425 STEVENS, J., dissenting Clearly, it is improper simply to lump huge quantities of investment income that have no special connection with the taxpayer's operations in the taxing State into the tax base and to apportion it on the basis of factors that are used to allocate operating income.13 The Court does not reject this reasoning; rather, its opinion at least partly disclaims reliance on any such theory.14 The Court appears to rely squarely on the third alternative approach to defining a unitary business. It assumes that Vermont's inclusion of the dividends in Mobil's apportionable tax base is predicated on the notion that the dividends represent the income of what would be the operating divisions of the Mobil Oil Corporation if Mobil and its affiliates were a single, legally integrated enterprise, rather than a corporation with numerous interests in other, separate corporations that pay it dividends. Ante, at 440-441.15 Theoretically, that sort owner, and since all of the investment activities take place in California, the investment income should be computed separately and assigned entirely to California. "The income from the railroad operations can likewise be identified as being derived from a distinct series of transactions, which should be considered as constituting a business separate and distinct from the investment activities. Since the railroad operations are carried on partly within and partly without the state, it is a unitary business and hence the income from the railway business as a whole should first be computed and apportioned within and without California by means of an appropriate allocation formula." (Footnote omitted.) 13 No one could seriously maintain that if a wealthy New York resident should open a gas station in Vermont, Vermont could use his dividends as a measure of the profitability of his gas station. 14 See n. 2, supra. 15 "Had appellant chosen to operate its foreign subsidiaries as separate divisions of a legally as well as a functionally integrated enterprise, there is little doubt that the income derived from those divisions would meet due process requirements for apportionability. Cf. General Motors Corp. v. Washington, 377 U. S. 436, 441 (1964). Transforming the same income into dividends from legally separate entities works no change in the underlying economic realities of a unitary business, and accordingly it ought not to affect the apportionability of income the parent receives." of definition is unquestionably acceptable. But there are at least three objections to its use in this case. First, notwithstanding the Court's characterization of the record, it is readily apparent that a large number of the corporations in which Mobil has small minority interests and from which it derived significant dividend income would seem neither to be engaged in the petroleum business nor to have any connection whatsoever with Mobil's marketing business in Vermont." Second, the record does not disclose whether the earnings of the companies that pay dividends to Mobil are even approximately equal to the amount of the dividends.18 But of greatest importance, the record contains no information about the payrolls, sales or property values of any of those corporations, and Vermont has made no attempt to incorporate them into the apportionment formula computa 16 "It seems clear, strictly as a logical proposition, that foreign source income is no different from any other income when it comes to determining, by formulary apportionment, the appropriate share of the income of a unitary business taxable by a particular state. This does not involve state taxation of foreign source income any more than does apportionment— in the case of a multistate business-involve the taxation of income arising in other states. In both situations the total income of the unitary business simply provides the starting point for computing the in-state income taxable by the particular state. . . . "Obviously, if the foreign source income is included in the base for apportionment, foreign property, payrolls and sales must be included in the apportionment fractions. This was recognized in Bass [, Ratcliff & Gretton, Ltd. v. State Tax Comm'n, 266 U. S. 271]. . . ." State Taxation 205. 17 See n. 9, supra. 18 A corporation's decision as to how much of its earnings to pay out in dividends is subject to many variables. Nothing says that 100% must be passed through to the stockholders. A corporation is not a partnership. Indeed, depending on the state of the corporation's finances, dividends could conceivably even exceed 100% of the earnings. In any event, at least for those corporations in which it has only a minority interest, Mobil cannot control the percentage of their earnings that is paid out in dividends. 