Petition for Writ of Certiorari — Louisville Country Club v. Watts

Supreme Court brief1999

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? ( Supreme Court, U.S.

FILED

BO 412 SEP; 1999

No.

GFE

IN THE

SUPREME COURT OF THE UNITED STATES

‘LOUISVILLE COUNTRY CLUB;

IDLE HOUR COUNTRY CLUB;

PENDENNIS CLUB, INC.,

Petitioners,

Vv.

BEVERLY L. WATTS, et al.,

Respondents.

On PETITION For Writ OF CERTIORARI

To Tue Unitep States Court oF APPEALS

For Tue Sixtu Circuit

PETITION FOR WRIT OF CERTIORARI

D. PATTON PELFREY

Counsel of Record

Brown, Topp & HEYBURN PLLC

400 West MarKET STREET, Suite 3200

LouISVILLE, KY 40202

(502) 589-5400

OF COUNSEL:

ROBERT W. DIBERT RICHARD G. GRIFFITH JOHN O. SHELLER

BROWN, Topp & Stites & HARBISON SMITH AND SMITH

HEYBURN PLLC 2300 LEXINGTON 400 NortH First

400 West MarKeT ST. _ FINANCIAL CENTER Trust CENTRE

Suite 3200 LEXINGTON, KY 40202 200 SouTH FiFtu St.

LOUISVILLE, KY 40202 (606) 226-2300 LoulIsvILLE, KY 40202

(502) 589-5400 (502) 587-0761

Counsel for Counsel for Counsel for

Pendennis Club, Inc. Idle Hour Country Club Louisville Country Club

BECKER GALLAGHER LEGAL PUBLISHING, INC., CINCINNATI, OHIO 800-890-5001

‘a

QUESTION PRESENTED

This Section 1983 action involves continuing and

repeated efforts by members of the Kentucky Commission on

Human Rights ("KCHR") to obtain membership lists and other

confidential information regarding the relationships between

Petitioners (the "Clubs") and their individual members,

purportedly to investigate whether the Clubs or their members

have taken improper tax deductions under anti-discrimination

provisions of the Kentucky Revenue Code. The district court

granted summary judgment in the Clubs’ favor, ruling that

Respondents lacked authority under the Kentucky Civil Rights

Act to investigate the Clubs after the KCHR previously had

made an administrative finding that the Clubs are exempt from

regulation as private clubs. The Court of Appeals for the Sixth

Circuit reversed, ruling sua sponte that the district court should

have abstained from exercising jurisdiction under Younger v.

Harris, 401 U.S. 37 (1971).

This petition presents the following question:

Whether the Tax Injunction Aci, 28 U.S.C. §1341, or

the judicial doctrine of abstention, prevents bona fide private

clubs from seeking relief in federal court to remedy a state

administrative agency's invasion of their members’ First and

Fourteenth Amendment rights of privacy and free association,

where the state agency acts outside its enabling legislation and

state law provides no prospect of meaningful relief in state

court?

PARTIES TO THE PROCEEDING

Petitioners

Louisville Country Club, Idle Hour Country Club, and

Pendennis Club, Inc. Pursuant to Supreme Court Rules 14(b)

and 29.6, Petitioners state that none of the Clubs has a parent

or subsidiary corporation.

Respondents

Beverly L. Watts, in her official capacity as Executive Director

of the Kentucky Commission on Human Rights; Howard O.

Mann, in his official capacity as Chairperson of the Kentucky

Commission on Human Rights; M. Gayle Hoffman, in her

official capacity as Treasurer of the Kentucky Commission on

Human Rights; Susan D. Phillips, Louise Cooper, Charles A.

Alexander, Dorothy A. Malone, Terry Flesher, Joseph

McMillan, Henry Jackson, Thurmond Coleman, Sr., and

Jennifer Jolly Ryan, in their official capacities as members of

the Kentucky Commission on Human Rights.

TABLE OF CONTENTS

QUESTION PRESENTED .......... cc cccecceceees i

PARTIES TO THE PROCEEDING ................ il

py FP Si fo ey ee ill

TABLE OF AUTHORITIES .................... Vill

OPINIONS AND ORDERS BELOW ............... l

DEED se cachecerccsseeetcabverceessans l

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED ................. 2

STAT Eemrts CP Teme CARE... ww cece tcc csececs 2

A ee ere ere 3

Die PROOORIIENE TIUIOW wn cc cee ccc cicceeres 5

REASONS FOR GRANTING THE WRIT........... 8

I. Petitioners Are Bona Fide Private Clubs Whose

Members Enjoy Rights Of Privacy And

Free Association Under The First And

Fourteenth Amendments To The United States

Re fie ee Se wk oe eb oe 0we 8

ill

a a

I]. The Court Of Appeals Improperly Applied

Younger Abstention To Preclude The

Clubs From Vindicating Rights Of Free

Association Guaranteed By The First and

Fourteenth Amendments To The United States

SN os oldies cud OA Rae cess hae een es 1]

A. There Is No "Ongoing State Judicial

POON od kad avucdeudta tebnshace 12

B. There Are No "Important State

Interests" Underlying The

Administrative Proceeding At Issue In

pe Perr rere rer ry ere rae 13

C, The Clubs Do Not Have A Fair

Opportunity To Raise Constitutional

Issues In The Purported State Judicial

PRE 0x06 00Gsvensadedeerees ss 16

Il. The District Court Properly Declined To

Abstain From Hearing The Clubs' Claims

Under The Pullman Doctrine ................. 17

IV. The District Court Erred In Ruling That The

Tax Injunction Act, 28 U.S.C. §1341, Precluded

The Clubs' Constitutional Challenge To

Respondents’ Attempt To Violate The First And

Fourteenth Amendment Rights Of Club

Members Through A Purported Investigation

Under The Kentucky Revenue Code ........... 19

A. The Tax Injunction Act Is Inapplicable

Because The Claims In This Case Do

Not Interfere With The Proper

Assessment, Levy Or Collection Of

WR cake Sein sueeuscceescveeeueers 20

B. Respondents’ Administrative

Complaints And Discovery Demands

Violate The Rights Of Free Association

That Club Members Enjoy Under The

First And Fourteenth Amendments ...... 22

CE vv Si eccsevesgeusvessvnseeivewerres 26

APPENDIX A

Bis Cisaudt Copteaiots, SIGS oon sc cceeveaceceseres la

APPENDIX B

U. S. District Court Judgment, 5/13/97 ............... 7a

APPENDIX C

U. S. District Court Memorandum Opinion and

Order on Motion for Summary Judgment, 5/13/97 ...... 9a

APPENDIX D

U.S. District Court Memorandum Opinion and

Order on Motion to Dismiss, 2/6/96 ................ 17a

APPENDIX E

Kentucky Commission on Human Rights

Conclusions of Law and Order, 3/15/95 ............. 28a

APPENDIX F

Sixth Circuit Order Denying Rehearing, 6/7/99 ....... 38a

APPENDIX G

Amendment I — Constitution of the United States ...... 40a

APPENDIX H

Amendment XIV — Constitution of the United States ... 4la

APPENDIX I

<p Sil 2 |. SMM rere reer ia Maes 43a

APPENDIX J

AR Tae 2, Speirs Minin yeaa mar vece 44a

APPENDIX K

Ras TF OME. 6 +0084 vce denee dese eae ee ene era 45a

APPENDIX L

Kentucky Revised Statutes § 131.030(1)............. 47a

APPENDIX M

Kentucky Revised Statutes § 131.081(10)............ 49a

APPENDIX N

Kentucky Revised Statutes § 131.130(1)............. 54a

APPENDIX O

Kentucky Revised Statutes § 131.190 ............... 57a

APPENDIX P

Kentucky Revised Statutes § 135.030(3) ............. 60a

APPENDIX Q

Kentucky Revised Statutes § 135.050(2) ............. 62a

APPENDIX R

Kentucky Revised Statutes

en ESI 6 oo io 60k 00 bd 600008 0800 64a

APPENDIX S

Kentucky Revised Statutes § 344.120 ............... 76a

APPENDIX T

Kentucky Revised Statutes § 344.130 ............... 77a

APPENDIX U

Kentucky Revised Statutes § 344.200(2) ............. 78a

APPENDIX V

Kentucky Revised Statutes § 344.240(1)............. 82a

APPENDIX W

Kentucky Revised Statutes § 344.270 ............... 85a

APPENDIX X

Kentucky Commission on Human Rights

Discovery Request, 10/15/93 ........ 20... cc cece 86a

APPENDIX Y

Kentucky Commission on Human Rights

First Request for Production of Documents,

eg POE Pry Or ey Tere Pe errr rT eer errr et 89a

Vii

TABLE OF AUTHORITIES

Cases

American Motor Sales Corp. v. Runke, 708 F.2d 202,

po ey ee ree 16

Arizonans for Official English v. Arizona, 520 U.S. 43,

oF Gee Ce SNOT a vies ecebceyedess 19

Barringer v. Griffes, 964 F.2d 1278 (2d Cir. 1992)...... 22

Board of Directors of Rotary Int'l v. Rotary Club of

Duarte, 481 U.S. 537, 545 n.4 (1987) ...... 8, 9, 23

Commonwealth v. Gossum, 887 S.W.2d 329, 333

NTC Pood e eee aaa ween ee wakes 22

Department for Natural Resources v. Stearns Coal &

Lumber Co., 563 S.W.2d 471, 473 (Ky. 1978) ... 18

Direct Marketing Assoc. v. Bennett, 916 F.2d 1451 (9th

Cir. 1990), cert. denied, 500 U.S. 905 (1991) .... 22

Dombrowski v. Pfister, 380 U.S. 479, 486-87 (1965) .... 15

Franchise Tax Board of California v. Alcan Aluminum

Lad, G3 U.S. 531, SSB CIGD) nc ccccccvccsess 20

Hinrichs v. Whitburn, 975 F.2d 1329 (7th Cir. 1992) 3,13,16

Hobson v. Wilson, 737 F.2d 1, 29 (D.C. Cir. 1984),

cert. denied, 470 U.S. 1084 (1995) ............ 10

Johnson v. Correll, 332 S.W.2d 843, 845 (Ky. 1960) .... 18

Kentucky Commission on Human Rights v. Fraser, 625

S.W.2d 852, 855-56 ( Ky. 1981) .............. 22

Louisiana Debating & Literary Assoc. v. City of New

Orleans, 42 F.3d 1483 (Sth Cir.), cert. denied,

FEF Us BR CESUEE Sv ncdescec ees 3, ty '3, 19, 28

Vill

Meredith v. Winter Haven, 320 U.S. 228, 234 (1943) .... 19

Middlesex County Ethics Commission v. Garden State

Bar Assoc., 457 U.S. 423, 432 (1982) .......... 1]

NAACP vy. Alabama, 357 U.S. 449, 462, 466 (1958) ... 8, 23

New Orleans Public Service, Ine. v. Council of City of

New Orleans, 491 U.S. 350, 370 (1989) ..... 12,14

New York State Club Assoc. v. City of New York, 487

Re ee ern rr ree 8

Northwest Airlines, Inc. v. Tennessee State Board of

Equalization, 11 F.3d 70 (6th Cir. 1993) ........ 22

Parker v. Commonwealth of Kentucky, 818 F.2d 504,

Ss POEE os eee aveus bw cenben 17

Pendleton v. Heard, 824 F.2d 448, 451 (Sth Cir.

EES. dda SS ee oa Ree eee ERECTOR ERK 21

Planned Parenthood of Greater lowa, Inc. v. Atchison,

126 F.36 1062 (GG Cir. 1997) 2... cc cccccces: 3, 13

Prentis v. Atlantic Coastline Co., 211 U.S. 210, 226

i SARE Be aio bark Dae pee ee ae oe 12

Railroad Commission v. Pullman Co., 312 U.S. 496

hg RRR RS EE eg tales ek Pe apes am ee eer 6,17

Roberts v. United States Jaycees, 468 U.S. 609, 618

PE FC Oe Pet ee ee a ee ee 9, 23

Rosewell v. LaSalle Nat'l Bank, 450 U.S. 503, 522

Se er eiui cia edees barter ecevr stb kk as 20

Schneider v. Indian River Community College

Foundation, 875 F.2d 1537, 1543 n. 6 (11th

Sy pies Ce hk wal enna se rinse nes 10

Swisher v. Brady, 438 U.S. 204, 213 n.11 (1978) ........ 7

Telco Communications, Inc. v. Carbaugh, 885 F.2d

1223 (4th Cir. 1989), cert. denied, 495U.S.904

to RP er re peers 2, 13

Township of Hillsborough v. Cromwell, 326 U.S. 620,

Se Ee kbc vob ecndbenecuatecceeness 21

Tyler v. Collins, 709 F.2d 1106, 1108 (6th Cir. 1983) .... 17

United States v. Hohri, 482 U.S. 64, 74 n.6 (1987) ...... 19

United States v. P.H.E., Inc., 965 F.2d 848, 856 (10th

OM rr Perr Tees Toe Cree 16

Wooley v. Maynard, 430 U.S. 705, 710 (1977) ......... 17

Younger v. Harris, 401 U.S. 37 (1971) ..... 2, 4, 44, §4,97

Statutes

U.S. Const., Amendment! .................... 2,22, 25

U.S. Const., Amendment XIV .......cccccecces y ye

Be Us GORPUEED chev enetenededueucsevensenueues l

BOO GUPTE cher kv voncuswanesesdeuesereie ee

Ge Ua SU 0c ccs 564s sbuek tes biseeuneees 2,3

GS UA GUM ss dos octoncvanesencunsadeceaeews 2,3

Kentucky Revised Statutes §131.030(1) ........ 15, 18, 21

Kentucky Revised Statutes §131.081(10) ............. 18

Kentucky Revised Statutes §131.130(1) ..... 12, 15, 18, 21

Kentucky Revised Statutes §131.190................. 18

Kentucky Revised Statutes §135.030(3) .............. 18

Kentucky Revised Statutes §135.050(2) .............. 18

Kentucky Revised Statutes §141.010................ 4,6

Kentucky Revised Statutes §141.010(11)(d) ......... 3,18

Kentucky Revised Statutes §141.010(13)(f) ............ 3

Kentucky Revised Statutes §344.120............ 3, 18, 24

Kentucky Revised Statutes §344.130.......... 4, 6, 14, 25

Kentucky Revised Statutes §344.200(2) ........... 12,14

Kentucky Revised Statv‘es §344.240(1) .......0...0... 16

Kentucky Revised Statutes §344.270............0.... 16

OPINIONS AND ORDERS BELOW

The opinion of the United States Court of Appeals for

the Sixth Circuit is not reported and is reprinted in the

Appendix ("App.") at App. A at 1-6a.' The order of the Court

of Appeals denying Petitioners’ ("the Clubs") petition for

rehearing and suggestion for rehearing en banc, is not reported

“and is reprinted at App. F at 38-39a. The order of the United

States District Court for the Eastern District of Kentucky

granting the Clubs’ motion for summary judgment is not

reported and is reprinted at App. C at 9-16a. The order of the

United States District Court for the Eastern District of

Kentucky granting in part and denying in part the KCHR's

motion to dismiss is not reported and is reprinted at App. D at

17-27a.

JURISDICTION

The United States Court of Appeals for the Sixth

Circuit entered judgment on April 16, 1999. It denied a timely

petition for rehearing and suggestion for rehearing en banc on

June 7, 1999. This Court has jurisdiction to review the

judgment by writ of certiorari under 28 U.S.C. §125+41).

'Citations to "App." are to the Appendix filed with this Petition for Writ of

Certiorari pursuant to Supreme Court Rule 14(i).

CONSTITUTIONAL AND STATUTORY

PROVISIONS INVOLVED

The constitutional provisions involved are the First and

Fourteenth Amendments to the United States Constitution, and

are reprinted at App. G at 40a and H at 41-42a. The statutory

provisions involved are 28 U.S.C. §1341 and 42 U.S.C. §1983

and 42 U.S.C. §1988, and are reprinted at App. I at 43a, J at

44a and K at 45-46a.

STATEMENT OF THE CASE

The Court of Appeals held, as a matter of law, that bona

fide private clubs may not seek a federal forum to redress a

state agency's invasions of their First Amendment rights of

privacy and free association where the state agency acts wholly

outside its enabling legislation, and the clubs have no prospect

of meaningful judicial relief in state court. The Court of

Appeals reversed the District Court's award of summary

judgment to the Clubs, and held instead that the District Court

was required to abstain from hearing the entire controversy by

reason of this Court's decision in Younger v. Harris, 401 U.S.

37 (1971). In so doing, the Court of Appeals has improperly

immunized state administrative agencies from judicial review

of administrative procedures and eviscerated the First

Amendment rights of private clubs. The Court of Appeals’

decision further conflicts with decisions of the Courts of

Appeals for the Fourth’, Fifth’, Seventh*, and Eighth’ Circuits.

