Kevin Marilley v. Charlton Bonham , 802 F.3d 958 ( 2015 )

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
KEVIN MARILLEY; SALVATORE No. 13-17358
PAPETTI; SAVIOR PAPETTI,
individually and on behalf of all D.C. No.
others similarly situated, 4:11-cv-02418-
Plaintiffs-Appellees, DMR
v. OPINION
CHARLTON H. BONHAM, in his
official capacity as Director of the
California Department of Fish and
Game,
Defendant-Appellant.
Appeal from the United States District Court
for the Northern District of California
Donna M. Ryu, Magistrate Judge, Presiding
Argued and Submitted
July 7, 2015—San Francisco, California
Filed September 18, 2015
Before: Susan P. Graber and Paul J. Watford, Circuit
Judges, and Paul L. Friedman, District Judge.*
*
The Honorable Paul L. Friedman, United States District Judge for the
District of Columbia, sitting by designation.
2 MARILLEY V. BONHAM
Opinion by Judge Friedman;
Dissent by Judge Graber
SUMMARY**
Constitutional Law
The panel affirmed the district court’s summary judgment
in favor of a plaintiff class of non-resident commercial fishers
who contended that California’s discriminatory fishing fees
violated the Privileges and Immunities Clause of the United
States Constitution.
The panel held that California’s differential commercial
fishing license fees, Cal. Fish & Game Code §§ 7852, 7881,
8550.5, and 8280.6, which charged non-residents two or
three times more in fees than residents, violated the Privileges
and Immunities Clause because California failed to offer a
closely related justification for its discrimination against non-
residents.
Judge Graber dissented because she would hold that
further evidentiary development is necessary to determine
whether the differential fees are permissible under the
Privileges and Immunities Clause, and she would reverse the
summary judgment and remand for further proceedings.
**
This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
MARILLEY V. BONHAM 3
COUNSEL
Kamala D. Harris, Attorney General, Robert W. Byrne,
Senior Assistant Attorney General, Annadel A. Almendras,
Supervising Deputy Attorney General, Gary Alexander and
M. Elaine Meckenstock (argued), Deputy Attorneys General,
Office of the Attorney General, Oakland, California, for
Defendant-Appellant.
Stuart G. Gross (argued) and Jared M. Galanis, Gross Law,
P.C., San Francisco, California; Todd R. Gregorian and Tyler
A. Baker, Fenwick & West LLP, Mountain View, California,
for Plaintiffs-Appellees.
OPINION
FRIEDMAN, District Judge:
Commercial fishers in California are subject to a bevy of
fees. For certain fees, however, non-residents are charged
two to three times more than residents. Plaintiffs represent a
class of non-resident commercial fishers who contend that
California’s discriminatory fees violate the Privileges and
Immunities Clause of the United States Constitution.
Because California has failed to offer a closely related
justification for its discrimination against non-residents, we
agree with plaintiffs and therefore affirm the district court’s
grant of summary judgment to the plaintiff class.
BACKGROUND
The named plaintiffs are commercial fishers residing
outside California. They represent a class of non-residents
4 MARILLEY V. BONHAM
who, since 2009, have purchased commercial fishing licenses,
registrations, or permits from California and paid higher fees
than residents. Plaintiffs sued Charlton Bonham, in his
official capacity as the Director of the California Department
of Fish and Game, alleging that the differential fees violate
the Privileges and Immunities and Equal Protection Clauses
of the United States Constitution.
Plaintiffs challenge four specific fees: general commercial
fishing license fees, commercial fishing vessel registration
fees, Herring Gill net permit fees, and Dungeness Crab vessel
permit fees. See Cal. Fish & Game Code §§ 7852, 7881,
8550.5, 8280.6. While the parties dispute the prevalence of
Herring Gill and Dungeness Crab permits, it is undisputed
that, at a minimum, non-resident commercial fishers must
purchase the general license to fish in California waters and
a vessel registration to do so from a boat they own or operate.
See id. §§ 7852, 7881. In 2012–13, the relevant fees were as
follows:
• Commercial fishing license: $130.03 for
residents; $385.75 for non-residents;
• Commercial fishing vessel registration:
$338.75 for residents; $1,002.25 for non-
residents;
• Herring Gill net permit: $359.00 for
residents; $1,334.25 for non-residents;
• Dungeness Crab vessel permit: $273.00
for residents; $538.00 for non-residents.
MARILLEY V. BONHAM 5
All four licenses would set a resident back $1,100.78, but a
non-resident $3,260.25.
