Court Opinion

ID: 5039
Source: CourtListenerOpinion
Date Created: 2010-04-25 05:01:47+00
Date Added: 2024-06-11T11:48:57.538397
License: Public Domain

IN THE UNITED STATES COURT OF APPEALS

                         FOR THE FIFTH CIRCUIT

                         _____________________

                                 No. 92-8244

                         _____________________

           COLEMAN H. SMITH, ET AL.,

                                    Plaintiffs-Appellants,
                                    Cross-Appellees,
           v.

           TRAVIS COUNTY EDUCATION DISTRICT, ET AL.,

                              Defendants-Appellees.
                              Cross-Appellants.
_________________________________________________________________

          Appeals from the United States District Court
                for the Western District of Texas
_________________________________________________________________
                          (August 3, 1992)
Before VAN GRAAFEILAND,* KING, and EMILIO M. GARZA, Circuit Judges.

KING, Circuit Judge:

     Texas taxpayers appeal the judgment of the district court

declining to enjoin the continued collection of taxes under a

public school finance system which, the Texas Supreme Court ruled,

violates the Texas Constitution. Travis County Education District,

joined by other county education districts, the Texas Education

Agency,   and   the   Attorney   General   of   Texas,   cross-appeal   the

district court's decision, arguing that the district court lacked

jurisdiction over the claim.        Concluding that the Tax Injunction

Act, 28 U.S.C. § 1341, bars the district court from entertaining

     *
       Senior Circuit Judge of the Second Circuit, sitting by
designation.
the taxpayers' claim, we vacate its judgment and remand with

instructions to dismiss the suit.

                                        I.

     This case involves the most recent challenge to Texas' public

school finance system.1         On January 30, 1992, the Texas Supreme

Court held that the Texas public school finance system levied ad

valorem taxes in violation of Article VII, § 1-e of the Texas

Constitution, and permitted county education districts (CEDs) to

levy ad valorem taxes without prior voter approval in violation of

Article VII, § 3 of the Texas Constitution. See Carrollton-Farmers

Branch Indep. School Dist. v. Edgewood Indep. School Dist., 826
S.W.2d 489, 524 (Tex. 1992) (Edgewood III).             Because the State

Legislature was not in regular session, the Texas Supreme Court

chose to defer the effect of its ruling for 17 months to avoid

disruption    to     public    school   operations    and    to    enable      the

Legislature    "to    consider    all    options   fully."        Id.   at    522.

Consequently, the Texas Supreme Court directed the state district

judge    to   re-issue    an    injunction   that    prohibits      the      state

Commissioner of Education and Comptroller from giving effect to

certain provisions of the Texas Education Code, but stays the

effect of this prohibition until June 1, 1993.               See id. at 523 &

     1
       The U.S. Supreme Court upheld the validity of an earlier
version of the Texas school finance system under the U.S.
Constitution in San Antonio Indep. School Dist. v. Rodriguez, 411
U.S. 1 (1973). Since then, that version and two subsequent
modifications of the school finance system have been struck down
under the Texas Constitution. See Edgewood Indep. School Dist.
v. Kirby, 777 S.W.2d 391 (Tex. 1989) (Edgewood I); Edgewood
Indep. School Dist. v. Kirby, 804 S.W.2d 491 (Tex. 1991)
(Edgewood II); Carrollton-Farmers Branch Indep. School Dist. v.
Edgewood Indep. School Dist., 826 S.W.2d 489 (Tex. 1992)
(Edgewood III).
n.42, 524.     The Texas Supreme Court also held that its ruling was

not to be used as a defense to the payment of the 1991 and 1992 CED

taxes.    Id. at 522.

       Two separate groups of Texas taxpayers filed suit against

Travis County Education District and other CEDs pursuant to 42

U.S.C. § 1983 in federal district court.                The taxpayers sought a

declaratory judgment that the imposition and collection of the 1991

and    1992   CED   taxes    violated    the    due    process   clause   of   the

Fourteenth Amendment to the U.S. Constitution. They also sought an

injunction requiring that the State of Texas fashion an appropriate

post-deprivation remedy to the unconstitutional collection of the

1991    CED   taxes   already    paid,    and    an    injunction   prohibiting

collection of the 1992 CED taxes.             The district court consolidated

the two suits and certified plaintiff and defendant classes.                   The

Texas Education Agency and the Attorney General of Texas intervened

as defendants.

       On May 1, 1992, the district court denied the defendants'

motions to dismiss for lack of jurisdiction.                The district court

determined that collection of the 1991 taxes did not violate due

process because the Edgewood III ruling was entered after that tax

year.     However,     the    district    court       declared   that   continued

collection of the 1992 taxes under the system violated due process.

Nevertheless, the district court denied injunctive relief on the

merits, finding that the public interest in the education of

children outweighed the injury to the taxpayers resulting from the

due process violation.

                                        II.
     The taxpayers argue that the district court erred in refusing

to award injunctive relief.      On cross-appeal, the defendants

contend that the district court erred in asserting jurisdiction

over the action.    Specifically, the defendants maintain that the

lack of a federal question and the Eleventh Amendment deprive the

court of jurisdiction, and alternatively, that the Tax Injunction

Act and principles of comity required the district court to abstain

from entertaining the action.   Because we find it dispositive, we

consider only the defendants' contention that the Tax Injunction

Act bars jurisdiction over this action.

