NOT RECOMMENDED FOR FULL

- TEXT PUBLICATION File Name: 14a0249n.06
No. 13

- 3731 UNITED STATES COURTS OF APPEALS FOR THE SIXTH CIRCUIT
DOUGLAS P. LABOR DE , On Behalf of Himself and All Others Similarly Situated, and KARLA J. LABORDE , on Behalf of Herself and All Others Similarly Situated, Plaintiffs

– Appellants,

v. THE CITY OF GAHANNA, REGIONAL INCOME TAX AGENCY, and JENNIFER TEAL , in both her individual capacity and as Finance Director of the City of Gahanna , Defendants

– Appellees

. ) ) ) ) ) ) ) ) ) ) ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF OHIO

BEFORE: ROGERS, M c KEAGUE, and WHITE, Circuit Judges. PER CURIAM . In this putative class action brought by taxpayer residents of the City of Gahanna , Ohio, Douglas and Karla LaBorde appeal the judgment of the district court dismissing some of their claims and remanding others to the state court from which the action was removed. For the reasons that follow, we affirm.
I
Defendants are the City of Gahanna , a municipal corporation located in Franklin County, Ohio ; Jennifer T eal , Gahanna’s Finance Director (collectively referred to as “Gahanna”) ; and the Regional Income Tax Agency ( “ RITA ” ) , the tax administrator for Gahanna

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- 3731, LaBorde, et al. v. City of Gahanna, et al.

2 Gahanna is a “ mandatory filing ” municipality ; residents file a municipal income tax
return on a form prescribed by RITA, “Form 37

. ” 1 Gahanna levies a municipal income tax at the rate of 11⁄2 percent on qualifying wages, salaries , and other compensa tion. Gahanna also provides certain credits that offset a resident ’ s tax liability, including a cr edit for taxes paid to another municipality. Gahanna City Code § 161.18(a) calculates this credit as follows: Every individual taxpayer who resides in the City, but who received net profits, salaries, wages, commissions, distributions from associations, or other compensation for work done or services performed or rendered outside the City, if it is made to appear that he has paid a municipal income tax or excise tax based on income, or such net profits, salaries, wages, commissions, distributions from ass ociations, or other compensation in another municipality, shall be allowed a credit of eighty

- three and one

- third percent (83

- 1/3%) of the amount so paid by him or in his behalf in such other municipality to the extent of the tax assessed by this chapter, by reason of such net profits, salaries, wages, commissions or other compensation earned in such other municipality where such tax is paid. In no instance shall the allowable credit for tax paid another municipality exceed the amount of tax imposed by this chapter. [ 2 ] The LaBorde s , the named plaintiffs, filed a nine

– count complaint in state court alleging that Form 37 caused their tax credit s for 2009, 2010, and 2011 to be understated by $347, $438, and $473 , respectively , because it inaccur ately limits their tax credit to 83 1/3% of 1.5% of their earnings rather than 83 1/3% of the taxes paid to another municipality. La B orde v. City of Gahanna , 946 F. Supp. 2d 725, 728

– 29 (S.D. Ohio 2013). T hey sought declaratory and injunctive relief and assert ed unconstitutional taking s claims under the Fifth Amendment and
42 U.S.C. § 1983

. Defendants removed the case to federal d istrict c ourt , invoking federal question jurisdiction. Gahanna moved to dismiss the unconstitutional taking s claims (counts 5 and 6 ) for failure to state a claim , and the claim seeking injunctive relief (count 7) as barred by

1 Gahanna allows paper and efile through RITA and allows residents who “DID NOT MOVE, have ONLY w

- 2 INCOME, and live in FULL CREDIT municipalities ” to file Form 37B. Form 37B does not have a “Credit Rate Worksheet

. ” http://www.ritaohio.com/media/451931/37

- final

- form.pdf; ttp://www.ritaohio.com/media/451934/37b

final

- form.pdf (accessed 2/20/2014).

2 http://www.conwaygreene.com/Gahanna/lpext.dll?f=templates&fn=main

- hit

- h.htm&2.0 (accessed 2/20/2014).No. 13

- 3731, LaBorde, et al. v. City of Gahanna, et al.

