RESPONDENT: Charlotte Cuno, et al.
LOCATION: United States Court of Appeals for the Seventh Circuit
DOCKET NO.: 04-1704
DECIDED BY: Roberts Court (2006-2009)
LOWER COURT: United States Court of Appeals for the Sixth Circuit
CITATION: 547 US 332 (2006)
GRANTED: Sep 27, 2005
ARGUED: Mar 01, 2006
DECIDED: May 15, 2006
Douglas R. Cole - argued the cause for Petitioners in No. 04-1724
Peter Enrich - argued the cause for Respondents
Theodore B. Olson - argued the cause for Petitioners in No. 04-1704
Facts of the case
As part of Ohio's economic development plan, DaimlerChrysler agreed to expand its operations in Toledo in exchange for tax exemptions and tax credits worth roughly $280 million. Charlotte Cuno and others challenged the deal, however, arguing that Ohio had violated the Commerce Clause of the U.S. Constitution by offering the tax incentives. A federal district court disagreed, ruling for DaimlerChrysler, but on appeal a panel of the Sixth Circuit Court of Appeals reversed. The panel found that the tax incentives coerced businesses to expand in Ohio at the expense of other states, and were therefore unconstitutional manipulations of interstate commerce.
Did Ohio violate the Commerce Clause of the U.S. Constitution by giving businesses tax incentives to expand their manufacturing operations inside Ohio?
Media for DaimlerChrysler Corp. v. CunoAudio Transcription for Oral Argument - March 01, 2006 in DaimlerChrysler Corp. v. Cuno
Audio Transcription for Opinion Announcement - May 15, 2006 in DaimlerChrysler Corp. v. Cuno
John G. Roberts, Jr.:
I have the opinion in 04-1704, Daimler Chrysler Corporation versus Cuno.
This case began when the City of Toledo and State of Ohio offered Daimler Chrysler local and state tax benefits to encourage it to expand its Jeep operation in Toledo.
Toledo residents who pay local and state taxes claimed that the tax breaks violated the Commerce Clause.
The 6th Circuit agreed that some of the tax benefits violated the Commerce Clause, and we granted review to consider whether they did.
The Constitution, however, requires that federal courts decide questions of law only when they are presented in a concrete case.
Before we decide the Commerce Clause question that has divided the parties, we have to make sure it arises in a proper case or controversy, as the Constitution requires.
Among other things, this means that we have to determine whether the plaintiffs have actually been injured by the conduct that they are complaining about.
If a person did not have to show a concrete injury of some sort before gaining access to federal court, then anyone could challenge any Government action or decision in federal court, simply because they disagreed with it.
That would give the courts a very different role in our system than the role intended by the framers.
The plaintiffs here claim injury because the tax breaks given to Daimler Chrysler might result in a decrease in the amount of money flowing into the Treasuries of Ohio and Toledo.
In response to this possible decrease, the State and the City might decide to increase the taxes that the plaintiffs pay.
“Might” here is not enough to show the sort of injury that the Constitution requires.
We cannot simply assume that the tax breaks will deplete the Treasuries and that, if they do, the officials responsible for deciding what to do about that would choose to make up a short fall from the plaintiffs’ pockets.
We have long held that federal taxpayers do not get to challenge the legality of actions by the Federal Government, simply because they are federal taxpayers.
The same rule applies to state taxpayers attempting to challenge State Government actions in Federal Court.
We have recognized one exception to the rule against taxpayers being able to sue, simply because they are taxpayers.
We have allowed federal taxpayers to challenge Congressional actions under the Establishment Clause, when their only claimed injury is as a taxpayer.
But that is because of the special nature of the Establishment Clause, interpreted to directly prohibit the Government from taking money from citizens to be put to improper religious use.
The Commerce Clause does not have that feature, so plaintiffs cannot establish injury by likening their claim to an Establishment Clause claim.
In a ruling that we don’t review today, the District Court held that plaintiffs were injured by exemptions from municipal taxes that the City gave to Daimler Chrysler.
The plaintiffs claim that this injury is enough to support their challenge to the state tax credit, because both tax breaks, the state and the local, were part of the same package.
For this claim, they rely on this Court’s decision in Mineworkers versus Gibbs.
But Gibbs held only that a federal court can hear state law claims that may be viewed as part of he same case, because they are closely related to a federal law claim.
Gibbs did not say that any claim closely related to a federal law claim may be heard in federal court.
If Gibbs meant that, federal courts could hear all sorts of questions that the Constitution would otherwise prohibit them from hearing in a particular proceeding, simply because they were factually related to a claim that the Constitution permits them to hear.
Since Marbury versus Madison, we have understood our power to construe the Constitution to be grounded in our responsibility to decide particular cases raising constitutional questions.
Plaintiffs here have not established that the Commerce Clause issue they want us to decide is presented in a concrete case, as the Constitution requires.
We therefore cannot decide it, and the 6th Circuit should not have decided it, either.
For the reasons stated more fully in an opinion filed with the Clerk today, we vacate in part the judgment of the Court of Appeals and remand for dismissal of the plaintiffs’ challenge to the state tax credit.
Justice Ginsburg has filed an opinion concurring in part and concurring in the judgment.