American Trucking Associations Inc v. Smith/Dissent Stevens

Justice Stevens, with whom Justice Brennan, Justice Marshall, and Justice Blackmun join, dissenting.

This case presents two issues: whether the flat tax features of the Arkansas HUE tax violate the Commerce Clause of the Federal Constitution and, if so, whether petitioners are entitled to a tax refund. The former is ordinarily a pure question of federal law, our resolution of which should be applied uniformly throughout the Nation, while the latter is a mixed question of state and federal law. The plurality today, however, inverts that analysis. With deceptive simplicity, the plurality rules that the constitutionality vel non of the flat tax turns on whether state officials in a particular State could have anticipated that such a tax would violate the Constitu- [p206] tion, ante, at 181–182, but that the availability of a refund, even if otherwise required under state law, ante, at 177, rests on our own determination, as a matter of federal law, whether retrospective relief would threaten a disruption of governmental operations. Ante, at 185–186. That analysis is wrong on both counts. Petitioners are entitled to an adjudication of the constitutionality of the Arkansas tax under our best current understanding of federal law regardless of the good faith of the Arkansas legislators. The question of remedy or refund, on the other hand, addressed today in McKesson Corp. v. Division of Alcoholic Beverages and Tobacco Dept. of Business Regulation of Fla., 496 U.S. 18, should be decided, not by us, but by the state court in the first instance. The plurality's contrary conclusion is supported by nothing more than a misreading of the Court's opinion in Chevron Oil Co. v. Huson, 404 U.S. 97 (1971).

I
Arkansas enacted the Highway Use Equalization Tax Act (HUE), 1983 Ark. Gen. Acts, No. 685, Ark. Code Ann. §§ 27-35-204, 27-35-205 (1987), in March 1983. The Act, which became effective on July 1, 1983, discriminated against interstate carriers by taxing them at a higher effective tax rate than carriers which operated intrastate. Vehicles of the weight class covered by the Act were required to display a certificate evidencing compliance with the tax. Operation of [p207] a vehicle in violation of the Act subjected the user to criminal sanctions and to a graduated scale of fines. § 27-35-205(k). The Act contained no method for challenging tax assessments or making payment under protest.

On May 27, 1983, before the effective date of the HUE Act, but after some $1,775,000 in tax revenues had been collected, petitioners filed suit in the Pulaski County Chancery Court challenging the constitutionality of the Act under state law and the Commerce Clause of the Federal Constitution, Art. 1, § 8, cl. 3. Arkansas adheres to the common-law rule that taxes voluntarily paid cannot be recovered. See County of Searcy v. Stephenson, 244 Ark. 54, 424 S.W.2d 369 (1968); Brunson v. Board of Directors of Crawford County, 107 Ark. 24, 153 S.W. 828 (1913). Petitioners, however, invoked the Arkansas constitutional provision governing illegal exactions, Ark. Const., Art. 16, § 13, arguing that, as a matter of state law, under the State Supreme Court's recent ruling in Little Rock v. Cash, 277 Ark. 494, 644 S.W.2d 229 (1982), cert. denied, 462 U.S. 1111 (1983), taxpayers who paid their taxes after the date of the complaint should "be deemed to have paid their taxes involuntarily." 277 Ark., at 506, 644 S.W.2d, at 234. Their substantive constitutional claims tracked those that had been raised by truckers to a similar Pennsylvania tax enacted in 1980. See American Trucking Assns., Inc. v. Bloom, 77 Pa. Commw. 575, 466 A.2d 755 (1983).

The Chancery Court denied petitioners' motion for a preliminary injunction, concluding that the tax was constitutional. 2 Record 764. After a trial on the merits, the court ruled in the State's favor. In an opinion delivered in April 1986, the State Supreme Court affirmed, holding that the tax was constitutional under our decisions in Aero Mayflower Transit Co. v. ''Georgia Pub. Serv. Comm'n, 295 U.S. 285 [p208] (1935), and Aero Mayflower Transit Co. v. Board of Railroad Comm'rs of Mont.'', 332 U.S. 495 (1947). American Trucking Assn., Inc. v. Gray, 288 Ark. 488, 707 S.W.2d 759 (1986). Simultaneously, the Pennsylvania Supreme Court reached a similar conclusion with respect to that State's statute. American Trucking Assns., Inc. v. Scheiner, 510 Pa. 430, 509 A.2d 838 (1986).

