Harper v. Virginia Department of Taxation Court Opinion

    . ' V
( w

y

U.s. SUPREME COURT REPORTS 125 L Ed 2d

HENRY HARPER, et al., Petitioners

i r !

VIRGINIA DEPARTMENT OF TAXATION 

509 US —, 125 L Ed 2d 74, 113 S Ct —

[No. 91-794]

Argued December 2, 1992. Decided June 18, 1993, 

satisfying requSm

SUMMARY

(1989) 48?US E“ 2 d ^ S ? i0 9 ^  Treasury
the constitutional doctrine of  ̂ violates
state taxes retirement benefite p^d bv ^  “̂ munity when the
from taxation retirement benefits Government but exempts
sions. la response
exemption from state incomp tofoK r ^  Virginia (1) repealed its 
employees; and (2) enacted a s tS te 'u L S '^  government
refund of state taxes im Ssed on̂  f  taxpayers could seek a
1985 through 1988 fo rT p  to 1 v l ?  f  retirement benefits in the years 
resolution of whether Virginia had to^^^JSuS® f  
federal civil service and militarv retirpp« ^  number of
trial court in which they sough^a refund ^  ^   ̂ Virginia state
^sessed for 1985-1988 hi v id a L n  ™P^°Perly
The trial court, applying the factors W r l f  Dept, of Treasury
decision set forth to Oifvron Oil application of a judicial
^ 6, 92 S a  349, d e n S  t o r r S u ^ L  T  ^ ^0 L Ed 2d 
M icl^an Dept, of Treasury X ? d 2  S ' t s T e  o f ^
resolution was not clearly foreshadowed^oi ® mpression whose
V Michigan Dept, o f Treasurv w ou ld  ’ Davis
retroactive application would ^Lult in in ^ ! •5®^*'  ̂ operation; and (3) 
appeal, the Supreme Court of V ir ^ to  . Y ’ injustice, and hardship. On 
OH ev„„ Of. CO. y Hosoo, <]] “ ^ S



Treasury was not to be applied retroactively; and (2) as a matter of Virginia 
law, a ruling which declared a taxing scheme unconstitutional was to be 
applied prospectively only (241 Va 232, 401 SE2d 868). On certiorari, the 
United States Supreme Court vacated the Supreme Court of Virginia’s 
judgment and remanded the case for further consideration in light of a 
United States Supreme Court decision that an earlier decision which invali­
dated excise taxes on alcoholic beverages was retroactively applicable to
claims arising from facts predating such earlier decision (501 U S ------ , 115 L
Ed 2d 1049, 111 S Ct 2883). On remand, the Virginia Supreme Court, 
reaffirming its prior decision in all respects, expressed the view that the 
issue of retroactivity was not decided in Davis v Michigan Dept, of Treasury 
because Michigan did not contest the plaintiffs’ entitlement to a refund (242 
Va 322, 410 SE2d 629).

On certiorari, the United States Supreme Court reversed the judgment of 
the Supreme Court of Virginia and remanded the case for further proceed­
ings. In an opinion by Thomas, J., joined by Blackmun, Stevens, Scalia, 
and SouTER, JJ., and joined in part (as to points 3-5) by Kennedy and White, 
JJ., it was held that (1) when the United States Supreme Court applies a 
rule of federal law to the parties before it, such rule is the controlling 
interpretation of federal law and must be given full retroactive effect in all 
cases still open on direct review and as to all events, regardless of whether 
such events predate or postdate the Supreme Clourt’s announcement of the 
rule; (2) under such retroactivity approach, the Virginia Supreme Court 
must apply in the present refund action the rule announced in Davis v 
Michigan Dept, of Treasury; (3) the Virginia Supreme Court’s judpnent did 
not rest on an independent and adequate state ground which relieved it of 
the obligation to apply retroactively the rule in Davis v Michigan Dept, of 
Treasury; (4) remand was appropriate where the issue of whether Virginia 
law provided the retirees an adequate form of predeprivation process had 
not been properly presented, and such question—and the performance of 
other tasks pertaining to the crafting of any appropriate remedy—would be 
left to the Virginia courts; and (5) Virginia was free to choose which form of 
relief it would provide, so long as such relief satisfied the minimum require­
ments under the due process clause of the Federal Constitution’s Fourteenth 
Amendment. <•

Scalia, J., concurring, joined the court’s opinion and expressed the view 
that the United States Supreme Court’s doctrine of prospective decisionmak­
ing was not protected by the flexible rule of stare decisis. * ■

Kennedy, J., joined by White, J., concurring in part and concurring in 
the judgment, expressed the view that_(l) it was sometimes appropriate in 
the civil context to give only prospective application to a judicial decision; 
(2) retroactivity in civil cases should continue to be governed by Chevron Oil 
Co. V Huson; and (3) under Chevron Oil Co. v Huson, the nfie announced in 
Davis V Michigan Dept, of Treasury must be given retroactive effect since it 
neither overruled clear past precedent on which litigants may have relied 
nor decided an issue of first impression whose resolution was not clearly 
foreshadowed. -

HARPER V VIRGINIA DEPT. OF TAXATION
(1993) 125 L Ed 2d 74

75



U.S. SUPREME COURT REPORTS 125 L Ed 2d

lated in Chevron Oil Co. v Huson- and ^ analysis articu-
correctly applied Chevron Oil Co v Husoi in Court

trodct-vity „a= »“ '>=‘= n ^ £ S ; r h  “

headnotes

Income T ^ ^ T u - T a t e ^ T " ^
retirement benefits -  intergi n r e m ^ r U n i t e d  States Su- 
vemmental immunity — ret O^n?  ̂ Michigan
^ c tiv ity  of Supreme Coui fo3 803,
decision ^ Ed 2d 891, 109 S Ct 1500-^

la, lb. A state’s highest I- violates the constitii

TOTAL CLIENT-SERVICE LIBRARY® REFERENCES

State and Local 'S?atiJn*̂ §°Jg3  ̂ d̂,

L Id  ̂ Ta.es § 14
spective Matte^^ Prospective or Retro-

Privilege; Income

fu r th e ?te £ ?r ?h S ^ S S ‘1lS  ^
^ted research service. Usf\uto-Cite ‘ °̂“ P*̂ ter-as-
forin, parallel references nrior citations for
tation references. ’ history, and anno-

. . ANNOTATION REFERENCES
State income tax ah iW»i„<..- “ 4

Court cases. 103 L Ed 2d 1027.  ̂ of United States-^upreme

I • ^ M '^ s S w'JiL ^S^LEdldTaT’^’ t  of its own dasisinn, 

decision. 10 ALR3d 1371. t«raictive operation of overruling

c

76



HARPER V VIRGINIA DEPT. OF TAXATION
(1993) 125 L Ed 2d 74

I

retirement benefits paid by the Fed­
eral Government but exempts from 
taxation retirement benefits paid by 
the state or its political subdivisions 
—in an action against the state for a 
refund of taxes erroneously or im­
properly assessed in violation of 
such rule, because in its decision in 
Davis V Michigan Dept, of Treasury, 
the Supreme Court retroactively ap­
plied such rule to the litigants be­
fore it where the Supreme Court (1) 
noted that it had been conceded that 
a refund would be appropriate if 
intergovernmental tax immunity 
principles had been violated; and (2) 
stated that a refund was appropriate 
in the case at hand to the extent 
that taxes had been paid pursuant to 
the state’s invalid tax scheme. 
(O’Connor, J., and Rehnquist, Ch. J., 
dissented from this holding.)

Courts § 777.5 — retroactivity o f  
Supreme Court decisions

2a, 2b. When the United States 
Supreme Court applies a rule of fed­
eral law to the parties before it, such 
rule is the controlling interpretation 
of federal law and must be given full 
retroactive eifect in sill cases still 
open on direct review and as to all 
events, regardless of whether such 
events predate or postdate the Su­
preme Court’s announcement of the 
rule; where the Supreme Court does 
not reserve the question whether its 
holding should be applied to the par­
ties before it, an opinion announcing 
a rule of federal law is properly 
understood to have followed the nor­
mal rule of retroactive application 
and must be read to hold that its 
rule should apply retroactively to 
the litigants then before the court; 
furthermore, the legal imperative to 
apply a rule of federal law retroac­
tively after the case announcing the 
rule already has done so must pre­

vail over any claim based on a retro­
activity analysis under Chevron Oil 
Co. V Huson (1971) 404 US 97, 30 L 
Ed 2d 296, 92 S Ct 349, which analy­
sis considers whether (1) the decision 
establishes a new rule of law by 
either overruling past precedent on 
which litigants may have relied or 
deciding an issue of first impression 
whose resolution was not clearly for­
eshadowed, (2) retrospective opera­
tion will further or retard operation 
of such rule, and (3) retroactive ap­
plication would be inequitable. (Ken­
nedy, White, and O’Connor, JJ., and 
Rehnquist, Ch. J., dissented from 
this holding.)

Appeal §492; Courts §777.5; In- 
com e Taxes § 14; States, Terri­
tories, and Possessions § 18 — 
adequate state grounds — in­
tergovernmental tax immu­
nity — retroactivity — su­
premacy clause

3. On certiorari to the United 
States Supreme Court, a judgment 
by a state’s highest court does not 
rest on an independent and ade­
quate state ground which relieves 
that court of the obligation to apply 
retroactively the rule announced by 
the Supreme Court in  Davis v Michi­
gan Dept, of Treasury (1989) 489 US 
803, 103 L Ed 2d 891, 109 S a  1500 
—that a state violates the constitu­
tional doctrine of intergovernmental 
tax immunity when the state taxes 
retirement benefits paid by the Fed­
eral Government but exempts from 
taxation retirement benefits paid by 
the state or its political subdivisions 
—in an action against the state, un­
der a state statute, for a refund of 
taxes erroneously or improperly as­
sessed in violation of such rule, 
where the state’s highest court as­
serted, pursuant to a state-law retro-



U.s. s u p r e m e  c o u r t  r e p o r t s
nt- ■ . ---------- - L Ed 2d

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only, . b e o i L T u t  S S  “ ■ o L . e T u S ” " ' ’ "^ * '

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.IlfW  iH p l■ini not apply „troactrval?' ‘ he n v^ abU if/^ f'?"^ *^ ™  ^“ ring,

-  * '• /*  ~  ~  f f f r  ~ v i -open on reversal  ̂ iraeir to satisfy the Hhq=¥S|̂:-s
im m m m

z  b y '̂ ^ 'S f r i ^ -r ^ a -s
state law proW d« t^^® 'whether other order th ^  c S t T  iThi^d^"?® 
adequate form of p r e d t p S ^ ® ”  ^   ̂“ oodiscriminatory scheme.

or . o. ' ^l be” ! -  « u .  
Ooeation of state law, and t''h T p e S ’ 6 " * ” ■
™ ®“ ' ®'’ - A otate incute the obliga-



I

h a r p e r  V VIRGINIA DEPT. OF TAXATION
^. (1993) 125 L Ed 2d 74
tion, under the due process Hanao *
tfi* Constitution’s Four- duress to prospective
teenth Amendment, to provide Ch I d> and Rehnquist,

; K - \ - ' 4 ^ ™ t r ' - d u r e i ‘* unaer duress
promptly to pay a tax when due and 
rrfegates the taxpayer to a S p T y  
ment refund action in which the 
axpayer can challenge the tax’s le­

gality; a state that establishes vari­
ous sanctions and summary reme-
teS a  prompt taxpayers to
tender payments before their objec- 
tions are entertained or resolved 
does not provide taxpayers a mean- 
mgful opportunity to withhold pay­
ment and to obtain a predeprivation 
determination of the tax assess 
meat’s validity, and such l i m i S S
dure^  h "°'^®*»*“ ‘ ionally significant 
duress because a tax payment ren-
musi h circumstancesmust be treated as an effort to avoid 
financial sanctions or a seizure of
S v ° " .  property; accord­
ingly, a state may not confine a

- .. uiay oe consid­
ered on remand — due pro- 
cess relief from unconstitu­
tional tax

remand from the United
to a state’s 

ighest court in a case in which the
S S T -  that thestates highest court was required to
apply retroactively a Supreme Court 
decision holding certain state taxes 
unconstitutional, a state is free to 
choose which form of relief it wUl 
provide, so long as that relief satis- 
ftes the minimum requirements un­
der the due process clause of the 
Federal Constitution’s Fourteenth 
Amendment; state law may provide 
relief beyond the demands o f federal 
due process, but under no circum-

l e S T r S y
-----X

In Davis v Michigan Dept, of Trea-

109 S Ct 1500, this Court invalidated 
M iclug^ ’s practice of taxing r e t i^

tile federal

SYLLABUS BY REPORTER OF DECISIONS

W b * - ' tile factors set
forth m Chevron Oil Co. v Huson

n f j   ̂ court de-
d relief to petitioners as to aU

AYrArtfo ______•  ̂  ̂ _

---- - î cuu uy tne reriprfli • i ~ witu court de
government while exempting retire- i'®iief to petitioners as to al

State or occurring before Da-
its political s7,k,u,u»7—  T, ^  was decided. In affirmine tha

Vireinia Snn«xr„xx .
;ts IKilitical subdivisions. ^ a u ^ I  

that a refund to
S S T hp r® appropriate

remanded for en- 
against the State, 

s im ^  siibsequently amended a 
similar statute that taxed federal
focaW eC  exempting state and 
local retirees. Petitioners, federal
s i t T ^ ' f  “ ^ “ iiitary retirees,

assessed b^ 
ginia before the revision of this

t l ^ f l i "  C o u T Z S u d L ^

^ r o a c ti^ ly ^ jir  cTevron M  L I

110 L Ed 2d 148̂  
lun  (plurality opinion). It
that ^  iai -̂that the assessments were neither
erroneous nor improper and that a 
decision declanng a tax scheme un­
constitutional has solely prospective



James B. Beam D.o+ it- Co. V Georgia, 501 n q  Distilling

Members of thS S  however, six 
retroactive a S v  * ''equired the
t a p o r t . l V f S T f i o f r c ^ ' ' ’ ™ 
L Ed 2d 200, 104
prohibited State.? f  ^ °4^w hich  
higher excise tava imposing
hohc b e S e ^ ^ ?  
duced b e v S g : ^ “  
from facts p ^ a ti^ ff  
Those Justices decision.
Georgia '^ ‘ h the
Chevron Oh’s retm of

this C o m  ™ d°eS ‘^ tion of DetiHnris^J. . ^®-evaJua- 
Bo m , , £ ‘ v S .  o “  “  “ 81't  o f 
reaffirmed iL  Supreme Court
spects. 1,  he?d ? S ? “b  “  >B re.
foreclose the use o f * '*  “ o*
analysis b e ca u s /n  • Oil’s
c i d e w h e t K f  did not da­
tively. applied retroac-

Held:

of fed !?“ ,™  *PPBos a rule
it. that rule is J h e ^ „ S ' “
Pretation of federal ^°” *^°hmg mter-
given full r e t o S -^ ^ '^ ^ ‘^ “ “ stbe
cases still open on i r  ^
^  to all^event,
jhethersucheventenr^^T'^®®"

ban against "selective 
new rules”  in Simin^] of
V Keutacky,
Ed 2d 649, 107 S Ct 7no \r- ^
the "basic norms „ f  r 
adjudication”  an im a/ ®°” ®titutional
view of retroactiviJ^^in^® 
cases, id at oo t "  criminal

" “ “ " ““P P w S l e J i S a S e ^ r f

U.S. SUPREME COURT REPORTS
125 L Ed 2d

rogative to make rules o f la 
active or prosnect^e '̂ t̂ro-
and that selectfve a p p l iS t io n T  rules violates the t̂’Pncation o f new
ing sim ila S  s^La7e7'’ ^̂  *̂ ®®t-
same, id., at 322 the
649, 107sS t7o| L ?h  V ^  ^ 2d 
Its the erection
barriers to the an n lta? temporal 
law in noncriLnai o f federal
Court does not re ^Tien the

p " ^  to ; ? o ' ’; 5 g  £ ‘ “  
opinion is Dron^it j*"® 't, the 
have follow^ the^  ̂ “ nderetood to 
i^i'Oadtrve aDDliraf"®*^^ rule o f
US, a t ------  I iV l  ®61
Gt 2439 (opinion of q f  ^
the legal i ^ S i ™  fn ®“ d
rule prevails "over anv^Ha'^  ̂
^ a  Chevron Oil a n a is !?^ i5 ^ ® ?

