Saban v. Ador , 418 P.3d 1066 ( 2018 )

IN THE
ARIZONA COURT OF APPEALS
DIVISION ONE
SABAN RENT-A CAR LLC, et al.,
Plaintiffs/Appellees/Cross-Appellants,
v.
ARIZONA DEPARTMENT OF REVENUE,
Defendant/Appellant/Appellee/Cross-Appellee,
_________________________________
TOURISM AND SPORTS AUTHORITY,
Defendant-in-Intervention/Appellant/Cross-Appellee.
No. 1 CA-TX 16-0007
FILED 3-13-2018
Appeal from the Arizona Tax Court
No. TX2010-001089
The Honorable Dean M. Fink, Judge
The Honorable Christopher T. Whitten, Judge
AFFIRMED IN PART; REVERSED IN PART; REMANDED
COUNSEL
Mandel Young, PLC, Phoenix
By Taylor C. Young, Robert A. Mandel
Co-Counsel for Plaintiffs/Appellees/Cross-Appellants Saban et al.
Kickham, Hanley, PLLC, Royal Oak, MI
By Gregory D. Hanley, pro hac vice
Co-Counsel for Plaintiffs/Appellees/Cross-Appellants Saban et al.
Aiken, Schenk, Hawkins & Ricciardi, PC, Phoenix
By Shawn K. Aiken
Co-Counsel for Plaintiffs/Appellees/Cross-Appellants Saban et al.
Arizona Attorney General's Office, Phoenix
By Kimberly J. Cygan, Jerry A. Fries
Co-Counsel for Defendant/Appellant/Appellee/Cross-Appellee ADOR
Osborn Maledon, PA, Phoenix
By Thomas L. Hudson, Eric M. Fraser
Co-Counsel for Defendant/Appellant/Appellee/Cross-Appellee ADOR
Fennemore Craig, PC, Phoenix
By Timothy J. Berg, Theresa Dwyer, Emily Ayn Ward
Co-Counsel for Defendant-in-Intervention/Appellant/Cross-Appellee AzSTA
Dickinson Wright, PLLC, Phoenix
By Scot L. Claus, Vail C. Cloar
Co-Counsel for Defendant-in-Intervention/Appellant/Cross-Appellee AzSTA
Lewis, Roca, Rothgerber, Christie, LLP, Phoenix
By Robert G. Schaffer
Counsel for amici curiae Halikowski and ADOT
Gammage & Burnham, PLC, Phoenix
By Michael R. King, Cameron C. Artigue, Christopher L. Hering
Counsel for amici curiae Convention and Visitors Bureaus
Pima County Attorney's Office, Tucson
By Regina L. Nassen
Counsel for amicus curiae Pima County
Gallagher & Kennedy, PA, Phoenix
By Michael K. Kennedy, Mark C. Dangerfield
Counsel for amicus curiae Arizona Chamber of Commerce
Perkins Coie, LLP, Phoenix
By Paul F. Eckstein, Thomas D. Ryerson
Counsel for amicus curiae City of Phoenix
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SABAN, et al. v. ADOR, et al.
Opinion of the Court
OPINION
Judge Diane M. Johnsen delivered the opinion of the Court, in which
Presiding Judge Lawrence F. Winthrop and Judge Maria Elena Cruz joined.
J O H N S E N, Judge:
¶1 A class of car-rental companies sued to invalidate a surcharge
enacted to build sports facilities to be owned by the Arizona Tourism and
Sports Authority ("AzSTA"). The car-rental companies argued the
surcharge is invalid both under Article IX, Section 14 of the Arizona
Constitution and under the Dormant Commerce Clause implied by the
United States Constitution. The tax court ruled the surcharge was invalid
under the Arizona Constitution (but not under the Dormant Commerce
Clause) and ordered a refund.
¶2 For reasons explained below, we reverse the tax court's order
granting summary judgment to the car-rental companies under the Arizona
Constitution and direct entry of judgment in favor of the Arizona
Department of Revenue ("ADOR") and AzSTA on that claim. We affirm the
judgment in favor of ADOR and AzSTA under the Dormant Commerce
Clause. Because we conclude the surcharge is not invalid under either
constitutional provision, we reverse the tax court's refund order.
FACTS AND PROCEDURAL BACKGROUND
¶3 AzSTA is a "corporate and political body" the legislature
created in 2000. Ariz. Rev. Stat. ("A.R.S.") § 5-802 (2018).1 By statute,
AzSTA's "boundaries" are those "of any county that has a population of
more than two million persons," meaning (then and now) Maricopa
County. A.R.S. § 5-802(A). The legislature directed AzSTA to build and
operate a "[m]ultipurpose facility" — a stadium/events center — that could
accommodate a professional football team, a college bowl game, and "other
sporting events and entertainment, cultural, civic, meeting, trade show or
convention events[.]" A.R.S. §§ 5-801(4) (2018) (defining "multipurpose
facility"), -804(A) (2018), -807 (2018), -815 (2018) (powers of AzSTA). The
legislature also granted AzSTA the power to contract to host the Super Bowl
1 Absent material revision after the relevant date, we cite the current
version of a statute or rule.
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Opinion of the Court
and college football national championship and playoff games and to build
Major League Baseball spring-training facilities and youth and amateur
sports and recreational facilities. A.R.S. §§ 5-808 (2018), -809 (2018).
¶4 Although AzSTA may charge for use of its facilities, it cannot
levy taxes or assessments to build those facilities. A.R.S. § 5-802(C).
Instead, the legislature authorized Maricopa County voters to approve
taxes to fund AzSTA's construction projects. See id. Among the taxes the
legislature authorized voters to impose is the one challenged here: A
surcharge on the gross proceeds of car-rental businesses. See A.R.S. § 5-
839(B) (2018). Maricopa County voters approved the car-rental surcharge
authorized by § 5-839 in November 2000, just months after the legislature
established AzSTA.2 As authorized, the surcharge is the greater of 3.25
percent "of the gross proceeds or gross income from the business" or $2.50
per car rental, payable by the car-rental business, not the customer. A.R.S.
§ 5-839(B)(1). If a customer rents a vehicle as a "temporary replacement" for
another vehicle, the surcharge charged the car-rental company is a flat
$2.50. See A.R.S. § 5-839(B)(2).3
¶5 In August 2009, Saban Rent-A-Car, Inc. sought a refund of
amounts it had paid under § 5-839, claiming the surcharge violated Article
IX, Section 14 of the Arizona Constitution and the Dormant Commerce
Clause implied by the U.S. Constitution. After ADOR denied the refund
and that decision was upheld on administrative review, Saban challenged
the ruling in the tax court, seeking injunctive relief and a refund on behalf
of a class of all similarly situated car-rental companies. The court granted
AzSTA leave to intervene as a defendant, then certified a class of all
2 This court already has denied two challenges to the tax. In Long v.
Napolitano, 203 Ariz. 247, 251-53, ¶¶ 2-9 (App. 2002), we ruled that § 5-839
did not violate provisions of the Arizona Constitution unrelated to the
provision at issue in this case. See id. at 253, ¶¶ 10-11. In Karbal v. ADOR,
215 Ariz. 114, 117, ¶ 11 (App. 2007), a car-rental customer raised some of
the same arguments made here against the surcharge, but we ruled that the
customer lacked standing because the surcharge is imposed on the car-
rental companies, not the customers.