Statement Of Facts

This is an action for declaratory, injunctive and

monetary’ relief arising under 42 U.S.C. §§1983 and 1988. The

Court of Appeals’ Opinion fairly describes the facts underlying

this Petition, as follows:

In 1991, the Reverend Louis Coleman filed a

complaint with the Kentucky Commission on

Human Rights ("KCHR") alleging that

plaintiffs in this case, the Louisville Country

Club, the Idle Hour Country Club, and the

Pendennis Club, Incorporated, denied him

membership because of his race. The complaint

alleged violations of Ky. Rev. Stat. Ann.

§344.120 (Banks-Baldwin 1999) and

§141.010(11)(d) & (13)(f). Section 344.120

prohibits racial discrimination by certain types

> Telco Communications, Inc. v. Carbaugh, 885 F.2d 1225 (4th Cir. 1989),

cert. denied, 495 U.S. 904 (1990).

Louisiana Debating & Literary Assoc. v. City of New Orleans, 42 F.3d

1483 (Sth Cir.), cert. denied, 515 U.S. 1145 (1995).

‘Hinrichs v. Whitburn, 975 F.2d 1329 (7th Cir. 1992).

*Planned Parenthood of Greater lowa, Inc. v. Atchison, 126 F.3d 1042 (8th

Cir. 1997).

The Clubs seek to recover their attorneys’ fees pursuant to 42 U.S.C.

$1988. Because the KCHR has not yet actually obtained membership lists

or other confidential materials regarding Club members, the Clubs have not

yet asserted claims for compensatory or punitive damages against the

KCHR or any of its officers in their individual capacities.

of organizations, while §141.010 forbids tax

deductions for organizations that discriminate.

The KCHR later determined that it lacked

jurisdiction over plaintiffs because they were

private social clubs as defined by §344.130.

At the request of a State General Assembly

Representative, the Kentucky Attorney General

reviewed the KCHR's interpretation of its

jurisdiction. The Attorney General disagreed

with the KCHR's interpretation, concluding that

the KCHR's authority to investigate whether an

organization had racially discriminated for

purposes of the tax statutes is not limited by

§344.130. Subsequent to the Attorney General's

opinion, then-Commissioner Mae Cleveland

filed identical, “commissioner-complaints"

against plaintiffs, and the KCHR began an

investigation of the matter.

Opinion, App. A at 2a.

KCHR's administrative complaints and related

discovery requests (App. X at 86-88a and Y at 89-9 1a)

constitute an intentionally broad and wide-ranging intrusion

into the details of the relationships between the Clubs and their

members.’ For purposes of this appeal, the KCHR has

conceded that it seeks "discovery about the extent club facilities

are used by members as instruments of commerce for business

See, e. g., October 15, 1993 Weatherby letter to Louisville Country Club

(App. X at 86-88a); March 31, 1995, "First Request for Production of

Documents" in KCHR vy. Louisville Country Club, Nos. 256-PA, 257-PA,

258-PA (App. Y at 89-9 1a).

lunch or dinner meetings, or to entertain customers or clients."*

The KCHR also has conceded that the Clubs are bona fide

private clubs which are exempt from investigation under the

Kentucky Civil Rights Act. See "Conclusions of Law and

Order" in Cleveland v. Louisville Country Club, et al.,

Complaint Nos. 256-PA, 257-PA, 258-PA (KCHR 3/15/95)

("[T]his Commission clearly has not been granted the statutory

authority to enforce the Kentucky Civil Rights Laws against the

Respondents") (App. E at 31a).

The Proceedings Below

In May 1995, the Clubs filed separate actions against

the KCHR and its Commissioners in their official capacities,

for declaratory and injunctive relief to prevent violations of

Club members' rights of free association protected under the

First and Fourteenth Amendments to the United States

Constitution (RA 29-217, R/. »**-352, RA 353-499).’ The

actions were consolidated on Ju «0, 1995 (RA 8, entry 7, RA

22, entry 20, RA 28, entry 20); since that time the KCHR itself

has been dismissed as a party-Defendant by reason of the

Commonwealth of Kentucky's immunity from suit under the

Eleventh Amendment (App. D at 18-19a, 26a). During the

pendency of the action, certain named Commissioner-

Defendants have been dismissed or added as they left or joined

the KCHR. (RA 670-673, RA 764-767.)

In August 1995, Respondents moved to dismiss the

action on grounds that the Tax Injunction Act, 28 U.S.C.

*"Brief of Appellants," at 6 n.2, filed with the U.S. Court of Appeals for the

Sixth Circuit on March 24, 1998.

*Citations to "RA" are to pages of the "record on appeal" (Joint Appendix)

filed with the U.S. Court of Appeals for the Sixth Circuit on March 4, 1998.

: §1341, precluded the District Court from reviewing the

| Respondents' actions purportedly permitted under the Kentucky

Revenue Code (RA 500-517). Alternatively, Respondents

urged the District Court to abstain from hearing this action by

reason of the doctrine of abstention first articulated in Railroad

Commission v. Pullman Co., 312 U.S. 496 (1941 ) (RA at 509-

10). Finally, Respondents argued in the alternative that the

District Court should certify questions of law to the Kentucky

Supreme Court. (RA at 510).

As the Court of Appeals’ Opinion noted, in February

1996, the District Court

dismissed plaintiffs’ claims to the extent that

they required a ruling on the constitutionality of

portions of the Kentucky Revenue Code.

However, the court ruled that the Tax

Injunction Act does not bar the court's

consideration of the limitation imposed by

§344.130 on KCHR's jurisdiction, that it should

not decline jurisdiction based upon the

abstention doctrine set forth in Railroad

Comm'n v. Pullman Co., 312 U.S. 496 (1941),

and that it should not certify the statutory

interpretation question to the Supreme Court of

Kentucky.

The parties then briefed the remaining claims,

and the district court entered summary

judgment for plaintiffs, ruling that §141.010 is

not a grant of jurisdiction to the KCHR, and

thus that the KCHR's jurisdiction in §141.010

determinations is limited to its authority under

§344.130.

Opinion, App. A at 3a.

Respondents filed their timely Notice of Appeal on

June 12, 1997 (RA 777-78); the Clubs filed their timely cross-

appeal on June 25, 1997 (RA 779-81). As the Court of Appeals

observed:

Defendants appeal the district court's ruling

concerning the Tax Injunction Act, abstention,

and certification and the court's grant of

summary judgment for plaintiffs. Plaintiffs

cross-appeal the district court's dismissal of

their claims concerning the constitutionality of

the Kentucky tax statutes.

Opinion, App. A at 3a.

Without addressing any of the issues raised by the

parties and resolved by the district court, the Court of Appeals

ruled sua sponte that the district court should have abstained

from adjudicating the Clubs’ claims by reason of the Younger

abstention doctrine. Although the Court of Appeals' sua sponte

action is not wholly unprecedented, this Court has disapproved

the practice. Swisher v. Brady, 438 U.S. 204, 213 n.11 (1978).

This is particularly true where, as here, there is minimal or no

interference with the purported state proceeding because it has

been deferred by acquiescence of the state pending adjudication

of the federal claims.'” Louisiana Debating, 42 F.3d at 1490-

91. Indeed, the Fifth Circuit's decision in Louisiana Debating

is virtually identical on its facts to this action, so that the Sixth

Circuit's Opinion in this case creates a clear conflict among the

Courts of Appeals.

"Brief of Appellants,” at 7, filed with the U.S. Court of Appeals for the

Sixth Circuit on March 24, 1998.

REASONS FOR GRANTING THE WRIT

I. Petitioners Are Bona Fide Private Clubs Whose

Members Enjoy Rights Of Privacy And Free

Association Under The First And Fourteenth

Amendments To The United States Constitution!’

It is well-settled that bona fide private clubs need not

provide the details of their membership relations, including

membership lists, for general government scrutiny and

intrusion into their private affairs. See NAACP v. Alabama, 357

U.S. 449, 462, 466 (1958):

This Court has recognized the vital relationship

between freedom to associate and privacy in

one's associations.

Inviolability of privacy in group association

may in many circumstances be indispensable to

preservation of freedom of association. ... We

think that the production order, in the respects

here drawn in question, must be regarded as

entailing the likelihood of a substantial restraint

upon the exercise by members of their right to

freedom of association.

We hold that the immunity from state scrutiny

of membership lists which the Association

claims on behalf of its members is here so

Decisions of this Court clearly establish that the Clubs have standing to

assert constitutional rights of privacy and free association on behalf of their

members. New York State Club Assoc. v. City of New York, 487 US. 1, 8-9

(1988); Board of Directors of Rotary Int'l v. Rotary Club of Duarte, 48 |

U.S. 537, 545 n.4 (1987).

related to the right of the members to pursue

their lawful private interests privately and to

associate freely with others in so doing as to

come within the protection of the Fourteenth

Amendment.

More recently, this Court reaffirmed that "freedom to

enter into and carry on certain intimate or private relationships

is a fundamental element of liberty protected by the Bill of

Rights." Board of Directors of Rotary Int'l v. Rotary Club of

Duarte, 481 U.S. 537, 545 (1987). Indeed,

because the Bill of Rights is designed to secure

individual liberty, it must afford the formation

and preservation of certain kinds of highly

personal relationships a substantial measure of

sanctuary from unjustified interference by the

State.

Roberts v. United States Jaycees, 468 U.S. 609, 618 (1984).

Moreover,

certain kinds of personal bonds have played a

critical role in the culture and traditions of the

Nation by cultivating and transmitting shared

ideals and beliefs; they thereby foster diversity

and act as critical buffers between the

individual and the power of the State.

Id. at 618-19.

As this Court recognized, "individuals draw much of

their emotional enrichment from close ties with others.

Protecting these relationships from unwarranted state

interference therefore safeguards the ability independently to

define one's identity that is central to any concept of liberty."

Id. at 619.

Thus, "associational activity need not relate to a matter

of public concern for First Amendment protection to apply."

Schneider v. Indian River Community C ollege Foundation, 875

F.2d 1537, 1543 n. 6 (11th Cir. 1989). In particular,

"Government action, taken with the intent to disrupt or destroy

lawful organizations, or to deter membership in those groups,

is absolutely unconstitutional." Hobson v. Wilson, 737 F.2d 1,

29 (D.C. Cir. 1984), cert. denied, 470 U.S. 1084 (1995).

Despite these admonitions and legacy of judicial respect for the

rights of individuals to gather privately in small groups of their

own choosing, the Record in this case shows that the KCHR

has initiated proceedings against the Clubs to harass their

members and disrupt their affairs. In choosing to conduct an

administrative inquiry into private Club affairs, the KCHR

acted contrary to the advice of its own counsel and its own

established precedent. The KCHR also has conceded that it has

no authority to investigate the Clubs under the Kentucky Civil

Rights Act.

Instead, the KCHR, at the urging of the state Attorney

General,'* has chosen to use an investigation of the Clubs as a

legislative device to expand its jurisdiction through the

Kentucky Revenue Code, and to wage an administrative

vendetta against its stereotypical profile of Club members and

Club activities.’ The end result of this latter-day witch-hunt

12 i

The Attorney General, not coincidentally, represented Respondents in the

underlying action and on appeal.

™ Respondents perjoratively refer to the Clubs’ members as "white male

goifers." "Brief of Appellants," at 38, filed with the U.S. Court of Appeals

for the Sixth Circuit on March 24, 1998.

can only be the harassment of Club members, disruption of

Club activities and ultimately deterrence of Club membership.

The KCHR's pretext of investigating Club members for

improper tax deductions is wholly specious, because KCHR

has no authority to assess or collect taxes and because club

dues are not deductible on either federal or state tax returns.

Consequently, the ultimate question for this Court is

whether the state may use administrative investigations to

harass what the state has conceded are bona fide private

organizations. The Clubs respectfully submit that, contrary to

the Court of Appeals’ opinion, the federal courts need not

abstain from resolving this constitutional issue in their favor.

II. The Court Of Appeals Improperly Applied Younger

Abstention To Preclude The Clubs From

Vindicating Rights Of Free Association Guaranteed

By The First and Fourteenth Amendments To The

United States Constitution

In Middlesex County Ethics Commission v. Garden

State Bar Assoc., 457 U.S. 423, 432 (1982), this Court

articulated three criteria for determining whether Younger

abstention may be proper in noncriminal proceedings: (1)

whether there are ongoing state judicial proceedings; (2)

whether the proceedings implicate important state interests; and

(3) whether there is an adequate opportunity in the state

proceedings to raise constitutional challenges. A review of the

undisputed facts and controlling law in this case shows that,

contrary to the Court of Appeals’ findings, none of the

Middlesex County criteria is met in this case.

A. There Is No "Ongoing State Judicial

Proceeding"

The Record shows that prior to filing the administrative

complaints in this action, the KCHR found that it lacked

jurisdiction to proceed against the Clubs. App. E at 3la. That

administrative finding has never been overruled. Instead, the

KCHR complaints underlying this action were filed ostensibly

for tax collection purposes at the instance of an opinion from

the Commonwealth's Attorney General.

Consequently, there is no administrative action by the

KCHR under its enabling legislation, KRS 344.200(2), App. U

at 78-79a. Moreover, any findings resulting from the KCHR

complaints cannot result in action against the Clubs or Club

members under the Kentucky Revenue Code because such

actions are exclusively within the jurisdiction of the Kentucky

Revenue Cabinet. KRS 131.130(1), App. N at 54a.

In these circumstances, the Court of Appeals erred when

it held that the KCHR complaints constituted a "state judicial

proceeding" for purposes of Younger abstention. Contrary to

the Court of Appeals’ Opinion, the administrative complaints

in this case are not of the character which "investigates,

declares and enforces liabilities as they stand on present and

past facts and under laws supposed already to exist." Opinion,

App. A at 5a, quoting New Orleans Public Service. Inc. y

Council of City of New Orleans, 491 U.S. 350, 370 (1989);

Prentis v. Atlantic Coastline Co., 211 U.S. 210. 226 (1908).

Instead, at most, the KCHR's pre-ordained conclusions may be

intrusive advisory opinions which the Kentucky Revenue

Cabinet may or may not choose to consider in deciding whether

to investigate individual Club members.

Thus, the Court of Appeals’ Opinion asserts, as a matter

of fact, that the KCHR findings against the Clubs will lead to

prosecution without citing a single supporting reference in the

Record. Opinion, App. A at 6a. The Clubs respectfully suggest

that such a finding is wholly speculative. See Hinrichs v.

Whitburn, 975 F.2d 1329, 1333 (7th Cir. 1992): "There can be

no interference with a state prosecution in this case, because no

prosecution has ever been initiated against plaintiff" (emphasis

in original).

If anything, the KCHR complaints underlying this case

are "legislative," not "judicial," because the Respondents are

seeking to enlarge KCHR's jurisdiction beyond the scope of its

enabling statute. As the conflicting decisions from the Courts

of Appeals for the Fourth, Fifth and Eighth Circuits make clear,

such preliminary proceedings simply are not "judicial" for

purposes of Younger abstention. See Telco Communications,

Inc. v. Carbaugh, 885 F.2d 1225, 1228-29 (4th Cir. 1989), cert.

denied, 495 U.S. 904 (1990); Louisiana Debating & Literary

Assoc. v. City of New Orleans, 42 F.3d 1483, 1490-91 (Sth

Cir.), cert. denied, 515 U.S. 1145 (1995); Planned Parenthood

of Greater Iowa, Inc. v. Atchison, 126 F.3d 1042, 1048 (8th

Cir. 1997) (no "judicial proceeding" where the agency had

“conducted no investigation, held no hearings, received no

evidence, kept no record, and enforced no liabilities").

B. There Are No "Important State Interests"

Underlying The Administrative Proceeding At

Issue In This Case

Put simply, there are no "important state interests" to

support the administrative complaints underlying this case. At

most, the KCHR's administrative action will produce only an

advisory opinion about whether the Kentucky Revenue Cabinet

might investigate and disallow tax deductions which individual

Club members might have taken improperly. KCHR's

speculation falls far short of this Court's requirement in New

Orleans Public Service, supra, that the state's interest in the

proper enforcement of its laws must outweigh the protection of

constitutional rights:

[C]onstitutional challenges to state action ... call

into question the legitimacy of the State's

interest in its proceedings reviewing or

enforcing that action ... when we inquire into

the substantiality of the State's interest in its

proceedings we do not look narrowly to its

interest in the outcome of the particular case --

which could arguably be offset by a substantial

federal interest in the opposite outcome. Rather,

what we look to is the importance of the generic

proceeding to the State. In Younger, for

example, we did not consult California's interest

in prohibiting John Harris from distributing

handbills, but rather its interest in "carrying out

the important and necessary task" of enforcing

its criminal laws.

491 US. at 365.

As noted previously, the Court of Appeals concluded

without any factual support or legal analysis that the KCHR

complaints would "result in full prosecution of plaintiffs under

existing Kentucky civil rights law" (Opinion, App. A at 5a). To

the contrary, however, the KCHR cannot "prosecute" the Clubs

or anyone else absent a finding of probable cause which has

never been made. See KRS 344.200(2), App. U at 78-79a.

