Opposition Brief — Christensen v. Griffes

n Supreme Court, U.S,

No. 96-1515 FILED

WAT 8 1997

In The DFEICE OF THE CLERK

Supreme Court of the United Staté

October Term, 1996

¢

THOR CHRISTENSEN and

JOSEPH WOODROW PANKEY, JR.,

Petitioners,

MICHAEL D. GRIFFES, COMMISSIONER

OF MOTOR VEHICLES,

Respondent.

+

Petition For A Writ Of Certiorari

To The Supreme Court Of The State Of Vermont

*

BRIEF IN OPPOSITION

+

Wrtuiam H. Sorreyi

Attorney General

Wituiaw E. GrirFin

Chief Assistant Attorney General

Vermont Attorney General’s Office

109 State Street -

Montpelier, VT 05609-1001

(802) 828-3171

THomas R. VIALL*

Assistant Attorney General

Vermont Agency of Transportation

133 State Street

Montpelier, VT 05633-5001

(802) 828-2831

Attorneys for Respondent

Michael D. Griffes,

Commissioner, Vermont

Department of Motor Vehicles

* Counsel of Record

COCKLE LAW BRIEF PRINTING CO., (800) 225-6964

OR CALL COLLECT (402) 342-2831 ry ?

Eee IE TREE NE aE ee

TABLE OF CONTENTS

Page

RESTATEMENT OF THE CASE .. .. cn ccccscccssesss 1

1. The Motor Vehicle Purchase and Use Tax..... 2

Fh: ER AE SF Fa os eka ivbatrescisnere 3

a ae NS a obs xo ocak cc peas ive 5

Ss See PE I hpi Kis de Sok 59 4 6

REASONS FOR DENYING CERTIORARI........... 8

I. THE DECISION OF THE VERMONT SUPREME

COURT IS CONSISTENT WITH THE DECI-

SIONS OF OTHER STATE COURTS AND WITH

FEDERAL PRECEDENTS. 200.5 ccc cc csecccerss 8

Il. NEITHER MCKESSON NOR WEBB’S FABU-

LOUS PHARMACIES SUGGEST THAT THERE

WAS ANY ERROR IN THE VERMONT

SUPREME COURT DECISION. . 2.0.65 s cesses 10

Ill. VERMONT HAS ACTED PROMPTLY TO COM-

PLY WITH THE LAW AS IT HAS EVOLVED DUR-

ING THE COURSE OF THIS LITIGATION....... 12

CRI Scns cd25 00 6ud svar ceees sae ew eee e ee 15

ii

TABLE OF AUTHORITIES

CASES

Bacchus Imports, Ltd. v. Dias, 468 U.S. 263 (1984)..... 12

Barringer v. Griffes, 801 F. Supp. 1282 (Vt. 1992)..... 13

Barringer v. Griffes (Barringer II), 1 F.3d 1331 (2d

Cir. 1993), cert. denied, 114 S. Ct. 879 (1994). . passim

Chicago Freight Car Leasing Co. v. Limbach, 584

Re Ete. Pe re ee 9

County of Ada v. Red Steer Drive-Ins, 609 P.2d 161

Rana SI. 35 ok nv tv nnctacaeedee inst eeedeen wan 9

Educational Films Corp. v. Ward, 282 U.S. 379 (1931) .... 11

Gulf, M. & O. R. Co. v. Webster County, 194 Miss.

GOO, 13 Se.de GOG CRG os 5 cae ieee ss 11

Hopkins v. Southern California Tel., 275 U.S. 393

GRR ous cascade nacneeasieaes0ekeuageteeaedioens 11

In re Petition of Williams, 686 A.2d 964, ___ Vt. ___

CRO IE s vninne ds ages Un heeswesonreeepeeee dias 9

Lakefront Realty Corp. v. Lorenz, 19 Ill. 2d 415, 167

OU. 2k RO CG, os on vk ccacewenbansawaasesacas 11

Leverson v. Conway, 144 Vt. 523, 481 A.2d 1029

(1984), vacated and remanded, 472 U.S. 1014

1 _., BP aSaSeR aperge cesgr rer ting Yar ne Toe Preny S eepe ee bee 3

Mathews v. Eldridge, 424 U.S. 319 (1976)............. 13

Matthew v. Rodgers, 284 U.S. 521 (1932).............. 11

McKesson Corp. v. Division of Alcoholic Beverages &

Tobacco, 496 U.S. 18 (1990)............ 8, 9, 10, 11, 13

Pendell v. Dept. of Revenue, 847 P.2d 846 (Or. 1993)..... 9

Quill Corp. v. North Dakota, 504 U.S. 298 (1992)...... 13

iii

TABLE OF AUTHORITIES —- Continued

Page

Rosewell v. LaSalle National Bank, 450 U.S. 503

SS dik wa wis ala OK bee A Rb eno Sas Owe x a, i2

Stratton v. St. Louis Southwestern R. Co., 284 US.