425 STEVENS, J., dissenting tions. Unless the sales, payroll, and property values connected with the production of income by the payor corporations are added to the denominator of the apportionment formula, the inclusion of earnings attributable to those corporations in the apportionable tax base will inevitably cause Mobil's Vermont income to be overstated.19 Either Mobil's worldwide "petroleum enterprise," ante, at 435, is all part of one unitary business, or it is not; if it is, Vermont must evaluate the entire enterprise in a consistent manner. As it is, it has indefensibly used its apportionment methodology artificially to multiply its share of Mobil's 1970 taxable income perhaps as much as tenfold.20 In my judgment, the record is clearly sufficient to establish the validity of Mobil's objections to what Vermont has done here. IV The Court does not confront these problems because it concludes that Mobil has in effect waived any objections with respect to them. Although the Court's effort to avoid constitutional issues by narrowly constricting its holding is commendable, I believe it has seriously erred in its assessment of the procedural posture of this case. It is true that appellant has disclaimed any dispute with "Vermont's method of apportionment." Brief for Appellant 11. And, admittedly, appellant has confused its cause by variously characterizing its attack in its main brief and reply brief. But contrary to the Court's assertions, see nn. 1, 3, supra, appellant did not disclaim any dispute with the accuracy or fairness of the application of the formula in this Mobil merely disclaimed any attack on Vermont's case. 19 See n. 16, supra. 20 The net result of the inclusion of the out-of-state investment income and the exclusion of the sales, payroll, and property factors that produce that investment income is to increase Mobil's tax liability to Vermont for 1970 from the $1,821.67 computed by Mobil to $19,078.56. method of apportionment generally to contrast its claims in this case with the sort of challenge to Iowa's single-factor formula that was rejected in Moorman. The question whether Vermont may include investment income in the apportionable tax base should not be answered in the abstract without consideration of the other factors in the allocation formula. The apportionable tax base is but one multiplicand in the formula. Appellant's challenge to the inclusion of investment income in that component necessarily carries with it a challenge to the product. Because of the inherent interdependence of the issues in a case of this kind, it seems clear to me that Mobil has not waived its due process objections to Vermont's assessment. Appellant's disclaimer of a Moorman style attack cannot fairly be interpreted as a concession that makes its entire appeal a project without a purpose. On the contrary, its argument convincingly demonstrates that the inclusion of its dividend income in the apportionable tax base has produced a palpably arbitrary measure of its Vermont income. In sum, if Vermont is to reject Mobil's calculation of its tax liability, two courses are open to it: (1) it may exclude Mobil's investment income from the apportionable tax base and also exclude the payroll and property used in managing the investments from the denominator of the apportionment factor; or (2) it may undertake the more difficult and risky task of trying to create a consolidated income statement of Mobil's entire unitary business, properly defined. The latter alternative is permissible only if the statement fairly summarizes consolidated earnings, and takes the payroll, sales, and property of the payor corporations into account. Because Vermont has employed neither of these alternatives, but has used a method that inevitably overstates Mobil's earnings in the State, I would reverse the judgment of the Supreme Court of Vermont. Syllabus UNITED STATES v. CREWS CERTIORARI TO THE DISTRICT OF COLUMBIA COURT OF APPEALS No. 78-777. Argued October 31, 1979-Decided March 25, 1980 Immediately after being assaulted and robbed at gunpoint, the victim notified the police and gave them a full description of her assailant. Several days later, respondent, who matched the suspect's description, was seen by the police around the scene of the crime. After an attempt to photograph him proved unsuccessful, respondent was taken into custody, ostensibly as a suspected truant from school, and was detained at police headquarters, where he was briefly questioned, photographed, and then released. Thereafter, the victim identified respondent's photograph as that of her assailant. Respondent was again taken into custody and at a court-ordered lineup was identified by the victim. Respondent was then indicted for armed robbery and other offenses. On respondent's pretrial motion to suppress all identification testimony, the trial court found that respondent's initial detention at the police station constituted an arrest without probable cause and accordingly ruled that the products of that arrest-the photographic and lineup identifications could not be introduced at trial, but further held that the victim's ability to identify respondent in court was based upon independent recollection untainted by the intervening identifications and that therefore such testimony was admissible. At trial, the victim once more identified respondent as her assailant, and respondent was convicted of armed robbery. The District of Columbia Court of Appeals reversed, holding that the in-court identification testimony should have been excluded as a product of the violation of respondent's Fourth Amendment rights. Held: The judgment is reversed. Pp. 470-477; 477; 477–479. 389 A. 2d 277, reversed. MR. JUSTICE BRENNAN delivered the opinion of the Court with respect to Parts I, II-A, II-B, and II-C, concluding that: The in-court identification need not be suppressed as the fruit of respondent's concededly unlawful arrest but is admissible because the police's knowledge of respondent's identity and the victim's independent recollections of him both antedated the unlawful arrest and were thus untainted by the constitutional violation. Pp. 470-474, 477. |