# Opposition Brief — Hibbs v. Winn > Briefs, arguments, decisions, and more. URL: https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0679%3A03 ## Record - **Collection:** Supreme Court brief - **Document type:** Opposition Brief - **Published:** January 1, 2004 - **Citation:** 542 U.S. 88 ## Text we) ya a | AUG 22 2733 No. 02-1809 In The Supreme Court of the Anited States + J. ELLIOTT HIBBS, in his official capacity as Director of the Arizona Department of Revenue, Petitioner, v. KATHLEEN M. WINN, Arizona taxpayer; DIANE WOLFTHAL, Arizona taxpayer; MAURICE WOLFTHAL, Arizona taxpayer; LYNN HOFFMAN, Arizona taxpayer, Respondents. + On Petition For Writ Of Certiorari To The United States Court Of Appeals For The Ninth Circuit + RESPONDENTS’ BRIEF IN OPPOSITION ¢ MARVIN S. COHEN* ISABEL M. HUMPHREY SACKS TIERNEY P.A. 4250 N. Drinkwater Blvd. Scottsdale, AZ 85251-3647 (480) 425-2600 PAUL BENDER College of Law ARIZONA STATE UNIVERSITY Box 877906 Tempe, AZ 85287-7906 (480) 965-2556 * Counsei 2 Record COCKLE LAW BRIEF PRINTING CO. (800) 225-6964 OR CALL COLLECT (402) 342-2831 QUESTIONS PRESENTED 1. Was the petition for certiorari jurisdictionally out of time? 2. Is district court jurisdiction in this case barred by the Tax Injunction Act or principles of federal-state com- ity? ii TABLE OF CONTENTS Page ee i Tebte 6f Cambemtt..cc.cccccsccccsccssssesesseenensmniennaan ii Table of Asstiner thes ...ccccccvcccccsescescessssennesemmmmmnnnnn iii PUTIBGICER ..0.000ccccccccccecnssccescnsoossssennemma 1 Db nGSERORG,.0..ccccccccccsccseccssecsiosnnsensensemme 3 Reasons Why The Petition Should Be Denied........... 8 I. The Petition For Certiorari Is Jurisdiction- Oly UtiRGEe .. Rima ae O™ 19 before coming here. Mueller v. Allen, 676 F.2d 1195 (8th Cir. 1982). If petitioner and amici are correct that the Tax Injunction Act and principles of comity bar federal district court jurisdiction in this case, jurisdiction would also have been precluded in Nyquist and Mueller. Yet none of the many opinions in either of these thoroughly well-litigated cases suggests the relevance of the Tax Injunction Act or comity principles. This omission is especially striking with regard to Mueller, in which the opinion of the Court was written by then-Justice Rehnquist who, less than two years earlier, had written the Court’s important opinion in Fair Assessment in Real Estate Assoc., Inc. v. McNary, 454 U.S. 100 (1981). The McNary opinion fully explored the history and scope of the Tax Injunction Act and applied comity principles to preclude district court jurisdiction in a case threatening direct interference with state tax collec- tion. If either the Act or principles of comity precluded a federal district court suit challenging an unconstitutional tax credit or deduction, there seems little doubt that the Court would have noticed that serious jurisdictional defect in Mueller. Ill. THERE IS NO SIGNIFICANT CONFLICT IN THE CIRCUITS; THE RECENT DECISION OF THE FIFTH CIRCUIT IS AN ANOMALY Like the court below, other federal courts of appeals have, with the single exception of a Fifth Circuit panel decision rendered after the decision below in this case, consistently construed the Tax Injunction Act as applicable only where the remedy sought would threaten some actual interference with a state’s ability to collect tax revenue. The basic distinction between suits that seek to prevent tax collection, to which the Act applies, and suits seeking remedies that do not interfere with tax collection, to which 20 the Act does not apply, has been consistently recognized in the courts of appeals. Thus in Dunn v. Carey, the Seventh Circuit, in an opinion by Judge Easterbrook, held that “[t]he Tax Injunc- tion Act applies only to requests that federal courts inter- fere with the collection of state taxes.” 808 F.2d 555, 557 (7th Cir. 1986) (emphasis added). The Seventh Circuit specifically rejected the contention (identical to the argu- ment that petitioner makes here) that the Act “applies to any federal litigation touching on the subject of state taxes.” Judge Easterbrook explained that “neither the language nor the legislative history of the statute supports this interpretation. The text of 28 U.S.C. § 1341 does not suggest that federal courts should tread lightly in issuing orders that might allow governments to raise additional taxes.” 