Daimlerchrysler Corporation v. Cuno

547 U.S. 332 (2006)

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Nature of the Case

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Facts

The city of Toledo and State of Ohio sought to encourage the current manufacturer of Jeeps -- DaimlerChrysler -- to expand its Jeep operation in Toledo, by offering local and state tax benefits for new investment. Ps, taxpayers in Toledo sued, alleging that their local and state tax burdens were increased by the tax breaks for D, tax breaks that they asserted violated the Commerce Clause. Ohio levies a franchise tax 'upon corporations for the privilege of doing business in the state, owning or using a part or all of its capital or property in [the] state, or holding a certificate of compliance authorizing it to do business in [the] state.' A taxpayer that purchases 'new manufacturing machinery and equipment' and installs it at sites in the State receives a credit against the franchise tax. Municipalities in Ohio may also offer partial property tax waivers to businesses that agree to invest in qualifying areas. D entered into a contract with the city of Toledo. D agreed to expand its Jeep assembly plant and in exchange, the city agreed to waive the property tax for the plant, with the consent of the two school districts in which the plant is located. D was also entitled to a credit against the state franchise tax. Ps filed suit against various state and local officials and D alleging that these tax benefits violated the Commerce Clause. They alleged that the tax breaks for d diminished the funds available to the city and State, imposing a 'disproportionate burden' on Ps. Ds removed the case and the District Court declined to remand the case, concluding that, 'at the bare minimum, Ps who are taxpayers have standing to object to the property tax exemption and franchise tax credit statutes under Massachusetts v. Mellon. The District Court found that neither tax benefit violated the Commerce Clause. The Court of Appeals for the Sixth Circuit agreed as to the municipal property tax exemption but held that the state franchise tax credit violated the Commerce Clause. Ds sought certiorari for the invalidation of the franchise tax credit and Ps sought certiorari to review the upholding of the property tax exemption.