     The Tax Injunction Act provides:

           The 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.

28 U.S.C. § 1341.    "[T]his legislation was first and foremost a

vehicle to limit drastically federal district court jurisdiction to

interfere with so important a local concern as the collection of

taxes."   Rosewell v. LaSalle Nat'l Bank, 450 U.S. 503, 522 (1981).

Thus, "the Tax Injunction Act imposes an equitable duty on federal

district courts to refrain from exercising jurisdiction over claims

arising from state revenue collection except when state remedies

could prevent a taxpayer from asserting a federal right."   McQueen

v. Bullock, 907 F.2d 1544, 1547 (5th Cir. 1990) (footnote omitted),

cert. denied, 111 S. Ct. 1308 (1991).   This restraint emerges from

"the scrupulous regard [of the federal courts] for the rightful

independence of state governments . . . and a proper reluctance to

interfere by injunction with their fiscal operations." Matthews v.
Rodgers, 284 U.S. 521, 525 (1932).

     The district court held that the Tax Injunction Act did not

prevent it from entertaining the taxpayers' action because the

Texas Supreme Court's decision in Edgewood III "eliminates the

possibility of a state remedy" by specifying that its ruling could

not be used as a defense to the payment of taxes under the

invalidated scheme. The defendants contend that the district court

improperly assumed jurisdiction over the taxpayers' action.             The

defendants maintain that the district court focused on whether the

taxpayers would receive relief in state court on their claim,

instead of the inquiry that the Tax Injunction Act requires:

whether the state provided a plain, speedy and efficient remedy for

the taxpayers.    Because Texas makes adequate judicial procedures

available for the taxpayers to bring their federal claim, the

defendants argue, the Tax Injunction Act precludes their action.

     The Tax Injunction Act bars federal district courts from

granting    declaratory   as   well   as    injunctive   relief   in   cases

challenging state tax systems.             California v. Grace Brethren

Church, 457 U.S. 393, 408 (1982) (citing Great Lakes Dredge & Dock

Co. v. Huffman, 319 U.S. 293, 299 (1943)).        Further, "taxpayers are

barred by the principles of comity from asserting § 1983 actions

against the validity of state tax systems in federal court."            Fair

Assessment in Real Estate Ass'n v. McNary, 454 U.S. 100, 116

(1981).    Therefore, the Tax Injunction Act bars the district court

from asserting jurisdiction unless the State fails to supply a

plain, speedy and efficient remedy for the taxpayers' claim.

     The inquiry into whether a plain, speedy and efficient remedy
exists focuses on whether a state provides a procedural vehicle

that affords taxpayers the opportunity to raise their federal

constitutional claims.        Rosewell, 450 U.S. at 512-13 (citing Tully

v. Griffin, Inc., 429 U.S. 68, 74 (1976), and Huffman, 319 U.S. at

300-01 (1943)).       A state provides a plain, speedy and efficient

remedy when    it     provides   taxpayers   "with      a    'full   hearing     and

judicial determination,'" with ultimate review available in the

United   States     Supreme   Court    pursuant   to        28   U.S.C.   §   1257.

Rosewell, 450 U.S. at 514 (quoting S. Rep. No. 701, 72d Cong., 1st

Sess., 1-2 (1932)) (citation omitted).

     The taxpayers do not allege that the state fails to furnish a

procedural avenue for them to pursue their federal due process

claim.   Indeed, they initiated state court actions before bringing

their claim in federal court.          These actions are still pending.

Rather, the taxpayers argue that because Edgewood III prevents them

from using the Texas Supreme Court's ruling as a defense to the

nonpayment of taxes under the public school finance system, it

appears unlikely that they will succeed on the merits of their

federal claim in state court.         This argument provides no basis for

circumventing the jurisdictional bar imposed by the Tax Injunction

Act. See Franchise Tax Bd. v. Alcan Aluminum, 493 U.S. 331, 340-41

(1990); Rosewell, 450 U.S. at 512-17; see also Redd v. Lambert, 674
F.2d 1032, 1036 (5th Cir. 1982) ("There is no indication that

Congress intended that the lower federal courts would provide

supplemental relief whenever a litigant does not receive all the

relief   he   seeks    in   state   court.").     The       taxpayers     have   not

demonstrated that the state courts have refused to entertain their
federal claim in their pending state court actions.     Nor do they

show that their state remedy is uncertain or speculative.       See

Alcan Aluminum, 493 U.S. at 340.   Accordingly, we hold that the Tax

Injunction Act bars the district court from exercising jurisdiction

over the taxpayers' claim.   In view of this holding, we need not

address other errors in the district court's opinion.

                               III.

     For the foregoing reasons, we VACATE the opinion and judgment

of the district court and REMAND with instructions to dismiss the

suit pursuant to 28 U.S.C. § 1341.     Costs shall be borne by the

taxpayers, plaintiffs-appellants herein.