Moreover, the Clubs are not subject to KCHR "prosecution"

under Kentucky civil rights laws because they are exempt from

the statute. KRS 344.130, App. T at 77a.

Finally, KCHR's purported investigation under the

Kentucky Revenue Code cannot result in "prosecution" of the

Clubs because only the Revenue Cabinet has jurisdiction to

investigate and "prosecute" tax law violations. See KRS

131.130(1), App. N at 54a (Revenue Cabinet to "make

administrative regulations, and direct proceedings and actions,

for the administration and enforcement of all tax laws of this

state") (emphasis added); KRS 131.030(1): "The Revenue

Cabinet shall exercise all administrative functions of the state

in relation to the state revenue and tax laws ... the supervision

of tax collections, and the enforcement of revenue and tax

laws" (App. L at 47a) (emphasis added).

The fact that Respondents lack authority under

Kentucky civil rights laws to investigate the Clubs is equally

fatal to the Court of Appeals’ other purported "important state

interest," prohibiting unlawful discrimination. As noted above,

the Clubs are exempt from the Kentucky Civil Rights Act and

the KCHR previously acknowledged that it has no jurisdiction

to investigate these Clubs for civil rights violations.

Consequently, there is no "important state interest" to offset the

unlawful chilling effect of improper administrative invasion of

First Amendment rights. See Dombrowski v. Pfister, 380 U.S.

479, 486-87 (1965) ("the chilling effect upon the exercise of

First Amendment rights may derive from the fact of the

prosecution, unaffected by the prospects of its success or

failure"): Louisiana Debating, supra at 1492 n.12 (Sth Cir.),

cert. denied, 515 U.S. 1145 (1995):

[T]he Commission's investigative powers and

procedures strike at the heart and soul of the

Clubs' and their members’ associational rights.

If the district court were to stay its hand while

the [government] violates that which the

Constitution protects, then the Clubs’ and their

members' First Amendment freedoms would be

for naught.

See also, United States v. P.H.E., Inc., 965 F.2d 848,

856 (10th Cir. 1992) ("the state may not use the agents and

instrumentalities of law enforcement to curb speech protected

by the First Amendment"); Hinrichs, supra; American Motor

Sales Corp. v. Runke, 708 F.2d 202, 207-09 (6th Cir. 1983)

(refusing to abstain where delays due to administrative or

judicial process could chill First Amendment rights).

In sum, the only "important state interest" in this case is

protecting the First Amendment rights of Club members against

an improper investigation and speculative advisory opinion

based upon the KCHR complaints. Neither of the purported

interests proffered in the Court of Appeals’ Opinion justifies

abstention in conflict with the Hinrichs and P.H E. decisions of

the Seventh and Tenth Circuits, so the Clubs respectfully

Suggest that the judgment of the Sixth Circuit should be

reversed.

S. The Clubs Do Not Have A Fair Opportunity To

Raise Constitutional Issues In The Purported

State Judicial Proceedings

The pending "proceeding" seeks discovery of the

relationships between the Clubs and their members, ostensibly

to provide evidence for subsequent formal proceedings under

the Kentucky Revenue Code. As such, the Clubs have no

redress for unlawful interlocutory discovery of their internal

affairs because Kentucky law provides for judicial review only

of final KCHR action. KRS 344.240(1) (App. V at 82a); KRS

344 -270 (App. W at 85a). Here, the only "final action" that

might trigger judicial review would consist of the Clubs'

contempt of a KCHR discovery order -- and this Court already

has made clear that a party need not subject itself to prosecution

in order to vindicate its constitutional rights in federal court.

Wooley v. Maynard, 430 U.S. 705, 710 (1977); see also, Parker

v. Commonwealth of Kentucky, 818 F.2d 504, 508-09 (6th Cir.

1987) (Younger abstention inappropriate where Kentucky did

not assure "a definite opportunity for the federal plaintiff to

raise his constitutional claims on direct state judicial review of

the state administrative proceedings").

Ill. The District Court Properly Declined To Abstain

From Hearing The Clubs' Claims Under The

Pullman Doctrine

Beyond the Court of Appeals' inappropriate sua sponte

application of Younger abstention, it is clear that the district

court properly declined to abstain pursuant to Railroad

Commission of Texas v. Pullman Co, 312 U.S. 497 (1941).

More specifically, Pullman abstention may be appropriate only

where "constitutional adjudication plainly can be avoided if a

definitive ruling on the state issue would terminate the

controversy." 312 U.S. at 498 (emphasis added).

Thus, for purposes of this action, Pullman abstention

would require "an unclear state law ... and the likelihood that a

decision on the state constitutional issue would obviate our

deciding the federal question." Tyler v. Collins, 709 F.2d 1106,

1108 (6th Cir. 1983).

In this case, the relevant state statute is clear -- the

Kentucky Revenue Code disallows tax deductions for

individuals or organizations that have been found to

discriminate on the basis of race or other protected

classifications,'* but it does not state that the KCHR is

authorized to investigate any particular organization or

individual beyond the scope of KCHR's enabling legislation in

the Kentucky Civil Rights Act.'* Instead, the Revenue Code

makes clear that the Kentucky Revenue Cabinet is the only

agency empowered to investigate and prosecute possible

violations of the tax code. See KRS 131 -030(1), -130(1), App.

L at 47a, and N at 54a!®.

Kentucky case law is equally plain that the KCHR's

regulatory jurisdiction cannot be expanded by implication. See,

e.g., Department for Natural Resources v. Stearns Coal &

Lumber Co., 563 S.W.2d 471, 473 (Ky. 1978) ("administrative

agencies are creatures of statute and must find within the statute

warrant for the exercise of any authority which they claim");

Johnson v. Correll, 332 S.W.2d 843, 845 (Ky. 1960) ("powers

not conferred are just as plainly prohibited as those which are

expressly forbidden").

Nor does this case satisfy the second criterion for Pullman

abstention because the only definitive ruling on the state issue

that would "terminate the controversy" would be a ruling in

favor of the Clubs. Any other ruling that either expanded

KRS 141.010(11)(d), App. S at 76a.

KRS 344.120, App. T at 77a.

Other statutory provisions make clear that the Revenue Cabinet's powers

are exclusive with respect to enforcement of the Kentucky Revenue Code.

For example, the Revenue Cabinet has the power to settle disputes, KRS

135.030(3) (App. P at 61a), and initiate proceedings to determine amounts

payable as taxes, KRS 135.050(2) (App. Q at 62a). Other statutes provide

for confidentiality of tax administration proceedings, KRS 131.190 (App.

O at 57-59a) and prohibit making tax investigations for non-tax purposes.

KRS 131.081(10), App. M at 53a.

KCHR's jurisdiction to embrace tax matters, or permitted the

KCHR to investigate the details of the Clubs’ relationships with

their members in the course of providing an advisory opinion

to the Revenue Cabinet, would produce the same constitutional

challenges as the Clubs have made in this case. The only

differences would be the passage of time and endurance of

more rounds of iegal proceedings and related expense. Thus,

"Pullman abstention proved protracted and expensive in

practice, for it entailed a full round of litigation in the state-

court system before any resumption of proceedings in federal

court." Arizonans for Official English v. Arizona, 520 U.S. 43,

137 L.Ed.2d 170, 199 (1997).

IV. The District Court Erred In Ruling That The Tax

Injunction Act, 28 U.S.C. §1341, Precluded The

Clubs' Constitutional Challenge To Respondents'

Attempt To Violate The First And Fourteenth

Amendment Rights Of Club Members Through A

Purported Investigation Under The Kentucky

Revenue Code

The district court properly exercised its obligation to

interpret Kentucky law and determine that Respondents lacked

statutory authority to launch KCHR's current administrative

complaints against the Clubs. See Meredith v. Winter Haven,

320 U.S. 228, 234 (1943) ("it has from the first been deemed to

be the duty of the federal courts, if their jurisdiction is properly

invoked, to decide questions of state law whenever necessary

to the rendition of a judgment"). In so doing, "a district judge's

determination of a state-law question usually is reviewed with

great deference." United States v. Hohri, 482 U.S. 64, 74 n.6

(1987). However, if this Court should choose to disturb District

Judge Hood's authoritative interpretation of Kentucky law, then

the Clubs respectfully suggest that the district court erred when

thd Nt aca te

it ruled, as a matter of federal law, that the Tax Injunction Act,

28 U.S.C. §1341, precluded the Clubs from challenging the

constitutionality of aKCHR investigation under the Kentucky

Revenue Code.

A. The Tax Injunction Act Is I napplicable Because

The Claims In This Case Do Not Interfere With

The Proper Assessment, Levy Or Collection Of

Taxes

By its terms, the Tax Injunction Act ("TIA"), 28 U.S.C.

§1341, provides that

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.

As this Court has observed:

The statute "has its roots in equity practice, in

principles of federalism, and in recognition of

the imperative need of a State to administer its

own fiscal operations." .... This last

consideration was the principal motivating force

behind the Actf.]

Franchise Tax Board of California v. Alcan Aluminum Ltd,

493 U.S. 331, 338 (1990): quoting Rosewell v. LaSalle Nat'l

Bank, 450 U.S. 503, 522 (1981) (citation omitted).

However, "a remedy that is uncertain or speculative is

not adequate to bar federal jurisdiction." /d. at 340. Moreover,

the mere prospect of discretionary review in state court is not

a "plain, speedy and efficient remedy" for purposes of the TIA.

Township of Hillsborough v. Cromwell, 326 U.S. 620, 628 n.10

(1946). In those circumstances, "where the federal court has

jurisdiction, it may pass on the whole case and agreeably with

the desired practice decide it on local law questions, without

reaching the constitutional issues." /d. at 629.

It is immediately obvious that the TIA cannot preclude

the Clubs' constitutional challenges in this case because the

Kentucky Revenue Code does not vest the Respondents with

any power regarding "assessment, levy or collection" of taxes

in the Commonwealth. As noted previously, that power is

reserved exclusively to the Kentucky Revenue Cabinet. KRS

131.030(1), -130(1), App. L at 47a, and N at 54a. In addition,

the Clubs’ lawsuit is not directed at the assessment, levy or

collection of taxes. Instead, the Clubs simply seek to prevent

the KCHR from investigating the private relationships between

the Clubs and their members in violation of the First

Amendment.

The TIA therefore is plainly inapplicable. See Pendleton

v. Heard, 824 F.2d 448, 451 (Sth Cir. 1987) ("a court must look

to the 'primary purpose’ of the lawsuit to decide whether the

statute prohibiting courts from restraining the collection of

taxes would apply") (holding TIA inapplicable to a lawsuit

challenging eligibility to vote on a state revenue bond issue).

Moreover, even if Respondents’ advisory investigation

were deemed somehow to involve the collection of Kentucky

taxes, it is clear that the TIA is inapplicable because the Clubs

do not have a "plain, speedy and efficient remedy" to redress

KCHR's unconstitutional invasion of Club members' rights of

privacy and free association. Initially, the Kentucky Supreme

Court already has held that the Commonwealth's pre-

deprivation remedies for improper taxes or tax procedures do

not provide due process as a matter of federal constitutional

law. Commonwealth v. Gossum, 887 S.W.2d 329, 333 (Ky.

1994). While the constitutional deficiency may be remedied

after the fact in the form of tax refunds in appropriate cases,

such relief is wholly inadequate here -- where the constitutional

violation lies in the improper invasion and prospective chilling

of First Amendment rights in the course of an administrative

investigation.

Similarly, the Kentucky Civil Rights Act does not

afford a "plain, speedy and efficient remedy" to the KCHR's

unconstitutional investigative acts. Kentucky courts must await

a final action from the KCHR, and defer to the findings on the

administrative record. E.g, Kentucky Commission on Human

Rights v. Fraser, 625 S.W.2d 852, 855-56 ( Ky. 1981). The

KCHR therefore threatens to trample Club members’

constitutional rights of privacy and free association during its

investigation. In these circumstances, the TIA does not

preclude the Clubs from vindicating First Amendment ri ghts in

federal court. Northwest Airlines, Inc. v. Tennessee State Board

of Equalization, 11 F.3d 70 (6th Cir. 1993); Barringer v.

Griffes, 964 F.2d 1278 (2d Cir. 1992); Direct Marketing Assoc.

v. Bennett, 916 F.2d 1451 (9th Cir. 1990), cert. denied, 500

U.S. 905 (1991).

B. Respondents’ Administrative Complaints And

Discovery Demands Violate The Rights Of Free

Association That Club Members Enjoy Under

The First And Fourteenth Amendments

Lacking immunity under the TIA, it is clear that

Respondents’ administrative complaints and discovery demands

impermissibly violate the Clubs’ members' rights of

associational privacy under the First and Fourteenth

Amendments. Initially

freedom to enter into and carry on certain

intimate or private relationships is a

fundamental element of liberty protected by the

Bill of Rights. Such relationships may take

various forms, including the most intimate. We

have not attempted to mark the precise

boundaries of this type of constitutional

protection. ... Of course, we have not held that

constitutional protection is restricted to

relationships among family members.

Rotary Club of Duarte, supra at 545 (citations omitted).

Of course, the fundamental right to define one's own

identity necessarily includes the right to associate with those of

one's own choosing. See Roberts, supra at 622 ("There can be

no clearer example of an intrusion into the internal structure of

the affairs of an organization than a regulation that forces the

group to accept members it does not desire.") More specifically,

this Court

has recognized the vital relationship between

freedom to associate and privacy in one's

associations ... the immunity from state scrutiny

of membership lists which the Association

claims on behalf of its members is here so

related to the right of members to pursue their

lawful private interests privately and to

| associate freely with others in so doing as to

come within the protection of the Fourteenth

Amendment.

NAACP vy. Alabama, supra at 462, 466 (1958) (preventing state

officials from obtaining membership lists during an

investigation of NAACP eligibility to transact business within

the state).

In balancing the rights of individual freedom of

association and the laudable goal of eradicating invidious

discrimination from public life, courts and legislatures have

drawn a distinction between private clubs, and organizations

which properly might be considered public places subject to

regulatory oversight:

Discrimination can find no rest in a place of

public accommodation. Whether it should be

suffered to abide in private clubs is debatable

among persons of good will. But the

Constitution trumps; those clubs have a right of

private association under the First Amendment

with which the Government may not interfere

impermissibly. Concomitantly, if those clubs

must go public, in order to remain private, then

their privacy rights ring hollow indeed: "the

flame is not worth the candle."

Louisiana Debating, supra, 42 F.3d at 1500.

In this case, the First Amendment line between

protected private association and permissible public intrusion

is acknowledged in the Kentucky Civil Rights Act, KRS

344.120, which prohibits discriminatory practices and

authorizes the KCHR to investigate and enforce the civil rights

laws in "place[s] of public accommodation[.]" That term

specifically is defined to exclude private clubs:

A private club is not a place of public

accommodation, resort, or amusement if its

policies are determined by its members and its

facilities or services are available only to its

members and their bona fide guests|.|

KRS 344.130, App. T at 77a.

In this action, there is no dispute over whether the Clubs

are "private" for purposes of Respondents’ investigative

authority. The KCHR determined that the Clubs were "private"

in 1991, and that finding has never been overturned or

reconsidered. Instead, Respondents have tried to justify the

current KCHR investigation by engaging in hyperbolic

speculation that private clubs generally are forums where

many business deals are made ... the rich, the

powerful, and the mainly white male elite of our

society meet to eat, play golf and socialize

among themselves ... the elite make contacts

where they gain a business advantage over

women and minorities historically excluded

from such clubs.

"Brief of Appellants," at 38, filed with the U.S. Court of

Appeals for the Sixth Circuit on March 24, 1998.

Respondents’ apparent obsession with white male

golfers is insufficient to justify their unprincipled invasion of

the constitutionally protected associational and privacy rights

of Club members. Indeed, the simple fact is that the KCHR has

not taken any steps to re-examine its previous finding that the

Clubs are private instead of being "places of public

accommodation" subject to regulation under the Kentucky Civil

Rights Act. Consequently, Respondents’ effort to launch a

wide-ranging investigation into the relationships between the

Clubs and their members is prohibited under the First and

Fourteenth Amendments, and not privileged by reason of the

TIA.

CONCLUSION

For the foregoing reasons, the petition for writ of

certiorari should be granted.

Respectfully submitted,

D. Patton Pelfrey

BROWN, TODD & HEYBURN PLLC

400 West Market St.

Suite 3200

: Louisville, KY 40202

(502) 589-5400

Counse/ of Record

Of Counsel:

Robert W. Dibert

BROWN, TODD & HEYBURN PLLC

400 West Market St.

Suite 3200

Louisville, KY 40202

(502) 589-5400

(Counsel for The Pendennis Club, Inc.)

