Subject:  JAMES B. BEAM DISTILLING CO. v. GEORGIA, Syllabus



 
    NOTE: Where it is feasible, a syllabus (headnote) will be released, as
is being done in connection with this case, at the time the opinion is
issued.  The syllabus constitutes no part of the opinion of the Court but
has been prepared by the Reporter of Decisions for the convenience of the
reader.  See United States v. Detroit Lumber Co., 200 U. S. 321, 337.
SUPREME COURT OF THE UNITED STATES


Syllabus



JAMES B. BEAM DISTILLING CO. v. GEORGIA et al.

certiorari to the supreme court of georgia

No. 89-680.  Argued October 30, 1990 -- Decided June 20, 1991

Before 1985, Georgia law imposed an excise tax on imported liquor at a rate
double that imposed on liquor manufactured from Georgia-grown products.  In
1984, this Court, in Bacchus Imports, Ltd. v. Dias, 468 U. S. 263, held
that a similar Hawaii law violated the Commerce Clause.  Petitioner, a
manufacturer of Kentucky Bourbon, thereafter filed an action in Georgia
state court, seeking a refund of taxes it paid under Georgia's law for
1982, 1983, and 1984.  The court declared the statute unconstitutional, but
refused to apply its ruling retroactively, relying on Chevron Oil Co. v.
Huson, 404 U. S. 97, which held that a decision will be applied
prospectively where it displaces a principle of law on which reliance may
reasonably have been placed, and where prospectivity is on balance
warranted by its effect on the operation of the new rule and by the
inequities that might otherwise result from retroactive application.  The
State Supreme Court affirmed.

Held: The judgment is reversed, and the case is remanded.

259 Ga. 363, 382 S. E. 2d 95, reversed and remanded.

    Justice Souter, joined by Justice Stevens, concluded that once this
Court has applied a rule of law to the litigants in one case, it must do so
with respect to all others not barred by procedural requirements or res
judicata.  Pp. 3-13.

    (a) Whether a new rule should apply retroactively is in the first
instance a matter of choice of law, to which question there are three
possible answers.  The first and normal practice is to make a decision
fully retroactive.  Second, there is the purely prospective method of
overruling, where the particular case is decided under the old law but
announces the new, effective with respect to all conduct occurring after
the date of that decision.  Finally, the new rule could be applied in the
case in which it is pronounced, but then return to the old one with respect
to all others arising on facts predating the pronouncement.  The
possibility of such modified, or selective, prospectivity was abandoned in
the criminal context in Griffith v. Kentucky, 479 U. S. 314, 328.  Pp.
3-7.

    (b) Because Bacchus did not reserve the question, and remanded the case
for consideration of remedial issues, it is properly understood to have
followed the normal practice of applying its rule retroactively to the
litigants there before the Court.  Pp. 7-9.

    (c) Because Bacchus thus applied its own rule, principles of equality
and stare decisis require that it be applied to the litigants in this case.
Griffith's equality principle, that similarly situated litigants should be
treated the same, applies equally well in the civil context as in the
criminal.  Of course, retroactivity is limited by the need for finality,
since equality for those whose claims have been adjudicated could only be
purchased at the expense of the principle that there be an end of
litigation.  In contrast, parties, such as petitioner, who wait to litigate
until after others have labored to create a new rule, are merely asserting
a right that is theirs in law, is not being applied on a prospective basis
only, and is not otherwise barred by state procedural requirements.
Modified prospectivity rejected, a new rule may not be retroactively
applied to some litigants when it is not applied to others.  This
necessarily limits the application of the Chevron Oil test, to the effect
that it may not distinguish between litigants for choice-of-law purposes on
the particular equities of their claims to prospectivity.  It is the nature
of precedent that the substantive law will not shift and spring on such a
basis.  Pp. 9-12.

    (d) This opinion does not speculate as to the bounds or propriety of
pure prospectivity.  Nor does it determine the appropriate remedy in this
case, since remedial issues were neither considered below nor argued to
this Court.  P. 13.

    Justice White concluded that, under any one of several suppositions,
the opinion in Bacchus Imports, Ltd. v. Dias, 468 U. S. 263, may reasonably
read to extend the benefits of the judgment in that case to Bacchus Imports
and that petitioner here should also have the benefit of Bacchus.  If the
Court in Bacchus thought that its decision was not a new rule, there would
be no doubt that it would be retroactive to all similarly situated
litigants.  The Court in that case may also have thought that retroactivity
was proper under the factors set forth in Chevron Oil Co. v. Huson, 404 U.
S. 97.  And, even if the Court was wrong in applying Bacchus retroactively,
there is no precedent in civil cases for applying a new rule to the parties
of the case but not to others.  Moreover, Griffith v. Kentucky, 479 U. S.
314, 328, has overruled such a practice in criminal cases and should be
followed on the basis of stare decisis.  However, the propriety of pure
prospectivity is settled in this Court's prior cases, see, e. g., Cipriano
v. City of Houma, 395 U. S. 701, 706, which recognize that in proper cases
a new rule announced by the Court will not be applied retroactively, even
to the parties before the Court.  To allow for the possibility of
speculation as to the propriety of such prospectivity is to suggest that
there may come a time when this Court's precedents on the issue will be
overturned.  Pp. 1-3.

    Justice Blackmun, joined by Justice Marshall and Justice Scalia,
concluded that prospectivity, whether "selective" or "pure," breaches the
Court's obligation to discharge its constitutional function in articulating
new rules for decision, which must comport with its duty to decide only
cases and controversies.  Griffith v. Kentucky, 479 U. S. 314.  The nature
of judicial review constrains the Court to require retroactive application
of each new rule announced.  Pp. 1-2.

    Justice Scalia, joined by Justice Marshall and Justice Blackmun, while
agreeing with Justice Souter's conclusion, disagreed that the issue is one
of choice of law, and concluded that both selective and pure prospectivity
are impermissible, not for reasons of equity, but because they are not
permitted by the Constitution.  To allow the Judiciary powers greater than
those conferred by the Constitution, as the fundamental nature of those
powers was understood when the Constitution was enacted, would upset the
division of federal powers central to the constitutional scheme.  Pp. 1-2.

Souter, J., announced the judgment of the Court, and delivered an opinion,
in which Stevens, J., joined.  White, J., filed an opinion concurring in
the judgment.  Blackmun, J., filed an opinion concurring in the judgment,
in which Marshall and Scalia, JJ., joined.  Scalia, J., filed an opinion
concurring in the judgment, in which Marshall and Blackmun, JJ., joined.
O'Connor, J., filed a dissenting opinion, in which Rehnquist, C. J., and
Kennedy, J., joined.

------------------------------------------------------------------------------




Subject: 89-680 -- OPINION, JAMES B. BEAM DISTILLING CO. v. GEORGIA

 


NOTICE: This opinion is subject to formal revision before publication in
the preliminary print of the United States Reports.  Readers are requested
to notify the Reporter of Decisions, Supreme Court of the United States,
Washington, D. C. 20543, of any typographical or other formal errors, in
order that corrections may be made before the preliminary print goes to
press.
SUPREME COURT OF THE UNITED STATES


No. 89-680



JAMES B. BEAM DISTILLING COMPANY, PETI-
TIONER v. GEORGIA et al.


on writ of certiorari to the supreme court of georgia

[June 20, 1991]



    Justice Souter announced the judgment of the Court, and delivered an
opinion in which Justice Stevens joins.