Following discovery, the parties filed cross-motions for
summary judgment. The district court concluded that
California had failed to demonstrate a genuine issue of
material fact and granted summary judgment to the plaintiff
class on its Privileges and Immunities Clause claim. The
district court then entered final judgment as to plaintiffs’
Privileges and Immunities Clause claim pursuant to Rule
54(b) of the Federal Rules of Civil Procedure.1
STANDARD OF REVIEW
We have jurisdiction under 28 U.S.C. § 1291. We review
a grant of summary judgment de novo. See Pac. Shore
Props., LLC v. City of Newport Beach, 730 F.3d 1142, 1156
(9th Cir. 2013). Viewing the evidence in the light most
favorable to the State, we must decide whether there are any
genuine disputes of material fact and whether the district
court correctly applied the substantive law. See Olsen v.
Idaho St. Bd. Of Med., 363 F.3d 916, 922 (9th Cir. 2004).
DISCUSSION
The Privileges and Immunities Clause provides that “[t]he
Citizens of each State shall be entitled to all Privileges and
Immunities of Citizens in the several States.” U.S. Consti.
art. IV, § 2, cl. 1. This clause “was designed ‘to place the
citizens of each State upon the same footing with citizens of
1
The district court expressly did not reach or enter final judgment on
plaintiffs’ Equal Protection Clause claim. We therefore lack jurisdiction
over that claim. See 28 U.S.C. § 1291.
6 MARILLEY V. BONHAM
other States, so far as the advantages resulting from
citizenship in those States are concerned.’” Sup. Ct. of Va. v.
Friedman, 487 U.S. 59, 64 (1988) (quoting Paul v. Virginia,
75 U.S. (8 Wall.) 168, 180 (1869)); see also Toomer v.
Witsell, 334 U.S. 385, 395 (1948) (The Clause “was designed
to insure to a citizen of State A who ventures into State B the
same privileges which the citizens of State B enjoy.”). The
Clause thus “establishes a norm of comity” between residents
and non-residents of a State, Austin v. New Hampshire,
420 U.S. 656, 660 (1975), to create “a national economic
union,” Council of Ins. Agents & Brokers v. Molasky-Arman,
522 F.3d 925, 934 (9th Cir. 2008) (quoting Sup. Ct. of N.H.
v. Piper, 470 U.S. 274, 280 (1985)).2
The Clause, however, “is not an absolute.” Molasky-
Arman, 522 F.3d at 934 (quoting Toomer, 334 U.S. at 396).
“While it bars ‘discrimination against citizens of other States
where there is no substantial reason for the discrimination
beyond the mere fact that they are citizens of other States . . .
it does not preclude disparity of treatment in the many
situations where there are perfectly valid independent reasons
for it.” Id. (quoting Toomer, 334 U.S. at 396). We therefore
employ a two-part test to determine whether disparate
treatment violates the Clause. “First, the activity in question
must be ‘sufficiently basic to the livelihood of the Nation’ . . .
as to fall within the purview of the Privileges and Immunities
Clause.” Friedman, 487 U.S. at 64 (quoting United Bldg. &
Constr. Trades Council v. Mayor and Council of Camden,
465 U.S. 208, 221–22 (1984)). “Second, if the challenged
restriction deprives nonresidents of a protected privilege, we
2
“While the Privileges and Immunities Clause cites the term ‘Citizens,’
for analytic purposes citizenship and residency are essentially
interchangeable.” Friedman, 487 U.S. at 64.
MARILLEY V. BONHAM 7
will invalidate it only if we conclude that the restriction is not
closely related to the advancement of a substantial state
interest.” Id. at 65 (citing Piper, 470 U.S. at 284). California
contends that the differential license fees pass muster under
both parts of this test. We disagree.
A
California does not dispute that plaintiffs’ right to pursue
“a common calling is one of the most fundamental of those
privileges protected by the Clause.” Camden, 465 U.S. at
219; see also Toomer, 334 U.S. at 403 (“Thus we hold that
commercial shrimping in the marginal sea, like other
common callings, is within the purview of the privileges and
immunities clause.”). It instead argues that, in addition to
demonstrating that the affected activity is protected, plaintiffs
must make two additional showings.
First, California argues that our decision in International
Organization of Masters, Mates, & Pilots v. Andrews,
831 F.2d 843 (9th Cir. 1987), requires plaintiffs to show that
the differential fees exclude them, in whole or in part, from
commercial fishing. This showing cannot be made,
California claims, because the percentage of non-resident
commercial fishers in California has increased, not decreased.
In Andrews, we held that the Clause was not violated by a
statute regarding cost of living wage adjustments because the
statute was “designed to provide equity between the wages of
[citizen] and non-[citizen] workers.” Andrews, 831 F.3d at
846. The statute in Andrews thus created equality, not
inequality, and therefore did not run afoul of the Privileges
and Immunities Clause because, we said, “the appellants
ha[d] not shown that they are prevented or discouraged by the
State from pursuing employment.” Id.
8 MARILLEY V. BONHAM
California contends that our choice of the words
“prevented or discouraged” upset decades of precedent and
added an exclusion requirement to the first part of the test.
