ACLU FOUNDATION OF LOUISIANA v. CRAWFORD

Full title: AMERICAN CIVIL LIBERTIES UNION FOUNDATION OF LOUISIANA v. BRETT CRAWFORD…

Court: United States District Court, E.D. Louisiana

Date published: Nov 21, 2000

Civil Action No. 00-1614, SECTION "C" (2) (E.D. La. Nov. 21, 2000)

Opinion

Civil Action No. 00-1614, SECTION "C" (2).

November 21, 2000.

ORDER AND REASONS

HELEN G. BERRIGAN, U.S. District Judge.

This matter comes before the Court on the issue of abstention raised in the defendant's motion to dismiss under 12(b). The defendant has also challenged the standing of the plaintiff to bring suit. Having considered the record, the memoranda of counsel and the law, the Court declines to abstain. However, the Court finds the issue of abstention unsettled enough to justify an interlocutory appeal should the defendant so move. The Court finds the plaintiff has alleged sufficient facts to confer standing.

Standing

The defendant has challenged the standing of the plaintiff, the American Civil Liberties Union Foundation of Louisiana ("ACLU"), to bring this suit. The defendant argues that the ACLU can not make the requisite showing under Lujan v. Defenders of Wildlife, 504 U.S. 555 (1992), that it suffered an injury in fact, that there is a causal connection between the injury and the challenged conduct of the defendant and that it is likely that the injury will be addressed in a favorable decision. The plaintiff responds that it pays taxes that others are unlawfully and unconstitutionally exempted from paying. The Supreme Court has recognized standing in situations where to do otherwise would effectively insulate underinclusive statutes from constitutional challenge . . ." Arkansas Writers' Project, Inc. v. Ragland, 481 U.S. 221, 227 (1987), citing Orr v. Orr, 440 U.S. 268, 272 (1979). In Orr, a divorced husband who was required to pay alimony to a former wife challenged the state's alimony statute because it did not allow alimony to be awarded to a husband. Even though the husband did not claim he was entitled to alimony, he was found to have standing to challenge the statute. Part of the rationale was that one possible response of the state to a successful challenge would be to eliminate alimony altogether which would benefit the husband. Likewise here, if the plaintiff is successful, a possible outcome is for the state to also exempt organizations such as the plaintiff's from paying the challenged taxes. For purposes of a motion to dismiss, the Court finds that standing has been adequately established.

Abstention

The plaintiff filed this declaratory action in this Court to challenge the constitutionality of certain tax exemptions provided by Louisiana state law to certain religious organizations. The Court previously found that the Tax Injunction Act, 28 U.S.C. § 1341 did not warrant dismissal on jurisdictional grounds, as this case concerns a challenge to a tax exemption, rather than a challenge to the "assessment, levy or collection of any tax." We now reach the different issue of abstention.¹

1 In this regard, the Court find that the issue of abstention was timely raised in the defendant's motion to dismiss and has not been waived.

As a threshold consideration, the Court concludes that none of the primary and well recognized avenues to abstention apply: Railroad Commission of Texas v. Pullman Co., 312 U.S. 496 (1941), Burford v. Sun Oil Co., 319 U.S. 315 (1943), and Louisiana Power Light Co. v. City of Thibodaux, 360 U.S. 25 (1959), Younger v. Harris, 401 U.S. 37 (1971).Pullman abstention requires the presence of an independent difficult and unsettled question of state law, which is not present here; Burford abstention is appropriate where proceedings or orders of state administrative agencies are involved, again a circumstance not present here and Younger abstention is triggered by ongoing state proceedings that are judicial in nature, likewise missing here.

The defendant primarily relies on the discretionary exercise of abstention in cases involving a state's tax laws. This doctrine of comity is discussed by the Supreme Court in LPL, supra, and relied upon by the Supreme Court in Fair Assessment in Real Estate Ass'n. v. McNary, 454 U.S. 100 (1981). The breadth of this abstention doctrine is however unclear to this Court. Specifically, the Court has not found binding case law, one way or the other, as to whether abstention is appropriate where a facial challenge is made to the constitutionality of a state taxstatute. The cases that the Court has found have all concerned constitutional challenges to the administration of a state tax system, a heavy fact-laden inquiry which raises different policy concerns than does a facial challenge to a tax statute.

