United States District Court, N.D. California
February 11, 2004.
STEPHEN FISHER, Plaintiff,
BARBARA BILLET, et al., Defendants
The opinion of the court was delivered by: MAXINE CHESNEY, District Judge
ORDER DISMISSING COMPLAINT
On October 28, 2003, Fisher filed the instant action and sought a
temporary restraining order enjoining various defendants associated with
the New York State Department of Taxation and Finance from pursuing
collection of state tax debts allegedly owed by Fisher. On October 30,
2003, the Court denied Fisher's motion for a temporary restraining order
and issued an order to show cause why this action should not be dismissed
for lack of subject matter jurisdiction. Fisher filed a written response
to the order to show cause on January 6, 2004. For the reasons set forth
below, Fisher's action is dismissed without leave to amend.
Federal courts are under an independent obligation to examine their own
jurisdiction; if the parties fail to raise the question, the issue of
jurisdiction must be addressed sua sponte by the court. See MacKay
v. Pfeil, 827 F.2d 540, 542 (9th Cir. 1987). In the order to show
cause, the Court noted that Fisher's allegations did not support his
diversity jurisdiction because he did not allege that the amount in
controversy exceeded $75,000. (See Order at 1:27-28, 2:1-4.) In Fisher's
response to the order to show cause, he does not contend the amount in
controversy is greater than $75,000; Fisher states that the amount of tax
at issue is $46,416. (See Resp. at 2.) The Court also determined that
Fisher's allegations were not sufficient to establish federal question
jurisdiction because he failed to allege a violation of any federal law
or constitutional rights. (See Order at 2:5-25.) In his response to the
order to show cause, Fisher states that he wishes to allege violations of
the Privileges and Immunities Clause and the Equal Protection Clause of
the Fourteenth Amendment. (See Resp. at 4.)
Even if Fisher were permitted to amend his complaint to allege these
constitutional violations, however, the Tax Injunction Act denies the
Court jurisdiction to entertain Fisher's claims for injunctive relief.
See 28 U.S.C. § 1341. The Tax Injunction Act provides: "The district
courts shall not enjoin, suspend or restrain the assessment, levy or
collection of any tax under State law where a plain, speedy and efficient
remedy may be had in the courts of such State." 28 U.S.C. § 1341. The Tax
Injunction Act jurisdictionally bars the Court from awarding injunctive
or declaratory relief, or a tax refund, even though Fisher alleges that
the tax is unconstitutional, as long as New York state law provides a
plain, speedy and efficient remedy. See Dillon v. Montana, 634 F.2d 463,
464-66 (9th Cir. 1980). The Supreme Court has held that New York state
law provides a plain, speedy and efficient remedy for claims of
unconstitutional tax assessment. See Tully v. Griffin. Inc., 429 U.S. 68,
75 (1976). Accordingly, Fisher may not seek, in federal court, an
injunction against New York's collection of taxes from him.
Next, Fisher's damages claims based on allegedly unconstitutional tax
assessment are barred by the principle of comity. See Fair Assessment in
Real Estate Assoc., Inc. v. McNary, 454 U.S. 100, 107, 111-12,
115-16(1981). The Supreme Court has explained that "damages actions no
less than actions for an injunction, would hale state officers into
federal court every time a taxpayer alleged the requisite elements of a
§ 1983 claim," which would be contrary to the "scrupulous regard for the
rightful independence of state
governments which should at all times actuate the federal courts. See
id. at 115-16 (quoting Matthews v. Rodgers, 284 U.S. 521, 525 (1932)).
Thus, taxpayers seeking damages for allegedly unconstitutional state
taxation "must seek protection of their federal rights by state
remedies, provided of course that those remedies are plain, adequate, and
complete, and may ultimately seek review of the state decisions in [the
Supreme Court]." See id. at 116 (footnote omitted). As noted, the Supreme
Court has held that New York state law provides a plain, speedy and
efficient remedy for claims of unconstitutional tax assessment. See
Tully, 429 U.S. at 75. There is no legal or factual distinction between
remedies that are "plain, adequate and complete" and those that are
"plain, speedy and efficient." See Fair Assessment, 454 U.S. at 116 n.8.
Fisher urges the court to apply the rules of law set forth in Lundinq
v. New York Tax Appeal Tribunal, 522 U.S. 287 (1998), City of New York
v. State, 94 N.Y.2d 577 (2000), and Allegheny Pittsburgh Coal Co. v.
County Comm'n of Webster County, 488 U.S. 336 (1989), all of which
addressed constitutional challenges to state taxation. Each of these
cases originated in state court, however, where the Tax Injunction Act
and the principle of comity do not apply. See Nat'l Priv. Truck Council.
