protection were shown to

approximate $500,000.00 per year.

The trial court found that, because the Boulevard

Night Club was not taxed prior to October 1, 1984, the tax

4

The court therefore entered judgment against Springdale

for the taxes collected of $535,139.14 plus interest as com-

puted by National of $258,695.00. The court had previously

held on summary judgment that after October 1, 1984 the

tax was constitutional since it was being imposed on al!

places of entertainment charging admission.

The Court of Appeals for the First Appellate District

reversed, entering final judgment for the city. The court

held that the prior judgment was res judicata so as to bar

this action; that the tax was not unconstitutional and the

award of interest was unauthorized by state law.

National’s motion to certify was granted by the Ohio

Supreme Court. That court affirmed, holding that this ac-

tion was barred by the doctrine of res judicata (53 Ohio St.

3d 60). In so holding, the court relied entirely upon Ohio

law. Thereafter, on October 3, 1990 the court denied Na-

tional’s motion for rehearing.

5

REASON FOR DENYING CERTIORARI

This Court lacks jurisdiction because the judg-

ment of the Ohio Supreme Court is supported

by an adequate state ground and no federal

question is therefore presented.

I. SUMMARY OF THE ARGUMENT

The Supreme Court of Ohio properly held that the

prior judgment was res judicata so as to bar the present ac-

tion which again challenges the constitutionality of the

same tax. Since the decision rests upon an adequate state

law ground, this Court lacks jurisdiction to review.

Res judicata prevents successive challenges to the con-

stitutionality of an admissions tax notwithstanding the

holding in Limbach v. Hooven & Allison Co., 466 US 353

(1984).

Where there is evidence that cinemas create an un-

usual burden on municipal services, cinema admissions may

be constitutionally taxed in the same manner as other retail

transactions even though other types of entertainment are

left untaxed.

Il. ARGUMENT

A. Res judicata is an adequate state law ground

supporting the judgment of the court below and

this Court therefore lacks jurisdiction.

It has long been the rule that, where the judgment of

the state court rests upon an adequate state ground, this

Court has no jurisdiction to review. As is pertinent to this

action, the Court’s jurisdiction is limited to cases present-

ing federal questions. Where an adequate state ground sup-

ports the state court judgment, this Court’s opinion as to

the federal question would be merely advisory and could

not affect the outcome of the case. (Fox Film Corporation v.

Muller, 296 US 207 (1935), Utley v. St. Petersburg, 292 US

106 (1934), Wilson v. Loew’s Inc., 355 US 597 (1958).

6

.

Petitioner has cited various cases, with some quota-

tions, without any elaboration of the facts which would

demonstrate any applicability to the present cause. The

most serious failing in petitioner’s argument is the failure

to distinguish between cases where the state court judg-

ment rested on a procedural rule and those where the judg-

ment rested on substantive law. This Court articulated that

distinction in Henry v. Mississippi, 379 US 443 (1965):

"But it is important to distinguish between state

substantive grounds and state procedural grounds.

Where the ground involved is substantive, the

determination of the federal question cannot affect

the disposition if the state court decision and the

state law question is allowed to stand. Under the

view taken in Murdock of the statutes conferring

appellate jurisdiction on this court, we have no

power to revise judgments on questions of state

law. Thus the adequate non federal ground doc-

trine is necessary to avoid advisory opinion.

These justifications have no application where the

state ground is purely procedural. A procedural de-

fault which is held to bar challenge to a conviction

in state courts, even on federal constitutional

grounds, prevents implementation of the federal_

right. Accordingly we have consistently held that

the question of when and how defaults in com-

pliance with state procedural rules can preclude

our consideration of a federal question is itself a

federal question."

This Court held in Federated Department Stores. Inc. v.

Moitie, 452 US 394, that:

"The doctrine of res judicata is not a mere matter

of practice or procedure inherited from a more

technical time than ours. It is a rule of fundamen-

tal and substantial justice, of public policy and of

private peace, which should be cordially regarded

and enforced by the courts."

7

Thus those cases cited by petitioner which involve state

court decisions resting merely on procedural grounds have

absolutely no application to the present cause. The applica-

tion of the doctrine of res judicata cannot reasonably be

construed to deprive the petitioner of a reasonable op-

portunity to assert First Amendment rights. Petitioner had

that opportunity in the first action and no case holds that it

is constitutionally entitled to a second opportunity.

It is of course, possible that a state court may apply a

substantive ground in such a way as to deny due process.