We disagree. As we recited in Andrews just two paragraphs
before, the first step requires only that “we determine first
whether [the statute] burdens” rights protected under the
Clause. Id. at 845. An exclusion requirement would
undermine the purpose of the Clause because permitting a
State to freely discriminate against non-residents up to the
point they are driven out would not “place the citizens of each
State upon the same footing with citizens of other States.”
Lunding v. N.Y. Tax Appeals Tribunal, 522 U.S. 287, 296
(1998) (quoting Paul, 75 U.S. (8 Wall.) at 180). And, to any
extent that Andrews may have implied that a plaintiff must
demonstrate exclusion from pursuing their common calling,
the Supreme Court’s subsequent statement in Friedman
makes clear that “[n]othing in [its] precedents . . . supports
the contention that the Privileges and Immunities Clause does
not reach a State’s discrimination against nonresidents when
such discrimination does not result in their total exclusion
from the State.” 487 U.S. at 66.3
Second, California argues that McBurney v. Young, 133
S. Ct. 1709 (2013), the Supreme Court’s most recent
Privileges and Immunities Clause decision, requires that
plaintiffs show that the differential fees were enacted for a
“protectionist purpose.” The Supreme Court in McBurney
did note that prior cases “struck laws down as violating the
3
Our conclusion is supported by the fact that, as the district court noted,
our “most recent Privileges and Immunities Clause decision, Molasky-
Arman, contains no discussion at all — at either step of the inquiry — of
the extent to which the challenged law’s increased burden on nonresidents
led to any deterrence or exclusion.”
MARILLEY V. BONHAM 9
privilege of pursuing a common calling only when those laws
were enacted for the protectionist purpose of burdening out-
of-state citizens.” Id. at 1715. California urges us to read
that statement to mean that proof of a protectionist purpose
always is required to meet step one of our privileges and
immunities inquiry. We cannot accept that interpretation of
McBurney.
When the Court determines that the Privileges and
Immunities Clause does not apply at all, it says so. For
example, in Baldwin v. Fish & Game Commission, 436 U.S.
371, 388 (1978), the Court held that, because elk hunting was
“not basic to the maintenance or well-being of the Union,”
the state’s decision to charge non-residents more than
residents for elk-hunting licenses “simply [did] not fall within
the purview of the Privileges and Immunities Clause.” In
McBurney, the Court rejected one of McBurney’s arguments
— that Virginia’s law denied them “the right to access public
information on equal terms with citizens” of Virginia — for
similar reasons, holding that the Privileges and Immunities
Clause did not “cover[] this broad right.” 133 S. Ct. at 1718.
By contrast, with respect to McBurney’s common calling
argument, the Court held that the Virginia law at issue did not
“abridge [non-residents’] ability to engage in a common
calling in the sense prohibited by the Privileges and
Immunities Clause.” Id. at 1715 (emphasis added). The
Court reached that conclusion because the statute had only an
“incidental effect” on the pursuit of a common calling, and
because the distinction it made between citizens and
non-citizens had a “distinctly nonprotectionist aim.” Id. at
1716. This reasoning, along with the Court’s discussion of
earlier cases involving statutes with protectionist purposes, is
a part of step two of the inquiry, which requires the state to
10 MARILLEY V. BONHAM
point to a “substantial reason[]” for the discrimination.
Friedman, 487 U.S. at 67. “Part and parcel to this analysis is
determining whether [the state has] demonstrated a
substantial factor unrelated to economic protectionism to
justify the discrimination.” Connecticut ex rel. Blumenthal v.
Crotty, 346 F.3d 84, 97 (2d Cir. 2003).
Requiring proof of a legislature’s protectionist purpose at
the first step of the inquiry, as California urges, would negate
the second step’s burden on the state to provide a valid
justification for the discrimination against non-residents.
Moreover, an intent requirement would undermine the
Clause’s purpose to “plac[e] the citizens of each State upon
the same footing with citizens of other States,” Lunding,
522 U.S. at 296 (quoting Paul, 75 U.S. (8 Wall.) at 180), by
mandating different outcomes depending upon a State’s
motive. We therefore reject California’s invitation to read
McBurney as a dramatic overhaul of the first step of the
settled two-step inquiry.
To reiterate, contrary to California’s arguments, the first
step of the Privileges and Immunities Clause inquiry asks
only whether the challenged statute directly burdens a
protected activity. It is undisputed that California’s
commercial fishing license fees are significantly higher for
non-resident fishers than for residents. And it is common
sense that commercial fishing license fees directly affect
commercial fishing. Those facts alone satisfy plaintiffs’
burden at the first step of the inquiry. See Toomer, 334 U.S.
at 396 (a statute that charged $25 to residents for commercial
shrimping licenses, but charged $2,500 to non-residents
“plainly and frankly discriminate[d] against non-residents”
and thus satisfied the first step); Mullaney v. Anderson,
342 U.S. 415, 417–18 (1952) (holding that the Privileges and
MARILLEY V. BONHAM 11
Immunities Clause “would bar any State from imposing” a $5
license fee on resident fishers and a $50 fee on non-residents
unless a State offered a substantial, closely related
justification at the second step of the inquiry).
