                          STATE OF MICHIGAN

                            COURT OF APPEALS



INTERNATIONAL BUSINESS MACHINES                                      FOR PUBLICATION
CORP.,                                                               July 21, 2016
                                                                     9:00 a.m.
               Plaintiff-Appellant,

v                                                                    No. 327359
                                                                     Court of Claims
DEPARTMENT OF TREASURY,                                              LC No. 11-000033-MT

               Defendant-Appellee.


Before: WILDER, P.J., and MURPHY and O’CONNELL, JJ.

PER CURIAM.

       Plaintiff International Business Machines Corporation (IBM) appeals as of right the
Court of Claims order granting, on reconsideration, summary disposition in favor of defendant
Department of Treasury (the Department). We reverse and remand for entry of judgment in
favor of IBM consistent with our Supreme Court’s directive in this case in Int’l Business
Machines Corp v Dep’t of Treasury, 496 Mich 642; 852 NW2d 865 (2014).

       In Int’l Business Machines, id. at 644-645, the Michigan Supreme Court opened its
opinion by alluding to the issue presented, describing the nature of the case, and setting forth its
holding:

               In this case, we must determine whether . . . IBM[] could elect to use the
       three-factor apportionment formula under the Multistate Tax Compact (the
       Compact)[, MCL 205.581 et seq.,] for its 2008 Michigan taxes, or whether it was
       required to use the sales-factor apportionment formula under the Michigan
       Business Tax Act (BTA)[, MCL 208.1101 et seq]. The Department . . . rejected
       IBM's attempt to use the Compact's apportionment formula and, instead, required
       IBM to apportion its income using the BTA's sales-factor formula.

              We conclude that IBM was entitled to use the Compact's three-factor
       apportionment formula for its 2008 Michigan taxes and that the Court of Appeals
       erred by holding otherwise on the basis of its erroneous conclusion that the
       Legislature had repealed the Compact's election provision by implication when it
       enacted the BTA. We further hold that IBM could use the Compact's


                                                -1-
       apportionment formula for that portion of its tax base subject to the modified
       gross receipts tax of the BTA.

              Accordingly, we reverse the Court of Appeals judgment in favor of the
       Department, reverse the Court of Claims order granting summary disposition in
       favor of the Department, and remand to the Court of Claims for entry of an order
       granting summary disposition in favor of IBM. [Emphasis added.]

       The Department filed a motion for rehearing, and before the Supreme Court rendered a
decision on the motion, the Legislature enacted 2014 PA 282, amending the BTA, retroactively
rescinding Michigan’s membership in the Compact, effective January 1, 2008, and precluding
foreign corporations such as IBM from using the three-factor apportionment formula that had
been available under the Compact. The Department filed supplemental authority in support of its
pending motion for rehearing, alerting our Supreme Court of the statutory amendment.
Subsequently, the Supreme Court denied the motion for rehearing absent any explanation or
elaboration. Int’l Business Machines Corp v Dep’t of Treasury, 497 Mich 894; 855 NW2d 512
(2014). On remand, the Court of Claims initially entered judgment in favor of IBM as directed
by the Supreme Court. However, it later granted the Department’s motion for reconsideration,
determining that 2014 PA 282 represented an intervening change of law, thereby excepting
application of the law of the case doctrine.

         “When an appellate court remands a case with specific instructions, it is improper for a
lower court to exceed the scope of the order.” People v Russell, 297 Mich App 707, 714; 825
NW2d 623 (2012); see also Glenn v TPI Petroleum, Inc, 305 Mich App 698, 706; 854 NW2d
509 (2014) (“The trial court erred by failing to comply on remand with the very specific
directives of this Court.”); K & K Constr, Inc v Dep’t of Environmental Quality, 267 Mich App
523, 544; 705 NW2d 365 (2005) (clear instructions in a remand order must be followed);
Rodriguez v Gen Motors Corp (On Remand), 204 Mich App 509, 514; 516 NW2d 105 (1994)
(“It is the duty of the lower court or tribunal, on remand, to comply strictly with the mandate of
the appellate court.”). Here, the Court of Claims did not have any discretion or authority to rule
in favor of the Department. The Court of Claims was specifically instructed to enter an order
granting summary disposition in favor of IBM, and it erred by ultimately failing to do so.

