Cyprus Max Coal Company v. United StatesCyprus Max Coal Company v. United States
Steven Becker, Coudert Brothers, of New York, New York, argued for plaintiffs-appellants. With him on the brief was Paul A. Horowitz.
Robert Stoddart, Attorney, Tax Division, Court of Federal Claims Section, Department of Justice, of Washington, DC, argued for defendant-appellee. With him on the brief were Loretta C. Argrett, Assistant Attorney General, and Mildred L. Seidman, Chief, Court of Claims Section, Tax Division.
Before PLAGER, LOURIE, and GAJARSA, Circuit Judges.
GAJARSA, Circuit Judge.
Cyprus Amax Coal Company and the other named plaintiffs (collectively “Cyprus“) are producers, sellers, and exporters of coal. Cyprus appeals the United States Court of Federal Claims’ judgment dismissing the Cyprus complaint without prejudice for lack of jurisdiction. See Cyprus Amax Coal Co. v. United States, Nos. 97-68 T, 97-310 T, 97-311 T, 97-317 T, 97-521 T, 97-522 T (Fed. Cl. Feb. 2, 1999). Cyprus alleged that the Coal Sales Tax,
BACKGROUND
Cyprus commenced an action in the Court of Federal Claims seeking a refund for the payment of coal excise taxes in connection with the Coal Tax, which imposes a tax “on coal from mines located in the United States sold by the producer.”
The Cyprus plaintiffs comprised two sub-groups: (1) those who did not file for a tax refund with the Internal Revenue Service (“IRS“), see
[Section 7422(a)‘s] language does not permit an exception for cases in which taxpayers may believe that they are entitled to a refund because the statute on which the tax is based is unconstitutional. For that reason, we must hold that those of plaintiffs’ claims that have not been submitted to the appropriate agency pursuant to the statute are barred. We will dismiss those claims without prejudice.
Cyprus Amax Coal Co. v. United States, Nos. 97-68 T, 97-310 T, 97-311 T, 97-317 T, 97-521 T, 97-522 T (Fed. Cl. Jan. 8, 1999) (preliminary order dismissing the complaint without prejudice).
Following that order, Cyprus and the United States Government (“the Government“) filed a Joint Status Report and Motion to Enter Judgment of Dismissal Without Prejudice in which both parties agreed that nothing more needed to be decided because the court consolidated the plaintiffs and treated their complaint as a tax refund action. On February 2, 1999, in accordance with its earlier order, the Court of Federal Claims entered a judgment dismissing Cyprus‘s complaint without prejudice. See Cyprus Amax Coal Co. v. United States, Nos. 97-68 T, 97-310 T, 97-311 T, 97-317 T, 97-521 T, 97-522 T (Fed. Cl. Feb. 2, 1999) (entering judgment to dismiss complaint). Concurrent with filing this appeal, Cyprus complied with the tax refund statutes and commenced a tax refund action in the Court of Federal Claims.
DISCUSSION
Before determining whether the Court of Federal Claims had jurisdiction under the Tucker Act, we resolve preliminary issues concerning our jurisdiction over this appeal. At oral argument, the Government conceded that the Court of Federal Claims’ order constituted an involuntary dismissal without prejudice. As a general rule, an involuntary dismissal without prejudice is appealable as a final judgment. See Nasatka v. Delta Scientific Corp., 58 F.3d 1578, 1580 (Fed. Cir. 1995); see also McGuckin v. Smith, 974 F.2d 1050, 1053 (9th Cir. 1992); Car Carriers, Inc. v. Ford Motor Co., 789 F.2d 589, 590 n.1 (7th Cir. 1986); see generally Charles Alan Wright et. al., Federal Practice and Procedure § 3914.6 (2d ed. 1992). That rule certainly applies to the present circumstances, in which the Court of Federal Claims dismissed Cyprus‘s entire complaint and re-filing the complaint with the same causes of action would be wasteful for Cyprus and a drain on judicial resources.
We also address whether Cyprus‘s subsequent compliance with the tax refund statute and filing of a tax refund action renders this appeal moot. We must dismiss an appeal as moot if an intervening event during the pendency of the appeal renders it impossible for this court to grant “‘any effectual relief whatever [sic]’ to the prevailing party.” Church of Scientology v. United States, 506 U.S. 9, 12 (1992) (quoting Mills v. Green, 159 U.S. 651, 653 (1895)). The Court of Federal Claims dismissed Cyprus‘s constitutionally-based causes of action for lack of jurisdiction because Cyprus did not comply with the tax refund statute. On appeal, Cyprus requests this court to hold that complying with the tax refund statute is not a predicate for the Court of Federal Claims to exercise jurisdiction over those causes of action. However, given that Cyprus has now complied with the tax refund statute and filed a tax refund action, it can pursue the theories underlying its constitutionally-based causes of action through its tax refund action. The issue therefore is whether a decision in favor of Cyprus can afford it any relief more meaningful than it could otherwise obtain in its tax refund action.
