Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca3-14-04168/USCOURTS-ca3-14-04168-0/pdf.json

Nature of Suit Code: 440
Nature of Suit: Other Civil Rights
Cause of Action: 

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NOT PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 14-4168

_____________

Z&R CAB, LLC,

ZORO, INC.,

Appellants

v.

PHILADELPHIA PARKING AUTHORITY

_____________

APPEAL FROM THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

(E.D. Pa. No. 2-13-cv-06173)

District Judge: Honorable Stewart Dalzell

______________

Argued on April 8, 2015

Before: AMBRO, VANASKIE, and SHWARTZ, Circuit Judges.

(Filed:May 28, 2015)

______________

OPINION*

______________

John K. Weston, Esq. [ARGUED]

Edward W. Millstein, Esq.

Sacks, Weston, Petrelli, Diamond & Millstein

Suite 1600

1845 Walnut Street

Philadelphia, PA 19103

Counsel for Appellants

 

*This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does 

not constitute binding precedent.

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Patrick J. Doran, Esq. [ARGUED]

Gary D. Fry, Esq.

Archer & Greiner

1650 Market Street

One Liberty Place, 32nd Floor

Philadelphia, PA 19103 

Counsel for Appellee

SHWARTZ, Circuit Judge.

In 2013, a Pennsylvania court held that the statute authorizing the Philadelphia 

Parking Authority (“PPA”) to charge taxicab operators an annual fee violated, among 

other things, due process. Two Philadelphia taxicab companies, Z&R Cab, LLC and 

Zoro, Inc. (collectively, the “Cab Companies”), thereafter filed suit in the District Court 

under 42 U.S.C. § 1983 seeking a full refund of the fees they had paid. The District 

Court dismissed their case for lack of jurisdiction. We conclude that the District Court 

had jurisdiction. Thus, we will vacate the dismissal order and remand.

I

In 2004, Pennsylvania’s General Assembly amended the Parking Authority Law 

(“PAL”), transferring regulatory responsibility for certain taxicab and limousine 

operators in Philadelphia to the PPA. The PAL funded the PPA’s regulatory activities 

with fees operators paid, 53 Pa. Cons. Stat. Ann. § 5708(b),1and provided that the PPA 

would annually submit a proposed fee schedule to the General Assembly, which would 

become effective if the legislature did not disapprove it, id. § 5707(b). The PAL also 

subjected operators to fines, vehicle impoundment, and revocation of their operating 

licenses for unpaid fees.

 

1 References to the PAL are to the version in effect from 2004 to 2013.

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In 2012, several taxicab operators refused to pay the fees, were cited by the PPA,

and challenged the constitutionality of the PAL in state court. In an opinion summarily 

affirmed by the Pennsylvania Supreme Court, the Commonwealth Court declared the law 

“unconstitutional and unenforceable” because, among other things, it did not permit 

taxicab operators to challenge the fees and imposed penalties for non-payment, and thus

“confer[red] autocratic power upon the [PPA] to condemn property without due process” 

in violation of the Pennsylvania and United States Constitutions. MCT Transp., Inc. v. 

Phila. Parking Auth., 60 A.3d 899, 919-920 (Pa. Commw. Ct. 2013) (“MCT”).

2

Soon after the Commonwealth Court’s decision, the Cab Companies filed this

putative class-action complaint on behalf of those entities that “paid to . . . the [PPA] fees 

assessed by the authority of [the PAL]” from 2004 through February 14, 2013, App. 41, 

seeking a refund of “all sums paid to . . . [the PPA] under authority of [the PAL],” plus 

interest, App. 43.3 The PPA moved to dismiss the complaint under Fed. R. Civ. P. 

12(b)(6), arguing that the Cab Companies are not entitled to refunds because MCT does 

not apply retroactively under Pennsylvania law. The District Court disagreed and 

concluded that MCT applies retroactively, but held that “the question of appropriate 

 

2 The General Assembly amended the PAL after the Commonwealth Court’s 

decision. See 53 Pa. Cons. Stat. Ann. §§ 5707 et seq. in Omnibus Amendments Act of 

July 9, 2013, P.L. 455, No. 64. The law now requires that the PPA give taxicab and 

limousine operators notice of the fees to be assessed, a fifteen-day period in which to 

contest them, and a hearing. See id.

