Court Opinion

ID: 613606
Source: CourtListenerOpinion
Date Created: 2011-09-14 16:43:04+00
Date Added: 2024-06-11T17:50:26.263234
License: Public Domain

PRECEDENTIAL

        UNITED STATES COURT OF APPEALS
             FOR THE THIRD CIRCUIT

                       No. 09-2053

   THE TOWNSHIP OF LYNDHURST, NEW JERSEY
    on behalf of itself and all similarly situated taxing
       authorities within the State of New Jersey,

                                        Appellant

                             v.

     PRICELINE.COM INC.; LOWESTFARE.COM;
    TRAVEL WEB LLC; TRAVELOCITY.COM, INC.;
        TRAVELOCITY.COM, L.P.; SITE59.COM,
       LLC; EXPEDIA, INC.; HOTELS.COM, L.P.;
      HOTWIRE INC.; TRAVELNOW.COM, INC.;
              ORBITZ WORLDWIDE, INC.;
TRAVELPORT AMERICAS, LLC; TRIP NETWORK, INC.,
 doing business as CHEAP TICKETS, INC.; ORBITZ, LLC

       Appeal from the United States District Court
              for the District of New Jersey
         (D.C. Civil Action No. 2-08-cv-03033)
        District Judge: Honorable Jose L. Linares
                   Argued June 10, 2010

             Before: AMBRO, CHAGARES,
          and GREENAWAY, JR., Circuit Judges

            (Opinion filed : September 14, 2011 )

John M. Agnello, Esquire
James E. Cecchi, Esquire (Argued)
Lindsey H. Taylor, Esquire
Carella, Byrne, Cecchi, Olstein, Brody & Agnello
5 Becker Fram Road
Roseland, NJ 07068

      Counsel for Appellant

Melissa C. Fulton, Esquire
Michael R. Griffinger, Esquire
Gibbons
One Gateway Center
Newark, NJ 07102-5310

Randolph K. Herndon, Esquire
Karen L. Valihura, Esquire
Skadden, Arps, Slate, Meagher & Flom
One Rodney Square, Room 6-23
P.O. Box 636
Wilmington, DE 19899

                              2
Brian S. Stagner, Esquire
Scott R. Wiehle, Esquire
Suite 2500
201 Main Street
Fort Worth, TX 76102

Lazar P. Raynal, Esquire
Jeffrey A. Rossman, Esquire (Argued)
Michael W. Weaver, Esquire
McDermott, Will & Emery
227 West Monroe Street, Suite 5200
Chicago, IL 60606

       Counsel for Appellees

                 OPINION OF THE COURT

AMBRO, Circuit Judge

       The Township of Lyndhurst, New Jersey, brought this
putative class action “in its capacity as a taxing authority” on
behalf of itself and all other similarly situated New Jersey
municipalities, townships, and counties.1 It alleges that

       1
         The putative class includes “every municipality,
township, and county in the State of New Jersey that, by
ordinance authorized under N.J. Stat. Ann. § 40:48F-1, imposes

                               3
defendants—all companies who operate hotel booking sites
online—owe the putative class unpaid hotel occupancy taxes.2
The District Court granted defendants’ motion to dismiss on
prudential standing grounds, concluding that Lyndhurst did
not have the right to sue for the alleged taxes owed under the
relevant statutory scheme. Instead, that enforcement right
was given to the State of New Jersey’s Director of Taxation
(the “Director”), aided by the State’s Attorney General (the
“Attorney General”).3 For the reasons that follow, we affirm.

I. STATUTORY BACKGROUND

       Lyndhurst is a political subdivision of the State of New
Jersey. “As a general principle, it is established beyond
question that [such] municipalities, being created by the State,

a tax on charges of rent for every occupancy of a room or rooms
in a hotel.”
       2
         Defendants in this case are Priceline.com Inc.,
Lowestfare.com LLC, Travelweb LLC, Travelocity.com, Inc.,
Travelocity.com L.P., Site59.com, LLC, Expedia, Inc.,
Hotels.com, L.P., Hotwire, Inc., TravelNow.com, Inc.,
Travelport Americas, LLC, Trip Network, Inc., Orbitz, LLC,
and Orbitz Worldwide, Inc.
       3
         The Director is head of the New Jersey Division of
Taxation, which is a division within the New Jersey Department
of the Treasury. See N.J. Stat. Ann. §§ 52:18A-1, -3; 52:27B-
49.