3 The first $2.50 collected for each car-rental transaction goes to the
Maricopa County stadium district; the remaining revenues go to AzSTA.
See A.R.S. §§ 5-801(1), -839(G)(1), (2). The legislature also authorized
Maricopa County to tax hotels at up to 1 percent of room sales to support
AzSTA. A.R.S. § 5-840 (2018).
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SABAN, et al. v. ADOR, et al.
Opinion of the Court
businesses that paid the surcharge from September 2005 through March
2008.
¶6 After discovery, the tax court ruled on cross-motions for
summary judgment that although the surcharge did not violate the
Dormant Commerce Clause, it was invalid under Article IX, Section 14 of
the Arizona Constitution. The court ruled that ADOR would have to
refund the tax to class members but could recoup the amount of the refund,
over time, from AzSTA pursuant to A.R.S. § 42-5029(G) (2018). The court
granted ADOR's motion for entry of judgment pursuant to Arizona Rule of
Civil Procedure 54(b), leaving the amount of the refund to be determined.
¶7 We have jurisdiction of the parties' various appeals and cross-
appeal from the Rule 54(b) judgment pursuant to Article VI, Section 9 of the
Arizona Constitution and A.R.S. § 12-2101(A)(6) (2018). See Empress Beauty
Supply, Inc. v. Price, 116 Ariz. 34, 35 (App. 1977) (Rule 54(b) appropriate
when "the only question remaining to be resolved is the amount of
recovery") (quotations omitted).4
DISCUSSION
A. Standard of Review.
¶8 We review de novo the grant of a motion for summary
judgment. See Tierra Ranchos Homeowners Ass'n v. Kitchukov, 216 Ariz. 195,
199, ¶ 15 (App. 2007). Summary judgment is appropriate when "there is no
genuine dispute as to any material fact and the moving party is entitled to
judgment as a matter of law." Ariz. R. Civ. P. 56(a). Although a party
ordinarily may not appeal an order denying summary judgment, see, e.g.,
Fleitz v. Van Westrienen, 114 Ariz. 246, 248 (App. 1977), the court of appeals
may review the denial of a motion for summary judgment if the superior
court denied the motion on a point of law, Strojnik v. Gen. Ins. Co. of America,
201 Ariz. 430, 433, ¶ 11 (App. 2001).
B. Article IX, Section 14 of the Arizona Constitution.
¶9 In relevant part, Article IX, Section 14 of the Arizona
Constitution states:
4 Empress Beauty Supply interpreted A.R.S. § 12-2101(G), which since
was renumbered to A.R.S. § 12-2101(A)(6) without substantial change. See
Empress Beauty Supply, 116 Ariz. at 35; H.B. 2645, 50th Leg., 1st Reg. Sess.,
Ariz. Laws 2011, Ch. 304, § 1.
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SABAN, et al. v. ADOR, et al.
Opinion of the Court
No moneys derived from fees, excises, or license taxes relating
to registration, operation, or use of vehicles on the public
highways or streets or to fuels or any other energy source
used for the propulsion of vehicles on the public highways or
streets, shall be expended for other than highway and street
purposes . . . .
Under this provision, revenues collected from certain "fees, excises, or license
taxes" may be spent only for "highway and street purposes." ADOR and
AzSTA concede the surcharge authorized by A.R.S. § 5-839 is an excise tax.
See also Karbal v. ADOR, 215 Ariz. 114, 116, ¶¶ 9-10 (App. 2007). Therefore,
if the surcharge is a tax "relating to registration, operation, or use of vehicles
on the public highways or streets," it violates Section 14 because its
proceeds are spent on sports and recreation facilities, not highways and
streets.
¶10 Relying on dictionary definitions, Saban argues the phrase
"relating to" in Section 14 broadly sweeps up any tax "having connection
with or reference to the operation or use of vehicles on the public
highways." To be sure, the phrase "relating to" is inherently indeterminate.
See New York State Conference of Blue Cross & Blue Shield Plans v. Travelers Ins.
Co., 514 U.S. 645, 655 (1995) ("If 'relate to' were taken to extend to the furthest
stretch of its indeterminacy, then for all practical purposes [its scope] would
never run its course, for 'really, universally, relations stop nowhere.'"
(quoting H. James, Roderick Hudson xli (New York ed., World's Classics
1980)) (alteration in original omitted)). For that reason, as Saban conceded
at oral argument, without some limiting principle, Section 14 would
encompass not only the car-rental surcharge at issue here but also a broad
range of taxes that Arizona does not now funnel to highways— including
retail sales or business privilege taxes on car sales, tire sales, car leases and
car repairs.
¶11 Nevertheless, Saban cites Landon v. Indus. Comm’n of Ariz., 240
Ariz. 21 (App. 2016), for the proposition that we should look no farther than
the dictionary in interpreting the words "relating to" in Section 14. The issue
in Landon was whether the discharge of an injured employee fell within a
provision of the Workers' Compensation Act concerning workers
"terminat[ed] from employment for reasons that are unrelated to the
industrial injury." Id. at 24, 25-26, ¶¶ 5-7, 15. We consulted dictionaries for
the plain meaning of "related," namely "connected" to or "associated" with.
Id. at 26, ¶ 16 (citing Black's Law Dictionary (10th ed. 2014) and Webster's II
New College Dictionary (3d ed. 2005)). But we also considered the purpose
of the legislation and applied common principles of statutory construction,
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Opinion of the Court
including the rule that "when statutory provisions relate to the same subject
matter, they should be construed together and reconciled whenever
possible, in such a way so as to give effect to all the statutes involved." 240
Ariz. at 25, 26, ¶¶ 12, 17 (quotation omitted).
