State of Michigan Court Opinion
STATE OF MICHIGAN
COURT OF APPEALS
FOR PUBLICATION
August 14, 1998
9:15 a.m.
YELLOW FREIGHT SYSTEM INC.,
Plaintiff-Appellee,
v No. 194703
Court of Claims
LC No. 95-015706 CM
STATE OF MICHIGAN, DEPARTMENT OF
TREASURY, STATE TREASURER,
DEPARTMENT OF COMMERCE, DIRECTOR
OF DEPARTMENT OF COMMERCE,
MICHIGAN PUBLIC SERVICE COMMISSION
AND MICHIGAN PUBLIC SERVICE
COMMISSIONERS,
Defendants-Appellants.
YELLOW FREIGHT SYSTEM INC.,
Plaintiff-Appellant,
v No. 195564
Court of Claims
LC No. 95-015706 CM
STATE OF MICHIGAN, DEPARTMENT OF
TREASURY, STATE TREASURER,
DEPARTMENT OF COMMERCE, DIRECTOR
OF DEPARTMENT OF COMMERCE,
MICHIGAN PUBLIC SERVICE COMMISSION
AND MICHIGAN PUBLIC SERVICE
COMMISSIONERS,
Defendants-Appellees.
Before: Griffin, P.J., and McDonald and O’Connell, JJ.
McDONALD, J.
Plaintiff, an interstate commercial carrier, brought this
action asserting that defendants (the state) had collected
registration fees pursuant to MCL 478.7(4); MSA 22.565(1)(4) in
excess of the amount allowed by federal law, specifically the
single-state registration system (SSRS). The Court of Claims,
ruling on cross motions for summary disposition, agreed with
plaintiff and granted its motion. The court entered judgment in
favor of plaintiff for $99,580 plus interest and ordered that the
state was barred from further collection of the registration fees
until 49 USC § 11506(c)(B)(iv) is rescinded. In Docket No.
194703, the state appeals this ruling as of right. In Docket No.
195564, plaintiff challenges the Court of Claims’ denial of
plaintiff’s request for attorneys fees. We affirm.
I
In 1991, Congress passed the Intermodal Surface
Transportation Efficiency Act (ISTEA), PL 102-240, 105 Stat 1914,
which substantially amended 49 USC 115061 and directed the
Interstate Commerce Commission (ICC) to reform the licensing and
registration system existing in the states. The statute mandated
the creation of a new system, the SSRS. The statute required the
ICC to prescribe amendments to the previously existing standards
and set forth certain requirements for the new standards.2
The provision at issue, 49 USC § 11506(c)(2)(B)(iv)(III),
stated that the amended standards shall establish a fee system
that “will result in a fee for each participating State that is
equal to the fee, not to exceed $10 per vehicle, that such State
collected or charged as of November 15, 1991.” The regulations
promulgated by the ICC repeated the phrase “collected or charged
as of November 15, 1991” without further explanation. See 49 CFR
1023.4(c)(4)(ii) (1995), later redesignated as 49 CFR
367.4(c)(4)(ii) (1996).
Because the statute essentially froze the fees a state could
collect at the level existing as of November 15, 1991, the fee
system in effect in this state at that time is pertinent to
understanding the issues raised in this case. For the 1991 and
1992 registration years, the state collected fees by requiring
interstate carriers to buy cab card stamps, also known as “bingo
stamps,” for each of the carrier’s vehicles operating within the
state. Each stamp cost $10. Pursuant to MCL 478.7(4); MSA
22.565(1)(4), the state had reciprocity agreements with certain
other states so that each would waive the fees for vehicles from
the other. The dispute arises in part because the state changed
the method it used for determining reciprocity. For 1991, the
state used the “base-plating system,” which means that
reciprocity was determined by the state of the vehicle’s
registration. In early 1991, the PSC decided that it would quit
using the base-plating system. Instead, for the 1992
registration year, fees and reciprocity were determined by the
carrier’s principal place of business. The revised renewal
applications were mailed to all interstate motor carriers in
September 1991. Importantly, the 1992 fees to be "collected or
charged" by the state were based on a calendar year and therefore
were not due and owing until January 1, 1992.
