Harper v. Va. Dep't of Taxation - 509 U.S. 86, 113 S. Ct. 2510 (1993)

Rule:

When the United States Supreme 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 still open on direct review and as to all events, regardless of whether such events predate or postdate our announcement of the rule.

Facts:

Petitioners, federal civil service and military retirees, sought a refund of taxes erroneously or improperly assessed in violation of the nondiscrimination principle, which stated that a state violated the constitutional doctrine of intergovernmental tax immunity when it taxed federal retirement benefits but exempted state retirement benefits. The state supreme court refused to retroactively impose the nondiscrimination principle to petitioners' benefits. Petitioners filed for a writ of certiorari.

Issue:

1. Should the nondiscrimination principle be retroactively applied to petitioners’ refund action? 
2. Did the application of the principle automatically entitle the petitioners to a refund? 

Answer:

1) Yes. 2) No.

Conclusion:

The court granted certiorari and reversed, holding that when it applied a rule of federal law to the parties before it, that rule was the controlling interpretation of federal law and was to be given full retroactive effect in all cases still open on direct review and as to all events, regardless of whether such events predated or postdated the court's announcement of the rule. Thus, the nondiscrimination principle applied to petitioners' refund action. However, the court did not enter judgment for petitioners because federal law did not necessarily entitle them to a refund. The action was remanded.