3 The Cab Companies also sought equitable relief, which was dismissed.

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remedy” is “entrusted to the Pennsylvania state courts,” App. 19, and dismissed the 

complaint for lack of subject matter jurisdiction.4

The Cab Companies moved for reconsideration of the dismissal order.5 The 

District Court denied the motion, reiterating that any remedy to be afforded the Cab 

Companies “lies exclusively in the hands of the state courts.” App. 35. As a result, the 

District Court reasoned that there was “no case or controversy” for it to adjudicate, so it 

lacked subject matter jurisdiction to either entertain or abstain from deciding this case. 

App. 31. The Cab Companies appeal, arguing that the District Court has jurisdiction over 

their complaint. For its part, the PPA asserts that principles of comity require the federal 

court to refrain from deciding this case.

II6

A

We first address the District Court’s conclusion that it lacked subject matter 

jurisdiction over the Cab Companies’ refund claim.

7

 The Cab Companies seek 

 

4 Less than one week after the District Court’s dismissal, the Cab Companies filed 

an identical complaint in Pennsylvania state court under § 1983, seeking a full refund. 

This proceeding is ongoing. 

5 The Cab Companies fully briefed their position concerning jurisdiction and 

abstention before the District Court in connection with the motion for reconsideration and 

thus were not prejudiced by the District Court’s initial sua sponte jurisdcitional ruling.

6 Neither party challenges MCT’s holding that the PAL violated federal due 

process or the District Court’s holding that MCT applies retroactively, and thus these 

issues are not before us.

7 We have jurisdiction under 28 U.S.C. § 1291. When reviewing a district court’s 

“order dismissing a claim for lack of subject matter jurisdiction, we exercise plenary 

review over legal conclusions and review findings of fact for clear error.” White-Squire 

v. U. S. Postal Serv., 592 F.3d 453, 456 (3d Cir. 2010). Likewise, when “a district court 

predicates its denial of reconsideration on an issue of law, our review is plenary, and 

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compensation for a federal due process violation under § 1983. Because this claim arises 

under the United States Constitution and federal law, 28 U.S.C. § 1331 grants the District 

Court subject matter jurisdiction. Notwithstanding this statutory authority, the District 

Court concluded, citing McKesson Corp. v. Division of Alcoholic Beverages & Tobacco, 

Department of Business Regulation of Florida, 496 U.S. 18 (1990), and Harper v. 

Virginia Department of Taxation, 509 U.S. 86 (1993), that it lacked subject matter 

jurisdiction because the Pennsylvania courts enjoy “exclusive[]” authority to determine 

the appropriate remedy due the Cab Companies, and thus the Cab Companies’ refund 

claim presents no federal “case” or “controversy.” See App. 34-36.

While in McKesson and Harper the Supreme Court left to state courts the task of 

fashioning an appropriate remedy for plaintiffs subjected to unconstitutional state tax 

laws, neither case barred a federal court from doing so. Indeed, in both cases, which 

involved direct appeals from state courts, the Supreme Court declined to order a specific 

remedy and remanded the issue to the state courts out of respect for the state’s “role in 

shaping the contours of . . . relief” in this context. McKesson, 496 U.S. at 50; see also

Harper, 509 U.S. at 101-02 (leaving to Virginia courts “the crafting of any appropriate 

remedy”). The Court did not categorically bar federal courts from providing such relief, 

and in fact acknowledged that it granted such relief in other cases. See id. at 33-36 

(noting that in Ward v. Love County Board of Commissioners, 253 U.S. 17, 24 (1920), 

 

when it bases its denial on an issue of fact, we review for clear error.” Wiest v. Lynch, 

710 F.3d 121, 128 (3d Cir. 2013). Otherwise, we review the denial of a motion for 

reconsideration for abuse of discretion. Id.

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the Court ordered a remedy for an unconstitutional state tax law). Accordingly, the 

District Court erred in concluding that it lacked subject matter jurisdiction.

B

McKesson and Harper, as well as more recent cases such as Levin v. Commerce 

Energy, Inc., 560 U.S. 413 (2010), and Direct Marketing Association v. Brohl, ___ U.S. 

___, ___, 135 S.Ct. 1124, 1134 (2015), do teach, however, that under principles of 

comity, deference should be given to state courts to remedy constitutional violations 

arising from state revenue-raising laws if adequate state remedies exist. 