We noted probable jurisdiction in the Pennsylvania case, see American Trucking Assns., Inc. v. Scheiner, 479 U.S. 947 (1986), and held the Arkansas case pending our decision in Scheiner. In June 1987, we reversed the judgment of the State Supreme Court in Scheiner, concluding that that court erred in upholding the constitutionality of Pennsylvania's unapportioned marker fee and axle tax. American Trucking Assns., Inc. v. Scheiner, 483 U.S. 266, 297; see also id., at 298 (O'Connor, J., dissenting). We reasoned that the flat taxes violated the Commerce Clause because they "exert[ed] an inexorable hydraulic pressure on interstate businesses to ply their trade within the State that enacted the measure rather than 'among the several States. Id., at 286–287 (quoting U.S. Const., Art. I, § 8, cl. 3). We rejected the argument that considerations of stare decisis required adherence to a series of cases that appeared to support the flat tax. Insofar as the Aero Mayflower cases—the cases upon which the Arkansas Supreme Court had relied—provided authority for the judgment of the Pennsylvania Supreme Court, we held that those precedents could "no longer support the broad proposition that every flat tax for the privilege of using a State's highways must be upheld even if it has a clearly discriminatory effect on commerce by reason of that commerce's interstate character." 483 U.S., at 296. We therefore remanded for consideration of various remedial issues.

Because our resolution of Scheiner bore on the constitutionality of the taxes challenged in this case, we remanded it to the Arkansas Supreme Court for reconsideration in light [p209] of that opinion. American Trucking Assns., Inc. v. Gray, 483 U.S. 1014 (1987). On remand, the Arkansas Supreme Court did not reconsider the constitutionality of the taxes assessed prior to Scheiner. Rather, it held that, as a matter of federal law, our ruling in Scheiner was not retroactive and did not apply to taxes assessed and applied to highway use prior to the date of decision. American Trucking Assns., Inc. v. Gray, 295 Ark. 43, 746 S.W.2d 377 (1988). Only as to the taxes assessed after the date of Scheiner, and indeed after the date of Justice Blackmun's order, taxes which the State had continued to collect, did the State Supreme Court hold that petitioners presented a meritorious constitutional challenge. As the plurality today explains, the judgment of the Arkansas Supreme Court constituted a decision that "whatever else Arkansas law might require, petitioners could not receive tax refunds if Scheiner is not retroactive under the test of Chevron Oil." Ante, at 177. The HUE tax simply was not unlawful until the date of Justice Blackmun's order. Under the State Supreme Court's theory, if the State had repealed the statute on the date Scheiner was decided, the State would have never violated the Constitution, and petitioners would have never obtained an adjudication that the taxes were unconstitutional.

II
In numerous civil cases, over the past several decades, we have declined to give "retroactive effect" to decisions announcing "new" rules of law. Those cases, arising from federal court and involving the application of statutes of limitations and the scope of equitable relief, have not required us to distinguish the two senses in which retroactivity may be used. A decision may be denied "retroactive effect" in the sense that conduct occurring prior to the date of decision is not judged under current law, or it may be denied "retroactive effect" in the sense that independent principles of law limit the relief that a court may provide under current law. [p210] Since, in a case arising from federal court, both the substantive law applicable to a course of conduct and the scope of permissible relief present federal questions, it has been unnecessary to distinguish the two senses of retroactivity.

