Opposition Brief — Government of the Virgin Islands v. Bluebeard's Castle, Inc.

No. 02-1819

IN THE

Supreme Court of the United States

GOVERNMENT OF THE VIRGIN ISLANDS, et al.,

Petitioners,

v.

EQUIVEST ST. THOMAS, INC.,

| Respondent.

ON PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES CouRT OF APPEALS FOR THE THIRD CIRCUIT

BRIEF IN OPPOSITION

JOHN P. DEMPSEY JOHN F. DIENELT

JEFFREY R. COHEN Counsel of Record

FAIRFIELD Resorts INC. Scott McINTOsSH

8427 South Park Circle PipER RuUDNICK LLP

Suite 300 1200 Nineteenth Street, N.W.

Orlando, FL 32819 Washington, DC 20036-2412

(407) 370-5315 (202) 861-3900

CHAD C. MESSIER

DuDLEY, TOPPER AND

FEUERZEIG, LLP

1A Frederiksberg Gade

Charlotte Amalie, St. Thomas

U.S. VI 00802

(340) 774-4422

Attorneys for Respondent

181882 g

COUNSEL PRESS

(800) 274-3321 * (800) 359-6859

«<

1

STATEMENT PURSUANT TO RULE 29.6

The original Respondents, Bluebeard’s Castle, Inc. and

Castle Acquisitions, Inc., have been merged into Equivest

St. Thomas, Inc. Equivest St. Thomas, Inc. is wholly owned

by its ultimate parent company, Cendant Corporation, which

is publicly traded.

Ti

TABLE OF CONTENTS

Statement Pursuant to Rule 29.6 ...............

Table Of COURONNS Wg. 0 6 in oe cae cance

Tabte of Cited Amite . «uc. dacocekuceee ee

Statement of the Came ... és <i icbdao eee

Reasons for Denying the Petition ...............

ATURE oo. snk ts <aenesee eee

I.

Il.

Il.

There are No Special Circumstances in this

Case Warranting Review of An Appeal of An

Intertocutery CHEE... oes cssasdnvsnssiun

The Court Should Not Grant the Petition,

Vacate and Remand (“GVR”) or Grant the

Petition to Hear this Case Because the

Question Presented Was Not Raised Below

and Petitioners Have Not Properly Preserved

TRO MOE. 5 iv 65 inset

There Is No Need to Grant the Petition or

GVR Based Upon An Asserted Lack of a

Private Right of Action or the Revised

Organic Act of 1954 Because Consderation

of Those Issues Will Not Alter the Result in

RE re metre Pane re oe

Page

11

lll

Contents

Page

A. The Asserted Lack of a Private Right of

Ee a oe 14

B. The Revised Organic Act of 1954

MERON TEC SS Rep p aetna ee aO mara 17

eo ues 65 64a baa OSs 18

STIS RSI as iat eg ee ie la

iv

TABLE OF CITED AUTHORITIES

Page

FEDERAL CASES

American Construction Co. v. Jacksonville, T. & K.W.

Railway Co., 148 U.S. 372 (1893) ............ )

Berne Corp. v. Govt of the V.I., __ F. Supp. 2d __,

2003 WL 21078073 (D.V.I. May 12, 2003) . .3, 6, 9, 10

Berne Corp. v. Gov t of the V-I., 120 F. Supp. 2d 528

Ce ee EE 6 ies Nee ew ae ees passim

Berne Corp., et al. v. Govt of the V.I., et al., No. 03-

2549 (3™ Cir., docketed, May 28, 2003) ....... 10

Bluebeard s Castle, Inc. v. Gov t of the V-I., 321 F.3d

TON OE Ste) oi ae EAR SS passim

Braden vy. University of Pittsburgh, 552 F.2d 948

Ge Se ROPER. is vk eG Cane ee ee 9

Bragdon v. Abbott, 524 U.S. 624 (1998) ......... 13

Brotherhood of Locomotive Firemen vy. Bangor &

Aroostock R. Co., 389 U.S. 327 (1967) ........ 9

Equivest St. Thomas, Inc. v. Govt of the V.I., 208

F. Supp. 2d 545 (D.V.I. 2002) .............. passim

Erienet, Inc. v. Velocity Net, Inc., 156 F.3d 513

a Ge Fe hee he ee oe oe eA ees 13

Cited Authorities

Page

Golden State Transit Corp. v. City of Los Angeles,

£93 US. 10S (IGG) co cide cewcewiinesseens 15, 16

Gonzaga University v. Doe, 536 U.S. 273 (2002) .. passim

Hopp v. The City of Pittsburgh, 194 F.3d 434

CH ate TE 5g i vas Gosek cevenewedvees ees 13

International Paper Co. v. Ouellette, 479 U.S. 481

thy) re ere ee re ror re sy egy 9

Merrill Lynch, Pierce, Fenner & Smith, Inc. y.

Curran, 496 0.5. 353 CAFGE) oven vasowinees 12

National Home Equity Mortgage Association v. Face,

322 F.3d Gas CO? Ci. Be i nk eee ees 14

National Railroad Passenger Corp. v. National Ass'n

of Railroad Passengers, 414 U.S. 453 (1974) .. 13

Organization for a Better Austin v. Keefe, 402 U.S.