                               4
have no powers save those delegated to them by the
Legislature and the State Constitution.” Dome Realty, Inc. v.
City of Paterson, 416 A.2d 334, 341 (N.J. 1980).4 This case
involves two distinct powers under N.J. Stat. Ann. §§ 40:48F-
1 to -5 (the “Enabling Act”): 1) the power to enact a local
hotel occupancy tax; and 2) the subsequent power to enforce
it.5 The text of the Enabling Act speaks to each of these
powers, as well as to the substantive reach of any ordinance
enacted under this statutory scheme.

A.    The Enactment Power and the Hotel Occupancy
Tax’s Substantive Reach

       The Enabling Act’s grant of power to enact local hotel
occupancy taxes varies based on the “class” of the political
subdivision at issue. For general classification purposes,
cities of the “first class” have populations of greater than

      4
         Under New Jersey law, a “municipality” is defined as
a “municipal corporation,” and “[t]he words ‘municipality’ and
‘municipal corporation’ include cities, towns, townships,
villages[,] and boroughs.” N.J. Stat. Ann. § 1:1-2.
      5
          After we heard oral argument, the New Jersey
legislature amended the Enabling Act to add two new
provisions, N.J. Stat. Ann. §§ 40:48F-6 and -7. Though the
latter is not relevant to this case, Lyndhurst argues that the
former is, an argument we answer in n.14 below.

                              5
150,000, while cities of the “second class” have populations
between 12,000 and 150,000. See N.J. Stat. Ann. §§ 40A:6-
4(a), (b).6 It is undisputed that Lyndhurst is a city of the
“second class” and that its enactment power is governed by
N.J. Stat. Ann. § 40:48F-1, which permits it to “adopt an
ordinance imposing a tax . . . on charges of rent for every
occupancy . . . of a room or rooms in a hotel.” (Emphasis
added).7 Lyndhurst exercised this authority by adopting (that

       6
          As noted below, the distinctions based on these
classifications are more nuanced, as cities of the “second class”
with international airports have the same powers as cities of the
“first class.”
       7
           In full, the provision reads as follows:

       The governing body of a municipality, other than
       a city of the first class or a city of the second class
       in which the tax is authorized under [N.J. Stat.
       Ann. § 40:48E-3] is imposed, a city of the fourth
       class in which the tax is authorized under [N.J. §
       40:48-8.15 et seq.] is imposed, or a municipality
       in which the tax and assessment authorized under
       [N.J. Stat. Ann. § 40:54D-4] is imposed, may
       adopt an ordinance imposing a tax, at a uniform
       percentage rate not to exceed 1% on charges of
       rent for every occupancy on or after July 1, 2003,
       but before July 1, 2004, and not to exceed 3% on
       charges of rent for every occupancy on or after
       July 1, 2004, of a room or rooms in a hotel subject

                                  6
is, enacting) such a tax, as did each member of the putative
plaintiff class.8    Even as the New Jersey legislature
provided Lyndhurst with the power to enact such a tax
ordinance, it (the legislature) also placed limits on the
ordinance’s substantive reach. In short, the Enabling Act only
permitted Lyndhurst to impose a local hotel occupancy tax on
transactions that were already subject to the Sales and Use

      to taxation pursuant to [the Sales and Use Tax
      Act, N.J. Stat. Ann. § 54:32B-3].

N.J. Stat. Ann. § 40:48F-1 (emphases added). Cities of the
“second class” with international airports are governed by a
different provision. See id. § 40:48E-3.
      8
           Lyndhurst’s hotel occupancy tax ordinance reads as
follows:

      There is hereby established a hotel and motel
      room occupancy tax in the Township of
      Lyndhurst which shall be fixed at a uniform
      percentage rate of one percent on charges of rent
      for every occupancy of a hotel or motel room in
      the Township of Lyndhurst on or after July 1,
      2003, but before July 1, 2004, and three percent
      on charges of rent for every occupancy of a hotel
      or motel room in the Township of Lyndhurst on
      or after July 1, 2004, of a room or rooms in a
      hotel subject to taxation pursuant to [the Sales and
      Use Tax Act].

                               7
Tax Act, which levied a statewide tax on “[t]he rent for every
occupancy of a room or rooms in a hotel in [New Jersey].”
N.J. Stat. Ann. § 54:32B-3(d). The tax was to be collected by
“the person collecting rent from the hotel customer,” id.
§ 40:48F-3(a), which included “every operator of a hotel,” id.
§ 54:32B-2(w). Given this scheme, although the substantive
reach of Lyndhurst’s hotel occupancy tax remains a matter of
dispute, its power to enact such a tax is not.