This case, which comes to us from state court, requires us for the first time to expressly distinguish between retroactivity as a choice-of-law rule and retroactivity as a remedial principle. Whereas in cases arising from federal court both the applicable law and the type of relief are subject to plenary review, in cases from state court our mandate is more limited. See Fox Film Corp. v. Muller, 296 U.S. 207, 210 (1935); Murdock v. City of Memphis, 20 Wall. 590 (1875). The decision of a state court on a substantive matter of federal law presents a pure federal question, see Martin v. Hunter's Lessee, 1 Wheat. 304, 345 (1816); a decision as to the appropriate remedy presents a mixed question of state and federal law. Although the Federal Constitution constrains the minimum remedy a State may provide, see McKesson, 496 U.S. 18; Arsenault v. Massachusetts, 393 U.S. 5 (1968); Chapman v. California, 386 U.S. 18, 21 (1967), and gives this Court authority to review a decision that a particular remedy is constitutionally compelled, see Delaware v. Van Arsdall, 475 U.S. 673 (1986); Michigan v. Payne, 412 U.S. 47 (1973), it does not ordinarily limit the State's power to give a decision remedial effect greater than that which a federal court would provide. See, e.g., Bacchus Imports, Ltd. v. Dias, 468 U.S. 263, 277, n. 14 (1984); Los Angeles v. Lyons, 461 U.S. 95, 113 (1983); Chapman, 386 U.S., at 48 (Harlan, J., dissenting); Iowa-Des Moines National Bank v. [p211] Bennett, 284 U.S. 239 (1931). The remedial effect a decision of federal constitutional law should be given is in the first instance a matter of state law. See ante, at 176 (citing Scheiner, 483 U.S., at 297–298; Tyler Pipe Industries, Inc. v. Washington State Dept. of Revenue, 483 U.S. 232, 251, 253 (1987); Williams v. Vermont, 472 U.S. 14, 28 (1985); Bacchus Imports, Ltd. v. Dias, 468 U.S., at 276–277; Exxon Corp. v. Eagerton, 462 U.S. 176, 196–197 (1983)).

Those principles elucidate the disposition of Scheiner and explain why a similar result is appropriate here. In Scheiner, we held that a flat tax substantially similar to the Arkansas HUE tax violated the Commerce Clause. That decision resolved the only question then before us—the lawfulness of a flat tax assessed for the years 1980 to 1986. Since no federal constitutional challenge was presented to the state remedy and since the State had not had the opportunity to determine the appropriate relief under federal and state law, we reversed the state court's determination on the merits and remanded the case for it "to consider whether our ruling should be applied retroactively and to decide other remedial issues." 483 U.S., at 297 (emphasis added). Our disposition left the state court room to apply its own remedy in the first instance but not to avoid the force of our mandate and declare the taxes under challenge constitutional "in the first place." Ante, at 182.

A similar disposition is appropriate here. Our judgment in Scheiner leaves no doubt that the Arkansas HUE tax is unconstitutional. As Justice BlackmunN concluded, in ruling on petitioners' application for establishment of an escrow account, the taxes challenged by petitioners are "substantially similar" in effect "to that of the Pennsylvania unapportioned flat taxes invalidated in Scheiner," and work "to deter interstate commerce." American Trucking Assns., Inc. v. Gray, 483 U.S. 1306, 1308–1309 (1987). The State Supreme Court held, and the plurality today acknowledges, that the Arkansas HUE tax, like the Pennsylvania flat taxes, violates the [p212] command of the Commerce Clause by exerting a pressure on interstate businesses to ply their trade within state boundaries.

In my opinion, the Arkansas HUE tax also violated the Constitution before our decision in Scheiner and petitioners are entitled to a decision to that effect. Like the taxpayers in Scheiner itself, petitioners timely challenged the constitutionality of the state flat tax. Petitioners would have prevailed if the Pennsylvania tax invalidated in the Scheiner case had never been enacted, or if that litigation had not reached our Court until after their litigation did. They should not lose simply because we decided Scheiner first. In Scheiner, we applied our understanding of the Commerce Clause retroactively, reversing the Pennsylvania Supreme Court's judgment that a similar flat highway tax was unconstitutional and remanding the case for further consideration of the remedial issues. 483 U.S., at 297–298. We should follow the same course here. The accidental timing of our decisions in two timely filed and currently pending cases should not, and has not in the past, produced such a difference in the law applicable to the respective litigants.