ee 22) eee ere rr rina Se ce ee 8

Owasso Independent School District v. Falvo,

SAR Le ee ere re er 13

Wilder v. Va. Hosp. Ass’n, 496 U.S. 498 (1990) ... 15-16

Youakin v. Miller, 425 U.S. 231 (1976) .......... 13

vi

Cited Authorities

Page

UNITED STATES CONSTITUTION, STATUTES,

LEGISLATIVE AND EXECUTIVE MATERIALS

U.S. Comet. Ae. FV, SBS v0 eis seat aw cess 16

2B USA, B TS 6h kes SS ae 8

ys gah Soe 2k Peewee err rere yee 5,7

OS UBS F008 ks kvnasnee sakes dyer e eee 14

SE DBAS POE 660s bec acareeee 12, 15, 16

WO Tie CONE nn ts. Tok bare eetr coer. ca passim

Be Se | Pe rere er es 5

ke eS r rerr ee eas her yee: i

eB Ee re re 12

Pod. %.. Civ. Pree, LRG) asec eae nkadedaweves 9

Organic Act of June 22, 1936, ch. 699, 49 Stat. 1801

ETE CEL TORT TO Ee ee ne eee 17

Revised Organic Act of 1954, Pub. L. No. 90-496,

GE Baek Arr CR 8s ka ei cig 11, 12, 14, 17

vil

Cited Authorities

Page

TERRITORIAL STATUTES

Pe ec bn Waco Ve kOe ea Ee harowes 6

oe ee er reer ere rer re 3,4

Act of July 14, 2003, No. 6586, 2003 V.I. Sess.

Fo, MOTE EER ETE CET CRC T Le eet PERE TT 6, 10

OTHER

Robert L. Stern et al., Supreme Court Practice

rr EE es kU hs Car phe bean coke kee es 15

]

Respondent Equivest St. Thomas, Inc. (“Equivest”)

respectfully requests that this Court deny the petition for a

writ of certiorari filed by the Government of the Virgin Islands

(the “VI Government’) and its Tax Assessor, Roy Martin

(“Martin”). The petition requests that this Court grant a writ,

vacate and remand the decision of the United States Court

of Appeals for the Third Circuit, reported at 321 F.3d 394

(3 Cir. 2003) (Pet. App. 1-16), which affirmed the district

court’s grant, in part, of a preliminary injunction to

respondent and affirmed the denial of petitioners’ motion to

dismiss. The district court subsequently issued a permanent

injunction, in favor of respondent and others, from which an

appeal to the Third Circuit is pending, and the VI Government

passed legislation with respect to the matter that permits

collection of taxes pending further judicial proceedings.

STATEMENT OF THE CASE

This case involves the question whether the VI

Government and Martin violated the rights of Equivest when

they refused to assess taxes on Equivest’s real property

according to its “actual value” as required by 48 U.S.C.

§ 1401la. The district court preliminarily enjoined the

VI Government and Martin from employing a certain tax

assessment method, concluding that it violated federal law.

The sole issues raised by the VI Government and Martin in

their interlocutory appeal were: (1) whether the district court

lacked federal subject matter jurisdiction; and (2) whether

the district court abused its discretion in rejecting their

unclean hands argument. They did noi challenge the district

court’s ruling on the merits. They raised the private right of

action issue, which is a subject of their petition here, only in

their motion for rehearing en banc, and did not raise the

Revised Organic Act of 1954 issue, the other subject of their

ee ,

2

petition, at all. Concluding that Congress, acting within its

Constitutional discretion, created a dual system of federal

and territorial taxation in the Virgin Islands, and that

Equivest’s action was properly brought under the federal

component of the tax system governed by 48 U.S.C. § 1401a,

the court of appeals held that the district court had federal

subject matter jurisdiction.’ Accordingly, the court of appeals

affirmed the preliminary injunction. It later denied rehearing

or rehearing en banc. Pet. App. 126-27.

This case is related to several other Virgin Islands tax

cases. These cases have been consolidated with this case and

the district court has issued a permanent injunction barring

the same conduct that is the subject of the preliminary

injunction, thus supplanting that injunction. The VI

Government and Martin have appealed to the Third Circuit,

and that appeal is pending.

In the first case, Berne Corp. v. Govt of the V.I., 120

F. Supp. 2d 528 (D. V.I. 2000) [Berne J], the district court

held that two real property owners in the Virgin Islands had

a private right of action under 48 U.S.C. § 140la.

See Berne I, 120 F. Supp. 2d at 533-535 (Pet. App. 42-45).

See also Pet. 11. Following its analysis of the federal taxation

rights granted under 48 U.S.C. § 1401a, the district court

denied a motion to dismiss and preliminarily enjoined

the Government of the Virgin Islands and Roy

Martin, tax assessor, . . . from collecting property

1. The Third Circuit also ruled that the district court did not

abuse its discretion in ho:ding that no issue of clean hands barred

issuance of a preliminary injunction. See Bluebeard’s Castle, Inc. v.

Govt of the V.I., 321 F.3d 394, 397 n.4 (3 Cir. 2003) (Pet. App. 3

n.4) [Equivest IT].

3

taxes against the real property owned by

[plaintiffs] until the tax assessor can establish at

a trial on the merits that the property taxes on those

properties have been assessed on their actual value

in accordance with 48 U.S.C. § 140la and 33

V.LC. § 2404.

Id. at 537 (Pet. App. 50). As the district court later found,-

the VI Government then apparently settled Berne /

“by agreeing to bring the Tax Assessor’s assessment

procedures and processes into compliance with the uniform

national appraisal standards, and to appoint an independent

special master to review for compliance.” Berne Corp. v.

Govt of the VI.,__ F. Supp. 2d __, 2003 WL 21078073,

at *2 (D.V.I. May 12, 2003) (consolidated case) (Pet. App.

55) [Berne II]. As the district court noted, however, the VI

Government subsequently “chose to ignore the Berne

Settlement and relitigate the same issues in [Equivest and]

other cases.” Jd.

When the VI Government assessed taxes against Equivest

in a manner inconsistent with the district court’s ruling in

Berne I and the settlement in connection with that case,

Equivest brought an action and sought a preliminary

injunction. See Equivest St. Thomas, Inc. v. Govt of the V.I.,

208 F. Supp. 2d 545 (D. V.I. 2002) (Pet. App. 17-32) [Equivest

I}. As had plaintiffs in Berne J, Equivest alleged that the

VI Government and Martin were violating federal law by

denying Equivest its statutory right to have its property

assessed at its “actual value” in accordance with 48 U.S.C.

