Opinion
August 8, 1994
Appeal from the Supreme Court, Queens County (LeVine, J.).
Ordered that the appeal from the order and judgment of the Supreme Court, Queens County, dated June 14, 1990, is dismissed, without costs or disbursements, as academic; and it is further,
Ordered that the order and judgment is affirmed insofar as cross-appealed from, without costs or disbursements; and it is further,
Ordered that the orders are affirmed insofar as appealed from, without costs or disbursements.
In Duffy v. Wetzler ( 174 A.D.2d 253, supra) (hereinafter Duffy I), this Court addressed the issue of whether the decision of the United States Supreme Court in Davis v. Michigan Dept. of Treasury ( 489 U.S. 803) should be applied retroactively. In Davis, the Supreme Court of the United States invalidated, as violative of principles of intergovernmental tax immunity, Michigan's income taxation scheme which exempted from taxation pensions paid to former State employees but taxed the pensions paid to all other retirees, including those of the Federal government. The tax laws existing in this State and the City of New York at the time of the Davis decision were similarly discriminatory (see, Tax Law § 612 [c] [former (3)]; Administrative Code § 11-1712), and were subsequently amended to exempt pensions paid to Federal retirees from taxation by the State and City (L 1989, ch 664, §§ 1, 2, 3). The plaintiffs, Federal retirees, sought to secure refunds of the illegally imposed taxes for the period provided by statute (see, Tax Law § 687 [a]), asserting that the Davis decision should be applied retroactively.
This Court, in Duffy I (supra, at 259-265), reasoned that the Supreme Court's plurality decision in Beam Distilling Co. v Georgia ( 501 U.S. 529), which proscribed the use of selective prospectivity, did not preclude the application of Davis on a purely prospective basis. This Court concluded that the appropriate analysis of the prospectivity issue was governed by Chevron Oil v. Huson ( 404 U.S. 97), and that application of the three-pronged Chevron Oil test required that Davis be given only prospective effect.
The United States Supreme Court subsequently granted the plaintiffs' petition for certiorari, vacated the opinion and order of this Court in Duffy I, and remitted the matter here for further consideration in light of Harper v. Virginia Dept. of Taxation (509 US ___, 113 S Ct 2510). In Harper, the Supreme Court ruled that its 1989 determination invalidating State laws taxing Federal pensions but not those of former State employees must be applied retroactively as a matter of Federal law. However, on the issue of remedy, the Court further held that Federal due process did not necessarily mandate refunds of the illegal taxes so imposed if State law provided an adequate form of "predeprivation process", as, for example, by allowing taxpayers to bring suit to enjoin imposition of a tax prior to its payment (Harper v. Virginia Dept. of Taxation, supra, at ___-___, at 2519-2520).
The State of New York decided to "pay full refunds plus interest to the approximately 10,000 federal retirees who paid State income taxes on their federal pensions prior to 1989 pursuant to tax provisions that were later held to be unconstitutional under Davis [and] * * * Harper * * * and who have filed timely administrative claims for refunds for those taxes with the Department of Taxation and Finance", and notified this Court of that decision in a letter dated June 29, 1994. The City of New York has acquiesced in this decision.
Accordingly, the issues affected by the remittitur by the United States Supreme Court for further consideration in light of Harper, i.e., those relating to the remedy and the potential refunds, are academic. Moreover, the plaintiffs' contentions regarding the remaining issues, including class action certification and common fund attorneys' fees, were previously rejected by this Court in Duffy I, and need not be reexamined. Thompson, J.P., Miller, O'Brien and Altman, JJ., concur.