B.     The Enforcement Power

       Once Lyndhurst passed its hotel occupancy tax, the
Enabling Act also provided for a specific enforcement regime.
By the terms of the statute, only the Director—a State of New
Jersey official—is given the explicit right to enforce
Lyndhurst’s hotel occupancy tax: “The Director of the
Division of Taxation shall collect and administer any tax
imposed pursuant to the provisions of [§ 40:48F-1].” Id. §
40:48F-5 (emphasis added). Interestingly, the Enabling Act
provides a distinct enforcement regime for cities of the “first
class” and those of the “second class” with an international
airport—as these municipalities may enforce directly their
local hotel occupancy taxes. See id. § 40:48E-3 (outlining the
enforcement regime for cities of the “first class” and cities of
the “second class” with international airports). The same
enforcement power is not given to other “second class” cities
like Lyndhurst. As noted, this power resides with the
Director.

                               8
       “In carry[ing] out” his authority to enforce Lyndhurst’s
hotel occupancy tax, the Director is given “all the powers
granted in” the Sales and Use Tax Act. Id. § 40:48F-5. This
includes the power to “determine” the amount of tax owed by
a taxpayer. Id. § 54:32B-19 (emphasis added). Indeed, the
Act provides that, “[i]f a return required . . . is not filed, or if a
return when filed is incorrect or insufficient, the amount of
tax due shall be determined by the [D]irector from such
information as may be available.” Id. “[S]uch determinations
shall finally and irrevocably fix the tax unless the person
against whom it is assessed . . . shall apply to the [D]irector
for a hearing, or unless the [D]irector of his own motion shall
redetermine the same.” Id. The Act also includes a specific
mechanism for dealing with delinquent taxpayers: “Whenever
any person required to collect tax shall fail to collect or pay
over any tax[,] . . . the Attorney General shall, upon the
request of the [D]irector, bring or cause to be brought an
action to enforce the payment of same on behalf of the State
of New Jersey . . . .” Id. at § 54:32B-22(a). In the end, the
question remains whether this explicit grant of enforcement
power to the Director (aided by the Attorney General)
precludes Lyndhurst from bringing its own enforcement
action against private parties in federal court.

II. FACTS AND PROCEDURAL HISTORY

      This case involves the propriety of the taxes owed by
defendants to certain New Jersey municipalities, pursuant to
the Enabling Act, under the so-called “Merchant Model”

                                  9
employed by defendants, whereby they (1) acquire inventories
of hotel rooms at negotiated rates; and then (2) rent those
rooms to consumers at higher rates.9 Lyndhurst alleges that
defendants calculate the amount owed under Lyndhurst’s
hotel occupancy tax based on the negotiated rate paid by a
defendant for rooms (the so-called “wholesale” rate), not the
higher rate that the consumers are subsequently charged (the

      9
       In its Complaint, Lyndhurst describes the “Merchant
Model” as follows:

      Defendants: (i) first acquire inventories of hotel
      rooms at negotiated rates from hotels
      (“wholesale” or “net” rates); and (ii) then rent the
      hotel rooms to consumers at higher rates (“retail”
      or “marked up” rates), keeping the difference as
      profit.     Defendants collect rent from their
      customers when the hotel rooms are rented from
      . . . [d]efendants on the [I]nternet. In addition, . .
      . [d]efendants charge the customer a separate
      amount for applicable Hotel Taxes. . . .
      Thereafter, when the customer checks out of the
      hotel, [d]efendants are either invoiced by the hotel
      for the net rate, or . . . [d]efendant pays the hotel
      the net rate through a “single use” credit card
      transaction. . . . The hotels then remit the amounts
      collected by . . . [d]efendants as “taxes” to the
      applicable taxing authority. . . . [T]he amount
      charged . . . fails to include any tax on the amount
      of the rent retained by . . . [d]efendant.

                               10
so-called “retail” rate). Defendants then pay the tax to the
hotel, which in turn remits it to the State taxing authority.
Lyndhurst alleges that this scheme, which understates the
amount of taxes it seeks to exact, is a form of tax evasion.

       At the same time, there is no evidence in the record
that the Director has ever sought to collect tax revenue under
a hotel occupancy tax based on the retail rate charged to
consumers by online travel booking sites. In fact, in a letter
opinion the New Jersey Division of Taxation has concluded
that online booking agents are not subject to the hotel
occupancy tax. This was in response to a ruling request by
one defendant.10

      Lyndhurst brought this putative class action in June
2008. It asserted claims for the collection of unpaid taxes,
conversion, and unjust enrichment, as well as for the

       10
           The parties dispute the weight that should be afforded
this letter. Defendants argue that this determination is entitled
to some deference. See Metromedia, Inc. v. Div. of Taxation,
478 A.2d 742, 749 (N.J. 1984) (holding that the Director’s
interpretation “is entitled to prevail, so long as it is not plainly
unreasonable”). Lyndhurst counters that the letter ruling should
be afforded no deference, as it was based on ex parte
communications by defendants’ counsel, which included both
factual and legal errors. We need not resolve this dispute, as our
conclusion is independent of the views expressed in the letter
opinion.