§ 1401a. Id. at 546 (Pet. App. 17).

With respect to the private right of action issue, the

district court in Equivest J held that “[r]elying on my analysis

4

in Berne [I], | also find that Equivest has a valid section

1983 action.” See Berne [I], 120 F. Supp. 2d at 533-34

(finding that section 1401a creates a federally protected right

actionable under section 1983). Jd. at 548 n.6 (Pet. App. 21-

22 n.6).? The district court also specifically reiterated its

holding that 33 V.I.C. § 2404 “did not supercede the federal

law or remove the local property tax from federal control.

The federal requirement under section- 1401la that the tax

assessor use ‘actual value’-in assessing the tax remains in

force and is unaffected by its territorial implementation.”

Id. at 548 (Pet. App. 20) (quoting Berne J, 120 F. Supp. 2d at

532-33).> Following an evaluation of the four preliminary

injunction factors, the district court granted Equivest’s

motion for preliminary injunction with respect to the

properties that satisfied the factors. Equivest I, 208 F. Supp.

2d at 549 (Pet. App. 24).

In their interlocutory appeal, the VI Government and

Martin only raised issues of whether the district court lacked

federal subject matter jurisdiction in light of certain territorial

legislation and whether the district court abused its discretion

in rejecting their unclean hands argument. The court of

appeals agreed with the district court that section 140la

remained binding and effective following enactment of a real

~—

2. In Equivest I, the district court frequently referred to Berne

I, rather than repeating its analysis.

3. The district court observed in Equivest J that, contrary to the

impression created by the Berne settlement, the VI Government had

“changed its position. Rather than putting all its efforts into correcting

the tax assessment process and negotiating settlements on unlawfully |

assessed properties, the [VI Government] now seems to want to

litigate these matters.” Equivest J, 208 F. Supp. 2d at 552- 33

(Pet. App. 31).

5

property assessment law by the Virgin Islands legislature in

1955. Equivest II, 321 F.3d at 399 (Pet. App. 8-9). When the

Virgin Islands legislature enacted specific tax requirements

at that time, those specific provisions supplanted the interim

provisions contained in section 1401b, as expressly provided

in that section. However, the “expiratory language in § 1401b

applies only to the specific requirements of that section; it

does not apply to the rest of the statute, including the general

requirements of § 1401a.” Jd. (Pet. App. 8). Concluding that

Equivest had “adequately alleged a violation under 48 U.S.C.

§ 1401a,” the court of appeals held that Equivest’s claims

““arise under’ § 1401a” and “are subject to the jurisdiction

of the District Court under 48 U.S.C. § 1612 and 28 US. C.

§ 1331.” Jd. at 402 (Pet. App. 14).4

The VI Government and Martin did not argue in their

appeal to the Third Circuit, and the opinion in Equivest II

did not address, the issue of a private right of action

under 48 U.S.C. § 1401a. Equivest IJ, 321 F.3d 394

(Pet. App. 1-16). ° Nor did they raise the Revised Organic

Act issue. /d.

4. Pétitioners have misread the decision of the Third Circuit in

this case by confusing the distinct issues of (1) a private right of

action and (2) federal subject matter jurisdiction. In their petition,

they state that “the Third Circuit held that § 1401a creates a private

right of action ...” Pet. 3. However, in connection with their

interlocutory appeal, petitioners only raised—and the court of appeals

therefore only addressed—the issue of federal subject matter

jurisdiction, not whether respondent had a private right of action.

Equivest IT, 321 F.3d at 399-402 (Pet. App. 9-15).

5. Even though the district court had addressed the issue of a

private right of action under 48 U.S.C. § 1401la and even though

Gonzaga University v. Doe, 536 U.S. 273 (2002),was decided

(Cont’d)

~—enmecam ae me e ena ae

6

In the meantime, the district court held a trial in the

consolidated actions brought against the VI Government and

Martin by the Berne plaintiffs, the Equivest plaintiffs and

several other plaintiff landowners. See Berne I], 2003

WL 21078073 at *1 (Pet. App. 59-60). On May 23, 2003,

the district court issued a detailed opinion (Pet. App. 52-

125) and entered a permanent injunction, enjoining

assessment of taxes against the plaintiffs, including Equivest,

until “a reliable and credible system that will appraise real

property consistently at its actual, market value in compliance

with 48 U.S.C. § 1401a” is established. Jd. at *25 (Pet. App.

113). The district court also entered a permanent injunction,

pursuant to 5 V.I.C. § 80, requiring the VI Government and

Martin to comply with terms of the Berne settlement that

was previously entered. /d. (Pet. App. 113). The VI

Government and Martin have appealed the district court’s

order granting the permanent injunction in Berne II to the

Third Circuit.

After the district court’s ruling in Berne // and the filing

of the petition here, the Virgin Islands legislature passed a

bill that allows for interim collection of real property taxes,

pending further judicial proceedings. Act of July 14, 2003,

No. 6505, 2003 V.I. Sess. Laws __ (Opp. App. la-11a).

The governor signed the bill, with certain line-item vetoes.

Id. (Opp. App. 9a-11a).

(Cont'd)

approximately one-and-a-half months before the VI Government and

Martin filed their brief with the Third Circuit, the VI Government

and Martin did not raise the issue of a private right of action before

the Third Circuit until they filed a motion for rehearing en banc,

which was denied without further briefing. Pet. App. 126-127.

7

REASONS FOR DENYING THE PETITION

The petition seeks review of a preliminary injunction

that has now been supplanted by a broader permanent

injunction and is on appeal. If this Court were to consider

any issues arising from the related Virgin Islands tax cases,

it should do so only after the court of appeals has addressed

them in the context of the permanent injunction.