III
Fundamental notions of fairness and legal process dictate that the same rules should be applied to all similar cases on direct review. Considerations of finality and the justifiable expectations that have grown up surrounding a rule are ordinarily and properly given expression in our rules of res judicata and stare decisis. When the legal rights of parties have been finally determined, principles of public policy and of private peace dictate that the matter not be open to relitigation every time there is a change in the law. Federated Department Stores, Inc. v. Moitie, 452 U.S. 394, 401 (1981) (quoting Hart Steel Co. v. Railroad Supply Co., 244 U.S. 294, 299 (1917)). At the same time, however, when the legal rights of the parties have not been finally deter- [p213] mined by a court of law, "simple justice," 452 U.S., at 401, requires that a rule of law, even a "new" rule, be evenhandedly applied. As Justice Blackmun explained in Griffith v. Kentucky, 479 U.S. 314 (1987), when we endorsed Justice Harlan's views on the subject of retroactivity:

"In Justice Harlan's view, and now in ours, failure to apply a newly declared constitutional rule to criminal cases pending on direct review violates basic norms of constitutional adjudication. First, it is a settled principle that this Court adjudicates only 'cases' and 'controversies.' See U.S. Const., Art. III, § 2. Unlike a legislature, we do not promulgate new rules of constitutional criminal procedure on a broad basis. Rather, the nature of judicial review requires that we adjudicate specific cases, and each case usually becomes the vehicle for announcement of a new rule. But after we have decided a new rule in the case selected, the integrity of judicial review requires that we apply that rule to all similar cases pending on direct review. Justice Harlan observed:

If we do not resolve all cases before us on direct review in light of our best understanding of governing constitutional principles, it is difficult to see why we should so adjudicate any case at all In truth, the Court's assertion of power to disregard current law in adjudicating cases before us that have not already run the full course of appellate review, is quite simply an assertion that our constitutional function is not one of adjudication but in effect of legislation.' Mackey v. United States, 401 U.S. [667,] 679 [(1971)] (opinion concurring in judgment).

"Second, selective application of new rules violates the principle of treating similarly situated defendants the same. See Desist v. United States, 394 U.S. [244,] 258–259 [(1969)] (Harlan, J., dissenting). As we pointed [p214] out in United States v. Johnson, the problem with not applying new rules to cases pending on direct review is 'the actual inequity that results when the Court chooses which of many similarly situated defendants should be the chance beneficiary' of a new rule. 457 U.S. [537,] 556, n. 16 [(1982)] (emphasis in original). Although the Court had tolerated this inequity for a time by not applying new rules retroactively to cases on direct review, we noted: 'The time for toleration has come to an end.' Ibid." Id., at 322–323.

Griffith was a criminal case, but the force of its reasoning cannot properly be so limited. The Court has no more constitutional authority in civil cases than in criminal cases to disregard current law or to treat similarly situated litigants differently. In both, adherence to legal principle requires that we determine the rights of litigants in accordance with our best current understanding of the law. That current understanding may include judicial principles of res judicata and stare decisis and legislatively prescribed statutes of limitations that protect interests in reliance and repose. It may also include a law of damages that recognizes reliance interests. But once a determination has been made that a party is properly before the Court and a new decisional rule properly states the law, interests of repose should play no role in determining the substantive legal rights of parties. Justice Harlan explained the distinction between retroactivity as a choice-of-law principle and the recognition of reliance as an element of the damages determination after a new principle of law has been applied:

