Opinion
No. C-03-4827 MMC (Docket No. 3)
February 11, 2004
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 claim of 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 present 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 (1988).
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.