Richard G. Griffith

STITES & HARBISON

2300 Lexington Financial Center

Lexington, KY 40507

(606) 226-2300

(Counsel for Idle Hour Country Club)

John O. Sheller

SMITH AND SMITH, ATTORNEYS

400 North First Trust Centre

200 South Fifth St.

Louisville, KY 40202

(502) 587-0761

(Counsel for Louisville Country Club)

;

)

APPENDIX A

[Filed: April 16, 1999]

NOT RECOMMENDED FOR PUBLICATION

Nos. 97-5758 & 97-5829

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

LOUISVILLE COUNTRY

CLUB,

a Kentucky Corporation on

behalf of itself and all its

members; et al.,

Plaintiffs-Appellees,

Cross-Appellants,

BEVERLY L. WATTS, in

her official capacity as

Director of the Kentucky

Commission on Human

Rights; et al.,

Defendants-Appellants,

Cross-Appellees.

)

ON APPEAL FROM

THE UNITED STATES

DISTRICT COURT

FOR THE EASTERN

DISTRICT OF

KENTUCKY

OPINION

Nos. 97-5758/5829

Louisville Country Club v. Watts

BEFORE: KEITH, MERRITT, and NORRIS, Circuit Judges.

PER CURIAM. In 1991, the Reverend Louis Coleman

filed a complaint with the Kentucky Commission on Human

Rights ("KCHR") alleging that plaintiffs in this cause, the

Louisville Country Club, the Idle Hour Country Club, and the

Pendennis Club, Incorporated, denied him membership because

of his race. The complaints alleged violations of Ky. Rev. Stat.

Ann. § 344.120 (Banks-Baldwin 1999) and § 141.010(1 1) &

(13)(f). Section 344.120 prohibits racial discrimination by

certain types of organizations, while § 141.010 forbids tax

deductions for organizations that discriminate. The KCHR later

determined that it lacked jurisdiction over plaintiffs because

they were private social clubs as defined by § 344.130.

At the request of a State General Assembly

Representative, the Kentucky Attorney General reviewed the

KCHR's interpretation of its jurisdiction. The Attorney General

disagreed with the KCHR's interpretation, concluding that the

KCHR's authority to investigate whether an organization had

racially discriminated for purposes of the tax statutes is not

limited by §344.130. Subsequent to the Attorney General's

opinion, then-Commissioner Mae Cleveland filed identical

"commissioner-complaints" against plaintiffs, and the KCHR

began an investigation of the matter.

In May, 1995, plaintiffs filed suit in federal district

court against the KCHR and its Commissioners pursuant to 42

U.S.C. §§ 1983 and 1988, seeking a declaration either that the

implementation of a Kentucky anti-discrimination tax law

~ gh Cores es ee

ARAM Di tea a ris

ean Steed

Nos. 97-5758/5829

Louisville Country Club v. Watts

violated plaintiffs' First Amendment rights of free association

or that the KCHR had exceeded its Statutory authority in

investigating plaintiffs. Plaintiffs also sought an injunction

preventing defendants’ investigation and claimed costs and

attorney fees pursuant to 42 U.S.C. § 1988.

Defendants moved to dismiss the action. The district

court granted the motion with regard to the KCHR itself.

finding that it is not a "person" for the purposes of 42 U.S. C.

§ 1983. The court also dismissed plaintiffs’ claims to the extent

that they required a ruling on the constitutionality of portions

of the Kentucky Revenue Code. However, the court ruled that

the Tax Injunction Act does not bar the court's consideration of

the limitation imposed by § 344.130. on KCHR's jurisdiction,

that it should not decline jurisdiction based upon the abstention

doctrine set forth in Railroad Comm'n v. Pullman C, 0., 312 US.

496 (1941), and that it should not certify the statutory

interpretation question to the Supreme Court of Kentucky.

The parties then briefed the remaining claims, and the

district court entered summary judgment for plaintiffs, ruling

that § 141.010 is not a grant of jurisdiction to the KCHR and

thus that the KCHR's jurisdiction in § 141.010 determinations

is limited to its authority under §344.130. Defendants appeal

the district court's ruling concerning the Tax Injunction Act,

abstention, and certification and the court's grant of summary

judgment for plaintiffs. Plaintiffs cross-appeal the district

court's dismissal of their claims concerning the constitutionality

of the Kentucky tax statutes.

Nos. 97-5758/5829

Louisville Country Club v. Watts

We conclude that the district court improperly

adjudicated plaintiffs’ claim in light of the abstention doctrine

created by Younger v. Harris, 401 U.S. 37 (1971), and its

progeny. Although neither party argued Younger abstention

before the district court or on appeal, Younger abstention is

properly raised sua sponte at any point in the appellate process.

Bellotti v. Baird, 428 U.S. 132,143 n. 10 (1976); Federal

Express Corp. v. Tennessee Public Serv. Comm'n, 925 F.2d

962, 966 (6th Cir. 1991).

The Younger doctrine, in its original form, maintains

that abstention is appropriate where federal jurisdiction has

been invoked for the purpose of restraining an ongoing state

criminal proceeding. Sun Refining & Marketing Co. v.

Brennan, 921 F. 2d 635, 639 (6th Cir. 1990). At the heart of

Younger abstention is the notion of comity, that is, "a proper

respect for state functions, a recognition of the fact that the

entire country is made up of a Union of separate state

governments, and a continuance of the belief that the National

Government will fare best if the States and their institutions are

left free to perform their separate functions in their separate

ways." Younger, 401 U.S. at 44.

In Middlesex Country Ethics Comm. v. Garden State

Bar Ass'n, 457 U.S. 423 (1982), the Supreme Court articulated

the following three-pronged test for determining when Younger

abstention is appropriate in noncriminal proceedings: (1) Are

there ongoing state judicial proceedings?; (2) Do the

proceedings implicate important state interests?; and (3) Is

there an adequate opportunity in the state proceedings to raise

+ Vee ena Tinta aka ®

Nos. 97-5758/5829

Louisville Country Club v. Watts

constitutional challenges? Id. at 43 2. Each of these

requirements is met in the instant action.

The proper time from which to judge the applicability

of Younger abstention is the date at which the federal complaint

was filed. Carras v. Williams, 807 F.2d 1286, 1290 n. 7 (6th

Cir. 1986). In the present case, plaintiffs filed suit in hopes of

enjoining defendants, an administrative agency and _ its

commissioners, from conducting an official inquiry into alleged

civil rights wrongdoing. An administrative agency proceeding

such as that brought by the KCHR will be characterized as

either judicial or legislative for purposes of the Younger

analysis depending upon the nature of the final act that the

proceeding is designed to produce. New Orleans Public Serv.,

Inc. v. Council of City of New Orleans, 491 U.S. 350, 370

(1989). A proceeding is judicial where it "investigates, declares

and enforces liabilities as they stand on present and past facts

and under laws supposed already to exist." Id (quoting Prentis

v. Atlantic Coastline Co., 211 U. S. 210, 226(1908)). Here,

KCHR's investigation of plaintiffs is clearly part of a judicial

proceeding that will, if fruitful, result in full prosecution of

plaintiffs under existing Kentucky civil rights law.

Furthermore, the proceedings against plaintiffs

implicate important state interests. Cf Ohio Civil Rights

Comm'n v. Dayton Christian Schools, Inc., 477 U.S. 619, 628

(1986) (finding that "the elimination of prohibited sex

discrimination is a sufficiently important state interest" to bring

the case within the ambit of the Younger precedent).

Nos. 97-5758/5829

Louisville Country Club v. Watts

Finally, plaintiffs have adequate opportunity to

challenge the constitutionality of the KCHR proceeding, if not

during the administrative proceeding itself, then in a

subsequent or even concurrent appeal to the Kentucky courts.

See Ky. Rev. Stat. Ann. § 344.240(1) (Banks-Baldwin 1999)

(providing state judicial review of any final order given by the

KCHR); see also Watts v. Burkhart, 854 F.2d 839, 848 (6th

Cir. 1988) (holding that where state administrative proceedings

would not afford the opportunity to raise constitutional claims,

it is sufficient to satisfy the third prong of Middlesex that

constitutional claims may be raised upon state court review of

the administrative proceeding).

Accordingly, we conclude that, under the circumstances

of this case, the district court should have abstained, under the

doctrine announced in Younger, from asserting jurisdiction

over the cause. We therefore vacate the decisions of the district

court.

ale 4 en 4

Oe eee ee ae

APPENDIX B

[Filed: May 13, 1997]

UNITED STATES DISTRICT COURT

EASTERN DISTRIC OF KENTUCKY

FRANKFORT

CIVIL ACTION NO. 95-48

LOUISVILLE COUNTRY CLUB, ET AL., PLAINTIFFS.

V. JUDGMENT

KENTUCKY COMMISSION ON

HUMAN RIGHTS, ET AL., DEFENDANTS.

**e * *£ ke &

In conformity with the Memorandum Opinion and

Order of even date,

IT IS ORDERED that this matter be, and the same

hereby is, DISMISSED WITH PREJUDICE and

STRICKEN FROM THE COURT'S ACTIVE DOCKET.

The plaintiffs are awarded costs pursuant to Fed. R. Civ. P.

54(d). This is a final and appealable Order, and there is no just

cause for delay.

This the 13th day of May, 1997.

/s/

JOSEPH M. HOOD, JUDGE

Date of Entry and Service: /s/ 5-13-97

;

APPENDIX C

[Filed: May 13, 1997]

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF KENTUCKY

FRANKFORT

CIVIL ACTION NO. 95-48

LOUISVILLE COUNTRY

CLUB, ET AL., PLAINTIFFS,

V. MEMORANDUM OPINION AND ORDER

KENTUCKY COMMISSION ON

HUMAN RIGHTS, ET AL., DEFENDANTS.

* eke kK kK &

The plaintiffs have moved for summary judgment in the

above-styled action [Record No. 35]. Being fully briefed, these

matters are ripe for decision. Having reviewed the record and

the memoranda submitted by the parties, the Court makes the

following findings of fact and conclusions of law.

FINDINGS OF FACT

The plaintiffs [Clubs] filed the instant action seeking

declaratory and injunctive relief under 42 U.S.C. § 1983 and §

1988, for alleged violation of their federal constitutional rights

under the First and Fourteenth Amendment of the United States

Constitution. The Clubs complain that the defendants

|Commission] "have engaged, and seek to continue to engage,

in an improper investigation of the Clubs’ membership

admission practices. The Clubs allege that such an investigation

is neither constitutionally permissible nor statutorily

authorized." Plaintiffs’ Memorandum for Summary Judgment

at p.1.

The Commission's investigation began when a former

member of the Commission, Ms. Cleveland, filed complaints

of discrimination against the Clubs. The complaints alleged that

the Clubs were engaging in discriminatory practices. Thus, the

Commission sought to investigate the Clubs pursuant to KRS

344.120 and KRS 141.010(11)(d) and (13)(f).

Commencing the investigation, the Commission, then,

tendered a request for information from the Clubs and a public

hearing was set. In response, the Clubs filed a motion to

dismiss, arguing that the Commission lacked

jurisdiction/authority to investigate the Clubs.

At the hearing, interestingly, the Commission's own

attorney agreed with the Clubs’ position, recommending that

the Commission dismiss the complaints for lack of jurisdiction.

See Plaintiffs’ Complaint, Exhibit G at pp. 23-27 and Exhibit

H at p. |. The Commission, however, declined to adopt their

attorney's recommendation and instead held that the

Commission had authority to investigate the Clubs based on

KRS 141.010(11)(d) and (13)(f). See Plaintiffs’ Complaint,

Exhibit H at pp. 4 & 6-8. In response, the Clubs initiated this

action, seeking to stop the Commission from infringing on their

members’ right to free association.

10a

The Clubs now move for summary judgment, arguing

that the Commission may not investigate their membership

roles without first determining that the Clubs are “public

accommodations", and not "private". The Clubs submit that

such determination must be made because, under KRS 344.1 30,

private clubs are exempt from investigation under Kentucky's

Civil Rights Act.

The Commission responds, arguing that they have the

power to investigate the Clubs under KRS 14] .010(11)(d) and

(13)(f) without first determining whether the clubs are

"private"; the Commission contends that the "private" status

exemption does not apply to an investigation under KRS

141.010(11)(d)and (13)(f).'! The Commission reasons that it

"has limited statutory authority under the Revenue statutes

[KRS 141.010(11)(d) and (1 3)(f)] to investigate a ‘private club’

in order to determine whether it is engaged in discriminatory

membership practices, so that its members may not have their

membership dues and other expenses subsidized by the

Kentucky tax code." Defendants’ Response at pp. 4-5.

CONCLUSIONS OF LAW

KRS 141.010(11)(d) prohibits the deduction from "net

income” by taxpayers of any amount:

paid to any club, organization, or establishment

which has been determined by the courts or an

agency established by the General Assembly

and charged with enforcing the civil rights laws

' Since the Commission acknowledges that "private" clubs are exempt from

investigation under the Civil Rights Act, Chapter 344, the sole issue to be

determined is whether the Commission can investigate "private" clubs under

KRS 141.010. See Defendants’ Response at pp. 5-6.

lla

of the Commonwealth, not to afford full and

equal membership and full and equal enjoyment

of its goods, services, facilities, privileges,

advantages or accommodations to any person

because of race, color, religion, national origin,

orsex....

Similarly, KRS 141.010(13)(f) prohibits the same deductions

by corporations. Thus, if a club has been determined to engage

in the discriminatory practices listed in these tax statutes, the

members of that club may not take deductions for their club

dues.’

Based on KRS 141.010(11)(d) and (13)(f), the

Commission argues that it has authority to investigate and

determine whether the Clubs are engaging in any such

discriminatory practices, and thus identify any taxpayers who

should not get tax breaks due to their membership in such

clubs. In support, the Commission highlights the language in

* Notably, the Internal Revenue Code does not allow deductions for any

“amounts paid or incurred for membership in any club organized for

business, pleasure, recreation, or other social purpose." 26 U.S.C. § 274.

Thus, any investigation premised on the ability for a club member to take

a deduction for his or her club dues appears to be moot.

KRS 141.010(11) states that "net income" means adjusted gross

income minus "the standard deduction allowed by KRS 141.081, or, at the

option of the taxpayer, minus the deduction allowed by KRS 141.0202 and

minus all the deductions allowed individuals by Chapter 1 of the

Internal Revenue Code as modified by KRS 141.0101 except those

listed below ... ", and KRS 141.010(13) states that "net income" means

gross income minus “the deduction allowed by KRS 141.0202 and minus

all the deductions from gross income allowed by corporations by

Chapter | of the Internal Revenue Code and as modified by KRS

141.0101, except the following... ."" 26 U.S.C. § 274 falls under Chapter

| of the Internal Revenue Code; thus, a deduction for club dues does not

appear allowable under Kentucky's tax code.

12a

KRS 141.010(11)(d) and (13)(f) which refers to the

Commission's determination that a club is not affording full

and equal membership or enjoyment of goods, services,

facilities, privileges, advantages, or accommodations.

As noted, the Clubs argue that KRS 141.010(11)(d) and

(13)(f) do not give the Commission independent authority to

determine whether private clubs afford full and fair

membership and full and equal enjoyment of goods, services,

facilities, privileges, advantages, or accommodations; instead,

the Clubs submit that the Commission's authority stems only

from the Kentucky Civil Right's Act, Chapter 344, which

established the Commission. The Court agrees.

The Court holds that the Commission does not have

independent authority to investigate the Clubs pursuant to KRS

141.010 (11)(d) and (13)(f). The Civil Rights Act, Chapter

344, solely grants the Commission authority, to act.’ The

Commission "is a statutorily created body with specifically

designated powers and duties." Martin v. Commonwealth

* See KRS 344.150 (establishing the Commission); KRS 344.180 (listing

the Commission's powers and duties) KRS 344. 190(8) (listing additional

powers and duties); KRS 344.230(2) (stating the Commission's power to

order); 344.250(1) (stating the power to investigate and examine records).

These statutes consistently refer to the Commissions’ power to act

under this chapter. For example, KRS 344. 190(8)(emphasis added) states

that the Commission has the power and duty to "receive, initiate,

investigate, seek to conciliate, hold hearings on, and pass, upon complaints

alleging violations of this chapter." Likewise, KRS 344.230(2)(emphasis

added) states that if unlawful discrimination is found, the Commission

"shall issue a final order requiring the respondent to cease and desist from

the unlawful practice and to take affirmative action as in the judgment of

the commission will carry out the purposes of this chapter." Lastly, KRS

344.250(1) (emphasis added) allows the Commission to "request access to

premises, records, and documents relevant to the complaint" pursuant to "an

investigation of a complaint filed under this chapter."

l3a

Personnel Bd., 711 S.W.2d 866, 867 (Ky. Ct. App. 1986); see

ini omm'n on Human Rights,

678 S.W.2d 393, 394 (Ky. 1984).

Under Chapter 344, the Commission must determine

whether the Clubs are "private" in nature‘; KRS 344.120 only

prohibits discrimination in places of "public accommodation".

Since private clubs, then, cannot unlawfully discriminate, they

are exempt from investigation by the Commission.°

As the Commission only receives its power to act from

the Civil Rights Act, the Commission has no authority to act

under KRS 141.010°; the tax statute does not authorize the

Commission to act. Instead, the Revenue Cabinet is the

administrative agency which is authorized to enforce the tax

code.