        The procedural posture of this case resulted in arguments regarding the applicability of
the law of the case doctrine, which doctrine is subject to an exception where there is an
intervening change of law. See People v Olear, 495 Mich 939; 843 NW2d 480 (2014); Grace v
Grace, 253 Mich App 357, 363; 655 NW2d 595 (2002). In Grievance Administrator v Lopatin,
462 Mich 235, 259-260; 612 NW2d 120 (2000), our Supreme Court explained the nature of the
law of the case doctrine:

              Under the law of the case doctrine, if an appellate court has passed on a
       legal question and remanded the case for further proceedings, the legal questions
       thus determined by the appellate court will not be differently determined on a
       subsequent appeal in the same case where the facts remain materially the same.
       The appellate court's decision likewise binds lower tribunals because the tribunal
       may not take action on remand that is inconsistent with the judgment of the
       appellate court. Thus, as a general rule, an appellate court's determination of an

                                               -2-
       issue in a case binds lower tribunals on remand and the appellate court in
       subsequent appeals. [Citations and quotation marks omitted.]

        The Department maintains that the law of the case doctrine is not controlling because the
legal question concerning the impact of 2014 PA 282 on IBM’s 2008 taxes was not passed on by
the Supreme Court in its opinion, nor, expressly, in its order denying the Department’s motion
for rehearing, and because 2014 PA 282 represented an intervening change of law, assuming that
the doctrine was initially implicated. We conclude that the analysis in this case is not governed
by the law of the case doctrine; however, contrary to the Department’s view, this does not mean
that the Court of Claims was free to try anew under 2014 PA 282 the issue regarding the
apportionment formula applicable to IBM’s 2008 taxes. Rather than the law of the case doctrine,
we hold that the principle alluded to above that a lower court cannot exceed the scope of a
remand order controls and is distinguishable from the law of the case doctrine. We find
instructive a recent decision by the United States Court of Appeals for the Ninth Circuit in Stacy
v Colvin, __ F3d __, __ (CA 9, 2016); slip op at 3, wherein the federal court, distinguishing the
law of the case doctrine from what it coined the “rule of mandate,” observed:

               The rule of mandate is similar to, but broader than, the law of the case
       doctrine. The rule provides that any district court that has received the mandate of
       an appellate court cannot vary or examine that mandate for any purpose other than
       executing it. The district court may, however, decide anything not foreclosed by
       the mandate. But the district court commits “jurisdictional error” if it takes actions
       that contradict the mandate. [Citations and quotation marks omitted.1]

         Although the terminology “rule of mandate” has apparently not been used in Michigan
caselaw, it quite plainly embodies the well-accepted principle in our jurisprudence that a lower
court must strictly comply with, and may not exceed the scope of, a remand order. Glenn, 305
Mich App at 706; Russell, 297 Mich App at 714; K & K Constr, 267 Mich App at 544;
Rodriguez, 204 Mich App at 514. Here, the Supreme Court mandated ministerial entry of
judgment in favor of IBM, the mandate foreclosed all other possibilities and any renewed
litigation over IBM’s 2008 business taxes, and the Court of Claims erred in taking an action that
contradicted the mandate, effectively exceeding the remand’s jurisdictional scope. The
distinction we recognize today between the law of the case doctrine and the rule of mandate, as
implicated by the Supreme Court’s explicit directive in Int’l Business Machines, is further
buttressed by the principles that the law of the case doctrine expresses the general practice of the
courts, is discretionary, and is not a limit on the power of the courts. Locricchio v Evening News
Ass’n, 438 Mich 84, 109, 109 n 13; 476 NW2d 112 (1991); Grace, 253 Mich App at 363. The
plain and unambiguous remand directive cannot be construed as having provided any room for
the exercise of discretion by the Court of Claims, and it most certainly placed a strict limit on the
power of the Court of Claims on remand, which limit was exceeded. For all intents and


1
 The Ninth Circuit concluded that an administrative law judge (ALJ) did not violate the rule of
mandate in the case by taking new evidence on a matter, given that the “remand order did not
preclude the ALJ from taking [the] new evidence.” Stacy, __ F3d at __; slip op at 3.


