WASHINGTON -- The Supreme Court concluded its 1993-94 term yesterday with a ruling that overturned more than $64 million of fines imposed on a labor union group. The fines would mostly have benefited the coffers of Virginia and two of its counties.
The fines levied by a trial court on a group of mineworker unions for contempt were criminal in nature, not civil as intended, and therefore should have been imposed only through a jury trial, the high court unanimously ruled in International Union, United Mine Workers of America v. Bagwell.
The Circuit Court of Russell County imposed the fines on a prospective basis in civil proceedings that found the unions in contempt of a 1989 injunction against strike-related activities.
Of the total amount, about $12 million would have been paid to mining companies for which the union members worked, but the companies and workers eventually settled. That left roughly $52 million at issue that would have been paid to Virginia and Russell and Dickenson counties, the two counties most affected by the strikes.
Civil contempt fines are designed to ensure future compliance with a court order, while criminal contempt fines are punitive in nature.
The high court said the differences between contempt fines are not always clear, but in general, a fine is civil if the person found in contempt has the ability to act to reduce or avoid the fine, or if the fine is meant to compensate a party for losses. Fines that are fixed regardless of what the person in contempt does are generally deemed punitive, or criminal.
The high court found that the mineworker fines, which were upheld by the Virginia Supreme Court, were criminal because they were not compensatory, they were imposed at a fixed amount, and the union's conduct did not occur in the court or affect the court's ability to control proceedings before it.
Since criminal penalties may not be imposed without going through criminal proceedings, including the right to a jury trial, the court struck down the fines.
Virginia budget official Rick Brown said the state had not anticipated revenue from the fines in its budgeting process. If the fines had been upheld, the resulting revenue would have gone into a special fund for school construction, said Brown, who is deputy director for budget and planning in the state's department of planning and budget. It would have been up to the court to decide how to apportion the fines among the state and counties, he said.
Also yesterday, the court deferred a decision on whether to review cases involving state taxation of multinational corporations. The court was scheduled on June 24 to decide whether to review NCR Corp. v. New Mexico Taxation & Revenue Department and NCR Corp. v. South Carolina Department of Revenue & Taxation.
The cases raise the issue of whether states may tax a corporation's foreign source dividends, interest, and royalties on which foreign taxes have been paid.
The court on June 26 declined to take several cases that had raised issues similar to that decided in the court's June 20 ruling in Barclays Bank v. California. The court upheld California's worldwide unitary method of taxing multinational firms. Among the cases denied review was Reuters Ltd. v. Tax Appeals Tribunal of New York.