Reply Brief — General Motors Corp. v. City of Linden

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. Supreme Court, U.S.

(3) FILED

No. 95-1930 JUL 19 1996

nal

In the Supreme Court of the Anited States

OCTOBER TERM, 1995

GENERAL MOTORS CORPORATION,

Petitioner,

Vv.

CITY OF LINDEN, THE ASSESSOR OF LINDEN, AND

RICHARD CHAIKEN, AGENT, SERVANT OR

EMPLOYEE OF LINDEN,

Respondents.

On Petition for a Writ of Certiorari to the

Supreme Court of New Jersey

REPLY BRIEF FOR PETITIONER

HOWARD FRIEDLAENDER KENNETH S. GELLER*

General Motors Corporation CHARLES A. ROTHFELD |

Mail Code 482-114-262 JOHN J. SULLIVAN

: 3044 West Grand Blvd. Mayer, Brown & Platt

Detroit, MI 48202 2000 Pennsylvania Ave., N.W.

(313) 556-1553 Washington, D.C. 20006

(202) 463-2000

JOHN E. GARIPPA

PHILIP J. GIANNUARIO

Garippa & Davenport, P.C.

66 Park Street

Montclair, NJ 07042

(201) 744-1688

* Counsel of Record

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TABLE OF CONTENTS

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TABLE OF AUTHORITIES

Cases Pages

423 South Salina Street, Inc. v. City of

Syracuse, 68 N.Y.2d 474, 503 N.E.2d 63

(1986), cert. denied, 481 U.S. 1008

CEE ks ee a ES 4

Aetna Life Ins. Co. v. Newark, 10 N.J.

Oe, ae a ee ES hoa kok ow eee 7

Allegheny Pittsburgh Coal Co. v. County

Comm ’n of Webster County, 488 U.S. 336

SOU 5-55 FE ORE CSE ERS 4

Baldwin Constr. Co. v. Essex County Bd.

of Taxation, 16 N.J. 329, 108 A.2d 598

CRG is 4 ae be eR Eee CR CES 4

Blackledge v. Perry, 417 U.S. 21 (1974) ........... 4

Edward Valves, Inc. v. Wake County,

7d a Pe ek i ew eS 1

Fair Assessment in Real Estate Ass’n v.

McNary, 454 U.S. 100 (1981) .......,....... 8

General Motors Corp. v. City of Linden,

13 N.J. Tax 324 (App. Div.) (per

curiam), certif. denied, 134 N.J. 561

COR ob he a ee we ee ke 3

Great Lakes Dredge & Dock Co. v. Huffman,

SAP Sih Se io RAG RD ecetn eo 4 O8 8

Hogan v. Wisconsin Dept. of Revenue, |

U.S. No. 95-1979 (filed June 7, 1996) ........ 1 |

McKesson Corp. v. Division of Alcoholic |

Beverages & Tobacco, 496 U.S. 18 (1990) ...... 8 |

TABLE OF AUTHORITIES — Continued

Pages

National Private Truck Council, Inc. v.

Oklahoma Tax Comm’n, 115 §. Ct. 2351

RR AGG we aS Wows aid 6.6 KA 8 6 ae. os 7,9

Pantasote Co. v. City of Passaic, 100

Ped. Ss Soe Fae Loe CIGES) 6c cw ee ee 7

Rosewell v. LaSalle National Bank, 450

a ee ace eke 2 2'é 4 ns 9 6 8

Township of West Milford v. Van Decker,

120 N J. 354, 576 A.2d 881 (1990) ......... 5-6

Statutes

ES Sk Tae wiry a ie we oid 6 Awe passim

I is ie a od eo Wen we & Sw owe eS 5

REPLY BRIEF FOR PETITIONER

In opposing the petition in this case, respondents

pointedly do not deny that the issues presented here are

important and recurring ones.’ They also do not deny that

New Jersey provides no remedy against individual state

officials who are responsible even for intentional violations of

the Constitution. And they nowhere take issue with our

demonstration (at Pet. 19-20) that GM’s Section 1983 action

will not interfere in any respect with New Jersey’s system of

tax administration. Instead, respondents insist that New

Jersey’s procedures, with all of their defects, are “adequate”

as a matter of federal law. As we explain below, this

contention is insupportable.

