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

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RECOMMENDED FOR FULL-TEXT PUBLICATION 

Pursuant to Sixth Circuit I.O.P. 32.1(b) 

File Name: 15a0123p.06 

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT 

_________________ 

JAMES PHILLIPS, 

Plaintiff-Appellant, 

v. 

CHARLES R. MCCOLLOM, III, 

Defendant, 

JOSEPH E. TERNES, JR., et al., 

Defendants-Appellees. 

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No. 14-6190 

Appeal from the United States District Court 

for the Western District of Kentucky at Owensboro. 

No. 4:11-cv-00066—Joseph H. McKinley, Jr., Chief District Judge. 

Decided and Filed: June 12, 2015 

Before: SUTTON, GRIFFIN, and WHITE, Circuit Judges. 

_________________ 

COUNSEL 

ON BRIEF: Evan Taylor, Owensboro, Kentucky, for Appellant. Ann Michelle Turner, 

TURNER, KEAL & DALLAS PLLC, Prospect, Kentucky, for Appellees. 

_________________ 

OPINION

_________________ 

SUTTON, Circuit Judge. In 2005, the City of Henderson, Kentucky, raised its taxes. 

The resulting $500 tab was too dear for James Phillips, a certified public accountant and 

Henderson resident. He assailed the tax hike before the city council, in the Henderson Gleaner, 

and in the course of advising his clients. When Tax Day 2006 came around, Phillips did not pay 

>

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what he thought he should not owe. The city treated his civil disobedience as criminal 

misconduct. A Kentucky jury convicted Phillips of a misdemeanor for failure to file a return, but 

a state appellate court threw out the conviction. Phillips sued the city and its officials in federal 

court for violating his Fourteenth Amendment rights to procedural due process and equal 

protection. The district court rejected both claims as a matter of law. We affirm. 

The 2005 tax law, still in effect today, requires “every person or business entity engaged 

in any business, trade, occupation, or profession” within Henderson’s city limits to pay 1% of its 

previous year’s net profits for the privilege of doing business there. Henderson, Ky., Code of 

Ordinances § 21-33(a). Each taxpayer must report his annual net profits on an “occupational 

license return.” The net-profits calculation depends on information reported on various Internal 

Revenue Service forms. As a result, no taxpayer can report anything to the city without doing 

his federal taxes first. As another result of that feature of the law, the ordinance’s filing 

deadlines and the IRS filing deadlines are identical. 26 U.S.C. § 6072(a); Code of Ordinances 

§ 21-37(a). 

The ordinance also creates a new agency: the Board of Occupational License Appeals. 

The Board is empowered to “render decisions on questions of interpretation of [the] ordinance, 

on questions of allocation of payroll and net profits, on proceedings of delinquent tax collections, 

and on the waiver of penalties assessed.” Code of Ordinances § 21-43. Although the ordinance 

does not say how such appeals work, the city’s assistant finance director described it this way: 

[T]he taxpayer would talk to my staff. If they disagreed with that, they would talk 

to me. If they still disagree, to my boss, up the chain of command to the City 

manager. If they still disagreed, then they would file some kind of written appeal 

that says “I don’t agree with this interpretation.” 

R. 96-6 at 11. Henderson’s Board of Commissioners has the power to review all Board 

decisions. 

The ordinance backstops its reporting system with several penalties. On the civil side, it 

designates delinquent taxes as personal debts owed to the city and enforceable “by civil action,” 

Code of Ordinances § 21-46(d), (e), and imposes steep penalties for failure to file and steeper 

penalties for failure to pay, id. § 21-46(a) to (c). On the criminal side, it creates a “class A 

misdemeanor” for “willful[] fail[ure] to make a return . . . with the intent to evade payment of the 

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tax or amount collected.” Id. § 21-46(f). That crime operates not as an alternative but “[i]n 

addition to” the civil penalties the ordinance prescribes. Id.

The ordinance took effect on New Year’s Day 2006. When Henderson’s Finance 

Department tried to apply the law to its taxpayers’ 2005 earnings, it ran into a problem. The 

federal tax code respects the difference between calendar-year filers (whose tax years end in 

December) and fiscal-year filers (whose tax years end in any month but December). Because the 

Henderson ordinance relies on information reported on IRS forms, it respects that difference too. 

But the tax it replaced—the one governing its taxpayers’ 2004 earnings—did not respect that 

difference. The earlier tax calculated obligations using “gross receipts” from “January through 

December” of the previous year, no matter whether the taxpayer was a calendar-year or fiscalyear filer. R. 96-5 at 26–27. 

