BNSF Railway Company v. Alabama Department of Revenue et al

Filing 178

ORDER - The standard governing a motion to alter is difficult to meet, and Irondale does not point to case law which compels the Court to reexamine its position. Accordingly, the Court denies the City of Irondale's motion to amend the judgment on the pleadings in favor of Norfolk. Signed by Judge Madeline Hughes Haikala on 8/5/2022. Associated Cases: 2:13-cv-01305-MHH, 2:11-cv-01047-MHH, 2:14-cv-00283-MHH(KEK)

FILED
2022 Aug-05 AM 10:33
U.S. DISTRICT COURT
N.D. OF ALABAMA

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION

NORFOLK SOUTHERN
RAILWAY COMPANY,
Plaintiff,
v.
ALABAMA DEPARTMENT OF
REVENUE, et al.,

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Case No.: 2:13-cv-01305-MHH

Defendants.

ORDER
The City of Irondale has asked the Court to alter, amend, or vacate the
judgment on the pleadings and permanent injunctive relief the Court entered in favor
of Norfolk. (Doc. 184).1 For the reasons discussed below, the Court denies the
motion.
I.
Pursuant to Rule 59(e) of the Federal Rules of Civil Procedure, a party may
ask a district court to alter, amend, or vacate a judgment. “[T]he decision to alter or
amend judgment is committed to the sound discretion of the district judge . . . .” Am.

1

Record citations refer to CM/ECF docket entry numbers in case 2:13-cv-01305-MHH.
1

Home Assur. Co. v. Glenn Estess & Assocs., Inc., 763 F.2d 1237, 1238–39 (11th Cir.
1985).
[R]econsideration of a judgment after its entry is an extraordinary
remedy which should be used sparingly. There are four basic grounds
upon which a Rule 59(e) motion may be granted. First, the movant may
demonstrate that the motion is necessary to correct manifest errors of
law or fact upon which the judgment is based. Of course, the corollary
principle applies and the movant’s failure to show any manifest error
may result in the motion’s denial. Second, the motion may be granted
so that the moving party may present newly discovered or previously
unavailable evidence. Third, the motion will be granted if necessary to
prevent manifest injustice. Serious misconduct of counsel may justify
relief under this theory. Fourth, a Rule 59(e) motion may be justified
by an intervening change in controlling law.
11 CHARLES ALAN WRIGHT, ARTHUR R. MILLER & MARY KAY KANE, FEDERAL
PRACTICE AND PROCEDURE §2810.1 (3d ed.). “Except in rare circumstances,” a party
may not use a motion under Rule 59(e) “to raise new legal theories or arguments.”
EEOC v. St. Joseph’s Hosp., Inc., 842 F.3d 1333, 1337 (11th Cir. 2016).
II.
The City of Irondale contends that the Court made a manifest error of law
“when it held that because the State cannot levy the sales and use tax, counties and
municipalities are also prevented from levying their own sales and use tax.” (Doc.
184, p. 12). Because water carriers do not travel in interstate commerce within the
City of Irondale, Irondale argues that it is not discriminating by levying taxes against
railroad carriers. (Doc. 184, pp. 5, 10, 16). According to Irondale, the state of

2

Alabama “cannot levy its sale and use tax until the tax is applied equally to both
railroad carriers and water carriers, but the State was not stripped of its power to levy
this tax completely. Because the State has not lost its power to levy a sales and use
tax, it is still within Irondale’s power to levy the tax so long as Irondale is not acting
in a discriminatory manner.” (Doc. 184, p. 15).
In the Court’s March 25, 2021 memorandum opinion granting most of the
plaintiff’s motions for judgment on the pleadings, (Doc. 134), the Court squarely
addressed the issue of county and municipal taxation:
The county and municipal defendants contend that a permanent
injunction on the State’s levying of the sales and use tax would not
necessarily enjoin counties and municipalities from levying the tax.
(Doc. 89, p. 30). Those defendants assert that no legal authority
establishes that an injunction entered against a state with respect to an
individual taxpayer limits the taxing authority delegated to counties or
municipalities and that the plaintiffs must offer evidence that they
compete with specific water carriers in each local jurisdiction to
succeed on their claims against the county and municipal defendants.
(Doc. 89, pp. 35–38).
The county and municipal defendants’ arguments miss the mark. The
counties and municipalities derive their taxing authority from the State,
and county and municipal sales and use taxes must parallel state sales
and use taxes. ALA. CODE §§ 11-3-11.2, 11-51-200–204; (see Doc. 83,
p. 5, ¶ 18; Doc. 84, p. 5, ¶ 18; Doc. 85, p. 5, ¶ 18; Doc. 89, pp. 30–31).
Likewise, the State cannot delegate to a county or municipality taxing
powers different from or greater than the State’s taxing powers. State
v. Butler, 225 142 So. 531, 533 (Ala. 1932). The parties agree that this
is so. So, the law and the parties’ agreement on the matter makes the
following clear: if the State cannot levy the sales and use tax, then
neither can counties nor municipalities within the State. An injunction
on the State will identically restrain the local jurisdictions.
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(Doc. 134, pp. 25–26).2
The standard governing a motion to alter is difficult to meet, and Irondale does
not point to case law which compels the Court to reexamine its position. In an April
19, 2021 hearing, counsel for the Alabama Department of Revenue represented to
the Court that it had no information that the Alabama Legislature intended to repeal
the water carrier exemption. (Doc. 176, p. 3). “So, at least for the present time, it
does not appear that that option would be available to the State.” (Doc. 176, pp. 3–
4). The State of Alabama may not collect the sales and use taxes from rail carriers
for as long as it retains the exemption for water carriers. See CSX Transp., Inc. v.
Ala. Dep’t of Revenue, 888 F.3d 1163, 1187 (11th Cir. 2018). Because county and
municipal sales and use taxes must parallel state sales and use taxes, the City of
Irondale is properly enjoined from levying its sales and use tax “for as long as the
State of Alabama retains the sales and use tax exemption for diesel fuel used by
water carriers ‘engaged in foreign or international commerce or in interstate
commerce.’” (Doc. 182, pp. 3–4).

2

The memorandum opinion acknowledged that it was premature to enter judgment against
Irondale because Irondale had not yet answered Norfolk’s amended complaint. (Doc. 134, p. 25).
The Court noted that “Irondale, like its municipal co-defendants, has acknowledged that its levying
of the sales and use tax must parallel the State’s sales and use tax, (see 2:13-cv-01305, Doc. 96,
pp. 9–10), and it is unlikely that Irondale could identify a factual dispute or raise an affirmative
defense that would change the ultimate permanent injunction or declaratory judgment.” (Doc.
134, p. 24). The Court entered judgment on the pleadings against Irondale on April 9, 2021. (Doc.
140).
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Accordingly, the Court denies the City of Irondale’s motion to amend the
judgment on the pleadings in favor of Norfolk.
DONE and ORDERED this August 5, 2022.

_________________________________
MADELINE HUGHES HAIKALA
UNITED STATES DISTRICT JUDGE

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