Japan Line, Ltd. v. County of Los Angeles
60 L. Ed. 2d 336, 441 U.S. 434, 1979 U.S. LEXIS 20 (1979)
Premium Feature
Subscribe to Lexplug to listen to the Case Podcast.
Rule of Law:
Under the Commerce Clause, a state may not impose a nondiscriminatory ad valorem property tax on instrumentalities of foreign commerce if the tax creates a substantial risk of international multiple taxation or prevents the federal government from speaking with one voice when regulating foreign relations.
Facts:
- Appellants are six Japanese shipping companies with their principal places of business and commercial domiciles in Japan.
- Appellants own large cargo shipping containers that are registered in Japan, have their home ports in Japan, and are used exclusively for transporting cargo in foreign commerce.
- The containers are in constant transit, intermittently passing through California, with an average stay in the state of less than three weeks.
- All of appellants' containers are subject to, and are in fact taxed under, a property tax in Japan.
- Appellees, political subdivisions of California, levied an annual ad valorem property tax on the containers physically present in their jurisdictions on the tax lien date.
- During the same period, similar containers owned by United States companies were not subject to property taxation in Japan.
Procedural Posture:
- Appellants paid the taxes levied by Appellees under protest.
- Appellants sued Appellees for a refund in the Superior Court for the County of Los Angeles, a state trial court.
- The Superior Court awarded judgment to Appellants, finding the tax unconstitutional under the 'home port doctrine.'
- Appellees, as appellants in that appeal, sought review in the California Court of Appeal, an intermediate appellate court.
- The Court of Appeal reversed the trial court's judgment, upholding the tax.
- Appellants, as appellants in that appeal, sought review in the Supreme Court of California, the state's highest court.
- The Supreme Court of California affirmed the Court of Appeal's decision and upheld the tax.
- Appellants appealed to the Supreme Court of the United States.
Premium Content
Subscribe to Lexplug to view the complete brief
You're viewing a preview with Rule of Law, Facts, and Procedural Posture
Issue:
Does a state's nondiscriminatory ad valorem property tax on foreign-owned cargo containers, used exclusively in international commerce and already taxed in their home country, violate the Commerce Clause?
Opinions:
Majority - Mr. Justice Blackmun
Yes. A state's ad valorem property tax on foreign-owned instrumentalities of international commerce violates the Commerce Clause when it results in multiple taxation or impairs federal uniformity in foreign relations. While the tax might satisfy the four-part test for interstate commerce established in Complete Auto Transit, Inc. v. Brady, state taxation of foreign commerce requires a more extensive constitutional inquiry. Two additional considerations must be addressed: first, whether the tax creates a substantial risk of international multiple taxation, and second, whether the tax prevents the federal government from 'speaking with one voice' in regulating foreign trade. Here, the tax fails both inquiries. First, it creates actual multiple taxation because Japan, the home domicile, has the right to and does tax the containers at their full value. Unlike in interstate commerce, this Court cannot compel a foreign sovereign to apportion its tax. Second, the tax impairs federal uniformity because Japan does not tax American-owned containers; California's tax creates an asymmetry in international taxation that invites foreign retaliation against the entire nation, thus undermining the federal government's ability to speak with one voice in foreign commercial relations.
Analysis:
This case establishes a new, more stringent two-part test for the constitutionality of state taxes on instrumentalities of foreign commerce, supplementing the existing Complete Auto test used for interstate commerce. By creating the 'multiple taxation' and 'one voice' prongs, the Court significantly limited the power of states to tax foreign-owned property involved in international trade. The decision underscores the preeminent role of the federal government in foreign affairs and commerce, creating a protective barrier against state laws that could cause international friction or subject foreign commerce to burdens not borne by domestic commerce. It forces courts to analyze not just the tax's domestic fairness but also its international implications.
Unlock the full brief for Japan Line, Ltd. v. County of Los Angeles