Opinion
No. 23228-0-III.
May 4, 2006.
Appeal from a judgment of the Superior Court for Spokane County, No. 04-2-00418-1, Kathleen M. O'Connor, J., entered July 27, 2004.
Counsel for Appellant(s), Aaron Lee Lowe, Aaron L. Lowe Associates PS, 1708 W Mission Ave, Spokane, WA 99201-2759.
Counsel for Respondent(s), Jason S. Richards, Attorney Generals Office, 1125 Washington St SE, PO Box 40100, Olympia, WA 98504-0100.
Affirmed by unpublished opinion per Brown, J., concurred in by Sweeney, C.J., and Kato, J.
Steven Cork and Lisa Brigman appeal the trial court's summary judgment dismissal of their petition for return of tobacco products and certain personal property seized by the State as contraband. We reject their constitutional, statutory, and exemption contentions involving Ms. Brigman's Indian status, and affirm.
FACTS
On January 14, 2004, Trooper Joe Pass stopped a van traveling westbound on Interstate 90 for a traffic violation. Trooper Pass had been given a description of a white van suspected of transporting untaxed cigarettes from Idaho, which matched the vehicle. Trooper Pass questioned the driver, Steven Cork, about cardboard boxes in the back of the van. Allegedly, Mr. Cork admitted he was transporting untaxed cigarettes. Trooper Pass arrested Mr. Cork and impounded the van.
Pursuant to a search warrant, the Washington State Liquor Control Board (Board) found 30,600 assorted packs of unstamped, untaxed cigarettes. The Board seized the van and cigarettes, and notified Mr. Cork and Lisa Brigman (the owner of the van) the property would be forfeited.
Mr. Cork and Ms. Brigman filed a petition in Spokane County Superior Court to recover the seized property. When deposed, Mr. Cork and Ms. Brigman refused to answer any questions about the shipment, based on the Fifth Amendment. However, according to Ms. Brigman's briefing at the trial court, she is a member of the Spokane Tribe and has an American Indian business license. According to Ms. Brigman, the cigarettes were in route from Plummer, Idaho to the Spokane Indian Reservation at the time of the stop.
The Board filed a CR 12(b)(6) motion to dismiss the petition. The court granted the Board's motion on all issues, except whether chapter 82.24 RCW violates the Commerce Clause. The Board successfully moved for summary judgment on that remaining issue. Mr. Cork and Ms. Brigman appeal.
ANALYSIS
The issue is whether the court erred in granting summary judgment dismissal of Mr. Cork's and Ms. Brigman's petition for the return of the alleged contraband seized by the State. Mr. Cork and Ms. Brigman contend the property is not contraband because, as an Indian, the statutory scheme does not apply to Ms. Brigman in view of federal law and constitutional principles. Alternatively, they contend that if state law does apply, Ms. Brigman is entitled to an exemption.
Summary judgment is appropriate when `the pleadings, affidavits, depositions, and admissions on file demonstrate there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law.' CR 56(c); Folsom v. Burger King, 135 Wn.2d 658, 663, 958 P.2d 301 (1998). Our inquiry is the same as the trial court when reviewing summary judgment issues. See id. The facts and reasonable inferences from the facts are viewed in the light most favorable to the nonmoving party. See Mountain Park Homeowners Ass'n v. Tydings, 125 Wn.2d 337, 341, 883 P.2d 1383 (1994). Questions of law are reviewed de novo. Id.
Washington imposes an excise tax on all cigarettes sold, used, consumed, handled, possessed or distributed within the state. RCW 82.24.020. The State collects the tax through the sale of cigarette stamps, which must be `affixed on every package of cigarettes' implicated by RCW 82.24.020. RCW 82.24.030(2).
Mr. Cork's and Ms. Brigman's main contention is that Washington's cigarette tax, as applied to Indians, is contrary to federal and constitutional law. They contend federal law prevents the State from taxing Indians, the tax is an impermissible burden on interstate and Indian commerce, differing treatment of military cigarette sales violates equal protection and state privileges and immunities guarantees, and the tax violates the State's constitutional guarantee of uniform taxation.
States lack the power to tax Indian tribes, Indian reservation lands or tribal members residing on Indian reservations without federal statutory authority. County of Yakima v. Confederated Tribes Bands of the Yakima Indian Nation, 502 U.S. 251, 258, 112 S. Ct. 683, 116 L. Ed. 2d 687 (1992). This state does not have a grant of federal authority to tax on-reservation activities. See 4 U.S.C. sec. 109; see also WAC 458-20-192(5) (recognizing that the State may not tax Indians or Indian tribes in Indian country). Accordingly, Washington's cigarette excise tax scheme does not apply to Indians purchasing or selling cigarettes on the reservation of a tribe of which they are enrolled members. RCW 82.24.040, .900. However, non-Indians and non-tribal Indians, those not enrolled with the tribe where they are doing business, must pay tax on cigarette retail sales on reservations. WAC 458-20-192(2)(a), (5). And, off-reservation activities are subject to taxation. See RCW 82.24.040, .900.