For calendar-year filers, the transition from the old tax to the new tax did not present a 

problem. The old tax applied to gross receipts between January 1, 2004 and December 31, 2004, 

while the new tax applied to the profits reported on the taxpayer’s federal return, which covered 

profits between January 1, 2005 and December 31, 2005. The same was not true for fiscal-year 

filers. Take a taxpayer whose fiscal year begins February 1 and ends January 31. In 2005, under 

the old system, he paid taxes on gross receipts between January 1, 2004 and December 31, 2004. 

(Just like his calendar-year counterpart.) In 2006, however, the new tax required him to pay 

taxes on the net profits reported on his federal return. Because federal returns take his fiscalyear status into consideration, the city could not capture all profits he earned during the 2005 

calendar year by reference to one return alone. Using his 2005 return, which spanned February 

2004 through January 2005, would have left eleven months of net profits untaxed: those earned 

between February 2005 and December 2005. (It would also have created a double-taxation 

problem by leaving him on the hook for net profits earned between February 2004 and December 

2004—from which sum the city had already assessed eleven months’ worth of tax.) Using his 

2006 return, which spanned February 2005 through January 2006, would have left one month of 

net profits untaxed: those earned in January 2005. The city considered resolving this dilemma 

by “combin[ing] two tax returns” or by “do[ing] some type of prorating.” R. 96-5 at 27. But 

those solutions created administrative difficulties of their own. Unable to come up with a 

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workable solution to the problem and doubtful there were many fiscal-year filers, the city 

decided to tax its fiscal-year taxpayers by reference to their 2006 returns alone. As a 

consequence, only calendar-year taxpayers were required to pay taxes on profits earned during 

every month in 2005. 

That resolution irritated Phillips, a calendar-year taxpayer. A certified public accountant 

licensed to practice in Henderson, Phillips initially supported the city’s tax hike. His views 

changed after he discovered that the city expected him to pay the new tax on his 2005 profits. As 

he read the law, its effective date meant it applied to his 2006 profits and onwards. The fact that 

the city planned to forgive fiscal-year filers’ obligations on a portion of their 2005 profits added 

insult to injury. 

Phillips criticized the ordinance in public meetings, private conferences, correspondence 

with city officials, and a letter to the editor of the Henderson Gleaner. He advised his clients to 

pay the new tax under protest. And when his own taxes came due (to the tune of $500), he did 

not even do that. He instead refused to file his occupational license return, prompting the city to 

charge him with a misdemeanor. When Phillips explained his actions to the county attorney, the 

attorney told him to “go ahead and file the return and just not pay it, because if you do that, that 

would be a civil matter and . . . the City will have to take . . . you to civil court.” R. 96-4 at 21. 

Phillips declined the offer and threatened a lawsuit of his own. His truculence did not pay 

dividends. A state jury convicted him. Happily for Phillips, the Kentucky Court of Appeals 

reversed that judgment. Phillips v. Commonwealth, 324 S.W.3d 741 (Ky. Ct. App. 2010). 

No longer content to play defense, Phillips sued the city and its officials in federal court 

for violations of federal and state law. He lost across the board in the district court. He appeals 

the resolution of two of those claims: a procedural due process claim, which the district court 

dismissed under Civil Rule 12(b)(6), and an equal protection claim, which the court rejected at 

summary judgment. 

Procedural Due Process. No State may “deprive any person of life, liberty, or property” 

without “due process of law.” U.S. Const. amend. XIV. To prevail on his due process claim, 

Phillips must do two things. He must show that the city and its officials deprived him of a 

“liberty or property interest.” And he must show that they did so without “process”—without 

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according him the procedural protections the Federal Constitution requires. See Sickles v. 

Campbell County, 501 F.3d 726, 730 (6th Cir. 2007). His key problem is that he has suffered no 

loss of property (or for that matter liberty). Almost a decade has passed since his 2006 taxes 

came due, but the city has yet to receive a cent of that money because Phillips has yet to pay. 

Nor has the city tried to collect that debt by way of a civil action. Nor has the city revoked 

Phillips’ license to practice as a certified public accountant. Nor did the criminal action succeed. 

Nor could a criminal action succeed in the future with respect to his 2006 taxes given the 

imperatives of the Double Jeopardy Clause in the United States Constitution. On this record, the 

city has not deprived Phillips of any constitutionally protected interest—a first prerequisite of a 

cognizable due process claim and a final answer to this claim. 