¶12 We must use these and other like principles to discern
whether Section 14 encompasses the car-rental surcharge. See Travelers Ins.,
514 U.S. at 656 ("We simply must go beyond the unhelpful text and the
frustrating difficulty of defining its key term, and look instead to the
objectives [of the statute]."); RSP Architects, Ltd. v. Five Star Dev. Resort
Communities, LLC, 232 Ariz. 436, 438, ¶ 8 (App. 2013) (phrase "relating to"
in Prompt Payment Act, A.R.S. § 32-1129(A)(1) (2018), does not encompass
every relationship or connection with the referenced term: "Common sense
. . . tells us there must be some bounds to the breadth of the statute."). We
look to the "context, subject matter, effects and consequences, reason and
spirit of the law" and try to construe it "in the context of related provisions
and in light of its place in the statutory scheme." RSP, 232 Ariz. at 438, ¶ 9;
see Landon, 240 Ariz. at 26, ¶ 17. And, in interpreting a voter-approved
measure, we seek to give effect to "'the intent of the electorate that adopted
it.'" State v. Maestas, 242 Ariz. 194, 197, ¶ 11 (App. 2017) (quoting Cave Creek
Unified Sch. Dist. v. Ducey, 233 Ariz. 1, 6-7, ¶ 21 (2013)).
¶13 Applying those principles here, the broad interpretation
Saban urges would render multiple phrases in the provision superfluous —
a result that we must seek to avoid. See RSP, 232 Ariz. at 439, ¶ 13. Section
14 expressly applies not only to excise taxes "relating to registration,
operation, or use of vehicles on the public highways or streets" but also to
such levies on "fuels or any other energy source used for the propulsion of
vehicles on the public highways or streets." Saban's broad construction of
"relating to" would render the fuels provision irrelevant because fuel used
to propel a vehicle is related to use or operation of a vehicle. The same is
true with respect to Section 14's express reference to "registration." A
vehicle's registration is related to its use on public streets; one may not
legally drive a vehicle that is not registered. Because a broad interpretation
of "relating to" deprives these other terms of any effect, the text of Section
14 itself reveals that we should not construe "relating to" in its broadest
possible sense.
¶14 Turning to the purpose of the provision, Section 14 was
enacted in response to federal legislation that conditioned grants of federal
highway funds on a state's assurance that revenue "from State motor
vehicle registration fees, licenses, gasoline taxes, and other special taxes on
motor-vehicle owners and operators of all kinds" would be used exclusively
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Opinion of the Court
for highway purposes. H.R. 8781, 73rd Cong., Ch. 586, § 12, 48 Stat. 993,
995 (1934) (enacted). In an official publicity pamphlet mailed before the
1952 election, at which Section 14 was approved, voters were informed that
21 states had adopted similar "anti-diversion" laws to ensure and preserve
eligibility for federal highway funds. See State of Ariz. Initiative &
Referendum Publicity Pamphlet, Proposed Amendment to the Constitution at 4
(1952).5
¶15 Significantly, the pamphlet assured voters that passage of
Section 14 would "entail no change in the source or expenditure of highway
revenues." But at the time, Arizona already was collecting a statewide
excise tax on car-rental business revenues. That tax was enacted in 1935 —
17 years before voters enacted Section 14. See S.B. 118, 12th Leg., 1st Reg.
Sess., Ariz. Laws 1935, Ch. 77, art. 2, § 2(f)(2) (encoded as Ariz. Code Ann.
§ 73-1303(f)(2) (1939)) (subsequently encoded as A.R.S. § 42-1314 (1959),
H.B. 41, 24th Leg., 1st Reg. Sess., Ariz. Laws 1959, Ch. 11, § 1) (repealed by
S.B. 1038, 27th Leg., 1st Reg. Sess., Ariz. Laws 1985, Ch. 298, § 11); A.R.S. §§
42-5008 (2018), -5071 (2018); see also Alvord v. State Tax Comm'n, 69 Ariz. 287,
289 (1950) (recounting history of Arizona's business privilege tax on car-
rental services). From the inception of that statewide car-rental business
tax, and at the time Section 14 was adopted, proceeds from the tax were not
reserved for highway uses but went instead to the state's general fund.
Ariz. Code Ann. § 73-1303 (1939) (providing for tax for "the purpose of
raising public money to be used in liquidating the outstanding obligations
of the state and county governments" and "to aid in defraying the necessary
and ordinary expenses of the state and counties"); see also Ariz. Code Ann.
§ 73-1303 (Supp. 1952) (same). The pamphlet sent to voters in 1952 did not
mention the then-existing car-rental business tax, even while telling voters
of other existing taxes that would fall within Section 14's scope: "[S]tate
gasoline and diesel taxes, registration fees, unladen weight fees on common
5 Citing Phelps v. Firebird Raceway, Inc., 210 Ariz. 403 (2005), Saban
argues we may not use the voter pamphlet in interpreting Section 14. But
the majority in Phelps held the constitutional provision at issue there was so
plain it required no interpretation. Id. at 405, ¶ 10. We may rely on voter
pamphlets to determine the electorate's intent when necessary to resolve
ambiguity. See, e.g., Calik v. Kongable, 195 Ariz. 496, 500-01, ¶¶ 17-19 (1999);
Laos v. Arnold, 141 Ariz. 46, 47-48 (1984). Such a pamphlet assists us in
ascertaining an "interpretation . . . consistent with the purpose" of the
measure "as communicated to the people of Arizona." Cave Creek Unified
Sch. Dist., 231 Ariz. at 351, ¶ 25.
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SABAN, et al. v. ADOR, et al.
Opinion of the Court
and contract motor carriers, and motor carrier taxes based on gross
receipts."
¶16 Further, echoing the federal statute's focus on "motor-vehicle
owners and operators," the pamphlet told voters that the purpose of the
constitutional measure was "to INSURE THE EXPENDITURE OF ALL
REVENUES DERIVED FROM ROAD USERS TO ROAD USES ONLY."
Consistent with that focus on tax collections from road users, Arizona puts
into its Highway Fund the proceeds of fees or taxes that must be paid in
order to legally drive on public roads — motor carrier taxes, vehicle
registration and in lieu fees and driver's license fees.6
¶17 By contrast, as respects the surcharge at issue here, the
relationship between the business of renting vehicles and the "operation, or use
of vehicles on the public highways or streets" (emphasis added) is attenuated
in at least two ways. First, the surcharge is not imposed on the road user
(the driver-customer), but instead is imposed on the car-rental business,
regardless of its own usage of vehicles on public highways or streets (and
regardless of whether it chooses to pass along the surcharge to its
customers). Second, the taxable event that triggers the surcharge is the
rental of a vehicle, not its operation or use. While most every car-rental
transaction will result in the customer using the car on public highways or
streets, the surcharge is imposed regardless of whether, how much or how
often the customer drives the car.
¶18 Ohio appellate courts have issued three decisions addressing
a nearly identical constitutional provision. See generally State v. Curry, 97
Ariz. 191, 194-95 (1965) (consulting decisions interpreting similar statutory
6 According to information provided by amicus Arizona Department
of Transportation, the revenue sources of the Arizona Highway Fund for
each year since 2000 have been "Motor Vehicle Fuel Tax Revenues," "Motor
Vehicle Registration Fee Revenues," "Motor Carrier Tax Revenues," "Motor
Vehicle Operators' License Fees and Misc. Fees and Revenues," and "Motor
Vehicle License (In Lieu) Tax Revenues." See Sources of Revenues Deposited
in the Arizona Highway User Revenue Fund and Arizona Highway Fund, Fiscal
Year 2000 Through Fiscal Year 2016 (July 13, 2016),
https://www.azdot.gov/docs/default-source/businesslibraries/hurf-
annual-disclosure-file-2016.pdf?sfvrsn=10.