top ih 'io^ of| 2 ,^ J ,X '’ " * ® « 2 « P
law fBe rule o f
tioe t»fore the 'Bp par.
response to \firV.' '» Tbe Court’s 
that a refund w o^d^J  concession 
in Davis, far frnm'^° °  appropriate 
roactivity question ® ^ ® ^ g  the ret- 
r o a c t iv e ^ a S t io n  ^ ®̂t‘
decision to ^cwrd 2.1 f **i® ™i®' ^  

the solely ,?®™ltted

aiinply in ^ c o z ^ r S  L T ® ?® .
the analysis of state law
criminal S r o a r ^ P f™  and 
roled by Griffith.'^^e S  ®'"®'"
Clause, however does nnf 
eral retroactivity l®d-
Planted by the i n v S S  of trary approach 1-/4 ®tion of a con-
der state law Sirnii®*?®*^ '̂^*^law. Similarly, the state



h a r p e r  V VIRGINIA DEPT. OF TAXATION
(1993) 125 L Ed 2d 74

court’s conclusion chal­
lenged assessments were not errone-

under state law
that n® determinationthat^Davis did not apply retroac-

is free to choose the
S T h a f lungas that relief is consistent with fed­
eral due process principles. A State

responding to 
the determination that it has im-

“ impermissibly discrimina­
t o r  t ^ .  The availability of a prede- 
pnvation hearing constitutes a pro- 
c f  Ural safeguard sufficient to L t- 
isty due process, but if no such relief

ngful backward-looking relief either 
by awarding full refunds or by issu­
ing some other order that creates in t • • •'7“ '’ — **“> wmcn
hindsight a nondiscrim inatory ^ d i i  ’ f  ’ O’Connor, J., filed 
scheme. Since any remedy’s constitu q u S r c ! “ S e d ” '"’ “

a p p e a r a n c e s  o f  c o u n se x

f ;  urgued the cause for petitioners
G«1 S U rtos Mar,I.aU argued the cau5 for r“ S n d e„t

OPINION OF THE COURT

tional sufficiency turns (at least ini- 
fa^ly) on whether Virginia law pro­
vides an adequate form of predepri­
vation process, and since that issue
S  properly presented,
this question and the performance of 
other tasks pertaining to the craft-

242 Va 322, 410 SE2d 629 
versed and remanded.
o f^ h T p  ’ i ’ the opinionof the Court, m which Blackmun 
Stevens, Scalia, and Souter, JJ 
joined, and in Parts I and III of 
which White and Kennedy, JJ^ 
joined. Scalia, J., filed a concurring 
opinion. Kennedy, J., filed an opin- 
mn concurring in part and concur-
Whfte^T Z. Jud^ent, in which 
White, J., jom ^ . O’Connor, J., filed

Justice Thomas delivered the 
opinion of the Court.

tion«] constitu-
tmn^ doctrine of mtergovemmental
IZ  “ munity when it taxes retire- 
ment benefits paid by the Federal 

exempts from taxa- 
t h e r e t i r e m e n t  benefits paid by 
the State or its political subdivisions 
R e^ n g  on ^ e  retroactivity analysis

(1971) i  ® Ct 349the Supreme Court of Vir-
g m a  twice refused to apply Davis to 
tmces imposed before Davis was de­
cided. In accord with Griffith v Ken-

f  ® 314, 93 L Ed 2d 649
7 S Ct 708 (1987), and James b ' 

Beam D>«tUling v Georgia, 501

Z  thiscourt s application of a rule of fed-

Court r^m res every court to give 

I

Iffie Mchigan tax scheme at issue 
m Davis exempt[ed] from taxation 
ffil retirement benefits paid by the 
b5  political subdivisions,
ffiit le^e[d] an income tax on retire­
ment benefits paid by . . . the Fed­



U.S. SUPREME COURT REPORTS 125 L Ed 2d

eral Government.” 489 US, at 805, 
103 L Ed 2d 891, 109 S Ct 1500. We 
held that the United States had not 
consented under 4 USC § 111 [4 
u s e s  § 111]' to this discriminatory 
imposition of a heavier tax burden 
on federal benefits than on state and 
local benefits. Id., at 808-817, 103 L 
Ed 2d 891, 109 S Ct 1500. Because 
Michigan "conceded that a refund 
[was] appropriate,”  we recognized 
that federal retirees were entitled to 
a refund of taxes "paid . . . pursu­
ant to this invalid tax scheme.” Id., 
at 817, 103 L Ed 2d 891, 109 S Ct 
1500.2

Like Michigan, Virginia exempted 
state and local employees’ retire­
ment benefits from state income tax­
ation while taxing federal retire­
ment benefits. Va Code Ann § 58.1- 
322(c)(3) (Supp 1988). In response to 
Davis, Virginia repealed its exemp­
tion for state and local government 
employees. 1989 Va Acts, Special 
Sess II, ch 3. It also enacted a spe­
cial statute of limitations for refund 
claims made in light of Davis. Under 
this statute, taxpayers may seek a 
refund of state taxes imposed on

1. "The United States consents to the taxa­
tion of pay or compensation for personal ser­
vice as an officer or employee of the United 
States . . .  by a duly constituted taxing au­
thority having jurisdiction, i f  the taxation 
does not discriminate against the officer or 
employee because of the source o f the pay or 
compensation.”  4 USC § 111 [4 USCS § 111]

2. We have since followed Davis and held 
that a State violates intergovernmental tax 
immunity and 4 USC § 111 [4 USCS § 111] 
when it "taxes the benefits received from the 
United States by military retirees but does 
not tax the benefits received by retired state 
and local government employees.”  Barker
Kansas, 503 US 
112 S a  1619 (1992).

, 118 L Ed 2d 243,

3. Applications for tax refunds generally 
must be made within three years of the as­
sessment. Va Code Ann § 58.1-1825 (1991). As
82

federal retirement benefits in 1985, 
1986, 1987, and 1988 for up to one 
year from the date of the final judi­
cial resolution of whether Virginia 
must refund these taxes. Va Code 
Ann § 58.1-1823(b) (Supp 1992).2

Petitioners, 421 federal civil ser­
vice and military retirees, sought a 
refund of taxes "erroneously or im- 
propierly assessed” in violation of 
Davis’ nondiscrimination principle. 
Va Code Ann § 58.1-1826 (1991). The 
trial court denied relief. Law No. 
CL891080 (Va Cir Ct, Mar. 12, 1990). 
Applying the factors set forth in 
Chevron Oil Co. v Huson, supra, at 
106-107, 30 L Ed 2d 296, 92 S Ct 
349,'* the court reasoned that "Davis 
decided an issue of first impression 
whose resolution was not clearly for­
eshadowed,”  that "prosp)ective appli­
cation of Davis will not retard its 
operation,”  and that "retroactive ap­
plication would result in inequity, 
injustice and hardship.” App to Pet 
for Cert 20a.

The Supreme Court of Virginia 
afidrmed. 241 Va 232, 401 SE2d 868 
(1991). It too concluded, after con­
sulting Chevron and the plurality

o f date we decided Davis, this statute of 
limitations would have barred all actions 
seeking refunds from taxes imposed before 
1985. ''

4. "First, the decision to be applied nonre- 
troactively must establish a new principle of 
law, either by overruling clear past precedent 
on w-hich litigants may have relied, or by 
deciding an issue of first impression whose 
resolution was not clearly foreshadowed. Sec­
ond, it has been stressed that 'we must . . . 
weigh the merits and demerits in each case 
by looking to the prior history of the rule in 
question, its purpose and effect, and whether 
retrospective operation will further or retard 
its operation.’ Finally, we have weighed the 
inequity imposed by retroactive application 

. . . ”  Chevron Oil Co. v Huson, 404 US 97, 
106-107, 30 L Ed 2d 296, 92 S Ct 349 (1971) 
(citations omitted).

i '
t i

I I



HARPER V VIRGINIA DEPT. OF TAXATION
(1993) 125 L Ed 2d 74

opinion in Am erican Trucking 
Assns., Inc. v Smith, 496 US 167, 
110 L Ed 2d 148, 110 S Ct 2323 
(1990), that "the Davis decision is 
not to be applied retroactively.” 241 
Va, at 240, 401 SE2d, at 873. The 
court also rejected petitioners’ con­
tention that "refunds [were] due as a 
matter of state law.” Ibid. It con­
cluded that "because the Davis deci­
sion is not to be applied retroac­
tively, the pre-Davis assessments 
were neither erroneous nor im­
proper” under Virginia’s tax refund 
statute. Id., at 241, 401 SE2d, at 873. 
As a matter of Virginia law, the 
court held, a "ruling declaring a 
taxing scheme unconstitutional is to 
be applied prospectively only.” Ibid. 
This rationale supplied "another 
reason” for refusing relief. Ibid.

Even as the Virginia courts were 
denying relief to petitioners, we 
were confronting a similar retroac­
tivity problem in James B. Beam 
Distilling Co. v Georgia, 501 US
------, 115 L Ed 2d 481, 111 S a  2439
(1991). At issue was Bacchus Im­
ports, Ltd. V Dias, 468 US 263, 82 L 
Ed 2d 200, 104 S Ct 3049 (1984), 
which prohibited States from impos­
ing higher excise taxes on imported 
alcoholic beverages than on local 
products. The Supreme Court of 
Georgia had used the emalysis de­
scribed in Chevron Oil Co. v Huson 
to deny retroactive effect to a deci­
sion of this Court. Six Members of 
this Court disagreed, concluding in­
stead that Bacchus must be applied 
retroactively to claims arising from 
facts predating that decision. Beam,

501 US, at ------, 115 L Ed 2d 481,
111 S Ct 2439 (opinion of Souter, J.); 
id., at 115 L Ed 2d 481, 111 S 
Ct 2439 (White, J., concurring in
judgment); id., a t ----------------, 115 L
Ed 2d 481, 111 S Ct 2439 (Blackmun, 
J., concurring in judgment); id., at
--------------- , 115 L Ed 2d 481, 111 S
Ct 2439 (Scalia, J., concurring in 
judgment). After deciding Beam, we 
vacated the judgment in Harper and 
remanded for further consideration
501 U S ------, 115 L Ed 2d 1049, 111
S Ct 2883 (1991).

On remand, the Supreme Court of 
Virginia again denied tax relief. 242 
Va 322, 410 SE2d 629 (1991). It rea­
soned that because Michigan did not 
contest the Davis plaintiffs’ entitle­
ment to a refund, this Court "made 
no . . . ruling” regarding the retro­
active application of its rule "to the 
litigants in that case.”  242 Va, at 
326, 410 SE2d, at 631. Concluding 
that Beam did not foreclose applica­
tion of Chevron’s retroactivity analy­
sis because "the retroactivity issue 
was not decided in Davis,”  242 Va, 
at 326, 410 SE2d, at 631, the court 

reaffirm[ed] [its] prior decision in 
all respects,” id., at 327, 410 SE2d, 
at 632.

When we decided Davis, 23 States 
gave preferential tax treatment to 
benefits received by employees of 
state and local governments relative 
to the tax treatment of benefits re­
ceived by federal employees.' Like 
the Supreme Court of Virginia, sev­
eral other state courts have refused 
to accord full retroactive effect to 
Davis as a controlling statement of

5. E.g., Ala Code § 36-27-28 (1991), Ala Code 
§ 40-18-19 (1985); Iowa Code § 97A.12 (1984) 
repealed, 1989 Iowa Acts, ch 228, § 10 (repeal 
retroactive to Jan. 1, 1989); La Rev Stat Ann 
§ 47:44.1 (Supp 1990); Miss Code Ann § 25-11- 
129 (1972); Mo Rev Stat § 86.190 (1971), Mo

Rev Stat §104.540 (1989); Mont Code Ann 
§ 15-30-111(2) (1987); NY Tax Law § 612(cX3) 
(McKinney 1987); Utah Code Ann §49-1-608 
(1989). See generally 241 Va, at 237, n 2, 401 
SE2d, at 871, n 2.



------, 115 L p 7  ®01 US
2881 (199l> ® Ct
of Taxatbn SOl^uV2 V « « , i n f ' c t ™ 8 i ^ b 9 u ^ “

2883' (IMl^ ?  2d 1049, H I S Ct
Preme S i  o f A?|T “ *• o“ »  «"■ 
Ptaded as a m L te ? ^ fT a ^ ^ , 'i™'

S 4 e r “ i X S c f

retroactively but Uavis applies
S t a t e , t h a t
PPning. Nos. 92-1276 a o ^ S s ^ "

8i.5 4 s'ffiLed‘’S T 4 T d ‘’f ' ' -
we granted certiorari dwision,
504 U S____ 71« t™e-
Ct 1934 (1992) w i"  ^^2 Suyyaij. We now reverse.

U.S. SUPREME COURT REPORTS
125 L Ed 2d

n

g M h the commoji ja ^ ^ ^ a n f ^

Mont 437, 820 P2d 1257 fiQ ?n^ ' '  250
No. 91-1473; Duffy v Pending,

265, 579 NYS2d 684 60T 2d
^  NY2d 890, 600 NEaifioy^/i’n S ^ * ^  denied. 

No 92-521 ■ Q (1992), cert pend
551-584, 4OT S K d  ^ c l ^ e ,
reh'g, 330 NC 390,l i b  SE2H 
pending. No. 91-1436 cert
o f  Revenue, H  Ore Department
other grounds 312 n  ^^9^0), atrd on 
11992); ^ r r S t e t f ,  ^ g ? -  «23 P2d 971
SE2d 110, 114-115 fiQQo, ----- ’ — -- 414
91-1697. *^^®2), cert pending. No.

re fun ^ ''^ ^a°m rtter^ ^  courts have ordered 
based on Davis «  claims

e.g., Kuhn V State, 817

own decisions” have ■ ,
general rule of rot a
for the constSfutionafT^'^® 
this Court ”  ReK"  ̂ •^ocisions of
505, 507^35 L ^ lT o l^ n '^ ’ US 
(1973). N othL^in  t h ? ’r  ̂  
alters the funf^ms. ^institution
rospecti?: "^et-
emed ’’[jjudicial d e c i s S  ® r '
near a thousand yeare”  K,\u 
Fairmont Coal Co 91^^'to
54 L Ed 228 I  ^72,
(Holtees .<'810)
ter V Walker 381 TK^«io“  ^^nklet- 
2d 601, 85 S Ct 1731 nofiii’ ^ 
we developed a de/.t however,
we could denv ret under which

law. Under LinWetter e 5 ™ m a l  
confine a n e w ^ i ?  ; ‘^in^ion to 
application rested on ^  Prospective 
the new ru l?  the of
upon the prerious view ^f t h ? f  and "the e ffe c t  “  *he law,
tion o f justice of n t ̂  administra-

tivs e f f S ‘ to ■? » f  sstaoac.
law” if  such a lim itf  P^nciple of----------- ^noP a limitation would avoid

Director
1989), cert denied 4briT<f^!,m (Mo
738, 110 S a  ? l ? ( i S .  L..Ed 2d

r e h 's h S 8 2 U S  4 ^ 1 5 ^ 4 * ^  States ex 
Ct 459 (1966) fl^ m iW  P 86 S
380 US 609, 14 California,
(1965)); J o h n 3 o n v N ^ f  ® ^t 1229
L Ed 2d 882, 86 S 719, 16
Escobedo v Illinois 378 (limiting
977. 84 S Ct 17M ( ? 9 ^ f  ^  Ed 2d
Arizona, 384 US 436 16 r  p A j Miranda v1602, 10 ALR3d 974 V ^ .E 8  2d 86 S a
388 US 293, 18 L L  '' E>cnno,
(1967) (limiting U n i S g „ * ^ ’ 5  ® Ct 1967 
218 (1967), and GilhSt^^J^i^r ^®8 US
* ! ,  i» h Ed 2d in e T , s a

41



h a r p e r  V VIRGINIA DEPT. OF TAXATION
(1993) 125 L Ed 2d 74

hardship’ ” without 
unduly undermining the "purpose 
and effect of the new rule. Chevron 

T US, at 106-107
C^ri 349 (quoting
701 7nfi 395 US<U1, 706, 23 L Ed 2d 647 89 S Pi 1897 (1969)).® . »y & Ct

We subsequently overruled Link-

n q«7?^ S Ct 708U987), and eliminated limits on ret- 
roactmty in the criminal context by 
ri / ' m ” "newly declared . .

tively to all criminal cases pending 
on direct review.” Id., at 322 99 T

107 S C . 7 0 ?  S  S i :
ing rested on two "basic norms of 
constitutional adjudication.” Ibid

of judicial review” strips us of the 
quintessentially "legislative]” pr^ 
rogative to make rules of law retro- 
active or prospective as we see fit. 
Ibid. Second, we concluded that "se- 
lective application of new rules vio­
lates the principle of treating simi­
larly situated [parties] the same.”
Id at 323, 93 L Ed 2d 649, 107 S Ct

that^S however, stated
S mi f retroactivity------- contin-

governed by the standard 
announced m Chevron Oil.”  Id at 

S3 L Ed 2d 649, 107 s S
708. We divided over the meaning of

this dicta m American Trucking
1 in” ?’’ Smith, 496 US 167
110 L Ed 2d 148, 110 S Ct 2329 
(1990). The four Justices in the plu­
rality used "the Chevron Oil test” to 
consider whether to confine "the ai>- 
phcation of [American Trucking 
^sn s., Inc. V Scheiner, 483 US 266;

(1987)] to taxation of highway use 
prior to June 23, 1987, the date we 
dmded Scheiner.”  Id., at 179 n o  L

2d 148 110 s e t  2323 (o p to  of 
OConnor J., joined by Rehnquist, C.