en, een we teen Cave ne week baws ne 11

Webb's Fabulous Pharmacies, Inc. v. Beckwith, 449

Gt tS sis vacd weeps Ge usea Cees os 11

Williams v. State (Williams II), 156 Vt. 42 (1990), 589

A.2d 840, cert. denied, 502 U.S. 821 (1991) ..3, 6, 13, 14

Williams v. Vermont, 144 Vt. 649, 478 A.2d 993

Reese ar Ca ss canki KS OMAN LRA SO eAG AS AnE Ws 3

Williams v. Vermont (Williams I), 472 U.S. 14

tie gg ksi asa vine Aki ae, 1, 35, 35

STATUTES

Be Er ok gC Ae Fe Ce SOS cae Os © da shdwn ow eueres 6

8) a en rene 2

ee SN SE i iig ncn nc ecoavdeanepeneveneas 2

Bee eas SUITED. 55h c Sacacu ewes ¥dcceses seasteys 3

ee is SPER PNIE, EODOP oo oc enncccncctosavane 2

ee eis ea eka > 6 <o-d bi Aes a bak th aoe 2

OTHER AUTHORITIES

BS Be. i ae. ek ee 1, 5, 9

Pom. PO. 201 (1985 Vt, Adj. Sess.) .. 0.2... 0cs ences 14

M.L. Cross, Annotation, Right to Interest on Tax

Refund or Credit in Absence of Specific Controlling

Statute, 88 A.L.R. 2d 825 (1963 & Supp. 1996)...... 9

BRIEF IN OPPOSITION

RESTATEMENT OF THE CASE

In June, 1994, just five months after this Court denied

certiorari in Barringer II,1 the Vermont General Assembly

amended the tax laws and effectively repealed the motor

vehicle purchase and use tax on vehicles acquired and

taxed in other states. Opp. App. 1-2. The owners of these

vehicles may now obtain Vermont registrations and drive

on Vermont's roads without paying the five percent tax

paid by other motorists.

As part of the same legislation the General Assembly

enacted a massive tax refund program. The motor vehi-

cles commissioner was authorized to grant tax refunds to

everyone who had paid the Vermont purchase and use

tax between 1980 and 1994 after first paying a similar tax

to another state. P.A. No. 223, §3 (1994 Vt., Adj. Sess.) Pet.

App. 29a-3la.

The legislation went on to require the commissioner

to assist taxpayers with the refund process, to consider

“any relevant evidence” of taxes paid to other states and

to honor all refund claims made through December 31,

1995. He was instructed to disregard the one-year statute

of limitations that applied to taxpayer lawsuits for

refunds. And, consistent with the existing refund statute,

he was instructed to pay refunds without also calculating

and paying interest. Id.

1 Barringer v. Griffes (Barringer II), 1 F.3d 1331 (2d Cir. 1993),

cert. denied, 114 S. Ct. 879 (1994).

ee es,

This remedy - the refund of all taxes collected over a

span of fourteen years, subject only to minimal documen-

tation and without interest - was generous, practical and

efficient. It was “a clear and certain remedy” which pro-

vided “meaningful backward-looking relief” to a very

large universe of taxpayers, including the petitioners. It

complied with Barringer II and afforded taxpayers all of

their rights under the Due Process and Just Compensa-

tion Clauses of the Constitution. :

1. The Motor Vehicle Purchase and Use Tax.

Vermont imposes a five percent tax on vehicles that

are registered for use on the State’s roads. See Vt. Stat.

Ann. tit. 32, §§8903(a) and (b) and 8905(a) and (b). The tax

is assessed as a sales tax in the case of vehicles purchased

in Vermont and as a use tax in the case of vehicles

purchased elsewhere. Id. The purpose of the tax is to

“improve and maintain the state and interstate highway

systems.” Id., §8912.

The statutes now provide a tax exemption (in the

form of a credit) for vehicles purchased in other states if

the owner has paid a purchase or use tax to the other —

state. See Vt. Stat. Ann. tit. 32, §8911(9) (Supp.1996). Per-

sons who have paid an equal or greater tax elsewhere

may register their vehicles in Vermont and use Vermont's

roads without paying any use tax to Vermont.

Prior to amendment in 1994 this credit for out-of-

state taxes was quite limited. It applied only if the vehicle

being registered in Vermont had never been registered in

the other state, and only if the other state allowed a

reciprocal credit “for Vermont tax[es] paid in similar cir-

cumstances.” Vt. Stat. Ann. tit. 32, §8911(9) (1991). As a

general practice prior to 1986, and as a matter of regula-

tion thereafter until 1994, the tax credit was rarely avail-

able and the use tax imposed identical burdens on

longtime residents and new residents alike. See Williams

v. State (Williams II), 156 Vt. 42, 46 n.3 (1990), 589 A.2d

840, 843, n.3, cert. denied, 502 U.S. 821 (1991).

2. Prior Litigation

Petitioners and others have pursued various

remedies using a variety of legal theories to avoid paying

the purchase and use tax and to obtain tax refunds. They

were ultimately successful. In the process, however, the

courts consistently acknowledged the fundamental fair-

ness of a tax formula that spread the tax burden to all

persons — petitioners included — who registered cars in

Vermont and used Vermont's roads.

In 1984, for example, the Vermont Supreme Court

concluded that the tax was valid because it served the

policy that “those who use the state’s highways must

contribute toward their maintenance” and because it did

not discriminate against interstate commerce. See Leverson

v. Conway, 144 Vt. 523, 532-36, 481 A.2d 1029, 1034-1036

(1984); see also Williams v. Vermont, 144 Vt. 649, 478 A.2d

993 (1984) (same). On appeal this Court reversed, on

Equal Protection grounds, but remanded with the obser-

vation that if a full record were developed it might “turn

out that in practice the statute does not operate in a

discriminatory fashion.” Williams v. Vermont (Williams I),

472 U.S. 14, 28 (1985). The Court “put to one side the

question whether a State must in all circumstances credit

sales or use taxes paid to another State against its own

use tax.” Id.

More recently, the U.S. District Court concluded after

a full hearing that Vermont taxed “only the local use of

automobiles” and applied “the same formula for calculat-

ing the tax . . . whether the car is purchased here or

elsewhere.” Barringer v. Griffes, 801 F. Supp. 1282 at 1286

(Vt. 1992). The Court rejected the argument that the tax

discriminated against interstate commerce or otherwise

violated the Commerce Clause.