    The question presented is whether our ruling in Bacchus Imports, Ltd.
v. Dias, 468 U. S. 263 (1984), should apply retroactively to claims arising
on facts antedating that decision.  We hold that application of the rule in
that case requires its application retroactively in later cases.
I
    Prior to its amendment in 1985, Georgia state law imposed an excise tax
on imported alcohol and distilled spirits at a rate double that imposed on
alcohol and distilled spirits manufactured from Georgia-grown products.
See Ga. Code Ann. MDRV 3-4-60 (1982).  In 1984, a Hawaii statute that
similarly distinguished between imported and local alcoholic products was
held in Bacchus to violate the Commerce Clause.  Bacchus, supra, at 273.
It proved no bar to our finding of unconstitutionality that the
discriminatory tax involved intoxicating liquors, with respect to which the
States have heightened regulatory powers under the Twenty-first Amendment.
Id., at 276.
    In Bacchus' wake, petitioner, a Delaware corporation and Kentucky
bourbon manufacturer, claimed Georgia's law likewise inconsistent with the
Commerce Clause, and sought a refund of $2.4 million, representing not only
the differential taxation but the full amount it had paid under MDRV 3-4-60
for the years 1982, 1983, and 1984.  Georgia's Department of Revenue failed
to respond to the request, and Beam thereafter brought a refund action
against the State in the Superior Court of Fulton County.  On cross-motions
for summary judgment, the trial court agreed that MDRV 3-4-60 could not
withstand a Bacchus attack for the years in question, and that the tax had
therefore been unconstitutional.  Using the analysis described in this
Court's decision in Chevron Oil Co. v. Huson, 404 U. S. 97 (1971), the
court nonetheless refused to apply its ruling retroactively.  It therefore
denied petitioner's refund request.
    The Supreme Court of Georgia affirmed the trial court in both respects.
The court held the pre-1985 version of the statute to have violated the
Commerce Clause as, in its words, an act of "simple economic
protectionism."  See 259 Ga. 363, 364, 382 S. E. 2d 95, 96 (1989) (citing
Bacchus).  But it, too, applied that finding on a prospective basis only,
in the sense that it declined to declare the State's application of the
statute unconstitutional for the years in question.  The court concluded
that but for Bacchus its decision on the constitutional question would have
established a new rule of law by overruling past precedent, see Scott v.
State, 187 Ga. 702, 2 S. E. 2d 65 (1939) (upholding predecessor to MDRV
3-4-60 against Commerce Clause objection), upon which the litigants may
justifiably have relied.  See 259 Ga., at 365, 382 S. E. 2d, at 96.  That
reliance, together with the "unjust results" that would follow from
retroactive application, was thought by the court to satisfy the Chevron
Oil test for prospectivity.  To the dissenting argument of two justices
that a statute found unconstitutional is unconstitutional ab initio, the
court observed that while it had " `declared statutes to be void from their
inception when they were contrary to the Constitution at the time of
enactment, . . . those decisions are not applicable to the present
controversy, as the original . . . statute, when adopted, was not violative
of the Constitution under the court interpretations of that period.' "  259
Ga., at 366, 382 S. E. 2d, at 97 (quoting Adams v. Adams, 249 Ga. 477,
478-479, 291 S. E. 2d 518, 520 (1982)).
    Beam sought a writ of certiorari from the Court on the retroactivity
question. {1}  We granted the petition, 496 U. S. --- (1990), and now
reverse.
II
    In the ordinary case no question of retroactivity arises.  Courts are
as a general matter in the business of applying settled principles and
precedents of law to the disputes that come to bar.  See Mishkin, Foreword:
The High Court, The Great Writ, and the Due Process of Time and Law, 79
Harv. L. Rev. 56, 60 (1965).  Where those principles and precedents
antedate the events on which the dispute turns, the court merely applies
legal rules already decided, and the litigant has no basis on which to
claim exemption from those rules.
    It is only when the law changes in some respect that an assertion of
nonretroactivity may be entertained, the paradigm case arising when a court
expressly overrules a precedent upon which the contest would otherwise be
decided differ ently and by which the parties may previously have regulated
their conduct.  Since the question is whether the court should apply the
old rule or the new one, retroactivity is properly seen in the first
instance as a matter of choice of law, "a choice . . . between the
principle of forward operation and that of relation backward."  Great
Northern R. Co. v. Sunburst Oil & Refining Co., 287 U. S. 358, 364 (1932).
Once a rule is found to apply "backward," there may then be a further issue
of remedies, i. e., whether the party prevailing under a new rule should
obtain the same relief that would have been awarded if the rule had been an
old one.  Subject to possible constitutional thresholds, see McKesson Corp.
v. Florida Alcoholic Beverages and Tobacco Div., 496 U. S. --- (1990), the
remedial inquiry is one governed by state law, at least where the case
originates in state court.  See American Trucking Assns., Inc. v. Smith,
496 U. S. ---, --- (1990) (slip op. 6) (Stevens, J., dissenting).  But the
antecedent choice-of-law question is a federal one where the rule at issue
itself derives from federal law, constitutional or otherwise.  See Smith,
supra, at --- (slip op. 7) (plurality opinion); cf. United States v. Estate
of Donnelly, 397 U. S. 286, 297, n. (1970) (Harlan, J., concurring).
    As a matter purely of judicial mechanics, there are three ways in which
the choice-of-law problem may be resolved.  First, a decision may be made
fully retroactive, applying both to the parties before the court and to all
others by and against whom claims may be pressed, consistent with res
judicata and procedural barriers such as statutes of limitations.  This
practice is overwhelmingly the norm, see Kuhn v. Fairmont Coal Co., 215 U.
S. 349, 372 (Holmes, J., dissenting), and is in keeping with the
traditional function of the courts to decide cases before them based upon
their best current understanding of the law.  See Mackey v. United States,
401 U. S. 667, 679 (1971) (Harlan, J., concurring in judgments in part and
dissenting in part).  It also reflects the declaratory theory of law, see
Smith, supra, at --- (slip op. 1) (1990) (Scalia, J., concurring in
judgment); Linkletter v. Walker, 381 U. S. 618, 622-623 (1965), according
to which the courts are understood only to find the law, not to make it.
But in some circumstances retroactive application may prompt difficulties
of a practical sort.  However much it comports with our received notions of
the judicial role, the practice has been attacked for its failure to take
account of reliance on cases subsequently abandoned, a fact of life if not
always one of jurisprudential recognition.  See, e. g., Mosser v. Darrow,
341 U. S. 267, 276 (1951) (Black, J., dissenting).
    Second, there is the purely prospective method of overruling, under
which a new rule is applied neither to the parties in the law-making
decision nor to those others against or by whom it might be applied to
conduct or events occurring before that decision.  The case is decided
under the old law but becomes a vehicle for announcing the new, effective
with respect to all conduct occurring after the date of that decision.
This Court has, albeit infrequently, resorted to pure pros pectivity, see
Chevron Oil Co. v. Huson, 404 U. S. 97 (1971); Northern Pipeline
Construction Co. v. Marathon Pipe Line Co., 458 U. S. 50, 88 (1982);
Buckley v. Valeo, 424 U. S. 1, 142-143 (1976); England v. Louisiana State
Bd. of Medical Examiners, 375 U. S. 411, 422 (1964); see also Smith, supra,
at ---, n. 11 (slip op. 16, n. 11) (Stevens, J., dissenting); Linkletter,
supra, at 628, although in so doing it has never been required to
distinguish the remedial from the choice-oflaw aspect of its decision.  See