"The impulse to make a new decisional rule nonretroactive rests, in civil cases at least, upon the same considerations that lie at the core of stare decisis, namely to avoid jolting the expectations of parties to a transaction. Yet once the decision to abandon precedent is made, I see no justification for applying principles determined to be wrong, be they constitutional or otherwise, to liti- [p215] gants who are in or may still come to court. The critical factor in determining when a new decisional rule should be applied to a transaction consummated prior to the decision's announcement is, in my view, the point at which the transaction has acquired such a degree of finality that the rights of the parties should be considered frozen. Just as in the criminal field the crucial moment is, for most cases, the time when a conviction has become final, see my Desist dissent, supra, so in the civil area that moment should be when the transaction is beyond challenge either because the statute of limitations has run or the rights of the parties have been fixed by litigation and have become res judicata. Any uncertainty engendered by this approach should, I think, be deemed part of the risks of life.

"To the extent that equitable considerations, for example, 'reliance,' are relevant, I would take this into account in the determination of what relief is appropriate in any given case. There are, of course, circumstances when a change in the law will jeopardize an edifice which was reasonably constructed on the foundation of prevailing legal doctrine. Thus, it may be that the law of remedies would permit rescission, for example, but not an award of damages to a party who finds himself able to avoid a once-valid contract under new notions of public policy. Cf. Simpson v. Union Oil Co., 377 U.S. 13, 25 (1964) The essential point is that while there is flexibility in the law of remedies, this does not affect the underlying substantive principle that short of a bar of res judicata or statute of limitations, courts should apply the prevailing decisional rule to the cases before them." United States v. Estate of Donnelly, 397 U.S. 286, 295–297 (1970) (concurring opinion).

Until today, we have consistently applied these principles in civil cases where a litigant has challenged the constitution- [p216] ality of a state or local law. In Cipriano v. City of Houma, 395 U.S. 701 (1969), for example, we struck down a Louisiana law which gave only property taxpayers the right to vote in elections called to approve the issuance of revenue bonds by a municipal utility. The Louisiana legislators who enacted the provision had "good reason to suppose," ante, at 182, that it was constitutional when it was first adopted in 1880 and reenacted in 1910 and 1921, but a string of subsequent decisions the preceding five Terms had effected a sea change in election law no less substantial than this Court's decisions in Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977), and Scheiner effected with respect to the understanding of the Commerce Clause. The good faith of the legislators and the reliance interests of the State, nonetheless, did not convince us that a different rule of constitutional law should be applied to the Louisiana statute than that which we understood to be the rule on the date of decision. Although "retroactive" application of our decision might [p217] produce injustice or hardship, 395 U.S., at 706 (quoting Great Northern R. Co. v. Sunburst Oil & Refining Co., 287 U.S. 358, 364 (1932)), those concerns were sufficiently protected by holding that, as a matter of federal law, the decision need not apply "where the authorization to issue the securities is legally complete on the date of this decision." 395 U.S., at 706. We ruled that the lower court which had rejected the plaintiff's timely filed challenge was in error and that our decision would apply "where, under state law, the time for challenging the election result has not expired, or in cases brought within the time specified by state law for challenging the election and which are not yet final." Ibid.

In Phoenix v. Kolodziejski, 399 U.S. 204 (1970), over the dissent of Justice Stewart, Justice Harlan, and Chief Justice Burger, the Court invalidated an Arizona statute limiting the franchise to real property taxpayers in elections to authorize general obligation bonds. Again, the legislators would have had little reason to believe that the provisions were unconstitutional when enacted in 1930. Justice White, in a portion of the opinion joined by Justice Harlan, reaffirmed the retroactivity approach of Cipriano. The decision would "apply only to authorizations for general obligation bonds that are not final as of the date of this decision." 399 U.S., at 214. Since the plaintiff's challenge was timely filed, the case would apply "retroactively" to her. Id., at 214–215. Moreover, "[i]n the case of States authorizing challenges to bond elections within a definite period, all elections held prior to the date of this decision will not be affected by this decision unless a challenge on the grounds sustained by this decision has been or is brought within the period specified by state law." Id., at 214. See also Hill v. Stone, 421 U.S. 289, 301–302 (1975).