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language in other states).7 In the first case, Ohio Trucking Ass'n v. Charles,
983 N.E.2d 1262 (Ohio 2012), the state supreme court considered whether
its anti-diversion constitutional provision applied to fees assessed on
certified abstracts of motor vehicle records. The court rejected a strict plain-
language approach to "relating to":
At an extreme level, at the furthest stretch of its
indeterminacy, there is no doubt that fees for certified
abstracts are related to the registration of vehicles on public
highways. We are not convinced that this extreme view of
"relating to" is logical; we know that it is not compelled by the
language of [the constitutional provision] or the objectives of
the amendment.
Id. at 1267, ¶ 15 (quotation omitted). The court concluded that certified
abstract fees were not sufficiently related to "registration, operation, or use"
of vehicles because the abstract fees were "not necessary to the general
motoring public" and "not triggered by the registration, operation, or use of
a vehicle on the public highways." Id. at 1267, ¶ 16 (emphasis added).
¶19 In another case decided a day later, the same court held that
a business tax on gross receipts from the sale of motor-vehicle fuel fell
within the scope of the constitutional provision. Beaver Excavating Co. v.
Testa, 983 N.E.2d 1317, 1319-20, ¶ 1 (Ohio 2012). The tax at issue there, like
the AzSTA surcharge, was a privilege tax paid by businesses, not a tax paid
directly by motorists. After considering the words "relating to" "according
to [their] plain and ordinary meaning given in the context of political
discussions and arguments, in order to carry out the intention and
objectives of the people," id. at 1325, ¶ 30 (quotation omitted), the court
concluded that the "text and history" of the provision showed it was
intended to apply "broadly" to business privilege taxes "derived from the
sales of motor-vehicle fuel" — not solely to transactional taxes imposed
directly on fuel sales, id. at 1325-27, ¶¶ 30, 33-36.
¶20 Although Beaver Excavating supports Saban's position that the
anti-diversion measure may encompass a business privilege tax, the case
7 The Ohio Constitution provides that "[n]o moneys derived from fees,
excises, or license taxes relating to registration, operation, or use of vehicles
on public highways, or to fuels used for propelling such vehicles, shall be
expended for other than" highway and related purposes. Ohio Const. art.
XII, § 5a.
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Opinion of the Court
says little about the meaning of "relating to the registration, operation, or
use of motor vehicles." The tax at issue there was imposed on fuel, which
Ohio and Arizona's anti-diversion provisions both explicitly mention in a
separate clause without any words of limitation. Further, whether framed
as a business tax or a sales tax, a tax on motor-vehicle fuel directly relates
to the operation or use of a motor vehicle.
¶21 The third Ohio case, Fowler v. Ohio Dep't of Pub. Safety, ___
N.E.3d ___, No. 16AP-867, 2017 WL 3263761 at *6, ¶ 21 (Ohio Ct. App. Aug.
1, 2017), considered a "financial responsibility reinstatement fee" imposed
on motorists ticketed for driving without insurance. The court concluded
the fee was not "related to" vehicle registration, operation or use because it
was not required of all motorists as a prerequisite to driving, see id. at *5-*6,
¶¶ 18-19, and because it was not "trigger[ed]" by registration, operation or
use of a vehicle but rather by a lack of insurance, id. at *6, ¶ 19. The court
acknowledged an undeniable relationship between the fee and motor
vehicle registration, but found that relationship was "too attenuated" to fall
within the scope of the Ohio provision. See id.
¶22 Under the reasoning of these cases, an anti-diversion
provision applying to fees or taxes "relating to . . . operation[] or use" of
vehicles on public highways and streets only encompasses fees and taxes
generally imposed on all who operate or use vehicles on public highways
and streets, meaning fees or taxes that are a prerequisite to legally operating
or using a vehicle on a public thoroughfare or that are triggered by
operation or use of a vehicle on a public thoroughfare.8
¶23 These general principles are reflected in the categories of taxes
the publicity pamphlet told Arizona voters would be subject to Section 14,
and those that voters reasonably understood would not. All of the non-fuel
revenue sources the pamphlet stated would be encompassed by the
constitutional provision — "registration fees, unladen weight fees on
8 Other out-of-state cases the parties cite are less helpful because the
anti-diversion provisions in those cases do not use the phrase "relate to" or
"relating to." See Thrifty Rent-A-Car Sys., Inc. v. City & County of Denver, 833
P.2d 852, 856 (Colo. App. 1992) (provision applied to "proceeds from the
imposition of any license, registration fee, or other charge with respect to
the operation of any motor vehicle upon any public highway in this state")
(alteration omitted); Wittenberg v. Mutton, 280 P.2d 359, 362 (Or. 1955)
(provision applied to "proceeds from any tax or excise levied on the
ownership, operation or use of motor vehicles").
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Opinion of the Court
common and contract motor carriers, and motor carrier taxes based on
gross receipts" — are prerequisites to the legal operation or use of a vehicle
on a public highway or are triggered by such operation or use of a vehicle.
See ¶ 16 supra. The surcharge authorized by A.R.S. § 5-839 lacks any such
nexus to operation or use of a vehicle. Setting aside the fact that the
surcharge is imposed on car-rental businesses, not on car-rental customers,
it goes without saying that one need not rent a vehicle to legally operate or
use that vehicle on an Arizona street; moreover, the surcharge is not
triggered by operation or use of a vehicle, but rather by a rental transaction.
Consistent with that conclusion, as stated, we infer that when voters
enacted Section 14 in 1952 knowing that Arizona already imposed a
statewide car-rental tax, they understood that Section 14 would not
constrain the state's use of the proceeds of that existing revenue source.9
¶24 Our analysis also is informed by the principle that "statutes
must be given a sensible construction which will avoid absurd results."
Sherman v. City of Tempe, 202 Ariz. 339, 343, ¶ 18 (2002) (citing Sch. Dist. No.