As a starting point, in McNary, the Supreme Court recognized that federal deference in state tax matters go beyond the jurisdictional boundaries of the Tax Injunction Act:

Neither the legislative history of the Act nor that of its precursor, 28 U.S.C. § 1342, suggests that Congress intended that federal-court deference in state tax matters be limited to the actions enumerated in those sections. . . . Thus, the principle of comity which predated the Act was not restricted by its passage.

McNary, 454 U.S. at 110. Consequently, the fact that this law suit challenges a tax exemption, as opposed to a tax assessment., does not necessarily eliminate the comity concerns.² McNary dealt with an allegation that the administration of the state tax system was unconstitutional in that it violated equal protection and due process. The law suit challenged the property assessment practices of the various county assessors and other state tax officials and also alleged that property owners who successfully appealed their assessment were then targeted for reassessment the following year. The petitioners sought actual damages in the amount of the alleged over assessments and punitive damages as well. The Supreme Court used broad language in favor of declining jurisdiction in order to let the state courts address the issues:

. . . (W)e hold that taxpayers are barred by the principle of comity from asserting § 1983 actions against the validity of state tax systems in federal courts. Such taxpayers 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 this Court.

McNary, 454 U.S. at 116. In reaching this decision, the Supreme Court relied upon the comity principle reflected in its opinion in another tax case, Great Lakes Dredge Dock Co. v. Huffman, 319 U.S. 293, 298 (1943), which in turn quoted equally broad language from Matthew v. Rodgers, 284 U.S. 521, 525 (1932):

2 The Court notes that the Fifth Circuit held in a pre-McNary decision that abstention is inappropriate when a suit seeks to requireadditional taxes, as is the case here. Appling County v. Municipal Electric Authority of Georgia, 621 F.2d 1301 (5th Cir. 1980). Appling has not been overruled. The defendant in this case relies upon the Sixth Circuit decision of In re Gillis, 836 F.2d 1001 (1988) which specifically rejected Appling and concluded that abstention is appropriate even to a challenge to exemptions. This Court is of course bound by the Fifth Circuit. This Court however is not primarily relying on Appling but notes that it is additional grounds for declining to abstain.

The scrupulous regard for the rightful independence of state governments which should at all times actuate the federal courts, and a proper reluctance to interfere by injunction with their fiscal operations, require that such relief be denied in every case where the asserted federal right may be preserved without it.

McNary, 454 at 111.

At the same time, the underlying concern in these cases has been that a federal court challenge to the actual administration of a state tax system would disrupt the flow of revenue or, at a minimum, severely interfere with the actual enforcement of the state's tax laws. McNary, 454 U.S. at 112-117; see also Great Lakes Dredge and Dock Company v. Huffman, 319 U.S. 293 (1943) (challenge was an "as applied" attack on a statute that called for the collection of a certain state tax); see alsoPerez v. Ledesma, 401 U.S. 82, 126-128, fn 17 (1971)³. McNary specifically left open the question at issue here — whether a facial challenge to a tax statute likewise calls for abstention.

3 Likewise, the Gillis, supra, relied upon by the defendant involved a complex "as applied" attack on the tax assessment practices of the state.

We need not decide in this case whether the comity spoken of would also bar a claim under § 1983 which requires no scrutiny whatever of state tax assessment practices, such as a facial attack on tax laws colorably claimed to be discriminatory as to race.

McNary, 454 U.S. at 107, fn 4.

In the more recent case of Jefferson County, Ala. v. Acker, 527 U.S. 423, 435 fn 5 (1999), the Supreme Court noted with approval the notation of the Second Circuit in Keleher v. New England Telephone Telegraph Co., 947 F.2d 547, 551 (2d Cir. 1991) acknowledging that "abstention and stay doctrines may counsel federal courts to withhold adjudication, according priority to state courts on questions concerning the meaning and proper application of a state tax law." (Emphasis added). Again, this case involves a facial challenge to state, tax statutes. The language of the statutes under attack is clear. There is no dispute as to their meaning, the dispute is to their legality.