Kennedy, JJ .). 
hour other Justices rejected the plu­
rality s anomalous approach” to 

declined to hold 
that the law applicable to a partic­
ular c^ e  IS the law which the par- 
ties believe in good faith to be appli­
cable to the case.” Id., at 219 HO L
| d 2d l 48 110S a '2323 ,lte;e“ .
d., dissentmg, joined by Brennan 
Marshall, and Blackmun, J J .). Fi­
nally, despite concurring in the judg­
ment, Justice Scalia "share[d]” the 
dissents "perception that prospec- 
tive decisionmaldng is incompatible 
with the judicial role.” Id at 201 
n o L M  2d 148, no s  
(&calia, J ., concurring in judgment).

9. We need not debate whether (3ievron Oil
S v  t  “  ‘ ■L". ?hoice^f-law  p r in e W ’ o '
o f M u ita h r 'T ^  pnnciple for the exercise 
01 equitable discretion by federal rmirto *»

US T 6 n 2 o T l O ? ^ 9 ^  ^
(1990) ^ S a  2323
1 9 M g f  1 m  r Compare id., atiai-197, 110 L Ed 2d 148, 110 S Ct 2393
(plurality opinion) (treating Chevron Oil ^  a
Ed 218-224 110 L
1^.1 n ® ^  2323 (Stevens. J.. d i s i „ t
ng) (treating Chevron Oil as a remedial doc-

and American Trucking 
thus left unresolved the precise ex­
tent to which the presumptively ret­
roactive effect of this Court’s deci- 
sions may be altered in civil cases.

o n  is char-
th1  I t :  n  clearthat the Chevron Oil test cannot determine
the ‘ he equities ofthe partacular case”  and that the f^ era l law 
applicable to a particular case does not turn
old r u l e l o r T h ' ' ® h e d  on [an] old rule [or] how they would suffer from retro­
active application” of a new one. n
^ m  D^tilling Co. v Georgia. 501 US — '

,1 1 5  L Ed 2d 481, 111 S Ct 2439 n g q i! 
(opinion of Souter, J.). U991)

85



U.S. SUPEEME COURT REPORTS

m !

But we have since adopted a rule 
r^uiring the retroactive application 
of a civil decision such as Davis

I DistillingI V Georgia, 501 U S____ 115 t p f
2d 481, i n  s  Ct 2439 (199i). did „o?

, a unified opinion for the
CJurt, a majority of Justices agreed 
that a rule of federal law, on cfa n  
nounced and applied to the parties 
to the controversy, must be given 
ull retroactive effect by all courts 

adjudicating federal law. In an-
J“ ^&ment of the Court 

Justice Souter laid down a rule fw
retroactive effect of 

a civil decision: After the case an-

applied] that rule with respect to 
the htigants” before the court no 
^urt may "refuse to apply fthat]
fV;® ;  • • retroactively.” Id a t ____
115 L Ed 2d 481, i l l  S a  2439

vens, J.). Justice Souter’s view of 
rrtroactmty superseded "any claim 
^ e d  on a Chevron Oil analysis.”
eluded t f i r  con-K /  ‘decision "extending 
he benefit of the judgment” to the 

^nning party "is to be applied to

taal^ at the time of the [first] deci-
n i  S S  wI qT " ’ ^ ^  2d 481, i l l  b Ct 2439 (opinion concurrinff in

i^^ed  that our judicial responsibil- 
y . . . requir[es] retroactive appli­

cation of each . . .  rule we an­
nounce.” Id., a t ------115 T p j  9 .
481, 111 S Ct 2439 (Blackmun J

ring m judgment). ’

86
[2b] Beam controls this case, and

125 L Ed 2d

we accordingly adopt a rule that 
fairly reflects the position of a m f

When

w h e ih e r - 'S  
predate or postdate our an­

nouncement of the rule This 
extend, Griffith’,  ban again,? ’U g  

^PPiicafmn of new rules.” ' 479 
US, at 323, 93 L Ed 2d 649 107 S Pf 
r08 Mindful of the - b i i c  n o ™ S
?m «f “ <’j “ <>ieiition”  tharah-
imated our view of retroactivity in 
the criminal context, id., at 322^ 93

of foe ta l , r r n o n  ? L S  ''o 2 i"In both civil and criminal cases we 
law substantive
to \ h  J ^ 1!  accordingto the particular equities o f find?
idual parties’] claims” o f actual re- 

lance on an old rule and o f harm
S"w rule^^S^'^'''® application of the
L Ed 4 8 ?1 ]1  s  a  2 4 l9 T '-
o f Souter, J ,,'. Ourtp^rfa^h
'? t £  ^ u r t ^  admonition that] 1 Court has no more constitu 
tional authority in civil cases than 
m cnmmal cases to disregard cur- 
rent law or to treat similarly situ-

senting) Stevens. J„ di,.

”  ®“ P''®me Court of Virginia
applied] the three-pronged Chevron 

Oil test m deciding the retroactivity 
949 ® by this litigation
WK 410 SE2d, at 63l'
When this Court does not "reserve



HARPER V VIRGINIA DEPT. OF TAXATION
(1993) 125 L Ed 2d 74

ih£L_aUfiStiao. whether its- holding 
should be applied to the parties be­
fore it,” however, an opinion an­
nouncing a rule of federal Taw "is 
properly understood to have followed 
the normal rule of retroactive appli­
cation” and must be "read to hold 
. . . that its rule should apply retro­
actively to the litigants then before
the Court.”  Beam, 501 US, at ------ ,
115 L Ed 2d 481, 111 S Ct 2439 
(opinion of Souter, J.). Accord, id., at
------115 L Ed 2d 481, 111 S Ct 2439
(White, J., concurring in judgment);
id., a t ------, 115 L Ed 2d 481, 111 S
Ct 2439 (O’Connor, J., dissenting). 
Furthermore, the legal imperative 
"to apply a rule of federal law retro­
actively after the case announcing 
the rule has already done so” must 
"prevai[l] over any claim based on a
Chevron Oil analysis.” Id., at ------
115 L Ed 2d 481, 111 S Ct 2439 
(opinion of Souter, J.).

In an effort to distinguish Davis, 
the Supreme Court of Virginia sur­
mised that this Court had "made no 
• . . ruling” about the application of 
the rule announced in Davis "retro­
actively to the litigants in that 
case.’’  ̂242 Va, at 326, 410 SE2d, at 
631. "[BJecause the retroactivity is­
sue was not decided in Davis,”  the 
court believed that it was "not fore­
closed by precedent from applying 
the three-pronged Chevron Oil test 
in deciding the retroactivity issue in 
the present case.” Ibid.

[1b] We disagree. Davis did not 
hold that preferential state tax 
treatment of state and local em­
ployee pensions, though constitution­
ally invalid in the future, should be 
upheld as to all events predating the 
announcement of Davis. The govern­
mental appellee in Davis "conceded 
that a refund [would have been] ap­
propriate” if we were to conclude

that "the Michigan Income Tax Act 
violate[d] principles of intergovern­
mental tax immunity by favoring 
retired state and local governmental 
employees over retired federal em­
ployees.” 489 US, at 817, 103 L Ed 
2d 891, 109 S Ct 1500. We stated 
that "to the extent appellant has 
paid taxes pursuant to this invalid 
tax scheme, he is entitled to a re­
fund.” Ibid. Far from reserving the 
retroactivity question, our response 
to the appellee’s concession consti­
tuted a retroactive application of the 
rule announced in Davis to the par­
ties before the Court. Because a deci­
sion to accord solely prospective ef­
fect to Davis would have foreclosed 
any discussion of remedial issues, 
our "consideration of remedial is­
sues” meant "necessarily” that we 
retroactively applied the rule we an­
nounced in Davis to the litigants
before us. Beam, supra, a t ------ , 115
L Ed 2d 481, 111 S Ct 2439 (opinion 
of Souter, J.). Therefore, under 
Griffith, Beam, and the retroactivity 
approach we adopt today, the Su­
preme Court of Virginia must apply 
Davis in petitioners’ refund action.

ni
[3] Respondent Virginia Depart­

ment of Taxation defends the judg­
ment below as resting on an inde­
pendent and adequate state ground 
that reheved the Supreme Court of 
Vir^nia of any obligation to apply 
Davis to events occurring before our 
announcement of that decision. Peti­
tioners had contended that "even if 
the Davis decision appliejd] prospec­
tively only,”  they were entitled to 
relief under Virginia’s tax refund 
statute, Va Code Ann §58.1-1826 
(1991). 241 Va, at 241, 401 SE2d, at 
873. The Virginia court rejected 
their argument. It first reasoned



'if

U.S. SUPREME COURT REPORTS

that because Davis did not apply 
retroactively, tax assessments pre­
dating Davis were "neither errone- 
ous nor improper within the mean- 
in g  of Virginia’s tax statute. Ibid. 
The court then offered "another rea­
son for rejecting petitioners’ "state- 
law contention’’ : "We previously 
have held that this Court’s ruling 
declaring a taxing scheme unconsti­
tutional IS to be applied prospec- 
tively only." Ibid, (citing Perkins v

modified on
rfoyl’i 200 SE2d 566(1973); Capehart v City of Chesa- 
peake. No. 5459 (Va Cir Ct, Oct. 16, 
1974), appeal denied, 215 Va xlyii 

423 US 875, 46 L Ed 2d 
109, 96 S Ct 109 (1975)). The formu­
lation of this state-law retroactivity 
doctrme—that "consideration should 
be given to the purpose of the new 
rule, the extent o f the reliance on 
the old rule, and the effect on the 
administration o f justice of a retro­
active application of the new rule ’’ 
fountain v Fountain, 214 Va 347 
348, 200 SE2d 513, 514 (1973), cert

^ 2d 290,
4 S Ct 1942 (1974), quoted in 241 

Va at 241 401 SE2d, at 874—sug- 
geste that the Supreme Court of Vir- 
gmia has simply incorporated into 
state law the three-pronged analysis

US, at 106-107,
30 L Ed 2d 296, 92 S Ct 349, and the 
crimmM retroactivity cases over-

® S > Stovall V 
Denno, 388 US 293, 297, 18 L Ed 2d 
1199, 87 s e t  1967 (1967).

125 L Ed 2d

law. Whatever freedom state courts 
may enjoy to limit the retroactive 
operation of their own interpreta­
tions of state law, see Great North- 

'' Sunburst Oil & Refinine 
S'A’ US 358, 364-366, 77 L Ed 
360, 53 S Ct 145, 85 ALR 254 (1932) 
c^ n o t  extend to their interpreta- 
^ons of federal law. See National 
Mines Corp. v Caryl, 497 US 922
? , 2 ^ 1 1 / L E d 2 d 7 « ; i l 0 S c L S
(1990) (per curiam); Ashland Oil, Inc

2d 734, 110 S Ct 3202 (1990) (per 
curiam). ^

We also decline the Department of 
T ^ ation s mvitation to afiirm the 
ju d ^ e n t  as resting on the indepen­
dent and adequate ground that Vir- 
p n ia s  law of remedies offered no 
retrospective refund remedy for 

t^able  years concluded before Da­
vis was announced. Brief for Re-—  joriei ror tie-
spoi^ent 33. The Virginia Supreme 
Uiurt s conclusion that the chal­
lenged tax assessments were "nei­
ther erroneous nor improper within 
the meaning”  of the refund statute 
rested solely on the court’s determi­
nation that Davis did not apply ret-
at 8 7 r^ ^ ' ^®2d.

We reject the Department’s de­
tense of the decision below. The Su­
premacy Clause, US Const, Art VI 
Cl 2 d^ s not allow federal retroac- 
tm ty doctrine to be supplanted by

® contrary ap­
proach to retroactivity under state 
88

Because we have de­
cided that Davis applies retroac- 
tively to the tax years at issue in 
petitioners refund action, we re- 
veree the judgment below. We do not 
enter judgment for petitioners, how­
ever, because federal law does not 
necessarily entitle them to a refund, 
^ th e r , the Constitution requires 

relief consistent 
ith federal due process principles ”

US, at 181,
}\^ 2d 148, 110 S Ct 2323
plurality opinion). Under the Due 
Process Clause’ US Const, Arndt 14, 
SI, a State found to have imposed

(



HARPER V VIRGINIA DEPT. OF TAXATION
(1993) 125 L Ed 2d 74

an impermissibly discriminatory tax 
retains flexibility in responding to 
this determination.” McKesson Corp. 
V Division of Alcoholic Beverages & 
Tobacco, 496 US 18, 39-40, 110 L Ed 
2d 17, 110 S Ct 2238 (1990). If Vir­
ginia "ofl'ers a meaningful opportu­
nity for taxpayers to withhold con­
tested tax assessments and to chal­
lenge their validity in a predepriva­
tion hearing,” the "availability of a 
predeprivation hearing constitutes a 
procedural safeguard . . . sufiicient 
by itself to satisfy the Due Process 
Clause.”  Id., at 38, n 21, 110 L Ed 2d 
17, 110 S Ct 2238. On the other 
hand, if no such predeprivation rem­
edy exists, "the Due Process Clause 
of the Fourteenth Amendment obli­
gates the State to provide meaning­
ful backward-looking relief to rectify 
any unconstitutional deprivation.” 
Id., at 31, 110 L Ed 2d 17, 110 S Ct 
2238 (footnotes omitted).*® In provid­
ing such relief, a State may either 
award fuU refunds to those burdened 
by an unlawful tax or issue some 
other order that "create[s] in hind­
sight a nondiscriminatory scheme.” 
Id., at 40, 110 L Ed 2d 17, 110 S Ct 
2238. Cf. Davis, 489 US, at 818, 103 
L Ed 2d 891, 109 S Ct 1500 (suggest­
ing that a State’s failure to respect 
intergovernmental tax immunity  
could be cured "either by extending 
[a discriminatory] tax exemption to 
retired federal employees . . .  or by 
eliminating the exemption for re­

tired state and local government em­
ployees” ).