                                11
imposition of a constructive trust and a declaratory judgment.
In August 2008, defendants moved to dismiss the complaint
under Fed. R. Civ. P. 12(b)(1) and (6). In their motion,
defendants argued that: 1) Lyndhurst lacked standing to bring
the action; 2) the Director (who was the proper party to bring
suit, with the aid of the Attorney General) had already
determined that defendants were not subject to the hotel
occupancy tax; 3) even if Lyndhurst had standing, it had
failed to exhaust its administrative remedies; and 4)
Lyndhurst’s claims failed as a matter of law.

       In March 2009, the District Court granted defendants’
motion to dismiss for lack of subject matter jurisdiction on the
prudential standing ground discussed below. It concluded
that Lyndhurst was attempting to assert a legal right that was
reserved to the Director (aided by the Attorney General) and
not to Lyndhurst—namely, the right to enforce Lyndhurst’s
hotel occupancy tax by determining the amount of tax due and
then collecting the related revenue. The Court did not reach
the remainder of defendants’ arguments.

       Lyndhurst filed a timely notice of appeal.

III. JURISDICTION AND STANDARD OF REVIEW

       The District Court had jurisdiction under 28 U.S.C.
§ 1332, and we have jurisdiction under 28 U.S.C. § 1291. We
exercise plenary review over a dismissal under Fed. R. Civ. P.
12(b)(1), and determine “whether the allegations on the face

                              12
of the complaint, taken as true, allege facts sufficient to
invoke the jurisdiction of the [D]istrict [C]ourt.” Turicento v.
Am. Airlines, 303 F.3d 293, 300 n.4 (3d Cir. 2002).

IV. ANALYSIS

       “[T]he question of standing in the federal courts is to
be considered within the framework of Article III [of the
Constitution,] which restricts judicial power to ‘cases’ or
‘controversies.’” Ass’n of Data Processing Serv. Orgs., Inc. v.
Camp, 397 U.S. 150, 151 (1970). However, this question
“involves both constitutional limitations on federal-court
jurisdiction and prudential limitations on its exercise.” Warth
v. Seldin, 422 U.S. 490, 498 (1975). Article III standing has
three elements: 1) “the plaintiff must have suffered an injury
in fact—an invasion of a legally protected interest which was
(a) concrete and particularized, and (b) actual or imminent,
not conjectural or hypothetical”; 2) “there must be a causal
connection between the injury and the conduct complained
of”; and 3) “it must be likely, as opposed to merely
speculative, that the injury will be redressed by a favorable
decision.” Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-
61 (1992).11 “The party invoking federal jurisdiction bears

       11
          As the Supreme Court recently explained, “[a]lthough
we have packaged the requirements of a constitutional ‘case’ or
‘controversy’ somewhat differently in the past 25 years—an era
rich in three-part tests—the point has always been the same:
whether a plaintiff personally would benefit in a tangible way
from the [C]ourt’s intervention.” Steel Co. v. Citizens for a

                              13
the burden of establishing these elements.” Id. at 561.

        Nevertheless, Article III standing does not answer all
questions. Even when it exists, courts at times deem it
prudent not to confer standing to a plaintiff. Though we call
it “prudential standing,” it is actually an additional set of
requirements that must be met even when standing otherwise
exists. Over time, we have developed yet another three-part
test for assessing when prudential standing is satisfied: 1) a
plaintiff must “assert his or her own legal interests rather than
those of a third party”; 2) “courts [should] refrain from
adjudicating abstract questions of wide public significance
amounting to generalized grievances”; and 3) “a plaintiff must
demonstrate that his or her interests are arguably within the
‘zone of interests’ that are intended to be protected by the
statute, rule, or constitutional provision on which the claim is
based.” Mariana v. Fisher, 338 F.3d 189, 204-05 (3d Cir.
2008). “Like their constitutional counterparts, these judicially

Better Env’t, 523 U.S. 83, 104 n.5 (1998). For helpful
background information on the history of standing, see generally
Anthony J. Bellia Jr., Article III and the Cause of Action, 89
Iowa L. Rev. 777 (2004); Daniel E. Ho & Erica L. Ross, Did
Liberal Justices Invent the Standing Doctrine?: An Empirical
Study of the Evolution of Standing, 1921-2006, 62 Stan. L. Rev.
591 (2010); Elizabeth Magill, Standing for the Public: A Lost
History, 95 Va. L. Rev. 1131 (2009); and Cass R. Sunstein,
What’s Standing after Lujan?: Of Citizen Suits, “Injuries,” and
Article III, 91 Mich. L. Rev. 163 (1992).