The change in the method for determining reciprocity
resulted in a substantial increase in the fees plaintiff owed the
state for the 1992 registration year. Under the base-plating
system used for 1991, plaintiff paid the state $50 for five
vehicles that were “base-plated” in Oklahoma, but paid nothing
for 3,730 vehicles “base-plated” in Illinois and Indiana, because
those states did not charge fees for vehicles based in Michigan.
However, plaintiff’s principal place of business is Kansas, which
had no fee waiver agreement with Michigan. Therefore, for 1992,
plaintiff paid $10 per vehicle, a total of $37,850 under the new
system. Plaintiff sent and the state received the fees for 1992
before November 15, 1991. Plaintiff voluntarily paid its 1992
fees early in order to prevent any disruption of its trucking
activities at the commencement of January 1, 1992, calendar year.
II
The state argues the Court of Claims erred in determining
that the state could not charge plaintiff $10 per vehicle.
According to the state, it had “charged or collected” $10 per
vehicle as of November 15, 1991. Plaintiff argued and the Court
of Claims agreed the statute was properly interpreted to refer to
the fees charged or collected for the 1991 registration year. We
affirm the Court of Claims’ decision on this issue.
The Court of Claims’ opinion indicates its decision was
based on the ICC’s decision in American Trucking Associations-
Petition for Declaratory Order-Single State Insurance
Registration, 9 ICC2d 1184 (1993). In American Trucking, the ICC
discussed various issues that had arisen under the SSRS. The
plaintiff sought clarification from the ICC concerning the
statutory language. The ICC summarized the issue raised by the
plaintiff in the following way:
Yellow [Freight] raises the issue of whether the
statutory language concerning the fee charged on
November 15, 1991, relates to fees charged for the 1991
registration year or the 1992 registration year.
(Under the “bingo” regulations, carriers filed
applications between October 1 and December 31 for
stamps or identification numbers for the ensuing year.)
Yellow points out that it paid a State zero fees
covering 1991 operations and $10 per vehicle fees
covering 1992 operations. However, Yellow paid the
1992 fees prior to November 15, 1991. It would have
the Commission conclude that the focus of the statute
is on the 1991 registration year and that the fee for
1992 is not germane.
The ICC resolved the matter as follows:
Yellow has raised the issue of whether the
statutory language concerning the “fee charged or
collected as of November 15, 1991[,]” relates to fees
charged for the 1991 registration year or for the 1992
registration year. We think it clear that the
statutory language concerns only fees charged or
collected for the 1991 registration year, and we so
find.
The state argues the court should not have followed American
Trucking because it does not comport with the unambiguous
language of the statute and renders the November 15, 1991
deadline a “nullity.” Therefore, the state argues the decision
was not entitled to the deference usually afforded an agency’s
interpretation of a statute that the agency is charged with
enforcing.
This Court has recognized that deference should be given to
the interpretation of a federal statute by the agency
administering it and that following an agency’s interpretation
promotes
uniformity in application by the states. Gibbs v General Motors
Co, 134 Mich App 429, 432; 351 NW2d 315 (1984). Where a statute
is silent or ambiguous regarding congressional intent, a
reviewing court “should defer to a federal agency’s construction
of the statute unless the agency’s interpretation is
unreasonable.” Walker v Johnson & Johnson Vision Products, Inc,
217 Mich App 705, 713; 552 NW2d 679 (1996), citing Chevron USA,
Inc v Natural Resources Defense Council, Inc, 467 US 837, 844;
104 S Ct 2778; 81 L Ed 2d 694 (1984).
Congress’ intent concerning the allowable fee levels is not
clear with respect to the pertinent period for fixing the fee
levels. The phrase “as of November 15, 1991” denotes a period of
time that ends on the specified date. However, the statute is
silent regarding when the period begins. One could argue a state
that had charged or collected fees from a carrier in any year
before 1991 was entitled to continue to collect the fees under
the SSRS. On the other hand, one could conclude, as the ICC did,
that the relevant period was the registration year that included
November 15, 1991. We do not believe Congress “had an intention
on the precise question at issue. . . .” Chevron, supra at 843,
n 9. Because the statute does not reveal congressional intent,
we should defer to the ICC’s interpretation unless it is
unreasonable. Walker, supra.