[4b, 5b, 7] The constitutional suffi­
ciency of any remedy thus turns (at 
least initially) on whether Virginia 
law "provide[s] a[n] [adequate] form 
of 'predeprivation process,’ for exam­
ple, by authorizing taxpayers to 
bring suit to enjoin imposition of a 
tax prior to its payment, or by allow­
ing taxpayers to withhold pa5mient 
and then interpose their objections 
as defenses in a tax enforcement 
proceeding.” McKesson, 496 US, at 
36-37, 110 L Ed 2d 17, 110 S Ct 2238. 
Because this issue has not been 
properly presented, we leave to Vir­
ginia courts this question of state 
law and the performance of other 
tasks pertaining to the crafting of 
any appropriate remedy. Virginia "is 
free to choose which form of relief it 
will provide, so long as that relief 
satisfies the minimum federal re­
quirements we have outlined.” Id., 
at 51-52, 110 L Ed 2d 17, 110 S Ct 
2238. State law may provide relief 
beyond the demands o f federal due 
process, id., at 52, n 36, 110 L Ed 2d 
17, 110 S Ct 2238, but under no 
circumstances may it confine peti­
tioners to a lesser remedy, see id., at 
44-51, 110 L Ed 2d 17, 110 S Ct 2238.

rv

We reverse the judgment of the

10. [6 b ] A State incurs this obligation 
when it "places a taxpayer under duress 
promptly to pay a tax when due and relegates 
him to a postpayment refund action in which 
he can challenge the tax’s legality.” McKes­
son, 496 US, at 31, 110 L Ed 2d 17, 110 S Ct 
2238. A State that ,"establish[es] various sanc­
tions and summary remedies designed”  to 
prompt taxpayers to "tender . . . payments 
before their objections are entertained or re­
solved” does not provide taxpayers "a mean­
ingful opportunity to withhold payment and

to obtain a predeprivation determination of 
the tax assessment’s validity.”  Id., at 38, 110 
L Ed 2d 17, 110 S Ct 2238 (emphasis in 
original). Such limitations impose constitu- 
tion6illy significant "  'duress’ ”  because a tax 
payment rendered under these circumstances 
must be treated as an effort "to avoid finan­
cial sanctions or a seizure o f real or personal 
property.” Id., at 38, n 21, 110 L Ed 2d 17, 110 
S Ct 2238. 'The State accordingly may not 
confine a taxpayer under duress to prospec­
tive relief.

89



U.S. SUPREME COURT REPORTS 125 L Ed 2d

Supreme Court of Virginia, and we 
remand the case for further proceed­
ings not inconsistent with this opin­
ion.

So ordered.

SEPARATE OPINIONS

Justice Scalia, concurring.
I am surprised to see an appeal to 

stare decisis in today’s dissent. In 
Teague v Lane, 489 US 288, 103 L 
Ed 2d 334, 109 S Ct 1060 (1989), 
Justice O’Connor wrote for a plural­
ity that openly rejected settled pre­
cedent controlling the scope of retro­
activity on collateral review. "This 
retroactivity determination,’’ the 
opinion said, "would normally entail 
application of the Linkletter [v 
Walker, 381 US 618, 14 L Ed 2d 601, 
85 S Ct 1731 (1965)] standard, but 
we believe that our approach to ret­
roactivity for cases on collateral re­
view requires modification.” Id., at 
301, 103 L Ed 2d 334, 109 S Ct 1060. 
The dissent in Teague was a sort of 
anticipatory echo of today’s dissent, 
criticizing the plurality for display­
ing "infidelity to the doctrine of 
stare decisis,”  id., at 331, 103 L Ed 
2d 334, 109 S Ct 1060 ®rennan, J., 
dissenting), for "upset[ting] . . . our 
time-honored precedents,”  id., at 
333, 103 L Ed 2d 334, 109 S Ct 1060, 
for ""repudiating our familiar ap­
proach without regard for the doc­
trine of stare decisis,”  id., at 345, 
103 L Ed 2d 334, 109 S a  1060, and 
for failing "so much as [to] mention 
stare decisis,” id., at 333, 103 L Ed 
2d 334,109 S Ct 1060.

I joined the plurality opinion in 
Teague. Not only did I believe the 
rule it announced was correct, see 
Withrow V Williams, 507 US ------ ,
------ , 123 L Ed 2d 407, 113 S Ct 1745
(1993) (Scalia, J., concurring in part 
and dissenting in part), but I also 
believed that abandonment of our
90

prior collateral-review retroactivity 
rule was fully in accord with the 
doctrine of stare decisis, which as 
applied by our Court has never been 
inflexible. The Teague plurality 
opinion set forth good reasons for 
abandoning Linkletter—reasons jus- 
tif}dng a similar abandonment of 
Chevron Oil Co. v Huson, 404 US 97, 
30 L Ed 2d 296, 92 S a  349 (1971). 
It noted, for example, that Linklet­
ter "ha[d] not led to consistent re­
sults,”  Teague, supra, at 302, 103 L 
Ed 2d 334, 109 S Ct 1060; but nei­
ther has Chevron OH. Proof that 
what it means is in the eye of the 
beholder is provided quite nicely by 
the separate opinions filed today: Of 
the four Justices who would still 
apply Chevron Oil, two find Davis v 
Michigem Dept, of Treasury, 489 US 
803, 103 L Ed 2d 891, 109 S Ct 1500
(1989), retroactive, see, post, a t ------ ,
125 L Ed 2d, at 95-96 (Kennedy, J., 
concurring in part and concurring in 
judgment), two find it not retroac­
tive, see post, a t ------, 125 L Ed 2d,
at 103 (O’Connor, J., dissenting). 
Second, the Teague plurality opinion 
noted that Linkletter had been criti­
cized by commentators, Teague, su­
pra, at 303, 103 L Ed 2d 334, 109 S 
Ct 1060; but the commentary cited 
in the opinion criticized not just 
Linkletter, but the Court’s retroac­
tivity jurisprudence in general, of 
which it considered Chevron Oil an 
integral part, see Beytagh, Ten 
Years of Non-Retroactivity; A Cri­
tique and a Proposal, 61 Va L Rev 
1557, 1558, 1581-1582, 1606 (1975). 
Other commentary, of course, has 
also regarded the issue of retroactiv-

V



HARPER V VIRGINIA DEPT. OF TAXATION
(1993) 125 L Ed 2d 74

ity as a general problem of jurispru­
dence. See, e.g., Fallon & Meltzer, 
New Law, Non-Retroactivity, and 
Constitutional Remedies, 104 Harv L 
Rev 1731 (1991); Schaefer, Prospec­
tive Rulings: Two Perspectives, 1982 
S Ct Rev 1; Schaefer, The Control of 
"Sunbursts” : Techniques of Prospec­
tive Overruling, 42 NYU L Rev 631 
(1967); Mishkin, Forward: The High 
Court, The Great Writ, and the Due 
Process of Time and Law, 79 Harv L 
Rev 56, 58-72 (1965).

Finally, the plurality opinion in 
Teague justified the departure from 
Linkletter by implicitly relying on 
the well-settled proposition that 
stare decisis has less force where 
intervening decisions "have removed 
or weakened the conceptual under­
pinnings from the prior decision. 
Patterson v McLean Credit Union, 
491 US 164, 173, 105 L Ed 2d 132, 
109 S Ct 2363 (1989). Justice O’Con­
nor endorsed the reasoning ex­
pressed by Justice Harlan in his 
separate opinions in Mackey v 
United States, 401 US 667, 28 L Ed 
2d 404, 91 S Ct 1160 (1971), and 
Desist V United States, 394 US 244, 
22 L Ed 2d 248, 89 S Ct 1030 (1969), 
and noted that the Court had al­
ready adopted the first part of Jus­
tice Harlan’s retroactivity views in 
Griffith V Kentucky, 479 US 314, 93

L Ed 2d 649, 107 S Ct 708 (1987). See 
Teague, supra, at 303-305, 103 L Ed 
2d 334, 109 S Ct 1060. Again, this 
argument equally— indeed, even 
more forcefully—supports reconsid­
eration of Chevron Oil. Griffith re­
turned this Court, in criminal cases, 
to the traditional view (which I shall 
discuss at greater length below) that 
prospective decisionmaking "violates 
basic norms of constitutional adjudi­
cation.” Griffith, supra, at 322, 93 L 
Ed 2d 649, 107 S Ct 708. One of the 
conceptual underpinnings of Chev­
ron Oil was that retroactivity pr^ 
sents a similar problem in both civil 
and criminal contexts. See Chevron 
Oil, supra, at 106, 30 L Ed 2d 296, 92 
S Ct 349; see also Beytagh, supra, at 
1606. Thus, after Griffith, Chevron 
Oil can be adhered to only by reject­
ing the reasoning o f Chevron Oil 
that is, only by asserting that the 
issue of retroactivity is different in 
the civil and criminal settings. That 

a particularly difficult proof toIS
make, inasmuch as Griffith rested on 
"basic norms of constitutional adju­
dication” and "the nature of judicial 
review.” 479 US, at 322, 93 L Ed 2d 
649, 107 S Ct 708; see also Teague, 
supra, at 317, 103 L Ed 2d 334, 109 
S Ct 1060 (White, J., concurring in 
part and “concurring in judgment) 
(Griffith "appear[s] to have constitu­
tional underpinnings” ).*

~1. The dissent attempts to distinguish be­
tween retroactivity in civil and criminal set­
tings on three grounds, none of which h ^  
ever been adopted by this Court. The dissent s 
first argument begins with the observation 
that "nonretroactivity in criminal casp  his­
torically has favored the government s reli­
ance interests over the rights of criminal
defendants.”  Post, at ------ , 125 L Ed 2d, at
102. But while it is true that prospectivity 
was usually employed in the past (during the 
brief period when it was used in criminal 
cases) to favor the government, there is no 
basis for the implicit suggestion that it would 
usually favor the government in the future.

That phenomenon was a consequence, not of 
the nature of the doctrine, cf. James v United 
States, 366 US 213, 6 L Ed 2d 246, 81 S 
1052 (1961), but of the historical "accident” 
that during the period prospectivity was in 
fashion legal rules favoring the government 
were more frequently overturned. But more 
fundamentally, to base a rule of full retroac­
tivity in the criminal-law area upon what the 
dissent calls "the generalized policy of favor­
ing individual rights over governmental pre­
rogative,”  post, a t ------ , 125 L Ed 2d, at 102,
makes no more sense than to adopt, because 
of the same "generalized policy,” a similarly 
gross rule that no decision favoring criminal

91

i



U.S. SUPREME COURT REPORTS 125 L Ed 2d

Jtl

What most provokes comment in 
the dissent, however, is not its insis­
tence that today a rigid doctrine of 
stare decisis forbids tinkering with 
retroactivity, which four Terms ago 
did not; but rather the irony of its 
invoking stare decisis in defense of 
prospective decisionmaking at all. 
Prospective decisionmaking is the 
hand-maid of judicial activism, and 
the bom enemy of stare decisis. It 
was formulated in the heyday of 
legal realism and promoted as a 
"techniqu[e] of judicial lawmaking” 
in general, and more specifically £is a 
means of making it easier to over­
rule prior precedent. B. Levy, Realist 
Jurisprudence and Prospective Over­
ruling, 109 U Pa L Rev 1 (1960). 
Thus, the dissent is saying, in effect, 
that stare decisis demands the pres­
ervation of methods of destroying 
stare decisis recently invented in 
violation of stare decisis.

Contrary to the dissent’s assertion 
that Chevron Oil articulated "our 
traditional retroactivity analysis,”
post, at ------, 125 L Ed 2d, at 97,
the jurisprudence it reflects "came 
into being,” as Justice Harlan ob­
served, less than 30 years ago with 
Linkletter v Walker, 381 US 618, 14 
L Ed 2d 601, 85 S Ct 1731 (1965). 
Mackey, supra, at 676, 28 L Ed 2d 
404, 91 S Ct 1160. It is so un-ancient 
that one of the current members of

defendants can ever be overruled. The law is 
more discerning than that. The dissent’s next 
argument is based on the dubious empirical 
assumption that civil litigants, but not crimi­
nal defendants, will often receive some benefit 
from a prospective decision. That assumption 
does not hold even in this case: Prospective 
invalidation of Virginia’s taxing scheme 
would sifibrd petitioners the enormous future
"benefit,”  post, a t ------ , 125 L Ed 2d, at 103,
of knowing that others in the State are being 
taxed more. But empirical problems aside, the 
dissent does not explain why, if a receipt-of- 
some-benefit principle is important, we should

92

this Court was sitting when it was 
invented. The true traditional view 
is that prospective decisionmaking is 
quite incompatible with the judicial 
power, and that courts have no au­
thority to engage in the practice. See
ante, at ------ , 125 L Ed 2d, at 84;
James B. Beam Distilling Co, v Geor­
gia, 501 U S ------, ------ , 115 L Ed 2d
481, 111 S Ct 2439 (1991) (opinion of 
Souter, J.); American Trucking 
Assns., Inc, v Smith, 496 US 167, 
201, 110 L Ed 2d 148, 110 S Ct 2323 
(1990) (Scalia, J., concurring in judg­
ment); Desist, supra, at 258-259, 22 L 
Ed 2d 248, 89 S a  1030 (Harlan, J,, 
dissenting); Great Northern R, Co, v 
Sunburst Oil & Refining Co., 287 US 
358, 365, 77 L Ed 360, 53 S Ct 145 
(1932). Linkletter itself recognized 
that "[a]t common law there was no 
authority for the proposition that 
judicial decisions made law only for 
the future.” 381 US, at 622-623, 14 L 
Ed 2d 601, 85 S Ct 1731. And before 
Linkletter, the academic proponents 
of prospective judicial decisionmak­
ing acknowledged that their pro­
posal contradicted traditional prac­
tice. See, e.g.. Levy, supra, at 2, and 
n 2; Carpenter, Court Decisions and 
the Common I^w, 17 Colum L Rev 
593, 594 (1917). Indeed, the roots of 
the contrary tradition are so deep 
that Justice Holmes was prepared to 
hazard the guess that "[jjudicial de­

use such an inaccurate proxy as the civil/ 
criminal distinction, or how this newly-discov­
ered principle overcomes the "basic norms of 
constitutional adjudication”  on which Griffith 
V Kentucky, 479 US 314; 322, 93 L Ed 2d 649, 
107 S Ct 708 (1987), rested. Finally, the dis­
sent’s "equal treatment”  argument ably dis­
tinguishes between cases in which a prospec­
tivity claim is properly raised, and those in
which it is not. See post, a t ----------------, 125 L
Ed 2d, at 103. But that does nothing to 
distinguish between civil and criminal cases; 
obviously, a party may procedurally default 
on a claim in either context.

M



I

cisions have had retrospective opera­
tion for near a thousand years.” 
Kuhn V Fairmont Coal Co., 215 US 
349, 372, 54 L Ed 228, 30 S Ct 140 
(1910) (dissenting opinion).

Justice O’Connor asserts that 
"'[w]hen the Court changes its 
mind, the law changes with it.
Post, at ------, 125 L Ed 2d, at 99
(quoting Beam, supra, a t ------, 115 L
Ed 2d 481, 111 S Ct 2439 (O’Connor, 
J., dissenting)). That concept is quite 
foreign to the American legal and 
constitutional tradition. It would 
have struck John Marshall as an 
extraordinary assertion o f raw 
power. The conception of the judicial 
role that he possessed, and that was 
shared by succeeding generations of 
American judges until very recent 
times, took it to be "the province 
and duty of the judicial department 
to say what the law is,” Marbury v 
Madison, 1 Cranch 137, 177, 2 L Eld 
60 (1803) (emphasis added^not
what the law shall be. That original 
and enduring American perception 
of the judicial role sprang not from 
the philosophy of Nietzsche but from 
the jurisprudence of Blackstone, 
which viewed retroactivity as an m- 
herent characteristic of the judicial 
power, a power "not delegated to 
pronounce a new law, but to main­
tain and expound the old one.”  1 W. 
Blackstone, Commentaries 69 (1765). 
Even when a "former determination 
is most evidently contrary to reason 
. . . [or] contrary to the divine law,” 
a judge overruling that decision 
would "not pretend to make a new 
law, but to vindicate the old one 
from misrepresentation.” Id., at 69- 
70. "For if it be found that the for­
mer decision is manifestly absurd or 
unjust, it is declared, not that such a 
sentence was bad law, but that it 
was not law.” Id., at 70 (emphases in

original). Fully retroactive decision­
making was considered a principal 
distinction between the judicial and 
the legislative power: "[I]t is said 
that that which distinguishes a judi­
cial from a legislative act is, that the 
one is a determination of what the 
existing law is in relation to some 
existing thing already done or hap­
pened, while the other is a predeter­
mination of what the law shall be 
for the regulation of all future 
cases.” T. Cooley, Constitutional 
Limitations 91 (1868). The critics of 
the traditional rule of full retroactiv­
ity were well aware that it was 
grounded in what one of them con­
temptuously called "another fiction 
known as the Separation of powers.” 
Kocourek, Retrospective Decisions 
and Stare Decisis and a Proposal, 17 
ABAJ 180, 181 (1931).