                               14
self-imposed limits on the exercise of federal jurisdiction are
founded in concerns about the proper—and properly
limited—role of the courts in a democratic society.” Bennett
v. Spear, 520 U.S. 154, 162 (1997) (internal citations and
quotation marks omitted).           However, “unlike their
constitutional counterparts, they can be modified or abrogated
by Congress.” Id.

       The District Court dismissed Lyndhurst’s suit on
prudential standing grounds. In particular, it concluded that
Lyndhurst was not the “proper party” to bring the lawsuit and
therefore ran afoul of our first prudential standing
requirement. For the reasons that follow, we agree and
therefore affirm.

A.     Article III Standing

       Beginning with Article III standing, there is little
question that Lyndhurst satisfies        “the irreducible
constitutional minimum of” injury in fact, causation, and
redressability. Lujan, 504 U.S. at 560. We consider each
requirement in turn.

       First, there is no dispute that the local hotel occupancy
tax revenue that the Director collects belongs to the
municipalities and not to the State. When those taxes are not
paid in full, the municipalities suffer an injury in fact in the
form of monetary harm. See Danvers Motor Co., Inc. v. Ford
Motor Co., 423 F.3d 268, 293 (3d Cir. 2005) (“Monetary
harm is a classic form of injury in fact. Indeed, it is often

                              15
assumed without discussion.”). As such, if Lyndhurst is
correct (and it is owed additional tax revenue under its hotel
occupancy tax), this constitutes both actual harm as to taxes
that should have been remitted to it in the past and imminent
harm with respect to taxes that should be collected for its
benefit in the future.

        Second, there is a causal connection between
defendants’ conduct and Lyndhurst’s alleged harm.           In
Lyndhurst’s view, defendants were required to pay hotel
occupancy taxes on the retail price charged to their customers.
Instead, they have paid taxes based only on the wholesale
rates that they had initially paid for the hotel rooms. As a
result, Lyndhurst contends that it has not received the full
amount of taxes due under its hotel occupancy tax
ordinance—an injury caused by defendants’ conduct.

       Finally, this alleged injury can be redressed by a
favorable decision of this Court. This could be in the form of
either money damages or equitable relief.

        In short, Lyndhurst has succeeded in making a non-
frivolous argument that it was entitled to additional tax
revenue under the substantive provisions of its hotel
occupancy tax ordinance. This is enough to satisfy the
threshold requirements of Article III standing. See, e.g., Steel
Co. v. Citizens for a Better Env’t, 523 U.S. 83, 89 (1998)
(“[T]he [D]istrict [C]ourt has jurisdiction if the right of the
petitioners to recover under their complaint will be sustained
if the . . . laws . . . are given one construction and will be

                              16
defeated if they are given another, unless . . . such a claim is
wholly insubstantial and frivolous.” (internal quotation marks
and citations omitted)).

B.     Prudential Standing

        Turning to prudential standing, we note at the outset
our reluctance to resolve this dispute. Although (overtly) an
action between a township and private parties, this dispute
involves decidedly local concerns that, in the interests of
federal-state comity, we are hesitant to adjudicate, including:
1) a disagreement between the State and a local government
over the meaning of New Jersey tax law; and 2) the relative
enforcement powers delegated to these entities by the State
legislature. Lyndhurst’s central complaint is that defendants
are not paying the full money owed to it under its hotel
occupancy tax. Implicit is a further complaint that the
Director has misapplied the underlying statute (or otherwise
neglected his duties) by not requesting enough money from
defendants. In a sense, Lyndhurst is second-guessing the
Director—and, through this federal action, asking us to do the
same. Though “we must be certain not to adjudicate the[se]
[disputes] unnecessarily,” the statutory scheme at issue in the
present case is sufficiently clear to justify “wad[ing] into
[this] fray[]”—albeit unenthusiastically. Amato v. Wilentz,
952 F.2d 742, 755 (3d Cir. 1991).