Although KRS_ 141.010(11)(d) and (13)(f) make

reference to the Commission's authority to determine that a

club is engaging in discriminatory practices, the Revenue Code

does not grant the Commission ihe authority to act under the

Code; in fact, the language used by the tax statute emphasizes

the Commission's limited authority to act. The language clearly

* KRS 344.130 provides that "{a] private club is not a place of public

accommodation, resort, or amusement if its policies are determined by its

members and its facilities and services are available only to its members and

their bona fide guests.”

‘ Kentucky's Civil Rights Act, Chapter 344, implicitly recognizes a private

persons right to free association under the First Amendment.

* If the Commission tried to act under KRS 141.010 (11)(d) and (13\(f), the

Commission could be said to be usurping the power it has been granted

under Chapter 344. See Martin, 711 S.W.2d at 868 (stating that if the

Commission tried to delegate power it had not been authorized to delegate,

“such a delegation would be invalid as a regulatory attempt to alter or

enlarge the terms of Chapter 344") (emphasis added).

l4a

states that the determination of discrimination is made by the

“agency established by the General Assembly and charged with

enforcing the civil rights laws of the Commonwealth."’” KRS

141.010(11)(d) & (13)(f) (emphasis added). Thus, the

Commission's ability to determine whether the club is engaging

in discriminatory practices still stems only from its power under

the Civil Rights Act, Chapter 344.

In sum, until the tax code grants the Commission

power-to act under its provision, the Commission's only power

comes from Chapter 344. Because the Commission's power

stems from the Civil Rights Act, the Commission may only

investigate a club once the club is determined to be a place of

"public accommodation". Since the Commission has not made

such a determination, the Clubs are entitled to injunctive relief,

and summary judgment must be granted. Accordingly,

IT IS ORDERED HEREIN,

(1) The plaintiffs, motion for summary judgment

[Record No. 35] be, and the same hereby is, GRANTED;

” KRS 141.010 (11)(d) and (13)(f) allow the Revenue Cabinet to disallow

any deductions for a club membership when the club has been determined

to engage in discriminatory practices by either (1) a court or (2) an agency

established and charged with enforcing the civil rights laws of Kentucky,

i.e. Chapter 344. The Court finds the designation of the above two bodies

enlightening. The legislature named both the Court and the Commission as

the bodies which are capable of determining whether a club is engaging in

discriminatory conduct because the legislature was aware that the

Commission could not determine whether a private club was engaging in

discriminatory practices due to the "public accommodation" limitation in

KRS 344.120. Thus, the only body which could determine whether a

"private" club was engaging in discriminatory practice would be a court.

Consequently, this language reinforces the Court's determination that KRS

141.010(11)(d) and (13)(f) do not grant the Commission the power to

determine whether a "private" club is engaging in discriminatory practices.

lSa

(2) The plaintiffs’ motion for a pretrial conference

and oral arguments on the summary judgment motion [Record

No. 43] be, and the same hereby is, DENIED AS MOOT.

(3) The plaintiffs be, and the same hereby are,

AWARDED costs and attorney's fees pursuant to 42 U.S.C. §

1988.

(4) The plaintiffs shall SUBMIT a statement of

costs and attorney's fees no later than Friday, May 23, 1997.

(5) The defendants shall have until Friday, June 6,

1997, to submit any objections to the statement of costs and

attorney's fees.

(6) This matter be, and the same hereby is,

DISMISSED WITH PREJUDICE and STRICKEN from the

Court's Active Docket.

(7) A final Judgment shall be entered

contemporaneously herewith.

This the 13th day of May, 1997.

/s/

JOSEPH M. HOOD, JUDGE

Date of Entry and Service: /s/ 5-13-97

l6a

APPENDIX D

[Filed: February 6, 1996}

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF KENTUCKY

FRANKFORT

CIVIL ACTION NO. 95-48

LOUISVILLE COUNTRY

CLUB, ET AL., PLAINTIFFS,

¥. MEMORANDUM OPINION AND ORDER

KENTUCKY COMMISSION ON

HUMAN RIGHTS, ET AL.., DEFENDANTS.

**e *& & & &

The defendants, by and through counsel, having moved

to dismiss the above-styled action [Record No. 9], or in the

alternative to certify a particular question of Kentucky law to

the Kentucky Supreme Court [Record No. 17], and being fully

briefed, these matters are ripe for decision. As the facts

applicable to the instant motion are not in dispute, the Court

adopts the factual background set forth by the parties in their

respective briefs.

17a

DISCUSSION

The plaintiffs [Clubs] filed the instant action under 42

U.S.C. § 1983 and § 1988, seeking a declaratory judgment on

the constitutionality of KRS 141.010(11)(d), (13)(f), and

various provisions of KRS 344, as interpreted and applied by

the defendants. The Clubs also seek corresponding injunctive

relief, costs and attorneys fees. The Clubs have named the

defendants in their official capacities only.

As grounds for the instant motion, the defendants

contend: (1) that the defendant Kentucky Commission on

Human Rights [Commission] must be dismissed as it enjoys

absolute Eleventh Amendment immunity, (2) that the court

lacks jurisdiction over the defendant Mae Smith Cleveland

[Cleveland], (3) that 28 U.S.C. § 1341 prohibits this Court

from entering a declaratory judgment or granting injunctive

relief regarding KRS 14 1.010(11)(d), 13(f), (4) that the Clubs

do not have organizational standing to bring the instant action,

and that (5) this Court should abstain from considering this

matter pursuant to Railroad Commission v. Pullman Co., 312

U.S. 469 (1941).

I. Will v. Michigan Department of State Police

It is undisputed that the Commission is a state

subdivision. In Will v. Michigan Department of State Police,

the United States Supreme Court held that states and state

subdivisions are not persons under 42 U.S.C. § 1983. The

Court subsequently held that the Will decision did not "import

the entirety of our Eleventh Amendment jurisprudence into the

area of statutory construction", but simply "treated the Eleventh

Amendment as a relevant consideration" and that therefore, a

"“wavier of immunity" by the state "does not result in the

conferral of amenability to suit under § 1983." Hilton v. South

18a

Carolina Pub. Ry. Comm'n, 112 S.Ct. 560, 565 (1991), and

Howlett ex rel. Howlette v. Rose, 496 U.S. 356, 376 (1990).

Thus, regardless of any argument concerning waiver of

sovereign immunity, the Commission is not subject to suit

under 42 U.S.C. § 1983 as it is nota "person" for the purposes,

of the statute. Accordingly, the Commission must be dismissed

from this action.

Il. PROPER PARTY IN INTEREST

A proper party defendant to a suit is one which may

afford the relief requested. The Clubs request declaratory and

injunctive relief in this action. It is undisputed that Cleveland

is no longer a member of the Commission. The Clubs cannot

dispute that Cleveland does not have the authority to grant

injunctive relief, if ever ordered to do so. Only this Court may

award declaratory relief and only the members of the

commission can fulfill any injunctive relief awarded.

Moreover, in the event the Court awards costs and

attorneys fees in this action, such award will necessarily be paid

by the state, and could not be collected from Cleveland

individually as she has been sued in her former official

capacity. Thus, Cleveland is not a proper party in interest to this

action and must be dismissed.

Ill. THE TAX INJUNCTION ACT - 28 U.S.C.

§ 1341

The Tax Injunction Act [TIA] prohibits this Court from

enjoining, suspending, or restraining 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. Consequently, the statute prohibits this Court

from issuing a declaratory judgment holding state tax laws

19a

unconstitutional. California v. Grace Brethren Church, 457

U.S. 393 (1982). The TIA is liberally construed and prohibits

injunctive relief which directly, or indirectly, affects a state's

power to assess, levy or collect taxes. See, Kerr v. Enoch Pratt

Free Library of Baltimore City, 149 F.2d 212 (D.C. Cir.), cert

denied, 326 U.S. 721 (1944).

The Clubs contend that KRS 141.010(11)(d), 13(f) is

unconstitutional as interpreted by the commission, and as

enforced by the Commission's members. The Commission does

not argue that its interpretation of the statute is different from

that asserted as unconstitutional, but contends that any

injunctive relief afforded by this Court would indirectly affect

Kentucky's ability to assess and levy taxes under KRS

141.010(11)(d), 13(f).

KRS 141.010(11)(d) prohibits the deduction from "net

income" by taxpayers other than corporations of any amount:

paid to any club, organization, or establishment

which has been determined by the courts or an

agency established by the General Assembly

and charged with enforcing the civil rights laws

of the Commonwealth, not to afford full and

equal membership and full and equal enjoyment

of its goods, services, facilities, privileges,

advantages or accommodations to any person

because of race, color, religion, national origin,

OF SCX....

Similarly, KRS 141.010(13)(f) prohibits the same

deductions by corporations. The Clubs argue that the

Commission does not have the authority to determine whether

private clubs afford full and fair membership and full and equal

enjoyment of goods, services, facilities, privileges, advantages,

20a

or accommodations. The defendants argue that Count III must

be dismissed as it explicitly requests a declaratory judgment

addressing the constitutionality of Kentucky's tax statutes. They

also aver that any ruling on the constitutionality of the

Kentucky Civil Rights Act [Civil Rights Act] will indirectly

affect the enforcement of KRS 141.010(11)(d), (13)(f). The

Commission argues that in order for this Court to entertain the

instant complaint, it will be necessary to consider whether the

Commission has the authority under the tax statutes to

determine what entities afford full and fair membership and full

and equal enjoyment of goods, services, facilities, privileges,

advantages, or accommodations.

To the extent Count III of the Clubs’ complaint requests

a declaratory judgment addressing the constitutionality of

Kentucky's tax statutes, the TIA requires dismissal. The

argument that any decision as to the Civil Rights Act will affect

the tax statutes, however, is not compelling.

The Clubs seek a declaratory judgment as to the

constitutionality of various provisions of the Civil Rights Act,

as applied by the Commission. In addressing this issue, the

Court will not need to analyze Kentucky's tax statutes on their

face, or in any other manner. The Civil Rights Act provides an

adequate basis upon which to determine whether the

commission acted in violation of the Clubs’ constitutional

rights. While it is true that a ruling in favor of the Clubs on

Count II of the complaint may require that the defendants

interpret the tax statutes differently than it has in the past, such

a ruling could not conceivably inhibit Kentucky's ability to

assess, levy or collect taxes, as envisioned by the TIA.'

* The defendants cannot seriously argue that Kentucky's tax statutes are

placed in issue by Count | of the Clubs’ complaint. The primary issues

raised in the complaint are: (1) whether the Commission's actions in

2la

Accordingly, Blangeres v. Burlington Northern, 872 F.2d 327

(9th Cir. 1989) is distinguishable from the instant action.”

Thus, the portion of Count III] which requests a

declaratory judgment as to the constitutionality of KRS

141.010(11)(d), (13)(f) must be dismissed. Moreover, this

court cannot enjoin the Commission from prosecuting a

complaint under the Kentucky Revenue Code. Yet, for the

reasons given above, any determination regarding the Civil

Rights Act may only affect the statutory construction of the tax

statutes and will not interfere with state revenue collection

procedures, and thus, the Clubs’ remaining claims will survive

the instant motion on this ground.

Ill. ORGANIZATIONAL STANDING

The parties contend that there is a split among the

circuit courts of appeals regarding the scope of organizational

standing. The test applied to determine the standing conferred

attempting to obtain certain statistics from the Clubs are in violation of the

constitution; and (2) whether the Civil Rights Act is constitutional if

interpreted as conferring authority upon the Commission to investigate

private clubs upon receipt of a discrimination complaint. The Kentucky

Revenue code is undisputedly secondary in the complaint, and the claims

regarding it may be dismissed without affecting the availability of a

decision on the constitutionality of the Civil Rights Act, as applied by the

Commission.

” The defendants’ reliance on Blangeres is misplaced. The Ninth Circuit

Court of Appeals held that the TIA prohibited an order enjoining

Burlington Northern from providing certain employee tax records to the

Idaho and Montana tax authorities. Thus, the facts in Blangeres distinguish

it from the instant action. Moreover, the court in Blangeres did not address

the narrow issue before this Court: whether the TIA prohibits statutory

construction of a statue, which construction may affect the interpretation of

a State's tax statute.

22a

upon Organizations by virtue of its members, however, is the

same as applied by all courts.

The United States Supreme Court recognized the

growing need for the development of Organizational standing

in Hunt v. Washington State Apple Advertising Comm'n, 432

U.S. 333, 343 (1986), holding:

[A]n association has Standing to bring suit on

behalf of its members when: (a) its members

would otherwise have Standing to sue in their

own right; (b) the interests its seeks to protect

are germane to the organization Purpose; and

(Cc) neither the claim nor the asserted relief

requested requires the Participation of

individual members in the lawsuit.

Subsequently, the Supreme Court granted third party

"organizational" Standing to an association of private clubs in

New York State Club Ass'n v. City of New York, 487 U.S. }

(1988).

The defendants do not dispute that the Clubs’ individual

members would have standing to bring suit on the issues raised

herein. Moreover, the interest asserted, privacy of association,

is certainly germane to a private club's organizational purpose.

The defendants urge this Court to find either that the presence

of the individual members will be necessary for effective

discovery in this action, or, that a "conflict of interest " among

the members is enough to strip the Clubs of Organizational

Standing.

The Fourth Circuit held that a split between an

organization's members creates a "conflict of interest" which

requires members to participate individually to protect their

23a

own interests. See, Maryland Highways Contractors Ass'n v,

Maryland, 933 F.2d 1401 (4" Cir.) , cert denied, 112 S.Ct. 373

(1991). In Associated General Contractors of California Inc. v.

Coalition for Economic Equity, 950 F.2d 1401 (9th Cir. 1991),

cert denied, 112 S.Ct. 1670 (1992), the Ninth Circuit Court of

Appeals declined to adopt the Fourth Circuit's reasoning,

holding that a conflict of interests between members does not

deny standing as unanimous opinions within a membership will

be "few and far between" with regard to most issues

controversial enough to engender litigation.

This Court finds the reasoning employed by the Ninth

Circuit most persuasive. The Court in Hunt did not consider

whether a conflict of interest between members affected an

organization's ability to bring suit on its own behalf, as well as

in the interest of its members. Clearly, this issue was not

addressed because the second prong of the test enunciated in

Hunt sufficiently considers the potential problem identified by

the defendants. Thus, the only question remaining is whether

the claims asserted or relief requested by the Clubs require

proof from the individual members.

The defendants argue that proof from the individual

members is necessary so that discovery can be re on the

degree of exclusiveness in membership policies, i.e. so the

Court may determine whether the Clubs are truly ' aaee? The

defendants concede, however, that such a determination, may

be made upon consideration of objective factors such as the

number of individual members and the use of club facilities for

business purposes. Moreover, KRS 344.130 provides that "[a]

private club is not a place of public accommodation, resort, or

amusement if its policies are determined by its members and its

facilities and services are available only to its members and

their bona fide guests."

24a

il)

wee et ry

Thus, to the extent that the Clubs’ organizational

characteristics are an issue, the facts needed to make such a

determination are clearly defined and can be discovered from

the Clubs' representatives. Accordingly, the presence of the

individual members is not required here, and each prong of the

test set forth by the Court in Hunt has been met. The Clubs

have organizational standing to bring the claims asserted.

IV. PULLMAN ABSTENTION

Under the doctrine established in Railroad Comm'n v.

Pullman Co., 312 U.S. 496 (1941), federal courts "should

abstain when construction of an unclear state statute would

obviate the necessity for a decision on the federal constitutional

question." Heitmanis v. Austin, 899 F.2d 521, 525 (6th Cir.

1990). Thus, where the state statute at issue is unambiguous or

where construction does not render the constitutional questions

moot, abstention is not appropriate.

The defendants argue that KRS 141.010(11 Wd), (13\(f)

and the relevant provisions of the Civil Rights Act, read

together, are ambiguous and thus, the first prong of the Pullman

doctrine is satisfied. The defendants further argue that a

determination of the scope of the Commission's authority will

obviate the need to address the Clubs’ constitutional claims.

This Court noted above that the claims asserted

regarding Kentucky's tax statutes are peripheral to the pivotal

question before the Court, but nonetheless are barred by the

TIA and will not be considered. Thus, any ambiguity perceived

by a reading of the tax and civil rights statutes together is

irrelevant, as Kentucky's tax statute will not be analyzed by this

Court. Moreover, the Court does not see the patent "ambi guity"

in the language of KRS 344.

25a

Furthermore, Count | of the Clubs’ complaint alleges

that the Commission's investigation of the Clubs as evidenced

by requests for particular documents violates the Clubs’

constitutional rights under the First and Fourteenth

Amendments. A determination of whether the Commission has

authority to investigate private clubs will not necessarily

obviate the consideration of whether the actions taken by the

defendants thus far are unconstitutional. Thus, as abstention is

the "exception not the rule", and as the present controversy is

properly before this Court, the Court declines to exercise its

discretion | in abstaining to comntet the claims presented herein.