Washington's cigarette excise tax scheme has been upheld by the United States Supreme Court. In Washington v. Confederated Tribes of the Colville Indian Reservation, 447 U.S. 134, 139, 100 S. Ct. 2069, 65 L. Ed. 2d 10 (1980), several Indian tribes challenged Washington's imposition of a cigarette tax on non-member Indians and non-Indians. The Court upheld the tax: `Federal statutes, even given the broadest reading to which they are reasonably susceptible, cannot be said to pre-empt Washington's power to impose taxes on Indians not members of the Tribe.' Id. at 160-61. This type of tax is valid so long as the incidence of the tax does not fall on members of the Indian tribe where the sales are taking place. Id. at 159. Mr. Cork and Ms. Brigman argue Colville is no longer good law in view of statutory changes. However, because the current version of the statutory scheme does not impose a tax on member Indians, it remains valid under federal law. See Nevada v. Hicks, 533 U.S. 353, 362, 121 S. Ct. 2304, 150 L. Ed. 2d 398 (2001); Oklahoma Tax Comm'n v. Citizen Band Potowatami Indian Tribe of Oklahoma, 498 U.S. 505, 512, 111 S. Ct. 905, 112 L. Ed. 2d 1112 (1991); United States v. Baker, 63 F.3d 1478 (9th Cir. 1995); Bercier v. Kiga, 127 Wn. App. 809, 820, 103 P.3d 232 (2004), review denied, 155 Wn.2d 1015 (2005). For example, Ms. Brigman's Indian status does not prevent the State from imposing an excise tax on her activities off-reservation. See Colville, 447 U.S. at 159-61.
Mr. Cork and Ms. Brigman broadly assert Washington's cigarette excise tax violates the Commerce Clause. The Commerce Clause, article I, section 8, Clause 3 of the United States Constitution, limits the power of the states to impose substantial burdens on interstate commerce. South-Central Timber Dev., Inc. v. Wunnicke, 467 U.S. 82, 87-88, 104 S. Ct. 2237, 81 L. Ed. 2d 71 (1984). A state law impermissibly burdens interstate commerce if it facially discriminates against interstate commerce in favor of state economic interests. State v. Heckel, 143 Wn.2d 824, 832, 24 P.3d 404 (2001). If the statute is facially neutral, the benefits must be balanced against the burdens on interstate commerce. Id. Where a legitimate public interest exists, the statute "will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits." Id. at 832-33 (quoting Pike v. Bruce Church Inc., 397 U.S. 137, 142, 90 S. Ct. 844, 25 L. Ed. 2d 174 (1070)).
Chapter 82.24 RCW does not openly discriminate against interstate commerce in favor of Washington state interests; the statute applies evenly to in-state and out-of-state transactions. Further, the statutes promote a legitimate state interest, the generation of revenue. As argued by the Board, the burden on interstate commerce is minimal, because the tax burden always falls on the consumer.
Without analysis, Mr. Cork and Ms. Brigman assert the Indian Commerce Clause (U.S. Const. art. I, sec. 8, cl. 3) is violated. State taxes which discriminate against Indian commerce are invalid. Dep't of Fisheries v. De Watto Fish Co., 100 Wn.2d 568, 572, 674 P.2d 659 (1983). The Commerce Clause does not bar all state taxation of matters touching the economic interests of Indian tribes, but it prohibits undue discrimination against, or burdens on, Indian commerce. Colville, 447 U.S. at 159-61. Here, Washington's tax scheme does not unduly burden or discriminate against Indian commerce because the incidence of the tax is on non-Indian or non-tribal Indian consumers. See id.
Mr. Cork and Ms. Brigman argue Washington's cigarette excise tax statutes violate equal protection principles by exempting transactions on military bases but not Indian reservations. While the United States Supreme Court has upheld taxes for on-reservation cigarette sales to non-Indians or non-tribal Indians, it has specifically prohibited state taxes on cigarettes sold to federal instrumentalities, like military bases. See Colville, 447 U.S. at 160; Hancock v. Train, 426 U.S. 167, 178-79, 96 S. Ct. 2006, 48 L. Ed. 2d 555 (1976). Washington's tax scheme simply recognizes this prohibition. For these reasons, the Ninth Circuit has specifically rejected an identical equal protection argument. See Baker, 63 F.3d at 1490-91.
Mr. Cork and Ms. Brigman argue a violation of the Washington State Constitutional guarantee of equal privileges. Under article I, section 12, `[n]o law shall be passed granting to any citizen, class of citizens, or corporation other than municipal, privileges or immunities which upon the same terms shall not equally belong to all citizens, or corporations.' Apparently, this argument is also based on the exemption of military base transactions from the cigarette tax scheme. However, as discussed, the State is prohibited from taxing federal instrumentalities. Hancock, 426 U.S. at 178-79.