Prospective decisionmaking was 
known to foe and friend alike as a 
practical tool of judicial activism, 
born out of disregard for stare deci­
sis. In the eyes of its enemies, the 
doctrine "smack[ed] o f the legislative 
process,”  Mishkin, 79 Harv L Rev, at 
65, "encroach[ed] on the prerogatives 
of the legislative department of gov­
ernment,” Von Moschzisker, Stare 
Decisis in Courts of Last Resort, 37 
Harv L Rev 409, 428 (1924), removed 
"one of the great inherent restraints 
upon this Court’s depart[ing] from 
the field of interpretation .to enter 
that of lawmaking,” James v United 
States, 366 US 213, 225, 6 L Ed 2d 
246, 81 S a  1052 (1961) (Black, J., 
concurring in part and dissenting in 
part), caused the Court’s behavior to 
become "assimilated to that of a 
legislature,”  Kurland, Toward a Po­
litical Supreme Court, 37 U Chi L 
Rev 19, 34 (1969), and tended "to cut 
[the courts] loose from the force of 
precedent, allowing [them] to re-

93

»r

I:



h-

I ! U.S. SUPREME COURT REPORTS 125 L Ed 2d

structure artificially those expecta­
tions legitimately created by extant 
law and thereby mitigate the practi­
cal force of stare decisis.” Mackey, 
401 US, at 680, 28 L Ed 2d 404, 91 S 
Ct 1160 (Harlan, J., concurring in 
judgment). All this was not denied 
by the doctrine’s friends, who also 
viewed it as a device to "augmen[t] 
the power of the courts to contribute 
to the growth of the law in keeping 
with the demands of society,” Malla- 
mud. Prospective Limitation and the 
Rights of the Accused, 56 Iowa L 
Rev 321, 359 (1970), as "a deliberate 
and conscious technique of judicial 
lawmaking,” Levy, 109 U Pa L Rev, 
at 6, as a means of "facilitating 

' ( more effective and defensible judicial 
lawmaking,”  id., at 28.

Justice Harlan described this 
Court’s embrace of the prospectivity 
principle as "the product of the 
Court’s disquietude with the impacts 
of its fast-moving pace of constitu­
tional innovation,”  Mackey, supra, 
at 676, 28 L Ed 2d 404, 91 S Ct 1160. 
'The Court itself, however, glowingly 
described the doctrine as the cause 
rather than the effect of innovation, 
extolling it as a "technique” provid­
ing the "impetus . . .  for the imple­
mentation of long overdue reforms.” 
Jenkins v Delaware, 395 US 213, 
218, 23 L Ed 2d 253, 89 S Ct 1677 
(1969). Whether cause or effect, 
there is no douht that the era which 
gave birth to the prospectivity prin­
ciple was marked by a newfound 
disregard for stare decisis. As one

commentator calculated, "[b]y 1959, 
the number of instances in which 
the Court had reversals involving 
constitutional issues had grown to 
sixty; in the two decades which fol­
lowed, the Court overruled constitu­
tional cases on no less than forty- 
seven occasions.”  Maltz, Some 
Thoughts on the Death of Stare De­
cisis in Constitutional Law, 1980 Wis 
L Rev 467. It was an era when this 
Court cast overboard numerous set­
tled decisions, and indeed even 
whole areas of law, with an uncere­
monious "heave-ho.” See, e.g., Mapp
V Ohio, 367 US 643, 6 L Ed 2d 1081, 
81 S Ct 1684 (1961) (overruling Wolf
V Colorado, 338 US 25, 93 L Ed 1782, 
69 S Ct 1359 (1949)); Gideon v Wain- 
wright, 372 US 335, 9 L Ed 2d 799, 
83 S Ct 792 (1963) (overruling Betts
V Brady, 316 US 455, 86 L Ed 1595, 
62 S Ct 1252 (1942)); Miranda v Ari­
zona, 384 US 436, 479, n 48, 16 L Ed 
2d 694, 86 S Ct 1602 (1966) (overrul­
ing Crooker v California, 357 US 
433, 2 L Ed 2d 1448, 78 S Ct 1287 
(1958), and Cicenia v Lagay, 357 US 
504, 2 L Ed 2d 1523, 78 S Ct 1297 
(1958)); Katz v United States, 389 
US 347, 19 L Ed 2d 576, 88 S Ct 507 
(1967) (overruling Olmstead v United 
States, 277 US 438, 72 L Ed 944, 48 
S Ct 564 (1928), and Goldman v 
United States, 316 US 129, 86 L Ed 
1322, 62 S Ct 993 (1942)). To argue 
now that one of the jurisprudential 
tools of judicial activism from that 
period should be extended on 
grounds of stare decisis can only be 
described as paradoxical.*

2. Contrary to the suggestion in the dissent, 
I am not arguing that we should "cast over­
board our entire retroactivity doctrine with 
. . . [an] unceremonious heave-ho.” Post, at
------ , 125 L Ed 2d, at 99 (emphasis added;
internal quotation marks omitted). There is 
no need. We cast over the first half six Terms 
ago in Griffith, and deep-sixed most of the rest

94

two Terms ago in James B. Beam Distilling
Co. V Georgia, 501 U S ------ , 115 L Ed 2d 481,
111 S Ct 2439 (1991)—in neither case uncere­
moniously (in marked contrast to some of the 
overrulings cited in text). What little, if any, 
remains is teetering at the end of the plank 
and needs no more than a gentle nudge. But 
if the entire doctrine had been given a quick

i.-’f



In sum, I join the opinion of the 
Court because the doctrine of pro­
spective decisionmaking is not in 
fact protected hy our flexible rule of 
stare decisis; and because no friend 
of stare decisis would want it to be.

Justice Kennedy, with whom Jus­
tice White joins, concurring in part 
and concurring in the judgment.

I remain of the view that it is 
sometimes appropriate in the civil 
context to give only prospective ap­
plication to a judicial decision. 
"[P jrospective overruling allows 
courts to respect the principle of 
stare decisis even when they are 
impelled to change the law in light 
of new understanding.” American 
Trucking Assns., Inc. v Smith, 496 
US 167, 197, 110 L Ed 2d 148, 110 S 
Ct 2323 (1990) (plurality opinion). 
When a court promulgates a new 
rule of law, prospective application 
functions "to avoid injustice or hard­
ship to civil litigants who have justi­
fiably relied on prior law.” Id., at 
199, 110 L Ed 2d 148, 110 S Ct 2323 
(internal quotation marks omitted). 
See Phoenix v Kolodziejski, 399 US 
204, 213-215, 26 L Ed 2d 523, 90 S Ct 
1990 (1970); Cipriano v City of 
Houma, 395 US 701, 706, 23 L Ed 2d 
647, 89 S a  1897 (1969) (per cu­
riam); England v Louisiana State Bd. 
of Medical Examiners, 375 US 411, 
422, 11 L Ed 2d 440, 84 S Ct 461 
(1964). And in my view retroactivity 
in civil cases continues to be gov­
erned by the standard announced in 
Chevron Oil Co. v Huson, 404 US 97, 
106-107, 30 L Ed 2d 296, 92 S Ct 349

and unceremonious end, there could be no 
complaint on the grounds of stare decisis; as 
it was bom, so should it die. I do not know 
the basis for the dissent's contention that I 
find the jurisprudence of the era that pro-

125 L Ed 2d, at 85-86, that ap­
pears to embrace in the civil con­
text the retroactivity principles a- 
dopted for criminal cases in Griffith 
V Kentucky, 479 US 314, 93 L Ed 2d 
649, 107 S Ct 708 (1987). As Justice 
O’Connor has demonstrated else­
where, the differences between the 
civil and criminal contexts counsel 
strongly against adoption of Griffith 
for civil cases. See American Truck­
ing Assns., Inc. v Smith, supra, at 
197-199, 110 L Ed 2d 148, 110 S Ct 
2323. I also cannot accept the
Court’s conclusion, ante, a t --------
------ , 125 L Ed 2d, at 85-87, which
is based on Justice Souter’s opin­
ion in James B. Beam Distilling
Co. V Georgia, 501 US ------ , ---------
------ , 115 L Ed 2d 481, 111 S Ct
2439 (1991), that a decision of this 
Court must be applied in a retroac­
tive manner simply because the rule 
of law there announced happened to 
be applied to the parties then before
the Court. See post, a t ----------------,
125 L Ed 2d, at 100-103 (O’Con­
nor, J., dissenting); James B. Beam 
Distilling Co. v Georgia, supra, at
--------------- , 115 L Ed 2d 481, 111 S
Ct 2439 (O’Connor, J., dissenting). 
For these reasons, I do not join Part 
II of the Court’s opinion.

I nonetheless agree with the Court 
that Davis v Michigan Dept, of Trea­
sury, 489 US 803, 103 L Ed 2d 891, 
109 S Ct 1500 (1989), must be given

duced the doctrine of prospectivity "distaste­
ful.”  Post, a t ------ , 125 L Ed 2d, at 99. Much
o f it is quite appetizing. It is only the cavalier 
treatment of stare decisis and the invention of 
prospectivity that I have criticized here.



U.S. SUPREME COURT REPORTS 125 L Ed 2d

retroactive effect. The first condition 
tor prospective application of any 
decision is that it must announce a 
new rule of law. Ashland Oil, Inc v

111 L Ed 2d
734, n o  S Ct 3202 (1990) (per cu­
riam); American Trucking Assns., 
Inc. V Smith, supra, at 179, 110 L Ed 
2d 148, n o  S Ct 2323; United States 
y Johnson, 457 US 537, 550, n 12 73 
L Ed 2d 202, 102 S Ct 2579 (1982);

Huson, 404 US, at 
106-107, 30 L Ed 2d 296, 92 S Ct 349 
The decision must "overrul[e] clear 
past precedent on which litigants 
may have relied” or "decid[e] an 
issue of first impression whose reso­
lution was not clearly foresha-

M 's  r  S i  “ b  296.b Ct 349. Because Davis did nei­
ther, it did not announce new law 
and therefore must be applied in a 
retroactive manner.

first impression whose resolution 
not clearly foreshadowed.” 

106, 30 L Ed
2d 296, 92 S Ct 349.

Respondent argues that two new 
principles of law were established in 
i f ? ® ;  *0 the holding
^if ?  u s e s  § 111], in

which the United States consents to 
Stete taxation of the compensation 
or an oflicer or employee of the 
United States,”  applies to federal 
retirees as well as current federal 
employees. Brief for Respondent 16-
iHQ US, at 808-810,
103 L Ed 2d 891, 109 S a  1500. In 
Davis, however, we indicated that 
t t o  holdmg was "dictate[dj” by "the 
plam language of the statute,”  id at 
808, 103 L Ed 2d 891, 109 S Ct 1500 
and we added for good measure our 
view that the language of the stat- 
ute was unambiguous,”  "unmistak- 

"leaves no room for 
doubt, id., at 809, n 3, 8-10, 103 L 
Ed 2d 891, 109 S a  1500. Given 
these chyacterizations, it is quite 

contend that in this 
egard Davis decided "an issue of 

96

The second new rule respondent 
in ten d s the Court announced in 
Davis was that the state statute at 
issue discriminated against federal 
retirees even though the statute 
treated them like all other state 
taxpayers except state employees 
Brief for Respondent 18-26. See Da-

n 4, 103 L Ed 
2d 891 109 S Ct 1500. The Davis 
Court, however, anchored its deci-

1 We observed that
in Phillips Chemical Co. v Dumas 
Independent School Dist., 361 US 
376, 4 L Ed 2d 384, 80 S Ct 474 
(I960), we faced th[e] precise situa- 
tion confronting us in Davis, and so 
Phillips Chemical controlled our

Ed 2d 891, 109 S Ct 1500. To be 
sure, Justice Stevens in dissent dis- 
^ e e d  with these contentions and 
attempted to distinguish Phillips 
Chemical. 489 US, at 824-826, 103 L 
Ed 2d 891, 109 S Ct 1500. The Court 
however, was not persuaded at the 
time, and I remain convinced that 
me Court had the better reading of 
Phillips Chemical. A contrary hold­
ing m Davis, in my view, would have 
created a clear inconsistency in our 
jurisprudence. Under Chevron Oil 
application of precedent which di- 
r ^ I y  controls is not the stuff of 
which new law is made.

A being "revolutionary ”
Ashland Oil Co. v Ca^l, supra at 
920, 111 L Ed 2d 734, 110 S Ct 3202, 
or an avulsive change which caused 
the current of the law thereafter to 
flow between new banks,” Hanover 

^ United Shoe Machinery 
Co., 392 US 481, 499, 20 L Ed 2d 
1231, 88 S Ct 2224 (1968), Davis was



a mere application of plain statutory 
language and existing precedent. In 
these circumstances, this Court is 
not free to mitigate any financial 
hardship that might befall Virginia’s 
taxpayers as a result of their state 
government’s failure to reach a cor­
rect understanding of the unambigu­
ous dictates of federal law.

Because I do not believe that Da­
vis V Michigan Dept, of Treasury, 
supra, announced a new principle of 
law, I have no occasion to consider 
Justice O’Connor’s argument, post,
a t --------------- , 125 L Ed 2d, at 109-
112, that equitable considerations 
may inform the formulation of reme­
dies when a new rule is announced. 
In any event, I do not read Part III 
of the Court’s opinion as sa}dng any­
thing inconsistent with what Justice 
O’Connor proposes.

On this understanding, I join 
Parts I and III of the Court’s opinion 
and concur in its judgment.

Justice O’Connor, with whom The 
Chief Justice joins, dissenting.

Today the Court applies a new 
rule of retroactivity to impose crush­
ing and unnecessary liability on the 
States, precisely at a time when they 
can least afford it. Were the Court’s 
decision the product of statutory or 
constitutional command, I would 
have no choice but to join it. But 
nothing in the Constitution or stat­
ute requires us to adopt the retroac­
tivity rule the majority now applies. 
In fact, longstanding precedent re­
quires the opposite result. Because I 
see no reason to abandon our tradi­
tional retroactivity analysis as artic­
ulated in Chevron Oil Co. v Huson, 
404 US 97, 106-107, 30 L Ed 2d 296, 
92 S Ct 349 (1971), and because I

This Court’s retroactivity jurispru­
dence has become somewhat chaotic 
in recent years. Three Terms ago, 
the case of American Trucking 
Assns., Inc. v Smith, 496 US 167, 
110 L Ed 2d 148, 110 S Ct 2323
(1990) , produced three opinions, 
none of which garnered a majority. 
One Term later, James B. Beam 
Distilling Co. v Georgia, 501 US 
------, 115 L Ed 2d 481, 111 S Ct 2439
(1991) , yielded five opinions; there, 
no single writing carried more than 
three votes. As a result, the C!ourt 
today finds itself confronted with 
such disarray that, rather than rely­
ing on precedent, it must resort to 
vote-counting: Examining the vari­
ous opinions in Jim Beam, it dis­
cerns six votes for a single proposi­
tion that, in its view, controls this
case. Ante, a t ----------------, 125 L Ed
2d, at 85-86.

If we had given appropriate 
weight to the principle of stare deci­
sis in the first place, our retroactiv­
ity jurisprudence never would have 
become so hopelessly muddled: After 
all, it was not that long ago that the 
law of retroactivity for civil cases 
was considered well settled. In Chev­
ron Oil Co., we explained that 
whether a decision will be nonre­
troactive depends on whether it an- 
noimces a new rule, whether pro­
spectivity would undermine the pur­
poses of the rule, and whether retro­
active application would produce in­
justice. 404 US, at 106-107, 30 L Ed 
2d 296, 92 S Ct 349. Even when this 
Court adjusted the retroactivity rule 
for criminal cases on direct review

97



4

U.S. SUPREME COURT REPORTS

some SIX years ago, we reaffirmed 
the vitality of Chevron Oil, noting 
that retroactivity in civil cases "con­
tinues to be governed by the stan- 
Mrd announced in Chevron Oil Co. v

^®ntucky, 479 US 
314, 322, n 8, 93 L Ed 2d 649 107 s 
c t  708 (1987). In A„.erican T™JkLg 
^sns., supra, however, a number of 
Justices expressed a contrary view 
and the jurisprudential equivalent of 
e^ropy immediately took over 
Whatever the merits o f any retroac­
tivity test. It cannot be denied that 
resolution of the case before us 
would be simplified greatly had we 
not disregarded so needlessly our 
obligation to follow precedent in the 
farst place.