Smith, supra, at --- (slip op. 5) (Stevens, J., dissenting).  This approach
claims justification in its appreciation that "[t]he past cannot always be
erased by a new judicial declaration," Chicot County Drainage District v.
Baxter State Bank, 308 U. S. 371, 374 (1940), see also Lemon v. Kurtzman,
411 U. S. 192, 199 (1973) (plurality opinion), and that to apply the new
rule to parties who relied on the old would offend basic notions of justice
and fairness.  But this equitable method has its own drawback: it tends to
relax the force of precedent, by minimizing the costs of overruling, and
thereby allows the courts to act with a freedom comparable to that of
legislatures.  See United States v. Johnson, 457 U. S. 537, 554-555 (1982);
James v. United States, 366 U. S. 213, 225 (1961) (Black, J., dissenting).
    Finally, a court may apply a new rule in the case in which it is
pronounced, then return to the old one with respect to all others arising
on facts predating the pronouncement.  This method, which we may call
modified, or selective, prospec tivity, enjoyed its temporary ascendancy in
the criminal law during a period in which the Court formulated new rules,
prophylactic or otherwise, to insure protection of the rights of the
accused.  See, e. g., Johnson v. New Jersey, 384 U. S. 719 (1966); Stovall
v. Denno, 388 U. S. 293, 297 (1967); Daniel v. Louisiana, 420 U. S. 31
(1975); see also Smith, supra, at --- (slip op. 28) ("During the period in
which much of our retroactivity doctrine evolved, most of the Court's new
rules of criminal procedure had expanded the protections available to
criminal defendants").  On the one hand, full retroactive application of
holdings such as those announced in Miranda v. Arizona, 384 U. S. 436
(1966); Escobedo v. Illinois, 378 U. S. 478 (1964); and Katz v. United
States, 389 U. S. 347 (1967), would have "seriously disrupt[ed] the
administration of our criminal laws [,] . . . requir[ing] the retrial or
release of numerous prisoners found guilty by trustworthy evidence in
conformity with previously announced constitutional standards."  Johnson,
supra, at 731.  On the other hand, retroactive application could hardly
have been denied the litigant in the law-changing decision itself.  A
criminal defendant usually seeks one thing only on appeal, the reversal of
his conviction; future application would provide little in the way of
solace.  In this context, without retroactivity at least to the first
successful litigant, the incentive to seek review would be diluted if not
lost altogether.
    But selective prospectivity also breaches the principle that litigants
in similar situations should be treated the same, a fundamental component
of stare decisis and the rule of law generally.  See R. Wasserstrom, The
Judicial Decision 69-72 (1961).  "We depart from this basic judicial
tradition when we simply pick and choose from among similarly situated
defendants those who alone will receive the benefit of a `new' rule of
constitutional law."  Desist v. United States, 394 U. S. 244, 258-259
(1969) (Harlan, J., dissenting); see also Von Moschzisker, Stare Decisis in
Courts of Last Resort, 37 Harv. L. Rev. 409, 425 (1924).  For this reason,
we abandoned the possibility of selective prospectivity in the criminal
context in Griffith v. Kentucky, 479 U. S. 314, 328 (1987), even where the
new rule constituted a "clear break" with previous law, in favor of
completely retroactive appli cation of all decisions to cases pending on
direct review.  Though Griffith was held not to dispose of the matter of
civil retroactivity, see id., at 322, n. 8, selective prospectivity appears
never to have been endorsed in the civil context.  Smith, 496 U. S., at ---
(slip op. 29) (plurality opinion).  This case presents the issue.
III
    Both parties have assumed the applicability of the Chevron Oil test,
under which the Court has accepted prospectivity (whether in the
choice-of-law or remedial sense, it is not clear) where a decision
displaces a principle of law on which reliance may reasonably have been
placed, and where pros pectivity is on balance warranted by its effect on
the operation of the new rule and by the inequities that might otherwise
result from retroactive application.  See Chevron Oil, 404 U. S., at
106-107.  But we have never employed Chevron Oil to the end of modified
civil prospectivity.
    The issue is posed by the scope of our disposition in Bacchus.  In most
decisions of this Court, retroactivity both as to choice of law and as to
remedy goes without the saying.  Although the taxpaying appellants
prevailed on the merits of their Commerce Clause claim, however, the
Bacchus Court did not grant outright their request for a refund of taxes
paid under the law found unconstitutional.  Instead, we remanded the case
for consideration of the State's arguments that appellants were "not
entitled to refunds since they did not bear the economic incidence of the
tax but passed it on as a separate addition to the price that their
customers were legally obligated to pay."  Bacchus, 468 U. S., at 276-277.
"These refund issues, . . . essentially issues of remedy," had not been
adequately developed on the record nor passed upon by the state courts
below, and their consideration may have been intertwined with, or obviated
by, matters of state law.  Id., at 277.
    Questions of remedy aside, Bacchus is fairly read to hold as a choice
of law that its rule should apply retroactively to the litigants then
before the Court.  Because the Bacchus opinion did not reserve the question
whether its holding should be applied to the parties before it, compare
American Trucking Assns., Inc. v. Scheiner, 483 U. S. 266, 297-298 (1987)
(remanding case to consider whether ruling "should be applied retroactively
and to decide other remedial issues"), it is properly understood to have
followed the normal rule of retroactive application in civil cases.  If the
Court were to have found prospectivity as a choice-of-law matter, there
would have been no need to consider the pass-through defense; if the Court
had reserved the issue, the terms of the remand to consider "remedial"
issues would have been incomplete.  Indeed, any consideration of remedial
issues necessarily implies that the precedential question has been settled
to the effect that the rule of law will apply to the parties before the
Court.  See McKesson, 496 U. S., at --- (slip op. 25-28) (passthrough
defense considered as remedial question).  Because the Court in Bacchus
remanded the case solely for consideration of the pass-through defense, it
thus should be read as having retroactively applied the rule there decided.
{2}  See also Williams v. Vermont, 472 U. S. 14, 28 (1985); Exxon Corp. v.
Eagerton, 462 U. S. 176, 196-197 (1983); cf. Davis v. Michigan Dept. of
Treasury, 489 U. S. 803, 817 (1989).
    Bacchus thus applied its own rule, just as if it had reversed and
remanded without further ado, and yet of course the Georgia courts refused
to apply that rule with respect to the litigants in this case.  Thus, the
question is whether it is error to refuse to apply a rule of federal law
retroactively after the case announcing the rule has already done so.  We
hold that it is, principles of equality and stare decisis here prevailing
over any claim based on a Chevron Oil analysis.
    Griffith cannot be confined to the criminal law.  Its equality
principle, that similarly situated litigants should be treated the same,
carries comparable force in the civil context.  See United States v. Estate
of Donnelly, 397 U. S. at, 296 (Harlan, J., concurring).  Its strength is
in fact greater in the latter sphere.  With respect to retroactivity in
criminal cases, there remains even now the disparate treatment of those
cases that come to the Court directly and those that come here in
collateral proceedings.  See Griffith, supra, at 331-332 (White, J.,
dissenting).  Whereas Griffith held that new rules must apply retroactively
to all criminal cases pending on direct review, we have since concluded
that new rules will not relate back to convictions challenged on habeas