B
At the second step, the burden shifts to the State to
demonstrate that “substantial reasons exist for the
discrimination and [that] the degree of discrimination bears
a close relation to such reasons.” Friedman, 487 U.S. at 67.4
To determine whether the State’s proffered justifications bear
a close relation to the discrimination, we must “consider[]
whether, within the full panoply of legislative choices
otherwise available to the State, there exist alternative means
of furthering the State’s purpose without implicating
constitutional concerns.” Id.
The Supreme Court has noted that “[t]he State is not
without power . . . to charge non-residents a differential
which would merely compensate the State . . . for any
conservation expenditures from taxes which only residents
pay.” Toomer, 334 U.S. at 398–99. California argues that it
is doing just that — merely compensating itself for
4
California argues that the district court applied a purportedly different
rule taken from the Supreme Court’s “tax” cases, as opposed to its
“common calling” cases, and failed to consider California’s justifications
for the discrimination. The Supreme Court, however, has employed the
same two-step inquiry for both “tax” and “common calling” cases.
Compare Friedman, 487 U.S. at 64–65 (challenge to a residency
requirement for admission to the State bar), with Lunding, 522 U.S. at
296–98 (challenge to a differential income tax deduction). The district
court applied the correct test and properly considered California’s asserted
State objectives.
12 MARILLEY V. BONHAM
expenditures on conservation and enforcement efforts from
which non-residents benefit. But California claims that
Toomer allows for inequality at step two and therefore any
fee differential is permissible so long as the State does not
“overcompensate” itself in the aggregate, which, according
to California, means only that the amount collected from non-
residents cannot exceed their collective “fair share” of the
State’s expenditures. These differential fees thus are
permissible, according to California, because the total
additional amount collected from non-residents
(approximately $400,000) constitutes a mere 3% of the
budget shortfall between costs and revenues (approximately
$14.6 million) but non-residents comprise approximately
11% of the commercial fishers in California.
We are unpersuaded. Although we agree that obtaining
compensation for expenditures the State makes for
conservation or enforcement is a permissible state objective,
the additional fees charged to non-residents must bear a close
relation to the “taxes which only residents pay.” Toomer,
334 U.S. at 399; see also Molasky-Arman, 522 F.3d at 934
(noting that “a ‘substantial reason’ for discrimination does
not exist ‘unless there is something to indicate that non-
citizens constitute a peculiar source of the evil at which the
statute is aimed’”) (quoting Toomer, 334 U.S. at 398). In
other words, a State may justify a differential fee by showing
either that it is closely related to the costs of addressing a
burden non-residents uniquely impose or that it approximates
the amount in “taxes which only residents pay” towards the
relevant State expenditures from which non-residents also
benefit. Toomer, 334 U.S. at 399; see also Tangier Sound
Waterman’s Ass’n v. Pruitt, 4 F.3d 264, 267 (4th Cir. 1993)
(Toomer permits state to discriminate against non-residents
where state “establishes an ‘advancement of a substantial
MARILLEY V. BONHAM 13
state interest’ as a reason for the disparate treatment, and, in
the facts of this case, evenly or approximately evenly
distributes the costs imposed on residents and nonresidents to
support those programs benefiting both groups.”). Such a
differential would “bear[] a close relation to the achievement
of [a] substantial state objective[],” Friedman, 487 U.S. at 70,
because it would address the particular evil non-residents
present, unfairly benefiting from residents’ tax expenditures.
It also would place non-residents “upon the same footing
with,” id. at 64, or at least in “substantial equality” with
California residents, Toomer, 334 U.S. at 396, by forcing an
individual non-resident who benefits from the State’s
expenditures to contribute an amount substantially equal to
that which an individual resident contributes across all fees
and related taxes.
California does not claim, however — nor has it presented
any evidence that shows — that the fee differential
approximates the amount in taxes a resident contributes to the
State’s expenditures related to commercial fishing. Mullaney,
342 U.S. at 418; see also Hicklin v. Orbeck, 437 U.S. 518,
527 (1978) (“[T]he discrimination the [statute] works against
nonresidents does not bear a substantial relationship to the
particular ‘evil’ they are said to present.”). California alone
bore the step two “burden of showing that the discrimination
is warranted by a substantial state objective and closely
drawn to its achievement.” Friedman, 487 U.S. at 68. It
failed to carry that burden, despite ample opportunity to
develop and support its offered justification and “all the facts
. . . in [its] possession.” Mullaney, 342 U.S. at 418–19.
