Document: 493 U.S. 331 110 S.Ct. 661 107 L.Ed.2d 696 FRANCHISE TAX BOARD OF CALIFORNIA, et al., Petitionersv.ALCAN ALUMINIUM LIMITED al. No. 88-1400. Argued Nov. 1, 1989. Decided Jan. 10, 1990. Syllabus Respondents—foreign corporations and sole shareholders of domestic conducting business in California—brought separate suits against petitioner California Franchise Tax Board (Board) certain its employees, seeking declaratory injunctive relief on Foreign Commerce Clause grounds from the Board's method determining taxable income respondents' subsidiaries that is allocable to California. The District Court dismissed suits, but Appeals reversed, holding respondents had alleged injuries sufficiently direct independent their confer both Article III stockholder standing. It also held federal actions were not barred by Injunction Act, which prohibits district courts enjoining, suspending, or restraining assessment, levy, collection any state tax where a plain, speedy, efficient remedy may be court. Held: 1. Respondents have A judicial determination accounting unconstitutional would prevent actual financial injury caused illegally reduced return investments lowered value stockholdings. Pp. 335-336. 2. Assuming standing, are nevertheless under Act. As shareholders, direction control entities that, as taxpayers, possess for claims. Respondents' argument even if they treated effectively having all subsidiaries' remedies, do because permitted raise challenge tax, at least could base such allegedly distinct foreign commerce suffered parent corporations, rejected. demonstrated uncertain thus inadequate bar jurisdiction. Petitioners represented no case currently pending State claiming cannot claims, has been cited refused hear similar claims; fact, there authority contrary. This hold Act inapplicable mere speculation. 336-341. 860 F.2d 688 (CA 7), reversed. WHITE, J., delivered opinion unanimous Court. Timothy G. Laddish, San Francisco, Cal., petitioners. Lawrence A. Salibra, II, respondents. Justice WHITE 1 presents two questions: First, whether company, shareholder an American subsidiary, standing court, grounds, determines locally subsidiary; second, action 28 U.S.C. § 1341 (1982 ed.). Seventh Circuit companies involved this principle comity underlies (1988). We granted certiorari, 490 1019, 109 1741, 104 179 (1989), conclude controversy, assume stockholders, these Accordingly, we reverse. 2 * Respondent Alcan Aluminium Limited (Alcan) Canadian company indirect Corporation (Alcancorp), Ohio corporation with operations Imperial Chemical Industries PLC (Imperial) British ICI Americas, Inc. (Americas), Delaware conducts arises out lawsuits brought Northern Illinois petitioners herein, Chicago employees. sought Alcancorp Americas Under method, known "unitary business/formula apportionment method," calculates total earnings business" taxpayer part. then allocation fraction taking unweighted average three ratios: payroll payroll, property value, sales sales. Finally, obtain taxpayer's California, multiplies unitary business. 3 allege application tax" violates Clause, Const., Art. I, 8, cl. 3. See Japan Line, Ltd. v. County Los Angeles, 441 434, 451, 99 1813, 1823, 60 336 (1979). expressly left open issue when addressed claims made subsidiaries. Container Corp. America Bd., 463 159, 189, n. 26, 195, 32, 103 2933, 2952, 2956, 77 545 (1983). II 4 first bring actions. consisting related components: constitutional requirements nonconstitutional prudential considerations. Warth Seldin, 422 490, 498, 95 2197, 2204, 45 343 (1975). stated controversy Valley Forge Christian College Americans United Separation Church & State, Inc., 454 464, 472, 102 752, 758, 70 700 (1982): 5 "Art. requires party who invokes court's 'show he personally some threatened result putatively illegal conduct defendant,' Gladstone, Realtors Village Bellwood, 91, 99, 1601, 1607, 66 (1979), 'fairly can traced challenged action' 'is likely redressed favorable decision,' Simon Eastern Kentucky Welfare Rights Org., 426 38, 41, 96 1917, 1924, 1925, 48 450 (1976)." 