States, 424 U.S

800, 813 (1976). Moreover, for he reasons set forth shove.

certification of the question presented by the defendants is not

necessary as this Court is capable of determining whether the

defendants’ investigative measures, as well, as_ their

interpretation of the Civil Rights Act, are constitutional.

Accordingly,

IT IS ORDERED HEREIN,

(1) That the defendants’ motion to dismiss | Record

No. 9] be, and the same hereby is, GRANTED IN PART and

DENIED IN PART;

(2) That the defendant Kentucky Commission on

Human Rights be, and the same hereby is, DISMISSED,

G) — That the defendant Mae Smith Cleveland be,

and the same hereby is, DISMISSED, |

(4) ‘That Count III of the plaintiffs’ complaint, to the

extent it questions the constitutionality of the Kentucky

26a

Revenue Code, be, and the same hereby is DISMISSED as

required by the Tax Injunction Act:

(5) That the defendants’ motion to certify the

question regarding the Kentucky Revenue Code to the

Kentucky Supreme Court [Record No. 17] be, and the same

hereby is, DENIED.

This the 6th day of February, 1996,

/s/

JOSEPH M. HOOD, JUDGE

Date of Entry and Service: 2-7-96

27a

APPENDIX E

|Filed: March 15, 1995]

COMMONWEALTH OF KENTUCKY

KENTUCKY COMMISSION ON HUMAN RIGHTS

Complaint Nos. 256-PA, 257-PA, & 258-PA

In the Matter of:

COMMISSIONER MAE CLEVELAND COMPLAINANT

LOUISVILLE COUNTRY CLUB;

THE PENDENNIS CLUB, AND

IDLE HOUR COUNTRY CLUB RESPONDENTS

CONCLUSIONS OF LAW

AND ORDER

ee ££ EK EEK EK EEE

This matter is before the Kentucky Commission on

Human Rights on Respondents’ Motion to Dismiss three

complaints filed by Commissioner Mae Cleveland, an African

American woman, charging unlawful discriminatory

membership practices. In their motion to dismiss, the

Respondent country clubs assert that "1) the Commission lacks

subject matter jurisdiction over this matter, and 2) the

Commission lacks personal jurisdiction over the Respondents."

(Respondents' motion to dismiss, June 22, 1994). Commission

28a

staff has filed a responsive memoranda in which it agreed that

the complaints against Respondents should be dismissed for

lack of jurisdiction, but without prejudice. In addition to the

extensive memoranda filed on this issue, the Commision has

considered the oral arguments presented by counsel on

December 9, 1994. Having before it, at this time, the limited

issue of jurisdiction, and the Commission being otherwise

sufficiently advised, The Kentucky Commission on Human

Rights finds the following conclusions of law.

CONCLUSIONS OF LAW

The question raised by Respondent's Motion to dismiss

is whether this Commission may maintain subject matter

jurisdiction over the Respondents in order to determine whether

they discriminated against the complainant in membership

selection.

KRS §344.230 provides that "if the commission

determines that the respondent has not engaged in an unlawful

practice, the commission shall state its findings of fact and

conclusions of law and shall issue an order dismissing the

complaint." In essence, Respondents argue that the

Commission must dismiss the complaints herein because, even

if this commission finds that its membership practices are

discriminatory, such discrimination does not constitute

"unlawful" discrimination under present Kentucky law, as

"private clubs" are specifically exempt from the Civil Rights

Act's coverage. KRS §344.130. The Kentucky Civil Rights

Act clearly provides that

[I]t is an unlawful practice for a person to deny

an individual the full and equal enjoyment of

the goods, services, facilities, privileges,

advantages, and accommodations of a place of

29a

public accommodation . .. on the ground of...

race....

KRS § 344.120.

However, KRS §344.130 specifically provides that "[a]

private club is not a place of public accommodation . .. . if its

policies are determined by its members and its facilities or

services are available only to its members and their bona fide

guests.... Id. "By its statuatory definition, a private club is

discriminatory, as its membership is selective. Although this

Commission strongly believes that allowing private clubs to

exclude classes of persons on the basis of race is detrimental to

our purpose of safeguarding "all individuals within the state

from discrimination because of . . . race," KRS §344.020(1)(b),

such discrimination is Clearly not "unlawful" under KRS

§344.130 as private clubs are specifically exempt from the

Civil Rights Act.

This Commission fully recognizes that discriminatory

membership policies "literally relegate women and minorities

to side doors and back rooms, perpetuating their treatment as

second class citizens that bears no relation to their actual

abilities." Parker, Membership Has Its Privileges, 8 Cal. Law

(June 1988). Membership in private clubs can be an important

source of business opportunity. In many small communities,

private clubs may hold a monopoly in a particular type of

recreational facility from which otherwise protected classes of

persons are excluded.

However, in the absence of legislative authority, this

commission may not take affirmative action under KRS

§344.230 to force Respondents to admit Commissioner

Cleveland to their membership or award any damages resulting

from any injury she may have suffered as a result of any

30a

discriminatory practices. We can not deem a private club's

discriminatory practices to be unlawful when the Legislature

has not made those practices unlawful. The subject-matter

jurisdiction of this Commission is "limited solely to that

granted by the Legislature." Auxier vy. Commonwealth of

Kentucky Board of | Directors, Ky.

App., 553 S.W.2d 286, 288 (1972).

Although this Commission clearly has not been granted

the statuatory authority to enforce the Kentucky Civil Rights

Laws against the Respondents, the General Assembly has

granted us authority to make a determination of discrimination

for other purposes. The Legislature has chosen to exempt

private clubs from The Civil Rights Act. However, it has also

made clear that the citizens and state of Kentucky will not

subsidize or condone any discriminatory practices by

permitting income tax deductions for amounts paid by

taxpayers to private clubs which engage in discriminatory

membership practices. Subsequent to the enactment of the

"private club" exemption found in KRS §344.020(1)(b), the

Kentucky General Assembly enacted KRS §141.010(d)

(amended 1990), which disallows

[a]ny deduction for amounts paid to any club,

organization, or establishment which has been

determined by .. . an agency established by the

General Assembly and charged with enforcin

the civil rights laws of the Commonwealth. not

to afford full and equal membership and full

and equal enjoyment of its goods, services,

facilities, privileges, advantages or

accommodations to any person because of race,

color, religion, national origin, or sex .. . .

Id. (emphasis added),

3la

In essence, the Kentucky General Assembly has

determined that certain government-regulated privileges, such

as tax benefits, may be withheld from private clubs that

discriminate. '

The question we confront is whether this Commission

has the statuatory authority to maintain a complaint alleging

discriminatory membership practices of a private club, for the

limited purpose stated in the Kentucky Revenue Code. In order

to resolve that question, we have examined the language of the

statute. On the other hand, the Civil Rights Act precludes us

from making a determination that any discriminatory practice

on the part of a private club is unlawful. KRS §344.130.

On the other hand, the Legislature has made it clear that

no tax exemption will be allowed for monies paid to private

clubs which discriminate on the basis of race, gender, and the

other protected classes enumerated in KRS Chapter 344 and

that the Kentucky Human Rights Commission shall make that

determination. KRS §141.010(d).

The General Assembly has determined that "[alll

statutes shall be liberally construed with a view to promote

their objects and carry out the intent of the legislature... ."

KRS §446.080. All provisions of statutes must be harmonized

if it can be reasonably done, and effect and enforcement given

to each clause, unless the provision of the statutes are

irreconcilably incongruous. Ross v. Board of Educ., 196 Ky.

366, 244 S.W. 793 (1922).

"A universally accepted rule of statuatory construction

is that the General Assembly is presumed to know the status of

the law and the construction placed on it by the courts." Butler

v. Groce, Ky. 880 S.W.2d 547 (1994) (citing Baker v. White,

251 Ky. 691, 65 S.W.2d 1022 (1933)). Therefore, we must

32a

presume that the General Assembly was well aware of the

private club exemption contained in the Civil Rights Act when

it enacted or amended The Kentucky Revenue Code.

In construing a statute, it must be presumed that the

Legislature intended something by what it attempted to do. Id.:

Grieb_v. National Bond and Invest Co., 264 Ky. 289, 94

S.W.2d 612 (1936). A statute will not be construed so as to

lead to an absurd conclusion. Hamilton v. International Union

of Operating Engineers, Ky. App., 262 S.W.2d 695 (1953). It

will not be presumed that the legislature intended a useless or

futile thing. Id. Moreover, where two statutes are not

repugnant to each other, although they may deal to some extent

with matters pertaining to the same subject, and each can be

enforced consistently with the provisions of each other, courts

will enforce the provisions of each. Newport Benev. Burial

Assn. v. Clay, Ky., 186 S.W. 658, 662 (1916).

When the foregoing rules of Statuatory construction are

applied in the case, we find that the General Assembly must

intend for this Commission to make a narrow determination of

whether the complainant was discriminated against on the basis

of race or gender. Otherwise, KRS §141.010, disallowing tax

deductions in such circumstances, would have no effect as no

agency would be authorized to make a factual determination of

whether there was any discrimination in the first instance. A

finding that this Commission has no authority to make the

initial determination of discrimination would render the

General Assembly's expressed intent to disallow a tax

deduction completely useless and futile. Since we must

presume that the General Assembly was well aware of its prior

enactment of the Civil Rights Act, we can not find that it

intended such a result.

33a

Finally, we conclude that this Commission has been

granted broad authority by the General Assembly of Kentucky

under the functions, powers, and duties section set forth in

Chapter 344, to make an initial determination of whether a tax

deduction for private clubs should be allowed under KRS

§141.010(11)(d) and 13(f). This Commission's purpose is to

"safeguard all individuals within the state from discrimination

because of race, gender, religion, national origin, sex, and age,

KRS § 344.020(1)(b), and this Commission was established to

discourage discrimination against any racial ethnic group or its

members. KRS § 344.150, KRS §344.170. These broad

powers and duties include conducting research projects and

publishing reports on discrimination. KRS §344.180. Based

on the foregoing, we conclude that KRS §344.130 does not

prohibit the Commission from making the initial determination

of whether a private club does discriminate in its membership

and that maintaining the complaints herein for that limited

purpose is the proper, and perhaps only vehicle to accomplish

that limited purpose.” Moreover, an agency always has

jurisdiction and determines the scope of their authority.

Initially, discovery should be pursued in regard to whether the

Respondents are indeed "private clubs" and entitled to any

exception.

34a

ORDER

For the foregoing reasons, IT IS HEREBY ORDERED

AND ADJUDGED that Respondents’ motion to dismiss is

denied and this matter will proceed for the limited purpose of

determining whether Respondents are "private clubs" and for

the purpose of determining whether they discriminate in their

membership selection practices,

Entered this 14" day of March, 1995.

Naomi L. Diaz, Vice Chair for

s/ Howard O. Mann

Chairperson

Kentucky Commission on

Human Rights

35a

ENDNOTES

l. Although we doubt that private clubs have any constitutional right

to discriminate in its membership on any arbitrary, criteria of race, gender,

or other protected classification, the Revenue Code does not purport in any

way to restrict private club's activities or impose conditions upon the free

exercise or right of speech, association, or assembly. Other local and state

ordinances which deny certain privileges to private clubs which

discriminate, such as tax, deductions or liquor licenses, have been upheld

against constitional challenges. See Sawyer, Private Golf Clubs: Freedom

of Expression and the Right to Privacy, 3 Marq. Sports L.J. 187 (1993);

Coalition for Open Doors v. Annapolis Lodge No. 622, Benevolent and

Protective Order of Elks, 333 Md. 359, 635 A.2d 412 (Ct. App. Md. 1922)

(City Ordinance Conditioning alcoholic beverage license upon

nondiscriminating membership policy by club licensee did not conflict with

state public accommodations law that excluded private clubs from its

coverage, statuatory exclusion was not affirmative authorization to

discriminate.)

2. Although no Kentucky court has confronted this issue, the

Kentucky Attorney General issued its opinion in 1991, consistent with our

opinion herein. OAG 91-197. Although not binding upon the commission,

we find the Attorney General's opinion persuasive.

36a

Certificate of Service

The undersigned hereby certifies that a copy of the attached

corrected CONCLUSIONS OF LAW AND ORDER was

served by hand delivery to Kathleen Jordan, Managing

Attorney, Kentucky Commission on Human Rights, The

Heyburn Building, 332 West Broadway Seventh Floor,

Louisville, Kentucky 40202, and served by Certified Mail,

postage prepaid on the following parties: Mr. James Smith, II]

Attorney at Law 400 North First Trust Center 200 S. Fifth

Street, Louisville, Kentucky 40202-3238: and same was served

on the Attorney General of the C ommonwealth of Kentucky, by

First Class Mail, postage prepaid, all done this 15" day of

March, 1995.

/s/ Beverly L. Watts

Beverly L. Watts

Executive Directors

Kentucky Commission on

Human Rights

The Heyburn Building

332 West Broadway

Seventh Floor

Post Office Box 69

Louisville, KY 40201-0069

37a

APPENDIX F

[Filed: June 7, 1999]

97-5758/5829

UNITED STATES COURT OF APPEALS

FOR THE SIXTH CIRCUIT

LOUISVILLE COUNTRY

CLUB, A KENTUCKY

CORPORATION, ON

BEHALF OF ITSELF AND

ALL OF ITS MEMBERS,

ET AL..,

Plaintiffs-Appellees/

Cross Appellants,

v. ORDER

BEVERLY L. WATTS, IN

HER CAPACITY AS

EXECUTIVE DIRECTOR

OF THE KENTUCKY

COMMISSION ON HUMAN

RIGHTS, ET AL.,

Defendants-Appellants/

)

Cross Appellees. )

)

38a

BEFORE: KEITH, MERRITT, and NORRIS,

Circuit Judges

The court having received a petition for rehearing en

blanc, and the petition having been circulated not only to the

original panel members but also to all other active judges of

this court, and no judge of this court having requested a vote on

the suggestion for rehearing en blanc, the petition for rehearing

has been referred to the Original panel.

The panel has further reviewed the petition for

rehearing and concludes that the issues raised in the petition

were fully considered upon the original submission and

decision of the case. Accordingly, the petition is denied.

ENTERED BY ORDER OF

THE COURT

/s/

Leonard Green, Clerk

39a

APPENDIX G

CONSTITUTION OF THE UNITED STATES

AMENDMENT I —- FREEDOM OF

RELIGION, SPEECH AND

PRESS; PEACEFUL ASSEMBLAGE;

PETITION OF GRIEVANCES

Congress shall make no law respecting an establishment

of religion, or prohibiting the free exercise thereof; or abridging

the freedom of speech, or of the press; or the right of the people

peaceably to assemble, and to petition the Government for a

redress of grievances.

40a

APPENDIX H

CONSTITUTION OF THE UNITED STATES

AMENDMENT XIV - CITIZENSHIP;

PRIVILEGES AND IMMUNITIES;

DUE PROCESS; EQUAL PROTECTION;

APPORTIONMENT OF REPRESENTATION;

DISQUALIFICATION OF OFFICERS;

PUBLIC DEBT; ENFORCEMENT

Section 1. All persons born or naturalized in the

United States, and subject to the jurisdiction thereof, are

citizens of the United States and of the State wherein they

reside. No State shall make or enforce any law which shall

abridge the privileges or immunities of citizens of the United

States; nor shall any State deprive any person of life, liberty, or

property, without due process of law; nor deny to any person

within its jurisdiction the equal protection of the laws.

Section 2, Representatives shall be apportioned

among the several States according to their respective numbers,

counting the whole number of persons in each State, excluding

Indians not taxed. But when the right to vote at any election for

the choice of electors for President and Vice President of the

United States, Representatives in Congress, the Executive and

Judicial officers of a State, or the members of the Legislature

thereof, is denied to any of the male inhabitants of such State.

being twenty-one years of age, and citizens of the United

States, or in any way abridged, except for participation in

rebellion, or other crime, the basis of representation therein

shall be reduced in the proportion which the number of such

4la

male citizens shall bear to the whole number of male citizens

twenty-one years of age in such State.

Section 3. No person shall be a Senator or

Representative in Congress, or elector of President and Vice

President, or hold any office, civil or military, under the United

States, or under any State, who, having previously taken an

oath, as a member of Congress, or as an officer of the United

States, or as a member of any State legislature, or as an

executive or judicial officer of any State, to support the

Constitution of the United States, shall have engaged in

insurrection or rebellion against the same, or given aid or

comfort to the enemies thereof. But Congress may by a vote of

two-thirds of each House, remove such disability.

Section 4. The validity of the public debt of the

United States, authorized by law, including debts incurred for

payment of pensions and bounties for services in suppressing

insurrection or rebellion, shall not be questioned. But neither

the United States nor any State shall assume or pay any debt or

obligation incurred in aid of insurrection or rebellion against

the United States, or any claim for the loss or emancipation of

any slave; but all such debts, obligations and claims shall be

held illegal and void.