14 MARILLEY V. BONHAM
CONCLUSION
For the above reasons, we hold that California’s
differential commercial fishing license fees, Cal. Fish &
Game Code §§ 7852, 7881, 8550.5, and 8280.6, violate the
Privileges and Immunities Clause. Charging non-residents
two to three times the amount charged to residents plainly
burdens non-residents’ right to pursue a common calling, in
this case commercial fishing. Such discrimination violates
the Privileges and Immunities Clause unless the State carries
its burden to show “that such discrimination bears a close
relation to the achievement of substantial state objectives.”
Friedman, 487 U.S. at 70. Although its stated objective,
compensation for State expenditures for conservation or
enforcement, is valid, California has failed to show that the
differential fee charged to a non-resident is closely related to
a resident’s share of the State’s expenditures.
AFFIRMED.
GRABER, Circuit Judge, dissenting:
I respectfully dissent. Although I agree fully with the
majority’s analysis at step one of the inquiry, I would hold, at
step two, that the differential fees survive summary judgment.
Further evidentiary development is necessary to determine
whether the nonresident fees “merely compensate the State
for any added enforcement burden [nonresidents] may impose
or for any conservation expenditures from taxes which only
residents pay.” Toomer v. Witsell, 334 U.S. 385, 399 (1948).
MARILLEY V. BONHAM 15
We have little guidance to assist us in determining what
the United States Supreme Court meant in the foregoing
passage from Toomer. Only twice since Toomer has the
Court quoted the phrase “taxes which only residents pay” in
a privileges and immunities context, and in neither case did
it explain the meaning of those words. Baldwin v. Fish &
Game Comm’n , 436 U.S. 371, 401 (1978); Mullaney v.
Anderson, 342 U.S. 415, 417 (1952). As I explain in more
detail below, two state supreme courts have reached different
conclusions about the proper interpretation of that phrase.
But we do not know which (if either) of those courts got it
right, because the Supreme Court denied certiorari in both
cases. Carlson v. Alaska Commercial Fisheries Entry
Comm’n, 519 U.S. 1101 (1997); Glaser v. Salorio, 449 U.S.
874 (1980). Further complicating our interpretive task, the
Privileges and Immunities Clause of Article IV “is not one
the contours of which have been precisely shaped by the
process and wear of constant litigation and judicial
interpretation over the years since 1789.” Baldwin, 436 U.S.
at 379.
Acknowledging those limitations, we must decide how to
interpret the phrase “taxes which only residents pay.”
Toomer, 334 U.S. at 399. On the one hand, as the State urges,
the phrase could be read to refer to residents’ aggregate tax
contribution to commercial fishing. Under that reading,
California permissibly could charge differential fees to
nonresidents so long as those fees do not exceed the
nonresidents’ fair share of the portion of commercial fisheries
management costs that California residents’ tax dollars fund.
The New Jersey Supreme Court has interpreted Toomer
in this way. In Salorio v. Glaser, 414 A.2d 943 (N.J. 1980),
the plaintiffs challenged New Jersey’s imposition of an
16 MARILLEY V. BONHAM
Emergency Transportation Tax, which applied only to
nonresident users of the state highway system. Although it
found the record insufficiently developed to render a final
decision, the New Jersey Supreme Court held that a tax that
applied only to nonresidents could, in theory, pass
constitutional muster, because “[t]he Constitution does not
entitle nonresident commuters to a ‘free ride.’ The State may
exact from them a fair share of the cost of adequate
transportation facilities without violating the Privileges and
Immunities Clause.” Id. at 954. The court read Toomer and
other Supreme Court cases to authorize a state to “impose
upon non-residents the additional expenses occasioned by
their activities within the state, or the reasonable costs of
benefits which they receive from the state.” Id. at 953.
Applying the Salorio court’s reasoning here, nonresidents
are on “equal footing” with residents so long as they are not
charged more than their “fair share” of commercial fisheries
management expenses that residents’ tax dollars fund.
California introduced evidence that nonresidents purchased
11% of commercial fishing licenses, while the differential
fees for out-of-state licenses equaled only 3% of the net
general fund contributions to the Department of Fish and
Wildlife (“DFW”) budget. The State asserts that it
constitutionally could charge differential fees that total up to
11% of the DFW’s general fund-supported commercial
fishing expenditures, so the smaller fee that California
actually charges is—a fortiori— permissible.
On the other hand, Plaintiffs read “taxes which only
residents pay,” Toomer, 334 U.S. at 399, very differently.
