## United States Court of Appeals FOR THE EIGHTH CIRCUIT

_____________ No. 98-1231SI

_____________ Christopher F. Padavich, * * Appellant, * Appeal from the United States

* District Court for the Southern
v. * District of Iowa. * John A. Thalacker, * * Appellee. *

_____________ Submitted: October 19, 1998

Filed: December 4, 1998

_____________ Before McMILLIAN, FAGG, and BEAM, Circuit Judges.

_____________ FAGG, Circuit Judge.
Law enf orcement officers arrested Christopher F. Padavich for possessin g marijuana, and the Iowa Department of Revenue and Finance (Department) the n assessed taxes and penalties against Padavich because heneglected to pay Iowa’s drug sta mp tax. See Iowa Code §§ 453B.3, 453B.12 (1997). After Padavich paid th e assessed taxes and p enalties, an Iowa state court convicted Padavich of possession of marijuana with intent to deliver and failure to affix drug tax stamps. See id. § 124.401 (1)(d); § 453B.12. The Iowa Supreme Court affirmed Padavich’s conviction and sentence on direct appeal. See State v. Padavich , 536 N.W.2d 743, 745 (Iow a 1995). Padavich then petitioned the district court for writ of habeas corpus. See 28-2-

U.S.C. § 2254 (1994). In his habeas petition, Padavich cl aimed the taxes and penalties
asses sed under Iowa’s drug stamp tax were criminal penalties and his later crimina l convic tion for the same activity violated the Double Jeopardy Clause. The distric t court denied Padavich’s petition, Padavich appeals, and we affirm.

Initi ally, the State contends Padavich procedurally defaulted his claim because he failed to present the claim to any Iowa state court. Padavich defends his failure to raise h is claim in state court because it would have been futile in light of the Iow a Supreme Court’s decision in State v . Lange , 531 N.W.2d 108 (Iowa 1995). In Lange , the court held the Iowa drug stamp tax was not a crimina l penalty and later prosecution d i d not violate the Double Jeopardy Clause. See id. at 115-17. We have recognized the futility of requiring a habeas petitioner to exhaust state remedies when the stat e court has r ecently decided the same legal question adversely to the petitioner unde r nearly identica

l facts. See Hawkins v. Higgins , 898 F.2d 1365, 1367 (8th Cir. 1990); Piercy v . Black , 801 F.2d 1075, 1077-78 (8th Cir. 1986). Nevertheless, the Stat e reminds us of the Unit

ed States Supreme Court’s admonishment that a defendant may not fail to raise a constitutional objection in “the state courts simply because [th e defendant] thinks [the state courts] will be unsympathetic to the claim.” Engle v. Isaac , 456 U.S. 107, 130 (1982). As the Supreme Court pointed out, “[e]ven a state cour t that has previously rejected a constitutional argument may decide, upon reflection, that the contention is valid.” Id. Although we acknowledge the possible inconsistenc y bet ween this Court’s holdings in Hawkins and Piercy and the Supreme Court’ s statemen t in Engle , we leave this issue for another day. Instead, we will decid e Padavich’s a ppeal on the merits because the “exhaustion rule is not a rule o f jurisdiction, and

sometimes ‘the interests of comity and federalism [are] better served by addressing the merits.’” Thompson v. Missouri Bd. of Parole , 929 F.2d 396, 398 (8th Cir. 1991) (quoting Granberry v. Greer , 481 U.S. 129, 134 (1987)); see 28 U.S.C. § 2254(b) (2) (Supp. II 1996) (permitting denial on merits of habeas petition withou t requiring applicant to exhaust state court remedies). “Thi s is particularly true when the claim is non-meritorious.” Thompson , 929 F.2d at 398.-3-

Turning to the merits of Padavich’s double jeopardy claim, we review the district court’s legal conclusions de novo and its factual findings for clear error. See Frey v. Schuetzle , 151 F.3d 893, 897 (8th Cir. 1998). Whether the Iowa drug stamp tax act is a criminal or civil penalty i s initially a matter of statutory construction. See Hudson v. United States , 118 S. Ct. 488, 4 93 (1997). When the state legislature has expressly given a tax statute a civil label, as Iowa’s legislature has in this case, we must decide whet her Iowa’s statutory scheme is “so punitive either in purpose or effect as t o trans for[m] what was clearly intended as a civil remedy into a criminal penalty. ” Huds on , 118 S. Ct. at 493 (internal quotations and citations omitted); accord Unite d States v. U rsery , 518 U.S. 267, 290 (1996); Department of Revenue of Montana v

. Kurth Ranch , 511 U. S. 767, 780-83 (1994). Only the clearest proof will be sufficient to transfor m into a criminal penalty what the legislative body intended to be a civi l remedy. See Hudson , 118 S. Ct. at 493.
In considering the punitive form and ef fect of Iowa’s drug stamp tax act, we are guided by the Supreme Court’s opinion in Kurth Ranch . In Kurth Ranch , the Cour t evaluated certain features of Montana’s drug tax statute and concluded the statut e operated a s a punishment implicating the Double Jeopardy Clause. At the outset, the Court stat ed that “neither a high rate of taxation nor an obvious deterrent purpos e automatically marks this tax as a form of punishment.” Kurth Ranch , 511 U.S. at 780. The Court decided, however, the rate of taxation and the tax’s deterrent purpose , combined with the fact that the tax was conditioned o n the commission of a crime, was
ex acted only after the taxpayer’s arrest for the same conduct giving rise to the ta x obligation, and was levied on goods the taxpayer did not own or possess when the tax was imposed, rendered the tax punitive. See id. at 780-83.
Although th e Iowa statute has both a high rate of taxation and an obviou s deterrent purpose, the statute lacks the other punitive features the Supreme Court found controllin g in Kurth Ranch . Iowa’s drug stamp tax is not conditioned on th e commission of a crime. The statute allows an individual to possess, manufacture,-4-

purc hase, produce, or transport drugs illegally without incurring tax liability o r penalties, provided either the individual’s activities involve less than the amount o f drugs specified in the drug stamp tax statute or the indi vidual timely pays the mandated tax. See Iowa Code §§ 453B.1(3), 453B.3. Also, the Iowa tax is not exacted onl y after the taxpayer has been arrested for the conduct giving rise to the tax obligation, but is “due and payable immediately upon m anufacture, production, acquisition, purchase, or possession” of specified drugs. Id. § 453B.3; see i d. § 453B.1(3). Additionally, the Iowa statute forbids the Departme nt to reveal any information provided by a taxpayer, does not require law en forcement officers to report individuals charged with failure to affix drug tax stamps to the Department, and prohibits the use in any crimina l proceeding of information received from a taxpayer unless the information is obtained from a source other than the Department. See id. §§ 453B.9, 453B.10.
Having considered Iowa’s drug stamp tax as a whole, we conclude the statute is not a criminal punishment and Padavich’s conviction does not implicate the Double Jeo pardy Clause. We thus affirm the district court’s denial of Padavich’s habea s petition.
A true copy.

Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.