Opinion
Civil Action No. 01-0359, Section "T" (4)
March 28, 2001
Before the Court is a Motion to Remand pursuant to 28 U.S.C. § 1447 (c) filed by the Plaintiff, the School Board of the Parish of St. Charles ("the Board"). The Defendants oppose said motion. The matter came for hearing before this Court on March 14, 2001, without oral argument. The Court, having considered the memoranda filed, the Court record, the law and applicable jurisprudence, is fully advised in the premises and ready to rule.
ORDER AND REASONS
I. BACKGROUND:
The Plaintiff filed the above-captioned action against Roxco and its alleged surety, American Home Assurance Company ("American Home"), seeking the recovery of $188,386.90 in sales and use taxes for the period of January 1, 997 through December 31, 2000, as well as certain penalties, interest, and attorney fees. The Plaintiff filed its petition in the Twenty-Ninth Judicial District Court for the Parish of St. Charles on January 2, 2001. The Defendants timely filed a notice of removal with this Court asserting subject matter jurisdiction pursuant to 42 U.S.C. § 1332, diversity of citizenship. The School Board filed the present Motion to Remand the action back to state court on the grounds that this Court is precluded from exercising subject matter jurisdiction over the above-captioned matter by the Eleventh Amendment to the United States Constitution and "The Tax Injunction Act," 28 U.S.C. § 1341. Specifically, the Plaintiff argues that federal jurisdiction does not extend to a state or local tax collection case removed on the basis of diversity.
II. LAW AND ANALYSIS:
A. The Law on Eleventh Amendment Immunity
The Plaintiff first argues that the Eleventh Amendment prevents this Court from exercising jurisdiction over the above-captioned matter. The Eleventh Amendment to the United States Constitution provides that "[t]he Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State." U.S. CONST. amend XI. In order to enjoy Eleventh Amendment immunity, the School Board must prove that it is an arm of the State, rather than an entity possessing "an identity sufficiently distinct from that of the State of Louisiana." Pendergrass v. Greater New Orleans Expressway Comm'n, 144 F.3d 342, 344 (5th Cir. 1998).
In Minton v. St. Bernard Parish School Board, 803 F.2d 129 (5th Cir. 1986), the Court of Appeals for the Fifth Circuit considered the issue of whether a parish school board in the State of Louisiana was an arm of the state such that it was entitled to Eleventh Amendment immunity. See Minton v. St. Bernard Parish School Board, 803 F.2d 129, 131-32 (5th Cir. 1986). After reviewing certain factors, such as the powers and characteristics of local school boards, the Fifth Circuit concluded that parish school boards are "local independent agents not shielded by the state's Eleventh Amendment immunity." Id. Accordingly, this Court concludes that the Plaintiff, the School Board of the Parish of St. Charles, is not entitled to Eleventh Amendment immunity in the present action because it is not an arm of the State of Louisiana.
Additionally, this Court notes that the text of the Eleventh Amendment makes it clear that its immunity protection applies in lawsuits "commenced or prosecuted against one of the United States." U.S. CONST. amend XI. However, the present action was not commended against the State of Louisiana. Rather, the School Board itself instituted the action against citizens of two other states. Therefore, even if the School Board were found to be an arm of the State of Louisiana, Eleventh Amendment immunity would still not be available to it in the instant action because the School Board is the Plaintiff rather than the Defendant in this action. Accordingly, this Court finds that the Plaintiff, The School Board of the Parish of St. Charles, is not entitled to Eleventh Amendment immunity.
B. 28 U.S.C. § 1341: The Tax Injunction Act
The Plaintiff further contends that 28 U.S.C. § 1341, the Tax Injunction Act, precludes this Court from exercising jurisdiction over the above-captioned matter. The Tax Injunction A ("the Act") provides that: "[t]he district court 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 each State." 28 U.S.C. § 1341. The Fifth Circuit, in interpreting the Tax Injunction Act, stated that the Act does not bar federal court jurisdiction in cases filed to collect state taxes because such cases are not brought to enjoin, suspend, or restrain the collection of taxes. See Louisiana Land Exploration Co. v. Pilot Petroleum Corp., 900 F.2d 816, 818 (5th Cir. 1990) (citing Hargrave v. McKinney, 413 F.2d 320 (5th Cir. 1969)). Furthermore, other federal courts have agreed with this interpretation of the Act. For example, in Diginet, Inc. v. Western Union ATS, Inc. 845 F. Supp. 1237 (N.D. Ill. 1994), the court concluded that the Tax Injunction Act "does not preclude jurisdiction over claims by a state entity to enforce the collection . . . of taxes." Diginet. Inc. v. Western Union ATS, Inc. 845 F. Supp. 1237, 1241 (N.D. Ill. 1994) (citations omitted).
Additionally, the United States Supreme Court, in addressing the scope of the Act, explained that the Act bars suits for anticipatory relief, that is those suits seeking to enjoin, suspend or restrain the collection of taxes by the State. See Jefferson County Alabama v. Acker, 527 U.S. 423, 433 (1999). The Supreme Court further explained that "a suit to collect a tax is surely not brought to restrain state action, and therefore does not fit the Act's description of suits barred from, federal district court adjudication." Id. at 433-34 (citing Louisiana Land Exploration Co., 900 F.2d at 818)). Ultimately, the Supreme Court held that "the Tax Injunction Act, as indicated by its terms and purpose, does not bar collection suits. . . ." Acker, 527 U.S. at 435.
The present action is one seeking the collection of $188,386.90 in sales and use taxes that allegedly were levied against the Defendants pursuant to La. R.S. 47:1542. As such, it is undoubtedly a collection action rather than an action seeking to enjoin, suspend, or restrain the collection of tax. Furthermore, the Defendants have not indicated that they intend to avoid or impede payment of the taxes in question through the use of anticipatory relief. Therefore, this Court finds that the Tax Injuction Act does not apply to the above-captioned matter. Accordingly, the Act does not deprive this Court of Jurisiction over this action.
III. CONCLUSION
For the reasons stated above, this Court finds that neither the Eleventh Amendment nor the Tax Injunctin Act preclude this court from exercising jurisdictiin over the above-captioned matter. Therefore, the removal of this action is proper. Accordingly,
This Court notes that neither party to this action challenged the diversity of the parties or the amount in controversy.
IT IS ORDERED that the Plaintiff's Motion to remend be, and the same is hereby, DENIED.