Japan Line, Ltd. v. County of Los Angeles

A group of six Japanese shipping companies (collectively, the shipping companies) (plaintiffs) operated vessels that transported large shipping containers for international commerce. The shipping companies were incorporated in Japan, all their vessels were registered in Japan, and their shipping containers were subject to property taxes in Japan. Through the course of their travels, the shipping companies went through California’s jurisdiction. Between 1970 and 1972, the county of Los Angeles and other political subdivisions of California (collectively, the California localities) (defendants) levied over $550,000 in ad valorem property taxes against the shipping companies on the average physical presence of their shipping containers in the jurisdictions of the California localities. During this same time, Japan did not levy property taxes against shipping containers owned by United States-based companies that were physically present in Japan. The shipping companies filed a lawsuit in the Los Angeles County Superior Court, seeking a refund and arguing that the application of the California localities’ tax violated the Commerce Clause of the United States Constitution. The superior court awarded the refund and held that to avoid double taxation, the shipping companies were taxable only in Japan. The California Supreme Court reversed the superior court, holding that double taxation as a result of international commerce was not an issue under the Commerce Clause. The United States Supreme Court granted certiorari.