Opposition Brief — Venture Coal Sales Co. v. United States

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Supreme Court. US”

a FILER

coy | NOV 2 - 2004

No. 04-306 vee

ERAN

Jn the Supreme Court of the Gnited States

VENTURE COAL SALES COMPANY, El AL., PETITIONERS

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

PAUL D. CLEMENT

Acting Solicitor General

Counsel of Record

EILEEN J. O'CONNOR

Assistant Attorney General

RICHARD T. MORRISON

Deputy Assistant Attorney

General

THOMAS J. CLARK

Attorney

Department of Justice

Washington, D.C. 20530-0001

(202) 514-2217

QUESTION PRESENTED

Petitioners filed this suit seeking a refund of excise

taxes paid on their coal exports on the ground that ex-

action of the tax violated the Export Clause of the

Constitution. Before petitioners filed suit, a federal

district court in another case had declared that the

excise tax was unconstitutional as applied to coal ex-

ports. The question presented is whether the limita-

tions period for filing petitioners’ suit began to run

when petitioners paid the tax, or instead did not begin

to run (or was tolled) until the federal district court

issued its decision.

(I)

TABLE OF CONTENTS

Page

OplnlOne BELOW cacsseccccsrscceressscerercsreccscereseecesesceneneaeneeeneseneseneeisen |

JUrtelethon serserscrsrserscsesceccsrcercsccrccccecccecscscessssesesseccencccssescsseeresssaesess |

BCALOIVOME serrccrrecrsccrercecceccccccccencceresncnccccccecccsecscececcesececsscnececensecesesees 2

APEUMENL ccc sebietieunsdhecegebbnadanbeamnsbbbebenennsenntibtanebaneeneneseonteneene i)

IRIE seccccceccccccensecncctecceeseecvacscccnenesenscensnecusoetennenenceqneccsccnensecsocee 10

TABLE OF AUTHORITIES

Cases:

Block vy. North Dakota, 461 U.S, 273 (1988) ......ceeseeeeeees 6

Boling v. United States, 220 F.3d 1365 (Fed. Cir.

BETTIE. cxincnecsusesbosesensnnbecnenttsinentnnbenetcsderetnshonsnensednneneninieonnnearnnnnaneete 7

Bowen v. United States, 292 F.3d 1383 (Fed. Cir.

I i tints cnncietabnbnnnibenmnbeniindbingpnneninauaienincaenen 6

Catawba Indian Tribe v. United States, 982 F.2d

1564 (Fed. Cir.), cert. denied, 509 U.S. 904 (1998) ........... 6

Chandler v. United States, 47 Fed. Cl. 106 (2000),

aff'd, 7 Fed. Appx. 957 (Ped. Cir, 2001) .cccccccccceenensnennes 6

Cyprus Amax Coal Co, vy. United States, 205 Fad

1369 (Fed, Cir, 2000), cert, denied, S82 U.S, 1065

TIDY scsi scene ciabeneabemaaininnineenncincinbintieinbdnitnienntenteniaiande 5

Fiesel v. Board of Educ, 675 F.2d 822 (2d Cir,

STITT ssittnesincsssaheiintsispniuinnunsiobnmssnndenbanenaheanmnaneatenncnessnenniriniensanseetieen 7

Hatter v. United States, 208 F.8d 795 (Fed, Cir,

2000), rev'd in part on other grounds, 582 U.S, 557

(QOOD) secersersrcerereereerercrsscrereorenncenscensrennecenesensennnecsnecnneennnesnsessnsssess 6

Japanese War Notes Claimants Ass'n v. United

States, 373 F.2d 356 (Ct. Cl), cert. denied, 389

RI, Ge CIEE D cesnncnseneevenenstenntnnynsansasnnnintninnannnmnasiiensnstantannnanni 7

Lewis v. United States, 348 U.S. 419 (1955) .........cceseeeees 7

Marchetti v. United States, 390 U.S. 39 (1968) .............02 7

McConnell v. Critchlow, 661 F.2d 116 (9th Cir.