corpus.  Teague v. Lane, 489 U. S. 288 (1989).  No such difficulty exists
in the civil arena, in which there is little opportunity for collateral
attack of final judgments.
    Nor is selective prospectivity necessary to maintain incentives to
litigate in the civil context as it may have been in the criminal before
Griffith's rule of absolute retroactivity.  In the civil context, "even a
party who is deprived of the full retroactive benefit of a new decision may
receive some relief."  Smith, 496 U. S., at --- (slip op. 28).  Had the
petitioners in Bacchus lost their bid for retroactivity, for example, they
would nonetheless have won protection from the future imposition of
discriminatory taxes, and the same goes for the petitioner here.  Assuming
that pure prospectivity may be had at all, moreover, its scope must
necessarily be limited to a small number of cases; its possibility is
therefore unlikely to deter the broad class of prospective challengers of
civil precedent.  See generally Currier, Time and Change in Judge-Made Law:
Prospective Overruling, 51 Va. L. Rev. 201, 215 (1965).
    Of course, retroactivity in civil cases must be limited by the need for
finality, see Chicot County Drainage District v. Baxter State Bank, 308 U.
S. 371 (1940); once suit is barred by res judicata or by statutes of
limitation or repose, a new rule cannot reopen the door already closed.  It
is true that one might deem the distinction arbitrary, just as some have
done in the criminal context with respect to the distinction between direct
review and habeas: why should someone whose failure has otherwise become
final not enjoy the next day's new rule, from which victory would otherwise
spring?  It is also objected that in civil cases unlike criminal there is
more potential for litigants to freeload on those without whose labor the
new rule would never have come into being.  (Criminal defendants are
already potential litigants by virtue of their offense, and invoke
retroactivity only by way of defense; civil beneficiaries of new rules may
become litigants as a result of the law change alone, and use it as a
weapon.)  That is true of the petitioner now before us, which did not
challenge the Georgia law until after its fellow liquor dis tributors had
won their battle in Bacchus.  To apply the rule of Bacchus to the parties
in that case but not in this one would not, therefore, provoke Justice
Harlan's attack on modified prospectivity as "[s]imply fishing one case
from the stream of appellate review, using it as a vehicle for pronouncing
new constitutional standards, and then permitting a stream of similar cases
to flow by unaffected by that new rule."  Mackey, 401 U. S., at 679
(Harlan, J., concurring in judgments in part and dissenting in part); see
also Smith, supra, at --- (slip op. 7-8) (Stevens, J., dissenting).  Beam
had yet to enter the waters at the time of our decision in Bacchus, and yet
we give it Bacchus' benefit.  Insofar as equality drives us, it might be
argued that the new rule should be applied to those who had toiled and
failed, but whose claims are now precluded by res judicata; and that it
should not be applied to those who only exploit others' efforts by
litigating in the new rule's wake.
    As to the former, independent interests are at stake; and with respect
to the latter, the distinction would be too readily and unnecessarily
overcome.  While those whose claims have been adjudicated may seek
equality, a second chance for them could only be purchased at the expense
of another principle.  " `Public policy dictates that there be an end of
litigation; that those who have contested an issue shall be bound by the
result of that contest, and that matters once tried shall be considered
forever settled as between the parties.' "  Federated Department Stores v.
Moitie, 452 U. S. 394, 401 (1981) (quoting Baldwin v. Iowa State Traveling
Men's Assn., 283 U. S. 522, 525 (1931)).  Finality must thus delimit
equality in a temporal sense, and we must accept as a fact that the
argument for uniformity loses force over time.  As for the putative
hangers-on, they are merely asserting a right that the Court has told them
is theirs in law, that the Court has not deemed necessary to apply on a
prospective basis only, and that is not otherwise barred by state
procedural requirements.  They cannot be characterized as freeloaders any
more than those who seek vindication under a new rule on facts arising
after the rule's announcement.  Those in each class rely on the labors of
the first successful litigant.  We might, of course, limit retroactive
application to those who at least tried to fight their own battles by
litigating before victory was certain.  To this possibility, it is enough
to say that distinguishing between those with cases pending and those
without would only serve to encourage the filing of replicative suits when
this or any other appellate court created the possibility of a new rule by
taking a case for review.
    Nor, finally, are litigants to be distinguished for choice-oflaw
purposes on the particular equities of their claims to prospectivity:
whether they actually relied on the old rule and how they would suffer from
retroactive application of the new.  It is simply in the nature of
precedent, as a necessary component of any system that aspires to fairness
and equality, that the substantive law will not shift and spring on such a
basis.  To this extent, our decision here does limit the possible
applications of the Chevron Oil analysis, however irrelevant Chevron Oil
may otherwise be to this case.  Because the rejection of modified
prospectivity precludes retroactive application of a new rule to some
litigants when it is not applied to others, the Chevron Oil test cannot
determine the choice of law by relying on the equities of the particular
case.  See Simpson v. Director, Office of Workers' Compensation Programs,
United States Dept. of Labor, 681 F. 2d 81, 85-86 (CA1 1982), cert. denied
sub nom. Bath Iron Works Corp. v. Director, Office of Workers' Compensation
Programs, United States Dept. of Labor, 459 U. S. 1127 (1983); see also
Note, 1985 U. Ill. L. Rev. 117, 131-132.  Once retroactive application is
chosen for any assertedly new rule, it is chosen for all others who might
seek its prospective application.  The applicability of rules of law are
not to be switched on and off according to individual hardship; allowing
relitigation of choice-of-law issues would only compound the challenge to
the stabilizing purpose of precedent posed in the first instance by the
very development of "new" rules.  Of course, the generalized enquiry
permits litigants to assert, and the courts to consider, the equitable and
reliance interests of parties absent but similarly situated.  Conversely,
nothing we say here precludes consideration of individual equities when
deciding remedial issues in particular cases.
IV
    The grounds for our decision today are narrow.  They are confined
entirely to an issue of choice of law: when the Court has applied a rule of
law to the litigants in one case it must do so with respect to all others
not barred by procedural requirements or res judicata.  We do not speculate
as to the bounds or propriety of pure prospectivity.
    Nor do we speculate about the remedy that may be appropriate in this
case; remedial issues were neither considered below nor argued to this
Court, save for an effort by petitioner to buttress its claim by reference
to our decision last Term in McKesson.  As we have observed repeatedly,
federal "issues of remedy . . . may well be intertwined with, or their
consideration obviated by, issues of state law."  Bacchus, 468 U. S., at
277.  Nothing we say here deprives respondent of his opportunity to raise
procedural bars to recovery under state law or demonstrate reliance
interests entitled to consideration in determining the nature of the remedy
that must be provided, a matter with which McKesson did not deal.  See
Estate of Donnelly, 397 U. S., at 296 (Harlan, J., concurring); cf. Lemon,
411 U. S., at 203.
    The judgment is reversed, and the case is remanded for further
proceedings.