The court of appeals, in considering petitioners’

interlocutory appeal here, correctly applied established

principles regarding statutory interpretation and federal

question jurisdiction in affirming the findings of the district

court that: (1) the general federal tax requirements adopted

by Congress in 48 U.S.C. § 1401a were not superceded by

the enactment of certain specific requirements by the Virgin

Islands legislature; (2) Equivest’s claims “adequately alleged

a violation under 48 U.S.C. § 1401a”; and (3) Equivest’s

claims “‘arise under’ § 140la” and “are subject to the

jurisdiction of the District Court under 48 U.S.C. § 1612

and 28 U.S.C. § 1331.” Equivest I], 321 F.3d at 402

(Pet. App. 14). The decision below, which affirmed the

interlocutory order, contains no ruling worthy of review.

In fact, petitioners have not challenged any of the actual

holdings of the court of appeals in their petition. Instead,

they raise in their question presented two new issues that

could have been, but were not, developed before the court of

appeals. The first issue was only raised in a motion for

rehearing en banc, although no new decisions had been issued

between the time petitioners filed their brief with the court

of appeals and the time they filed their motion,°® and the

6. The first issue presented by petitioners is whether respondent

had a private right of action under 48 U.S.C. § 1401a, an issue that

was answered affirmatively by the district court.

g | :

second issue has never been raised in any of the proceedings

or submissions of the parties prior to the petition.’ Because

the two issues could have been, but were not, presented to

the court of appeals in connection with its original decision

and because petitioners do not challenge any of the holdings

of the court of appeals, nothing in the petition warrants further

review. Moreover, if either of the issues presented warranted

review, it should occur in the context of the Third Circuit’s

ruling on the pending appeal of the permanent injunction

directed to the same underlying conduct that is the subject

of the superceded interlocutory ruling as to which petitioners

seek review now.

ARGUMENT

I. There are No Special Circumstances in this Case

Warranting Review of An Appeal of an Interlocutory

Order.

In Equivest I, the district court granted respondent’s

request for a preliminary injunction, in part, and denied

petitioners’ motion to dismiss. See Equivest J, 208 F. Supp.

2d at 546 (Pet. App. 18). The district court, in its order,

indicated that a trial on the merits would be set promptly.

Id. at 551-52 (Pet. App. 29). Both aspects of the district

court’s order were interlocutory. See 28 U.S.C. § 1292(a)(1)

(authorizing appeal of interlocutory orders granting

injunctions); Organization for a Better Austin v. Keefe, 402

U.S. 415,420 (1971) (Harlan, J., dissenting) (“Review of

preliminary injunctions is a classic form of interlocutory

7. The second issue presented by petitioners relates to whether

a Statute passed in 1954, as amended, repealed 48 U.S.C. § 1401la by

implication.

9

appeal . . .”); International Paper Co. v. Ouellette, 479 U.S.

481 (1987) (noting that district court denied a motion to

dismiss and certified its decision for interlocutory appeal);

Braden v. University of Pittsburgh, 552 F.2d 948, 965

(3 Cir. 1977) (Garth, J., concurring.) (“[T]his case is before

us on interlocutory appeal from an order of the district court

which did no more than to deny [appellant’s] motion to

dismiss [appellee’s] complaint under Fed. R. Civ. Proc.

12 (b)(6).”). The court of appeals affirmed the district @ourt’s

interlocutory order. See Equivest II, 321 F.3d at 402-03

(Pet. App. 15-16). Absent compelling circumstances, this

Court does issue a writ of certiorari when it is presented with

an appeal from an interlocutory order. See Brotherhood of

Locomotive Firemen v. Bangor & Aroostock R. Co., 389 U.S.

327, 328 (1967) (denying the petition “because the Court of

Appeals remanded the case [and thus it] is not yet ripe for

review by this Court”). See also American Construction Co.

v. Jacksonville, T. & K.W. Railway Co., 148 U.S. 372,

384 (1893) (“this court should not issue a writ of certiorari

to review a decree of the circuit court of appeals on appeal

from an interlocutory order, unless it is necessary to prevent

extraordinary inconvenience and embarrassment in the

conduct of the cause”).

Consideration of an interlocutory appeal would be

particularly premature in this case because the district court

has already conducted a trial and issued a permanent

injunction. See Berne II, 2003 WL 21078073 at *29-31

(Pet. App. 121-125)." Additionally, petitioners have already

appealed the final judgment in Berne JI, which granted a

8. Berne II is a consolidated action involving the Equivest

plaintiffs, the Berne plaintiffs, and other plaintiffs. See Berne II, 2003

WL 21078073 at *1 (Pet. App. 52).

a ee ee

10

permanent injunction to Equivest and other landowners, to

the Third Circuit.’ In Berne I, the district court performed a

full analysis of the private right of action issue. Berne J, 120

F. Supp. 2d at 534-35 (Pet. App. 42-45). If petitioners have

properly preserved the arguments, and if they choose to do

so, they will have the opportunity to raise in the court of

appeals in Berne III the issues presented in their petition, |

where they may, for the first time, be properly briefed by the

parties and considered by the court of appeals. Therefore,

the petition should be denied in light of its interlocutory

~ nature and the fact that a superceding permanent injunction

is currently on appeal to the Third Circuit.

Legislation passed by the Virgin Islands subsequent to

the filing of the petition further eliminates any need for

review by this Court. On July 1, 2003, the Virgin Islands

legislature passed Bill No. 25-0039, to allow petitioners to

collect taxes for tax years 1999 through 2004 based

upon the real property assessments utilized in 1998,

with the ability to seek adjustments for those years in the

event a new and compliant tax system results in higher

assessments. See Act of July 14, 2003, No. 6586, 2003 V.I.

Sess. Laws __ (Opp. App. la-lla). On July 14, 2003,

the governor signed the bill, with certain line-item vetoes

not relevant to the interim collection of real property taxes.

Id. (Opp. App. 9a-11a).

Petitioners contend that the district court’s ruling has

created a “financial crisis” and, at least implicitly, suggest

that this Court should review the case to address the “crisis.”