I aaa ceeesnabcisennisminnninntanientinntits 7

McKesson Corp. vy. Division of Alcoholic Beverages

& Tobacco, 496 U.S. 18 (1990) ...ccccccsceseeeserseeeeeeeeees 3, 4,9

(IIT)

Casea—Continued:

Menominee Tribe of Indiana vy. United States,

726 F.2d 718 (ed, Cir), cert, denied, 460

U.S, B26 (LORE) viscssscseeeeeeneen ausveneneveroneescconesecscsonenesececscnes

Neely v, United States, 546 F.2d 1059 (fd Cir,

GTS) scescecerercerevecesceccercecsscoseesncsecuonsscnssneeteceensscesetovcesoseseetens

Ranger Fuel Corp, v, United States, 33 ¥, Supp,

ea as. Cs ID eicaiecccitinidiiceincibinsitnsninticiinetdaniaeresesen

United States v. Dalm, 494 U.S, 596 (1990) .....cccceserees

United States v. Kahriger, 345 U.S, 22 (1953) ..........04

United States v. Mottaz, 476 U.S. 834 (1986) ..........006

United States v. One 1961 Red Chevrolet Impala

Sedan, 457 F.2d 1353 (5th Cir. 1972)

United States v. United States Coin & Currency,

401 U.S. 715 (1971)

United States v. Williams, 514 U.S. 527 (1995) ...........

Versluis v. Town of Haskell, 154 F.2d 935 (10th

Cir, 1946)

Constitution and statutes:

U.S, Const.

Art. I, § 9, Cl. 5 (Export Clause) ccccscresrsesrscsssnssees

Amend. V .. ‘ss sible ciate ahs

Due Sonia c eee. Ree ee TIE

Internal Revenue Code (26 U.S.C, .

26 U.S.C, 4121

. . ve . seeeee SSSSSSSSSSSS ESSE SE SER SE See eeeeeeeeeese

26 U.S.C, 4121(ayQ) ...

26 U.S.C, 6511(a) .

26 U.S.C, 7422

26 U.S.C. 7422(a)

28 U.S.C. 2501

Miscellaneous:

I.R.S. Notice 2000-28, 2000-1 C.B. 1116 ......scsscssesseeeesees

Page

an a

In the Supreme Court of the United States

No, 04-806

VENTURE COAL SALES ( ‘OMPANY, BTAL,, PETITIONERS

Vv,

UNITED STATES OF AMERICA

ON PETITION FOR A WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FEDERAL CIRCUIT

BRIEF FOR THE UNITED STATES IN OPPOSITION

OPINIONS BELOW

The opinion of the court of appeals (Pet. App. 3, at 15-

29') is reported at 370 F.8d 1102. The opinion of the

Court of Federal Claims (Pet. App. 2, at 8-14) is re-

ported at 57 Fed. Cl. 52.

JURISDICTION

The judgment of the court of appeals was entered on

June 1, 2004. The petition for a writ of certiorari was

filed on August 27, 2004. The jurisdiction of this Court

is invoked under 28 U.S.C. 1254(1).

1 The Appendix in this petition has no page numbers. For the

convenience of the Court we are citing the Appendix as if num-

bered consecutively 1-29.

(1)

STATEMENT

In October 2002, petitioners brought suit in the

United States Court of Federal Claims seeking to re-

cover taxes collected by the Internal Revenue Service

from 1988 through 1995. The Court of Federal Claims

dismissed the complaint on the ground that it had not

been filed within the applicable limitations period. The

court of appeals affirmed. Pet. App. 2, at 7; Pet. App. 3,

at 19-20, 29.

1. Petitioners produce and sell coal subject to the

tax imposed by Section 4121 of the Internal Revenue

Code of 1986, 26 U.S.C. 4121. Pet. App. 3, at 18. Sec-

tion 4121 imposes a tax “on coal from mines located in

the United States sold by the producer.” 26 U.S.C.

4121(a)(1). The statute on its face contains no exemp-

tion for exported coal. From the first quarter of 1988

through the second quarter of 1995, petitioners paid the

excise tax on their coal exports. Pet. App. 3, at 18.

2. In Ranger Fuel Corp. v. United States, 33 F.

Supp. 2d 466 (E.D. Va. 1998), a number of coal com-

panies, other than petitioners here, successfully sued

for a refund of the excise taxes they had paid on ex-

ported coal pursuant to 26 U.S.C. 4121. The district

court held in that case that the excise tax was uncon-

stitutional as applied to exported coal because it vio-

lated the Export Clause, U.S. Const. Art. I, § 9, Cl. 5,

which provides that “[nJo Tax or Duty shall be laid on

Articles exported from any State.” The government

did not appeal from that decision, and the IRS pub-

lished an acquiescence to it. I.R.S. Notice 2000-28,

2000-1 C.B. 1116.