Because this case involves a continuously imposed tax and a different statute of limitations pertains to the Tucker Act than to the tax refund statutes, this court can provide Cyprus with meaningful relief. The statute of limitations is six years for a cause of action brought under the Tucker Act. See
The Tucker Act
On appeal, we must determine whether Cyprus alleged a cause of action within the Court of Federal Claims’ jurisdiction under the Tucker Act. A determination of the Court of Federal Claims’ jurisdiction presents a question of law that we review de novo. See, e.g., Wheeler v. United States, 11 F.3d 156, 158 (Fed. Cir. 1993). The Tucker Act, which constitutes a waiver of sovereign immunity by the United States, see United States v. Mitchell, 463 U.S. 206, 212 (1983), provides as follows:
The United States Court of Federal Claims shall have jurisdiction to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress or any regulation of an executive department, or upon any express or implied contract with the United States . .
The Tucker Act is a purely jurisdictional statute; on its own predicate, it does not enable a party to recover monetary damages from the United States. See United States v. Testan, 424 U.S. 392, 398 (1976); New York Life Ins. Co. v. United States, 118 F.3d 1553, 1555-56 (Fed. Cir. 1997); Eastport S.S. Corp. v. United States, 372 F.2d 1002, 1007 (Ct. Cl. 1967). Thus, to invoke jurisdiction under the Tucker Act, a party must point to a complementary substantive right found in another source of federal law, such as the Constitution, federal statutes, or executive regulations. See Mitchell, 463 U.S. at 216. In addition, that substantive right must be “fairly interpreted as mandating compensation by the Federal Government for the damages sustained.” Id. at 217; see Testan, 424 U.S. at 400; James v. Caldera, 159 F.3d 573, 580 (Fed. Cir. 1998) (requiring a party “to assert a claim under a separate money-mandating constitutional provision, statute, or regulation” to invoke jurisdiction under the Tucker Act). This appeal therefore turns on whether the Export Clause, when fairly interpreted, affords an independent cause of action for monetary remedies.
The Constitution‘s Export Clause states that “[n]o Tax or Duty shall be laid on Articles exported from any State.”
The policies underlying the Export Clause confirm our textual interpretation. Records from the Federal Convention indicate that the Framers intended the Export Clause to allay the fears of certain States that they would bear a greater tax burden due to differing levels of exportation. See, e.g., Max Farrand, The Records of the Federal Convention of 1787 307 (rev. ed. 1966) (“Mr. Gerry thought the legislature could not be trusted with such a power [to tax exports]. It might ruin the Country. It might be exercised partially, raising one and depressing another part of it.“); id. at 305 (“Mr. Mason urged the necessity of connecting with the power of levying taxes . . . that no tax should be laid on exports.“). The Framers’ decision to phrase the Export Clause in unconditional language serves to free all exports from such a burden, see International Bus. Machs., 517 U.S. at 859-60; Fairbank, 181 U.S. at 292-93, and the recognition of a monetary remedy furthers that purpose. Indeed, absent a prompt restoration of money unlawfully exacted, the Export Clause would be more hollow than real because in the event that Congress imposed export taxes, equitable relief alone could not ameliorate the harm.
Our reading of the Export Clause also finds support in Supreme Court precedent. In United States v. United States Shoe Corp., 523 U.S. 360 (1998), the Supreme Court held that the Harbor Maintenance Tax,
We also hold that the cause of action based on the Export Clause is self-executing; that is, similar to the Compensation Clause, a party can recover for payment of taxes under the Export Clause independent of the tax refund statute. In Hatter v. United States, 953 F.2d 626, 627 (Fed. Cir. 1992), the question before this court was whether plaintiffs could recover the exaction of social security taxes by the IRS through the Compensation Clause rather than a tax refund action. In Hatter, plaintiffs filed a complaint in the Claims Court alleging that the imposition of social security taxes diminished their salary in violation of the Compensation Clause, which provides that federal judges’ compensation “shall not be diminished during their Continuance in Office.”