3 of Maricopa County v. Dailey, 106 Ariz. 124, 127 (1970)). Acknowledging
that Section 14's reach is not limitless, Saban asserts we should construe the
provision so that it "reach[es] no further than A.R.S. § 5-839." That
contention disregards the duty of a court that is interpreting a legal
provision to strive to discern and apply sound principles of general
applicability in accordance with the intent of those who enacted the
provision. Saban offers no principled rule of textual interpretation that
would invalidate the surcharge here without invalidating many other
vehicle-related taxes that Arizona never has earmarked for highway
purposes — including taxes on motor vehicle sales and leases, auto repairs,
sales of automobile-related equipment and parts, and everything else that
might be said to be "related to" use of motor vehicles. Voters approved
Section 14 more than 60 years ago. We cannot ignore that so far as we know,
9 Saban argues § 5-839(C) echoes the language of Section 14 in that it
authorizes a surcharge on the business of renting "motor vehicles . . . that
are designed to operate on the streets and highways of this state." Surely
the lawmakers who enacted the statute did not intend the surcharge to fall
within Section 14 – its purpose is to fund AzSTA facilities, not to benefit the
Highway Fund. That being said, and accepting that the car-rental
surcharge applies only to the renting of vehicles to be used on public
thoroughfares, as stated above, the surcharge is imposed not on the user of
those public thoroughfares but on the business that rents a vehicle to the
user. Nor is it a tax that one must pay to legally operate a vehicle on a public
thoroughfare or that is triggered by operation of a vehicle on a public
thoroughfare.
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at no time since then have they, the legislature or the executive branch
seriously suggested that the provision might be or should be interpreted to
sweep so broadly.
¶25 In sum, contrary to Saban's contention, Section 14's text,
context and history teach that the voters did not intend it to encompass
every tax or fee in any way "relating to" vehicles. Instead, we conclude
Section 14 applies to a tax or fee that is a prerequisite to, or triggered by, the
legal operation or use of a vehicle on a public thoroughfare. By that
reasoning, we hold it does not apply to the surcharge enacted pursuant to
A.R.S. § 5-839.
C. The Dormant Commerce Clause.
1. General principles.
¶26 Saban cross-appeals the superior court's rejection of its
challenge to the surcharge under the Dormant Commerce Clause implied
by the United States Constitution. The Commerce Clause grants Congress
the power to "regulate Commerce . . . among the several States." Art. I, § 8,
cl. 3. "[T]he Commerce Clause . . . reflected a central concern of the Framers
that[,] . . . in order to succeed, the new Union would have to avoid the
tendencies toward economic Balkanization that had plagued relations
among the Colonies and later among the States under the Articles of
Confederation." Hughes v. Oklahoma, 441 U.S. 322, 325 (1979). Accordingly,
"[a]lthough the Clause is framed as a positive grant of power to Congress,
[the U.S. Supreme Court has] 'consistently held this language to contain a
further, negative command, known as the dormant Commerce Clause,
prohibiting certain state taxation even when Congress has failed to legislate
on the subject.'" Comptroller of Treasury of Maryland v. Wynne, ___ U.S. ___,
___, 135 S. Ct. 1787, 1794 (2015) (quoting Oklahoma Tax Comm'n v. Jefferson
Lines, Inc., 514 U.S. 175, 179 (1995)). The concern of the Dormant Commerce
Clause is with "economic protectionism[,] that is, regulatory measures
designed to benefit in-state economic interests by burdening out-of-state
competitors." Dep't of Revenue of Ky. v. Davis, 553 U.S. 328, 337-38 (2008)
(quotation omitted). Here, Saban argues the surcharge violates the clause
because it targets non-Arizona residents who rent vehicles when they visit
the state.
¶27 A threshold question under the Dormant Commerce Clause
is whether the activity alleged to be unconstitutionally burdened is part of
interstate commerce. Interstate commerce includes the provision of goods
or services aimed primarily at out-of-state visitors. See Heart of Atlanta
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SABAN, et al. v. ADOR, et al.
Opinion of the Court
Motel, Inc. v. United States, 379 U.S. 241, 256 (1964) ("transportation of
passengers in interstate commerce"); Exec. Town & Country Servs., Inc. v. City
of Atlanta, 789 F.2d 1523, 1525-26 (11th Cir. 1986) (limousine business
primarily used by airport patrons); Op. of Justices to the House of
Representatives, 702 N.E.2d 8, 12 (Mass. 1998) (car-rental business). Saban
submitted evidence on summary judgment that a significant majority of the
customers of class members Avis, Hertz and Budget — 87%, 72.3% and
80%, respectively — are out-of-state residents. It does not matter, for
purposes of the Dormant Commerce Clause, that the surcharge is not
imposed directly on travelers from out of state, but rather is paid by
businesses whose revenues derive from transactions with those travelers.
See Camps Newfound/Owatonna, Inc. v. Town of Harrison, Me., 520 U.S. 564,
580 (1997) ("no analytic difference" when "the discriminatory burden is
imposed on the out-of-state customer indirectly by means of a tax on the
entity transacting business with the non-[resident] customer"); Heart of
Atlanta, 379 U.S. at 258 ("[I]f it is interstate commerce that feels the pinch, it
does not matter how local the operation which applies the squeeze.")
(citation omitted). Accordingly, the car-rental business in Arizona is part
of interstate commerce.
¶28 That being said, the Dormant Commerce Clause is not
violated whenever a state taxes a service primarily used by non-residents.
"It was not the purpose of the commerce clause to relieve those engaged in
interstate commerce from their just share of state tax burden even though it
increases the cost of doing . . . business." Western Live Stock v. Bureau of
Revenue, 303 U.S. 250, 254 (1938). Thus, "interstate commerce may be made
to pay its way." Complete Auto Transit, Inc. v. Brady, 430 U.S. 274, 281 (1977).
A tax is not invalid if it "is applied to an activity with a substantial nexus
with the taxing State, is fairly apportioned, does not discriminate against
interstate commerce, and is fairly related to the services provided by the
State." Id. at 279.
¶29 As framed on appeal, the only question under Complete Auto
is whether A.R.S. § 5-839 impermissibly discriminates against interstate
commerce. See Complete Auto, 430 U.S. at 279. In this context,
"'discrimination' simply means differential treatment of in-state and out-of-
state economic interests that benefits the former and burdens the latter."
Oregon Waste Sys., Inc. v. Dep't of Envtl. Quality of State of Or., 511 U.S. 93, 99
(1994). In that inquiry, "a fundamental element . . . [is] the principle that
'any notion of discrimination assumes a comparison of substantially similar
entities.'" Davis, 553 U.S. at 342-43 (quoting United Haulers Ass'n, Inc. v.
Oneida-Herkimer Solid Waste Mgmt. Auth., 550 U.S. 330, 342 (2007) (quoting
Gen. Motors Corp. v. Tracy, 519 U.S. 278, 298 (1997))). Thus, a law is
14
SABAN, et al. v. ADOR, et al.
