WASHINGTON - The Supreme Court yesterday agreed to review the constitutionality of a Massachusetts tax on milk wholesalers as the justices opened the court's 1993-1994 term by taking action in a number of cases affecting municipalities.
The court, issuing orders in nearly 1,500 cases, also agreed to decide the constitutionality of a Ladue, Mo., ordinance prohibiting the display of lawn signs, a dispute that promises to refine the limits of municipal power in regulating speech.
The Massachusetts case, West Lynn Creamery Inc. v. Watson, asks the justices to decide whether a state tax assessment unconstitutionally burdens interstate commerce.
Massachusetts law imposes an assessment at the wholesale level on all milk sold within the state. The taxes are deposited in a fund and rebated only to in-state dairy farmers.
West Lynn Creamery and LeComte's Dairy Inc. are challenging an April 15 ruling by the Massachusetts Supreme Judicial Court upholding the assessment against charges that the tax violates the U.S. Constitution's commerce clause.
The clause gives Congress the right to regulate interstate and foreign trade and generally prohibits states from erecting barriers to the free flow of goods and services across state lines.
The dairy wholesalers claim the assessment protects Massachusetts dairy farms from competition in the interstate market for milk, at the expense of out-of-state producers.
The court did not say when it would hear arguments in the case, but the justices directed the wholesalers to file their brief by Nov. 16. The Massachusetts Department of Food and Agriculture was ordered to file its brief by Dec. 14. The wholesalers have until Jan. 5 to file a brief in reply to the state agriculture department's filing.
The justices ordered an identical briefing schedule in the Ladue, Mo., case. In that dispute, the court has agreed to review a decision by the U.S. Court of Appeals for the Eighth Circuit that struck down a city law prohibiting residents from posting signs on their lawns.
The local ordinance was challenged by a resident who was required to remove signs protesting U.S. involvement in the Persian Gulf War. The appeals court said the law unconstitutionally infringes on free speech guarantees, but the city defends the law as being necessary to protect community aesthetics. The city contends that because the sign ban is applied to all residents regardless of their political beliefs, it is content-neutral and passes First Amendment scrutiny.
In other action yesterday, the justices:
Asked the U.S. solicitor general to file a brief "expressing the views of the United States" in a dispute over whether section 12(2) of the 1933 Securities Act applies only to initial distributions of securities or whether it applies in the secondary market as well. The law provides that anyone who sells a security and makes an untrue or misleading statement in connection with the sale can be held liable to the purchaser for damages.
* Declined to review a 1988 Berrien County, Ga., bond issue that was challenged by a resident on federal due process grounds. Bobby Akridge claimed a $2 million bond issue by the county Resource Recovery Development Authority violated the U.S. Constitution's due process clause because the debt, though advertised as a revenue bond issue, was secured by the full faith and credit of the county.
* Declined to review a North Dakota Supreme Court ruling that denied a company the right to pursue a federal civil rights claim against the state for having been forced to collect an illegal tax. The case sprang from the court's 1992 ruling in Quill Corp. v. North Dakota, in which the justices said states cannot require mail order companies to collect and remit state sales taxes unless the companies have a physical presence in the state. The justices yesterday also rejected an appeal by the California Board of Equalization of a state appellate court ruling that the import-export clause of the U.S. Constitution forbids states from taxing sales of goods meant for export.
A Mexican-based firm bought replacement parts from McDonnell Douglas Corp. and had them shipped to San Ysidro, Calif. From there, the parts were to be shipped to Mexico, but there was no contract for the transfer at the time of the original shipment.
The equalization board assessed a tax against McDonnell Douglas on the sale, which the manufacturer appealed. The trial court upheld the levy, contending that until they left San Ysidro the parts were not part of the "export stream" protected by the Constitution from taxation. But a state appeals court overturned the tax.
In seeking Supreme Court review, the equalization board warned that unless the high court overturned the appeals court decision, "state revenues will be seriously eroded through the erroneous application of import-export clause to bar application of sales taxes merely because goods are sold to foreign companies, when those goods are shipped to a destination within the same state instead of" being exported.
The court yesterday also denied a request by the city of Chicago to review a federal appeals court ruling questioning the rationale behind a city affirmative action program. The U.S. Court of Appeals for the Seventh Circuit held that the city had only a limited basis for believing it had engaged in past discrimination in the fire department, even though the city had entered into a consent decree with the U.S. Justice Department agreeing to promote more minorities.
A friend-of-the-court brief filed by the State and Local Legal Center on behalf of a phalanx of municipal groups warned that the appeals court ruling "creates a climate of debilitating uncertainty for state and local governments that seek to remedy past discrimination without exposing themselves and their officials to liability."
The case now will proceed to a trial, during which the city of Chicago will be required to prove that there was a bona fide need for an affirmative action plan.