1. At the outset, we note that respondents’ (largely

erroneous) factual assertions are entirely beside the point.

The courts below decided this case on the express assumption

— agreed to by all of the parties at all levels of the

proceedings — that GM’s factual allegations are correct. In

fact, the case was initially decided by the trial court, at

respondents’ insistence, on motions for summary judgment

based on respondents’ agreement to accept the truth of all of

GM’s factual allegations made in the “complaint, amended

complaint, responses to interrogatories or as alluded to by

GM’s counsel.” Memorandum of Law of Defendant, Richard

Chaiken, in Support of Motion to Dismiss 1; see Reply Brief

of Defendants City of Linden and the Tax Assessor of Linden

in Support of Their Motion for Summary Judgment 1.

' Indeed, since the petition for certiorari was filed in this case

the Supreme Court of North Carolina has held that a taxpayer may

proceed under Section 1983 in state court to challenge the

constitutionality of a state tax. Edward Valves, Inc. v. Wake

County, 471 S.E.2d 342 (N.C. 1996). In addition, another petition

presenting an issue closely related to the one here is now pending

before the Court. Hogan v. Wisconsin Dept. of Revenue, No. 95-

1979 (filed June 7, 1996).

On the basis of this agreement by respondents, the trial

court stayed discovery at a very early stage (PA 65A-66A),’

and GM did not amend its complaint to include, among other

things, the subsequent admission in 1989 by the Mayor of the

City of Linden about the City’s retaliatory motive for the

added property tax assessment imposed on GM in 1986 (Pet.

App. 33a).’ In deciding respondents’ motions for summary

judgment, therefore, the trial court did not address “the

merits of General Motors’ factual allegations [which] have

neither been briefed nor argued.” PA 66A. Instead, the

court accepted GM’s factual allegations as true and decided

only the pure questions of law raised by respondents’

motions, including the question presented by the petition in

this case: whether the Law Division must adjudicate GM’s

Section 1983 claim. PA 65A; Pet. App. 3la-33a, Both the

Appellate Division and the New Jersey Supreme Court also

accepted GM’s factual allegations as true for purposes of

deciding whether GM may bring this Section 1983 action.

Pet. App. 3a, 17a.

Thus, the courts below accepted as true the following

facts supporting GM’s claim of unconstitutional retaliation by

respondents: (1) GM “was treated in a discriminatory

2 GM acquiesced in the discovery stay based on the parties’

agreement, and the Law Division’s assurance, that respondents’

motions would raise only legal — not factual — issues. The Law

Division accepted GM’s argument that, if the case were allowed to

proceed in that court, GM “should be given the opportunity to have

discovery and to brief and argue the facts which it alleges

demonstrates a conspiracy and bad faith.” PA 67A.

> In light of the agreement by respondents to accept all of GM’s

factual allegations made in any pleading or brief and the

forbearance of GM in not amending its complaint in deference to

respondents’ proposed summary judgment motions, the suggestion

now by respondents (Br. in Opp. 6) that GM’s complaint was

somehow deficient is both misleading and patently inappropriate.

———— 0S

manner with respect to [the] added assessment imposed in

1986 after its facility was gutted and remodeled;” (2) “no

other property in the City was reevaluated when [GM’s]

facility received a new assessment and * * * this clearly

demonstrates that it was improperly singled out by the City;”

and (3) “the City’s Mayor * * * stated [to GM

representatives] that ‘[t]he additional increased assessment

was placed on the General Motors’ plant because [GM] filed

the tax appeal.’” Pet. App. 32a-33a.‘

In light of this admission by the Mayor — which must be

accepted as true for purposes of deciding this case — and

* In their partisan rendition of the facts (Br. in Opp. 1-4),

respondents fail to acknowledge that virtually all of the renovations

to GM’s facility during the 12 months following August 1985

involved nontaxable personal property: machinery and equipment.