[p218] Under Cipriano and Kolodziejski, petitioners are plainly entitled to an adjudication that the Arkansas HUE tax violated the Constitution both before and after our decision in Scheiner. Their lawsuit was timely filed and as the case comes to us the assessment of the taxes is not yet final. The evenhanded administration of justice requires that we give them the benefit of the same decisional rule that we applied in favor of the taxpayers in Scheiner.

IV
The plurality rejects this analysis and, by implication, our decisions in Cipriano and Kolodziejski, and instead applies the approach that we took with respect to federal statutes of limitations in Chevron Oil Co. v. Huson, 404 U.S. 97 (1971). The plurality states that, "[i]f the operative conduct or events occurred before the law-changing decision, a court should apply the law prevailing at the time of the conduct," ante, at 191, and that "[e]ither party before a court may benefit from the application of the Chevron Oil rule." Ante, at 198. The assessment of HUE taxes was constitutional, ante, at 182, because at the time it was enacted the state legislators would have had good reason to believe it to be constitutional and, at the time it was collected, state authorities were justified in relying on then-current precedents of the Court. Ante, at 181–182. Under the same logic, if the tax was con- [p219] sidered unconstitutional prior to a law-changing decision such as James v. Dravo Contracting Co., 302 U.S. 134 (1937), or Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977), presumably the State would still be held liable even though, under our better understanding of the Constitution, its conduct was entirely lawful. If the plurality's proffered distinction of Griffith is to be accepted, the same retroactivity rules must apply to civil defendants as apply to civil plaintiffs. Ante, at 198–199.

The plurality's sole support for this anomalous approach—that the law applicable to a particular case is that law which the parties believe in good faith to be applicable to the case—is citation to a single footnote in Griffith that states that "the area of civil retroactivity continues to be governed by the standard announced in Chevron Oil Co. v. Huson, 404 U.S. 97, 106–107 (1971)." 479 U.S., at 322, n. 8. The footnote in Griffith, however, does not support the majority's reading. Close examination of Chevron Oil and its progeny re- [p220] veals that those cases establish a remedial principle for the exercise of equitable discretion by federal courts and not, as the plurality states, a choice-of-law principle applicable to all cases on direct review. Ante, at 191.

Chevron Oil involved a controversy between two private litigants over application of the statute of limitations for actions under the Outer Continental Shelf Lands Act. At the time the lawsuit was initiated there was a long line of federal-court decisions holding that the admiralty law doctrine of laches applied to personal injury suits under the Act, 404 U.S., at 107, and the defendant did not initially challenge the timeliness of the action. Id., at 99. In those special circumstances, we ruled that our interpretation that the Act did not incorporate the admiralty doctrine would not apply retroactively to bar the plaintiff's suit. Remedial considerations were dispositive to our analysis. We stressed that a court considering the retroactive effect of a decision establishing a new principle of law should consider remedial issues such as the purpose and effect of the rule in question and the inequity imposed by retroactive application, id., at 106–107, and held that "devotion to the underlying purpose of the Lands Act's absorption of state law and a weighing of the equities requires nonretroactive application of the state statute of limitations." Id., at 109; see also Goodman v. Lukens Steel Co., 482 U.S. 656, 662–664 (1987) (applying new limitations rule retroactively when there was no previous law on which party was entitled to rely). It would have been most inequitable to have held that the plaintiff had slept on his rights during a period in which neither he nor the defendant could have known the time limitation that applied to the case. 404 U.S., at 108.

Insofar as the Court in Chevron Oil did not apply its interpretation of federal law to the parties before the Court, and affirmed the lower court's decision adopting a contrary understanding of federal law, that case does not even address the problem which is presented by this case, and was ad- [p221] dressed by Justice Harlan, of disparate treatment of similarly situated parties. It is one thing for a court to address issues that are not indispensable to its judgment or to delay the issuance of a judgment; it is quite another for it to refuse to apply reasoning in one case that is necessary to its judgment in a virtually identical case.