Pet. 3-4. The passage of recent legislation, however, permits

collection of taxes pending further judicial proceedings, thus

9. The appeal to the Third Circuit of Berne II, Berne Corp., et all.

v. Gov t of the V.I., et al., No. 03-2549 (3™ Cir., docketed, May 28, 2003),

will be designated as Berne III in this Opposition.

11

resolving any alleged financial crisis arising from the granting

of a permanent injunction.'°

II. The Court Should Not Grant the Petition, Vacate and

- Remand (“GVR”) or Grant the Petition to Hear this

Case Because the Question Presented Was Not Raised

Below and Petitioners Have Not Properly Preserved

The Issues.

Petitioners’ question presented claims to seek a GVR

based upon either Gonzaga University v. Doe, 536 U.S. 273

(2002) or the Revised Organic Act of 1954.'' However,

neither of these arguments was made in petitioners’ brief on

the merits in the court of appeals, or addressed in its opinion.

Nor is either of these arguments founded on decisions or other

10. The district court’s preliminary injunction applied only to

Equivest’s two properties, the absence of tax revenue from which

could hardly precipitate a financial crisis. Equivest J, 208 F. Supp.2d

545 (Pet. App. 17-32). The district court’s permanent injunction,

which is not before this Court, has broader application.

11. Strictly speaking, while petitioners claim to be seeking a

GVR, they are not. Instead, petitioners are seeking a summary

disposition on the merits on two issues that were not briefed before

the court of appeals. See Pet. 14 (Petitioners ask this Court to “grant

certiorari, vacate the judgment below, and remand this case (‘GVR’)

to the Third Circuit with instructions to dismiss the case for lack of

subject matter jurisdiction.”). If petitioners were actually seeking a

GVR, they would instead request that this Court remand to the

court of appeals for further consideration in light of Gonzaga.

Perhaps petitioners have adopted this unorthodox approach in light

of their failure to raise the issues asserted in this petition before the

court of appeals and knowing that Gonzaga was decided before they

submitted their brief to the court of appeals.

12

intervening factors subsequent to the decision of the court

of appeals. See Equivest I], 321 F.3d 394 (Pet. App. 1-16).

The district court opinion in this case held that there was

a private right of action under 42 U.S.C. § 1983 arising from

a violation of the right to an assessment at the “actual value”

contained in 48 U.S.C. § 140la. See Equivest I, 208

F. Supp. 2d at 548, n.6 (Pet. App. 21-22 n.6). The district

court relied upon its detailed analysis of the private right of

action issue in Berne J, which is consistent with the holding

and principles contained in Gonzaga. See Berne I, 120

F. Supp. 2d at 534-35 (Pet. App. 42-45).'”

In their appeal to the Third Circuit, petitioners did not

raise either the Gonzaga private right of action issue or

the argument that 48 U.S.C. § 1401a was impliedly repealed

by the Revised Organic Act of 1954, as amended, 48 U.S.C.

§§ 1541-1645 (the “ROA”), even though Gonzaga was

decided well before the petitioners submitted their brief to

the Third Circuit’? and the ROA was enacted in 1954.

12. See Section III.A., infra, for an evaluation of Berne I's

consistency with Gonzaga.

13. As noted, petitioners raised the private right of action issue

in their motion for rehearing en banc. See n.5, supra. However,

petitioners were aware of this issue when they filed their appeal

because the requirement of a private right of action was addressed

by the district court and because it is a long-standing concept.

See Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Curran, 456 U.S.

353, 377 (1982) (“In 1975 the Court unanimously decided to modify

its approach to the question whether a federal statute includes a

private right of action.”).

13

Therefore, it cannot be said that an intervening event or

decision would support a GVR in this case because petitioners

had ample notice of Gonzaga and the ROA, but either failed

to—or decided not to—raise those issues below. Given that

petitioners did not appeal on these issues and that they were

not briefed in connection with the court of appeals’ decision,

this Court should abide by its practice “to decide cases on

the grounds raised and considered in the Court of Appeals

... and decline to issue a GVR or to grant the petition.

Owasso Independent School District v. Falvo, 534 U.S. 426,

431 (2002) (quoting Bragdon v. Abbott, 524 U.S. 624, 638

(1998)); Youakim v. Miller, 425 U.S. 231, 234 (1976)

(“ordinarily, this Court does not decide questions not raised

or involved in the lower court”).

Petitioners attempt to address their failure to raise in the

courts below the questions presented in their petition by °

claiming that the issues raised relate to federal subject matter

jurisdiction, which can be raised at any time. However, this

Court has determined that the existence of a private right of

action is a separate legal concept from federal subject matter

jurisdiction. See National Railroad Passenger Corp. v.

National Ass'n of Railroad Passengers, 414 U.S. 453, 456

(1974). See also Erienet, Inc. v. Velocity Net, Inc., 156 F.3d

513, 520 (3™ Cir. 1998) (“The Supreme Court has recognized

that the question of whether a statute creates a private right

of action is distinct from the question of whether a federal

court has jurisdiction.”) (citing National Railroad Passenger

Corp., 414 U.S. at 456). While a court would ordinarily

address the question of a private right of action first,

see National Railroad Passenger Corp., 414 U.S. at 456,

the issue may be waived because it is distinct from federal

subject matter jurisdiction. See Hopp v. The City of

Pittsburgh, 194 F.3d 434, 440 (3™ Cir. 1999) (holding that

14

appellant waived its challenge based upon lack of a private

right of action under 42 U.S.C. § 1981 by failing to timely

assert the argument). Because the issue of a “private right of

action” is not jurisdictional, and may be waived, the Fourth

Circuit recently ruled—on remand for reconsideration in light

of Gonzaga—that appellants’ railure properly to raise the

issue in the court of appeals resulted in a waiver of the

potential argument. See National Home Equity Mortgage

Association v. Face, 322 F.3d 802 (4" Cir. 2003). Similarly,

if the Court were to issue a GVR in this case, the Third Circuit

would be presented with the unappealed holding of the

district court that 48 U.S.C. § 1401a creates a private right

of action for landowners in the Virgin Islands and that

respondent prevailed on that right of action. As was the case

in National Home, it would be appropriate in these

circumstances for the Third Circuit to affirm its previous

decision based upon a waiver of the “private right of action”

issue and defer any consideration of the issue to the pending

appeal of the order entering a permanent injunction, if the

argument is properly presented there.