On appeal, in a dissenting opinion, Circuit Judge Van

Graafeiland reached the same conclusion as the District

Court. He observed that “[iJn order for Vermont to make

fair charges for the use of its highways it had to adopt

some means of measuring use that was practical in opera-

tion and possessed at least a modicum of accuracy.”

Barringer II, supra, 1 F.3d at 1340 (1994). He reasoned that

a tax like Vermont's, based on a car’s value, should

withstand constitutional scrutiny because it “bears at

least a rough relationship to the benefits the car’s owner

will receive.” Id. (citing Williams I, supra, 472 U.S. at 25 -

n.9) (“[dJespite the looseness of the fit, we would be hard

pressed to say that this means of funding highway main-

tenance and construction is irrational.”).

The two-judge majority on the Court of Appeals dis-

agreed, ruling that the tax was unconstitutional as

applied to persons who have paid taxes to other states.

However, the majority refused to hold that a tax credit

was “affirmatively required” in these cases, saying that

such a holding would give the case “a broader reach than

necessary to decide this appeal.” Id. at 1337. They

decided instead that “[w]hat is to be done now is a matter

confided to the Vermont legislature.” Id.

3. Public Act No. 223.

The General Assembly responded to the Court of

Appeals ruling by abandoning the principle that all who

use Vermont's roads should pay a purchase and use tax to

maintain them. The credit for out-of-state taxes was

expanded so that the Vermont tax no longer applies to

“motor vehicles on which a state sales or use tax has been

paid by the person applying for a registration in Ver-

mont...” P.A. No. 223, supra, at §1 (1994 Vt., Adj. Sess.)

Opp. App. 1. Only “[iJf the tax paid in another state is

less than the Vermont tax” is the use tax payabie in

Vermont, in which case “the tax due shall be the differ-

ence...” Id.

Act No. 223 also established a program for paying tax

refunds. The motor vehicles commissioner was directed

to refund taxes collected from all taxpayers who had paid

similar taxes to other states. Id., §3 Pet. App. 29a-30a. If

the taxpayer was unable to document the taxes that were

paid, the commissioner was required to “research the tax

rates in effect in other states at all times relevant”, “pro-

vide relevant information in the possession of the depart-

ment of motor vehicles” and “compute the refund due

when in receipt of a certified application.” Id. The sum of

$500,000 was appropriated to cover the administrative

costs of processing refunds. Id., §5.

In the same Act the General Assembly considered

whether the commissioner should calculate and pay some

rate of interest on refunds and whether he should assert

the statute of limitations that applies to civil actions to

recover taxes. It answered both questions in the negative.

The Act authorized refunds of taxes collected since 1980

“{notwithstanding] the provisions of 12 V.S.A. §517” (the

one-year statute of limitations in tax cases), and it autho-

rized refunds “without interest”. Id., §3.

4. The Petitioners’ Claims.

The petitioners moved to Vermont in 1984 and 1985

and sometime thereafter registered vehicles that they had

brought with them. They had paid sales taxes to Indiana

and to Louisiana when they purchased the vehicles in

those states, and they paid a use tax when they registered

the vehicles in Vermont. Pet. App. 1la-12a. Contrary to

the assertions in their petition, they did not pay “a sec-

ond sales tax” (or any sales tax) to Vermont. They paid a

single use tax. Id.

Petitioners first sued for tax refunds in 1986, in the

Vermont Superior Court. The Superior Court dismissed

on the merits, petitioners appealed, and the Vermont

Supreme Court dismissed for lack of subject matter juris-

diction. Pet. App. 28a. The appeal was dismissed by

stipulation after the parties agreed that motor vehicles

tax refund claims should be decided in administrative

proceedings before the commissioner, and not in the

superior courts. See Williams II, supra, 156 Vt. at 56.

?etitioners took no further action until September,

1993, after the Court of Appeals had announced its deci-

sion in Barringer II. At this point they filed refund claims

with the commissioner, citing the Court’s decision. The

commissioner had already requested a rehearing in the

Court of Appeals and so deferred action on their claims.

During the next several months the Court of Appeals

denied the Commissioner’s request for rehearing in Bar-

ringer II, the Supreme Court denied certiorari and the

petitioners filed a civil action for tax refunds and for

interest on the refunds. The commissioner answered the

complaint and asserted various defenses including the

statute of limitations. However, when the Legislature

authorized refunds in all cases without regard to the

limitations period the commissioner refunded petitioners’

taxes.

Petitioners accepted refunds but continued to press

their Superior Court action in an effort to recover interest

on the amounts refunded. Their case was consolidated

with another action that their attorney had filed pro se

and on behalf of another client. The parties agreed that all

of these cases could be decided on motions and cross-

motions for summary judgment. Opp. App. 3 (Norman C.

Williams letter to superior court). The trial court denied

petitioners’ claims for interest and entered judgment in

favor of the defendant. The Vermont Supreme Court

affirmed.

REASONS FOR DENYING CERTIORARI

Certiorari should be denied because the lower courts

and this Court have consistently held that the States

retain flexibility to fashion case-specific remedies when a

tax is found to be unconstitutional. Petitioners have cited

no decision which holds that discriminatory taxes must

be refunded with interest in order to satisfy Due Process.

Nor have they cited any decision which holds that tax

payments to the government are takings covered by the

Just Compensation Clause.