125 L Ed 2d

where the operative events occurred 
before the court’s decision, depend­
ing on the equities. See id., a t _____
- . 115 L Ed 2d 481, 111 S Ct

2439. The first option is called "pure 
prospectivity” and the second "selec­
tive prospectivity.”

As the majority notes, ante, at 
■ 125 L Ed 2d, at 86, six Jus-

th! today, rather
than rectifying that confusion, rein­
forces It still more. In the usual 
case, of course, retroactivity is not 
^  issue; the courts simply apply 
their best understanding of current 
law in resolving each case that
5 0 ?  B eam -oui US, a t ------ -------------------T
Ed 2d 481, 111 S Ct 2439 (Soiiter, J.).

changes in some 
respect, the courts sometimes may

RS. iiew law; in-
|| ( apply the law that gov­

erned when the events giving rise to
the" ^ e r ethe change in law is abrupt and the

?n
? a v  ® courtmay choose to make the decision
ft n o?  prospective, refusing to apply
coifrt^w  parties before the
wurt but also to any case where the 
relevMt facts predate the decision.
C t’2? 39~ T ’ ^ 2d 481, 111 SW  2439. Second, a court may apply
the rule to some but not all
98

.. Cll- OD, six dus
tices in James B. Beam, supra, ex­
pressed their disagreement with se- 
lective prospectivity. Thus, even 
though there was no majority opin- 
lon in that case, one can derive from 
that case the proposition the Court 
announces today: Once "this Court 
applies a rule of federal law to the 
parties before it, that rule . . . must 
be given full retroactive eflfect in all 
cases still open on direct review” 
Ante, at — , 125 L Ed 2d, at 86. 
But no decision of this Court fore­
closes the possibility of pure prospec- 
tivity-refusal to apply a new rule 
in the very case in which it is an­
nounced and every case thereafter. 
As Justice White explained in his 
concurrence in James B. Beam, 
Ltjhe propriety of prospective appli­

cation o f decision in this Court, in 
both constitutional and statutory 
c^es, IS settled by our prior deci­
sions.”  501 US, a t -------- _ _ _  i]<  ̂ T
Ed 2d 481, 111 S Ct 2439 (WWte, J 
concurring in judgment).

Rather than limiting its pro- 
noiancements to the question o f se­
lective prospectivity, the Court inti­
mates that pure prospectivity may 
be prohibited as well. See ante, at 

f  ^  2d, at 86 (referring 
to oirr lack of "'constitutional au-
la w -?  -h-d ?  disregard current law ), ibid, (relymg on "'basic

.. , o f constitutional 
adjudication (quoting Griffith, su-

f  2 b  Ed 2d 649, 107 S Ct 
i^o)), see also ante, at ------, 125 L



HARPER V VIRGINIA DEPT. OF TAXATION
(1993) 125 L Ed 2d 74

Ed 2d, at 84 (touting the "funda­
mental rule of 'retrospective 
operation’ ’’ of judicial decisions). 
The intimation is incorrect. As I 
have explained before and will touch 
upon only briefly here:

"[W]hen the Court changes its 
mind, the law changes with it. If 
the Court decides, in the context 
of a civil case or controversy, to 
change the law, it must make [a] 
determination whether the new 
law or the old is to apply to con­
duct occurring before the law­
changing decision. Chevron Oil de­
scribes our long-established proce­
dure for making this inquiry.”
James B. Beam, supra, a t --------
------, 115 L Ed 2d 481, 111 S Ct
2439 (O’Connor, J., dissenting) (in­
ternal quotation marks omitted).

Nor can the Court’s suggestion be 
squared with our cases, which re­
peatedly have announced rules of 
purely prospective effect. See, e.g.. 
Northern Pipeline Constr. Co. v 
Marathon Pipe Line Co., 458 US 50, 
88, 73 L Ed 2d 598, 102 S Ct 2858 
(1982); Chevron Oil, supra, at 106- 
107, 30 L Ed 2d 296, 92 S Ct 349; 
Phoenix v Kolodziejski, 399 US 204, 
214, 26 L Ed 2d 523, 90 S Ct 1990 
(19'70); Cipriano v City of Houma, 
395 US 701, 706, 23 L Ed 2d 647, 89 
S Ct 1897 (1969); see also American 
Trucking Assns., supra, at 188-200, 
110 L Ed 2d 148, 110 S a  2323 
(plurality opinion) (canvassing the 
(hurt’s retroactivity jurisprudence);
ante, at ------ , 125 L Eki 2d, at 95
(Kennedy, J., concurring in part and 
concurring in judgment) (citing 
cases).

In any event, the question of pure 
prospectivity is not implicated here. 
The majority first holds that once a 
rule has been applied retroactively.

the rule must be applied retroac­
tively to all cases thereafter. Ante,
a t ------ , 125 L Ed 2d, at 86. Then it
holds that Davis v Michigan Dept, of 
Treasury, 489 US 803, 103 L Ed 2d 
891, 109 S Ct 1500 (1989), in fact 
retroactively applied the rule it an­
nounced. Ante, a t --------------- , 125 L
Ed 2d, at 85-86. Under the ma­
jority’s approach, that should end 
the matter: Because the Court ap­
plied the rule retroactively in Davis, 
it must do so here as well. Accord­
ingly, there is no reason for the 
Court’s careless dictum regarding 
pure prospectivity, much less dictum 
that is contrary to clear precedent.

Plainly enough. Justice Scalia 
would cast overboard our entire ret­
roactivity doctrine with precisely the 
"unceremonious 'heave-ho’ ” he de­
cries in his concurrence. See ante, at
------ , 125 L Ed 2d, at 94. Behind
the undisguised hostility to an era 
whose jurisprudence he finds dis­
tasteful, Justice Scalia raises but 
two substantive arguments, both of 
which were raised in James B.
Beam, supra, at ------ , 115 L Ed 2d
481, 111 S Ct 2439 (Scalia, J., con­
curring in judgment), and neither of 
which has been adopted by a major­
ity of this Court. Justice White ap­
propriately responded to those argu­
ments then, see id., at ------ , 115 L
Ed 2d 481, 111 S Ct 2439 (White, J., 
concurring in judgment), and there 
is no reason to repeat the responses 
now. As Justice Frankfurter ex­
plained more than 35 years ago:

"W e should not indulge in the 
fiction that the law now an­
nounced has always been the law 
. . . .  It is much more conducive 
to law’s self-respect to recognize 
candidly the considerations that 
give prospective content to a new 
pronouncement of law.” Griffin v

99



U.S. SUPREME COURT REPORTS 125 L Ed 2d

Illinois, 351 US 12, 26, 100 L Ed 
891, 76 S Ct 585 (1956) (opinion 
concurring in judgment).

II
I dissented in James B. Beam be- 

cause I believed that the absolute 
prohibition on selective prospectivity 
was not only contrary to precedent, 
but also so rigid that it produced 
unconscionable results. I would have 
adhered to the traditional equitable 
balancing test of Chevron Oil as the 
appropriate method of deciding the 
retroactivity question in individual 
cases. But even if one believes the 
prohibition on selective prospectivity 
desirable, it seems to me that the 
Court today takes that judgment to 
an illogical—and inequitable—ex­
treme. It is one thing to say that, 
where we have considered prospec­
tivity in a prior case and rejected it, 
we must reject it in every case 
thereafter. But it is quite another to 
hold that, because we did not con­
sider the possibility of prospectivity 
in a prior case and instead applied a 
rule retroactively through inadver­
tence, we are foreclosed from consid- 
enng the issue forever thereafter, 
buch a rule is both contrary to es­
tablished precedent and at odds with 
any notion o f fairness or sound deci­
sional practice. Yet that is precisely 
the rule the (jourt appears to adopt 
^ a y .  Ante, a t ----------------, 125 L Ed
Q̂, at 06.

actively to the parties before the 
Court. Deciding whether we in fact 
have applied Davis retroactively 
turns out to be a rather difficult 
matter. Parsing the language of the 
Dayis opinion, the Court encounters 
a single sentence it declares determi­
native: "The State having conceded 
that a refund is appropriate in these 
circumstances, see Brief for Appellee 
63, to the extent appellant has paid 
taxes pursuant to this invalid tax 
scheme, he is entitled to a refund.” 
Id. at 817, 103 L Ed 2d 891, 109 S Ct
loOO (quoted in part, ante, at ____
125 L Ed 2d, at 87). According to 
the majority, that sentence consti­
tutes " 'consideration of remedial 
issues’ ” and therefore

necessarily’ ” indicates that we ap­
plied the rule in Davis retroactively 
to the parties before us. Ante, at 
~ , 125 L Ed 2d, at 87 (quoting
James B. Beam, supra, at ------  115
L Ed 2d 481, 111 S Ct 2439 (opinion 
ot Souter, J.)). Ironically, respondent 
and its amici draw precisely the op­
posite conclusion from the same sen- 

^̂ .‘ ‘̂^ording to them, the fact 
that Michigan conceded that it 
would offer relief meant that we had 
no reason to decide the question of 
retroactivity in Davis. Michigan was 
willmg to provide relief whether or 
not relief was required. "The Court 
simply accepted that offer and pre- 
serv^  the retroactivity question for 
another day.

Under the Court’s new approach, 
we have neither authority nor dis­
cretion to consider the merits of ap­
plying Davis V Michigan Dept, of 
Ire^ury, supra, retroactively. In­
stead, we must inquire whether any 
ot our previous decisions happened 
to have applied the Davis rule retro- 
100

One might very well debate the 
meaning of the single sentence on 
which everyone relies. But the de­
bate is as meaningless as it is inde- 

®fecht V Abrahamson,
507 U S ------, 123 L Ed 2d 353, 113 S
Ct 1710 (1993), we reaffirmed our 
longstanding rule that, if a decision 
does  ̂not "squarely addres[s] [an] is­
sue, this Court remains "free to



HARPER V VIRGINIA DEPT. OF TAXATION
(1993) 125 L Ed 2d 74

address [it] on the merits” at a later
date. Id., a t --------------- , 123 L Ed 2d
353, 113 S Ct 1710. Accord, United 
States V L. A. Tucker Truck Lines, 
Inc., 344 US 33, 38, 97 L Ed 54, 73 S 
Ct 67 (1952) (issue not "raised in 
briefs or argument nor discussed in 
the opinion of the Court” cannot be 
taken as "a binding precedent on 
th[e] point” ); Webster v Fall, 266 US 
507, 511, 69 L Ed 411, 45 S Ct 148 
(1925) ("Questions which merely 
lurk in the record, neither brought 
to the attention of the court nor 
ruled upon, are not considered as 
having been so decided as to consti­
tute precedents” ). The rule can be 
traced back to some of the earliest of 
this Court’s decisions. See Statement 
of Marshall, C. J., as reported in the 
arguments of counsel in United 
States V More, 3 Cranch 159, 172, 2 
L Ed 397 (1805) ("No question was 
made, in that case, as to the jurisdic­
tion. It passed sub silentio, and the 
court does not consider itself as 
bound by that case” ). Regardless of 
how one reads the solitary sentence 
upon which the Court relies, surely 
it does not "squarely address”  the 
question of retroactivity; it does not 
even mention retroactivity. At best, 
by addressing the question of reme­
dies, the sentence implicitly "as­
sumes” the rule in Davis to be retro­
active. Our decision in Brecht, how­
ever, makes it quite clear that unex­
amined assumptions do not bind this
Court. Brecht, supra, a t ----------------,
123 L Ed 2d 353, 113 S Ct 1710 
(That the Court "assumed the appli­
cability o f ’ a rule does not bind the 
Court to the assumption).

In fact, there is far less reason to 
consider ourselves bound by prece­
dent today than there was in Brecht. 
In Brecht, the issue was not whether 
a legal question was resolved by a

single case; it was whether our con­
sistent practice of applying a partic­
ular rule. Chapman v California, 386 
US 18, 24, 17 L Ed 2d 705, 87 S Ct 
824 (1967), to cases on collateral 
review precluded us from limiting 
the rule’s application to cases on 
direct review. Because none of our 
prior cases directly had addressed 
the applicability of Chapman to 
cases on collateral review—each had 
only assumed it applied—the Court 
held that those cases did not bind us 
to any particular result. See Brecht,
supra, a t --------------- , 123 L Ed 2d
353, 113 S Ct 1710. I see no reason 
why a single retroactive application 
of the Davis rule, inferred from the 
sparse and ambiguous language of 
Davis itself, should carry more 
weight here than our consistent 
practice did in Brecht.

The Court offers no justification 
for disregarding the settled rule we 
so recently applied in Brecht. Nor do 
I believe it could, for the rule is not 
a procedural nicety. On the con­
trary, it is critical to the soundness 
of our decisional processes. It should 
go without saying that any decision 
of this Court has wide-ranging appli­
cations; nearly every opinion we is­
sue has effects far beyond the partic­
ular case in which it issues. The rule 
we applied in Brecht, which limits 
the stare decisis effect of our deci­
sions to questions actually consid­
ered and passed on, ensures that 
this Court does not decide important 
questions by accident or inadver­
tence. By adopting a contrary rule in 
the area of retroactivity, the Court 
now permanently binds itself to its 
every unexamined assumption or in­
attention. Any rule that creates a 
grave risk that we might resolve 
important issues of national concern 
sub silentio, without thought or con­
sideration, cannot be a wise one.

101



This case demonstrates the danger 
of such a rule. The question of retro­
activity was never briefed in Davis. 
It had not been passed upon by the 
court below. And it was not within 
the question presented. Indeed, at 
oral argument we signaled that we 
would not pass upon the retroactiv­
ity of the rule Davis would an­
nounce. After conceding that the 
Michigan Department of Taxation 
would give Davis himself a refund if 
he prevailed, counsel for the Depart­
ment argued that it would be unfair 
to require Michigan to provide re­
funds to the 24,000 taxpayers who 
were not before the Court. The fol­
lowing colloquy ensued:

"[Court]: So why do we have to 
answer that at all?

"[Michigan]: —if, if this Court 
issues an opinion stating that the 
current Michigan classification is 
unconstitutional or in violation of 
the statute, there are these 24,000 
taxpayers out there.

"[Court]: But that’s not—it’s 
not here, is it? Is that question 
here?.

"[Michigan]: It is not specifi­
cally raised, no.’ ’ Tr of Oral Arg, 
o r  1988, No. 87-1020, pp 37-38.

Now, however, the Court holds that 
the question was implicitly before us 
and that, even though the Davis 
opinion does not even discuss the 
question of retroactivity, it resolved 
the issue conclusively and irretriev­
ably.

If Davis somehow did decide that 
its rule was to be retroactive, it was 
by chance and not by design. The 
absence of briefing, argument, or 
even mention of the question belies
102

any suggestion that the issue was 
given thoughtful consideration. Even 
the author of the Davis opinion re­
fuses to accept the notion that Davis 
resolved the question of retroactiv­
ity. Instead, Justice Kennedy applies 
the analysis of Chevron Oil to re­
solve the retroactivity question to­
day. See ante, a t --------------- , 125 L
Ed 2d, a t --------------- (opinion concur­
ring in part and concurring in judg­
ment).