III. There Is No Need to Grant the Petition or GVR

Based Upon An Asserted Lack of a Private Right of

Action or the Revised Organic Act of 1954 Because

Consideration of Those Issues Will Not Alter the

Result in this Case

A. The Asserted Lack of a Private Right of Action

Prior to filing this petition, petitioners sought rehearing

by the court of appeals, asserting that its opinion conflicted

with Gonzaga's holding regarding private rights of action.

See Pet. 2. The court of appeals denied rehearing, both by

the deciding panel and en banc. See Pet. App. 126-27.

15

Thus, while respondent did not have the opportunity to

respond to petitioners’ argument regarding the impact, if any,

of Gonzaga “n this case, the court of appeals has already

denied rehearing when presented with these arguments.

In addition to the reasons stated above, there is no

merits-based justification for granting the petition here

because the decision of the court of appeals was correct and

the district court’s analysis of the private right of action issue

was consistent with Gonzaga.'* The district court in Berne J

affirmatively determined that a violation of 48 U.S.C.

§ 1401a’s requirement that land be taxed at its “actual value”

results in a “deprivation of ... rights, privileges, or

immunities secured by the Constitution and laws.” Berne /,

120 F. Supp. 2d at 533-35 (Pet. App. 42-45) (quoting

42 U.S.C. § 1983). The district court in Berne J held that

“48 U.S.C. § 1401a creates a federally protected right

actionable pursuant to 42 U.S.C. § 1983.” Jd. at 535

(Pet. App. 44-45) (emphasis added). Section 1401a

“was intended to benefit taxpayers by creating uniformity of

taxation and reducing the burdens of taxation on land

(and thus landowners such as plaintiffs) in productive use.”

Id. (Pet. App. 44). As petitioners acknowledge, the district

court “based [its] analysis on [this] Court’s decisions in

Golden State Transit Corp. v. City of Los Angeles, 493 U.S.

103 (1989), and Wilder v. Va. Hosp. Ass’n, 496 U.S. 498

14. Even if the court of appeals’ decision was in error (which it

was not), review would not be justified on that basis because this

Court is not a court of error correction. See Robert L. Stern et al.,

Supreme Court Practice 321 (8* ed. 2002) (quoting Address of Chief

Justice Vinson before the American Bar Association, Sept. 7, 1949)

(“[T]he Supreme Court ‘is not and never has been, primarily

concerned with the correction of errors in lower court decisions.’ ”)

(citation omitted).

16

(1990).” (Pet. 11-12 n.5). Gonzaga, which cites Golden State

with approval, would not dictate a different result.'°

Additionally, this is not, as was Gonzaga, a Spending

Clause case. Here, the right of landowners to be taxed upon

the actual value of their property was explicitly created by

Congress in 48 U.S.C. § 1401la under its broad power to

govern territories under the United States Constitution.

See U.S. Const. art. IV, § 3, cl. 2. (“The Congress shall have

Power to dispose of and make all needful Rules and

Regulations respecting the Territory or other Property

belonging to the United States .. .”’”). In contrast, Gonzaga

expressly dealt with attempts by a person to create an action

based upon a purported interest arising in connection with

15. Moreover, the petition attempts to treat this case as an implied

right of action case, rather than a section 1983 case, asserting that:

Even assuming, arguendo, that § 1401a creates a private

right of action for Virgin Islands landowners ...,

“a plaintiff suing under an implied right of action still must

show that the statute manifest an intent ‘to create not jusi a

private right but also a private remedy.’” Gonzaga Univ.,

536 U.S. at 284 (emphasis in original).

Pet. 21. The district court specifically held, however, that respondent’s

claim was actionable under 42 U.S.C. § 1983. See Equivest I, 208 F.

Supp. 2d at 548 n.6 (Pet. App. 21-22) (citing Berne J, 120 F. Supp.2d at

533-34 (Pet. App. 40-42)) (holding “that Equivest has valid section 1983

action”). In this Section 1983 case, Gonzaga specifically requires that

the statute need only confer a right, not a remedy, because the remedy is

implied from section 1983. See Gonzaga, 536 U.S. at 284 (“Plaintiffs

suing under § 1983 do not have the burden of showing an intent to

create a private remedy because § 1983 generally supplies a remedy for

the vindication of rights secured by federal statutes.”).

17

“spending legislation.”'° If Gonzaga is to be analyzed in the

context of Congress’ explicit power to legislate over the

territories, it should be in a setting where the private right of

action issue has been fully briefed and carefully considered

by the court of appeals. Therefore, if the private right of action

issue is ever to be worthy of consideration by this Court in

the context of 48 U.S.C. § 1401a, it should not occur in the

context of this appeal of an interlocutory ruling.

B. The Revised Organic Act of 1954 (“ROA”)

Petitioners raise the argument that the ROA may have

silently repealed 48 U.S.C. § 1401a for the first time in their

petition. As they acknowledge, the ROA only superceded the

laws applicable to the Virgin Islands that addressed the

same issues. Pet. 23. Petitioners then note that the ROA

superceded the bulk of the Organic Act of 1936. Jd. The 1954

Revised Organic Act, however, did not purport to, and did

not, supercede other laws, including Section 1401a,

notwithstanding petitioners’ unfounded assertions to the

contrary. Section 1401a remains effective. See Equivest II,

321 F.3d at 399 (Pet. App. 8-9). It is for the U.S. Congress to

determine whether that law should be repealed. Again, if the

Court is ever to consider this issue, it should be in the context

of a case where the issue has been briefed and considered in

the courts below.