3. On October 23, 2002,° petitioners brought suit in

the Court of Federal Claims seeking to recover taxes

they paid on their coal exports from the first quarter of

1988 through the second quarter of 1995. Pet. App. 2,

at 7; Pet. App. 3, at 18-19. The Court of Federal Claims

dismissed the complaint for lack of subject matter ju-

risdiction, because petitioners’ claims were barred by

the six-year statute of limitations in 28 U.S.C. 2501.

Pet. App. 2, at 3-14. The court explained that peti-

tioners’ claims “accrued each time [they] paid tax on

coal sold for export,” because “the unconstitutionality of

the tax was fixed when it was enacted” and thus peti-

tioners’ “damages were established when they paid the

unconstitutional tax.” Jd. at 9-10. The statute of limita-

tions was not tolled until the Ranger Fuel decision be-

cause “the courts were completely open to [petitioners]

as they were to the plaintiffs in Ranger Fuel”—peti-

tioners could not point to any adverse “decision that

would have made their cause of action unknowable

prior to” the Ranger Fuel decision. Id. ai 12. More-

over, although this Court in McKesson Corp. v. Divi-

sion of Alcoholic Beverages & Tobacco, 496 U.S. 18, 31

(1990), held that the Due Process Clause requires

States to provide “meaningful backward-looking relief”

when taxes are found to be unconstitutional, this Court

also expressly permitted States to impose on such ac-

tions “relatively short statutes of limitations.” Pet.

App. 2, at 13 (quoting McKesson, 496 U.S. at 45).

2 The Federal Circuit erroneously stated in its opinion that the

complaint was filed in October 2003. Pet. App. 3, at 19. Peti-

tioners’ complaint was filed on October 23, 2002. Pet. App. 2, at 7;

see Pet. C.A. Br. App. at 12 (No. 03-5132) (note dated stamp). The

error is not germane, however, because regardless of whether the

suit was filed in 2002 or 2003, it was filed more than six years after

the latest taxes at issue were paid.

4. The court of appeals affirmed. Pet. App. 3, at 15-

29. The court rejected petitioners’ claim that the deci-

sion in Ranger Fuel served as the “jurisdictional trig-

ger” for petitioners’ claims, because that decision “was

not the action that damaged [petitioners].” Jd. at 24.

Instead, the court held that petitioners suffered an

injury each time they made a payment of tax on their

coal exports, and thus a separate claim accrued upon

each payment for which they could have sought a re-

fund. Jbid. The court also rejected petitioners’ argu-

ment that they were entitled to relief under this

Court’s decision in McKesson, supra. Relying on this

Court’s statement that a taxing authority “was free to

‘Impose various procedural requirements on actions for

postdeprivation relief,’ including the enforcement of

‘relatively short statutes of limitation,” the court of ap-

peals concluded that “[iJn the case before us, enforce-

ment of the six-year limitations period serves as such

an appropriate procedural requirement consistent with

the McKesson holding.” Pet. App. 3, at 25-26.

Finally, the court of appeals rejected petitioners’

argument “that the statute of limitations should be

tolled because [they] did not know nor could [they] have

known in the exercise of reasonable diligence that

[their] claims had accrued.” Pet. App. 3, 27. The court

explained that petitioners “had all the facts necessary

to initiate a claim against the United States,” and were

unaware only of “the legal theory on which [their]

refund claim might succeed.” Jd. at 29. Petitioners

were thus not entitled to tolling, because “[(i]gnorance

of rights which should be known is not enough.” Jbid.

(citation omitted).

ARGUMENT

The decision of the court of appeals is correct and

does not conflict with any decision of this Court or of

any other court of appeals. Further review is therefore

not warranted.

1. Petitioners’ contention (Pet. 5-8) that their claims

did not accrue until Ranger Fuel was decided, and thus

that their complaint is timely, is meritless. In Cyprus

Amax Coal Co. v. United States, 205 F.3d 1369 (2000),

cert. denied, 532 U.S. 1065 (2001), the Federal Circuit

held that constitutionally-based causes of action seeking

recovery of excise taxes paid on exported coal are

governed by the six-year limitations period of 28 U.S.C.