We conclude that the agency’s interpretation of the statute
was reasonable. In our opinion, the agency acted reasonably in
determining the fees should be fixed at the level in effect for
the 1991 registration year, regardless whether a new basis for
determining reciprocity had been announced for 1992 or whether
certain carriers had paid fees for 1992 before November 15, 1991.
Plaintiff's voluntary payment of fees not due and owing does not
affect our analysis.
The state also contends the Court of Claims’ ruling applying
the American Trucking decision by the ICC “effectively repeals
existing reciprocity agreements and/or alters them to reinstate a
previous basis for determining fee waivers thereunder[,]” and
thereby “contravenes the Tenth Amendment.”3 This argument has no
merit. We disagree with the premise of the state’s argument,
i.e. that the Court of Claims’ decision repeals or alters any
reciprocity agreements. Any impact on a state’s ability to alter
its reciprocity agreements is the result of Congress’ decision to
freeze fees at the level as of November 15, 1991. Congress has
the authority to take this action under the Commerce Clause, US
Const art I, § 8.
The state argues the language in the ICC American Trucking
decision was not binding on the state because the notice of
institution of declaratory action resulting in that decision did
not indicate facts specific to Michigan. We disagree. The Court
of Claims did not conclude that the ICC decision in American
Trucking was binding on the state. However, the court could not
properly disregard the agency’s interpretation of a statute
merely because the state did not participate in the proceeding.
The state has not provided nor are we aware of any authority
holding that an alleged deficiency in the notice of institution
of declaratory action affects judicial review of an agency’s
interpretation of a statute.
The state also suggests that states should not be required
to consider reciprocity agreements in determining the amount of
fees “charged or collected as of November 15, 1991.” In Single-
State Insurance Registration, 9 ICC2d 610 (1993), the ICC
determined that states must
consider the reciprocity agreements. The ICC’s decision in this
regard was upheld in Nat’l Ass’n of Regulatory Utility Comm’rs v
ICC, 309 US App DC 325; 41 F3d 721 (1994). Although that
decision is not binding on this Court, we find it persuasive and
adopt its ruling on this issue.
III
We also reject the state’s argument that governmental
immunity, MCL 691.1407; MSA 3.9996(107), bars plaintiff’s action.
The wrong alleged by plaintiff does not fall within the
definition of a tort. This action to recover fees paid in excess
of the amount allowed by federal law is analogous to an action to
recover illegal taxes. “The remedy to recover illegal taxes paid
is in assumpsit for money had and received.” Service Coal Co v
Unemployment Compensation Commission, 333 Mich 526, 531; 53 NW2d
362 (1952), quoting Salisbury v City of Detroit, 258 Mich 235;
241 NW 888 (1932). An action in assumpsit for money had and
received is not an action in tort. Therefore, governmental
immunity from tort liability under MCL 691.1407; MSA 3.9996(107)
does not apply.
VI
The state also contends plaintiff was required to request a
declaratory ruling from the PSC as a prerequisite to court
review. We disagree. The state relies on both §§ 63 and 64 of
the Administrative Procedures Act, MCL 24.263; MSA 522.3 and MCL
24.264; MSA 522.4. However, neither section would support
reversing the judgment entered in favor of plaintiff.
Plaintiff’s action is not accurately characterized as simply
an action for a declaratory judgment available under § 64.
Rather, as previously discussed, the action was essentially an
action in assumpsit for money had and received. Furthermore,
only the validity or applicability of rules that had been
formally promulgated as rules may be challenged in actions for
declaratory judgments under § 64. See Jones v Dep’t of
Corrections, 185 Mich App 134, 137; 460 NW2d 575 (1990). The
state has not suggested that the collection of fees was pursuant
to a rule that had been formally promulgated under the APA.