The remedial legislation enacted by the Vermont

General Assembly in the wake of Barringer II authorized

the refund of motor vehicle taxes paid over a span of

fourteen years. It even included an appropriation of

funds earmarked to provide assistance to taxpayers

unable to complete their own refund applications. This

law gave petitioners and others like them a full refund of

the taxes they had paid. It afforded them a “clear and

certain remedy” and the “meaningful backward-looking

relief” required by the Constitution. McKesson Corp. v.

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

(1990).

I. THE DECISION OF THE VERMONT SUPREME

COURT IS CONSISTENT WITH THE DECISIONS

OF OTHER STATE COURTS AND WITH FEDERAL

PRECEDENTS.

The Supreme courts of three states (including Ver-

mont) have considered the precise question presented by

this case: whether Due Process requires the payment of

interest on tax refunds when a state chooses refunds as

iniemeninemmieenacinicamiiaiaiiaaiiaaiiiuiiasiiiiiaitailiait ii

the form of relief it will provide to cure an unconstitu-

tional discrimination. All three courts decided that inter-

est payments are not required in these circumstances. See

Pendell v. Dept. of Revenue, 847 P.2d 846 (Or. 1993) (power

to tax distinguished from power of eminent domain);

Chicago Freight Car Leasing Co. v. Limbach, 584 N.E.2d 690

(Ohio 1992) (failure to pay interest not a denial of due

process); and In re Petition of Williams, 686 A.2d 964, ___

Vt. __ (1996). The courts are not divided on this issue.

The several state court decisions cited by petitioners

are distinguishable from the present case for two reasons.

First, all of those cases were decided in the absence of a

statute which indicated whether or not interest should be

paid. See M.L. Cross, Annotation, Right to Interest on Tax

Refund or Credit in Absence of Specific Controlling Statute, 88

A.L.R. 2d 825 (1963 & Supp. 1996). The Vermont Supreme

Court was guided by Public Act No. 223 - a specific

controlling statute.

The cases are also distinguishable because they did

not arise in a context where the state was “free to choose

which form of relief it will provide.” McKesson, supra, 496

U.S. at 51. The taxing authority was not free to resolve

claims, for example, by retroactively increasing the

assessments on other taxpayers. See, e.g., County of Ada v.

Red Steer Drive-Ins, 609 P.2d 161 (Idaho 1980). As a matter

of state law or policy the choice of remedies was limited

to tax refunds.

The present circumstances are different. According to

McKesson, “a State found to have imposed an impermissi-

ble discriminatory tax retains flexibility in responding to

this determination.” Id. at 39-40. The choice of remedies

10

ranges “from a refund of the excess taxes ... to an

offsetting charge to previously favored [taxpayers].” Id. at

51. Moreover, “within our due process jurisprudence,

state interests traditionally have played, and may play,

some role in shaping the contours of the relief that the

State must provide... ” Id. at 50.

This balancing of state interests and taxpayer inter-

ests and this deference to a state’s choice of remedies was

evident throughout the course of the litigation over Ver-

mont’s purchase and use tax. In Williams I this Court

“express[ed] no opinion as to the appropriate remedy.”

472 U.S. at 28. In Barringer II the Court of Appeals

decided that “[W]hat is to be done now is a matter

confided to the Vermont legislature.” 1 F.3d at 1337.

The Vermont legislature selected an appropriate rem-

edy and its choice was sustained by the Vermont

Suprem. Court. There is no inconsistency between the

decision of the Vermont Supreme Court and the rulings of

other courts that have addressed the issue in similar

circumstances.

Il. NEITHER MCKESSON NOR WEBB’S FABULOUS

PHARMACIES SUGGEST THAT THERE WAS ANY

ERROR IN THE VERMONT SUPREME COURT

DECISION.

McKesson did not hold that discriminatory taxes must

be refunded with interest. Indeed, the range of options

endorsed by McKesson included “refunds on a reasonable

installment basis” without any reference to paying inter-

est. Id. at 45. The tax refunds authorized by the Vermont

legislature and approved by the Vermont Supreme Court

11

— full refunds of all taxes actually paid by the petitioners

- provided the “clear and certain” remedy required by

McKesson.

Petitioner’s reliance on Webb’s Fabulous Pharmacies,

Inc. v. Beckwith, 449 U.S. 155 (1980), is also misplaced.

Webb's was not a tax case. It was a dispute about interest

that had accrued on an interpleader fund that was held in

escrow by a state court. The Supreme Court decided that

since the fund was “private property” held for the pur-

pose of making a distribution among private creditors,

the Takings Clause protected both principal and interest.

Id. at 160-161. The Court’s holding was grounded in the

“narrow circumstances of this case.” Id. at 164.

Nor is any error suggested by the earlier cases cited

by petitioners. See Petition at 11, citing Educational Films

Corp. v. Ward, 282 U.S. 379 (1931) and Hopkins v. Southern

California Tel., 275 U.S. 393 (1928). These decisions were

discredited by the Court’s opinion in Rosewell v. LaSalle

National Bank, 450 U.S. 503 (1981).

[Their] treatment of a no-interest refund remedy

was undercut by later cases. Without expressly

addressing the issue, the Court in two cases

decided the same day, Matthew v. Rodgers, 284

U.S. 521, 528 (1932) (Mississippi refund rem-

edy); Stratton v. St. Louis Southwestern R. Co., 284

U.S. 530, 534 (1932) (Illinois refund remedy),

found adequate two state refund remedies that

apparently did not pay interest, Gulf, M. & O. R.

Co. v. Webster County, 194 Miss. 660, 662, 13

So.2d 644, 645 (1943); Lakefront Realty Corp. v.