2501, rather than the three-year limitations period

applicable to administrative refund claims under 26

U.S.C. 6511(a). 205 F.3d at 1372.’

* Although we did not challenge the holding of Cyprus Amaz in

our briefs below, the position of the United States is that Cyprus

Amax was decided incorrectly. When Congress waived the

sovereign immunity of the United States and permitted tax-refund

suits, it prescribed in great detail a particular track for claimants

to follow, in administrative or judicial proceedings. See 26 U.S.C.

7422(a) (“No suit or proceeding shall be maintained in any court for

the recovery of any internal revenue tax alleged to have been

erroneously or illegally assessed or collected, or of any penalty

claimed to have been collected without authority, or of any sum

alleged to have been excessive or in any manner wrongfully col-

lected, until a claim for refund or credit has been duly filed with

the Secretary, according to the provisions of law in that regard,

and the regulations of the Secretary established in pursuance

thereof.”). Cyprus Amax erroneously gave claimants the ability to

sue under the Tucker Act and thereby bypass the exclusive refund

procedures established by Congress. A broad jurisdictional stat-

ute such as the Tucker Act cannot displace the specific provisions

of the refund statutes, such as 26 U.S.C. 7422. This issue is juris-

dictional, moreover, because it implicates the sovereign immunity

Applying that holding, the court of appeals correctly

concluded that petitioners’ claims accrued, and thus the

statute began to run, each time they paid taxes. A

claim accrues “on the date when all the events have

occurred which fix the liability of the Government and

entitle the claimant to institute an action.” Rowen v.

United States, 292 F.3d 1388, 13885 (Fed. Cir. 2002)

(quoting Chandler v. United States, 47 Fed. Cl. 106, 113

(2000), aff’d, 7 Fed. Appx. 957 (Fed. Cir. 2001)). As the

court explained, “[eJach time that [petitioners] paid the

Coal Sales Tax, the language of the statute and its

possible unconstitutional nature were thus fixed, injury

was inflicted, and a separate claim accrued.” Pet. App.

3, at 24. Thus, petitioners had the same right to file a

suit for refund upon payment of the tax as did the coal

companies that in fact brought suit in Ranger Fuel.

2. Petitioners also err in asserting (Pet. 8-10) that

the statute of limitations was tolled until Ranger Fuel

was decided. Petitioners contend (zbid.) that their

of the United States. This Court has recognized that “[u]nder

settled principles of sovereign immunity, the Uniied States, as

sovereign, is immune from suit, save as it consents to be sued . . .

and the terms of its consent to be sued in any court define that

court’s jurisdiction to entertain the suit,” as well as that “one of

those terms” is “[a] statute of limitations requirirg that a suit

against the Government be brought within a certain time period.”

United States v. Dalm, 494 U.S. 596, 608 (1990) (internal quotation

marks and citations omitted); see, e.g., United States v. Williams,

514 U.S. 527, 534 n.7 (1995); United States v. Mottaz, 476 U.S. 834,

841 (1986); Block v. North Dakota, 461 U.S. 273, 287 (1983).

4 Indeed, this case is no different from Hatter v. United States,

203 F.3d 795 (Fed. Cir. 2000), rev’d in part on other grounds, 532

U.S. 557 (2001), in which the court held that a claim accrued each

time the United States improperly deducted moneys from judges’

pay. See Catawba Indian Tribe v. United States, 982 F.2d 1564,

1570 (Fed. Cir. 1993), cert. denied, 509 U.S. 904 (1993).

claims were “inherently unknowable” prior to that time,

but petitioners’ mere ignorance of their legal rights is

not sufficient to toll the statute of limitations. See

Menominee Tribe of Indians v. United States, 726 F.2d

718, 720-721 (Fed. Cir.) (“28 U.S.C. § 2501 1s not tolled

by the [plaintiffs’] ignorance of their legal rights”), cert.

denied, 469 U.S. 826 (1984); Japanese War Notes

Claimants Ass’n v. United States, 373 F.2d 356, 359

(Ct. Cl.), cert. denied, 389 U.S. 971 (1967). Conse-

quently, petitioners are not entitled to a tolling of the

limitations period.

3. Petitioners err in contending (Pet. 5-10) that the

decision below conflicts with United States v. One 1961

Red Chevrolet Impala Sedan, 457 F.2d 1353 (5th Cir.