The Court’s decision today cannot 
be justified by comparison to our 
decision in Grifiith v Kentucky, 479 
US 314, 93 L Ed 2d 649, 107 S Ct 
708 (1987), which abandoned selec­
tive prospectivity in the criminal 
context. Ante, at 9, 125 L Ed 2d, 
at 86. As I explained in American 
Trucking Assns., 496 US, at 197-200, 
110 L Ed 2d 148, 110 S Ct 2323, 
there are significant differences be­
tween criminal and civil cases that 
weigh against such an extension. 
First, nonretroactivity in criminal 
cases historically has favored the 
government’s reliance interests over 
the rights of criminal defendants. As 
a result, .the generalized policy of 
favoring individual rights over gov­
ernmental prerogative can justify 
the elimination of prospectivity in 
the criminal arena. The same ratio­
nale cannot apply in civil cases, as 
nonretroactivity in'the civil context 
does not necessarily favor plaintiffs 
or defendants; "nor is there any pol­
icy reason for protecting one class of 
litigants over another.”  Id., at 198, 
110 L Ed 2d 148, 110 S Ct 2323. 
More important, even a party to 
civil litigation who is "deprived of 
the full retroactive benefit of a new 
decision may receive some relief.” 
Id., at 198-199, 110 L Ed 2d 148, 110 
S Ct 2323. Here, for example, peti­
tioners received the benefit of pro-

I,.



HARPER V VIRGINIA DEPT. OF TAXATION 
(1993) 125 L Ed 2d 74

spective invalidation of Virginia s 
taxing scheme. From this moment 
forward, they will be treated on an 
equal basis with all other retirees, 
the very treatment our intergovern­
mental immunity cases require. The 
criminal defendant, in contrast, is 
usually interested only in one rem- 
e(jy—reversal of his conviction. That 
remedy can be obtained only if the 
rule is applied retroactively. See id., 
at 199, 110 L Ed 2d 148, 110 S Ct 
2323.

Nor can the Court s rejection of 
selective retroactivity in the civil 
context be defended on equal treat­
ment grounds. See Griffith, supra, at 
323, 93 L Ed 2d 649, 107 S Ct 708 
(selective retroactivity accords a ben­
efit to the defendant in whose case 
the decision is announced but not to 
any defendant thereafter). It may 
well be that there is little difference 
between the criminal defendant in 
whose csise a decision is announced 
and the defendant who seeks certio­
rari on the same question two days 
later. But in this case there is a 
tremendous difference between the 
defendant in whose case the Davis 
rule was announced and the defen­
dant who appears before us today: 
The latter litigated and preserved 
the retroactivity question while ^ e  
former did not. The Michigan De­
partment of Taxation did not even 
brief the question of retroactivity m 
Davis. Respondent, in contrast, actu­
ally prevailed on the question in the 
court below.

If the Court is concerned with 
equal treatment, that difference 
should be dispositive. Having failed 
to demand the unusual, prospectw- 
ity, respondent in Davis got me 
usual—namely, retroactivity. Re­
spondent in this case has asked for 
the unusual. In fact, respondent

here defends a judgment below that 
awarded it just that. I do not see 
how the principles of equality can 
support forcing the Commonwealth 
of Virginia to bear the harsh conse­
quences of retroactivity simply be­
cause, years ago, the Michigan De­
partment of Taxation failed to press 
the issue—and we neglected to con­
sider it. Instead, the principles of 
fairness favor addressing the conten­
tions the Virginia Department of 
Taxation presses before us by apply­
ing Chevron Oil today. It is there­
fore to Chevron Oil that I now turn.

B
Under Chevron Oil, whether a de­

cision of this Court will be applied 
nonretroactively depends on three 
factors. First, as a threshold matter, 
"the decision to be applied nonre­
troactively must establish a 
principle of law.” 404 US, at 106, 30 
L Ed 2d 296, 92 S Ct 349. Second, 
nonretroactivity must not retard the 
new rule’s operation in light of its 
history, purpose, and effect. Id., at 
107, 30  L Ed 2d 296, 92 S Ct 349. 
Third, nonretroactivity must be nec­
essary to avoid the substantial injus­
tice and hardship that a holding of 
retroactivity might impose. Ibid. In 
my view, all three factors favor hold­
ing our decision in Davis nonretroac­
tive. _ i

As Justice Kennedy points out in 
his concurrence, ante, at , Î  
Ed 2d, at 96, a decision cannot be 
made nonretroactive unless it an­
nounces "a new principle of lu ^  
Chevron Oil, 404 US, at 106, 30 L Ed 
2d 296, 92 S Ct 349. For purposes of 
civil retroactivity, Chevron Oil iden­
tifies two types of decisions that can

103



U.S. SUPREME COURT REPORTS 125 L Ed 2d

; I
be new. First, a decision is new if it 
overturns "clear past precedent on 
which litigants may have relied.”
Ibid.; ante, a t ------ , 125 L Ed 2d, at
96 (Kennedy, J., concurring in part 
and concurring in judgment). I agree 
with Justice Kennedy that Davis did 
not represent such a 
" 'revolutionary’ ” or " 'avulsive
change’ ” in the law. Ante, at ------,
125 L Ed 2d, at 96 (quoting Han­
over Shoe, Inc. v United Shoe Ma­
chinery Corp., 392 US 481, 499, 20 L 
Ed 2d 1231, 88 S Ct 2224 (1968)).

Nonetheless, Chevron also ex­
plains that a decision may be "new” 
if it resolves "an issue of first im­
pression whose resolution was not 
clearly foreshadowed.” Chevron Oil, 
supra, at 106, 30 L Ed 2d 296, 92 S 
Ct 349 (emphasis added). Thus, even 
a decision that is "controlled by the 
. . . principles” articulated in prece­
dent may announce a new rule, so 
long as the rule was "sufiiciently 
debatable” in advance. Arizona Gov­
erning Committee for Tax Deferred 
Annuity and Deferred Compensation 
Plans V Norris, 463 US 1073, 1109, 
77 L Ed 2d 1236, 103 S Ct 3492 
(1983) (O’Connor, J., concurring). 
Reading the Davis opinion alone, 
one might get the impression that it 
did not announce a new rule even of 
that variety. "The opinion’s emphatic 
language suggests that the outcome 
was not even debatable. See ante, at
--------------- , 125 L Ed 2d, at 96
(Kennedy, J., concurring in part and 
concurring in judgment). In my view, 
however, assertive language is not 
itself determinative. As The Chief 
Justice explained for the Court in a 
different context:

"[TJhe fact that a court says that 
its decision . . .  is 'controlled’ by a 
prior decision, is not conclusive for 
purposes of deciding whether the 

104

current decision is a 'new rule’ 
. . . .  Courts frequently view their 
decisions as being 'controlled’ or 
'governed’ by prior opinions even 
when aware of reasonable con­
trary conclusions reached by other 
courts.” Butler v McKellar, 494 
US 407, 415, 108 L Ed 2d 347, 110 
S Ct 1212 (1990).

In Butler, we determined that the 
rule announced in Arizona v Rober­
son, 486 US 675, 100 L Ed 2d 704 
108 S Ct 2093 (1988), was "new” for 
purposes of Teague v Lane, 489 US 
288, 103 L Ed 2d 334, 109 S Ct 1060 
(1989), despite Roberson’s repeated 
assertions that its rule was "directly 
controlled” by precedent. Indeed, we 
did not even feel bound by the opin­
ion’s statement that it was not an­
nouncing a new rule at all but 
rather declining to create an excep-, 
tion to an existing rule. While 
Teague and its progeny may not 
provide the appropriate standard of 
novelty for Chevron Oil purposes, 
their teaching—that whether an 
opinion is new depends not on its 
language or tone but on the legal 
landscape from which it arose—ob-' 
tains nonetheless. -ir.v

In any event. Justice Stevens cer­
tainly thought that Davis announced 
a new rule. In fact, he thought that 
the rule was not only unprece-’ 
dented," but wrong: "The .Court’s 
holding is not supported by the ra­
tionale for the intergovernmental 
immunity doctrine and is not com­
pelled by our previous decisions. I 
cannot join the unjustified, court-im­
posed restriction on a State’s power 
to administer its own affairs.” 489 
US, at 818-819, 103 L Ed 2d 891, 109 
S Ct 1500 (dissenting opinion). And 
just last Term two Members of this 
Court expressed their disagreement



n
HARPER V VIRGINIA DEPT. OF TAXATION

(1993) 125 L Ed 2d 74
with the decision in Davis, labeling 
its application of the doctrine of in­
tergovernmental immunity "per­
verse.”  Barker v Kansas, 503 US
------, ------ , 118 L Ed 2d 243, 112 S Ct
1619 (1992) (Stevens, J., joined by 
Thomas, J., concurring). Although I 
would not call our decision in Davis 
perverse, I agree that its rule was 
sufficiently debatable in advance as 
to fall short of being "clearly foresh­
adowed.” The great weight of au­
thority is in accord.*

In fact, before Davis was an­
nounced, conventional wisdom 
seemed to be directly to the con­
trary. One would think that, if Davis 
was "clearly foreshadowed,” some 
taxpayer might have made the inter­
governmental immunity argument 
before. No one had. Twenty-three 
States had taxation schemes just 
like the one at issue in Davis; and 
some of those schemes were estab­
lished as much as half a century 
before Davis was decided. See Har­
per V Virginia Dept, of Taxation, 241 
Va 232, 237, 401 SE2d 868, 871 
(1991). Yet not a single taxpayer 
ever challenged one o f those 
schemes on intergovernmental im­
munity grounds until Davis chal­
lenged Michigan’s in 1984. If Justice 
Holmes is correct that "[t]he prophe­
cies of what the courts will do in 
fact, and nothing more pretentious”

are "law,” O. Holmes, The Path of 
the Law, in Collected Legal Papers 
167, 173 (1920), then surely Davis 
announced new law; the universal 
"prophecy” before Davis seemed to 
be that such taxation schemes were 
valid.

An examination of the decision in 
Davis and its predecessors reveals 
that Davis was anything but clearly 
foreshadowed. Of course, it was well 
established long before Davis that 
the nondiscrimination principle of 4 
u s e  § 111 [4 u s e s  § 111] and the 
doctrine of intergovernmental immu­
nity prohibit a State from imposing 
a discriminatory tax on the United 
States or those who do business with 
it. The income tax at issue in Davis, 
however, did not appear discrimina­
tory on its face. Like the Virginia 
income tax at issue here, it did not 
single out federal employees or reti­
rees for disfavored treatment. In­
stead, federal retirees were treated 
identically to all other retirees, with 
a single and numerically insignifi­
cant exception—retirees whose re­
tirement benefits were paid by the 
State. Whether such an exception 
rendered the tax "discriminatoiy”  
within the meaning of the intergo­
vernmental immunity doctrine, it 
seems to me, was an open question. 
On the one hand, the t ^  scheme did 
distinguish between federal retirees

* Swanson v Powers, 937 F2d 965, 968, 970, 
971 (CA4 1991) ("[t]he most pertinent judicial 
decisions”  were contrary to a holding o f im­
munity and "the rationale behind the prece­
dent might have suggested a different result 
in [Davis itself]” ; **how the intergovernmental 
tax immunity doctrine and 4 USC § 111 [4 
u s e s  § 111] applied to [plans like the one at 
issue in Davis] was anything but clearly es­
tablished prior to Davis” ); Harper v Virginia 
Dept, of Taxation, 241 Va 232, 238, 401 SE2d 
868, 872 (1991) ("[T]he Davis decision estab­
lished a new rule of law by deciding an issue 
o f first impression whose resolution was not

clearly foreshadowed” ); Swanson v  State, 329 
NC 576, 583, 407 SE2d 791, 794 (1991) ("the 
decision o f Davis was not clearly foresha­
dowed” ); Bass V State, 302 SC 250, 256, 395 
SE2d 171, 174 (1990) (Davis "established a 
new principle of law” ); Bohn v Waddell, 164 
Ariz 74, 92, 790 P2d 772, 790 (Ariz Tax 1990) 
(Davis "established a new principle of law” ); 
Note, Rejection of the "Similarly Situated’ 
Taxpayer”  Rationale: Davis v Michigan De­
partment o f Treasury, 43 Tax Lawyer 431, 
441 (1990) ("The majority in Davis rejected a 
long-standing doctrine” ).

105



3' U.S. SUPREME COURT REPORTS 125 L Ed 2d

and state retirees: The former were 
required to pay state t^ e s  on their 
retirement income, while the latter 
were not. But it was far from clear 
that such was the proper compari­
son. In fact, there were strong argu­
ments that it was not.

As Justice Stevens e x p ir e d  more 
thoroughly in his D a ^  '
vis, supra, at 819, 103 L Ed 2d 891, 
109 S Ct 1500—and as we have rec­
ognized since McCulloch, v Mary- 

Wheat 316, 4 L Ed 579 (1819)
__intergovernmental immunity is
necessary to prevent the States from 
interfering with federal interests 
through teixation. Because the JNa- 
tional Government has no recourse 
to the state ballot box, it has only a 
limited ability to protect itself 
against excessive state taxes. But 
the risk of excessive taxation of fed­
eral interests is eliminated, and [aj 
'political check’ is provided, when a 
state tax falls” not only on the Fed­
eral Government but also on a sig- 
niGcant group o f state citizens who 
can be counted upon to use their 
votes to keep the State from raismg 
the tax excessively, and thus placing 
an unfair burden on the Federal 
Government.”  Washington v I^ited 
States, 460 US 536, 545, 75 L Ed 2d 
264, 103 S Ct 1344 (1983) (emphasis 
added). Accord, United States v 
County of Fresno, 429 US 45^  462- 
464, 50 L Ed 2d 683, 97 S Ct 699 
(1977); South Carolina v Baker, 485 
US 505, 526, n 15, 99 L Ed 2d 592, 
108 S a  1355 (1988).

There can be no doubt that the 
taxation scheme at issue in Davis 
and the one employed by the Com­
monwealth of Virginia provided that 
necessary "political check. They ex­
empted only a small ^oup of citi­
zens, state retirees, while subjectii^ 
the remainder of their citizens fed-
106

eral retirees, retirees who receive 
income from private sources, and 
nonretirees alike—to a uniform in­
come tax. As a result, any attempt 
to increase income taxes excessively 
so as to interfere with federal inter­
ests would have caused the similarly 
taxed populace to "use their vot^  
to protect their interests, thereby 
protecting the interests of the Fed­
eral Government as well. 'Riere be­
ing no risk of abusive taxation of the 
National Government, there was a 
good argument that there should 
have been no intergovernmental im­
munity problem either. See Davis, 
489 US, at 821-824, 103 L Ed 2d 891, 
109 S Ct 1500 (Stevens, J., dissent­
ing).

In addition, distinguishing be­
tween taxation of state retirees and 
all others, including private and fed­
eral retirees, was justifiable from an 
economic standpoint. The State, af­
ter all, does not merely collect taxes 
from its retirees; it pays their bene­
fits as well. As a result, it makes no 
difference to the State or the retirees 
whether the State mcreases state 
retirement benefits in an amount 
sufficient to cover taxes it imposes, 
or whether the State offers reduced 
benefits and makes them tax-free. 
The net income level of the retirees 
and the impact on the state fisc is 
the same. Thus, the Michigan De­
partment of Taxation had a good 
argument that its differential treat­
ment of state and federal retirees 
was "directly related to, and justified 
by, [a] significant differenc[e] be­
tween the two classes, id., at 816, 
103 L Ed 2d 891, 109 S a  1500 
(internal quotation marks omitted): 
Taxing federal retirees enhances the 
State’s fisc, whereas taxing state re­
tirees does not.

I recite these arguments not to



HARPER V VIRGINIA DEPT. OF TAXATION
(1993) 125 L Ed 2d 74

show that the decision in Davis was 
wrong—I joined the opinion then 
and remain of the view that it was 
correct—but instead to point out 
that the arguments on the other side 
were substantial. Of course, the 
t^urt was able to "ancho[r] its deci­
sion in precedent,” ante, a t ------ , 125
L Ed 2d, at 96 (Kennedy, J., con­
curring in part and concurring in 
judgment). But surely that cannot be 
dispositive. Few decisions are so 
novel that there is no precedent to 
which they may be moored. What is 
determinative is that the decision 
was "sufficiently debatable” ex ante 
that, under Chevron Oil, nonretroac­
tivity cannot be precluded. Arizona 
Governing Committee v Norris, 463 
US, at 1109, 77 L Ed 2d 1236, 103 S 
Ct 3492 (O’Connor, J., concurring). 
That, it seems to me, is the case 
here.