With no specific case law on the particular issue of whether a facial attack to a state tax statute survives McNary, the Court has looked to abstention doctrine in other areas. The Court notes first the recurring theme of the United States Supreme Court that the areas is which abstention is permissible are "carefully defined" and that abstention remains the exception, not the rule. New Orleans Public Service, Inc. v. Council for he City of New Orleans, 491 U.S. 350, 359 (1989) (and cases cited therein).

We have often acknowledged that federal courts have a strict duty to exercise the jurisdiction that is conferred upon them by Congress. See, e.g., Colorado River, 424 U.S., at 821, 96 S.Ct., at 1248 ("[F]ederal courts have a `virtually unflagging obligation . . . to exercise the jurisdiction given them'"); England v. Louisiana Bd. of Medical Examiners, 375 U.S. 411, 415, 84 S.Ct. 461, 464-465, 11 L.Ed.2d 440 (1964) ("`When a federal court is properly appealed to in a case over which it has by law jurisdiction, it is its duty to take such jurisdiction'") (quoting Willcox v. Consolidated Gas Co., 212 U.S. 19, 40, 29 S.Ct. 192, 195, 53 L.Ed. 382 (1909)); Cohens v. Virginia, 6 Wheat. 264, 404, 5 L.Ed. 257 (1821) (federal courts "have no more right to decline the exercise of jurisdiction which is given, than to usurp that which is not").

Quackenbush v. Allstate Insurance Company, 517 U.S. 706, 716 (1996).

In New Orleans Public Service. Inc., supra, a conflict arose between a producer of retail electrical service, a state rate-making authority and a local rate-making authority over a proposed utility rate increase. The focus of the challenge was a retail rate order issued by the City Council. The district court concluded it had no jurisdiction, and even if it had, it would be appropriate to abstain on the basis of Burford. The Fifth Circuit ultimately affirmed on the basis, in part, of Burford. The Fifth Circuit found abstention appropriate because of the possible interference with a complex state regulatory system of "paramount local concern and a matter which demands local administrative expertise." Id., 491 U.S. at 362 (quoting from the Fifth Circuit opinion). The Supreme Court reversed. The Court found that the legality of the City Council's rate order could be determined on its face. "Such an inquiry would not unduly intrude into the processes of state government or undermine the State's ability to maintain desire uniformity." Id., 491 U.S. at 363. Abstention was therefore not appropriate.

In Baran v. Port of Beaumont Navigation District of Jefferson County Texas, 57 F.3d 436 (5th Cir. 1995), the petitioners made a facial attack on the constitutionality of a statute dealing with river pilotage rates on various waterways. The district court ruled on the merits and one issue on appeal was whether the court should have abstained under theBurford doctrine. The Fifth Circuit noted that the Burford case dealt with a "highly technical and complicated regulatory scheme that affected the state's entire oil and gas conservation system" and that Burford abstention is "concerned with protecting complex state administrative processes from undue federal interference." Id., 57 F.3d at 441-442. The Court found Burford inapplicable to the case before it "[a]s the Pilots present a facial challenge to the statute — disputing the constitutionality of the Ports' authority to act at all — reaching the merits of this challenge will not intrude into any particular state administrative process or administrative order." Id., 57 F.3d at 442.

In light of the above, the Court concludes that abstention is inappropriate as this is a facial challenge to these statutes, which does not require a review of the actual administration of the tax laws in question. However, the Court considers this abstention issue unsettled enough to justify an interlocutory appeal, should the defendant so move. See 28 U.S.C. § 1292 (b). The issue of standing could be reviewed on an interlocutory basis as well.

Accordingly, IT IS ORDERED that the defendant's challenge to the plaintiff's standing is DENIED, and the defendant's request that the Court abstain from hearing this case is DENIED.