Lorenz, 19 Ill. 2d 415, 422-423, 167 N.E. 2d 236,

12

240-241 (1960). Therefore, prior federal equity

practice is a two-sided sword.

450 U.S. at 524 n. 31.

Ill. VERMONT HAS ACTED PROMPTLY TO COM-

PLY WITH THE LAW AS IT HAS EVOLVED DUR-

ING THE COURSE OF THIS LITIGATION.

Petitioners have attempted to portray Vermont and

its officials as scofflaws. They argue that certiorari should

be granted to teach “States and State officials to respect

constitutional requirements.” Petition at 23. The flaw in

the argument is that the constitutional principle

announced in Barringer II was previously unknown. Less

than a year prior to that Court of Appeals decision the

Chief Judge of the United States District Court for the

District of Vermont had decided that there was no consti-

tutional violation.

Moreover, Vermont’s response to Barringer II was not

at all analogous to the Florida circumstances discussed in

McKesson and invoked by petitioners. The Florida statute

at issue in McKesson “reflected only cosmetic changes

from the prior version of the tax scheme that itself was

virtually identical to the Hawaii scheme invalidated in

Bacchus Imports, Ltd. v. Dias, 468 U.S. 263 (1984).”

McKesson, 496 U.S. at 46. The Vermont statute at issue

here effectively repealed the tax on vehicles like those

owned by petitioners and gave them tax refunds.

The legal backdrop prior to Barringer II afforded little

guidance to Vermont policymakers attempting to fashion

a tax that was both easy to administer and that applied to

all registered vehicles. As Judge Parker observed, “[i]t is

13

probably an understatement to say that the Court’s dor-

mant Commerce Clause jurisprudence, particularly as it

relates to limits on state taxation powers, is unpredict-

able.” Barringer v. Griffes, 801 F. Supp. at 1286. This Court

has acknowledged that the law in this area “is something

of a ‘quagmire’ ”. Quill Corp. v. North Dakota, 504 U.S. 298,

315 (1992).

Barringer II itself produced conflicting opinions, and

the two-judge majority began its discussion by remarking

on the “changing winds” of Commerce Clause doctrine.

Barringer II, supra, 1 F.3d at 1332. Continuing this nautical

allusion they resolved “to hug the shore closely”,

declined to “rechart our course” to fashion a specific

remedy and in the end said that “what is to be done .. . is

a matter confided to the Vermont legislature.” Id. This

was hardly an outcome consistent with the Petitioners’

characterization of Vermont officials and the ‘itigation

generally.

Petitioners are also wrong to imply that Vermont

evaded this Court’s decision in Williams I. Consistent

with Williams the state promulgated a regulation to

assure that the purchase and use tax applied to new and

old Vermonters alike. See Williams II, supra, 156 Vt. at 46

n.3. Consistent with Williams I, Mathews v. Eldridge, 424

U.S. 319 (1976), and McKesson, the Vermont Supreme

Court decided that the commissioner of motor vehicles

had the statutory authority and a constitutional obliga-

tion to afford taxpayers a due process hearing to chal-

lenge any erroneous or unlawful tax collection. See

14

Williams II, 156 Vt. at 52-56.2 Petitioners’ attorney

requested and obtained exactly such a hearing. Opp.

App. 4-5 (excerpts from Hearing Officer’s Findings of

Fact, Conclusions of Law and Order).

In this same vein petitioners claim that the Vermont

courts committed procedural errors in the present case by

ignoring the rules that govern motions for judgments on

the pleadings and motions to dismiss. Petition at 19 n.9

and 22 n.12. In fact the case was submitted to the trial

court on cross-motions for summary judgment, a pro-

cedure that petitioners agreed to. See Opp. App. 3 (“Peti-

tioners have no objection to the Court treating the

[Petitioners’] Memorandum in Opposition as a Cross-

Motion for Summary Judgment, if it agrees that no mate-

rial facts are in dispute.”) Neither the trial court nor the

Vermont Supreme Court relied on facts in dispute.

A final error in the petition is the claim that tax-

payers like the petitioners are liable for interest and pen-

alties on late payments up to 25 percent of the tax.

Petition at 20 n.10. The 25 percent penalty was enacted as

part of a law that taxes car rental companies. It does not

apply at all to individuals. See P.A. No. 251 (1983 Vt., Adj.

Sess.) Opp. App. 6-11 (“An Act Relating to the Motor

Vehicle Purchase and Use Tax on Pleasure Car Rentals”).

2 Williams II also overruled the inconsistent part of

American Trucking Ass’ns v. Conway, 146 Vt. 579, 508 A.2d 408

(1986), a case cited by Petitioners as an example of Vermont

intransigence.

3 The statements contained in the press clippings appended

to the Petition were not among the agreed facts. Pet. App.

32a-34a.

id

xs

er

15

And, as petitioners’ attorney well knows, the 1 percent

penalty on late payments by individuals is not enforced.

See Williams v. Vermont, 472 U.S. at 36 (“Mr. Williams and

Ms. Levine apparently delayed the day on which they

were required to pay for their right to use Vermont's

roads by failing to register their cars within the time

period set by Vermont law.”). Neither Mr. Williams or Ms.

Levine paid any penalties.

CONCLUSION

The petition for writ of certiorari should be denied.

Respectfully submitted,

STATE OF VERMONT

WiiuiaM. H. Sorrecr

Attorney General

WILLIAM GRIFFIN

Chief Assistant Attorney General

THomas R. VIALL

Assistant Attorney General

App. 1

‘a

NO. 223. AN ACT RELATING TO MOTOR VEHICLE

PURCHASE AND USE TAX CREDIT FOR TAX PAID TO

OTHER STATES.

