Court: Court of Appeals for the Federal Circuit; December 13, 2000; Federal Appellate Court
Amoco Oil Company appeals a decision from the United States Court of International Trade, which granted the government's motion to dismiss Amoco's challenge to the constitutionality of the Harbor Maintenance Tax (HMT) import provision under 26 U.S.C. § 4461(c)(1)(A). The HMT, established in the Water Resources Development Act of 1986, is a tax on commercial cargo for port use intended to fund port maintenance and improvements. Amoco, having paid over $1 million in taxes as an importer, contested the HMT's constitutionality based on the Supreme Court's ruling in United States v. U.S. Shoe Corp., which found the HMT's export provision unconstitutional under the Export Clause.
The Court of International Trade ruled that the unconstitutional export provision is severable from the remaining provisions of the HMT, affirming that the HMT does not violate the Uniformity Clause or the Port Preference Clause of the Constitution. Consequently, the appellate court upheld the lower court's decision, affirming the dismissal of Amoco's claim.
The court determined that the existence of a general severability provision in the WRDA (33 U.S.C. § 2304) supported the conclusion that the statute's constitutionality should be preserved. It found no violations of the Uniformity Clause or the Port Preference Clause regarding the Harbor Maintenance Tax (HMT), as Amoco failed to prove any discriminatory treatment toward specific states. Amoco appealed, challenging the dismissal of its complaint for failure to state a claim. The appellate court reviews such dismissals de novo, presuming factual allegations in the complaint as true and drawing inferences in favor of the plaintiff. Amoco argued that severability is a factual issue warranting discovery, and contended that the severability clause in Title IX of the WRDA does not apply to the HMT, asserting that an import-only tax would breach GATT. The government countered that severability is a legal question, asserting that the severability clause applies to the HMT and that the export and import provisions are distinct. The court agreed with the government, reinforcing that severability is a matter of statutory interpretation, thus rejecting Amoco's claims regarding the need for further discovery.
The court reaffirms its prior rulings that the unconstitutional export provision in the Harbor Maintenance Tax (HMT) is severable from the rest of the statute, referencing two cases: Princess Cruises and Carnival Cruise Lines. It specifically rejects Amoco's argument that the severability clause in the Water Resources Development Act (WRDA) does not apply to the HMT and also dismisses claims regarding Congress's intent concerning the severability of the export and import provisions. Amoco's new arguments regarding the HMT's validity under the Uniformity Clause and the Port Preference Clause are deemed waived because they were not raised in the opening brief, which is a requirement for appellate review. The court emphasizes that a reply brief is not the proper venue for introducing new issues. Additionally, the involvement of amicus Fentax International Corporation does not allow Amoco to bypass this procedural rule, as the appellant is responsible for raising all relevant issues in its opening brief.
The appellant's opening brief was insufficient due to the failure of counsel to cite or distinguish relevant case law, specifically the Carnival and Princess decisions, despite their prior involvement in those cases. The Carnival opinion was issued only forty days prior to the submission of the appellant's brief. Counsel's omission of controlling adverse authority may constitute a breach of professional conduct obligations, specifically under Model Rules of Professional Conduct Rule 3.3(a)(3), which mandates disclosure of known adverse legal authority. The appeal should have been reconsidered following the Carnival decision, and counsel should have either sought a stay or acknowledged the ruling in the brief, rather than introducing new issues in a reply brief. Consequently, the Court of International Trade's dismissal of the appeal for failure to state a claim was upheld, affirming the lower court's decision.