It is so ordered.
 
 
 
 
 
 

------------------------------------------------------------------------------
1
    Although petitioner expends some effort, see Brief for Petitioner 5-8,
in asserting the unconstitutionality under Bacchus of the Georgia law as
amended, see Ga. Code Ann. MDRV 3-4-60 (1990), an argument rejected by the
Georgia Supreme Court in Heublein, Inc. v. State, 256 Ga. 578, 351 S. E. 2d
190 (1987), that issue is neither before us nor relevant to the issue that
is.

2
    In fact, the state defendant in Bacchus argued for pure prospectivity
under the criteria set forth in Chevron Oil Co. v. Huson, 404 U. S. 97
(1971).  See Brief for Appellee in Bachus Imports Ltd. v. Dias, O. T. 1983,
No. 82-1565, p. 19.  It went on to argue that "even if" the challenged tax
were held invalid and the decision were not limited to prospective
application, the challengers should not be entitled to refunds because any
taxes paid would have been passed through to consumers.  Id., at 46.
Though unnecessary to our ruling here, the prospectivity issue can thus be
said actually to have been litigated and by implication actually to have
been decided by the Court by the fact of its consideration of the
pass-through defense.  See Clemons v. Mississippi, 494 U. S. ---, ---, n. 3
(1990) (slip op. 8, n. 3).





Subject: 89-680 -- CONCUR, JAMES B. BEAM DISTILLING CO. v. GEORGIA

 


    SUPREME COURT OF THE UNITED STATES


No. 89-680



JAMES B. BEAM DISTILLING COMPANY, PETI-
TIONER v. GEORGIA et al.


on writ of certiorari to the supreme court of georgia

[June 20, 1991]



    Justice White, concurring in the judgment.
    I agree with Justice Souter that the opinion in Bacchus Imports, Ltd.
v. Dias, 468 U. S. 263 (1984), may reasonably be read as extending the
benefit of the judgment in that case to the appellant Bacchus Imports.  I
also agree that the decision is to be applied to other litigants whose
cases were not final at the time of the Bacchus decision.  This would be
true under any one of several suppositions.  First, if the Court in that
case thought its decision to have been reasonably foreseeable and hence not
a new rule, there would be no doubt that it would be retroactive to all
similarly situated litigants.  Chevron Oil Co. v. Huson, 404 U. S. 97
(1971), would not then have been implicated.  Second, even if retroactivity
depended upon consideration of the Chevron Oil factors, the Court may have
thought that retroactive application was proper.  Here, it should be noted
that although the dissenters in Bacchus -- including Justice O'Connor --
argued that the Court erred in deciding the Twenty-first Amendment issue
against the State, they did not argue that the Court erred in giving the
appellant the benefit of its decision.  Bacchus, supra, at 278 (Stevens,
J., dissenting).  Third, even if -- as Justice O'Connor now argues -- the
Court was quite wrong in doing so, post, at 4-10, that is water over the
dam, irretrievably it seems to me.  There being no precedent in civil cases
applying a new rule to the parties in the case but not to others similarly
situated, {1} and Griffith v. Kentucky, 479 U. S. 314, 328 (1987), having
overruled such a practice in criminal cases (a decision from which I
dissented and still believe wrong, but which I now follow on the basis of
stare decisis), I agree that the petitioner here should have the benefit of
Bacchus, just as Bacchus Imports did.  Hence I concur in the judgment of
the Court.
    Nothing in the above, however, is meant to suggest that I retreat from
those opinions filed in this Court which I wrote or joined holding or
recognizing that in proper cases a new rule announced by the Court will not
be applied retroactively, even to the parties before the Court.  See, e.
g., Cipriano v. City of Houma, 395 U. S. 701, 706 (1969).  This was what
Justice Stewart wrote for the Court in Chevron Oil, summarizing what was
deemed to be the essence of those cases.  Chevron Oil, supra, at 105-109.
This was also what Justice O'Connor wrote for the plurality in American
Trucking Assns., Inc. v. Smith, 496 U. S. --- (1990).  I joined that
opinion and would not depart from it.  Nor, without overruling Chevron Oil
and those other cases before and after Chevron Oil, holding that certain
decisions will be applied prospectively only, can anyone sensibly insist on
automatic retroactivity for any and all judicial decisions in the federal
system.
    Hence, I do not understand how Justice Souter can cite the cases on
prospective operation, ante, at 5, and yet say that he need not speculate
as to the propriety of pure prospectivity, ante, at 13.  The propriety of
prospective application of decision in this Court, in both Constitutional
and statutory cases, is settled by our prior decisions.  To nevertheless
"speculate" about the issue is only to suggest that there may come a time
when our precedents on the issue will be overturned.
    Plainly enough, Justices Scalia, Marshall, and Blackmun would depart
from our precedents.  Justice Scalia would do so for two reasons, as I read
him.  Post, at ---.  First, even though the Justice is not naive enough
(nor does he think the Framers were naive enough) to be unaware that judges
in a real sense "make" law, he suggests that judges (in an unreal sense, I
suppose) should never concede that they do and must claim that they do no
more than discover it, hence suggesting that there are citizens who are
naive enough to believe them.  Second, Justice Scalia, fearful of our
ability and that of other judges to resist the temptation to overrule prior
cases, would maximize the injury to the public interest when overruling
occurs, which would tend to deter them from departing from established
precedent.
    I am quite unpersuaded by this line of reasoning and hence concur in
the judgment on the narrower ground employed by Justice Souter.

 
 
 
 
 

------------------------------------------------------------------------------
1
    See Northern Pipeline Construction Co. v. Marathon Pipe Line Co., 458
U. S. 50, 88 (1982); Buckley v. Valeo, 424 U. S. 1, 142-143 (1976); Chevron
Oil Co. v. Huson, 404 U. S. 97 (1971); Cipriano v. City of Houma, 395 U. S.
701, 706 (1969); Allen v. State Bd. of Elections, 393 U. S. 544, 572
(1969); Simpson v. Union Oil Co., 377 U. S. 13, 24-25 (1964); England v.
Louisiana State Bd. of Medical Examiners, 375 U. S. 411, 422 (1964); Chicot
County Drainage Dist. v. Baxter State Bank, 308 U. S. 371, 374 (1940).





Subject: 89-680 -- CONCUR, JAMES B. BEAM DISTILLING CO. v. GEORGIA

 


 
SUPREME COURT OF THE UNITED STATES


No. 89-680



JAMES B. BEAM DISTILLING COMPANY, PETI-
TIONER v. GEORGIA et al.


on writ of certiorari to the supreme court of georgia

[June 20, 1991]



