Justices Won’t Take Up Tax Fight Between Arizona and California

WASHINGTON (CN) — The Supreme Court declined Monday to hear a case in which Arizona claims California is engaging in an “extraordinarily aggressive policy of extraterritorial tax assessment and enforcement.”

In the interstate tussle, the Golden State is accused of trampling over state borders and flouting the Constitution by applying a “doing business” tax.

(AP Photo/J. Scott Applewhite)

“California is not content to assess the ‘doing business’ tax solely against entities actually conducting business in California, however,” Arizona argued in its bill of complaint. “Instead, California assesses the ‘doing business’ tax so expansively that it reaches out-of-state companies that do not conduct any actual business in California.”

Arizona urged the high court to take action to stop California in the tracks of its alleged constitutional violations, claiming that the state was enforcing the tax against several Arizona-based companies that have no connection to California except for “purely passive investment” in companies doing business in the Golden State.

But the justices opted Monday not to grant the motion to file the bill of complaint. Justice Clarence Thomas, however, issued a dissent along with Justice Samuel Alito arguing the court likely does not have the discretion to decline cases that arise between two states within its jurisdiction.

“Our original jurisdiction in suits between two states is also ‘exclusive,’” Thomas wrote, adding that as he has previously argued if the court “does not exercise jurisdiction over a controversy between two states, then the complaining state has no judicial forum in which to seek relief.”

The conservative justice argued that the court provided scant justification for denying the Arizona request, writing: “Denying leave to file in a case between two or more states is thus not only textually suspect, but also inequitable.”

The Supreme Court declined to take up another case Monday, Patterson v. Walgreen Co., sparking a concurring opinion from Justices Alito and Thomas, joined by Justice Neil Gorsuch.

The court requested the solicitor general to weigh in on the meaning under Title VII of “prohibition of employment discrimination ‘because of . . . religion.’”

Alito wrote that the input was helpful in considering whether the court should take a new look at its 1977 position in Trans World Airlines v. Hardison that Title VII does not require an employer to accommodate an employee’s religious practices if doing so would impose more than a de minimis, or minor, burden.

Employment discrimination is prohibited under Title VII, requiring employers to accommodate religion in the workplace unless observance and practice cause “undue hardship” on their business.

But Alito wrote that the court should undertake a review of the issues in Hardison when an appropriate case lands at the bench.

“As the solicitor general observes, Hardison’s reading does not represent the most likely interpretation of the statutory term ‘undue hardship’; the parties’ briefs in Hardison did not focus on the meaning of that term; no party in that case advanced the de minimis position; and the court did not explain the basis for this interpretation,” Alito wrote.

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