They contend that the phrase requires a per capita calculation
of a California resident’s tax burden related to DFW’s
commercial fishing budget. The Alaska Supreme Court
MARILLEY V. BONHAM 17
adopted this alternative interpretation in Carlson v. State,
798 P.2d 1269 (Alaska 1990). There, the plaintiffs
challenged Alaska’s commercial fishing fees, which were
three times higher for nonresidents than for residents. The
state urged the court to follow Salorio. But the Alaska
Supreme Court rejected the New Jersey Supreme Court’s
interpretation of Toomer:
Implicit in Salorio is the notion that it is
permissible to require nonresidents to pay up
to 100% of their pro rata share of
expenditures regardless of what percentage of
their pro rata share residents are in fact
paying. In other words, Salorio, as applied to
this case, seems to add up to a general
proposition that the state may subsidize its
own residents in the pursuit of their business
activities and not similarly situated
nonresidents, even though this results in
substantial inequality of treatment.
Carlson, 798 P.2d at 1278. The court held that the proper
inquiry was “whether all fees and taxes which must be paid
to the state by a nonresident to enjoy the state-provided
benefit are substantially equal to those which must be paid by
similarly situated residents when the residents’ pro rata
shares of state revenues to which nonresidents make no
contributions are taken into account.” Id.
Under the Carlson court’s approach, the state would have
to divide general fund expenditures for commercial fishing
management by the total number of California taxpayers; the
quotient would represent the maximum permissible
differential fee. The State introduced evidence that net
18 MARILLEY V. BONHAM
annual general fund outlays for commercial fisheries
management total at least $12 million. Thus, for instance, if
there were 12 million taxpayers in California, the per capita
formula would limit the permissible differential fee to $1 per
nonresident fisher.1 According to Plaintiffs, this formula puts
residents and nonresidents on “equal footing” because their
out-of-pocket costs to support commercial fisheries are the
same.
I would reject the per capita formula. The purpose of the
Privileges and Immunities Clause is to “place the citizens of
each State upon the same footing with citizens of other States,
so far as the advantages resulting from citizenship in those
States are concerned.” Paul v. Virginia, 75 U.S. (8 Wall.)
168, 180 (1868). In my view, the per capita approach does
not advance that goal. The per capita formula attributes to
each resident a pro rata contribution to every program and
activity supported by a state’s general fund expenditures. But
that sort of rigid across-the-board calculation does not
accurately reflect the real benefit that a taxpayer obtains
through his or her tax dollars. Taxpayer dollars support a
large number of state-funded programs. Education, natural
resources management, healthcare services, corrections and
rehabilitation, infrastructure, and transportation all are at least
partially funded with state tax revenues in California. In a
given year, an individual taxpayer likely receives no direct
benefit from some of those programs, but a benefit that far
1
This illustrative example likely is a generous estimate, as the
population of California was nearly 39 million in 2014. U.S. Census
Bureau, State & County QuickFacts, http://quickfacts.census.gov/qfd/
states/06000.html. Thus, the permissible differential likely would be less
than $1 under the per capita formula, even though a substantial number of
California residents—for example, minor children—are not taxpayers.
MARILLEY V. BONHAM 19
exceeds his or her pro rata contribution from others. This is
the deal that we make when we pay taxes: We all put a
portion of our income into a big pot and it is spent in a variety
of ways, some of which benefit us directly and some of which
do not.
California residents subsidize each other with their taxes.
For example, suppose that each taxpayer’s share of state
support for secondary schools is $1 per year. A certain
California taxpayer has a teenager who attends public high
school. That taxpayer’s per capita “payment” for the
educational benefit is $1, but the benefit to the taxpaying
parent is worth much more than that. The parent agrees to
subsidize a number of other activities in the state, including
commercial fishing. In exchange, taxpayers without school-
age children subsidize public education.2 The per capita
formula permits a nonresident fisher to obtain the same
benefit as a resident fisher, but the nonresident does not have
to subsidize any other programs or activities in California in
exchange. The per capita formula thus systematically
disadvantages the resident vis-à-vis the nonresident.
Instead of using a per capita formula, I would adopt the
Salorio court’s “fair share” approach. At step two of the
privileges and immunities inquiry, the state must show that
the discrimination against nonresidents is “closely related to
2
Of course, some commercial fishers are parents whose children attend
public school. But that fact just demonstrates that each taxpayer benefits
directly from a different set of state programs supported by his or her tax
dollars. The value of the taxpayer-funded investment in a given program
to each individual taxpayer who benefits from that program varies. The
value is less than the taxpayer’s total tax bill, but more—generally,
significantly more—than the taxpayer’s strict pro rata contribution to the
program.