Postal Telegraph Cable Co. v. Newport, 247 US 464 (1918), is

such an example. In that case the state court had held that

the petitioner was barred from litigating the validity of its

franchise by reason of a judgment rendered against its

predecessor in title. However, the prior suit had been filed

some two years after the predecessor had parted with the

title and thus was not binding upon anyone in privity with

the petitioner. Under those circumstances the application

of the doctrine clearly violated due process. Obviously, no

such situation exists in the present case. Both cases in-

volved exactly the same parties and petitioner had a full op-

portunity to litigate its rights in the prior action. This

~ Court also noted that res judicata is ordinarily a matter of

state law.

The remainder of the cases cited by petitioner all in-

volve situations where a party was precluded from asserting

his federal right because of the application of a local proce-

dural rule. None involve the situation where the state court

decided the case on adequate state ground and therefore

declined to reach the federal question. In those cases this

Court has uniformly denied jurisdiction.

B. A judgment upholding the constitutionality

of a cinema admissions tax is res judicata so as

to preclude a later action between the same

parties challenging the same tax, not withstand-

8

ing the taxpayer advances a different constitu-

tional ground in the second action.

Even if this Court were free to determine questions of

state law, there is no question that the decision of the court

below is entirely consistent with its prior decisions. The

Ohio Supreme Court has consistently rejected successive

attacks on the constitutionality of the legislation even

though different grounds are asserted. See Cincinnati, ex

rel. Crotty, v. City of Cincinnati, 50 Ohio St. 2d 27 (1977),

Cincinnati v. Whitman, 44 Ohio St. 2d 58 (1975), and

Canton v. Whitman, 44 Ohio St. 2d 62 (1975).

While not seriously challenging that point, petitioner

argues that the Ohio Supreme Court was bound to apply

the federal law as to res judicata rather than state law,

citing Limbach v. Hooven & Allison Co., 466 US 353 (1984).

In that case this Court did examine the question whether

the Ohio Supreme Court had decided the case under state

law principles so as to insulate the case from review. This

Court then examined the opinion of the court below and

noted that the court had considered the matter in light of

several decisions of this Court as well as under the Im-

port\Export Clause of the U.S. Constitution. The Court

therefore determined that the lower court decision had de-

cided a question of federal law. There was however, ab-

solutely no suggestion in that opinion that the state court

was required to apply federal law as opposed to state law.

Moreover, there is an important distinction in that the

principal issue in the case was the effect of a prior decision

of this Court rather than the prior decision of a state court.

Even if the Ohio Supreme Court had been required to

consider the decision in Limbach v. Hooven & Allison Co.,

466 US 353 (1984), the result would have been the same.

That case involved the imposition of the Ohio Personal

Property Tax on imported raw materials which were

warehoused in their original packages. An earlier decision

(Hooven & Allison Co. v. Evatt, 324 US 652 (1945), had held

9

that such taxation constituted a duty on imported goods in

violation of the Import/Export Clause of the U.S. Constitu-

tion. In a later decision, Michelin Tire Corp v. Wages, 423

US 276 (1976), this Court abandoned the "original package"

doctrine holding that imported goods were subject to a

generally applicable state personal property tax.

This Court held that Hooven & Allison Co. v. Evatt was

not res.judicata because it involved different tax years. The

basis of the decision is that in the case of an annual tax,

such as a property tax, each year is a different tax and a dif-

ferent cause of action. The rates are fixed annually and the

property subject to taxes is determined annually. The

Springdale admissions tax is not an annual tax and the fact

that payments are remitted quarterly does not change the

character of the tax. It is instead an excise tax on a continu-

ing activity and the years involved are of no significance.

This Court further held that collateral estoppel would not

apply since Hooven & Allisoi: Co. v. Evatt. was based upon a

now overruled decision. (Low v. Austin, 80 US 29, (1872)).

The earlier decision in this case is not based upon any

overruled decision and in fact Minneapolis Star and

Tribune Company v. Minnesota, 460 US 575 (1983), did not

overrule any case or blaze any new trails. A virtually

identical taxing scheme was struck down in Grosjean v.

American Press Co., Inc., 297 US 233 (1936). Minneapolis

Star merely made it clear that a discriminatory tax imposed

on only a few newspapers was urconstitutional regardless of

legislative motive. Thus, res judicata remains a bar to this

action.

The decision in Limbach v. Hooven & Allison Co., was

based largely on Commissioner of Internal Revenue v. Sun-

nen, 33 US 591 (1948), an income tax case. Sunnen owned

various patents and had entered into a number of license

agreements with his corporation authorizing their use in

return for royalties. Sunnen assigned the agreements to his

wife as a gift and the royalties were paid to the wife who

r 10

reported them as her income. Earlier litigation in 1935 had

determined that the royalties were not taxable to Mr. Sun-

nen for the years 1929 to 31. This Court refused to apply

res judicata, holding that each tax year is the origin of a

new liability and a separate cause of action. Because of the

intervening change in the tax law created by Helvering uv.