Mr. Cork and Ms. Brigman assert the uniform taxation requirements of Article VII, section 1 of the Washington State Constitution are offended. Taxes must be uniformly applied to the same class of property so that the burdens of taxation are uniformly distributed. Bond v. Burrows, 103 Wn.2d 153, 157, 690 P.2d 1168 (1984). However, the uniformity requirement does not apply to excise taxes, such as Washington's cigarette tax. See Black v. State, 67 Wn.2d 97, 100, 406 P.2d 761 (1965).
Without sufficient analysis, Mr. Cork and Ms. Brigman contend chapter 8.24 RCW conflicts with the Treaty of Medicine Creek, the Treaty of Point Elliot, and the Yakima Treaty. However, Mr. Cork and Ms. Brigman fail to demonstrate how any of these treaties preclude the State from imposing a cigarette excise tax on the off-reservation activities of non-licensed wholesalers. The Colville Court specifically rejected a claim that Washington's excise tax scheme was preempted by these treaties. See Colville, 447 U.S. at 156.
In sum, Mr. Cork and Ms. Brigman fail to persuade us that Washington's tax scheme is invalid as applied to Indians generally. Accordingly, we shift our focus to their alternative contention that unresolved genuine fact issues remain as to whether Mr. Cork qualifies for statutory exemptions. A Washington licensed wholesaler may possess unstamped cigarettes for a reasonable time to affix the stamps. RCW 82.24.040(2)(b), .260(1). And, a Washington licensed wholesaler who pays a surety bond may possess extra `stock' to conduct business. RCW 82.24.040(2)(b). Ms. Brigman argues she is a licensed wholesaler. However, the statute exempts wholesalers licensed in Washington. RCW 82.24.040, .260(1). Even when viewed in the light most favorable to Mr. Cork and Ms. Brigman, the facts merely show she has an American Indian business license; this is not a Washington state cigarette wholesaler's license.
Ms. Brigman cites cases she says support her contention the State cannot require her to obtain a cigarette wholesaler's license. However, the cited cases do not support her position. See Moe v. Confederated Salish Kootenai Tribes of the Flathead Reservation, 425 U.S. 463, 480, 96 S. Ct. 1634, 48 L. Ed. 2d 96 (1976) (holding an on-reservation vendor license fee to be impermissible); Cree v. Flores, 157 F.3d 762 (9th Cir. 1998) (challenge to truck license and overweight permit fees).
Further, the statutes exempt sales by Indian tribal organizations to enrolled members of the tribe from the stamping requirements. Mr. Cork and Ms. Brigman contend Ms. Brigman is an Indian tribal organization. An Indian tribal organization is statutorily defined as `a federally recognized Indian tribe, or tribal entity, and includes an Indian wholesaler or retailer that is owned by an Indian who is an enrolled tribal member conducting business under tribal license or similar tribal approval within Indian country.' RCW 82.24.010(3). Ms. Brigman alleges she is a member of the Spokane Indian tribe. However, Ms. Brigman does not show she was conducting business under tribal license or approval or in Indian country. Thus, this exemption does not apply as a matter of law. The statutes exempt the transportation of unstamped cigarettes by a licensed wholesaler in the wholesaler's own vehicle (RCW 82.24.250(1)(a)), or any individual who has given advance notice to the Board (RCW 82.24.250(1)(b)). Mr. Cork and Ms. Brigman are not licensed wholesalers in Washington. They did not give any notice to the Board. As a matter of law, Mr. Cork and Ms. Brigman do not qualify for this exemption. See also RCW 82.24.500.
While Mr. Cork and Ms. Brigman argue the RCW 82.24.250 notification requirements are unconstitutionally vague, they never attempted to give the Board notification of the shipment. They have repeatedly asserted they were not required to give notice. Under the circumstances, they do not have standing to challenge its legality. See Grant County Fire Prot. Dist. No. 5 v. City of Moses Lake, 150 Wn.2d 791, 802, 83 P.3d 419 (2004) (standing requires an interest within the zone of interests being regulated and that the challenged action caused an `injury in fact.').
In sum, Mr. Cork and Ms. Brigman possessed, transported and intended to sell non-exempt, unstamped cigarettes. Thus, the seized cigarettes are contraband subject to forfeiture. See RCW 82.24.130(1)(a), (1)(b). A court may refuse to return seized property if it is contraband or subject to forfeiture by statute. State v. Alaway, 64 Wn. App. 796, 798, 828 P.2d 591 (1992). The cigarettes and other seized property were, under these facts, therefore, subject to statutory forfeiture.
We hold the trial court did not err in granting the Board's motion for summary judgment.
Affirmed.
A majority of the panel has determined this opinion will not be printed in the Washington Appellate Reports, but it will be filed for public record pursuant to RCW 2.06.040.
SWEENEY, C.J., KATO, J., Concur.