As respondents note (Br. in Opp. 4), GM has objected to the

inclusion of this nontaxable property in the calculation of the 1986

added assessment. But respondents fail to note that this was one of

the bases on which GM prevailed in the Appellate Division

regarding the City’s 1983-1985 assessments. Indeed, respondents

make the astonishing assertion (id. at 5) that it was “highly

misleading” for GM to state (Pet. 2) that its “position was

vindicated on appeal when the Appellate Division * * * reversed

the Tax Court decision and remanded for reconsideration.” In fact,

contrary to respondents’ bald assertion, the Appellate Division

reversed the Tax Court’s decision to include the facility’s so-called

“fitups, that is, its paint booths, paint ovens, conveyor assemblies,

water processing system, welder water system, auto fluid fills, * *

*,” in its calculation of the plant’s value. General Motors Corp.

v. City of Linden, 13 N.J. Tax 324, 325-326 (App. Div.) (per

curiam), certif. denied, 134 N.J. 561 (1993). The court held that

“some, if not all, of the fitups in this case constitute excluded

personal property.” 13 N.J. Tax at 328. The court therefore

reversed and remanded for reconsideration. Jd. at 329. Thus, GM

clearly prevailed in the Appellate Division, and respondents’

contrary claim is itself “highly misleading.”

longstanding precedents of this Court, no one has ever

disputed (indeed, the courts below have assumed) that GM

has made out a due process violation based on respondents’

retaliation against it for challenging prior tax assessments. It

is plainly unconstitutional for a municipality and its taxing

officials to discriminate and retaliate against a taxpayer for

invoking its right to appeal property tax assessments, and

respondents do not contend otherwise. See Allegheny

Pittsburgh Coal Co. v. County Comm’n of Webster County,

488 U.S. 336 (1989); Blackledge v. Perry, 417 U.S. 21

(1974); Township of West Milford v. Van Decker, 120 N.J.

354, 362-364, 576 A.2d 881, 885-886 (1990); Baldwin

Constr. Co. v. Essex County Bd. of Taxation, 16 N.J. 329,

342, 108 A.2d 598, 604-605 (1954); 423 South Salina Street,

Inc. v. City of Syracuse, 68 N.Y.2d 474, 503 N.E.2d 63

(1986), cert. denied, 481 U.S. 1008 (1987).

2. GM now seeks redress for this gross constitutional

violation. Under the New Jersey Supreme Court’s decision

in this case, however, GM is relegated to the state tax system

to pursue its claim for relief. And, as we explained in the

petition (at 12-19), the New Jersey tax system has three

deficiencies, each of which renders the regime inadequate as

a matter of federal law. First, as respondents expressly

conceded below, the question in the state tax proceeding is

whether the valuation number selected by the assessor fairly

reflects the value of the taxpayer’s property, not whether the

assessor acted unconstitutionally in making the assessment.

See Pet. 12-15. Second, the New Jersey statute provides that

the taxpayer challenging a constitutional violation must satisfy

a prohibitively high burden of proof. See Pet. 15. And

third, New Jersey law does not provide for personal or

punitive liability against an assessor or other tax official —

even one who has engaged in intentionally and blatantly

unconstitutional conduct — and therefore does not serve to

preclude or deter repeated constitutional violations. See Pet.

16-19. Respondents assert that the first and second of these

points are inaccurate and that the third is irrelevant.

Respondents plainly are incorrect on all three counts.

a. The sole object of the state tax regime is the

“correction” of erroneous tax assessments. As the New

Jersey Supreme Court itself observed below (Pet. App. 11a-

12a), even in constitutional cases the only relief available in

Tax Court is the “correct[ion} [of] an unconstitutional

assessment,” plus interest on any excess taxes collected.°

And in determining whether a tax assessment is “correct,” the

Tax Court applies a so-called “zone of reasonableness” or

“protective range,” see N.J.S.A. § 54:51A-6, under which an

assessment may not be “corrected” if it is within 15% of the

actual taxable value of the subject property. See Pet. 4-5.

Respondents suggest, although they never affirmatively

state,° that the “zone of reasonableness” would not apply to

GM’s case in the Tax Court. The New Jersey Supreme

Court, however, never even hinted in its opinion below that

GM would get any favorable treatment of its constitutional

* Respondents cite a 1993 New Jersey statute that deleted the

word “inferior” from the statutory description of the Tax Court and

expanded the jurisdiction of that court (Br. in Opp. 19), but they

fail to note that this statutory change is, as the Appellate Division

found (Pet. App. 20a n.2), inapplicable to GM’s case, which was

pending when the statute was modified. Moreover, as the

Appellate Division correctly noted (ibid.), this statutory change is

irrelevant to the question of state court jurisdiction over Section

1983 actions presented by this case.