    Justice Blackmun, with whom Justice Marshall and Justice Scalia join,
concurring in the judgment.
    I join Justice Scalia's opinion because I agree that failure to apply a
newly declared constitutional rule to cases pending on direct review
violates basic norms of constitutional adjudication.  It seems to me that
our decision in Griffith v. Kentucky, 479 U. S. 314 (1987), makes clear
that this Court's function in articulating new rules of decision must
comport with its duty to decide only "cases" and "contro versies."  See U.
S. Const., Art. III, MDRV 2, cl. 1.  Unlike a legislature, we do not
promulgate new rules to "be applied prospectively only," as the dissent,
post, at 1, and perhaps the Court, would have it.  The nature of judicial
review constrains us to consider the case that is actually before us, and,
if it requires us to announce a new rule, to do so in the context of the
case and apply it to the parties who brought us the case to decide.  To do
otherwise is to warp the role that we, as judges, play in a government of
limited powers.
    I do not read Justice Scalia's comments on the division of federal
powers to reject the idea expressed so well by the last Justice Harlan that
selective application of new rules violates the principle of treating
similarly situated defendants the same.  See Mackey v. United States, 401
U. S. 667, 678-679 (1971), and Desist v. United States, 394 U. S. 244,
258-259 (1969) (dissenting opinion), on which Griffith relied.  This rule,
which we have characterized as a question of equity, is not the remedial
equity that the dissent seems to believe can trump the role of adjudication
in our constitutional scheme.  See post, at 2.  It derives from the
integrity of judicial review, which does not justify applying principles
determined to be wrong to litigants who are in or may still come to court.
We fulfill our judicial responsibility by requiring retroactive application
of each new rule we announce.
    Application of new decisional rules does not thwart the principles of
stare decisis, as the dissent suggests.  See post, at 3.  The doctrine of
stare decisis profoundly serves important purposes in our legal system.
Nearly a half century ago, Justice Roberts cautioned: "Respect for
tribunals must fall when the bar and the public come to understand that
nothing that has been said in prior adjudication has force in a current
controversy."  Mahnich v. Southern S.S. Co., 321 U. S. 96, 113 (1944)
(dissenting opinion).  The present dissent's view of stare decisis would
rob the doctrine of its vi tality through eliminating the tension between
the current controversy and the new rule.  By announcing new rules
prospectively or by applying them selectively, a court may dodge the stare
decisis bullet by avoiding the disruption of settled expectations that
otherwise prevents us from disturbing our settled precedents.  Because it
forces us to consider the disruption that our new decisional rules cause,
retroactivity combines with stare decisis to prevent us from altering the
law each time the opportunity presents itself.
    Like Justice Scalia, I conclude that prospectivity, whether "selective"
or "pure," breaches our obligation to discharge our constitutional
function.

------------------------------------------------------------------------------




Subject: 89-680 -- CONCUR, JAMES B. BEAM DISTILLING CO. v. GEORGIA

 


    SUPREME COURT OF THE UNITED STATES


No. 89-680



JAMES B. BEAM DISTILLING COMPANY, PETI-
TIONER v. GEORGIA et al.


on writ of certiorari to the supreme court of georgia

[June 20, 1991]



    Justice Scalia, with whom Justice Marshall and Justice Blackmun join,
concurring in the judgment.

    I think I agree, as an abstract matter, with Justice Souter's
reasoning, but that is not what leads me to agree with his conclusion.  I
would no more say that what he calls "selective prospectivity" is
impermissible because it produces inequitable results than I would say that
the coercion of confessions is impermissible for that reason.  I believe
that the one, like the other, is impermissible simply because it is not
allowed by the Constitution.  Deciding between a constitutional course and
an unconstitutional one does not pose a question of choice of law.

    If the division of federal powers central to the constitutional scheme
is to succeed in its objective, it seems to me that the fundamental nature
of those powers must be preserved as that nature was understood when the
Constitution was enacted.  The Executive, for example, in addition to
"tak[ing] Care that the Laws be faithfully executed," Art. II, MDRV 3, has
no power to bind private conduct in areas not specifically committed to his
control by Constitution or statute; such a perception of "[t]he Executive
power" may be familiar to other legal systems, but is alien to our own.  So
also, I think, "[t]he judicial Power of the United States" conferred upon
this Court and such inferior courts as Congress may establish, Art. III,
MDRV 1, must be deemed to be the judicial power as understood by our
common-law tradition.  That is the power "to say what the law is," Marbury
v. Madison, 1 Cranch 137, 177 (1803), not the power to change it.  I am not
so naive (nor do I think our forebears were) as to be unaware that judges
in a real sense "make" law.  But they make it as judges make it, which is
to say as though they were "finding" it -- discerning what the law is,
rather than decreeing what it is today changed to, or what it will tomorrow
be.  Of course this mode of action poses "difficulties of a . . . practical
sort," ante, at 4, when courts decide to overrule prior precedent.  But
those difficulties are one of the understood checks upon judicial law
making; to eliminate them is to render courts substantially more free to
"make new law," and thus to alter in a fundamental way the assigned balance
of responsibility and power among the three Branches.
    For this reason, and not reasons of equity, I would find both
"selective prospectivity" and "pure prospectivity" beyond our power.

------------------------------------------------------------------------------




Subject: 89-680 -- DISSENT, JAMES B. BEAM DISTILLING CO. v. GEORGIA

 


    SUPREME COURT OF THE UNITED STATES


No. 89-680



JAMES B. BEAM DISTILLING COMPANY, PETI-
TIONER v. GEORGIA et al.


on writ of certiorari to the supreme court of georgia

[June 20, 1991]



    Justice O'Connor, with whom Chief Justice Rehnquist and Justice Kennedy
join, dissenting.

    The Court extends application of the new rule announced in Bacchus
Imports, Ltd. v. Dias, 468 U. S. 263 (1984), retroactively to all parties,
without consideration of the analysis described in Chevron Oil Co. v.
Huson, 404 U. S. 97 (1971).  Justice Souter bases this determination on
"principles of equality and stare decisis."  Ante, at 9.  To my mind, both
of these factors lead to precisely the opposite result.
    Justice Blackmun and Justice Scalia concur in the judgment of the Court
but would abrogate completely the Chevron Oil inquiry and hold that all
decisions must be applied retroactively in all cases.  I explained last
Term that such a rule ignores well-settled precedent in which this Court
has refused repeatedly to apply new rules retroactively in civil cases.
See American Trucking Assns. v. Smith, 496 U. S. ---, --- - --- (slip op.
18-30) (opinion of O'Connor, J.).  There is no need to repeat that
discussion here.  I reiterate, however, that precisely because this Court
has "the power `to say what the law is,' Marbury v. Madison, 1 Cranch 137,
177 (1803)," ante, at 2 (Scalia, J., concurring), when the Court changes
its mind, the law changes with it.  If the Court decides, in the context of
a civil case or controversy, to change the law, it must make the subsequent
determination whether the new law or the old is to apply to conduct
occurring before the law-changing decision.  Chevron Oil describes our
long-established procedure for making this inquiry.