More fundamentally, however, Chevron Oil involved the application of a statute of limitations, an area over which the federal courts historically have asserted equitable discretion to craft rules of tolling, laches, and waiver. See Bowen v. City of New York, 476 U.S. 467, 479 (1986); Zipes v. Trans World Airlines, Inc., 455 U.S. 385, 398 (1982); Burnett v. New York Central R. Co., 380 U.S. 424 (1965); Braun v. Sauerwein, 10 Wall. 218, 223 (1870) ("It seems, therefore, to be established, that the running of a statute of limitation may be suspended by causes not mentioned in the statute itself"). Statutes of limitations proceed upon the "presumption that claims are extinguished whenever they are not litigated in the proper forum within the prescribed period, and they take away all solid ground of complaint, because they rest on the negligence or laches of the party himself," Hanger v. Abbott, 6 Wall. 532, 538 (1868); when "none of the reasons on which the statute is founded can possibly apply," id., at 539–540, the federal courts have exercised equitable discretion to suspend the running of a limitations period in conformity with the "policy underlying [the] statute of limitations," Burnett, supra, 380 U.S., at 434. The author of Chevron Oil later explained: "[T]he mere fact that a federal statute providing for substan- [p222] tive liability also sets a time limitation upon the institution of suit does not restrict the power of the federal courts to hold that the statute of limitations is tolled under certain circumstances not inconsistent with the legislative purpose." American Pipe & Construction Co. v. Utah, 414 U.S. 538, 559 (1974) (Stewart, J.). When the federal courts have no equitable discretion, we have held a federal court has no authority to refuse to apply a law retroactively. See Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 379 (1981).

The remainder of our "retroactivity" cases fit into a similar mold. In Saint Francis College v. Al-Khazraji, 481 U.S. 604 (1987), we once again recognized that "[t]he usual rule is that federal cases should be decided in accordance with the law existing at the time of decision," id., at 608 (citing Gulf Offshore Co. v. Mobil Oil Corp., 453 U.S. 473, 486, n. 16 (1981); Thorpe v. Housing Authority of Durham, 393 U.S. 268, 281 (1969); United States v. Schooner Peggy, 1 Cranch 103, 110 (1801)), but found that Chevron Oil "counsel[ed] against retroactive application of statute of limitations decisions in certain circumstances." 481 U.S., at 608 (emphasis added). Without deciding the correct statute of limitations period ourselves, we held that the respondent's claim was not time barred because it was timely filed under clearly established law in the Circuit. By contrast, in Goodman v. Lukens Steel Co., 482 U.S. 656 (1987), we gave retroactive effect to our decision on the statute of limitations for suits under 42 U.S.C. § 1981—which overruled clearly established law in the Circuit—because at the time the complaining party brought suit there was no clear Circuit precedent on which it was entitled to rely. 482 U.S., at 662–663. Saint Francis College and Lukens Steel Co. make clear that Chevron Oil does not alter the principle that consummated transactions are analyzed under the best current understanding of the law at the time of decision, but rather establishes a principle particular to the exercise of equitable discretion.

[p223] The civil cases upon which Chevron Oil relied, Allen v. ''State Bd. of Elections, 393 U.S. 544 (1969), Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968), Reynolds v. Sims, 377 U.S. 533, 585 (1964), and Simpson v. Union Oil Co. of Cal., 377 U.S. 13 (1964), as well as those cases which have relied upon it, Florida v. Long, 487 U.S. 223 (1988), Arizona Governing Comm. for Tax Deferred Annuity and Deferred Compensation Plans v. Norris, 463 U.S. 1073 (1983), and Lemon v. Kurtzman, 411 U.S. 192 (1973) (Lemon II), have concerned not the application of a new constitutional or statutory rule, id., at 199, but rather the relief that a federal'' court should award when applying the new law. Chevron Oil also relied upon the criminal cases that were overruled in Griffith v. Kentucky, 479 U.S. 314 (1987). The other civil cases relied on by the Court in Chevron Oil—Cipriano v. City of Houma, 395 U.S. 701 (1969), Chicot County Drainage District v. Baxter State Bank, 308 U.S. 371 (1940), Great Northern R. Co. v. Sunburst Oil & Refining Co., 287 U.S. 358 (1932), and the municipal bond cases, Gelpcke v. City of Dubuque, 1 Wall. 175 (1864); Havemeyer v. Iowa County, 3 Wall. 294 (1866); and Railroad Co. v. McClure, 10 Wall. 511 (1871), provide no support for the judgment here. On Cipriano, see supra, at 215–217. As to the other civil cases cited by Chevron Oil, Justice Harlan has explained why none of them support the result reached by the Court today:

"Gelpcke v. City of Dubuque, 1 Wall. 175 (1864), holds only that state courts may be compelled in some situations by particular provisions of the Federal Constitution to apply certain new rules prospectively only Great Northern R. Co. v. Sunburst Oil & Refining Co., 287 U.S. 358 (1932), merely holds that the Federal Constitution imposes no barrier to a state court's decision to apply a new state common-law rule prospectively only. Is it not sufficient answer to the dissenters' final assertion of precedential support to point out that Chicot County Drainage District v. Baxter State Bank, 308 U.S. 371 (1940), was a collateral attack on a civil judgment already otherwise final and entitled to res judicata effect?" Mackey v. United States, 401 U.S. 667, 698 (1971) (opinion concurring in judgment in part and dissenting in part).

See also Caban v. Mohammed, 441 U.S. 380, 416 (1979) (Stevens, J., dissenting). These cases are all remedy cases in which, as Justice Harlan explained, consideration of reliance might be appropriate. See United [p224] States v. Estate of Donnelly, 397 U.S., at 296–297 (1970) (concurring opinion). As the plurality stated in Lemon II, the problem of "the appropriate scope of federal equitable remedies" is distinct from the choice-of-law issue implicated by this case. 411 U.S., at 199 (emphasis added). "In equity, as nowhere else, courts eschew rigid absolutes and look to the practical realities and necessities inescapably involved in reconciling competing interests, notwithstanding that those interests have constitutional roots." Id., at 201; see also id., at 199–200 (citing Estate of Donnelly, 397 U.S., at 296–297 (Harlan, J., concurring)).

The Arkansas HUE tax unquestionably violates the Commerce Clause. Two results might follow from that conclusion. If the retention of taxes assessed violates the Due Process Clause under our decision today in McKesson Corp. v. Division of Alcoholic Beverages and Tobacco, Dept. of Business Regulation of Fla., 496 U.S., at 36–43, petitioners are entitled to a remedy. The State's freedom to impose various procedural requirements on the refund mechanism sufficiently meets any state interest in sound fiscal planning. 496 U.S., at 44–45. If the retention of the taxes does not violate the Due Process Clause, but does violate the state constitutional provision governing illegal exactions, petitioners are entitled to relief as a matter of state law. The State has the right to provide relief for illegally exacted taxes and make its own judgment as to the equities free from this Court's determination that such relief would be unduly burdensome. In either event—whether we think relief from a violation of fundamental fairness to be unfair or the State's choice of remedy unjust to the State—we have no warrant to substitute our judgment for what the Due Process Clause or state law would require.

V
I would hold that our decision in Scheiner need apply only where, under state law, the time for challenging the tax has not expired, or in cases brought within the time specified by [p225] state law for challenging the tax, the decisions are not yet final. The Arkansas Supreme Court did not reach the issue whether a refund remedy was available under state law because of its erroneous view that federal law prevented retroactive application of our decision in Scheiner to taxes paid prior to the date of Justice Blackmun's escrow order. I would therefore remand the case to the Arkansas Supreme Court for consideration whether petitioners are entitled to relief under state law or under our decision today in McKesson Corp. v. Division of Alcoholic Beverages and Tobacco, Dept. of Business Regulation of Fla., 496 U.S., at 18.

I respectfully dissent.