While the Levin Court indicated that “[c]omity’s constraint has particular force 

when lower federal courts are asked to pass on the constitutionality of state taxation of 

commercial activity,” id. at 422, in discussing its preference for permitting states to 

fashion an appropriate remedy for challenges to state fiscal laws, it also referenced 

“economic legislation,” “tax classifications or other legislative prescriptions,” and “a 

[s]tate’s allocation of benefits or burdens,” id. at 426-27, suggesting that this type of 

comity applies outside of tax cases. This is consistent with the Supreme Court’s 

expressed “respect for state functions,” id. at 421, and “reluctance . . . to interfere with 

the [state’s] fiscal operations.” Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 

293, 298 (1943). 

In light of this language, and the fact that the state court has already ruled on the 

constitutionality of the PAL, which governed a commercial activity in a single city, Levin

suggests that a federal court may wish to carefully weigh whether to intervene. Levin, 

560 U.S. at 425-32 & n. 11 (internal quotation marks and citations omitted); see also

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Direct Marketing 135 S. Ct. at 1132 (comity may cause a court to refrain from deciding a 

case that involves the fiscal operations of state government). Because the District Court 

concluded it lacked jurisdiction and thus did not address whether it should refrain from 

adjudicating this case under this doctrine, we will remand to allow it to decide, among 

other things, whether comity should be invoked in this case seeking a monetary remedy 

for the imposition of unconstitutional state fees.

8

 

III

For the foregoing reasons, because the District Court had subject matter 

jurisdiction over the Cab Companies’ refund claim, we will vacate the dismissal order 

and remand for the District Court to consider, among other things, whether it should 

refrain from adjudicating this case under principles of comity.

 

8

 The Levin Court identified several factors a federal court might weigh in 

deciding whether to refrain, based upon comity, from deciding such a case, namely 

whether: (1) the challenged law concerned “commercial matters over which” the state 

“enjoys wide regulatory latitude”; (2) the suit requires adjudicating “any fundamental 

right or classification” to which heightened scrutiny applies; (3) the state courts are

“better positioned than their federal counterparts to correct any violation” and provide a 

remedy; and (4) more than one potential remedy could adequately redress the alleged 

constitutional defect. Levin, 560 U.S. at 431-32. We leave consideration of these 

factors, the unique facts of this case, and the applicable case law to the discretion of the 

District Court. See Remington Rand Corp. Del. v. Bus. Sys. Inc., 830 F.2d 1260, 1266 

(3d Cir. 1987). 

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AMBRO, Circuit Judge, concurring in part and concurring in the judgment

I join my colleagues in their holding that subject matter exists. I also agree that if 

PPA on remand moves to dismiss on the grounds of comity and the District Court deems 

that argument not waived and meritorious, we would review its decision for abuse of 

discretion. I write separately, however, to explain why dismissing for comity concerns 

would be, in my view, an error of law and therefore an abuse of discretion. Thus I concur 

in the judgment and join all but Part II.B of the majority opinion. 

Several Supreme Court cases address the comity doctrine. Read together, they 

stand for the propositions that: (1) the doctrine is not jurisdictional, meaning that a state 

must request its application or it will be deemed waived; and (2) federal courts should 

abstain from hearing lawsuits when (a) an adequate state remedy exists, (b) the plaintiff 

challenges a state tax law, and (c) the state may choose among more than one 

constitutionally permissible remedy. The first proposition is beyond debate. See Direct 

Mktg. Ass’n v. Brohl, 135 S. Ct. 1124, 1134 (2015) (“[T]he comity doctrine is 

nonjurisdictional.”). Similarly the requirement in the second proposition of an adequate 

state remedy is clear and is not at issue here, as the plaintiffs may repair to Pennsylvania 

courts. See Nat’l Private Truck Council, Inc. v. Okla. Tax Comm’n, 515 U.S. 582, 587 

(1995) (requiring adequate state remedy); Howlett v. Rose, 496 U.S. 356, 367 (1990) 

(“Federal law is enforceable in state courts . . . because the Constitution and laws passed 

pursuant to it are as much laws in the States as laws passed by the state legislature.”).