Opinion of the Court
discriminatory if it "impose[s] disparate treatment on similarly situated in-
state and out-of-state interests." Tracy, 519 U.S. at 298, n.12. Discriminatory
laws are almost always per se invalid; they may survive a constitutional
challenge only if they serve a legitimate local interest other than economic
protectionism and there is no reasonable nondiscriminatory alternative. See
Dean Milk Co. v. City of Madison, Wis., 340 U.S. 349, 354 (1951).10
2. Facial discrimination.
¶30 Saban first argues the surcharge violates the Dormant
Commerce Clause because it discriminates on its face against interstate
commerce. "State laws discriminating against interstate commerce on their
face are virtually per se invalid." Camps Newfound, 520 U.S. at 575 (quoting
Fulton Corp. v. Faulkner, 516 U.S. 325, 331 (1996)) (internal quotation
omitted). But there is no discrimination evident on the face of the surcharge
or its statutory authority, A.R.S. § 5-802: The tax is imposed on all car-rental
business revenues generated in Maricopa County, whether or not they are
derived from transactions with customers who live in Arizona.
¶31 Saban argues, however, that the surcharge falls within what
it calls a category of "facial discrimination-by-proxy" decisions by the
Supreme Court that, according to Saban, "involve[] regulations that, while
not drawn explicitly along state lines, contained language that either
plainly was intended to serve as a neutral proxy for that demarcation or
that impelled the Supreme Court to scrutinize the design or predictable
effect of the tax scheme." But the two cases Saban cites both involve explicit
facial discrimination. In the first, Bacchus Imports, Ltd. v. Dias, 468 U.S. 263
(1984), the Court struck down a Hawaii tax on liquor sales. The text of the
statute plainly discriminated along state lines: It specifically exempted
"[o]kolehao manufactured in the State" and "fruit wine manufactured in the
State from products grown in the State." Matter of Bacchus Imports, Ltd., 656
P.2d 724, 726, n.1 (Haw. 1982), rev'd sub nom. Bacchus Imports, Ltd. v. Dias,
468 U.S. 263 (1984) (quoting Haw. Rev. Stat. § 244-4 (6), (7)) (emphasis
added); see also Bacchus Imports, 468 U.S. at 265. In the second case, Camps
Newfound, the Court struck down a Maine tax exemption that excluded
10 Per se discrimination is the only issue here. ADOR and AzSTA do
not contend the surcharge can survive if it is per se discriminatory; Saban
does not contend the surcharge is invalid under any lesser standard. See
Oregon Waste Sys., 511 U.S. at 99 ("nondiscriminatory regulations that have
only incidental effects on interstate commerce are valid unless 'the burden
imposed on such commerce is clearly excessive in relation to the putative
local benefits'") (quoting Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970)).
15
SABAN, et al. v. ADOR, et al.
Opinion of the Court
charitable institutions "conducted or operated principally for the benefit of
persons who are not residents of Maine." 520 U.S. at 568 (emphasis added).
Neither case supports Saban's argument for "facial discrimination-by-
proxy."
3. Discriminatory effect.
¶32 Even when no discrimination is evident on the face of a state
provision, it may violate the Dormant Commerce Clause if its effects
discriminate against non-residents. "The commerce clause forbids
discrimination, whether forthright or ingenious. In each case it is our duty
to determine whether the statute under attack, whatever its name may be,
will in its practical operation work discrimination against interstate
commerce." W. Lynn Creamery, Inc. v. Healy, 512 U.S. 186, 201-02 (1994)
(quoting Best & Co. v. Maxwell, 311 U.S. 454, 455-56 (1940)). Saban argues
the surcharge is discriminatory because it falls disproportionately on out-
of-state residents, who make up the majority of car-rental customers in
Arizona.
¶33 Because three-quarters or more of the customers of the
plaintiff class are non-Arizona residents, it is undeniable that, to the extent
class members pass along the surcharge to their customers, non-residents
bear the main burden of the surcharge. The Supreme Court, however, has
expressly rejected the notion "that a state tax must be considered
discriminatory for purposes of the Commerce Clause if the tax burden is
borne primarily by out-of-state consumers." Commonwealth Edison Co. v.
Mont., 453 U.S. 609, 618-19 (1981). The issue is whether non-residents bear
a greater burden than similarly situated residents. See CTS Corp. v. Dynamics
Corp. of Am., 481 U.S. 69, 88 (1987); see also, e.g., Commonwealth Edison, 453
U.S. at 617-18 (Montana coal tax imposed on all customers at same rate was
permissible even though 90% of revenues were collected from non-resident
customers); Halliburton Oil Well Cementing Co. v. Reily, 373 U.S. 64, 70 (1963)
("[E]qual treatment for in-state and out-of-state taxpayers similarly situated
is the condition precedent for a valid use tax on goods imported from out-
of-state."). Under this analysis, the surcharge does not discriminate in its
effect on non-residents: It is imposed at the same rates on all car-rental
revenues, whether those revenues are generated from transactions with
residents or transactions with non-residents.11
11 Saban contends the lower rate the surcharge imposes on revenues
from temporary-replacement rentals (i.e., cars rented on a short-term basis
16
SABAN, et al. v. ADOR, et al.
Opinion of the Court
¶34 Saban argues the surcharge here is not unlike the tax struck
down for its discriminatory effect in W. Lynn Creamery, 512 U.S. 186. But
the tax at issue there -- a facially neutral tax imposed even-handedly on
both in-state and out-of-state milk producers -- burdened out-of-state
interests in a predictably disproportionate way because it was coupled with
a subsidy that effectively refunded the tax to in-state milk producers, but
not to out-of-state milk producers. Id. at 199, n.16. Here, no subsidy or
other like measure reimburses an Arizona resident (or Arizona car-rental
company) for the surcharge when a resident rents a car — a distinction that
renders W. Lynn Creamery inapposite.
¶35 By Saban's reasoning, all taxes on goods and services used
primarily by out-of-state residents would be suspect. But courts routinely
uphold "tourism" taxes; as long as such taxes do not distinguish between
in-state and out-of-state residents, it is irrelevant whether the overall
burden of the tax falls mostly on visitors to the state. See, e.g., Youngblood v.
State, 388 S.E.2d 671, 672, 673 (Ga. 1990) (hotel tax used to help finance
domed stadium; law "imposes an equal tax on residents of the state as well
as nonresidents"); Geja's Cafe v. Metro. Pier & Exposition Auth., 606 N.E.2d
1212, 1214, 1219-20 (Ill. 1992) (restaurant tax); Second St. Properties, Inc. v.
Fiscal Court of Jefferson County, 445 S.W.2d 709, 711, 716 (Ky. 1969) (hotel tax
to fund tourist and convention commissions); Hunter v. Warren County Bd.
of Supervisors, 800 N.Y.S.2d 231, 233, 235 (App. Div. 2005) (tax on hotel room
revenues); Travelocity.com LP v. Wyo. Dep't of Revenue, 329 P.3d 131, 151, ¶¶
91-94 (Wyo. 2014) (same). By the same token, the lower rate charged on
revenues from temporary-replacement rentals, which does not distinguish
between residents and non-residents, is similar to residency-neutral
exceptions in other tourism taxes that have been upheld. See, e.g., Paustian
v. Pa. Convention Ctr. Auth., 3 Pa. D. & C.4th 16, 17, 20, 28-31 (Com. Pl. 1988),
aff'd sub nom. Paustian v. Pa. Convention Ctr. Auth., 561 A.2d 1337 (1989)
(hotel tax exempted those renting a room for 30 days or more; "the
classification is rational and those within the class are treated equally").