I
    I agree that the Court in Bacchus applied its rule retroactively to the
parties before it.  The Bacchus opinion is silent on the retroactivity
question.  Given that the usual course in cases before this Court is to
apply the rule announced to the parties in the case, the most reasonable
reading of silence is that the Court followed its customary practice.
    The Bacchus Court erred in applying its rule retroactively.  It did not
employ the Chevron Oil analysis, but should have.  Had it done so, the
Court would have concluded that the Bacchus rule should be applied
prospectively only.  Justice Souter today concludes that, even in the
absence of an independent examination of retroactivity, once the Court
applies a new rule retroactively to the parties before it, it must
thereafter apply the rule retroactively to everyone.  I disagree.  Without
a determination that retroactivity is appropriate under Chevron Oil,
neither equality nor stare decisis leads to this result.
    As to "equality," Justice Souter believes that it would be unfair to
withhold the benefit of the new rule in Bacchus to litigants similarly
situated to those who received the benefit in that case.  Ante, at 6, 9.
If Justice Souter is concerned with fairness, he cannot ignore Chevron Oil;
the purpose of the Chevron Oil test is to determine the equities of
retroactive application of a new rule.  See Chevron Oil, supra, at 107-108;
Smith, supra, at --- (slip op. 21).  Had the Bacchus Court determined that
retroactivity would be appropriate under Chevron Oil, or had this Court
made that determination now, retroactive application would be fair.  Where
the Chevron Oil analysis indicates that retroactivity is not appropriate,
however, just the opposite is true.  If retroactive application was
inequitable in Bacchus itself, the Court only hinders the cause of fairness
by repeating the mistake.  Because I conclude that the Chevron Oil test
dictates that Bacchus not be applied retroactively, I would decline the
Court's invitation to impose liability on every jurisdiction in the Nation
that reasonably relied on pre-Bacchus law.
    Justice Souter also explains that "stare decisis" compels its result.
Ante, at 9.  By this, I assume he means that the retroactive application of
the Bacchus rule to the parties in that case is itself a decision of the
Court to which the Court should now defer in deciding the retroactivity
question in this case.  This is not a proper application of stare decisis.
The Court in Bacchus applied its rule retroactively to the parties before
it without any analysis of the issue.  This tells us nothing about how this
case -- where the Chevron Oil question is squarely presented -- should come
out.
    Contrary to Justice Souter's assertions, stare decisis cuts the other
way in this case.  At its core, stare decisis allows those affected by the
law to order their affairs without fear that the established law upon which
they rely will suddenly be pulled out from under them.  A decision not to
apply a new rule retroactively is based on principles of stare decisis.  By
not applying a law-changing decision retroactively, a court respects the
settled expectations that have built up around the old law.  See, American
Trucking, supra, at --- - --- (slip op. 26-27) (opinion of O'Connor, J.)
("prospective overruling allows courts to respect the principle of stare
decisis even when they are impelled to change the law in light of new
understanding"); id., at --- (slip op. 5) (Scalia, J., concurring in
judgment) (imposition of retroactive liability on a litigant would "upset
that litigant's settled expectations because the earlier decision for which
stare decisis effect is claimed . . . overruled prior law.  That would turn
the doctrine of stare decisis against the very purpose for which it
exists").  If a Chevron Oil analysis reveals, as it does, that retroactive
application of Bacchus would unjustly undermine settled expectations, stare
decisis dictates strongly against the Court's holding.
    Justice Souter purports to have restricted the application of Chevron
Oil only to a limited extent.  Ante, at 12.  The effect appears to me far
greater.  Justice Souter concludes that the Chevron Oil analysis, if
ignored in answering the narrow question of retroactivity as to the parties
to a particular case, must be ignored also in answering the far broader
question of retroactivity as to all other parties.  But it is precisely in
determining general retroactivity that the Chevron Oil test is most needed;
the broader the potential reach of a new rule, the greater the potential
disruption of settled expectations.  The inquiry the Court summarized in
Chevron Oil represents longstanding doctrine on the application of
nonretroactivity to civil cases.  See American Trucking, supra, at --- -
--- (slip op. 18-30).  Justice Souter today ignores this well-established
precedent, and seriously curtails the Chevron Oil inquiry.  His reliance
upon stare decisis in reaching this conclusion becomes all the more ironic.


II
    Faithful to this Court's decisions, the Georgia Supreme Court in this
case applied the analysis described in Chevron Oil in deciding the
retroactivity question before it.  Subsequently, this Court has gone out of
its way to ignore that analysis.  A proper application of Chevron Oil
demonstrates, however, that Bacchus should not be applied retroactively.
    Chevron Oil describes a three-part inquiry in determining whether a
decision of this Court will have prospective effect only:

"First, the decision to be applied nonretroactively must establish a new
principle of law, either by overruling clear past precedent on which
litigants may have relied, or by deciding an issue of first impression
whose resolution was not clearly foreshadowed.  Second, . . . we must . . .
weigh the merits and demerits in each case by looking to the prior history
of the rule in question, its purpose and effect, and whether retrospective
operation will further or retard its operation.  Finally, we [must] weig[h]
the inequity imposed by retroactive application, for [w]here a decision of
this Court could produce substantial inequitable results if applied
retroactively, there is ample basis in our cases for avoiding the injustice
or hardship by a holding of nonretroactivity."  404 U. S., at 106-107
(citations and internal quotations omitted).


    Bacchus easily meets the first criterion.  That case considered a
Hawaii excise tax on alcohol sales that exempted certain locally produced
liquor.  The Court held that the tax, by discriminating in favor of local
products, violated the Commerce Clause, U. S. Const., Art. I, MDRV 8, cl.
3, by interfering with interstate commerce.  468 U. S., at 273.  The Court
rejected the State's argument that any violation of ordinary Commerce
Clause principles was, in the case of alcohol sales, overborne by the
State's plenary powers under MDRV 2 of the Twenty-first Amendment to the
United States Constitution.  That section provides:

"The transportation or importation into any State, Territory, or possession
of the United States for delivery or use therein of intoxicating liquors,
in violation of the laws thereof, is hereby prohibited."


    The Court noted that language in some of our earlier opinions indicated
that MDRV 2 did indeed give the States broad power to establish the terms
under which imported liquor might compete with domestic.  See 468 U. S., at
274, and n. 13.  Nonetheless, the Court concluded that other cases had by
then established "that the [Twenty-first] Amendment did not entirely remove
state regulation of alcoholic beverages from the ambit of the Commerce
Clause."  Id., at 275.  Relying on Hostetter v. Idlewild Bon Voyage Liquor
Corp., 377 U. S. 324 (1964), California Retail Liquor Dealers Assn. v.
Midcal Aluminum, Inc., 445 U. S. 97 (1980), and Capital Cities Cable, Inc.
v. Crisp, 467 U. S. 691 (1984), the Court concluded that MDRV 2 did not
protect the State from liability for economic protectionism.  468 U. S., at
275-276.
    The Court's conclusion in Bacchus was unprecedented.  Beginning with
State Board of Equalization of California v. Young's Market Co., 299 U. S.
59 (1936), an uninterrupted line of authority from this Court held that
States need not meet the strictures of the so-called "dormant" or
"negative" Commerce Clause when regulating sales and importation of liquor
within the State.  Young's Market is directly on point.  There, the Court
rejected precisely the argument it eventually accepted in Bacchus.  The
California statute at issue in Young's Market imposed a license fee for the
privilege of importing beer into the State.  The Court concluded that
"[p]rior to the Twenty-first Amendment it would obviously have been
unconstitutional to have imposed any fee for that privilege" because doing
so directly burdens interstate commerce.  299 U. S., at 62.  Section 2
changed all of that.  The Court answered appellees' assertion that MDRV 2
did not abrogate negative Commerce Clause restrictions.  The contrast
between this discussion and the Court's rule in Bacchus is stark:

    "[Appellees] request us to construe the Amendment as saying, in effect:
The State may prohibit the importation of intoxicating liquors provided it
prohibits the manufacture and sale within its borders; but if it permits
such manufacture and sale, it must let imported liquors compete with the
domestic on equal terms.  To say that, would involve not a construction of
the Amendment, but a rewriting of it.
    "The plaintiffs argue that, despite the Amendment, a State may not
regulate importations except for the purpose of protecting the public
health, safety or morals; and that the importer's license fee was not
imposed to that end.  Surely the State may adopt a lesser degree of
regulation than total prohibition.  Can it be doubted that a State might
establish a state monopoly of the manufacture and sale of beer, and either
prohibit all competing importations, or discourage importation by laying a
heavy impost, or channelize desired importations by confining them to a
single consignee?"  Id., at 62-63.