Section5. The Congress shall have power to enforce,

by appropriate legislation, the provisions of this article.

42a

APPENDIX I

28 U.S.C. § 1341

1341. Taxes by States

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.

43a

APPENDIX J

42 U.S.C. § 1983

§ 1983. Civil action for deprivation of rights

Every person who, under color of any statute,

ordinance, regulation, custom, or usage, of any State or

Territory or the District of Columbia, subjects, or causes to be

subjected, any citizen of the United States or other person

within the jurisdiction thereof to the deprivation of any rights,

privileges, or immunities secured by the Constitution and laws,

shall be liable to the party injured in an action at law, suit in

equity, or other proper proceeding for redress, except that in

any action brought against a judicial officer for an act or

omission taken in such officer’s judicial capacity, injunctive

relief shall not be granted unless a declaratory decree was

violated or declaratory relief was unavailable. For the purposes

of this section, any Act of Congress applicable exclusively to

the District of Columbia shall be considered to be a statute of

the District of Columbia.

44a

APPENDIX K

42 U.S.C. § 1988

§ 1988. Proceedings in vindication of civil rights

(a) Applicability of statutory and common law

The jurisdiction in civil and criminal matters conferred

on the district courts by the provisions of titles 13. 24, and 70

of the Revised Statutes for the protection of all persons in the

United States in their civil rights, and for their vindication,

shall be exercised and enforced in conformity with the laws of

the United States, so far as such laws are suitable to carry the

same into effect; but in all cases where they are not adapted to

the object, or are deficient in the provisions necessary to

furnish suitable remedies and punish offenses against law, the

common law, as modified and changed by the constitution and

statutes of the State wherein the court having jurisdiction of

such civil or criminal cause is held, so far as the same is not

inconsistent with the Constitution and laws of the United

States, shall be extended to and govern the said courts in the

trial and disposition of the cause, and, if it is of a criminal

nature, in the infliction of punishment on the party found

guilty.

(b) Attorney’s fees

In any action or proceeding to enforce a provision of

sections 1981, 1981a, 1982, 1983, 1985, and 1986 of this title,

title IX of Public Law 95-318 [20 U.S.C.A. § 1681 et seq.], the

Religious Freedom Restoration Act of 1993 [42 U.S.C.A.

45a

§2000bb et seq.], title VI of the Civil Rights Act of 1964 [42

U.S.C.A. §2000d et seq.], or section 13981 of this title'’, the

court, in its discretion, may allow the prevailing party, other

than the United States, a reasonable attorney’s fee as part of the

costs, except that in any action brought against a judicial officer

for an act or omission taken in such officer’s judicial capacity

such officer shall not be held liable for any costs, including

attorney's fees, unless such action was clearly in excess of such

officer’s jurisdiction.

In awarding an attorney’s fee under subsection (b) of

this section in any action or proceeding to enforce a provision

of section 1981 or 1981a of this title, the court, in its discretion,

may include expert fees as part of the attorney’s fee.

' So in original.

46a

(1)

(2)

(3)

APPENDIX L

BALDWIN'S KENTUCKY REVISED

STATUTES ANNOTATED

TITLE XI REVENUE AND TAXATION

CHAPTER 131. REVENUE CABINET

131.030 FUNCTIONS OF CABINET;

SETTLEMENT OF TAX CASES

The Revenue Cabinet shall exercise all administrative

functions of the state in relation to the State revenue and

tax laws, the licensing and registering of motor vehicles.

the equalization of tax assessments, the assessment of

public utilities and public service corporations for taxes,

the assessment of franchises, the supervision of tax

collections, and the enforcement of revenue and tax laws,

either directly or through supervision of tax

administration activity in other departments to which the

Revenue Cabinet may commit administration of certain

taxes.

The Revenue Cabinet shall have all the powers and

duties with reference to assessment or equalization of the

assessment of property heretofore exercised or performed

by any state board or commission.

The Revenue Cabinet shall have all the powers and

duties necessary to consider and settle tax cases under

KRS 131.110 and refund claims made under KRS

134.580. The Revenue Cabinet is encouraged to settle

controversies on a fair and equitable basis and shall be

47a

authorized to settle tax controversies based on the

hazards of litigation applicable to them.

48a

and

APPENDIX M

BALDWIN'S KENTUCKY REVISED

STATUTES ANNOTATED

TITLE XI REVENUE AND TAXATION

CHAPTER 131. REVENUE CABINET

KENTUCKY TAXPAYERS' BILL OF RIGHTS

131.081 RULES APPLICABLE TO THE

ADMINISTRATION OF ALL TAXES UNDER

JURISDICTION OF REVENUE CABINET

The following rules, principles, or requirements shall apply in

the administration of all taxes subject to the jurisdiction of the

Revenue Cabinet.

(1)

(2)

The cabinet shall develop and implement a Kentucky tax

education and information program directed at new

taxpayers, taxpayer and industry groups, and cabinet

employees to enhance the understanding of and

compliance with Kentucky tax laws, including the

application of new tax legislation to taxpayer activities

and areas of recurrent taxpayer noncompliance or

inconsistency of administration.

The cabinet shall publish brief statements in simple and

nontechnical language which explain procedures,

remedies, and the rights and obligations of taxpayers and

the cabinet. Such statements shall be provided to

taxpayers with the initial notice of audit; each original

notice of tax due; each denial or reduction of a refund or

credit claimed by a taxpayer; each denial, cancellation, or

49a

(3)

(4)

(5)

(6)

revocation of any license, permit, or other required

authorization applied for or held by a taxpayer; and, if

practical and appropriate, in informational publications

by the cabinet distributed to the public.

Taxpayers shall have the right to be assisted or

represented by an attorney, accountant, or other person in

any conference, hearing, or other matier before the

cabinet. The taxpayer shall be informed of such right

prior to conduct of any conference or hearing.

The cabinet shall perform audits and conduct conferences

and hearings only at reasonable times and places.

Taxpayers shall have the right to make audio recordings

of any conference with or hearing by the cabinet. The

cabinet may make similar audio recordings only if prior

written notice is given to the taxpayer. The taxpayer shall

be entitled to a copy of such cabinet recording or a

transcript thereof as provided in KRS 61.874.

If any taxpayer's failure to submit a timely return or

payment to the cabinet is due to the taxpayer's reasonable

reliance on written advice from the cabinet, the taxpayer

shall be relieved of any penalty or interest with respect

thereto provided the taxpayer requested such advice in

writing from the cabinet and the specific facts and

circumstances of the activity or transaction were fully

described in the taxpayer's request, the cabinet did not

subsequently rescind or modify the advice in writing and

there were no subsequent changes in applicable laws or

regulations or a final decision of a court which rendered

the cabinet's earlier written advice no longer valid.

50a

(7)

(8)

(9)

Taxpayers shall have the right to receive a copy of any

audit of the cabinet by the Auditor of Public Accounts

relating to the cabinet's compliance with the provisions

of KRS 131.041 to 131.081.

The cabinet shall include with each notice of tax due a

clear and concise description of the basis xnd amount of

any tax, penalty, and interest assessed against the

taxpayer, and copies of the agent's audit workpapers and

the agent's written narrative setting forth the grounds

upon which the assessment is made. Taxpayers shall be

similarly notified regarding the denial or reduction of any

refund or credit claim filed by a taxpayer.

Taxpayers shall have the right to an installment payment

agreement for the payment of delinquent taxes, penalties,

and interest owed provided the taxpayer requests the

agreement in writing clearly demonstrating his inability

to pay in full and that the agreement will facilitate

collection by the cabinet of the amounts owed. The

cabinet may modify or terminate an installment payment

agreement if it determines the taxpayer has not complied

with the terms of the agreement; the taxpayers’ financial

condition has sufficiently changed; the taxpayer fails to

provide any requested financial condition update

information; the taxpayer gave false or misleading

information in securing the agreement; or the taxpayer

fails to timely report and pay any other tax due the

Commonwealth. The cabinet shall give written notice to

the taxpayer at least thirty (30) days prior to modifying or

terminating an installment payment agreement unless the

cabinet has reason to believe that collection of the

amounts owed will be jeopardized in whole or in part by

delay.

S5la

(10) The cabinet shall not knowingly authorize, require, or

conduct any investigation or surveillance of any person

for nontax administration related purposes, except

internal security related investigations involving Revenue

Cabinet personnel.

(11) In addition to the circumstances under which an

extension of time for filing reports or returns may be

granted pursuant to KRS 131.170, taxpayers shall be

entitled to the same extension of the due date of any

comparable Kentucky tax report or return for which the

taxpayer has secured a written extension from the

Internal Revenue Service provided the taxpayer notifies

the cabinet thereof in writing and provides a copy of such

extension at the time and in the manner which the cabinet

may require.

(12) The cabinet shall bear the cost or, if paid by the taxpayer,

reimburse the taxpayer for recording or bank charges as

the direct result of any erroneous lien or levy by the

cabinet, provided the erroneous lien or levy was caused

by cabinet error and, prior to issuance of the erroneous

lien or levy, the taxpayer timely responded to all contacts

by the cabinet and provided information or

documentation sufficient to establish his or her position.

When the cabinet releases any such erroneous lien or

levy, notice of the fact shall be mailed to the taxpayer

and, if requested by the taxpayer, a copy of the release,

together with an explanation thereof, shall be mailed to

the major credit reporting companies located in the

county where it was filed.

(13) The cabinet shall not evaluate individual officers or

employees on the basis of taxes assessed or collected or

impose or suggest tax assessment or collection quotas or

52a

(14)

(15)

goals.

Taxpayers shall have the right to bring an action for

damages against the Commonwealth to the Board of

Claims for actual and direct monetary damages sustained

by the taxpayer as a result of willful, reckless, and

intentional disregard by cabinet employees of the rights

of taxpayers as set out in KRS 131.041 to 131.081 or in

the tax laws administered by the cabinet. In the awarding

of damages pursuant to this subsection, the board shall

take into consideration the negligence or omissions, if

any, on the part of the taxpayer which contributed to the

damages. If any such proceeding brought by a taxpayer is

ruled frivolous by the board, the cabinet shall be

reimbursed by the taxpayer for its costs in defending the

action.

Taxpayers shall have the right to privacy with regard to

the information provided on their Kentucky tax returns

and reports, including any information or documents

attached thereto. Except as provided by KRS 131.190, no

information pertaining to such returns, reports, or the

affairs of a person's business shall be divulged by the

cabinet or the Finance and Administration Cabinet's

Office of Financial Management and Economic Analysis

to any person.

53a

APPENDIX N

BALDWIN'S KENTUCKY REVISED

STATUTES ANNOTATED

TITLE XI REVENUE AND TAXATION

CHAPTER 131. REVENUE CABINET

GENERAL PROVISIONS

131.130 GENERAL POWERS AND DUTIES

OF CABINET; PROSECUTION DUTIES

Without limitation of other duties assigned to it by law, the

following powers and duties are vested in the revenue cabinet:

(1)

(2)

The cabinet may make administrative regulations, and

direct proceedi#igs and actions, for the administration and

enforcement of all tax laws of this state.

The cabinet, by representatives appointed by it in writing,

may take testimony or depositions, and may examine the

records, documents, files and equipment of any taxpayer

or of any person whose records, documents or equipment

will furnish knowledge concerning the tax liability of any

taxpayer, when it deems this reasonably necessary for

purposes incident to the performance of its functions.

The cabinet may enforce this right by application to the

circuit court in the county wherein the person is

domiciled or has his principal office, or by application to

the Franklin Circuit Court, which courts may compel

compliance with the orders of the cabinet.

54a

(3)

(4)

(5)

(6)

The cabinet shall prescribe the style, and determine and

enforce the use or manner of keeping, of all assessment

and tax forms and records employed by state and county

officials, and may prescribe forms necessary for the

administration of any revenue law.

The cabinet shall advise on all questions respecting the

construction of state revenue laws and the application

thereof to various classes of taxpayers and property.

Attorneys employed by the cabinet and approved by the

attorney general as provided in KRS 15.020 may

prosecute all violations of the criminal and penal laws

relating to revenue and taxation. If a revenue cabinet

attorney undertakes any of the actions prescribed in this

subsection, he shall be authorized to exercise all powers

and perform all duties in respect to the criminal actions

or proceedings which the prosecuting attorney would

otherwise perform or exercise, including, but not limited

to, the authority to sign, file, and present any and all

complaints, affidavits, information, presentments,

accusations, indictments, subpoenas and processes of any

kind, and to appear before all grand juries, courts, or

tribunals.

In the event of the incapacity of attorneys employed by

the cabinet or at the request of the secretary of the

revenue cabinet, the attorney general or his designee shall

prosecute all violations of the criminal and penal laws

relating to revenue and taxation. If the attorney general

undertakes any of the actions prescribed in this

subsection, he shall be authorized to exercise all powers

and perform all duties in respect to the criminal actions

or proceedings which the prosecuting attorney would

otherwise perform or exercise, including, but not limited

55a

(7)

(8)

(9)

to, the authority to sign, file, and present any and all

complaints, affidavits, information, presentments,

accusations, indictments, subpoenas and processes of any

kind, and to appear before all grand juries, courts, or

tribunals.

The cabinet may require the Commonwealth's attorneys

and county attorneys to prosecute actions and

proceedings and perform other services incident to the

enforcement of laws assigned to the cabinet for

administration.

The cabinet may conduct research in the fields of

taxation, finance and local government administration,

and publish its findings, as the secretary may deem wise.

The cabinet may make administrative regulations

necessary to establish a system of taxpayer identifying

numbers for the purpose of securing proper identification

of taxpayers subject to any tax laws or other revenue

measure of this state, and may require such taxpayer to

place on any return, report, statement or other document

required to be filed, any number assigned pursuant to

such administrative regulations.

56a

(1)

APPENDIX O

BALDWIN'S KENTUCKY REVISED

STATUTES ANNOTATED

TITLE XI REVENUE AND TAXATION

CHAPTER 131. REVENUE CABINET

GENERAL PROVISIONS

131.190 INFORMATION ACQUIRED

IN TAX ADMINISTRATION NOT

TO BE DIVULGED; EXCEPTIONS

No present or former secretary or employee of the

Revenue Cabinet, or employee in the Finance and

Administration Cabinet's Office of Financial

Management and Economic Analysis, member of a

county board of assessment appeals, property valuation

administrator or employee thereof, or any other person,

shall divulge any information acquired by him of the

affairs of any person, or information regarding the tax

schedules, returns or reports required to be filed with the

cabinet or other proper officer, or any information

produced by a hearing or investigation, insofar as the

information may have to do with the affairs of the

person's business. This prohibition does not extend to

information required in prosecutions for making false

reports or returns of property for taxation, or any other

infraction of the tax laws, nor does it extend to any

matter properly entered upon any assessment record, or

in any way made a matter of public record, nor does it

preclude furnishing any taxpayer or his properly

57a

(2)

(3)

(5)

authorized agent with information respecting his own

return. Further, this prohibition does not preclude the

secretary or any employee of the Revenue Cabinet, or any

employee of the Finance and Administration Cabinet's

Office of Financial Management and Economic Analysis,

from testifying in any court, or from introducing as

evidence returns or reports filed with the cabinet, in an

action for violation of state or federal tax laws or in any

action challenging state or federal tax laws.

The secretary shall make available any information for

official use only and on a confidential basis to the proper

officer, board or commission of this state, any Kentucky

county, any Kentucky city, any other state, or the federal

government, under reciprocal arrangements whereby the

cabinet shall receive similar or useful information in

return.

Statistics of tax-paid gasoline gallonage reported monthly

to the Revenue Cabinet by any licensee under the

gasoline excise tax law may be made public by the

cabinet.

Notwithstanding the above, information received from

the Internal Revenue Service shall not be made available

to any other agency or office within any agency of state

government that does not perform a tax administrative

function, any county, any city, or any other state.

Statistics of crude oil as reported to the Revenue Cabinet

under the crude oil excise tax requirements of KRS

Chapter 137 and statistics of natural gas production as

reported to the Revenue Cabinet under the natural

resources severance tax requirements of KRS Chapter

58a

143A may be made public by the cabinet by release to the

Department of Mines and Minerals.

59a

APPENDIX P

BALDWIN'S KENTUCKY REVISED

STATUTES ANNOTATED

TITLE XI REVENUE AND TAXATION

CHAPTER 135. COLLECTION OF PUBLIC CLAIMS

(1)

BY ACTION

135.030 ISSUE OF PROCESS AND

EXECUTIONS ON JUDGMENTS IN

FAVOR OF THE STATE

Each circuit court clerk shall, after the expiration of ten

(10) days from the rendition of judgment in favor of the

state, unless otherwise ordered by the court, issue proper

process and place it in the hands of the sheriff on all such

judgments that have not been paid or replevied in the

office or remitted or respited by the governor, and each

such clerk shall, within ten (10) days after the maturity of

each replevied bond on any such judgment entered in the

court of which he is clerk, issue executions and place

them in the hands of the sheriff. Upon an execution so

issued upon any replevied bond being returned by the

sheriff without making the money, the officer who issued

it shall reissue executions and place them in the hands of

the sheriff from time to time at least once every ten (10)

months for a period of five (5) years, and as often

thereafter as demanded by the Commonwealth's attorney,

county attorney, sheriff or circuit court clerk. Upon all

such judgments, executions or capias pro fine that are

stayed or respited by the governor, the clerk of the court

in which the judgment has been entered shall issue

60a

proper process and place it in the hands of the sheriff

within ten (10) days after the expiration of the stay or

respite. A receipt shall be taken from the sheriff for all

process placed in his hands pursuant to this section.