Clifford, 309 US 331 (1940), this Court also refused to apply

the more limited principle of collateral estoppel.

In the case of income taxes it is essential that a tax year

be established since it is impossible to determine whether a

taxpayer has taxable income without calculation of the

gross income and deductions occurring in a given year. In

this respect the Ohio Personal Property Tax involved in

Limbach v. Hooven & Allison Co. is similar in nature. An

annual assessment date is essential in order to determine

tax liability. The admissions tax involved here has none of

these characteristics. There is no "tax year" and the taxes

are a continuous obligation imposed as admissions are col-

lected. The determination in the amount of tax due is in no

way dependent upon the establishment of a "tax year." For

that reason it is obvious that the prior judgment deter-

mined the constitutionality of tax for all future years and is

therefore the same cause of action.

In order to bring itself within the rule of Limbach v.

Hooven & Allison, petitioner must demonstrate first that

the tax involves different "tax years” so as to constitute a

different cause of action and, second, that there has been a

complete repudiation of the constitutional analysis underly-

ing the prior decision. Petitioner fails to meet either prong

of the test. There is no tax year and the cause of action is

identical. Secondly, the prior action does not rest upon any

repudiated constitutional analysis.

The precise posture in the present case is that

petitioner simply did not raise the First Amendment argu-

ment in the first case. Neither Limbach v. Hooven & Al-

lison nor Commissioner of Internal Revenue v. Sunnen nor

11

any other decision grant petitioner the right to now make

an argument that counsel did not think of in 1978.

There is another basic flaw in petitioner’s argument.

The cases on which it relies involve questions of whether

some event or some property was legally taxable under the

particular taxing law. Neither of these cases involved the

constitutionality of the law itself. The only decision cited

which actually involved the constitutionality of the state

tax law was Montana v. U.S., 440 US 147 (1979), and in that

case this Court applied res judicata and denied relitigation

of the question. We have found no reported decision

permitting a given party to relitigate the constitutionality

of any state law or municipal ordinance. If the rule were

otherwise, it wouid be impossible to stop repeated and suc-

cessive challenges to the constitutionality of any law.

C. A municipal admissions tax is constitutional-

ly applied to cinemas when the result is to tax

cinema admissions in the same manner as

other retail transactions.

Petitioner relies principally on Minneapolis Star and

Tribune v. Minnesota Commissioner of Revenue, 460 US 575

(1983), but the facts are clearly distinguishable. In that case

the tax was a use tax on the cost of paper and ink products

consumed by newspapers while no other type of business

was subjected to a similar tax. By reason of exemptions only

14 out of 388 newspapers in the state were subject to the

tax. Of course, the tax on the production of just a few of 388

newspapers, without any other justification, can be used ef-

fectively to censor the press and violates the First Amend-

ment. Moreover, this Court held that, because newspapers

were being subjected to a totally different type of tax, it was

not practical to calculate the relative burden so as to

determine whether actual discrimination existed.

In determining whether Springdale’s admissions tax

discriminates against cinemas, it is necessary to examine

12.

the effect of the tax and this analysis requires an examina-

tion of Ohio’s overall taxing structure. The basic question to

be resolved under the Minneapolis Star analysis is whether

cinemas are being taxed in the same manner as other retail

businesses and at the same or lower rates. Minneapolis Star

establishes that the motive of the legislature is immaterial

in determining whether the tax discriminates. It is there-

fore the effect of the tax which is controlling and we cannot

limit our inquiry to examination of Springdale’s ordinance

alone. The only relevant inquiry is to examine the com-

bined effect of state and local taxation on cinemas and other

retail businesses in Ohio.

While Ohio municipalities are granted home rule by

Ohio Constitution, Article XVIII, Section 3, any taxing power

is subject to statutory control (Ohio Constitution, Article ©

XVIII, Section 13). Moreover, it has consistently been held

that where the state imposes a given type of tax it pre-

empts the field barring a municipality from levying a

similar tax (See Haefner v. City of Youngstown, 147 Ohio St.

58, (1946)). This has the effect of avoiding double taxation

and it also greatly restricts a municipality’s taxing options.