The second Chevron Oil factor is 
whether denying the rule retroactive 
application will retard its operation 
in light of the rule’s history, pur- 
pose, and effect. 404 US, at 107 30 L 
Ed 2d 296, 92 S a  349. That factor 
werwhelmingly favors respondent. 
The purpose of the intergovernmen- 
^  immunity doctrine is to protect 
the rights of the Federal Sovereign 
against state interference. It does 
not protect the private rights of indi­
viduals:

466, 483-484, 83 L Ed 927, 59 S Ct 
595 (1939) (footnote omitted).

Accord, Davis, 489 US, at 814, 103 L 
Ed 2d 891, 109 S a  1500 ("intergo­
vernmental tax immunity is based 
on the need to protect each sover- 
eign s governmental operations from 
undue interference by the other”). 
Affording petitioners retroactive re­
lief in this case would not vindicate 
the interests of the Federal Govern­
ment. Instead, it lines the pockets of 
the Government’s former employees. 
It therefore comes as no surprise 
that the United States, despite its 
consistent participation in intergo­
vernmental immunity cases in the 
past, has taken no position here. 
Because retroactive application of 
the rule in Davis serves petitioners’ 
interests but not the interests inter­
governmental immunity was meant 
to protect—the Federal Govern- 
ment’s--denying Davis retroactive 
application would not undermine the 
decision’s purpose or effect.

[T]he purpose of the immunity 
•was not to confer benefits on the 

employees by relieving them from 
contributing their share of the 

 ̂ financial support of the other gov- 
emment . . . , but to prevent un- 

» due interference with the one gov- 
" ®™®ent by imposing on it the tax 
• Durdens of the other.” Graves v 
- New York ex rel. O’Keefe, 306 US

The final factor under Chevron Oil 
IS whether the decision " 'could pro­
duce substantial inequitable results 
if applied retroactively.’ ”  Chevron 
Off supra, at 107, 30 L Ed 2d 296, 92 
S (Jt 349 (quoting Cipriano v City of 
Houma, 395 US, at 706, 23 L Ed 2d 
647, 89 S Ct 1897). We repeatedly 
have declined to give our decisions 
retroactive effect where doing so 
would be unjust. In Arizona Govern­
ing Committee v Norris, supra, for 
example, we declined to apply a Ti­
tle V n decision retroactively, noting 
that the resulting "unanticipated 
financial burdens would come at a 
time when many States and local 
governments are struggling to meet 
substantial fiscal deficits.”  Id., at

107

—■V



U.S. SUPREME COURT REPORTS 125 L Ed 2d

1106-1107, 77 L Ed 2d 1236, 103 S Ct 
3492 (Powell, J., joined by Burger, C. 
J., Blackmun, Rehnquist, and O’Con­
nor, JJ.). There was "no justifica­
tion” for "imposing] this magnitude 
of burden retroactively on the pub­
lic,” we concluded. Id., at 1107, 77 L 
Ed 2d 1236, 103 S Ct 3492. Accord, 
id., at 1107-1111, 77 L Ed 2d 1236, 
103 S Ct 3492 (O’Connor, J., concur­
ring); see id., at 1075, 77 L Ed 2d 
1236, 103 S Ct 3492 (per curiam). 
Similarly, we declined to afford the 
plaintiff full retroactive relief in Los 
Angeles Dept, of Water and Power v 
Manhart, 435 US 702, 718-723, 55 L 
Ed 2d 657, 98 S Ct 1370 (1978) (Ste­
vens, J.). There, too, we explained 
that "[rjetroactive liability could be 
devastating” and that "[t]he harm 
would fall in large part on innocent 
third parties.”  Id., at 722-723, 55 L 
Ed 2d 657, 98 S a  1370.

Those same considerations exist 
here. Retroactive application of rul­
ings that invalidate state tax laws 
have the potential for producing 
"disruptive consequences for the 
State[s] and [their] citizens. A re­
fund, if required by state or federal 
law, could deplete the state treasur- 
[ies], thus threatening the State[s’] 
current operations and future 
plans.” American Trucking Assns., 
Inc. V Smith, 496 US, at 182, 110 L 
Ed 2d 148, 110 S Ct 2323 (plurality 
opinion). Retroactive application of 
Davis is no exception. "The fiscal 
im plications of Davis for the 
[Sjtates,” one commentator has 
noted, "are truly staggering.” Heller- 
stein, Preliminary Refiections on 
McKesson and American Trucking 
Associations, 48 Tax Notes 325, 336 
(1990). The States estimate that 
their total liability will exceed $1.8 
billion. Brief for Respondent SA-1; 
Brief for State of Utah et al. as

Amici Curiae 12-13. Virginia’s share 
alone exceeds $440 million. Brief for 
Respondent SA-1; Brief for State of 
Utah et al. as Amici Curiae 12-13. 
This massive liability could not come 
at a worse time. See Wall Street 
Journal, July 27, 1992, p A2 ("Most 
states are in dire fiscal straits, and 
their deteriorating tax base is mak­
ing it harder for them to get out, a 
survey of legislatures indicates” ). Ac­
cord, 241 Va, at 239-240, 401 SE2d, 
at 873 (such massive liability "would 
have a potentially disruptive and 
destructive impact on the Common­
wealth’s planning, budgeting, and 
delivery of essential state services” ); 
Swanson v State, 329 NC 576, 583, 
407 SE2d 791, 794 (1991) ("this State 
is in dire financial straits” and $140 
million in refunds would exacerbate 
it); Bass v State, 302 SC 250, 256, 
395 SE2d 171, 174 (199(D) ($200 mil­
lion in refunds "would impose a se­
vere financial burden on the State 
and its citizens [and] endanger the 
financial integrity of the State” ). To 
impose such liability on Virginia 
and the other States that relied in 
good faith on their taxation laws, 
"at a time when most States are 
struggling to fund even the most 
basic services, is the height of un­
fairness.”  James B. Beam, 501 US, 
a t ------ , 115 L Ed 2d 481, 111 S Ct
2439 (O’Connor, J., dissenting).

It cannot be contended that such a 
burden is justified by the States’ 
conduct, for the liability is entirely 
disproportionate to the offense. We 
do not deal with a State that will­
fully violated the Constitution but 
rather one that acted entirely in 
good faith on the basis of an unchal­
lenged statute. Moreover, during the 
four years in question, the constitu­
tional violation produced a benefit of 
approximately $8 million to $12 mil-

108



HARPER V VffiGINIA DEPT. OF TAXATION
(1993) 125 L Ed 2d 74

9

lion per year, Tr of Oral Arg 33, 36, 
and that benefit accrued not to the 
Commonwealth but to individual re­
tirees. Yet, for that $32 million to 
$48 million error, the Court now 
allows the imposition of liability well 
in excess of $400 million dollars. 
Such liability is more than just dis­
proportionate; it is unconscionable. 
Finally and perhaps most important, 
this burden will not fall on some 
thoughtless government official or 
even the group of retirees that bene­
fited from the offending exemption. 
Instead the burden falls squarely on 
the backs of the blameless and unex­
pecting taxpayers of the affected 
States who, although they profited 
not at all from the exemption, will 
now be forced to pay higher taxes 
and be deprived of essential services.

Petitioners, in contrast, would 
suffer no hardship if the Court re­
fused to apply Davis retroactively. 
For years, 23 States enforced taxa­
tion schemes like the Common­
wealth’s in good faith, and for years 
not a single taxpayer objected on 
intergovernmental immunity 
grounds. No one put the States on 
notice that their taxing schemes 
might be constitutionally suspect. 
Denying Davis retroactive relief thus 
would not deny petitioners a benefit 
on which they had relied. It merely 
would deny them an unanticipated 
windfall. Because that windfall 
would come only at the cost of im­
posing hurtful consequences on inno­
cent taxpayers and the communities 
in which they live, I believe the 
substantial inequity of imposing ret­
roactive relief in this case, like the 
other Chevron factors, weighs in fa­
vor of denying Davis retroactive ap­
plication.

m
Even if the dburt is correct that

Davis must be applied retroactively 
in this case, there is the separate 
question of the remedy that must be 
given. The questions of retroactivity 
and remedy are analytically distinct. 
American Trucking Assns., Inc. v 
Smith, supra, at 189, 110 L Ed 2d 
148, 110 S Ct 2323 (plurality opin­
ion) ("[T]he Court has never equated 
its retroactivity principles with re­
medial principles” ). As Justice 
Souter explained in James B. Beam,
supra, a t --------------- , 115 L Ed 2d
481, 111 S Ct 2439, retroactivity is a 
matter of choice of law "[sjince the 
question is whether the court should 
apply the old rule or the new one.” 
When the retroactivity of a decision 
of this Court is in issue, the choice- 
of-law issue is a federal question. 
Ashland Oil, Inc. v Caryl, 497 US 
916, 918, 111 L Ed 2d 734, 110 S a  
3202 (1990) (per curiam).

The question of remedy, however, 
is quite different. The issue is not 
whether to apply new law or old 
law, but what relief should be af­
forded once the prevailing party has 
been determined under applicable 
law. See James B. Beam, supra, at
------ , 115 L Ed 2d 481, 111 S a  2439
(Souter, J.) ("Once a rule is found to 
apply 'backward,’ there may then be 
a further issue of remedies, i.e., 
whether the party prevailing under 
a new rule should obtain the same 
relief that would have been awarded 
if the rule had been an old one”). 
The question of remedies is in the 
first instance a question of state law. 
See ibid. ("[Tjhe remedial inquiry is 
one governed by state law, at least 
where the case originates in state 
court” ). In fact, the only federal 
question regarding remedies is 
whether the relief afforded is suffi­
cient to comply with the require-

109



U.S. SUPREME COURT REPORTS 125 L Ed 2d

ments of due process. See McKesson 
Corp. V Division of Alcoholic Bever­
ages and Tobacco, 496 US 18, 31-52, 
110 L Ed 2d 17, 110 S Ct 2238 (1990).

While the issue of retroactivity is 
properly before us, the question of 
remedies is not. It does not appear 
to be within the question presented, 
which asks only if Davis may be 
applied "nonretroactively so as to 
defeat federal retirees’ entitlement 
to refunds.” Pet for Cert i. Moreover, 
our consideration of the question at 
this juncture would be inappropri­
ate, as the Supreme Court of Vir­
ginia has yet to consider what rem­
edy might be available in light of 
Davis’s retroactivity and applicable 
state law. 'The Court inexplicably 
discusses the question at length 
nonetheless, noting that if the Com­
monwealth of Virginia provides ade­
quate predeprivation remedies, it is 
under no obligation to provide full 
retroactive ref^unds today. Ante, at 
--------------- , 125 L Ed 2d, at 88-89.

When courts take it upon them­
selves to issue helpful guidance in 
dictum, they risk creating additional 
confusion by inadvertently suggest­
ing constitutional absolutes that do 
not exist. The Court’s dictum today 
follows that course. Amidst its dis­
cussion of pre- and postdeprivation 
remedies, the Court asserts that a 
plaintiff who has been deprived a 
predeprivation remedy cannot be 
"confine[d] . . .  to prospective re­
lief.” Ante, a t ------ , n 10, 125 L Ed
2d, at 89. I do not believe the 
Court’s assertion to be correct.

Over 20 years ago. Justice Harlan 
recognized that the equities could be 
taken into account in determining 
the appropriate remedy when the
110

Court announces a new rule of con­
stitutional law:

"To the extent that equitable 
considerations, for example, 'reli­
ance,’ are relevant, I would take 
this into account in the determina­
tion of what relief is appropriate 
in any given case. There are, of 
course, circumstances when a 
change in the law will jeopardize 
an edifice which was reasonably 
constructed on the foundation of 
prevailing legal doctrine.” United 
States V Estate of Donnelly, 397 
US 286, 296, 25 L Ed 2d 312, 90 S 
Ct 1033 (1970) (concurring opin­
ion).- r

The commentators appear to be in 
accord. See Fallon & Meltzer, New 
Law, Non-Retroactivity, and Consti­
tutional Remedies, 104 Harv L Rev 
1733 (1991) (urging consideration of 
novelty and hardship as part of the 
remedial framework rather than as 
a question of whether to apply old 
law or new). In my view, and in 
light of the Court’s revisions to the 
law of retroactivity, it should be 
constitutionally permissible for the 
equities to inform the remedial in­
quiry. In a particularly compelling 
case, then, the equities might permit 
a State to deny taxpayers a full 
refund despite having refused them 
predeprivation process.

Indeed, some members of this 
Court have argued that we recog­
nized as much long ago. In Ameri­
can Trucking Assns., 496 US, at 219- 
224, 110 L Ed 2d 148, 110 S Ct 2323 
(dissenting opinion). Justice Stevens 
admitted that this Court repeatedly 
had applied the Chevron Oil factors 
to preclude the provision of mone­
tary relief. In Justice Stevens’ view, 
however. Chevron Oil determined 
the question of remedy rather than



W -

HARPER V VIRGINIA DEPT. OF TAXATION
(1993) 125 L Ed 2d 74

which law would apply, new or old. 
See 496 US, at 220, 110 L Ed 2d 148, 
110 S Ct 2323 (Chevron Oil and its 
progeny "establish a remedial princi­
ple for the exercise of equitable dis­
cretion by federal courts and not, as 
the plurality states, a choice-of-law 
principle applicable to all cases on 
direct review”); see also ante, at
------n 9, 125 L Ed 2d, at 85
(reserving the possibility that Chev­
ron Oil governs the question of rem­
edies in federal court). If Justice 
Stevens’ view or something like it 
has prevailed today—and it seems 
that it has—then state and federal 
courts still retain the ability to exer­
cise their "equitable discretion” in 
formulating appropriate relief on a 
federal claim. After all, it would be 
wholly anomalous to suggest that 
federal courts are permitted to de­
termine the scope of the remedy by 
reference to Chevron Oil, but that 
state courts are barred from consid­
ering the equities altogether. Not 
only would that unduly restrict state 
court "flexibility in the law of reme­
dies,” Estate of Donnelly, supra, at 
297, 25 L Ed 2d 312, 90 S a  1033 
(Harlan, J., concurring), but it also 
would turn federalism on its head. I 
know of no principle of law that 
permits us to restrict the remedial 
discretion of state courts without 
imposing similar restrictions on fed­
eral courts. Quite the opposite 
should be true, as the question of 
remedies in state court is generally 
a question of state law in the first 
instance. James B. Beam, 501 US, at
------, 115 L Ed 2d 481, 111 S Ct 2439
(Souter, J).

The (ilourt cites only a single case 
that might be read as precluding 
courts from considering the equities 
when selecting the remedy for the 
violation of a novel constitutional

rule. That case is McKesson Corp. v 
Division of Alcoholic Beverages and 
Tobacco, 496 US 18, 110 L Ed 2d 17,
110 S a  2238 (1990). Ante, a t ------,
125 L Ed 2d, at 89. But, as the 
controlling opinion in James B. 
Beam explains, McKesson cannot be
so read. 501 US, a t ------ , 115 L Ed 2d
481, 111 S a  2439 ("Nothing we say 
here [precludes the right] to raise 
procedural bars to recovery under 
state law or demonstrate reliance 
interests entitled to consideration in 
determining the nature o f the rem­
edy that must be provided, a matter 
with which McKesson did not deal” 
(emphases added)). Accord, id., at
------ , 115 L Ed 2d 481, 111 S Ct 2439
("[N]othing we say here precludes 
consideration of individual equities 
when deciding remedial issues in 
particular cases” ). It is true that the 
Court in McKesson rejected, on due 
process grounds, the State of Flori­
da’s equitable arguments against the 
requirement of a full refund. But the 
opinion did not hold that those argu­
ments were irrelevant as a categori­
cal matter. It simply held that the 
equities in that case were insufii- 
cient to support the decision to with­
hold a remedy. The opinion ex­
pressly so states, rejecting the 
State’s equitable arguments as insuf­
ficiently "weighty in these circum­
stances.”  McKesson, 496 US, at 45, 
110 L Ed 2d 17, 110 S Ct 2238 
(emphasis added).

The circumstances in McKesson 
were quite different than those here. 
In McKesson, the tax imposed was 
patently unconstitutional: The State 
of Florida collected taxes under its 
Liquor Tax statute even though this 
Court already had invalidated a 
"virtually identical” tax. Id., at 46, 
110 L Ed 2d 17, 110 S Ct 2238. Given 
that the State could "hardly claim 
surprise” that its statute was de-

111



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