808 F.2d at 558. The Fifth Circuit, prior to its recent panel decision, had adopted the same reading, concluding that, “under Fifth Circuit precedents, § 1341 is inapplicable to the present case because it seeks not to inhibit the collection of taxes, but to require the collection of additional taxes.” Appling County, 621 F.2d at 1303-04 (emphasis added). The Second, Third, Fourth, and Tenth Circuits have all reached the same conclusion. Wells v. Malloy, 510 F.2d 74 (2nd Cir. 1975) (Friendly, J.) (“In speaking of ‘collection’ [in the Tax Injunction Act], Congress was referring to meth- ods similar to assessment and levy, e.g., distress or execu- tion ... that would produce money or other property directly [to the State].”); ANR Pipeline Co. v. LaFaver, 150 F.3d 1178, 1191 (10th Cir. 1998) (Tax Injunction Act applies to claims for “injunctive relief against state or local taxes”); Sipe v. Amerada Hess Corp., 689 F.2d 396, 403 (3rd Cir. 1982) (“The policy of non-interference with state ™ os el ts LIne ceptor en ee ae eee ee ee —— betes net 21 revenue collection served by the Tax Injunction Act applies fully to attempts to enjoin withholding, which often comprises an essential administrative mechanism for the orderly collection of taxes.”); Lawyer v. Hilton Head Pub. Serv. Dist. No. 1, 220 F.3d 298, 301 (4th Cir. 2000) (Tax Injunction Act reflects “Congress’s desire to keep federal courts from unduly interfering with state revenue collec- tion”) (emphasis added); In re Jackson County, 834 F.2d 150, 151 (8th Cir. 1987), the Tax Injunction Act “has been held to be inapplicable to efforts to require collection of additional taxes, as opposed to efforts to inhibit the collec- tion of taxes” (emphasis added). Petitioner cites three cases as support for the conten- tion that a conflict in the circuits exists: United States Brewers Ass’n v. Perez, 592 F.2d 1212 (1st Cir. 1979); In re Gillis, 83 F.2d 1001 (6th Cir. 1988); and Colonial Pipeline Co. v. Collins, 921 F.2d 1237 (11th Cir. 1982). Perez was decided, not under the Tax Injunction Act, but under a jurisdictional statute applicable only to the Common- wealth of Puerto Rico. The case involved a challenge to a tax increase on beer that exempted local beer producers. The court observed that the plaintiffs’ request for relief “could be formed in two ways, either by ordering the state not to collect the tax increase or by requiring the state to levy the tax hike on exempt as well as nonexempt parties.” The court noted that the first (and most probable) form of relief would directly restrain the collection of tax, while the second would result in the district court’s creation of a “broad taxing statute for which the Commonwealth may have believed there was no need or which was actually detrimental to its domestic policy.” The situation in the present case is wholly dissimilar. The relief respondents seek cannot possibly restrain the 22 collection of state taxes, would not impose any new tax on any Arizona citizen, and would work no basic change in Arizona income-tax policy. Similarly, in Colonial Pipeline Co., the Eleventh Circuit applied the Tax Injunction Act because the requested relief, if granted, “would require a massive federal judicial intervention into virtually all phases of Georgia’s ad valorem tax system.” Nothing remotely comparable is present here. In Gillis, the Sixth Circuit did not base its decision on the Tax Injunction Act. It applied comity principles to preclude federal jurisdiction in a case that challenged the entire ad valorem tax system of the state of Kentucky. The court of appeals observed that, if the plaintiffs prevailed, there “the district court would be forced to issue a declara- tory judgment finding that virtually all property owners in the state of Kentucky had been deprived of their right to equal protection under the United States Constitution by the manner in which petitioners administered the state tax system.” 836 F.2d at 1008. Plaintiff’s requested injunc- tive relief would have required petitioners “to reassess all real and personal property owned by coal, oil and gas interests.” Jd. at 1009. The Gillis court concluded that, in these circumstances, “the interference by the federal courts into the state tax system is the same in degree and kind as a suit seeking to enjoin a state tax.” Id. at 1008 (emphasis added). Gillis thus explicitly relied on the presence of the same revenue-destructive factors that this Court has recognized as the basis for applying comity principles to preclude district court jurisdiction. These revenue- destructive factors are obviously not present here. Gillis, like Perez and Colonial Pipeline, is completely consistent with the court of appeals’ decision in the present case — = — = eee Te 23 federal district court jurisdiction is precluded only where the relief requested would interfere with the state’s ability to collect tax revenues. In a supplemental filing, petitioner has informed the Court of the June 11, 2003 Fifth Circuit opinion in Ameri- can Civil Liberties Union