The remaining conditions are related. Historically, the comity doctrine has been 

applied only to tax cases; the justification for declining to extend it to other contexts, 

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particularly to suits that challenge regulatory fees, is that states have a great deal of 

flexibility in remedying unconstitutional taxes. This range of remedial options (whether 

to extend a benefit to an unconstitutionally burdened party, whether to burden an 

unconstitutionally benefitted party, or some combination) implicates sensitive questions 

of state policy, and the Constitution has no preference among the possible outcomes. 

However, in many constitutional challenges to state laws or policies, only one remedy, or 

a suite of possible remedies no more varied than in any typical lawsuit, will satisfy the 

Constitution. The comity doctrine is unsuited to cases—such as this one—where state 

legislative prerogatives are not at stake.

Before describing the comity doctrine in some detail to illustrate why I believe 

applying it to this case would be a mistake, I stress that only one remedy is possible here: 

damages. The case before us concerns a procedural due process violation (I presume that 

the Cab Companies will be able to preclude the Commonwealth from arguing that the 

challenged regulatory scheme satisfied the Constitution’s requirements). Although 

procedural due process is a flexible standard, the remedies for violations of it are 

straightforward: equitable relief where appropriate (the Cab Companies concede their 

request for such relief is moot), and damages if plaintiffs can prove, consistent with 

ordinary tort principles, that they in fact suffered compensable injuries. Carey v. Piphus, 

435 U.S. 247, 259–64 (1978). There is no similarly situated party Pennsylvania could 

choose to burden to remedy the due process violation at issue here, but if the Cab 

Companies lost money specifically because they lacked an opportunity to challenge the 

rates the PPA set, they can recover that amount of money. Id. The extent of the damages 

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is open to debate; the Cab Companies demand all the fees paid to the PPA over a decade, 

but it is not clear from the record before us that they will be entitled to nearly that amount 

of money. The causal relationship between the due process violation and the amount the 

Cab Companies paid has yet to be established, and I note that any recovery may be 

affected by Pennsylvania’s two-year statute of limitations for § 1983 actions. See Kach v. 

Hose, 589 F.3d 626, 634 (3d Cir. 2009). 

Whatever sum may be appropriate to cover the Cab Companies’ injury, the 

calculation of damages does not depend on the answer to any sensitive questions of state 

policy. And, as I suggest in greater detail below, “[b]ecause state courts would have no 

greater leeway than federal courts to cure the alleged violation, nothing would be lost in 

the currency of comity or state autonomy by permitting the . . . suit to proceed in a 

federal forum.” Levin v. Commerce Energy, Inc., 560 U.S. 413, 431 (2010).

I. The Comity Doctrine Has Only Been Applied to Challenges to Taxes as 

Unconstitutionally Discriminatory.

The Supreme Court has discussed the comity doctrine exclusively in the context of 

challenges to state tax laws. Fair Assessment in Real Estate Ass’n v. McNary, 454 U.S. 

100 (1981); Nat’l Private Truck Council, 515 U.S. 582; Hibbs v. Winn, 542 U.S. 88 

(2004); Levin, 560 U.S. 413; Direct Mktg. Ass’n, 135 S. Ct. 1124. In each of these cases, 

comity barred the suit where a plaintiff challenged a tax as violating a constitutional 

guarantee of equal treatment: McNary was an equal protection challenge to an allegedly 

irrational discrimination between non-suspect classes of property owners; National 

Private Truck Council and Direct Marketing were both dormant Commerce Clause cases 

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whereby out-of-state private parties accused states of favoring in-state taxpayers in 

violation of the Constitution’s vesting in Congress the power to regulate interstate 

commerce; and the plaintiff in Levin challenged a state tax under both the Equal 

Protection and dormant Commerce Clauses. Under both these Clauses (as well as the 

intergovernmental tax immunity doctrine, which prohibits one sovereign from 

discriminating against subjects of another sovereign in taxation, see Davis v. Mich. Dep’t 

of Treasury, 489 U.S. 803, 814 (1989)), an unconstitutional state tax scheme may be 

remedied either by burdening an unconstitutionally benefitted party, by benefitting an 

unconstitutionally burdened party, or by some combination of the two. Hibbs, the only 

recent Supreme Court case to hold that comity did not bar a tax suit, concerned an alleged 

Establishment Clause violation, and the only available remedy was annulling the 

challenged tax credit. Levin, 560 U.S. at 431 (2010).