16. See Gonzaga, 536 U.S. at 279 (“But we have never before

held, and decline to do so here, that spending legislation drafted in

terms resembling those of FERPA can confer enforceable rights.”)

(emphasis added); Jd. at 281 (“Our more recent decisions, however,

have rejected attempts to infer enforceable rights from Spending

Clause statutes.”) (emphasis added); Jd. at 290 (“FERPA’s

nondisclosure provisions . . . serve primarily to direct the Secretary

of Education’s distribution of public funds to educational

institutions.”) (emphasis added).

18

CONCLUSION

The court of appeals’ decision applies sound principles

of law to the issues presented on appeal from an interlocutory

order. Petitioners do not challenge any of the actual holdings

of the court of appeals. There is no justification for this Court

to consider two new issues that could have been, but were

not, raised before the court of appeals. The petition for a

writ of certiorari should accordingly be denied.

Respectfully submitted,

JOHN P. DEMPSEY JOHN F. DIENELT

JEFFREY R. COHEN Counsel of Record

FAIRFIELD REsorts INC. Scott McINTOosH

8427 South Park Circle PipER RuDNICK LLP

Suite 300 1200 Nineteenth Street, N.W.

Orlando, FL 32819 Washington, DC 20036-2412

(407) 370-5315 (202) 861-3900

CHaD C. MESSIER

DuDLEY, TOPPER AND

FEUERZEIG, LLP

1A Frederiksberg Gade

Charlotte Amalie, St. Thomas

U.S. VI 00802

(340) 774-4422

Attorneys for Respondent

APPENDIX

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APPENDIX

ACT NO. 6586

BILL NO. 25-0039

TWENTY-FIFTH LEGISLATURE

OF THE VIRGIN ISLANDS

OF THE UNITED STATES

Regular Session

i 2003

To amend title 33, Virgin Islands Code, sections 2402, 2452,

2453 and add section 2456, relating to the assessment and

collection of real property taxes, to provide for other related

purposes, and to repeal Act 6574

ow ae

BE IT ENACTED by the Legislature of the Virgin Islands:

SECTION 1. The Legislature finds and declares that:

(e) The Virgin Islands is experiencing a severe fiscal

crisis that threatens the financial stability of the Government

and its institutions;

(f) A protracted injunction against collecting real

property taxes would have Draconian consequences for the

Government and the people of the Virgin Islands;

3a

Appendix

(g) To defray the costs of complying with the Decree in

the Property Tax Litigation and the cost of revising the

property tax system of the Virgin Islands te-ceniph ath

48-USC-$H46la, it is crucial that Government collect

property tax revenues expeditiously; and

_ (h) To fulfill its fiduciary duty to the people of the Virgin

Islands to promote and ensure the public health, safety and

general welfare by ensuring the collection of sufficient

revenues to provide for adequate government services and

to develop a fair and equitable property tax system, the

measures set forth in this Act must be executed faithfully.

SECTION 2. Fhe-Gevernment-andthetax— Assessor

SECTION 3. Notwithstanding title 33, Virgin Islands

Code, section 2402, the Tax Assessor may issue tax bills and

collect taxes at the 1998 assessment level, for all classes of

real property, including commercial and non commercial real

property, for the tax years 1999, 2000, 2001, 2002, 2003 and

2004, before the revision of the property tax system+required

by-section-2-of this Act and by the Property Tax Litigation,

provided the tax due shall be subject to adjustment for each

year according to the assessed value based on aetual-vahie

when the new system is implemented. The taxpayer shall be

entitled to a credit applied to his subsequent years’ tax bills

4a

Appendix

or a refund for any over-payment that may have accrued as

the result of the payment of any of his tax bills for any year

from 1999 until the new system is implemented. In the case

of an underpayment of the taxes paid pursuant to this section,

the taxpayer may be billed for any prior years’ real property

tax obligations and shall have 120 days in which to pay the

sum due, without penalty or interest otherwise due under title

33, Virgin Islands Code, chapter 89, section 2494.

SECTION 4. Title 33, section 2452, Virgin Islands

Code, is amended by striking “sixty (60)” and by inserting

in lieu thereof the “one hundred twenty (120)”.

SECTION 5. Title 33, Virgin Islands Code, section

2453 is amended by re-designating subsection (c) as

subsection (d) and inserting a new subsection (c) to read as

follows:

“(c) The Board of Tax Review shall designate a hearing

officer, qualified by training or experience in the areas of

law, tax, or accounting, to conduct hearings under this

chapter, to compile evidence and establish findings of fact,

but the final substantive decision in all appeals or complaints

under this chapter shall be made by the Board of Tax Review.”

SECTION 6. Title 33, chapter 87, Virgin Islands Code,

is amended by adding a section 2456 to read as follows:

Ҥ2456. Office of the Tax Assessor Revolving Fund

(a) There is established in the Treasury of the

Government of the Virgin Islands a separate and distinct fund

designated as “The Office of the Tax Assessor’s Revolving

Sa

Appendix

Fund.” The Commissioner of Finance shall provide for the

administration of the Fund, and no monies shall be available

for expenditure from the Fund except as provided by this

section. =

(b) The Fund shall consist of one percent of the real

property taxes collected annually by the Commissioner of

Finance or an amount not to exceed $500,000 per annum,

and such sums as may be appropriated from time to time by

the Legislature, all of which shall remain available until

expended.

(c) Monies shall be disbursed from the Fund by the

Commissioner of Finance upon the authorization of the

Lieutenant Governor, for the purpose of purchasing and

maintaining data processing equipment, for staffing and

training of personnel, and for the purchase and procurerzent

of such other necessary supplies, equipment and professional

services as may be determined to be necessary by the

Lieutenant Governor for maintaining and improving the

Office of the Tax Assessor.