(S.371)

It is hereby enacted by the General Assembly of the State

of Vermont:

Sec. 1. 32 V.S.A. § 8911(9) is amended to read:

(9) “[pleasure cars acquired outside the state by a

resident of Vermont]” motor vehicles on which a state sales

or use tax has been paid by the person applying for a

registration in Vermont “[, providing that the state or

province collecting such tax would grant the same pro-

rata credit for Vermont tax paid under similar circum-

stances]”. If the tax paid in another state is less than the

Vermont tax the tax due shall be the difference;

Sec. 2. REPEAL

32 V.S.A. § 8911(11) is repealed.

& * +

See Pet’s App. for Sections 3, 4 and 5.

App. 2

GRAVEL AND SHEA

Attorneys at Law

76 St. Paul Street

Post Office Box 369

Burlington, Vermont 05402-0369

February 23, 1995

Ms. Diane A. Lavallee

Clerk

Chittenden Superior Court

P. O. Box 187

Burlington, VT 05402

Re: Williams v. Vermont — Docket No. $1247-93 CnC

Christensen v. McDonald — Docket No. $0117-94

CnC

Dear Diane:

I enclose two copies of Petitioners’ Memorandum In

Opposition To Summary Judgment in the above cases

(one for each case file). Petitioners have no objection to

the Court treating the Memorandum In Opposition as a

Cross-Motion for Summary Judgment, if it agrees that no

material facts are in dispute. See V.R.Civ.P. 56(c) (“sum-

mary judgment, when appropriate, may be rendered

against the moving party”). However, Petitioners would

respectfully request a conference with the Court if it does

intend to issue a decision on the merits, in order to

discuss notice to class members. Such notice was not

given initially, while the parties discussed a possible set-

tlement.

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App. 3

Thank you very much for your consideration.

Very truly yours,

GRAVEL AND SHEA

/s/ Norman C. Williams

Norman C. Williams

NCW:wnb

Enclosures

ce: William E. Griffin, Esq. (w/enclosures)

Thomas R. Viall, Esq. (w/enclosures)

App. 4

STATE OF VERMONT

AGENCY OF TRANSPORTATION

DEPARTMENT OF MOTOR VEHICLES

120 State Street, Montpelier, Vermont 05603-0001

STATE OF VERMONT

DEPARTMENT OF MOTOR VEHICLES

IN RE:

PETITIONS OF NORMAN

WILLIAMS, SUSAN LEVINE

AND JAMES WOODARD

Nee ee ee ee ee”

FINDINGS OF FACT, CONCLUSIONS

OF LAW AND ORDER

Appearances:

Petitioners Norman Williams and Susan Levine were

represented by Norman Williams Esquire and Jerome F.

O’Neill of O’Neill and Crawford. Petitioner James Wood-

ard was represented by Mary Kehoe, Esquire of Saxer,

Anderson, Wolinsky and Sunshine. Thomas R. Viall,

Esquire, Assistant Attorney General represented the

Respondent State of Vermont Agency of Transportation

Department of Motor Vehicles.

Decision Regarding Petition of James Woodard:

No pre-hearing pleadings were filed on behalf of

James Woodard, and Mr. Woodard did not appear at the

Final Hearing in these proceedings. Therefore, the Peti-

tion of James Woodard is dismissed.

| ;

App. 5

Procedural Facts:

These Petitions are filed in accordance with the pro-

visions of Title 23 V.S.A. §105, the undersigned Hearing

Officer having been appointed to conduct these proceed-

ings by Michael D. Griffes, Commissioner of the Motor

Vehicle Department of the Vermont Agency of Transpor-

tation. The Petitioners seek refunds of motor vehicle Pur-

chase and Use Taxes paid in accordance with Title 32

V.S.A. §8903. Title 32 V.S.A. §8914 provides for the

refunding of taxes determined by the Commissioner to

have been over payments.

* * *

not Vermont residents at the time they purchased motor

vehicles out of state and who subsequently moved to

Vermont. Nevertheless, Petitioners have failed to prove

that either of them were members of this class of persons.

Indeed, the record reflects that neither Petitioner consul-

ted a Motor Vehicle Department Inspector at any time.

The State has proven that applicants who were dealt with

by other units of the Department were not denied equal

protection of the laws. Although there is no specific evi-

dence as to the relative numbers of the larger class of

persons whose applications were resolved without any

contact with the Inspectors and the smaller class of per-

sons who did appeal to the Inspectors, I must conclude

that the former class vastly out numbers the latter. Fur-

ther, I find no case law authority for the proposition that

the entire Department should be guilty of the sins of the

Inspectors so that the Petitioners should be entitled to

relief. Given the fact that each of the Petitioners dealt

with units of the Department in which the law was

App. 6

administered without any violations of equal protection

as applied, I find that the Petitioners are not entitled to

refunds of their motor vehicle Purchase and Use Taxes.

Having decided the merits of the Petitions favorably

to the Department, I will not consider the question of the

statute of limitations, noting that our Supreme Court has

also remained silent on this question, Williams v. State 156

VT 42, 53 footnote 10.

Order:

The Petitions of Norman Williams and Susan Levine

are each denied.

DATED at Jeffersonville, Vermont this 20th day of

July, 1993.

/s/ Philip J. Fitzpatrick

Philip J. Fitzpatrick, Esquire

Hearing Officer

App. 7

PUBLIC ACTS, 1984 SESSION

NO. 251. AN ACT RELATING TO THE MOTOR VEHI-

CLE PURCHASE AND USE TAX ON PLEASURE CAR

RENTALS.