       In dismissing this case on prudential standing grounds,
the District Court explained that Lyndhurst was not asserting
its own “legal interests” as prescribed by the statute, but

                              17
instead those of the Director. At first glance, this may appear
an odd proposition. After all, Lyndhurst brought the current
action to enforce its own (properly enacted) hotel occupancy
tax. As such, one might argue that Lyndhurst had a clear
“legal interest” in the tax revenue it intended to collect
through this enforcement action—indeed, it was its own
revenue under its own ordinance.

       Taken in isolation, this is an appealing argument.
However, it fails to consider the statutory scheme as a whole,
and thus construes the legal interests involved too narrowly.
To understand why, we must return to the specific powers
granted to Lyndhurst under the Enabling Act.

       A municipality “is a creature of the state and thus
necessarily subordinate to its creator[,] and can exercise only
such powers as may be granted to it by the Legislature.” In re
Grant Charter Sch. Application of Englewood on Palisades
Charter Sch., 727 A.2d 15, 45 (N.J. Super. Ct. App. Div.
1999). This is especially true in the area of taxation. See,
e.g., Taxi’s, Inc. v. E. Rutherford, 373 A.2d 717, 723 (N.J.
Super. Ct. Law Div. 1977) (“The power of taxation, a basic
right of government, is vested in the Legislature and
municipalities have no comparable power.”). Even as the
New Jersey Constitution “directs that grants of power to
municipalities be construed liberally in favor of the local
government,” State v. Crawley, 447 A.2d 565, 569 (N.J.
1982), where the legislature has “adopted a series of statutes
which spell out in comprehensive fashion the powers and
rights of [a] municipalit[y],” those statutes “set forth the

                              18
exclusive means available to a municipality to enforce tax
liabilities,” Dome Realty Inc. v. City of Paterson, 375 A.2d
1240, 1243 (N.J. Sup. Ct. App. Div. 1977) (emphasis added).
As such, “[w]hen a municipality enters the field of
enforcement of tax collections[,] its power is limited by the
state legislation on the subject.” Id.; see also Murphy v. Jos.
Hollander, Inc., 34 A.2d 780, 783 (N.J. 1943) (“Where the
[l]egislature has provided a special method for the collection
of taxes, such is ordinarily an exclusive procedure, and
remedies based upon general legal rules may not be
invoked.”); cf. Great Adventure, Inc. v. Dir., Div. of Taxation,
9 N.J. Tax 480, 484-85 (N.J. Tax Ct. 1988) (“Strict adherence
to statutory requirements is mandated in tax matters because
they involve exigencies of taxation and the administration of
government.”).

        Given these well-established principles, Lyndhurst’s
enforcement power turns on the relevant powers delegated to
it by the State. To repeat, the Enabling Act itself did not grant
Lyndhurst any direct enforcement powers—certainly none
explicitly. The New Jersey legislature’s silence on this point
takes on added significance when the provisions of the
Enabling Act governing Lyndhurst are contrasted with those
governing cities of the “first class” and those of the “second
class” with an international airport. For those two groups, the
principal provision reads as follows:

       The governing body of any city of the first class
       or the governing body of any city of the second
       class in which there is located a terminal of an

                               19
       international airport may make, amend, repeal[,]
       and enforce an ordinance imposing in the city a
       tax, not to exceed 6%, on charges for the use or
       occupation of rooms in hotels[,] which tax shall
       be in addition to any other tax imposed by law.

N.J. Stat. Ann. § 40:48E-3 (emphasis added). The Enabling
Act further provides these municipalities with the power to
“enforce the payment of delinquent hotel occupancy taxes in
the same manner as provided for municipal real property
taxes.” Id. § 40:48E-4(e) (emphasis added). At the same
time, the provision governing Lyndhurst (and the putative
class) allows those municipalities—“second class” cities
without an international airport—to “adopt an ordinance
imposing a tax . . . for every occupancy . . . of a room or
rooms in a hotel,” and nothing more. Id. § 40:48F-1
(emphasis added). Only the Director is given the explicit
authority to “collect and administer any tax imposed pursuant
to the provisions of [§ 40:48F-1].” Id. § 40:48F-5 (emphasis
added).

       Thus, though both §§ 40.48E-3 and 40.48F-1 permit
the relevant municipalities to enact a local hotel occupancy
tax ordinance, only the former allows a municipality to
“enforce” such an ordinance directly.            This distinction
strongly suggests that, if the State legislature had intended for
Lyndhurst to have a similar power to “enforce” its hotel
occupancy tax, then it would have expressly granted such a
power. Yet it did not do so. Instead, for Lyndhurst the power
to “collect and administer” its hotel occupancy tax was

                               20
delegated explicitly to the Director.