The comity doctrine got its start in McNary, when the Supreme Court was faced 

with a conflict between a line of cases under § 1983 holding “that a litigant challenging 

the constitutionality of any state action may proceed directly to federal court,” 455 U.S. 

at 102, and another line where “the comity principle . . . bars at least federal injunctive 

challenges to state tax laws,” id. McNary modestly extended the comity principle to bar 

suits seeking damages in challenges to state tax laws that violate a principle of equal 

treatment. The Court based its holding on how “disruptive of Missouri’s tax system” it 

would be to allow the suit to proceed, id. at 113–15, and it held explicitly “that taxpayers

are barred by the principle of comity from asserting § 1983 actions against the validity of 

state tax systems in federal courts,” id. at 116 (emphases added). Lest there be any doubt 

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that McNary was a tax case, its author, Chief Justice Rehnquist, wrote of the case, “Our 

decision that such suits must be brought in state court was driven by the unique and 

sensitive interests at stake when federal courts confront claims that States acted 

impermissibly in administering their own tax systems.” San Remo Hotel, L.P. v. San 

Francisco, 545 U.S. 323, 350 (2005) (Rehnquist, C.J., concurring in the judgment) 

(emphases added).

National Private Truck Council again considered the scope of § 1983, interpreting 

the statute “in light of the strong background principle against federal interference with 

state taxation.” 515 U.S. at 589. In doing so, the Court characterized the Tax Injunction 

Act “as but a partial codification of the federal reluctance to interfere with state taxation,” 

id. at 590, and reasoned that “because of principles of comity and federalism, Congress 

never authorized federal courts to entertain damages actions under § 1983 against state 

taxes when state law furnishes an adequate legal remedy,” id. at 587 (emphasis added). 

Thus, National Private Truck Council provides no sound basis for extending the comity 

doctrine beyond the state tax context.

The doctrine of comity has not spread far from its historical roots in the reluctance 

to interfere with state tax laws. The reason for the consistency in the doctrine is that the 

Constitution and § 1983 do not command a specific remedy for unconstitutionally 

discriminatory taxes, an unusual circumstance discussed below.

II. Remedial Flexibility Explains Why the Comity Doctrine Is Confined to 

Tax Cases.

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The Supreme Court’s development of the comity doctrine has tethered the 

historical basis relied on in National Private Truck Council and McNary to the logical 

and practical post of remedial flexibility. States may remedy constitutional violations 

with minimal federal supervision in cases involving the dormant Commerce Clause, the 

intergovernmental tax immunity doctrine, and the Equal Protection Clause (when there is 

no suspect classification) because these are all requirements of nondiscrimination. In 

remedying any constitutional infirmity in these cases, the Constitution is indifferent about 

whether a state extends or contracts a burden or a benefit (or does some combination 

thereof). 

Hibbs v. Winn, the next relevant case, is less important by itself than for how Levin 

later treated it. Hibbs involved an Establishment Clause challenge to an Arizona tax 

program that effectively allowed taxpayers to divert taxes to religious schools. In a 

footnote, the Court considered the argument that the case should be dismissed under the 

comity doctrine and rejected it, as the plaintiffs did not seek “district-court aid in order to 

arrest or countermand state tax collection.” Hibbs, 542 U.S. at 107 n.9. Relying on this 

footnote, the Levin plaintiffs, challenging under the Equal Protection and dormant 

Commerce Clauses a tax law that did not implicate a fundamental right or a suspect class, 

creatively requested the district court not to lower their own tax burden but to raise that of 

their competitors. 

Levin distinguished Hibbs with reasoning that forecloses a comity challenge to the 

Cab Companies’ suit here. It first noted that the statute at issue, one that taxed differently 

public utilities and independent corporations that provided natural gas, was “economic 

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legislation [that] does not employ classifications subject to heightened scrutiny or 

impinge on fundamental rights.” 560 U.S. at 426. The Court then underscored that “in 

taxation, even more than in other fields, legislatures possess the greatest freedom in 

classification.” Id. 