Phillips protests that the city did deprive him of something: his interest in airing his 

grievances at a hearing before the Board of Occupational License Appeals. The ordinance 

establishing the new tax, he points out, required the City of Henderson to create the board and 

the city, he adds, never did. All true. But the Supreme Court has rejected the notion that an 

interest in process itself warrants process, holding that “an expectation of receiving process is 

not, without more,” an “interest protected by the Due Process Clause.” Olim v. Wakinekona, 

461 U.S. 238, 250 n.12 (1983). “Process is not an end in itself” after all, but a means to protect 

other interests. Id. at 250. We have said the same thing in other settings. See, e.g., United of 

Omaha Life Ins. Co. v. Solomon, 960 F.2d 31, 34 (6th Cir. 1992) (per curiam). To rule otherwise 

creates this tail-chasing dilemma: “If a right to a hearing is a liberty interest, and if due process 

accords the right to a hearing, then one has interpreted the Fourteenth Amendment to mean that 

the state may not deprive a person of a hearing without providing him with a hearing.” Levin v. 

Childers, 101 F.3d 44, 46 (6th Cir. 1996) (per curiam) (quoting Shango v. Jurich, 681 F.2d 1091, 

1101 (7th Cir. 1982)), abrogated on other grounds as recognized by Johnson v. City of Detroit, 

446 F.3d 614, 627–28 (6th Cir. 2006). We have no interest in going down that road. In the final 

analysis, a cognizable due process claim requires the deprivation of a substantive liberty or 

property interest; a city’s failure to provide process by itself does not suffice. 

Phillips insists that, even if he did not have an interest in the creation of the board itself, 

he at least had an interest in the ability to petition that board before his misdemeanor 

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prosecution. That argument rests on the false premise that the board has authority over criminal 

prosecutions. In reality, the board’s power extends only to civil collection actions; Kentucky’s 

county attorneys retain sole control over the levers of criminal justice. See Ky. Rev. Stat. 

§ 15.725(2). Nothing in the Federal Constitution requires States to pursue civil remedies as a 

prerequisite to criminal ones. See Butler v. Elle, 281 F.3d 1014, 1023 (9th Cir. 2002). The 

argument at any rate would fail even if the board did have authority over criminal prosecutions. 

A mere failure “to comply with state law does not . . . automatically translate into a deprivation 

of procedural due process under the United States Constitution.” DePiero v. City of Macedonia, 

180 F.3d 770, 788 (6th Cir. 1999). 

Equal Protection. Phillips accuses the city of violating the Fourteenth Amendment’s 

equal protection guarantee by exempting all fiscal-year filers from taxes on a portion of their 

2005 profits while forcing all calendar-year filers to pay taxes on their 2005 profits in full. But 

the Federal Constitution does not prohibit all differential enforcement of municipal laws. See 

Warren v. City of Athens, 411 F.3d 697, 710–11 (6th Cir. 2005). So long as the city has not 

drawn its categories “along suspect lines,” its classifications survive constitutional scrutiny “if 

there is a rational relationship between the disparity of treatment and some legitimate 

governmental purpose.” Armour v. City of Indianapolis, 132 S. Ct. 2073, 2080 (2012). 

Administrative convenience alone “can justify a tax-related distinction,” as the Court made clear 

in Armour. Id. at 2081. There, the City of Indianapolis created a tax its citizens could pay in 

installments or in full. When the city later abandoned the tax, it forgave all outstanding 

obligations for its installment-paying taxpayers, but refused to refund any money it had collected 

from the thirty-eight taxpayers who had paid in full. Id. at 2079. Sufficiently rational, held the 

Court: “To have added refunds to forgiveness would have meant adding yet further 

administrative costs, namely the cost of processing refunds.” Id. at 2081. 

The City of Henderson faced a similar problem and handled it similarly. In the words of 

the city’s assistant finance director, “[T]here were so few fiscal-year filers and I didn’t think that 

the amount of money involved was that large, so we just didn’t pursue that [class of taxpayers] 

for lack of time.” R. 96-6 at 4. The city’s actions satisfy the modest requirements of equal 

protection in this area. 

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Phillips claims that the city could have enforced the new tax against fiscal-year filers 

without much, if any, hassle. But rational basis review does not authorize us to substitute his 

views—or for that matter our views—for the city’s views, so long as the city’s views otherwise 

meet the slack minimums of rationality. Phillips adds that the city never made a reasoned 

decision to confer a benefit on fiscal-year filers because the record does not say who in its 

finance department signed off on that policy. As a factual matter, we do not see how his 

conclusion follows from his premise: Just because we do not know who authorized the policy 

does not mean that the city failed to debate it. As a legal matter, the argument is irrelevant: The 

city’s actions do not violate the Equal Protection Clause so long as there is any plausible 

justification for them, supported by the record or not. Heller v. Doe, 509 U.S. 312, 320–21 

(1993). 

For these reasons, we affirm. 

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