(H.726)

It is hereby enacted by the General Assembly of the State

of Vermont:

Sec. 1. 32 V.S.A. § 8902(9) is added to read:

(9) “Rental of pleasure cars on a short-term basis”,

or words of similar import, means rentals of pleasure cars

for a rental period of less than one year. It shall not apply

to school buses.

Sec. 2. 32 V.S.A. § 8903(a) is amended to read:

(a) There is hereby imposed upon the purchase in

Vermont of a motor vehicle by a resident a tax at the time

of such purchase, payable as hereinafter provided. The

amount of the tax shall be four percent of the taxable cost

of the motor vehicle or $600.00 for each motor vehicle,

whichever is smaller, except that pleasure cars which are

purchased for use in short-term rentals shall be subject to

taxation under subsection (d) of this section.

Sec. 3. 32 V.S.A. § 8903(d) is added to read:

(d) There is hereby imposed a use tax on the rental

charge of each transaction, in which the renter takes

possession of the vehicle in this state, during the life of a

pleasure car purchased for use in short-time rentals,

which tax is to be collected by the rental company from

the renter and remitted to the commissioner. The ammount

of the tax shall be five percent of the rental charge. Rental

App. 8

charge means the total rental charge for the use of the

pleasure car, but does not include a separately stated

charge for insurance, or recovery of refueling costs, or

other separately stated charges which are not for the use

of the pleasure car. In the event of resale of the vehicle in

this state for use other than short-term rental, such trans-

action shall be subject to the tax imposed by section

8903(a).

Sec. 4. 32 V.S.A. § 8905(d) is added to read:

(d) Every person required to collect the use tax

under section 8903(d) shall forward such tax and a report

of same on forms prescribed and furnished by the com-

missioner at the frequency determined by the commis-

sioner.

Sec. 5. 32 V.S.A. § 8906 is amended to read:

§ 8906. TAX FORM CONTENTS

Except as otherwise provided pursuant to section

8905(d), such tax form shall require information as to the

purchase price of the motor vehicle, the value of any

motor vehicle accepted in trade together with its make,

type, serial or identification number and year of manu-

facture and the make, type, serial or identification

number and year of manufacture of the motor vehicle

purchased.

Sec. 6. 32 V.S.A. § 8909 is amended to read:

§ 8909. ENFORCEMENT

If the tax due under subsections (a), (b) and (d) of

section 8903 of this title is not paid as hereinbefore pro-

vided the commissioner shall suspend such purchaser’s

Se ee ee ee eee ee eee |

App. 9

or rental company’s right to operate a motor vehicle

within the state of Vermont until such tax is paid, and

such tax may be recovered with costs in an action brought

in the name of the state on this statute.

Sec. 7. 32 V.S.A. § 8913 is amended to read:

§ 8913. FRAUDULENT COLLECTION OF TAX

No person except the commissioner and his autho-

rized representatives, including rental companies as pro-

vided in section 8903(d), may collect or accept payment of

any tax imposed by this chapter. Any person so doing

sha'l be presumed to have the intent to convert it to his

own use. Any unauthorized person who wilfully collects

or accepts payment of such a tax, upon conviction for a

first offense, shall be fined not more than $200.00 or

imprisoned for not more than ninety days, or both. Upon

each subsequent conviction he shall be fined not more

than $500.00 or imprisoned for not more than one year, or

both.

Sec. 8. 32 V.S.A. § 8903(e) is added to read:

(e) Any person registering a pleasure car in this

state subject to the tax imposed by subsection (d) which is

not actually rented for not less than 30 days in any single

year must pay the tax imposed by subsection (a) or (b)

upon demand of the commissioner.

Sec. 9. 32 V.S.A. § 8902(10) is added to read:

(10) “Rental company” means any person offering

pleasure cars for rent on a short-term basis.

Sec. 10. 32 V.S.A. § 8916 is added to read:

App. 10

§ 8916. BONDS

(a) When the commissioner deems it necessary to

protect the revenues to be obtained under this chapter, he

may require a rental company to file with him a bond

issued by a surety company authorized to transact busi-

ness in this state and approved by the commissioner of

banking and insurance of this state as to solvency and

responsibility, in an amount fixed by the commissioner,

but not to exceed the total potential liability of such

person, to secure the payment of any tax or penalties or

interest due or which may become due from a rental

company under this chapter. In the event that the com-

missioner determines that such person is to file a bond,

he shall give notice to him to that effect, specifying the

amount of the bond required. That person shall file a

bond within 15 days after the giving of the notice unless

within those 15 days he shall request in writing a hearing

before the commissioner at which the necessity, propriety

and amount of the bond shall be determined by the

commissioner. The determination shall be final and shall

be complied with within 15 days after the giving of notice

thereof. In lieu of a bond, securities approved by the

commissioner or cash in such amount as he may prescribe

may be deposited, which shall be kept in the custcedy of

the state treasurer who may at any time upon instructions

from the commissioner without notice to the depositor

apply them to any tax or interest or penalties due, and for

that purpose the securities may be sold by him at public

or private sale without notice to the depositor thereof.

(b) The total amount of the bond required of a

rental company may be fixed by the commissioner and

App. 11

may be increased or decreased by him at any time subject

to the limitations imposed by this section.

(c) If the liability upon a bond filed by a rental

company with the commissioner becomes discharged or

reduced, whether by judgment rendered, payment made

or otherwise, or if in the opinion of the commissioner any

surety on a bond has become unsatisfactory or unaccept-

able, the commissioner shall require the rental company

to file a new bond with satisfactory sureties in the same

amount and, upon failure to do so, the commissioner

shall forthwith suspend the right to operate a motor

vehicle in this state.