® Respondents quote from Township of West Milford v. Van

Decker, 120 N.J. 354, 576 A.2d 881 (1990), but never actually

concede that the holding of Van Decker would apply to GM’s case

in the Tax Court to preclude application of the “zone of

reasonableness.” In fact, as we demonstrate below (at page 6), Van

Decker is distinguishable and the “zone of reasonableness” would

apply to GM’s case.

claim in this regard from the Tax Court.’ Indeed, the court

went to great lengths to explain how the usual procedures

applicable in all tax cases would apply in GM’s case and

provide GM with an adequate remedy. Pet. App. 1la-13a.

The New Jersey Supreme Court’s decision in Township

of West Milford v. Van Decker, 120 N.J. 354, 576 A.2d 881

(1990), is not to the contrary. In that case, the township and

its assessor had no authority to impose any new assessment at

all on the taxpayer’s property. 120 N.J. at 357, 364, 576

A.2d at 882, 886.* The New Jersey Supreme Court held that

the statutory “zone of reasonableness” would not protect an

assessment where there was no municipal authority to make

any assessment. Jbid. In such cases, the actual amount of

the assessment was irrelevant.

In this case, by contrast, GM concedes that the City of

Linden has authority to impose an added assessment based on

additions to GM’s facility. GM anticipated that the added

assessment would be approximately $1 million. Instead, the

added assessment was over $17 million. Thus, the amount of

the assessment is at issue in the Tax Court, and the “zone of

reasonableness” will apply, as it does in all cases in which

the actual amount of an assessment is at issue, as opposed to

the municipality’s authority to make any assessment at all.

7 No one — and particularly not respondents — has ever

suggested in the Tax Court proceedings involving GM’s challenge

to the 1986 added assessment, or elsewhere, that the “zone of

reasonableness” might not apply to GM’s challenge to that added

assessment. Respondents apparently have crafted their argument

carefully in this Court so as to preserve the claim in the Tax Court

that the “zone of reasonableness” applies to GM’s case.

® The township in Van Decker established an illegal “practice of

reassessing only properties that were the subject of a recent sale

while leaving undisturbed the appraised valuations of properties in

the same class.” 120 N.J. at 357, 576 A.2d at 882.

b. As for the extraordinarily high burden of proof

imposed on taxpayers in the Tax Court, respondents argue

that it will not apply in GM’s case (Br. in Opp. 20-21). The

New Jersey Supreme Court, however, has already held that

it will apply (Pet. App. 12a): in the Tax Court, GM must

“introduce evidence to overcome the presumptive validity of

the assessment.” And, as we have explained in the petition

(at 5), GM faces a daunting task in trying to overcome this

presumption. “The strength of the presumption is

exemplified by the nature of the evidence that is required to

overcome it. That evidence must be ‘definite, positive and

certain in quality and quantity to overcome the

presumption.’” Pantasote Co. v. City of Passaic, 100 N.J.

408, 413, 495 A.2d 1308, 1310 (1985) (quoting Aetna Life

Ins. Co. v. Newark, 10 N.J. 99, 105, 89 A.2d 385, 387

(1952)).

c. Inadvancing the spurious contentions that neither the

“zone of reasonableness” nor the heightened burden of proof

will apply to GM’s case in the Tax Court, respondents’ tactic

is clear: they hope to defeat review by obscuring the

meaning of New Jersey law. This stratagem should not

succeed. We demonstrated in the petition (at 21) — and

respondents do not deny — that features of the sort we

describe are found in state tax regimes across the Nation. As

a consequence, whether such tax schemes are “adequate” and

therefore preclude recourse to Section 1983 is an important

and recurring issue, which this Court left open in National

Private Truck Council, Inc. v. Oklahoma Tax Comm’n, 115

S. Ct. 2351 (1995). Allowing a taxing jurisdiction to avoid

review of this issue by the simple expedient of manufacturing

a wholly chimerical dispute about the meaning of state law

would assure the frustration of federal rights.

d. Finally, respondents declare it irrelevant that New

Jersey does not provide for personal liability against tax

assessors who maliciously and knowingly engage in

unconstitutional acts; they maintain that a state remedy

necessarily is adequate so long as it provides for refunds. Br.

in Opp. 11-18. The decisions they cite for this proposition,

however, are simply not on point.

