ANALYSIS OF JUNE 30, 2016 SUPREME COURT OPINIONS
[Posted June 30, 2016] After a long wait, two sets of litigants get rulings today in cases argued almost four months ago.
Here’s one you don’t see every day: in three separate opinions that occupy just 7½ pages, and by a vote of 3-1-3, the justices unanimously affirm the trial court’s judgment in a tax case.
How can a metaphorical fracas like that be unanimous? Let’s dig into City of Richmond v. VEPCO and see.
The issue is fairly simple, though it involves seven million dollars. VEPCO runs an electricity-generating station in Richmond; the plant operates on natural gas. Pursuant to statutory authority, the City taxes “consumers of natural gas provided by pipeline distribution companies.” The Code defines this last term as a company that “transmits, by means of a pipeline, natural gas … to a purchaser for purposes of furnishing heat or light.”
The giant utility company refused to pay the tax. It admittedly used natural gas at the plant, but not “for purposes of furnishing heat or light.” It used it for purposes of generating power. The City didn’t budge; it evidently insisted that the plant converted gas into heat, and that heat got converted in turn into power. On appeal, the Department of Taxation sided with the City.
VEPCO appealed to circuit court, which reversed, finding that the purpose of generating power wasn’t the same as furnishing light or heat. The justices agreed to take a look at the dispute.
Justice Mims writes what’s designated as the opinion of the court. He notes that in this location, the Code refers to “heat or light.” In a nearby statute, it specifies “heat, light and power.” The court reasons that the omission of the word power in “our” statute has to mean that the legislature elected to treat power generation differently in this context. Accordingly, the trial court got it right.
Justice Powell writes separately. She notes that the trial court made a factual finding that VEPCO doesn’t consume gas in order to provide heat or light. She would affirm simply because there is evidence in the record to support that finding.
Justice Lacy pens the third opinion, and she’s joined by Justices McClanahan and Millette. Her approach is to decide the issue at an analytically earlier point: there is no “pipeline distribution company” involved here, so the tax doesn’t apply. She notes that VEPCO gets its gas from a company called VP Energy, and the SCC, which regulates such companies, has never classified VP Energy as a pipeline distribution company. Since the courts defer to interpretations like this from the SCC, Justice Lacy would affirm on that ground.
And that, my brethren and sistren, is how you get from three separate opinions to a unanimous result. It is also, quite understandably, how you take four months to hand down a quasi-unanimous, seven-page decision.
At the other end of the complexity spectrum, we have The Babcock & Wilcox Co. v. Areva NP, Inc. It’s a suit for royalty payments arising from the use of nuclear technology. Overwhelmingly, it involves the interpretation of some fairly unique contract language in a complex deal between a couple of large companies, and it applies fairly standard contract principles in doing that.
So why isn’t this an unpub? After all, publishing opinions serves to inform the public (including the bench and bar) of the legal reasoning that will govern future litigation; unpubs typically involve matters of no great precedential value.
Reason #1 might be the fact that this is a 42-page opinion. It’s easy to see why this one took four months to write and polish. Reason #2 might have something to do with the $16 million judgment for breach of contract and misuse of trade secrets.
Having just spent over 90 minutes reading and digesting the opinion, I don’t propose to lay out all the facts, including complex contract provisions, in detail. That would make this a monstrously long essay, and I might lose you. Instead, I’ll mention a couple of key points that contributed to the court’s decision to overturn the verdict and enter final judgment for the defendant.
First, the court rules that just because a contract provision is complex doesn’t make it ambiguous. Ambiguity means that language is susceptible of two meanings. The language of this contract is highly technical and scientific, but the justices don’t find that it requires rules of construction or interpretation; just plain application of the words used to reach a single, though complex, meaning.
Second, the trial court had entered a partial summary judgment order that barred some of the plaintiff’s claims. At the ensuing trial, however, the court allowed the plaintiff to present those claims to the jury, and the plaintiff got a verdict on them. The Supreme Court rules that the judge’s original ruling was correct, and the trial court should have set the verdict aside and entered judgment for the defendant on those claims.
How can a trial court rule in limine that a jury won’t get a particular claim, and then go ahead and allow that claim? Well, two obvious answers are mistake and oversight. But in reality, a ruling like that is interlocutory, and a trial judge can always change his mind on it, at any time before 21 days after final judgment.
Defense attorneys may take comfort in the fact that the Supreme Court has set aside yet another eight-figure judgment. The court has historically been the place where large judgments go to die. I can’t say that that’s because of actual antipathy toward them by the justices; it may be coincidence. After all, eight-figure judgments don’t come along every session. But the last one of which I’m aware that the Supreme Court affirmed on the merits was VEPCO v. Dungee, way back in 1999 (258 Va. 235). (There may be a more recent one, but I can’t think of any right now.)
One last point: according to today’s opinion, the appendix in this appeal comprised at least 28 volumes and occupied over 13,000 pages. Rule 5:32(a) requires that the parties designate for inclusion in the appendix only the portions of the record that are “germane to the assignments of error” or “necessary for an understanding of the case.” In addition, the rule allows parties to designate other parts of the record “to which the parties wish to direct the Court’s attention.”
Now, I understand that the issues were complex, but 13,000 pages is, in my mind, clearly excessive. Overdesignating is a form of defensive lawyering — including more than you have to, to ensure that you leave nothing out that might possibly be relevant. I’m going to make a wild guess that many thousands of those pages — certainly more than half the total — fit into none of Rule 5:32’s categories. That produced a stack of volumes probably four feet high, much of which was wasted paper.