3 the Tax Injunction Act ( “ TIA ” ), 28 U.S.C. § 1341

. 3 RITA moved to dismiss the federal claims as barred by the TIA, and asked the district court to relinquish jurisdiction over the remaining
state

- law claims

. LaBorde , 946 F. Supp. 2d at 7 29

. The district court granted defendant s ’ motion s to dismiss counts 5, 6 and 7 , recognized that the state

- law claims for declaratory relief asserted in counts 1, 2 and 3 were also barred by the TIA, a nd remanded the remaining state

- law claims to state court. 4
II We review a decision to dismiss on the pleadings unde r Fed. R. Civ. P. 12(c) de novo, Fritz v. Charter Twp. of Comstock , 592 F.3d 718, 722 (6 th Cir. 2010) , under the standard applicable to motions to dismiss under Rule 12(b)(6). Grindstaff v. Green , 133 F.3d 416, 421 (6 th Cir. 1998). To survive a Rule 12(b)(6) motion to dism i ss, the complaint must plead “enough facts to state a claim to relief that is plaus ible on its face.” Bell Atl. Corp. v . Twombly , 550 U.S. 544, 570 (2007). To survive a motion to dismiss under 42 U.S.C § 1983, the plai ntiff must allege two elements: 1) the defendant acted under color of state law; and 2) the defendant’s conduct deprived the plaintiff of rights secured under federal law. Bloch v. Ribar , 156 F.3d 673, 677 (6 th Cir. 1998).

3 The TIA states “[t]he 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.”

4 Although the district court’s use of the term “remaining state

- law claims” is not crystal clear, we construe it as including all six state

- law claims embodied in counts 1, 2, 3, 4, 8 and 9. We derive this understanding from three circumstances. First, neither of the defendants’ motions to dismiss attacked the state

- law claims; rather, they simply asked the court to relinquish jurisdiction over the state

- law claims . Second, upon gran ting the motions to dismiss the federal claims on which federal jurisdiction was premised, the court correctly recognized that the balance of considerations weighed in favor of declining to exercise supplemental jurisdiction over the state

- law claims under 28 U.S.C. § 1367. Third, although the court noted cursorily that the TIA barred the relief sought in counts 1, 2 and 3, it offered no explanation that would justify treating these state

- law claims any differently than those stated in counts 4, 8 and 9, which were more explicitly made subject to remand.No. 13

- 3731, LaBorde, et al. v. City of Gahanna, et al.

4 III A. Federal Claims : Counts 5 and 6 The LaBordes’ complaint alleged a “taking” of their private property , i.e., that Gahanna residents’ overpayment of income taxes and Gahanna’s retention of these overpayments constitutes a taking of private property without compensation. The LaBordes argue that the district court erred in dismissing the federal takings claims stated in counts 5 and 6. 5 They assert that under state law , the tax credit is an “intangible” property interest that falls within the ambit
of the Fifth Amendment t akings c lause , or alternat iv ely , that it is tangible in that it can be consi d ered a monetary appropriation.
T he LaBordes seek to enjoin Gahanna from u sing Form 37 in its present configuration , which they allege results in incorrect c a lculation (to Gahanna taxpayers’ detriment) of the tax credit for taxes paid to other municipalities on income earned outside Gahanna

. They a rgue that the TIA does not bar their federal claims because they are not seeking to enjoin the assessment, levy, or collectio n of any taxes , but rather, are requesting that Gahanna follow the Gahanna City Code and collect only those income taxes provided for by ordinance. Their position is that the tax is legal; it is jus t not being properly enforced. The district court recognized the well

- established proposition that a government’s act of taxation is not a “taking” of private property under the C onstitution. The court rejected the argument that the tax credit to which the LaBordes claim entitlement represents an intangible property right. The court determined that Woda Ivy Glen L.P. v. F ayette Cnty. Bd. of Revision , 902 N.E. 2d 984 (Ohio 2009) , relied on by the LaBordes, and a similar case the LaBordes cited, Cottonwood Affordable Hous. v. Yavapai Cnty. , 72 P.3d 357 (Ariz. Tax Ct

. 2003) , simply ho ld

5 The LaBordes have not appealed the dismissal of count 7. Nor do they challenge the remand of state

- law claims to state court.No. 13

- 3731, LaBorde, et al. v. City of Gahanna, et al.