6 did seriously contest F.2d, 691-692, ruled ownership interests alone, considered apart harms participants commerce, gave " 'such personal stake outcome assure concrete adverseness sharpens presentation issues upon so largely depends illumination difficult questions.' Baker Carr, 369 186, 204, 82 691, 703, 7 663 (1962)." Id., 692. takes Circuit's characterization position respect standing: "[T]he never accepted proposition redress corporate sense." Brief 20, 4. emphasize plaintiff must show question shareholder's interest sufficient itself satisfy "injury fact" requirement III. Ibid. think was quite right taxes wholly owned required pay. California's amount assessed If those higher than law land allows, threatens cause reducing lowering injuries. That 8 more meet doctrine. One "the generally assert his own legal rights interests, rest claim third parties." supra, U.S., 499, S.Ct., 2205. Related so-called rule. observed, rule longstanding equitable restriction initiating enforce unless corporation's management pursue same reasons other good-faith judgment. 693. There is, however, exception allowing direct, suit implicated. fall within exception, arguing status Americas. Specifically, complain burden complying information demands, double taxation affiliate already subject jurisdictions, choice use subsidiary instrumentality commerce. insist entirely derivative 9 concluded compliance costs give burdens better viewed merely added subsidiaries, experienced parents decline interests. 696-697. However, court reasoned focus exclusively parents' ignores second feature parent-domestic relationship: instrumentalities parents. 697. diminishes attractiveness owning comparison entering into contracts means engaging concluded: "It incidence potential disfavor particular mode participation economy, rather magnitude it imposes provides strongest standing." decide significance threat facts case, decided light, them maintain suits. 10 Ninth Circuit, contrast, does harm Shell Petroleum, N.V. Graves, 709 593, 595, cert. denied, 464 1012, 537, 78 717 EMI Bennett, 738 994, 997 (CA9), 469 1073, 105 567, 83 508 (1984) (following Graves ); Aluminum 558 F.Supp. 624, 626-629 (SDNY), aff'd, 742 1430 (CA2 1983), 1041, 705, 79 170 (1984). 11 need dispute about assuming cf. Moe Confederated Salish Kootenai Tribes, 425 463, 479-480, 1634, 1644-45, (1976), 12 provides: "The shall enjoin, suspend restrain levy speedy State." provision applies well relief. Grace Brethren Church, 457 393, 408, 2498, 2507, 73 93 (1982). explained Rosewell LaSalle National Bank, 503, 522, 101 1221, 1233, 67 (1981) (footnote omitted): 13 statute 'has roots equity practice, principles federalism, recognition imperative administer fiscal operations.' Tully Griffin, 429 [68, 73, 97 219, 222, 50 227 (1976) ]. last consideration principal motivating force behind Act: legislation foremost vehicle limit drastically jurisdiction interfere important local concern taxes." 14 To extent available, refund procedures constitute remedy. Cf. 417, 2512. undisputed only state-court calculating tax. fact enough make inapplicable: construed broadly nontaxpayer (like here) lacks bringing ground affiliated possesses adequate remedies." 698. statement true, arrive different conclusion. over They respects pursuit inability challenges names determinative where, here, challenges. otherwise elevate form substance. South Carolina Regan, 465 367, 381, 19, 1107, 1115, 372 therefore construe barring entity possessing controlling party's 15 contend remedies available "plain, remedy" meaning corporations. According Imperial: "Americas, unlike Imperial, class investors protected policy." 24. argues inverse rule—a based shareholders. 26. contends civil prosecuted name real "[i]f effective deprivation [sic ] one interest, [Alcan]." 47, 16 Petitioners, entertain desire present. 47-48. point represent argue "it makes sense" entitled relieve them. 48. At oral argument, counsel reiterated position, Tr. Oral Arg. 5, 12, 15, informed cases courts, "in claims." 6. 17 course, binding speculative jurisdiction, Rosewell, 516-517, 1230-31; 414, 31, 2511, 31. Here, uncertain. law, "claiming computed part void whole action, set forth refund. . ." Cal.Rev. Tax.Code Ann. 26102 (West 1979). want In Mercedes-Benz North America, Bd. Equalization, 127 Cal.App.3d 871, 874, Cal.Rptr. 760 (1982), hearing Mar. 17, 1982 (Cal.Sup.Ct.), appellate allowed burdened parent's election through separately incorporated subdivision. Although authoritatively determine agree "[respondents] given us convincing reason doubt will Alcancorp's Americas' clause arguments." 691. escape prohibitions 18 Should refuse permit contentions heard, might different. point, speculation allow arguments going constitutionality IV 19 judgment 20 ordered.

Category: 8