20 MARILLEY V. BONHAM
the advancement of a substantial state interest.” Supreme
Court of Va. v. Friedman, 487 U.S. 59, 65 (1988). We
recently reiterated that “[a] ‘substantial reason’ for
discrimination does not exist ‘unless there is something to
indicate that non-citizens constitute a peculiar source of the
evil at which the statute is aimed.’” Council of Ins. Agents &
Brokers v. Molasky-Arman, 522 F.3d 925, 934 (9th Cir. 2008)
(quoting Toomer, 334 U.S. at 398)). Nonresidents increase
the amount of commercial fishing activity in California’s
coastal waters. That increased activity, in turn, requires the
state to spend more money than it otherwise would spend on
commercial fisheries management, including enforcement
and conservation. Because nonresidents are a “peculiar
source” of those additional costs, I would hold that not
subsidizing nonresident participation in an activity funded
with residents’ tax dollars is a substantial reason for
discrimination. See Tangier Sound Waterman’s Ass’n v.
Pruitt, 4 F.3d 264, 268 (4th Cir. 1993) (assuming, without
deciding, that such an interest is permissible under the
Privileges and Immunities Clause).
Turning to the “close relationship” requirement, I would
hold that the State has the burden to show three things. First,
it must isolate the state expenditures that benefit only the
licensees.3 See id. (rejecting Virginia’s differential license
fee in part because it unfairly charged nonresident
3
These expenditures would include any costs associated with programs
or activities in which only licensees participate—for example, the cost of
enforcing rules such as size of fish or season limits. They also would
include conservation expenditures made necessary by licensees’ activities.
If the state engages in conservation activities designed to keep fish stocks
at a certain level, some of those activities benefit only licensees. To count
those costs, the state must separate general conservation activities from
conservation activities directed to the effect of commercial fishing.
MARILLEY V. BONHAM 21
commercial fishers “for programs funded by all taxpayers to
benefit all fishermen, whether commercial or sport
fishermen”). Second, it must determine what portion of those
expenditures fairly may be characterized as deriving “from
taxes which only residents pay.” Toomer, 334 U.S. at 399;
see Tangier, 4 F.3d at 267 (striking down Virginia’s
differential commercial fishing license fees in part because
the state calculated the fee without considering nonresident
fishers’ payment of state sales and use taxes); Salorio,
414 A.2d at 955 (discussing whether property and sales taxes
are “taxes imposed upon residents alone” in light of the fact
that some nonresidents pay them). And third, it must assess
what portion of qualifying expenditures is fairly allocable to
the nonresidents as “the additional expenses occasioned by
their activities within the state.”4 Salorio, 414 A.2d at 953;
see also Tangier, 4 F.3d at 267 (holding that “the record does
not disclose that the Commonwealth of Virginia has shown
that it created any credible method of allocating costs as
between residents and nonresidents”).
I would hold that the “close relationship” requirement of
step two is satisfied so long as the state charges a differential
4
It may be, as the State asserts, that multiplying the qualifying
expenditures by the percentage of commercial fishers who are
nonresidents is the appropriate way to calculate those nonresidents’ fair
share, but that is not necessarily the case. See Salorio v. Glaser, 461 A.2d
1100, 1106 (N.J. 1983) (“Although the State has not shown that New York
commuters cause higher average costs per commuter than New Jersey
commuters, the New York commuter does exacerbate the peak load.
Accordingly, both incremental and average costs are pertinent factors in
determining the costs attributable to the New York commuter.”); Salorio,
414 A.2d at 955 (questioning a “strict percentage computation” that
assumed equal transportation costs for nonresident and resident
commuters).
22 MARILLEY V. BONHAM
fee that, in the aggregate, does not exceed5 the amount that
the state spends that (1) benefits only licensees, (2) derives
from taxes that only residents pay, and (3) is fairly allocable
to nonresidents.6 This test puts residents and nonresidents on
“substantially equal footing” with respect to commercial
fishing: Residents reap the benefit of the tax dollars that they
alone pay, and nonresidents cannot be required to pay more
than their “fair share” of the benefits they enjoy that are
subsidized by those resident-paid tax dollars.
This fair share approach accurately reflects the relative
benefit that residents and nonresidents obtain from a state’s
general fund expenditures. Suppose that a state charges a $50
license fee to resident commercial fishers. Over and above
the revenue collected from those fees, the state spends $1
million in tax-supported funds on commercial fisheries
management. If 10,000 people per year obtain licenses, the
benefit of the $1 million subsidy to each fisher is $100. Thus,
a nonresident may be charged the $50 fee that residents pay,
plus a $100 differential. If only 5,000 people obtain licenses,
5
Because the Privileges and Immunities Clause neither bars the
residents of a state from deciding to use their tax dollars to subsidize the
activities of nonresidents nor precludes a state from providing a greater
benefit to nonresidents than it provides to residents, it is permissible for
a state to charge less than the maximum allowable differential.