(d) The Commissioner of Finance shall maintain a

record of all monies deposited into and disbursed from the

Fund and shall annually report to the Governor and the

Legislature on the status of the Fund.

(e) Unless extended by the Legislature, the authorization

for this Fund shall expire on October 1, 2008.”

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Appendix

SECTION 7. The sum of $1,600,000 is appropriated

in the fiscal year ending September 30, 2003, from the

property taxes collected pursuant to section 3 of this Act to

The Actual Value Property Tax Assessment Fund, established

by the Commissioner of Finance pursuant to paragraph 4 of

the Decree entered on May 12, 2003, in the Property Tax

Litigation. The sum shall remain available until expended.

SECTION 8. Notwithstanding title 33, Virgin Islands

Code, section 2402 (a) or any other law to the contrary, the

next assessment of commercial and non-commercial property

shall occur in the year 2005, and biennially thereafter.

SECTION 9. (a) The Tax Study Commission established

under section 3 (c) of Act No. 6391, shall analyze and make

recommendations for the adjustment of the 1.25 percent millage

rate establishedn48-U-S-C-$+4401» and shall submit a report

and its recommendations to the Governor and to the Legislature

within 180 days after the effective date of this Act.

(b) The Law Revision Commission established under

titie 1, Virgin Islands Code, section 275, in conjunction with

The Tax Study Commission and the Tax Assessor’s Office, shall

recommend needed changes to the property tax code to bring

property tax laws into eomphance—with-the requirements-—of

48-U-S-C-4$-46+2-and-in harmony with modern times and

conditions, and shall submit to the Governor and to the

Legislature within 270 days after the effective date of this Act,

a report on their findings and recommendations, including

proposed draft legislation.

-

7a

Appendix

SECTION 10. Pursuant to title 3, Virgin Islands Code,

section 180, subsection (h), the Governor shall submit to the

Legislature within 30 days after the effective date of this Act,

the names of nominees selected to fill any vacancies on the

Board Tax Review.

SECTION 11. Act No. 6574 (Bill No. 25-0003) is

repealed.

SECTION 12. Severability. Each section and each

provision of this Act stand alone, and if any provision in this

Act has been held, or in the future is held, to be

unconstitutional, preempted by federal law, or otherwise

invalid by any court of competent jurisdiction, all of the other

provisions set forth in this Act are intended to, and shall

remain, fully effective and shall be interpreted to exclude

the unconstitutional, preempted, or otherwise invalid

provision. If any section, subsection, paragraph, sentence,

clause, word, or portion of this Act is for any reason held to

be unconstitutional, preempted by federal law, or otherwise

invalid, that holding shall not effect the remaining portions

of this Act. The Legislature expressly declares that it would

have enacted this Act and each section, subsection, paragraph,

sentence, clause, word, or portion thereof despite the fact

that one or more sections, subsections, paragraphs, sentences,

clauses, words, or portions of this Act may be held

unconstitutional, preempted by federal law, or otherwise

invalid.

Thus passed by the Legislature of the Virgin Islands on

June 18, 2003.

8a

Appendix

Witness our Hands and the Seal of the Legislature of the

Virgin Islands this 1* Day of July, A.D., 2003.

s/ David S. Jones

David S. Jones ~

President

s/ Shawn-Michael Malone

Shawn-Michael Malone

- Legislative Secretary

9a

Appendix

THE UNITED STATES VIRGIN ISLANDS

OFFICE OF THE GOVERNOR

GOVERNMENT HOUSE

Charlotte, Amalie, V.I. 00802

340-774-0001

THE GOVERNOR’S OBJECTIONS

Bill No. 25-0039 is hereby approved with the exception

of the following items, part or parts, portion or portions

thereof, which are nereby objected to (and deleted and

disapproved in full) pursuant to Section 9(d) of the Revised

Organic Act of 1954, as amended:

SECTION 1.

(a) Itis a federal mandate of Congress and the policy of

the Legislature of the Virgin Islands to equalize and more

equitably distribute taxes on real property in the Virgin

Islands and to reduce the burden of taxation now imposed

on land in productive use in the Territory;

(b) Congress, through the Revised Organic Act of the

Virgin Islands, 48 U.S.C. §1401a, commands the Territory

to establish and implement a real property tax system based

on the actual value of the real property; ‘

(c) The District Court of the Virgin Islands has ruled

that the statutory framework for taxing real property and the

administration of the taxing system by the Virgin Islands Tax

Assessor and the Board of Tax Review violate federal and

Virgin Islands law;

10a

Appendix

(d) The District Court in Berne Corp. et. al. v. the

Government of the Virgin Islands, et. al. Civil Nos 2000-

141, 2000-167, 2001-151, 2001-155, 2001-181, 2001-196,

2001-197, 2001-228, and 2002-057, (“the Property Tax

Litigation”) has decreed that the Government shall make no

further effort to collect any tax bills already issued for any

real property for tax years 1999, 2000, and 2001, nor may

the Government issue any tax bills for the tax year 2002 and

beyond, unless provisions are made for adjustment of tax

bills until such time as the tax system is revised to reliably

assess all classes of real property at actual value;

(g)

to comply with 48 U.S.C. §140la

* * *

SECTION 2. The Governor and the Tax Assessor shall

bring the Virgin Islands real property tax system into

compliance with the federal mandate of 48 U.S.C. §140la

that real property be assessed based on its actual value, and

into accordance with the Uniform Standards of Professional

Appraisal Practice or other appropriate nationally recognized

standards.

lla

Appendix

SECTION 3.

system required by section 2 of this Act... actual value

when is

SECTION 9.

(a) established in 48 U.S.C. §1401(b)

(b) compliance with the requirements of 48 U-S-C.

§1401a and in

Witness my hand and the Seal of the Government of the

United States Virgin Islands at Charlotte Amalie, St. Thomas,

Virgin Islands, this 14" day of July, A.D., 2003.

s/ Charles W. Turnbull

Charles W. Turnbull

= Governor