    Numerous cases following Young's Market are to the same effect,
recognizing the States' broad authority to regulate commerce in
intoxicating beverages unconstrained by negative Commerce Clause
restrictions.  See, e. g., Ziffrin, Inc. v. Reeves, 308 U. S. 132, 138
(1939); United States v. Frankfort Distilleries, Inc., 324 U. S. 293, 299
(1945); Seagram & Sons, Inc. v. Hostetter, 384 U. S. 35, 42 (1966);
Heublein, Inc. v. South Carolina Tax Comm'n, 409 U. S. 275, 283-284 (1972);
see generally Bacchus, supra, at 281-282 (Stevens, J., dissenting).
    The cases that the Bacchus Court cited in support of its new rule in
fact provided no notice whatsoever of the impending change.  Idlewild,
Midcal, and Capital Cities, supra, all involved States' authority to
regulate the sale and importation of alcohol when doing so conflicted
directly with legislation passed by Congress pursuant to its powers under
the Commerce Clause.  The Court in each case held that MDRV 2 did not give
States the authority to override congressional legislation.  These
essentially were Supremacy Clause cases; in that context, the Court
concluded that the Twenty-first Amendment had not "repealed" the Commerce
Clause.  See Idlewild, supra, at 331-332; Midcal, supra, at 108-109;
Capital Cities, supra, at 712-713.
    These cases are irrelevant to Bacchus because they involved the
relation between MDRV 2 and Congress' authority to legislate under the
(positive) Commerce Clause.  Bacchus and the Young's Market line concerned
States' authority to regulate liquor unconstrained by the negative Commerce
Clause in the absence of any congressional pronouncement.  This distinction
was clear from Idlewild, Midcal, and Capital Cities themselves.  Idlewild
and Capital Cities acknowledged explicitly that MDRV 2 trumps the negative
Commerce Clause.  See Idlewild, supra, at 330 (" `Since the Twentyfirst
Amendment, . . . the right of a state to prohibit or regulate the
importation of intoxicating liquor is not limited by the commerce clause .
. . .' "), quoting Indianapolis Brewing Co. v. Liquor Control Comm'n, 305
U. S. 391, 394 (1939); Capital Cities, supra, at 712 (" `This Court's
decisions . . . have confirmed that the [Twenty-first] Amendment primarily
created an exception to the normal operation of the Commerce Clause.' . . .
MDRV 2 reserves to the States power to impose burdens on interstate
commerce in intoxicating liquor that, absent the Amendment, would clearly
be invalid under the Commerce Clause"), quoting Craig v. Boren, 429 U. S.
190, 206 (1976).
    In short, Bacchus' rule that the Commerce Clause places restrictions on
state power under MDRV 2 in the absence of any congressional action came
out of the blue.  Bacchus overruled the Young's Market line in this regard
and created a new rule.  See Bacchus, 468 U. S., at 278-287 (Stevens, J.,
dissenting) (explaining just how new the rule of that case was).
    There is nothing in the nature of the Bacchus rule that dictates
retroactive application.  The negative Commerce Clause, which underlies
that rule, prohibits States from interfering with interstate commerce.  As
to its application in Bacchus, that purpose is fully served if States are,
from the date of that decision, prevented from enacting similar tax
schemes.  Petitioner James Beam argues that the purposes of the Commerce
Clause will not be served fully unless Bacchus is applied retroactively.
The company contends that retroactive application will further deter States
from enacting such schemes.  The argument fails.  Before our decision in
Bacchus, the State of Georgia was fully justified in believing that the tax
at issue in this case did not violate the Commerce Clause.  Indeed, before
Bacchus it did not violate the Commerce Clause.  The imposition of
liability in hindsight against a State that, acting reasonably would do the
same thing again, will prevent no unconstitutionality.  See American
Trucking, 496 U. S., at --- (slip op. 10-11) (opinion of O'Connor, J.).
    Precisely because Bacchus was so unprecedented, the equities weigh
heavily against retroactive application of the rule announced in that case.
"Where a State can easily foresee the invalidation of its tax statutes, its
reliance interests may merit little concern . . . .  By contrast, because
the State cannot be expected to foresee that a decision of this Court would
overturn established precedents, the inequity of unsettling actions taken
in reliance on those precedents is apparent."  American Trucking, supra, at
--- (slip op. 12) (opinion of O'Connor, J.).  In this case, Georgia
reasonably relied not only on the Young's Market line of cases from this
Court, but a Georgia Supreme Court decision upholding the predecessor to
the tax statute at issue.  See Scott v. Georgia, 187 Ga. 702, 705, 2 S. E.
2d 65, 66 (1939), relying on Young's Market and Indianapolis Brewing.
    Nor is there much to weigh in the balance.  Before Bacchus, the
legitimate expectation of James Beam and other liquor manufacturers was
that they had to pay the tax here at issue and that it was constitutional.
They made their business decisions accordingly.  There is little hardship
to these companies from not receiving a tax refund they had no reason to
anticipate.
    The equitable analysis of Chevron Oil places limitations on the
liability that may be imposed on unsuspecting parties after this Court
changes the law.  James Beam claims that if Bacchus is applied
retroactively, and the Georgia excise tax is declared to have been
collected unconstitutionally from 1982 to 1984, the State owes the company
a $2.4 million refund.  App. 8.  There are at least two identical refund
actions pending in the Georgia courts.  These plaintiffs seek refunds of
almost $28 million.  See Heublein, Inc. v. Georgia, Civ. Action No.
87-3542-6 (DeKalb Super. Ct., Apr. 24, 1987); Joseph E. Seagram & Sons,
Inc. v. Georgia, Civ. Action No. 87-7070-8 (DeKalb Super. Ct., Sept. 4,
1987).  Brief for Respondents 26, n. 8.  The State estimates its total
potential liability to all those taxed at $30 million.  Id., at 30.  To
impose on Georgia and the other States that reasonably relied on this
Court's established precedent such extraordinary retroactive liability, at
a time when most States are struggling to fund even the most basic
services, is the height of unfairness.
    We are not concerned here with a State that reaped an unconstitutional
windfall from its taxpayers.  Georgia collected in good faith what was at
the time a constitutional tax.  The Court now subjects the State to
potentially devastating liability without fair warning.  This burden will
fall not on some corrupt state government, but ultimately on the blameless
and unexpecting citizens of Georgia in the form of higher taxes and reduced
benefits.  Nothing in our jurisprudence compels that result; our
traditional analysis of retroactivity dictates against it.
    A fair application of the Chevron Oil analysis requires that Bacchus
not be applied retroactively.  It should not have been applied even to the
parties in that case.  That mistake was made.  The Court today compounds
the problem by imposing widespread liability on parties having no reason to
expect it.  This decision is made in the name of "equality" and "stare
decisis."  By refusing to take into account the settled expectations of
those who relied on this Court's established precedents, the Court's
decision perverts the meaning of both those terms.  I respectfully
dissent.

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