6
The test here is one of “substantial equality of treatment,” not absolute
equality. Austin v. New Hampshire, 420 U.S. 656, 665 (1975). So long
as the state “fairly attempts to distribute the burdens and costs of
government to those receiving its benefits” pursuant to a reasonable
methodology, I would hold that the requirements of the Privileges and
Immunities Clause are met. Salorio, 414 A.2d at 952; see also Travelers’
Ins. Co. v. Connecticut, 185 U.S. 364, 371 (1902) (“It is enough that the
state has secured a reasonably fair distribution of burdens, and that no
intentional discrimination has been made against nonresidents.”).
MARILLEY V. BONHAM 23
each nonresident may be charged a $200 differential. This
variance makes sense, because the benefit to each fisher of
the tax-supported outlay decreases as more people use the
resource. The per capita approach makes less sense because
it is unresponsive to such changes; so long as a state’s tax rate
and general fund outlay on the commercial fisheries program
remain unchanged, the permissible differential is fixed. It is
the same whether 10 or 10,000 people obtain licenses and use
the resource.
Plaintiffs raise the specter of a year in which only one
nonresident purchases a commercial fishing license. They
argue that the state’s approach would permit California to
collect hundreds of thousands of dollars from that single
licensee. Not so. The fair share formula accounts for this
possibility. Assuming the scenario described above, in a year
in which a single nonresident and 4,999 residents obtain
licenses the permissible differential for that nonresident
would remain $200.7
Finally, Plaintiffs challenge the “fair share” approach
because, using it, the state could set nonresident license fees
ten, twenty, or even a hundred times higher than resident
license fees. They point out that the Supreme Court has
rejected nonresident fees at such ratios before. See Mullaney,
342 U.S. at 418 (invalidating nonresident fees ten times
7
The only way the permissible differential charged to a nonresident
would skyrocket is if the overall number of fishers obtaining licenses
plunged to single digits. But if that happened, the state likely would slash
its commercial fisheries management spending. And if it did not cut
spending, it is hard to see how the State could prove that the full $1
million in my example benefitted just a handful of fishers, because it is not
reasonable to attribute hundreds of thousands of dollars in enforcement
and conservation costs to a single fisher.
24 MARILLEY V. BONHAM
higher than resident fees); Toomer, 334 U.S. at 389 (striking
down nonresident fees one hundred times higher than resident
fees). And they urge us to rely on the ratio of nonresident to
resident fees here (roughly three to one)8 to reject the “fair
share” analysis. Plaintiffs’ argument is flawed for two
reasons.
First, the Supreme Court did not reject the differential
fees because of the size of the ratio. Rather, it rejected the
nonresident fees because Alaska and South Carolina had
failed to show any connection between the differential and
state spending on services to the nonresidents. See Mullaney,
342 U.S. at 418 & n.1 (rejecting the state’s argument that the
differential fees merely compensated the state for
enforcement against nonresidents because the state had not
calculated the cost of that enforcement and the total amount
of differential fees collected “may easily have exceeded the
entire amount available for administration” of the office in
charge of enforcement); Toomer, 334 U.S. at 398 (noting that
“[n]othing in the record indicate[d] . . . that any substantial
amount of the State’s general funds [was] devoted to shrimp
conservation” and that, even if there had been such evidence,
it “would not necessarily support a remedy so drastic as to be
a near equivalent of total exclusion”).
Second, focusing on the size of the ratio requires
consideration of fees in a vacuum. That isolation makes little
sense in light of the Supreme Court’s statement that a state
may charge a fee designed to “compensate [it] for any added
8
The ratio of nonresident fees to resident fees for commercial fishing
licenses and commercial boat registrations is three to one. For dungeness
crab vessel permits, the ratio is lower (two to one); and for herring gill net
permits, the ratio is higher (nearly four to one).
MARILLEY V. BONHAM 25
enforcement burden [nonresidents] may impose or for any
conservation expenditures from taxes which only residents
pay.” Toomer, 334 U.S. at 399. In Salorio, the tax at issue
applied only to nonresidents. On appeal after remand, the
New Jersey Supreme Court ultimately invalidated the
tax—but not because the nonresident-to-resident ratio was too
high. The problem was that, during a period of two decades,
the revenues collected by the state through the tax had
exceeded the costs attributable to nonresidents by a factor of
more than two. Salorio v. Glaser, 461 A.2d 1100, 1107 (N.J.
1983). Focus on the size of the ratio per se is misplaced; the
privileges and immunities inquiry requires consideration of
all taxes and fees paid by residents and nonresidents in
support of commercial fishing.
Because it applied a different test, the district court did
not address whether the net general fund outlay benefits only
licensees, whether that outlay derives solely from taxes that
only residents pay, or what portion of qualifying costs is
properly allocable to nonresident fishers. Thus, on the
current record, I would hold that we cannot determine
whether the differential fees are permissible under the
Privileges and Immunities Clause. Accordingly, I would
reverse the summary judgment of the district court and
remand for further proceedings.