Although there were earlier limited sales taxes, the

comprehensive Ohio Sales Tax was enacted December 6,

1934, levying a tax of 3% on virtually all retail sales (115

Ohio Laws Pt. 2 V. 306). A 3% admissions tax was enacted

on the same date (115 Ohio Laws Pt. 2 V. 342). Thus, the

Ohio admissions tax became a part of the overall plan to tax

all retail sales transactions at a rate of 3%. There is ab-

solutely no question that under that tax structure cinemas

were not being discriminated against and the admissions

tax was clearly permissible under the Minneapolis Star

analysis.

The Ohio admissions tax was repealed in 1947 (122

Ohio Laws 459) making this field of taxation available to

municipalities, Estelle Realty, Inc. v. Mayfield Heights, 176

Ohio St. 367, (1964). Springdale, a political subdivision of

13

the state, has merely availed itself of the taxing option

granted by the legislature. A cinema in Springdale is thus

bearing exactly the same tax burden that it bore in 1947

with one exception. Its admissions are still being taxed at

3%, while other retail sales are being taxed at 5!/2%.

The fact that Springdale is collecting the admissions

tax while Ohio is collecting the sales tax does not create a

discriminatory effect. Springdale is not singling out cinemas

for differential treatment. Its ordinance merely places cine-

mas back into the Ohio taxing structure so that they are

taxed on the same basis as other retail businesses. It should

be noted that the Boulevard Night Club has always been

subject to sales tax on its principal source of revenue - the

sale of drinks.

Aside from the fact that only a few papers were taxed,

the tax in Minneapolis Star was a use tax on paper and ink

consumed while other businesses were taxed on retail sales.

For this reason this Court held that the relative tax burden

could not be compared so as to determine whether newspa-

pers were taxed disproportionately. In the present case,

cinemas have not been "singled out” for a different type of

tax. They have been subjected to exactly the same type of

tax as other retail businesses and at a lower rate. In the ma-

jority opinion, Justice O’Connor makes this distinction at

page 590, n.13:

"If a state employed the same method of taxation

but applied a lower rate to the press, so that there

could be no doubt that the legislature was not sin-

gling out the press to bear a more burdensome tax,

we would, of course, be in a position to evaluate the

relative burdens. And, given the clarity of the rela-

tive burdens as well as the rule that differential

methods of taxation are not automatically permis-

sible if less burdensome, a lower tax rate for the

press would not raise the threat that the legisla-

ture might later impose an extra burden that

would escape detection by the courts."

14

The Springdale tax does not pose the threat involved in

Minneapolis Star. Thus, if Springdale ever raised the ad-

missions tax to a rate in excess of the sales tax, it would be

easy for a court to detect the discrimination. Nor does the

fact that Springdale initially overlooked the Boulevard

Night Club in enacting its admissions tax change the result.

As the statement of facts discloses, this omission involved

only $77.00 in 1985 and $38.00 in 1986, since the Boulevard

was already paying a substantial license fee. Considering

the millions of dollars of retail sales and admissions taxes

imposed on all retail transactions in Springdale, this omis-

sion can only be described as de minibus non curat lex.

Petitioner also cites Festival Enterprises, Inc. v. City of

Pleasant Hill, 182 Cal. App 3d 960, (1986), but in that case

the court stated a clearly distinguishing fact relative to the

case at bar:

"There is no contention that the additional

revenue is needed because of the increased use~of———"—

city services required by virtue of the operation of

plaintiff's theaters, i.e. police protection, street

repair or sanitation collection."

A similar holding was made in United Artists Commu-

nications, Inc. v. City of Montclair, 209 Cal. App. 3d 245

(1989), but there likewise was no evidence in this case of

the burden which cinemas impose on municipal services.

The tax in United Artists was 6% or the applicable sales tax

rate "whichever is greater." The tax was thus discriminatory

on its face. Neither case made the overall tax analysis con-

templated by Minneapolis Star and thus neither is controll-

ing here.

15

CONCLUSION

The decision of the Ohio Supreme Court is entirely

consistent with its prior decisions on res judicata. Its judg-

ment therefore rests upon an adequate state ground and

there is thus no federal question which could be the basis

for this Court’s jurisdiction. Even if the Ohio Supreme

Court was required to apply the prior decisions of this

Court on the question of res judicata, the result would have

been the same. The petition for certiorari should be denied.

Respectfully submitted,

DAVID A. CALDWELL (Counsel of Record)

KENNETH J. SCHNEIDER

ALBERT H. NEMAN

WoopD & LAMPING

2500 Cincinnati Commerce Center

600 Vine Street

Cincinnati, Ohio 45202

(513) 852-6031

Attorneys for Respondents