Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_08-cv-00803/USCOURTS-caed-2_08-cv-00803-0/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 42:1983 Civil Rights Act

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IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF CALIFORNIA

DONNIE SCHROEDER

Plaintiff, No. CIV 2:08-cv-0803 MCE KJM PS

vs.

STATE BOARD OF EQUALIZATION,

FRANCHISE TAX BOARD, THE 

SACRAMENTO COUNTY RECORDER’S

OFFICE, STATE OF CALIFORNIA

Defendant. FINDINGS AND RECOMMENDATIONS

 /

In this action, plaintiff challenges a proposed assessment by the Franchise Tax

Board (“FTB”), approval of the assessment by the State Board of Equalization (“SBE”), and the

recording of a tax lien by the Sacramento County Recorder’s Office as violative of plaintiff’s due

process rights. Defendants move to dismiss, contending this action is barred by the Tax

Injunction Act (“TIA”). 

Under the TIA, “[t]he district courts shall not . . . 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. Thus, a determination must

be made on (1) whether the district court would “suspend or restrain the assessment, levy or

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collection of any tax” by deciding the merits, and (2) whether there is a “plain, speedy and

efficient remedy” in the state court system.

Plaintiff contends in his opposition to the motion to dismiss that, “this case has

nothing to do with an alleged tax liability.” Opp’n at 2. However, this contention is belied by

the allegations of the complaint wherein the plaintiff asserts that the “tax assessment, fines and

penalties” were levied without due process. Compl. at 1. In addition, plaintiff alleges that his

Seventh Amendment rights were abridged by the denial of a jury trial in determining whether the

tax collection was proper. Id. at 2. Given the allegations of the complaint, a decision on the

merits of plaintiff’s claims in his favor -- i.e., that the assessment and collection thereof were

improper -- would necessarily restrain the collection of the tax assessed by the FTB, approved by

the SBE and recorded by the Sacramento County Recorder’s Office.

The Supreme Court has stated that the “plain, speedy and efficient remedy” prong

of the TIA requires the state court remedy to meet certain minimums procedurally. Rosewell v.

LaSalle Nat. Bank, 450 U.S. 503, 512-22 (1981). The TIA was created “to limit drastically

federal district court jurisdiction to interfere with . . . collection of taxes.” California v. Grace

Brethren Church, 457 U.S. 393, 408-09 (1982) (quoting Rosewell, supra). In order to fulfill

Congress’s intent “‘to limit drastically’ federal-court interference with state tax systems, [the

court] must construe narrowly the ‘plain, speedy and efficient’ exception to the Tax Injunction

Act.” Id. at 413.

A state court refund procedure providing the taxpayer with a “full hearing and

judicial determination” of constitutional arguments as to whether a tax can be levied, is sufficient

to provide an adequate remedy. Rosewell, 450 U.S. at 514-15 (remedy was sufficient where

taxpayer was required to pay the contested tax under protest, and file an objection to the county’s

circuit court, without the right to interest if she prevailed). California provides for a tax refund

suit in its Revenue and Taxation Code, in a provision which has been deemed to provide a “plain,

speedy, and efficient remedy.” See Cal. Rev. & Tax. Code, § 19382; Jerron West, Inc. v. State of

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 In the Jerron West and Alcan Aluminum decisions, the courts addressed the adequacy 1

of California Revenue and Taxation Code section 19382's predecessor, section 26102.

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Cal., State Bd. Of Equalization, 129 F.3d 1334, 1339 (9th Cir. 1997) (citing Franchise Tax Bd. v.

Alcan Aluminum, 493 U.S. 331, 338 (1989)). Accordingly, since a decision on the merits 1

would restrain the collection of a tax and plaintiff is afforded an adequate remedy under state

law, this action is barred by the TIA.

Accordingly, IT IS HEREBY RECOMMENDED that:

1. Defendants’ motion to dismiss be granted; and

2. This action be dismissed

These findings and recommendations are submitted to the United States District

Judge assigned to the case, pursuant to the provisions of Title 28 U.S.C. § 636(b)(1). Within ten

days after being served with these findings and recommendations, any party may file written

objects with the court and serve a copy on all parties. Such a document should be captioned

“Objections to Magistrate Judge’s Findings and Recommendations.” Any reply to the objections

shall be served and filed within ten days after service of the objections. The parties are advised

that failure to file objections within the specified time may waive the right to appeal the District

Court’s orders. Martinez v. Ylst, 951 F.2d 1153 (9th Cir. 1991).

DATED: July 8, 2008.

 

schroeder.57

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