Next, the Court stressed that “[o]f key importance, when unlawful discrimination 

infects tax classifications or other legislative prescriptions, the Constitution simply calls 

for equal treatment. How equality is accomplished—by extension or invalidation of the 

unequally distributed benefit or burden, or some other measure—is a matter on which the 

Constitution is silent.” Levin, 560 U.S. at 426–27 (first emphasis added). The Court 

developed this theme at length. It discussed how the remedy sought by the challengers in 

Levin could interfere with Ohio’s legislative prerogatives in a way the Constitution did 

not command. Id. at 429. And it reiterated that, in Hibbs and in prior cases that had 

challenged state allocations of tax revenue to maintain racially segregated schools, “only 

one remedy would redress the plaintiffs’ grievance: invalidation of the credit. . . . 

Because state courts would have no greater leeway than federal courts to cure the alleged 

violation, nothing would be lost in the currency of comity or state autonomy by 

permitting the Hibbs suit to proceed in a federal forum.” Id. at 431. The constitutional 

command of equal treatment, and nothing more, was also present in National Private 

Truck Council and McNary, discussed above, as well as in Harper v. Virginia 

Department of Taxation, 509 U.S. 86 (1993), and McKesson v. Division of Alcoholic 

Beverages & Tobacco, 496 U.S. 18 (1990), the cases the District Court cited in 

dismissing this suit.

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Remedial flexibility synthesizes the Supreme Court’s comity cases: informed by a 

historical reluctance to upend state tax systems, when a constitutional violation does not 

require a specific remedy and the available choices implicate sensitive policy questions 

best left up to state governments, the federal courts will not interfere. However, § 1983

authorizes, indeed commands, federal courts to interfere in state policymaking that 

violates individual rights if a specific remedy to the plaintiff is required. 

A contrary reading of the comity doctrine would be difficult—dare I write 

impossible—to square with the well-established narrowness of the traditional abstention 

doctrines, which clearly do not apply to this case. In particular, if comity were extended 

to every case where a plaintiff challenged a state practice implicating revenue generation, 

Burford abstention would become irrelevant. See Burford v. Sun Oil Co., 319 U.S. 315 

(1943). It allows district courts to decline to hear suits that would result in repeated 

federal intervention in a complex regulatory scheme and concomitant confusion 

throughout state government. Id. at 327–34; see also New Orleans Pub. Serv., Inc. v. 

New Orleans, 491 U.S. 350, 361 (1989) (outlining cases where Burford abstention is 

appropriate). If the comity doctrine were extended to cases like this one, any suit from 

which a federal court could abstain under Burford would much more easily be dismissed 

on comity grounds, a result hardly consistent with the Supreme Court’s admonition that 

there is only a “narrow range of circumstances in which Burford can justify the dismissal 

of a federal action.” Quackenbush v. Allstate Ins. Co., 517 U.S. 706, 726 (1996).1

 

1 Nor are the other abstention doctrines relevant. Younger v. Harris, 401 U.S. 37 (1971), 

applies when a District Court is asked to enjoin an ongoing state criminal case; Railroad 

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III. Even If the Comity Doctrine Should Be Extended, It May Not Be 

Stretched to This Case.

In the recent case of Direct Marketing Ass’n v. Brohl, the Supreme Court 

discussed how the Tax Injunction Act did not apply to a challenge to state law reporting 

requirements that would affect tax collection, but it left open the question of whether the 

“nonjuristictional” comity doctrine would nonetheless bar the suit. 135 S. Ct. 1124, 

1133–34 (2015). Although “the comity doctrine is more embracive than the” Tax 

Injunction Act, Levin, 560 U.S. at 424, it is not wide enough to capture this case. This is 

in part because the comity doctrine is about the scope of § 1983; National Private Truck 

Council makes that clear, and it helps explain why the Court allowed the tax suit in 

Hibbs, an Establishment Clause challenge, and in the cases involving tax benefits to 

segregated schools. Those individual rights—like the right not to be deprived of property 

without due process of law—are at the core of § 1983 protection, in areas where federal 

supervision is particularly important, whereas dormant Commerce Clause, 

intergovernmental tax immunity, and equal protection challenges to tax classifications 

 

Commission v. Pullman Co., 312 U.S. 496 (1941), comes into play when an interpretation 

of state law may moot a federal constitutional case; and Colorado River Water 

Conservation District v. United States, 424 U.S. 800 (1976), becomes pertinent when 

there are parallel federal and state civil cases and four factors (which case was filed first, 

whether the federal forum is convenient for the parties, whether there is in rem

jurisdiction, and whether there is a risk of piecemeal litigation that cannot be averted by 

issue preclusion) balance in favor of abstention. Younger and Pullman plainly don’t 

apply, and the Colorado River factors weigh in favor of exercising jurisdiction: although 

the Cab Companies have filed a parallel state suit, the federal case came first, the Eastern 

District of Pennsylvania is convenient to the parties (all operate in and around 

Philadelphia), there is no in rem jurisdiction here, and issue preclusion can likely attach 

to whatever judgment comes first. 