Because plaintiff’s action was not a challenge to the validity or
applicability of a formally promulgated rule, § 64 of the APA
does not require plaintiff to get a declaratory ruling as a
prerequisite to judicial review.
To the extent that the state claims that plaintiff was
required to get a declaratory ruling under § 63, we also find
that section inapplicable. Section 63 indicates that the agency
“may issue a declaratory ruling as to the applicability to an
actual state of facts of a statute administered by the agency or
of a rule or order of the agency.” Assuming plaintiff could have
requested a declaratory ruling, § 63 does not require plaintiff
to do so before seeking judicial review.
V
We next address the relief that the court awarded to
plaintiff, specifically, a refund of $99,580, which is the amount
collected for 1994, 1995 and 1996. Arguing that a refund is
contrary to the United States Supreme Court decision in McKesson
Corp v Division of Alcoholic Beverages and Tobacco, 496 US 18;
110 S Ct 2238; 110 L Ed 2d 17 (1990), the state requests the
remedy be limited to prospective relief as of “any final
appellate decision” on the issue.
Contrary to the state’s argument, we believe that McKesson
indicates that a refund is an appropriate remedy in this case.
In McKesson, the United States Supreme Court considered whether
prospective relief was an adequate remedy for wholesale liquor
distributors who sought a refund of excess taxes they had paid
pursuant to Florida’s excise tax scheme. The scheme was found
unconstitutional because it discriminated against interstate
commerce. In determining the appropriate remedy, the Court
concluded that due process required more than prospective relief:
The question before us is whether prospective
relief, by itself, exhausts the requirements of federal
law. The answer is no. If a State places a taxpayer
under duress promptly to pay a tax when due and
relegates him to a postpayment refund action in which
he can challenge the tax’s legality, the Due Process
Clause of the Fourteenth Amendment obligates the State
to provide meaningful backward-looking relief to
rectify any unconstitutional deprivation. [Id. at 31.]
The state cites McKesson for its discussion of the “pass-on”
defense to an action for a tax refund. See McKesson, supra at 47-
48. The state suggests a refund is not necessary if the expense
of the unlawfully collected fees was passed on to plaintiff’s
customers. However, the McKesson Court ultimately rejected the
defense in that case, id. at 48-49. The state has not cited any
authority indicating that the pass-on defense has been adopted in
this jurisdiction, and we decline to adopt it in this case.
The state also cites LCI Int’l Telecommunication Corp v
Dep’t of Commerce, 227 Mich App 196; 574 NW2d 710 (1997), as
support for its argument that plaintiff should only receive
prospective relief. In LCI, this Court determined that the
defendants had consistently misinterpreted a statute for over
twenty years, resulting in improper assessments against
telecommunications carriers. The Court held that its holding
should only be applied prospectively, in part because the ruling
was not “clearly foreshadowed.” In the present case, the result
was clearly foreshadowed by the ICC’s decisions in American
Trucking and Single-State Registration, which were issued in
1993, less than a year after the ICC adopted the SSRS.
The state also contends that, if this Court does not limit
Yellow Freight to prospective relief, it should order a remand to
the PSC to allow the state to change the fee schedule to
retroactively surcharge carriers who benefited from the state’s
misapplication of the SSRS. The state relies on language in
McKesson suggesting that, as one of the alternatives to providing
a refund to the aggrieved distributors in that case, Florida
could assess and collect back taxes from the petitioners’
competitors. Id. at 40. However, the adequacy of any remedy
necessarily depends on the basis for relief. In McKesson, the
petitioners were entitled to relief because a statute imposing an
excise tax discriminated in favor of distributors of local
products. The remedies the Court approved were ways Florida
could undo the discriminatory effects of the statute and make the
tax scheme valid under the Commerce Clause. In the present case,
plaintiff is entitled to relief because the state collected fees
contrary to a statute. Because the purpose of the relief in this
instance is not to undo discriminatory effects, surcharging
carriers who were allegedly undercharged is unrelated to
providing plaintiff with an adequate remedy in this case. The
only way to provide plaintiff with “meaningful backward-looking
relief,” McKesson, supra at 31, to undo the misapplication of the
statute is to order a refund of the amounts wrongfully collected.4
We express no opinion whether the state may surcharge other
carriers because that issue is not appropriately before us in the
context of this case.