(d) If a rental company fails or refuses to increase

the amount of a bond or file a bond as required by the

commissioner within 15 days after notice mailed to him,

his right to operate a motor vehicle in this state shall be

suspended forthwith.

Sec. 11. 32 V.S.A. § 8917 is added to read:

§ 8917. BONDS; DISCHARGE

Any surety on a bond furnished by a rental company

shall be discharged from any liability to the state accruing

on the bond after expiration of 60 days from the date the

surety shall have filed with the commissioner a written

request to be released and discharged, but the surety

shall not be released or discharged from liability already

accrued or which shall accrue before the expiration of the

60-day period. The commissioner, upon receipt of such a

request, shall promptly notify by mail the rental company

who furnished the bond. Unless the rental company, prior

to the expiration of the 60-day period, files a new bond

App. 12

satisfactory to the commissioner, the commissioner shall

suspend his right to operate a motor vehicle in this state.

Sec. 12. 32 V.S.A. § 8918 is added to read:

§ 8918. RECORDS

(a) Each rental company shall keep and retain for a

period of not less than three years such records as may be

prescribed by the commissioner which are reasonably

necessary to substantiate the reports required by section

8905(d).

(b) The commissioner or his agents may examine

the books and records of any rental company during the

usual business hours of the day to verify the truth and

accuracy of any statement, report or return or to deter-

mine if the tax imposed by this chapter has been paid.

Sec. 13. 32 V.S.A. § 8919 is added to read:

§ 8919. ADDITIONAL ASSESSMENTS

(a) If the commissioner is not satisfied that the

report filed or the amount of tax paid by a rental com-

pany is accurate, after investigating and finding such

inaccuracy, he may make an additional assessment of

taxes due from such rental company based upon his

investigation. A penalty equal to ten percent and interest

at the rate of one and one-half percent per month shall be

payable on the additional assessment, with interest com-

puted from the date the tax payment was due. The com-

missioner shall give notice by mail to the rental company

of the additional assessment, penalty and interest and

shall designate the error or reason for such assessment.

Payment shall be due within 30 days of the date of

mailing the notice.

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—- T. 7

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App. 13

(b) When no report or payment of tax has been

made as required by section 8905(d), or when a wilfully

false or fraudulent report has been filed, the tax may be

assessed at any time; in all other cases, no assessment of

additional tax, and the mailing of notice thereof, shall be

made after the expiration of three years from the date of

filing a report.

Sec. 14. 32 V.S.A. § 8920 is added to read:

§ 8920. INTEREST; PENALTIES

(a) Any person who fails to file a report when due

shall pay a fee of $10.00 as partial compensation for the

added administrative costs.

(b) In addition to the fee prescribed in subsection

(a), any person who fails to pay any tax when due, shall

pay in addition to the tax interest calculated at one and

one-half percent per month on the tax from the due date,

until paid. In addition, if the taxpayer fails to pay the tax

liability in full within 30 days, a penalty equal to five

percent of the outstanding tax liability for each month or

portion thereof, shall be paid; provided, however, that in

no event shall the amount of the penalty imposed here-

under exceed 25 percent of the tax liability unpaid on the

prescribed date of payment. The commissioner may remit

all or any part of the penalty if he is satisfied that the

delay was excusable.

App. 14

Sec. 15. 32 V.S.A. § 8921 is added to read:

§ 8921. ASSESSMENTS

If a rental company neglects or refuses to file any

report required by this chapter, the commissioner shall

make an estimate of the tax due, based upon information

available to him, for the period for which the rental

company failed to make the report, and shall assess the

tax due from such rental company, adding to the amount

thus determined a penalty of 50 percent thereof. The

assessment shall bear interest at the rate of one and one-

half percent per month from the date the tax payment

was due until paid. The commissioner shall give the

rental company notice by mail of the assessment and

payment shall be due within 15 days of the date of the

mailing of the notice.

Sec. 16. 32 V.S.A. § 8922 is added to read:

§ 8922. ASSESSMENT; HEARING

A rental company against whom assessment is made

pursuant to section 8919 or 8902 may appear in person or

by counsel in the office of the commissioner within 15

days after the mailing to him of notice of the assessment

then and there to show cause why the assessment is in

error or to present any other facts or testimony that

would bear on the amount of the assessment or the

manner in which it was made. The hearing may be con-

tinued from time to time. If the rental company or his

agent does not appear within the 15 days, the assessment

shall become final.

App. 15

Sec. 17. 32 V.S.A. § 8923 is added to read:

§ 8923. LICENSE REQUIRED

(a) It is unlawful for any person to act as a rental

company without being licensed as such.

(b) On or before January 1 of each year, an applicant

for a rental company license shall file with the commis-

sioner an application prepared and furnished by the com-

missioner. The application shall not be under oath but

shall contain a declaration that it is made under the

penalties of perjury.

(c) Upon receipt of an application in proper form

and the other conditions and requirements of this chapter

having been complied with the commissioner may issue a

license to an applicant which will remain in effect for one

year or until such time as surrendered or revoked.

Sec. 18. TRANSITIONAL PROVISIONS

All rental companies shall apply for their first rental

company license during the month of December 1984.

Thereafter licenses shall be obtained pursuant to the pro-

visions of section 8923(b).

Sec. 19. EFFECTIVE DATE

This act shall take effect January 1, 1985 except for

Sec. 18 which shall take effect December 1, 1984.

Approved: May 16, 1984