v. Bridges, No. 02-30493, 2003 WL 21362357 (5th Cir. 2003). In that case, decided after the petition for certiorari here was filed, Louisiana had created exemptions in several state tax statutes for reli- gious activities. These exemptions were challenged as violations of the Establishment Clause. The district court, following established precedent, found that the Tax In- junction Act did not apply because plaintiff was not seek- ing to restrain the “assessment, levy or collection” of state taxes but to eliminate unconstitutional tax exemptions. The Fifth Circuit reversed, broadly stating that the Tax Injunction Act prevents a district court from hearing a suit “seeking to prevent the state from carrying out the current tax system by having a portion of that tax system declared unconstitutional.” 2003 WL 21362357 at p. 5. While the Fifth Circuit saw its decision as inconsis- tent with the Ninth Circuit’s decision in the present case, there are at least two important factual differences. First, the Fifth Circuit in Bridges recognized that the district court’s decision there could, in practical effect, result in loss of tax revenue to the state: “[I]t is not necessarily true that declaring the [Louisiana] exemptions to be unconsti- tutional will result in the State collecting more taxes... . In fact even as the ACLU argues, just the opposite could occur, the State may resolve any putative constitutional problems created by the challenged statutes by exempting more entities and therefore collecting less taxes.” Ibid. 24 This potential for loss of state revenue as a result of federal district court action is not present here. A second distinction between ACLU v. Bridges and the present case is the difference between tax exemptions and tax credits. Exemptions are part of the process of estab- lishing the amount of the taxpayer’s tax obligation; credits are a means of satisfying that obligation once it is estab- lished. It is possible, therefore, to characterize a challenge to an exemption as a challenge to the process of “assess- ing” the amount of income tax that is due to the state. Even under such a broad definition of “assessment,” however, the application of a credit toward satisfaction of the tax obligation would not be part of the tax “assess- ment” process. While the Fifth Circuit’s language may be inconsistent with the decision below in this case, its holding thus may not create a conflict. In all events, one recent opinion of one circuit that is out of step with the decisions of all other circuits to have considered the question, as well as with the opinions and decisions of this Court, does not call for — review of the decision below in this case. The decision below is consistent with decisions in every other circuit and with this Court’s actions in Griffin, Nyquist and Mueller. It is a clearly correct application of the Tax Injunction Act and prevailing comity principles. ¢ 25 CONCLUSION The petition for a writ of certiorari should be denied. AUGUST, 2003 Respectfully submitted, MARVIN S. COHEN* ISABEL M. HUMPHREY SACKS TIERNEY PA. 4250 N. Drinkwater Blvd. Scottsdale, AZ 85251-3647 (480) 425-2600 PAUL BENDER College of Law ARIZONA STATE UNIVERSITY ’ Box 877906 Tempe, AZ 85287-7906 (480) 965-2556 * Counsel of Record App. 1 UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT KATHLEEN M WINN, an No. 01-15901 Arizona taxpayer, etal, =| 1). ©. No. CV-00-00287-EHC Plaintiffs-Appellants, | District of Arizona, Phoenix v. ORDER MARK W KILLIAN, inhis_ | (Filed Oct. 28, 2002) official capacity as Director of the Arizona Department of Revenue, Defendant-Appellee. The mandate issued on October 25, 2002 in the above captioned appeal was in error and is RECALLED. FOR THE COURT: Cathy A. Catterson Clerk of Court /s/ Pinky Argonza By: Pinky Argonza Deputy Clerk App. 2 UNITED STATES COURT OF APPEALS FOR THE NINTH CIRCUIT KATHLEEN M WINN, an No. 01-15901 Arizona taxpayer; DIANE : WOLFTHAL, Arizona D.C. No. CV-00-00287-EHC taxpayer; MARUICE [sic] ORDER WOLFTHAL, an Arizona taxpayer; LYNN HOFFMAN,| “1°? Nev. 18, 2002) an Arizona taxpayer, Plaintiffs-Appellants, v. MARK W KILLIAN, in his official capacity as Director of the Arizona Department of Revenue, Defendant-Appellee. Before: SCHROEDER, Chief Judge, D.W. NELSON and REINHARDT, Circuit Judges The parties are directed to file simultaneous briefs setting forth their respective positions on whether this case should be reheard en banc. The briefs shall not exceed fifteen (15) pages and shall be filed within twenty-one (21) days from the filed date of this order. Fifty (50) copies should be filed. --- Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385014_0679%3A03. Public record. Not legal advice.