Inc. v. Okla. Tax Comm'n, 515 U.S. 582, 588 (1995) ("[T]he Tax Injunction
Act does not prohibit state courts from entertaining § 1983 suits that
seek to enjoin the collection of state taxes.")
Fisher's reliance on California v. Grace Brethren Church, 457 U.S. 393
(1981), is also misplaced. In that case, California religious schools and
churches sought to enjoin state tax officials from collecting state
unemployment tax in violation of their First Amendment rights. See id. at
396. The Supreme Court held that the Tax Injunction Act deprived the
court of jurisdiction. Id. The available state remedy was plain, speedy
and efficient because taxpayers had an opportunity to seek a full hearing
at which they could raise any and all constitutional objections to the
tax. Id. at 417. In so holding, the Court contrasted Hillsborouqh v.
Cromwell, 326 U.S. 620 (1946), where the opportunity to raise
constitutional claims in the administrative proceedings never existed.
See Grace Brethren, 457 U.S. at 414 n.31. Applying similar reasoning, the
Ninth Circuit, in Direct Marketing
Ass'n v. Bennett, 916 F.2d 1451, 1457 (9th Cir. 1990), also cited by
Fisher, determined that the Tax Injunction Act did not apply because no
plain, speedy and efficient remedy existed under state law. Likewise, in
another case cited by Fisher, Southland Mall v. Garner, 455 F.2d 887 (6th
Cir. 1972), the court determined that abstention was inappropriate
because the state proceeding would not adequately resolve the issue
presented. See id. at 888 n.1 (citing Hillsborough, 326 U.S. at 623).
Here, however, a plain, speedy and efficient remedy does exist under New
York state law. See Tully, 429 U.S. at 75.
Fisher argues that New York offers no speedy and efficient remedy
because the doctrine of res judicata bars him from seeking any new New
York state remedies in that he has already litigated, in the New York
state and federal courts, claims relating to his tax liabilities for the
years 1977 and 1984, and thereafter appealed to the United States Supreme
Court. For the purposes of the Tax Injunction Act and the principle of
comity, however, state court application of the doctrine of res judicata
to bar future action on previously litigated facts is not relevant with
respect to the issue of whether the state affords a plain, speedy and
efficient remedy. See Jerron West, Inc. v. Cal. State Bd. of
Equalization, 129 F.3d 1334, 1338-40 (9th Cir. 1997) (holding plaintiffs'
failure to pursue particular cause of action in state court "does not
render their state remedy ineffective); Sacks Bros. Loan Co. v.
Cunninqham, 578 F.2d 172, 175 (5th Cir. 1978) (noting that "the
application of Section 1341 depends on whether a state remedy was at some
time available to the taxpayer and the taxpayer's failure to win in state
court or to use the remedy properly does not negate the existence of the
remedy"). Consequently, even if Fisher's present claims are precluded
under New York state law due to Fisher's failure to pursue those claims
previously in state proceedings, the existence of a plain, speedy and
efficient remedy under that law is not negated. See id.
Finally, Fisher argues that because the U.S. District Court for the
Northern District of California asserted jurisdiction over his prior 1996
lawsuit against several of the same New York State Department of Taxation
and Finance defendants, the principle of stare decisis dictates that this
Court also exert jurisdiction over Fisher's present claims. Fisher's
claims can be distinguished from his prior claim, however. Whereas,
here, Fisher is seeking injunctive relief and damages resulting from
alleged violations of his rights under the Privileges and Immunities
Clause and Due Process Clause of the Fourteenth Amendment, Fisher
previously sought only damages related to alleged violations of his First
Amendment rights. As discussed above, the Tax Injunction Act clearly bars
this Court from considering claims for injunctive relief related to the
collection of state taxes. Moreover, the Supreme Court's decision in Fair
Assessment, which was not raised by the parties in Fisher's prior case,
prevents the Court from considering claims for damages related to the
collection of state taxes. See Fair Assessment, 454 U.S. at 107, 111-12,
115-16. Because, in Fisher's previous lawsuit, neither the district court
nor the Ninth Circuit addressed the applicability of Fair Assessment,
neither the doctrine of stare decisis nor "law of the case" applies. See
Christianson v. Colt Indus. Operating Corp., 486 U.S. 800, 815-16
For the reasons set forth above, the above-titled action is DISMISSED
without leave to amend but without prejudice to Fisher's refiling his
complaint in state court.
The Clerk shall close the file.
IT IS SO ORDERED.
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