Larry Van Emmerik, Etc. v. William J. Janklow, Etc.

1982-01-11

Headline: Dismissal of challenge to South Dakota’s retroactive 4% sales tax on utility bills leaves the state law in place, while a dissent urges full Supreme Court review of retroactive tax rules.

Holding: The Court dismissed the appeal for want of a substantial federal question, leaving the South Dakota rulings upholding the retroactive 4% utility sales tax unreviewed.

Real World Impact:

Leaves South Dakota’s retroactive 4% utility sales tax in effect for now.
Denies immediate Supreme Court review of retroactive tax constitutionality.
Creates ongoing uncertainty for taxpayers and utilities about refunds.

Topics: retroactive taxes, utility bills, sales tax, due process challenge

Summary

Background

A South Dakota resident filed a class action on behalf of people who paid sales taxes on utility bills above the lawful rate. The State had a 3% utility tax in 1967 and retail sales taxes rose to 4% in 1969. The State collected 4% from utilities, and utilities sought refunds. The South Dakota Supreme Court held the utility tax rate had not changed in 1969 and allowed credits or refunds. The state court also found the suit against the State barred by sovereign immunity, but allowed claims against the utility companies. The Legislature then passed Senate Bill 40 in 1981, making a 4% utility tax retroactive to 1969. The plaintiff sued, arguing the retroactive increase violated due process and contract protections, and sought to block enforcement and obtain refunds.

Reasoning

The central question was whether the retroactive tax increase was a permissible "curative" act or an unconstitutional retroactive change in policy. The South Dakota Supreme Court held the statute did not violate due process because it acted as curative legislation. The United States Supreme Court dismissed the appeal for want of a substantial federal question and declined to review the state-court decision. Justice White, joined by Justice Blackmun, dissented and said the issue is substantial, that prior cases give mixed guidance, and that lower courts are in conflict.

Real world impact

Because the Supreme Court dismissed the appeal, the state-law rulings and the retroactive 4% tax remain in effect for now. The dismissal leaves questions about refunds for taxpayers and utility companies unresolved at the national level. This is not a final Supreme Court decision on the constitutional merits; the issue could return if the Court grants review later.

Dissents or concurrances

Justice White would have noted probable jurisdiction and set the case for full review because retroactive tax increases raise important, contested legal questions among lower courts.