¶36 In the end, although the car-rental surcharge falls mostly on
revenues generated by transactions with non-Arizonans, that is true only
because non-Arizonans rent most of the cars. Saban has provided no
evidence that the surcharge has an impermissible discriminatory effect.
to replace damaged or stolen cars) discriminates against non-residents, who
are less likely to rent replacement vehicles and more likely to rent vehicles
for vacations or other visits to Arizona.
17
SABAN, et al. v. ADOR, et al.
Opinion of the Court
4. Discriminatory purpose.
¶37 Saban also argues the surcharge is invalid because it
purposefully discriminates against interstate commerce. Citing Bacchus
Imports, Saban contends that a discriminatory purpose, by itself, may
invalidate a law. See 468 U.S. at 270 ("Examination of the State's purpose in
this case is sufficient to demonstrate the State's lack of entitlement to a more
flexible approach permitting inquiry into the balance between local benefits
and the burden on interstate commerce."). As further support, Saban cites
Amerada Hess Corp. v. Director, Div. of Taxation, N.J. Dep't of Treasury, 490
U.S. 66, 75-76 (1989), in which the Court said of Bacchus Imports that
"because the exemption [in that case] was motivated by an intent to confer
a benefit upon local industry not granted to out-of-state industry, the
exemption was invalid."
¶38 Notwithstanding the dictum in Amerada Hess, however, the tax
invalidated in Bacchus Imports expressly discriminated on its face in favor
of liquor produced in the state. See ¶ 31 supra. And Saban cites no case in
which the Supreme Court has invalidated any measure on Dormant
Commerce Clause grounds solely based on discriminatory intent.
Nevertheless, some circuit courts of appeals have concluded that
discriminatory purpose alone may be a sufficient ground on which to
invalidate a measure under the Dormant Commerce Clause. See, e.g., S.D.
Farm Bureau, Inc. v. Hazeltine, 340 F.3d 583, 594, 597 (8th Cir. 2003) (striking
down voter-approved measure when "pro-con" statement sent to voters
before the election was "brimming with protectionist rhetoric"); Waste
Mgmt. Holdings, Inc. v. Gilmore, 252 F.3d 316, 337, 338, 340 (4th Cir. 2001)
(bill's sponsor stated it addressed "large volume of out of state waste"
coming into Virginia, and governor declared the state "has no intention of
becoming the nation's dumping grounds"); SDDS, Inc. v. S.D., 47 F.3d 263,
268, 272 (8th Cir. 1995) (ballot materials stated that "South Dakota is not the
nation's dumping grounds"); Alliance for Clean Coal v. Miller, 44 F.3d 591, 595
(7th Cir. 1995) (statute's stated purpose was "the need to maintain and
preserve as a valuable State resource the mining of coal in Illinois").
¶39 If discriminatory purpose may be enough by itself to
invalidate a state tax under the Dormant Commerce Clause, the question is
the nature and amount of the evidence required to prove such purpose,
issues as to which the Supreme Court has not laid out clear guidance. See
18
SABAN, et al. v. ADOR, et al.
Opinion of the Court
Hazeltine, 340 F.3d at 596.12 In examining the evidentiary basis for the
"purpose" of a measure challenged on equal-protection grounds, however,
the Court has noted that: (1) it will assume that a law's stated purpose is its
actual purpose; (2) the proper inquiry is into the law's "principal purposes";
and (3) it "will not invalidate a state statute . . . merely because some
legislators sought to obtain votes for the measure on the basis of its
beneficial side effects on state industry." Minnesota v. Clover Leaf Creamery
Co., 449 U.S. 456 463, n.7, 471, n.15 (1981) (law whose actual purpose is
permissible is not invalid merely because some legislators defended it with
protectionist rhetoric).
¶40 At issue in Clover Leaf Creamery was a state law that banned
the sale of milk in certain plastic containers. Id. at 458. Although
proponents argued the measure was aimed at promoting conservation, the
challengers contended the real purpose of the law was to promote local
"dairy and pulpwood industries," id. at 460, a contention supported by a
statement by the law's chief legislative proponent chiding a colleague for
letting "the guys in the alligator shoes from New York and Chicago come
here and tell you how to run your business," Brief for Respondents,
Minnesota v. Clover Leaf Creamery Co., 449 U.S. 456 (1981), 1980 WL 339367
at *30 (cited in Clover Leaf Creamery, 449 U.S. at 463, n.7). Another legislator
supporting the bill said:
I don't think there is anything the matter with supporting the
timber industry which is our third largest employer in the
state. I think in fact that is one of our responsibilities to keep
a healthy economy in the state rather than importing
petrochemicals and importing plastic bottles from Chicago or
wherever they are manufactured certainly the natural
resources aren't from here.
Id. at 30-31.
12 "[T]he Supreme Court 'never has articulated clear criteria for
deciding when proof of a discriminatory purpose and/or effect is sufficient
for a state or local law to be discriminatory. Indeed, the cases in this area
seem quite inconsistent.'" Puppies 'N Love v. Phoenix, 116 F. Supp. 3d 971,
987 (D. Ariz. 2015) (quoting E. Chemerinsky, Constitutional Law, Principles
and Policies 444-45 (4th ed. 2011)), superseded by statute, A.R.S. §§ 44-1799.10
to -1799.11 (2018), as recognized and vacated by Puppies 'N Love v. Phoenix, No.
CV-14-00073-PHX-DGC, 2017 WL 4679258, at *6 (D. Ariz. Oct. 18, 2017).
19
SABAN, et al. v. ADOR, et al.
Opinion of the Court
¶41 The Supreme Court acknowledged these statements, but
nonetheless refused to invalidate the law based on an improper
protectionist purpose. The Court remarked that the lawmakers'
protectionist statements were "easily understood, in context, as economic
defense of an Act genuinely proposed for environmental reasons," Clover
Leaf Creamery, 449 U.S. at 463, n.7, and concluded that "the principal
purposes of the [law] were to promote conservation and ease solid waste
disposal problems." Id.
¶42 As noted, the Arizona legislature enacted A.R.S. § 5-839 in
2000. According to the evidence offered on summary judgment and in the
public record, the measure was proposed by a gubernatorial task force
based on a report titled, "Arizona Tourism Retention and Promotion."