The recent state court decisions relied upon by

respondents (Br. in Opp. 17-18) are inapplicable because the

taxpayers in those cases did not seek damages for intentional

constitutional violations by state tax officials. The decisions

of this Court cited by respondents are equally off the mark:

@ Fair Assessment in Real Estate Ass’n v. McNary, 454

U.S. 100 (1981), cited at Br. in Opp. 8-10, 12, expressly did

not address the adequacy of the state remedy, and expressly

did observe (with evident approval) that the state courts

would entertain a Section 1983 action to redress constitutional

violations almost identical to those alleged here. 454 U.S. at

106, 116-117.

@ The Court held in Rosewell v. LaSalle National

Bank, 450 U.S. 503 (1981), cited at Br. in Opp. 13-14, that

a state system that failed to pay interest on refunds was

adequate because Congress was aware when it passed the Tax

Injunction Act that many “States did not pay interest on their

refunds to taxpayers, following the then-familiar rule that

interest in refund actions was recoverable only when

expressly allowed by statute.” 450 U.S. at 523. In contrast,

we explained in the petition (at 18) that pre-Section 1983 law

regarded the availability of an action against individual taxing

officers as an important part of the adequate legal remedy that

precluded injunctive relief. Respondents make no response.

U.S. 293 (1943), cited at Br. in Opp. 14-15, was an action

for declaratory relief, did not involve a request for damages,

and did not suggest that damages against individual taxing

officials would be unavailable.

@ McKesson Corp. v. Division of Alcoholic Beverages

& Tobacco, 496 U.S. 18 (1990), cited at Br. in Opp. 15, has

nothing whatsoever to do with the issue in this case; it

addressed the question whether federal due process principles

require states to refund unconstitutional taxes.

@ Respondents read National Private Truck Council to

hold that “a refund is an adequate legal remedy unless a

State’s tax authorities continue to impose the unconstitutional

tax.” Br. in Opp. 16. We explained in the petition (at 11),

however, that National Private Truck Council had no occasion

to address the nature of the adequacy requirement. Indeed,

the taxpayer in National Private Truck Council sought only

declaratory and injunctive relief, and the Court’s decision

rested in part on “principles of equitable restraint” that have

no bearing here. 115 S. Ct. at 2356. In addition, as we

already have explained, the pre-Section 1983 decisions upon

which the Court principally relied in National Private Truck

Council recognized the importance of actions against

individual tax assessors; respondents make no response to this

important point.

e. At the end of the day, respondents are left with the

half-baked assertion that their adequacy principle might not

preclude Section 1983 claims challenging discrimination on

the basis of race or other impermissible factors. Br. in Opp.

21-22. But there is absolutely no reason to believe that this

is so. In such a case the taxpayers could assert their

constitutional claims in the Tax Court and (if the “zone of

reasonableness” limit did not apply) could obtain a refund,

just as GM can here. Under respondents’ theory, that is the

very definition of adequacy. See Br. in Opp. 11. The

suggestion that the adequacy of the state remedy nevertheless

somehow varies depending upon the nature of the taxpayer’s

constitutional claim is a wholly illogical one that finds no

support in this Court’s decisions.

Indeed, that respondents feel the need to float the

possibility at all stands as a tacit and embarrassing admission

that a state tax refund regime is not adequate, and is not a

permissible substitute for Section 1983, when it fails to

punish and deter intentional violations of the Constitution.

Because the New Jersey scheme plainly suffers from this

defect, further review of this important issue is in order.

CONCLUSION

For the foregoing reasons and those stated in the petition,

the petition for a writ of certiorari should be granted.

Respectfully submitted.

HOWARD FRIEDLAENDER KENNETH S. GELLER*

General Motors Corporation CHARLES A. ROTHFELD