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ArtIII.S1.7.3.3 Retroactivity of Civil Decisions

Article III, Section 1:

The judicial Power of the United States, shall be vested in one supreme Court, and in such inferior Courts as the Congress may from time to time ordain and establish. The Judges, both of the supreme and inferior Courts, shall hold their Offices during good Behaviour, and shall, at stated Times, receive for their Services, a Compensation, which shall not be diminished during their Continuance in Office.

As in criminal cases,1 a civil case announcing a new legal rule might in theory apply retroactively in all instances, might apply purely prospectively, or might apply with “selective prospectivity” such that the prevailing party in the case obtains the retroactive benefit of a new rule but no one else does. In some civil cases, the Court has declined to apply new rules retroactively, sometimes even with respect to the prevailing party in the case.2 In Chevron Oil Co. v. Huson, the Court held that the question of retroactivity was to be determined by balancing the equities, considering whether a decision announced a new principle of law, whether retroactive application would advance or hinder the purpose of the rule in question, and whether retroactive application would cause injustice or hardship that could be avoided through purely prospective application.3

In two cases from the 1990s, the Court revealed itself to be deeply divided on whether judicial decisions should, or must, apply retroactively. First, in American Trucking Assn’s, Inc. v. Smith, the Court considered whether to give retroactive effect to a prior case holding unconstitutional the state’s application of a highway tax.4 The Court held that the decision did not apply retroactively. A four-Justice plurality applied the Chevron Oil test to reach that conclusion. Justice Scalia concurred in the judgment but disagreed with the plurality’s reasoning.5 The following year, in James B. Beam Distilling Co. v. Georgia, the Court considered whether a company could claim a tax refund under an earlier ruling holding unconstitutional the imposition of certain taxes upon its products.6 A fractured Court held that the company could seek a refund.7

In the 1993 case Harper v. Virginia Dep’t of Taxation, a bare majority of the Court departed from the Chevron Oil balancing test and announced a new rule to determine the retroactive effect of civil cases.8 The Court held: “When this Court applies a rule of federal law to the parties before it, that rule is the controlling interpretation of federal law and must be given full retroactive effect in all cases open on direct review and as to all events, regardless of whether such events predate or postdate our announcement of the rule.” 9

For discussion of criminal cases, see ArtIII.S1.7.3.2 Retroactivity of Criminal Decisions. back
E.g., Cipriano v. City of Houma, 395 U.S. 701 (1969); Allen v. State Board of Elections, 393 U.S. 544 (1969); but see Hanover Shoe, Inc. v. United Shoe Machinery Corp., 392 U.S. 481 (1968). back
404 U.S. 97 (1971). back
496 U.S. 167 (1990). back
Id. at 200. Four dissenting Justices would have applied the prior case “only where, under state law, the time for challenging the tax has not expired,” or in timely-filed challenges to the tax where “the decisions are not yet final.” Id. at 224–25. back
501 U.S. 529 (1991). back
Two Justices objected to the possibility of “selective prospectivity” noting that, in the earlier decision, the Court had applied the holding to the contesting company, and concluding that once a new rule has been applied retroactively to the litigants in a civil case, considerations of equality and stare decisis compel application to all. Id. at 532–44. Justice White wrote separately to emphasize that it was permissible for the Court to apply its decisions purely prospectively. Id. at 544–47. By contrast, three concurring Justices argued that limiting the retroactive application of judicial decisions, whether through partial or total prospectivity, violates Article III by expanding the jurisdiction of the federal courts beyond true cases and controversies. Id. at 547–49 back
509 U.S. 86 (1993). back
Id. at 97; see also Reynoldsville Casket Co. v. Hyde, 514 U.S. 749 (1995) (setting aside a state court refusal to give retroactive effect to a U.S. Supreme Court invalidation of that state’s statute of limitations in certain suits); Ryder v. United States, 515 U.S. 177, 184–85 (1995). back