United States Court of Appeals

FOR THE EIGHTH CIRCUIT

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No. 98-1231SI

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Christopher F. Padavich, *

*

Appellant, * Appeal from the United States

* District Court for the Southern

v. * District of Iowa.

*

John A. Thalacker, *

*

Appellee. *

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 Submitted: October 19, 1998

Filed: December 4, 1998

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Before McMILLIAN, FAGG, and BEAM, Circuit Judges.

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FAGG, Circuit Judge.

Law enforcement officers arrested Christopher F. Padavich for possessing

marijuana, and the Iowa Department of Revenue and Finance (Department) then

assessed taxes and penalties against Padavich because he neglected to pay Iowa’s drug

stamp tax. See Iowa Code §§ 453B.3, 453B.12 (1997). After Padavich paid the

assessed taxes and penalties, 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 (Iowa

1995). Padavich then petitioned the district court for writ of habeas corpus. See 28
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U.S.C. § 2254 (1994). In his habeas petition, Padavich claimed the taxes and penalties

assessed under Iowa’s drug stamp tax were criminal penalties and his later criminal

conviction for the same activity violated the Double Jeopardy Clause. The district

court denied Padavich’s petition, Padavich appeals, and we affirm.

Initially, 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 his claim in state court because it would have been futile in light of the Iowa

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 criminal penalty and later prosecution

did 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 state

court has recently decided the same legal question adversely to the petitioner under

nearly identical 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 State

reminds us of the United States Supreme Court’s admonishment that a defendant may

not fail to raise a constitutional objection in “the state courts simply because [the

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 court

that has previously rejected a constitutional argument may decide, upon reflection, that

the contention is valid.” Id. Although we acknowledge the possible inconsistency

between this Court’s holdings in Hawkins and Piercy and the Supreme Court’s

statement in Engle, we leave this issue for another day. Instead, we will decide

Padavich’s appeal on the merits because the “exhaustion rule is not a rule of

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 without

requiring applicant to exhaust state court remedies). “This is particularly true when the

claim is non-meritorious.” Thompson, 929 F.2d at 398.
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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 is initially a matter of statutory construction. See Hudson

v. United States, 118 S. Ct. 488, 493 (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

whether Iowa’s statutory scheme is “so punitive either in purpose or effect as to

transfor[m] what was clearly intended as a civil remedy into a criminal penalty.”

Hudson, 118 S. Ct. at 493 (internal quotations and citations omitted); accord United

States v. Ursery, 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 transform into a criminal penalty what the legislative body intended to be a civil

remedy. See Hudson, 118 S. Ct. at 493. 

In considering the punitive form and effect of Iowa’s drug stamp tax act, we are

guided by the Supreme Court’s opinion in Kurth Ranch. In Kurth Ranch, the Court

evaluated certain features of Montana’s drug tax statute and concluded the statute

operated as a punishment implicating the Double Jeopardy Clause. At the outset, the

Court stated that “neither a high rate of taxation nor an obvious deterrent purpose

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 on the commission of a crime, was

exacted only after the taxpayer’s arrest for the same conduct giving rise to the tax

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 the Iowa statute has both a high rate of taxation and an obvious

deterrent purpose, the statute lacks the other punitive features the Supreme Court found

controlling in Kurth Ranch. Iowa’s drug stamp tax is not conditioned on the

commission of a crime. The statute allows an individual to possess, manufacture,
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purchase, produce, or transport drugs illegally without incurring tax liability or

penalties, provided either the individual’s activities involve less than the amount of

drugs specified in the drug stamp tax statute or the individual timely pays the mandated

tax. See Iowa Code §§ 453B.1(3), 453B.3. Also, the Iowa tax is not exacted only

after the taxpayer has been arrested for the conduct giving rise to the tax obligation, but

is “due and payable immediately upon manufacture, production, acquisition, purchase,

or possession” of specified drugs. Id. § 453B.3; see id. § 453B.1(3). Additionally, the

Iowa statute forbids the Department to reveal any information provided by a taxpayer,

does not require law enforcement officers to report individuals charged with failure to

affix drug tax stamps to the Department, and prohibits the use in any criminal

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

Jeopardy Clause. We thus affirm the district court’s denial of Padavich’s habeas

petition.

A true copy.

Attest:

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