        In short, without the Enabling Act, Lyndhurst would
have no power to enact a local hotel occupancy tax—let alone
sue private parties to enforce it directly. With the Enabling
Act, Lyndhurst is entitled to enact such a tax and receive
related revenue, but only as dictated by the Act itself. Under
it, the State legislature conditioned Lyndhurst’s right to enact
a local hotel occupancy tax on a specific enforcement
regime—one where the Director was the exclusive decision-
maker charged with determining the amount of tax due and
then collecting the related revenue. 12 In short, Lyndhurst is
only entitled to tax revenue under its hotel occupancy tax as

       12
          The cases cited by Lyndhurst are not to the contrary.
See, e.g., Jersey City v. Hague, 115 A.2d 8 (N.J. 1955); Board
of Taxation of Essex County v. Town of Belleville, 223 A.2d 359
(N.J. Super. Ct. Law Div. 1966). These cases simply show that
a liberal construction of a municipal ordinance is proper when
either the State statute grants certain powers to the municipality
or the State legislature did not contemplate a specific context.
Here, the State legislature considered the current situation (how
to “collect and administer” Lyndhurst’s hotel occupancy tax)
and enacted a specific provision addressing it (the Director
“shall collect and administer,” with the aid of the Attorney
General, if necessary). As the State legislature never granted
Lyndhurst the power to “collect and administer” (that is, to
“enforce”) its hotel occupancy tax, there is nothing to construe
liberally in its favor. As a result, the statute cannot be
interpreted (liberally or otherwise) to give Lyndhurst implied
powers that the State legislature decided not to confer on it.

                               21
determined by the Director—revenue that it has already
received. In the current action, Lyndhurst is asking for more
than the Director decided was due. This contravenes the
enforcement regime enacted by the State legislature. We thus
agree with the District Court that this suit must be dismissed
on prudential standing grounds because “Lyndhurst is not the
proper party to bring suit to enforce its ordinance created
pursuant to the Enabling Act.”         Dist. Ct. Op. at 13.
Furthermore, its attempt to do so conflicts with the Director’s
legal interest in fulfilling his related enforcement
responsibilities.

       N.J. Stat. Ann. § 40:48F-3 does not, as Lyndhurst
contends, undermine this reading of the statutory scheme or
our conclusion that this suit must be dismissed. That
provision simply requires a municipality’s chief fiscal officer
to be joined as a party in any action brought by a hotel
operator to collect taxes owed by a customer. It reads as
follows:

              a.     A tax imposed pursuant to a
                     municipal ordinance adopted
                     under the provision of N.J. Stat.
                     Ann. § 40:48F-1 shall be collected
                     on behalf of the municipality by
                     the person collecting the rent from
                     the hotel customer.

              b.     Each person required to collect a
                     tax imposed by the ordinance

                              22
                     shall be personally liable for the
                     tax imposed, collected[,] or
                     requ ired to be collected
                     hereunder. Any such person shall
                     have the same right in respect to
                     collecting the tax from a customer
                     as if the tax were a part of the rent
                     and payable at the same time;
                     provided, however, that the chief
                     fiscal officer of the municipality
                     shall be joined as a party in any
                     action or proceeding brought to
                     collect the tax.

N.J. Stat. Ann. § 40:48F-3. Lyndhurst argues this provision
demonstrates that the State legislature did not give the
Director the exclusive right to enforce its hotel occupancy tax.

       We disagree for the reasons already stated by the
District Court. Properly understood, there are two separate
“collections” under the Enabling Act. First, there is a
collection of the tax from the customer by the hotel operator.
Second, there is a collection of all related taxes from the hotel
operator by the Director. Importantly, each hotel operator is
required to remit any taxes owed to the Director, whether the
operator actually receives the amount owed from its
customers or not. Under § 40:48F-3, the hotel operator is
“personally liable” for this tax revenue, and that provision
simply permits the operator to bring suit directly against
delinquent customers for the amount owed.              As such,

                               23
§ 40:48F-3 covers a hotel operator’s power to sue for a fixed
amount owed (but unpaid) by a customer, not a municipality’s
power to bring suit on its own to enforce its ordinance
directly.