5 that tax credits are an intangible asset that should not be taken into account in valuing low

income ho u s ing property for property

- tax purposes , and do not support the position that miscalculati ng an income tax credit implicates the Fifth Amendment taking s principle. The district court found tha t the tax credit issue in the present case is part and parcel of the entire municipal income tax system implemented by Gahanna , and that since the Fifth Amendment
t akings c lause is no t implicated by the collection o f taxes, it is not implicated by a miscalculation of the tax credit s. We find no error in the district court’s reasoning. Whether or not a tax credit is a property right, t he LaBordes failed to allege facts that, if proved, would establish an unconstitutional taking

. Moreover, a llegations of deprivation of constitutional rights do not render the TIA inapplicable. Schneider Transp

. , Inc. v. Cattanach , 6 57 F.2d 128, 131 (7th Cir. 1981). The TIA’s prohibition of federal court restraint of state or local taxation encompasses a broad array of state and local taxes

. The TIA does not bar all federal court challenges to state and local tax policies, but only those in which the taxpayer seeks to avoid a tax obligation , where the relief sought is prosp ective in nature, whether injunctive or declaratory

. Hibbs v. Winn , 542 U.S. 88,
99

– 100 (2004). Although Ohio distinguishes a tax credit from the imposition of a tax, a tax credit impacts the taxpayer’s tax liability. The Gahanna tax credit is a credit for taxes already paid to another municipality. The credit operates to reduce the tax liability t hat a resident would otherwise owe, thereby reducing revenue collected by Gahanna. T h e LaBordes’ takings claims clearly implicate the correct interpretation of the Gahanna C ity C ode and seek judicial relief that would have the effect of limit ing their tax liability

. This is a question that , when raised in federal court in support of injunctive or declaratory relief, per the TIA , must be left to state procedures,
p rovided they satisfy the plain, speedy, and efficient state remedy requirement

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- 3731, LaBorde, et al. v. City of Gahanna, et al.

6 B. Plain, Speedy and Efficient Remedy
T he TIA prohibits district courts from issuing declaratory judgments holding state tax laws unconstitutional where a plain, speedy and efficient state remedy exists. Kunkle v. Fulton Cnty. Bd. of Comm’rs , 922 F.2d 841 (6 th Cir. 1991) (quoting California v. Grace Brethren Church , 457 U.S. 393, 408 (1982) )

. The district court cited Ohio Rev. Code § 2723.01 as a plain , speedy and efficient remedy for the LaBordes’ challenges. 6 The LaBordes argue that if City Code § 161.18 is legal and not being properly enforced, they are entitled to a refund for the past three years under § 161.12(d). However, if the claim falls under Ohio Rev. Code § 2723 (as an illegal tax), they contend it is subject to a one

- year statute of limitations and § 2723 unfairly limits the refund to which they are entitled. To satisfy the “plain, speedy and effi cient remedy” requirement, the remedy “need not necessarily be the best remedy available or even e qual to or better than the remedy that might be available in federal court.” 17 C harles Alan Wright, A rthur Miller & E dward H. Cooper, Federal
Practice and Procedure § 4237 , pp. 643

– 44 (2d ed. 1988). Instead, a state court remedy is plain, speedy and eff

icient within the meaning of the T IA if it provides the taxpayer with a “full hearing and judicial determination” at which the taxpayer may raise consti tutional objections to the tax. Aluminum Co. of Am. v. Dep’ t o f Treasury , 522 F.2d 1120, 1126 (6th Cir. 1975) (quoting Helmsley v. Detroit , 320 F.2d 476, 480 (6th Cir. 1963)); Wilson v. Bredesen , 113 F. App’x 70, 72 73 (6 th Cir. 2004) (quoting California v. Grace Brethren Church , 457 U.S. at 411 ( citing Rosewell v. LaSalle Nat’ l Bank , 450 U.S. 503, 514 (1981) ) )

. Ohio Revenue Code

6 Ohio Rev. Code § 2723.01 states: “ Courts of common pleas may enjoin the i llegal levy or collection of taxes and assessments and entertain actions to recover them when collected, without regard to the amount thereof, but no recovery shall be had unless the action is brought within one year after the taxes or assessments are coll ected. ”No. 13

- 3731, LaBorde, et al. v. City of Gahanna, et al.

7 § 2723.01 thus provides the taxpayer with a “plain, speedy and efficient remedy. ” Additionally, Ohio Revised Code § 2721.03 allows : . . . any person whose rights, status, or other legal relations are affected by a constitutional provision, statute, rule as defined in section 119.01 of the Revised Code, municipal ordinance, township resolution, . . . may have determined any question of construction or validity arising under the instrument, constitutional provision, statute, rule, ordinance, resolution,

. . . and obtain a declaration of rights, status, or other legal relations under it

. Because state law provides a plain, speedy and efficient remedy, the TIA bars prosecution of the ta kings claims in federal court.
I V Accordingly, we AFFIRM the judgment of the district court, dismiss ing counts 5, 6 and 7, and remanding the remaining state

- law claims asserted in counts 1, 2, 3, 4, 8 and 9 to state
court.