1972), and Neely v. United States, 546 F.2d 1059 (3d

Cir.-1976). Those cases involved the application of this

Court’s decision in Marchetti v. United States, 390 U.S.

39 (1968), which had overruled two earlier decisions of

the Court.

In United States v. Kahriger, 345 U.S. 22, 32-33

(1953), and Lewis v. United States, 348 U.S. 419, 421-

423 (1955), the Court had held that certain wagering

tax provisions of the Internal Revenue Code, which

required persons engaged in the business of accepting

wagers to register with the Internal Revenue Service

° Indeed, the courts of appeals have recognized that even the

existence of adverse authority that affects the viability of an unas-

serted cause of action does not automatically toll the statute of

limitations. Boling v. United States, 220 F.3d 1365, 1374 (Fed. Cir.

2000); Fiesel v. Board of Educ., 675 F.2d 522, 524-525 (2d Cir.

1982); Versluis v. Town of Haskell, 154 F.2d 935, 943 (10th Cir.

1946); see McConnell v. Critchlow, 661 F.2d 116, 118 (9th Cir.

1981) (“A decision recognizing a cause of action after the period has

run does not retroactively interrupt the running of the limitations

period.”).

and to pay an occupational tax, did not violate the Fifth

Amendment privilege against self-incrimination. In

Marchetti, the Court overruled Kahriger and Lewis,

and held that the Fifth Amendment privilege could be

raised as a defense to a criminal prosecution charging

failure to file the required forms. 390 U.S. at 54. Three

years later, in United States v. United States Coin &

Currency, 401 U.S. 715 (1971), the Court held that

Marchetti had retroactive effect, and that persons who

had been required to forfeit property following their

convictions under the statute could recover the prop-

erty. Id. at 722-724.

At issue in both One 1961 Red Chevrolet and Neely

was whether actions by taxpayers to recover property

they had forfeited following their convictions for failure

to register were barred by the statute of limitations. In

One. 1961 Red Chevrolet, the Fifth Circuit held that the

limitations period did not begin to run until Marchetti

was decided, because until that time the taxpayer “had

no reasonable probability of successfully prosecuting

his claim.” 457 F.2d at 1358. In Neely, the Third Cir-

cuit held that in light of Kahriger and Lewis, the tax-

payer’s claim was “inherently unknowable” until Mar-

chetti was decided, and thus the running of the limita-

tions period was suspended until that time. 546 F.2d at

1068.

One 1961 Red Chevrolet and Neely are thus far differ-

ent from the instant case. In those cases, the actions

brought by the taxpayers—to recover property they

had forfeited following their convictions under a statute

held to be unconstitutional in Marchetti—were, until

Marci etti, barred by this Court’s decisions in Kahriger

and Lewis. In contrast, no prior decisions of this Court

—or of any other court, for that matter—would have

barred petitioners from filing a timely suit to recover

the taxes they had paid on their coal exports. Unlike

One 1961 Red Chevrolet and Neely, the legal theory

upon which petitioners now seek a refund has never

been rejected by any court. The decision below thus

does not conflict with One 1961 Red Chevrolet or Neely.

4. Finally, petitioners’ argument (Pet. 10-12) that

their petition should be granted so that the Court may

elaborate on the “meaningful backward-looking relief”

standard it enunciated in McKesson is similarly unwar-

ranted. 496 U.S. at 31. In McKesson, the Florida

Supreme Court had denied a taxpayer any right to a

refund of state taxes paid under a statute that the court

had declared unconstitutional. Jd. at 22. This Court

reversed, holding that, when taxpayers must pay taxes

first and obtain review of the tax’s validity later in a

refund action, the Due Process Clause requires the

State to afford taxpayers a “meaningful opportunity” to

secure postpayment relief for taxes paid under a

statute later found to be unconstitutional. Jbid. In so

holding, however, the Court recognized that, in order to

engage in sound fiscal planning, a State is free to

impose various procedural requirements on actions for

postdeprivation relief, including the enforcement of

“relatively short statutes of limitations.” Jd. at 45. The

six-year limitations period applied by the courts below

(or, for that matter, the three-year limitations period

applicable under 26 U.S.C. 6511(a)) plainly satisfies the

“meaningful opportunity” requirement. Further re-

view is not warranted.

CONCLUSION

The petition for a writ of certiorari should be denied.

Respectfully submitted.