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that do not single out disenfranchised populations were less likely in Congress’s mind 

when it passed the Civil Rights Act of 1871. 

Comity also should not apply here because the Constitution, enforced through 

§ 1983, commands a specific remedy (assuming the Cab Companies incurred damages 

because of a procedural due process violation), unlike in the tax-discrimination cases 

where a range of remedial options among which the Constitution has no preference can 

cure the relevant deficiency. Finally, as McNary, Levin, and National Private Truck 

Council confirm, the comity doctrine is important “particularly in the area of state 

taxation.” McNary, 454 U.S. at 103 (emphasis added); see also Levin, 560 U.S. at 421 

(“Comity’s constraint has particular force when lower federal courts are asked to pass on 

the constitutionality of state taxation of commercial activity.”); Nat’l Private Truck 

Council, 515 U.S. at 587 (1995) (discussing “longstanding federal reluctance to interfere 

with state taxation”). 

The strongest argument that the Commonwealth could raise here for the District 

Court to favor Pennsylvania courts would be based on a simplistic reading of one 

paragraph in Levin. There the Supreme Court concluded its discussion of the comity 

doctrine with sentences that the majority opinion’s eighth footnote rearranges and 

decontextualizes:

First, respondents seek federal-court review of commercial matters over 

which Ohio enjoys wide regulatory latitude; their suit does not involve any 

fundamental right or classification that attracts heightened judicial scrutiny. 

Second, while respondents portray themselves as third-party challengers to 

an allegedly unconstitutional tax scheme, they are in fact seeking federalcourt aid in an endeavor to improve their competitive position. Third, the 

Ohio courts are better positioned than their federal counterparts to correct 

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any violation because they are more familiar with state legislative 

preferences and because the [Tax Injunction Act] does not constrain their 

remedial options.

Levin, 560 U.S. at 431–32. I do not, as my colleagues appear to suggest, believe these 

remarks created a multi-factor test that should be applied mechanistically to future cases; 

rather, I view them as a summary of a long opinion that turns on two key facts: (1) Levin 

was a tax case, and (2) if the challenged tax was unconstitutional, the state could remedy 

its violation either by raising taxes for the plaintiffs’ competitors, lowering them for 

plaintiffs, or some combination. 

Even if Levin created a multi-factor test to be applied to any challenge to any state 

law, those factors do not counsel in favor of dismissal here. It is true that the Cab 

Companies seek review of a commercial statute, but, as for the second factor, they are not 

seeking to improve their “competitive position” because there are not similarly situated 

competitors unburdened by the PPA’s regulation. Third, and relatedly, although the 

remedial options in any lawsuit may be broad, they are not flexible in this case in the 

same way that they are in tax cases where a state is to reapportion taxes among the 

classes that must be treated equally.

IV. The Circuit Courts and the “Fees v. Taxes” Line of Cases

For the reasons set forth above, I conclude that the Supreme Court’s comity 

jurisprudence counsels federal courts against dismissing cases on comity grounds unless 

a state seeks application of the doctrine, the plaintiff challenges a tax, and a range of 

remedial options is available to the state should a court deem the tax unconstitutional. 

And I am in good company. Every court of appeals to address the question has applied 

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comity only in state tax cases where an adequate state remedy exists. Taxes aside, 

federal courts must exercise their “virtually unflagging obligation . . . to exercise the 

jurisdiction given them,” Colorado River, 424 U.S. at 817, when presented with 

constitutional challenges to regulatory fees. The cases describe “taxes” as generally 

imposed by a legislature, assessed against a broad class of people or entities, and used for 

general public purposes, while “regulatory fees” are usually imposed by an agency, 

assessed against a narrow class of persons, and used for the benefit or regulation of those 

who pay. See DIRECTV, Inc. v. Tolson, 513 F.3d 119, 125–26 (4th Cir. 2008); Marcus v.