According to the report, although the task force's original mission was to
study how to pay for a new stadium to house the Arizona Cardinals and to
maintain the Fiesta Bowl's "status as a 'Top-Tier' bowl," after considering
"additional threats to the State's tourism tax base," the task force broadened
its mission "to include the protection and promotion of Arizona's tourism
industry and Cactus League[,] and directed that any capital finance plan to
build a stadium also include resources to promote tourism retention." The
report asserted that a new stadium would generate $800 million annually
and that Arizona would not be allowed to host another Super Bowl without
a new stadium. The report also stated that $200 million in annual revenues
generated by the Cactus League were at risk because other warm-weather
cities were offering new spring-training facilities to lure Major League
Baseball teams away from Arizona. Pursuant to the Governor's reported
directive "that the funding package minimize the impact on the average
Arizona resident," the task force estimated that under the legislation it
proposed, 85-90% of the car-rental and hotel assessments would be paid by
visitors to Arizona.
¶43 At the sole legislative committee hearing on the bill that
authorized AzSTA and its funding sources, members of the Governor's task
force spoke on behalf of the measure, as did representatives of the Arizona
Cardinals, the Fiesta Bowl and the Cactus League. The committee also
heard words of support from the Arizona Office of Tourism, the Valley
Hotel & Resort Association and from a representative of Enterprise Leasing,
a car-rental company that has opted out of the present class action.
¶44 At the urging of a lawmaker who cited a desire to minimize
the bill's "impact to residents," a House committee amended the proposed
legislation to explicitly exempt vehicle rentals to Arizonans. See S.B. 1220,
44th Leg., 2d Reg. Sess., Committee on Program Authorization Review, Minutes
20
SABAN, et al. v. ADOR, et al.
Opinion of the Court
of Meeting (March 9, 2000) page E-11 (considering S.B. 1220). Other
committee members opposed the exemption out of concern for its
constitutionality; one warned that "certain nonresidents cannot be
targeted." Id. at E-12. Ultimately, the resident exemption was stricken from
the bill before it became law.
¶45 Notwithstanding Saban's arguments to the contrary, the
statements recited above are even less probative of a discriminatory
purpose than the comments at issue in Clover Leaf Creamery. The statements
in that case were made in support of the challenged law; the comments by
the Arizona lawmakers concerned an amendment — an exemption for
Arizona residents — that the legislature ultimately rejected. We cannot
conclude a statute that is neither discriminatory on its face nor in its effect
is rendered unconstitutional simply because lawmakers considered and
dismissed a protectionist amendment at some point in the legislative
process. Nor is it proper to impute protectionist intent to legislators who
correctly inform their peers of the constitutional limits to their power. See
also generally Julian Cyril Zebot, Awakening A Sleeping Dog: An Examination
of the Confusion in Ascertaining Purposeful Discrimination Against Interstate
Commerce, 86 Minn. L. Rev. 1063, 1086 (2002) (invalidating statute based on
purported discriminatory purpose when other legitimate purposes may
exist "is a direct affront to state sovereignty, for it fails to respect legitimate
state policymaking.").
¶46 Saban also cites as evidence of discriminatory intent a single
sentence in the pamphlet sent to Maricopa County voters before the election
on the surcharge. In the middle of the second page of the 22-page pamphlet,
voters were told that "the surcharge on car rentals targets visitors to the
State (and includes an exemption for 'replacement vehicles' for vehicles
undergoing repair or similarly unavailable on a temporary basis)." We
often look to election materials to discern the purpose of a voter-approved
law. See ¶ 14 supra. But the language Saban cites is only one sentence in a
lengthy document that broadly describes the purposes of the surcharge --
to promote tourism; to build a "multipurpose facility" for professional
football, college bowl games and other events, including college basketball
tournament games and trade shows and concerts; to build and renovate
Cactus League facilities; and to develop youth and amateur sports and
recreational facilities. Guided by the Supreme Court's demonstrated
reluctance to strike down a law based on isolated statements evidencing
protectionist motives, we are not persuaded that the statement Saban cites
proves discriminatory intent sufficient to invalidate the surcharge.
21
SABAN, et al. v. ADOR, et al.
Opinion of the Court
¶47 In addition, Saban points to the Governor's task force report
and comments by task force and AzSTA members to the effect that the
surcharge was created so that visitors to Arizona would pay most of the
cost of the new AzSTA-owned facilities. Assuming for purposes of
argument that these non-legislative statements may bear on the issue, they
merely highlight that the facilities to be built with the surcharge were
intended to spur tourism and its resulting positive effects on the Arizona
economy. As noted, proponents of AzSTA and the surcharge argued that
the new facilities would attract visitors to the state, who would spend large
amounts not only on rental cars but on hotels, food and beverage and other
recreational activities. Saban cites no authority for the notion that the
Dormant Commerce Clause is offended by a tax on tourism activities when
the proceeds of the tax are used to build facilities to attract tourists.13
Because the car-rental surcharge funds construction of facilities that benefit
non-residents who visit Arizona to attend events at those facilities, we are
not persuaded that the comments Saban cites are anything other than
legitimate discussion about whether services those non-residents purchase
should be taxed to fund those facilities.
¶48 In sum, A.R.S. § 5-839 and the resulting car-rental surcharge
are not discriminatory on their face; nor do they cause any discriminatory
effects on interstate commerce. Finally, assuming arguendo that a state tax
that is non-discriminatory on its face and in its effect may be invalid solely
based on a discriminatory purpose, Saban has not demonstrated that the
challenged surcharge has a discriminatory purpose that violates the
Dormant Commerce Clause.
CONCLUSION
¶49 We conclude that the car-rental surcharge authorized under
A.R.S. § 5-839 is not invalid under Article IX, Section 14 of the Arizona
13 Nor does Saban argue that the surcharge is unconstitutional because
it is not fairly related to the promotion of tourism. See Complete Auto, 430
U.S. at 279. Saban repeatedly asserts that the surcharge was designed to
pay for a new stadium for the Arizona Cardinals, suggesting that the
proceeds of the surcharge have been spent primarily for the benefit of local
sports fans. It offered no evidence, however, to support the proposition
that (even apart from the multiplier effect of tourism dollars on the state's
economy) the facilities built by the surcharge benefit local sports fans more
than the out-of-state fans of professional and college football and Major
League Baseball, concert-goers, trade-show visitors and others who use
those facilities when they visit Arizona.
22
SABAN, et al. v. ADOR, et al.
Opinion of the Court
Constitution, and reverse the tax court's ruling on summary judgment to
the contrary, including its award of attorney's fees and costs. We affirm the
superior court's ruling that the surcharge is not unconstitutional under the
Dormant Commerce Clause. Accordingly, we vacate the superior court's
refund order, direct entry of judgment in favor of ADOR and AzSTA and
remand for any further required proceedings consistent with this decision.
AMY M. WOOD • Clerk of the Court
FILED: AA
23