VI
In docket No. 195564, plaintiff advances several issues
relating to the court’s denial of plaintiff’s motion for attorney
fees pursuant to 42 USC 1988. Although the court did not
explicitly rule on the merits of plaintiff’s § 1983 claim, we
conclude that the denial of attorney fees was appropriate because
the § 1983 claim was not viable against either the state agencies
or the state officials.
Case law indicates plaintiff could not prevail in a § 1983
action against the state agencies. Section 1983 applies to
“person[s],” and the United States Supreme Court has held that a
state agency is not a “person” for the purposes of § 1983.
Hardges v Dep’t of Social Services, 201 Mich App 24, 27; 506 NW2d
532 (1993), citing Howlett v Rose, 496 US 356; 110 S Ct 2430; 110
L Ed 2d 332 (1990) and Will v Michigan Dep’t of State Police, 491
US 58, 66; 109 S Ct 2304; 105 L Ed 2d 45 (1989).
Plaintiff was not entitled to relief on the basis of its §
1983 claim brought against the state officials acting in their
official capacity. Section 1983 claims seeking prospective
injunctive relief may be brought against state officials acting
in an official capacity. Will, supra at 71, n 10; Hardges,
supra. However, the United States Supreme Court has held that a
state court cannot grant injunctive or declaratory relief under §
1983 in state tax cases when an adequate legal remedy exists.
National Private Truck Council, Inc v Oklahoma Tax Commission,
515 US 582; 115 S Ct 2351; 132 L Ed 2d 509 (1995).
We are not persuaded by plaintiff’s attempt to distinguish
Nat’l Private Truck on the basis that the fees in this case were
collected under federal law pursuant to a system implemented by
the ICC. Plaintiff contends the principles of comity and federal
deference to state authorities underlying the decision in Nat’l
Private Truck are not relevant in this case. However, federal
law does not require that states charge the fees, but rather sets
forth the method and limits on states that choose to collect the
fees. Plaintiff’s contention, “No issues of state tax law or
state tax administration are here involved,” is disingenuous, and
does not provide a meritorious basis for distinguishing Nat’l
Private Truck.
We also disagree with plaintiff’s suggestion that the
Supreme Court intended its decision in Nat’l Private Truck to be
limited to taxes and not fees. On the basis of the principles of
comity and federalism, the Supreme Court concluded that Congress
did not intend § 1983 claims to be brought in state tax cases
when an adequate state remedy is available. Those principles
apply equally well when the revenue collection is in the form of
a fee.
VII
The Court of Claims properly granted plaintiff’s motion for
summary disposition. The state was precluded from collecting
fees from plaintiff in excess of the amount charged or collected
for the 1991 registration year. Plaintiff is entitled to a
refund of the amount improperly collected. We also affirm the
Court of Claims’ denial of plaintiff’s motion for attorney fees
pursuant to § 1988 because plaintiff had no viable § 1983 claim
against any of the defendants.
Affirmed.
/s/ Gary R. McDonald
/s/ Richard Allen Griffin
1 49 USC 11506 was amended and recodified and now appears at 49
USC 14504. To avoid confusion, we will refer only to 49 USC
11506.
2 The registration system in effect before and after the ISTEA is
explained in detail in Nat’l Ass’n of Regulatory Utility Comm’rs
v ICC, 309 US App DC 325; 41 F3d 721 (1994).
3 US Const, Am X states, “The powers not delegated to the United
States by the Constitution, nor prohibited by it to the States,
are reserved to the States respectively, or to the people.”
4 The holding in McKesson is limited to situations in which a
state places a taxpayer under duress to pay tax promptly when due
and limits the taxpayer to challenging the tax after payment.
The state does not suggest that plaintiff was given the
opportunity to challenge the fees before payment and do not
suggest that a distinction should be drawn in this context
between the payment of fees and taxes.