                                                -3-
purposes, the case was over once it left the jurisdiction of the Michigan Supreme Court; there
was not to be any further substantive litigation, proceedings, or decision-making. The Court of
Claims was simply to perform the nondiscretionary, ministerial task of entering judgment in
favor of IBM. Indeed, the Supreme Court itself had the option of entering the judgment. MCR
7.316(A)(7) (Supreme Court may “enter any judgment . . . that ought to have been entered”).

        Further, the Department’s position that the Court of Claims should be able to examine the
issue of IBM's 2008 taxes under 2014 PA 282 is untenable. In Int’l Business Machines, 496
Mich at 645, our Supreme Court conclusively determined that IBM could use the Compact’s
apportionment formula for purposes of the 2008 taxes. Under the Department’s theory, the issue
of the proper apportionment formula relative to IBM’s 2008 taxes could be litigated endlessly on
the basis of any future statutory changes bearing on the question. Collateral estoppel principles
preclude such an approach. See Monat v State Farm Ins Co, 469 Mich 679, 682-684; 677 NW2d
843 (2004). Again, the case had effectively been concluded, except for the formal entry of the
judgment. Additionally, it is well-established that “the Legislature may not reverse a judicial
decision,” Gen Motors Corp v Dep’t of Treasury, 290 Mich App 355, 372-373; 803 NW2d 698
(2010), and that “only the Supreme Court has the authority to overrule its own decisions,”
People v Crockran, 292 Mich App 253, 256; 808 NW2d 499 (2011). If 2014 PA 282 is
specifically applied in order to ascertain the apportionment formula available to IBM with
respect to its 2008 business taxes, it would effectively result in the impermissible legislative
reversal of Int’l Business Machines. Similarly, in ignoring the remand directive and ordering
application of 2014 PA 282 to IBM’s 2008 taxes in connection to the apportionment formula, the
Court of Claims essentially and improperly reversed the ruling in Int’l Business Machines. And
recall that the Supreme Court was fully cognizant of 2014 PA 282 when ruling to deny the
Department’s motion for rehearing. If the Supreme Court wishes to revisit the issue on an
application for leave to appeal, it of course has that prerogative, but neither this Court nor the
Court of Claims is in the position to alter the ruling and ignore the remand directive in Int’l
Business Machines, 496 Mich 642.

        Finally, this Court’s opinion in Gillette Commercial Operations North America &
Subsidiaries v Dep’t of Treasury, 312 Mich App 394; __ NW2d __ (2015), does not and cannot
change our analysis. Gillette addressed numerous state and federal constitutional arguments
challenging 2014 PA 282 and the retroactive character of the legislation. This Court found that
2014 PA 282 is constitutionally sound. Id. at 401. That said, the Gillette opinion could not
overrule or reverse the Supreme Court’s earlier opinion in Int’l Business Machines and the
resolution of the specific tax issues addressed therein. See Crockran, 292 Mich App at 256.
IBM is entitled to the protection afforded it under the Int’l Business Machines decision, although
with respect to other taxes not addressed in the opinion but caught under the umbrella of 2014
PA 282, those taxes would be subject to 2014 PA 282 as construed by the Gillette panel. There
is a distinction between applying 2014 PA 282, as upheld in Gillette, to alter the specific
resolution in Int’l Business Machines of the apportionment-formula question pertaining to IBM’s
2008 taxes, which is not permissible under the ruling and remand directive, and applying 2014
PA 282 to all other pending tax disputes, recognizing that the Legislature was free to change the
law in response to Int’l Business Machines.




                                               -4-
        Reversed and remanded for entry of judgment in favor of IBM. We do not retain
jurisdiction. Having fully prevailed on appeal, taxable costs are awarded to IBM under MCR
7.219.

                                                       /s/ Kurtis T. Wilder
                                                       /s/ William B. Murphy
                                                       /s/ Peter D. O'Connell




                                           -5-