       Finally, Lyndhurst also argues that it has a right to
enforce its hotel occupancy tax based on its general police
powers. Under N.J. Stat. Ann. § 40:48-1, the State legislature
granted municipalities the right to “make, amend, repeal[,]
and enforce ordinances to . . . [m]anage, regulate[,] and
control the finances and property, real and personal, of the
municipality.” Lyndhurst asserts that its hotel occupancy tax
is an ordinance relating to the “manage[ment], regulat[ion][,]
and control” of its finances, which Lyndhurst may “enforce”
on its own, without the assistance of the Director. However,
under New Jersey law there is a “clear distinction between the
power of taxation for revenue and police powers which are
granted for the maintenance of order and the administration of
the internal affairs of a municipality.” State v. Hoboken, 41
N.J.L. 71, 78-79 (1879); see also Taxi’s, Inc., 373 A.2d at 723
(distinguishing a municipality’s power to tax from its general
police powers).       Hence, a grant of power under a
municipality’s general police powers does not necessarily
affect its powers of taxation. Moreover, a municipality’s
police powers are still limited by “the laws of [New Jersey],”
N.J. Stat. Ann. § 40:48-1, which include the Enabling Act.
And, “[w]here the legislature has provided a special method
for the collection of taxes,” as in this case, that “is ordinarily
an exclusive procedure, and remedies based upon general

                               24
legal rules may not be invoked.” Murphy, 34 A.2d at 783.13

       In the end, we believe that the Enabling Act provided
Lyndhurst with the power to enact its hotel occupancy tax, but
not to enforce it directly. This enforcement power was given
to the Director alone (though assisted by the Attorney
General), and included the exclusive right both to determine
the amount of tax due and then to collect that amount.14 As

       13
           Lyndhurst contends as well that N.J. Stat. Ann.
§ 40:48-2.11 lends additional textual support to its argument that
it can sue to enforce its own ordinances. This provision reads as
follows:

       Nothing in this act shall be construed to abrogate
       or impair the powers of the courts or of any
       department of any municipality to enforce any
       provisions of its charter or its ordinances or
       regulations, nor to prevent or punish violations
       thereof; and the powers conferred by this act shall
       be in addition and supplemental to the powers
       conferred by any other law.

The stumbling block is again that the State legislature never
granted Lyndhurst the power to enforce its hotel occupancy tax.
       14
        N.J. Stat. Ann. § 40:48F-6(a), which was added to the
Enabling Act after we heard oral argument, reads:

       The State Treasurer [who oversees New Jersey’s
       Department of the Treasury, a division of which
       is the State’s Division of Taxation] shall annually

                               25
such, it was for the Director—not Lyndhurst—to determine
whether the difference between the wholesale rate and the
retail rate was taxable under Lyndhurst’s hotel occupancy tax.
Since Lyndhurst is not given a similar enforcement power, it
is in effect attempting to share, if not take over, the Director’s
role as exclusive enforcer of this tax regime—a role
consciously delegated by the State legislature to the Director
(aided by the Attorney General) and not to Lyndhurst. Once
made, it is not our role to second-guess such a legislative
determination—especially one made by the legislature of a
sovereign state.

       Viewed this way, this federal action is an attempted
end-run around the exclusive enforcement regime enacted by
the New Jersey legislature, with Lyndhurst asking us to insert
ourselves into this dispute as a means of circumventing the

       provide to a municipality that has adopted an
       ordinance imposing the tax pursuant to
       [§ 40:48F-1] written notification of nonpayment
       by a hotel or motel of taxes required to be paid
       under the ordinance. The written notification
       required by this section shall also authorize the
       municipality to act as the collection agent for the
       outstanding balance of taxes due and owing to it
       in place of the State Treasurer.

We do not find this provision to grant Lyndhurst any direct
power to enforce its hotel occupancy tax.

                               26
Director. We refuse to do so.

                         *   *   *    *   *

        For these reasons, we affirm the District Court’s
judgment and dismiss this action with prejudice.15 Although
Lyndhurst undoubtedly has a legal interest in receiving tax
revenue from its local hotel occupancy tax, the State has
delegated the task of determining the amount of tax due (as
well as its collection) to its Director of Taxation (assisted by
its Attorney General). Therefore, any effort by Lyndhurst to
bring in federal court a direct enforcement action against
private parties is an attempt to assert the “legal interests . . . of
a third party”—namely, those of the Director—in determining
the amount of tax due and collecting the related revenue. Any
disagreement with this arrangement must be voiced in the
halls of the State Capitol in Trenton, not the chambers of this
Court.16

       15
         We asked the parties to offer supplemental briefing on
whether Lyndhurst had the legal capacity to bring this suit. See
Fed. R. Civ. P. 17(b). As we have dismissed this action on
prudential standing grounds, we need not address this issue.
       16
         We also deny Lyndhurst’s Motion to Certify the
Question to the New Jersey Supreme Court.

                                 27