Kan. Dep’t of Revenue, 170 F.3d 1305, 1311 (10th Cir. 1999) (conflating comity and Tax 

Injunction Act and distinguishing between fees and taxes); see also Kathrein v. Evanston, 

752 F.3d 680, 688–87 (7th Cir. 2014) (adopting distinction between fees and taxes under 

comity doctrine, but applying different test to determine whether exaction is fee or tax). 

And several district courts have properly entertained challenges to regulatory fees despite 

motions to dismiss based on comity. Pac. Bell Tel. Co. v. City of Hawthorne, 188 F. 

Supp. 2d 1169, 1177 (C.D. Cal. 2001); Attorneys’ Liab. Assurance Soc’y v. Fitzgerald, 

174 F. Supp. 2d 619, 629 (W.D. Mich. 2001); Diginet, Inc. v. W. Union ATS, Inc., 845 F. 

Supp. 1237, 1242 (N.D. Ill. 1994).2

 

2 The one case where a district court dismissed a challenge to regulatory fees on a comity 

ground involved a dormant Commerce Clause challenge. Valero Terrestrial Corp. v. 

Callaghan, 1995 U.S. Dist. LEXIS 17490 (N.D. W. Va. Sept. 28, 1995), vacated in part 

on other grounds sub nom. Valero Terrestrial Corp. v. McCoy, 50 F. Supp. 2d 564 (N.D. 

W. Va. 1999), and further vacated on other grounds sub nom. Valero Terrestrial Corp. v. 

Paige, 211 F.3d 112, 122 (4th Cir. 2000). Valero presented a far better vehicle for 

expanding the comity doctrine than our case because there the state had multiple remedial 

options just as in the tax cases. Nonetheless, it was probably wrongly decided. Scott v. 

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Appellees concede that the policy challenged here involves collection of 

regulatory fees, but they argue that distinguishing between fees and taxes is arid 

formalism. I disagree. First, the comity doctrine of the McNary–Levin line has 

developed exclusively in the state-tax context, and the cases emphasize specifically “the 

federal reluctance to interfere with state taxation.” Levin, 560 U.S. at 424 (quoting Nat’l 

Private Truck Council, 515 U.S. at 590). Second, refraining from federal interference 

makes particular sense in the tax context because of the remedial flexibility discussed 

above and stressed in Levin. 

It is hard for me to imagine (and no court has suggested) a limiting principle to 

comity other than the historical reluctance to interfere with taxes and the related remedial 

flexibility. All § 1983 cases affect the public fisc directly or indirectly, and expanding 

comity to our case would, it seems to me, mean that the doctrine would bar any suit 

against a state practice that is subject to rational basis review, a radical curtailment of the 

scope of § 1983 unsupported by cases from any level of the federal judiciary. 

* * * * *

No court, let alone the Supreme Court, has suggested that the comity doctrine is as 

broad as the majority’s selective quotations from Levin and other similarly off-point cases 

imply.3 Given that a focus on remedial flexibility and the historical practice of not 

 

Donald, 165 U.S. 58, 101 (1897) (affirming a federal court’s award of damages incurred 

by violation of the dormant Commerce Clause).

3 Particularly perplexing is the majority’s decision to quote Levin’s language about “other 

legislative prescriptions” as suggesting that maybe comity could apply here. 456 U.S. at 

at 426. Let’s read the rest of the sentence (again): “Of key importance, when unlawful 

discrimination infects tax classifications or other legislative prescriptions, the 

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interfering with state tax laws harmonizes the Supreme Court’s comity and Tax 

Injunction Act cases as well as the solid wall of other courts of appeals’ authority on the 

distinction between regulatory fees and taxes, I would adopt the distinction between fees 

and taxes and conclude that comity should not bar the Cab Companies’ suit here. I would 

thus vacate the judgment of the District Court and remand the case with instructions not 

to consider the red herring called the comity doctrine.

 

Constitution simply calls for equal treatment.” Id. (first two emphases added). This 

sentence alone exposes the impropriety of applying comity here, all the more so when 

read in light of a doctrine that has only been applied in the discriminatory tax context 

(excepting the Northern District of West Virginia, which erroneously, but at least 

arguably plausibly, extended the doctrine to a different context calling for equal 

treatment, see supra n.2).

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