On appeal, this court reversed and held that the Compensation Clause itself provides a monetary remedy for diminution of judicial compensation. See id. at 628. We reasoned that, fairly interpreted, the Compensation Clause‘s mandatory and unconditional language “presupposes damages as the remedy for a governmental act violating the compensation clause. Only a timely restoration of lost compensation would prevent violation of the Constitution‘s prohibition against diminution of judicial salaries.” Id. We then found that the Claims Court incorrectly treated plaintiffs’ complaint as a request for a tax refund, when the complaint sought damages for a constitutional violation. See id. at 629. We explained that plaintiffs could have chosen to pursue either a tax refund claim or an action based on the Compensation Clause, and because plaintiffs chose the latter, the Constitution triggered the Claims Court‘s jurisdiction under the Tucker Act. See id. at 629-30.
Because Hatter addressed the same issue as presented here and because the salient facts in Hatter are virtually identical to the present case, we find the analysis in Hatter to be controlling. Thus, like the plaintiffs in Hatter, Cyprus was not required to pursue an administrative refund claim before filing suit because the Export Clause provides a self-executing cause of action that is not subject to compliance with the tax refund statute. Put differently, Cyprus had two alternative avenues through which to obtain relief--a tax refund action or a cause of action based on the Export Clause--and either one is sufficient to invoke the Court of Federal Claims’ jurisdiction under the Tucker Act.
The Government relies heavily on United States v. New York & Cuba Mail S.S. Co., 200 U.S. 488 (1906), arguing that it requires a taxpayer to follow the administrative procedures for a tax refund before suing for money damages under the Export Clause. An examination of New York & Cuba Mail, however, reveals that the case cannot sustain the burden that the Government places on it. In New York & Cuba Mail, plaintiff alleged that a tax paid for stamps affixed to manifests of cargo violated the Export Clause. See id. at 489. Plaintiff initially sought to recover under a tax refund statute which provided that the Internal Revenue Commissioner could “redeem such of the stamps, issued under authority of law, to denote the payment of any internal revenue tax, as may have been . . . in any manner wrongfully collected.” id. at 494-95 (quoting Act of May 12, 1900, ch. 393, 31 Stat. 177). With “the Commissioner having declined to [issue a refund],” id. at 494, the plaintiff filed a complaint in district court attempting to invoke jurisdiction under the Tucker Act, see id. The Government demurred for failure to state a claim because plaintiff did not pay the tax under protest. See id. at 490-91. The district court denied the demurrer and held that the tax was unconstitutional. See id. at 491. On appeal, the Supreme Court reversed, ordering the demurrer sustained and finding that plaintiff‘s failure to protest the tax at the time of payment resulted in non-compliance with the refund statute. See id. at 495. Thus, read properly, New York & Cuba Mail stands for the unremarkable proposition that a taxpayer suing to recover under a refund statute must satisfy all the requirements attendant to that statute. Here, given that Cyprus seeks to recover under the Export Clause rather than the tax refund statute, New York & Cuba Mail is of no moment.
The Government further contends that plaintiff‘s failure to protest in New York & Cuba Mail is tantamount to Cyprus‘s failure to file for a tax refund. That argument again misses the point. The failure to protest in New York & Cuba Mail was determinative because plaintiff proceeded under a tax refund statute. In this case, however, Cyprus‘s instant complaint is not predicated on such a statute.
The Government next attempts to distinguish U.S. Shoe and Hatter from the present case. The Government‘s argument is as follows: U.S. Shoe involved a customs “duty” and Hatter involved “compensation,” but neither case involved recovery of a “tax” payment. Cyprus, on the other hand, seeks to recover “taxes” paid under the Coal Tax and collected by the IRS. Thus, because the Export Clause uses the term “tax” and Cyprus is challenging a “tax,” it must comply with the tax refund statute before it can sue to recover its payments.
While the Government‘s argument may be superficially appealing, it cannot withstand close scrutiny. The significance of U.S. Shoe lies not in the fact that the case involved a duty rather than a tax, but in its affirmance of the Export Clause as providing a cause of action for money damages. The language of the Export Clause prohibits with equal force the burdening of exports by a duty or a tax. Taking the language of the Export Clause in concert with U.S. Shoe, it follows that the clause provides a cause of action to recover money that was unlawfully exacted through either a duty or a tax. To read U.S. Shoe otherwise--as endorsing a cause of action for money damages with respect to a duty but not a tax--would afflict the Export Clause with an interpretive anomaly based on the form of the unlawful exaction, with no textual or precedential support for such a dichotomy.
Although Cyprus also alleges a cause of action under the Takings Clause, we need not reach that issue because the matter is properly resolved pursuant to the Export Clause.
CONCLUSION
Because we hold that the Export Clause supplies an independent cause of action for monetary remedies that invokes the Court of Federal Claims’ jurisdiction under the Tucker Act, we reverse and remand for further proceedings.
REVERSED and REMANDED.
COSTS
Each party shall bear its own costs.