(2) Upon the failure of any circuit court clerk to discharge

his duties as required in this section, he shall be held

responsible on his official bond for the amount of the

judgment, interest and costs to which such failure is

applicable,

(3) Nothing in this section shall authorize the governor to

remit any judgment unless it is a fine imposed as a

punishment.

6la

APPENDIX Q

BALDWIN'S KENTUCKY REVISED

STATUTES ANNOTATED

TITLE XI REVENUE AND TAXATION

CHAPTER 135. COLLECTION OF PUBLIC

CLAIMS BY ACTION

135.050 ACTION BY REVENUE CABINET TO

ASCERTAIN AND COLLECT TAXES; INJUNCTION;

(1)

(2)

(3)

ATTACHMENT AND GARNISHMENT

The secretary of revenue shall prosecute diligently the

collection ofall license fees, omitted license, inheritance,

estate, income, excise or franchise taxes, judgments or

other moneys, claims or demands due the state from any

person.

The revenue cabinet may institute legal proceedings to

ascertain the amount of tax due under any statute

imposing a license, excise or income tax in favor of the

state, and to enforce the collection of the amount due and

the penalties and interest thereon, and, in the case of a

license or excise tax, to enjoin the operation of the

business of the delinquent until the tax is paid.

The revenue cabinet may, at or after the commencement

of an action under subsection (2) of this section to collect

the amount of license, excise or income tax due and the

penalties and interest thereon, have an attachment against

62a

the property of the person liable for the tax or a

garnishment of his debtors, without the execution of a

bond.

APPENDIX R

BALDWIN'S KENTUCKY REVISED

STATUTES ANNOTATED

TITLE XI REVENUE AND TAXATION

CHAPTER 141. INCOME TAXES

141.010 DEFINITIONS FOR CHAPTER

As used in this chapter, unless the context requires otherwise:

(1) "Secretary" means the secretary of revenue;

(2) "Cabinet" means the Revenue Cabinet;

(3) "Internal Revenue Code" means the Internal Revenue

Code in effect on December 31, 1993, exclusive of any

amendments made subsequent to that date, other than

amendments that extend provisions in effect on

December 31, 1993, that would otherwise terminate, and

as modified by KRS 141.0101;

(4) "Dependent" means those persons defined as dependents

in the Internal Revenue Code;

(5) "Fiduciary" means "fiduciary" as defined in Section

7701(a)(6) of the Internal Revenue Code;

(6) "Fiscal year" means "fiscal year" as defined in Section

7701(a)(24) of the Internal Revenue Code;

(7) "Individual" means a natural person;

64a

(8)

(9)

(10)

For taxable years beginning on or after January 1, 1974,

"federal income tax" means the amount of federal income

tax actually paid or accrued for the taxable year on

taxable income as defined in Section 63 of the Internal

Revenue Code, and taxed under the provisions of this

chapter, minus any federal tax credits actually utilized by

the taxpayer;

"Gross income" in the case of taxpayers other than

corporations means "gross income" as defined in Section

61 of the Internal Revenue Code:

"Adjusted gross income" in the case of taxpayers other

than corporations means gross income as defined in

subsection (9) of this section minus the deductions

allowed individuals by Section 62 of the Internal

Revenue Code and as modified by KRS 141.0101 and

adjusted as follows, except that deductions shall be

limited to amounts allocable to income subject to

taxation under the provisions of this chapter, and except

that nothing in this chapter shall be construed to permit

the same item to be deducted more than once:

(a) Exclude income that is exempt from state

taxation by the Kentucky Constitution and

the Constitution and statutory laws of the

United States and Kentucky;

(b) Exclude income from supplemental

annuities provided by the Railroad

Retirement Act of 1937 as amended and

which are subject to federal income tax by

Public Law 89-699:

65a

(c)

(d)

(e)

(f)

(g)

(h)

Include interest income derived from

obligations of sister states and political

subdivisions thereof;

Exclude employee pension contributions

picked up as provided for in KRS 6.505,

16.545, 21.360, 61.560, 65.155, 67A.320,

67A.510, 78.610, and 161.540 upon a ruling

by the Internal Revenue Service or the

federal courts that these contributions shall

not be included as gross income until such

time as the contributions are distributed or

made available to the employee;

Exclude Social Security and railroad

retirement benefits subject to federal income

tax;

Include, for taxable years ending before

January 1, 1991, all overpayments of federal

income tax refunded or credited for taxable

years;

Deduct, for taxable years ending before

January |, 1991, federal income tax paid for

taxable years ending before January |, 1990;

Exclude any money received because of a

settlement or judgment in a lawsuit brought

against a manufacturer or distributor of

"Agent Orange" for damages resulting from

exposure to Agent Orange by a member or

veteran of the armed forces of the United

States or any dependent of such person who

served in Vietnam; and

66a

(i)

1. Exclude the applicable amount of total

distributions from pension plans, annuity

contracts, profit-sharing plans, retirement

plans, or employee savings plans.

2. The "applicable amount" shall be:

a. Twenty-five percent (25%), but not more

than six thousand two hundred and fifty

dollars ($6,250), for taxable years beginning

after December 31, 1994, and before January

1, 1996;

b. Fifty percent (50%), but not more than

twelve thousand five hundred dollars

($12,500), for taxable years beginning after

December 31, 1995, and before January 1,

1997;

c. Seventy-five percent (75%), but not more

than eighteen thousand seven hundred fifty

dollars ($18,750), for taxable years

beginning after December 31, 1996. and

before January 1, 1998: and

d. One hundred percent ( 100%), but not

more than thirty-five thousand dollars

($35,000), for taxable years beginning after

December 31, 1997.

3. As.used in this paragraph:

a. "Distributions" includes but is not limited

to any lump-sum distribution from pension

or profit-sharing plans qualifying for the

67a

income tax averaging provisions of Section

402 of the Internal Revenue Code; any

distribution from an individual retirement

account as defined in Section 408 of the

Internal Revenue Code; and any disability

pension distribution that is taxed as pension

and annuity income for federal income tax

purposes;

b. "Annuity contract" has the same meaning

as set forth in Section 1035 of the Internal

Revenue Code; and

c. "Pension plans, profit-sharing plans,

retirement plans, or employee savings plans"

means any trust or other entity created or

organized under a written retirement plan

and forming part of a stock bonus, pension,

or profit-sharing plan of a public or private

employer for the exclusive benefit of

employees or their beneficiaries and includes

plans qualified or unqualified under Section

401 of the Internal Revenue Code and

individual retirement accounts as defined in

Section 408 of the Internal Revenue Code.

(11) “Net income" in the case of taxpayers other than

corporations means adjusted gross income as defined in

subsection (10) of this section, minus the standard

deduction allowed by KRS 141.081, or, at the option of

the taxpayer, minus the deduction allowed by KRS

141.0202 and minus all the deductions allowed

individuals by Chapter | of the Internal Revenue Code as

modified by KRS 141.0101 except those listed below,

except that deductions shall be limited to amounts

68a

allocable to income subject io taxation under the

provisions of this chapter and that nothing in this chapter

shall be construed to permit the same item to be deducted

more than once:

(a)

(b)

(c)

(d)

Any deduction allowed by the Internal

Revenue Code for state taxes measured by

gross or net income, except that such taxes

paid to foreign countries may be deducted;

Any deduction allowed by the Internal

Revenue Code for amounts allowable under

KRS 140.090(1)(h) in calculating the value

of the distributive shares of the estate of a

decedent, unless there is filed with the

income return a statement that such

deduction has not been claimed under KRS

140.090(1)(h);

The deduction for personal exemptions

allowed under Section 151 of the Internal

Revenue Code and any other deductions in

lieu thereof; and

Any deduction for amounts paid to any club,

organization, or establishment which has

been determined by the courts or an agency

established by the General Assembly and

charged with enforcing the civil rights laws

of the Commonwealth, not to afford full and

equal membership and full and equal

enjoyment of its goods, services, facilities,

privileges, advantages, or accommodations

to any person because of race, color,

religion, national origin, or sex, except

69a

nothing shall be construed to deny a

deduction for amounts paid to any religious

or denominational club, group, or

establishment or any organization operated

solely for charitable or educational purposes

which restricts membership to persons of the

same religion or denomination in order to

promote the religious principles for which it

is established and maintained;

(12) "Gross income," in the case of corporations, means

"gross income" as defined in Section 61 of the Internal

Revenue Code and as modified by KRS 141.0101 and

adjusted as follows:

(a)

(b)

(c)

(d)

Exclude income that is exempt from state

taxation by the Kentucky Constitution and

the Constitution and statutory laws of the

United States;

Exclude all dividend income received after

December 31, 1969;

Include interest income derived from

obligations of sister states and political

subdivisions thereof;

Exclude fifty percent (50%) of gross income

derived from any disposal of coal covered by

Section 631(c) of the Internal Revenue Code

if the corporation does not claim any

deduction for percentage depletion, or for

expenditures attributable to the making and

administering of the contract under which

such disposition occurs or to the

70a

(e)

(f)

(g)

(h)

preservation of the economic interests

retained under such contract;

Include in the gross income of lessors

income tax payments made by lessees to

lessors, under the provisions of Section 110

of the Internal Revenue Code, and exclude

such payments from the gross income of

lessees;

Include th amount calculated under KRS

141.205;

Ignore the provisions of Section 281 of the

Internal Revenue Code in computing gross

income; and

Exclude income from "safe harbor leases"

(Section 168(f)(8) of the Internal Revenue

Code);

(13) "Net income," in the case of corporations, means "gross

income" as defined in subsection (12) of this section

minus the deduction allowed by KRS 141.0202 and

minus all the deductions from gross income allowed

corporations by Chapter | of the Internal Revenue Code

and as modified by KRS 141.0101, except the following:

(a)

Any deduction for a state tax which is

computed, in whole or in part, by reference

to gross or net income and which is paid or

accrued to any state of the United States, the

District of Columbia, the Commonwealth of

Puerto Rico, any territory or possession of

the United States, or to any foreign country

T7la

(b)

(c)

(d)

(f)

or political subdivision thereof;

The deductions contained in Sections 243,

244, 245, and 247 of the Internal Revenue

Code;

The provisions of Section 281 of the Internal

Revenue Code shall be ignored in computing

net income;

Any deduction directly or indirectly

allocable to income which is either exempt

from taxation or otherwise not taxed under

the provisions of this chapter, and nothing in

this chapter shall be construed to permit the

same item to be deducted more than once;

Exclude expenses related to "safe harbor

leases" (Section 168(f)(8) of the Internal

Revenue Code); and

Any deduction for amounts paid to any club,

organization, or establishment which has

been determined by the courts or an agency

established by the General Assembly and

charged with enforcing the civil rights laws

of the Commonwealth, not to afford ful! and

equal membership and full and equal

enjoyment of its goods, services, facilities,

privileges, advantages, or accommodations

to any person because of race, color,

religion, national origin, or sex, except

nothing shall be construed to deny a

deduction for amounts paid to any religious

or denominational club, group, or

72a

(14)

(a)

(b)

(c)

(d)

establishment or any organization operated

solely for charitable or educational purposes

which restricts membership to persons of the

same religion or denomination in order to

promote the religious principles for which it

is established and maintained;

"Taxable net income," in the case of

corporations having property or payroll only

in this state, means "net income" as defined

in subsection (13) of this section:

"Taxable net income," in the case of

corporations having property or payroll both

within and without this state means "net

income" as defined in subsection (13) of this

section and as allocated and apportioned

under KRS 141.120:

"Property" means either real property or

tangible personal property which is either

owned or leased. "Payroll" means

compensation paid to one (1) or more

individuals, as described in KRS

141.120(8)(b). Property and payroll are

deemed to be entirely within this state if all

other states are prohibited by Public Law

86-272, as it existed on December 31, 1975,

from enforcing income tax jurisdiction; and

"Taxable net income" in the case of

homeowners’ associations as defined in

Section 528(c) of the Internal Revenue

Code, means "taxable income" as defined in

Section 528(d) of the Internal Revenue

73a

Code. Notwithstanding the provisions of

subsection (3) of this section, the Internal

Revenue Code sections referred to in this

paragraph shall be those code sections in

effect for the applicable tax year;

(15) "Person" means "person" as defined in Section

7701(a)(1) of the Internal Revenue Code;

(16) "Taxable year" means the calendar year or fiscal year

ending during such calendar year, upon the basis of

which net income is computed, and in the case of a return

made for a fractional part of a year under the provisions

of this chapter or under regulations prescribed by the

secretary, "taxable year" means the period for which such

return is made;

(17) "Resident" means an individual domiciled within this

state or an individual who is not domiciled in this state,

but maintains a place of abode in this state and spends in

the aggregate more than one hundred eighty-three (183)

days of the taxable year in this state;

(18) "Nonresident" means any individual nota resident of this

State;

(19) "Employer" means "employer" as defined in Section

3401(d) of the Internal Revenue Code:

(20) "Employee" means "employee" as defined in Section

3401(c) of the Internal Revenue Code;

(21) “Number of withholding exemptions claimed" means the

number of withholding exemptions claimed in a

withholding exemption certificate in effect under KRS

74a

141.325, except that if no such certificate is in effect, the

number of withholding exemptions claimed shall be

considered to be zero;

"Wages" means "wages" as defined in Section 3401(a) of

the Internal Revenue Code and includes other income

subject to withholding as provided in Section 3401 (f) and

Section 3402(k), (0), (p), (q), and (s) of the Internal

Revenue Code;

"Payroll period" means "payroll period” as defined in

Section 3401(b) of the Internal Revenue Code:

Corporations" means "corporations" as defined in

Section 7701(a)(3) of the Internal Revenue Code;

"S corporations" means "S corporations" as defined in

Section 1361l(a) of the Internal Revenue Code.

Stockholders of a corporation qualifying as an "S

corporation” under this chapter may elect to treat such

qualification as an initial qualification under Subchapter

S of the Internal Revenue Code Sections.

75a

APPENDIX S

BALDWIN'S KENTUCKY REVISED

STATUTES ANNOTATED

TITLE XXVIII LABOR AND HUMAN RIGHTS

CHAPTER 344. CIVIL RIGHTS

344.120 REFUSAL TO RENT OR SELL PUBLIC

ACCOMMODATIONS UNLAWFUL

Except as otherwise provided in KRS 344.140 and 344.145, it

is an unlawful practice for a person to deny an individual the

full and equal enjoyment of the goods, services, facilities,

privileges, advantages, and accommodations of a place of

public accommodation, resort, or amusement, as defined in

KRS 344.130, on the ground of disa’*lity, race, color, religion,

or national origin.

76a

APPENDIX T

BALDWIN'S KENTUCKY REVISED

STATUTES ANNOTATED

TITLE XXVII LABOR AND HUMAN RIGHTS

CHAPTER 344. CIVIL RIGHTS

344.130. "PLACE OF PUBLIC

ACCOMMODATION, RESORT,

OR AMUSEMENT" DEFINED

As used in this chapter unless the context requires otherwise:

"Place of public accommodation, resort, or amusement"

includes any place, store, or other establishment, either licensed

or unlicenced, which supplies goods or services to the general

public or which solicits or accepts the patronage or trade of the

general public or which is supported directly or indirectly by

government funds: except that

(1) A private club is not a place of public

accommodation, resort, or amusement if its policies

are determined by its members and its facilities or

services are available only to its members and their

bona fide guests; and

(2) "Place of public accommodation, resort. or

amusement" does not include a rooming or boarding

house containing not more than one (1) room for rent

or hire and which is within a building occupied by the

proprietor as his residence.

77a

APPENDIX U

BALDWIN'S KENTUCKY REVISED

STATUTES ANNOTATED

TITLE XXVII LABOR AND HUMAN RIGHTS

CHAPTER 344. CIVIL RIGHTS

344.200. COMPLAINTS OF DISCRIMINATION;

PROCEDURE; CONCILIATION AGREEMENTS;

ENFORCEMENT

(1) An individual claiming to be aggrieved by an

unlawful practice other than a discriminatory housing

practice, amember of the commission, or the Attorney

General may file with the commission a written sworn

complaint stating that an unlawful practice has been

committed, setting forth the facts upon which the

complaint is based, and setting forth facts sufficient to

enable the commission to identify the persons charged

(hereinafter the respondent). The commission staff or

a person designated pursuant to its rules shall

promptly investigate the allegations of unlawful

practice set forth in the complaint and shall within

five (5) days furnish the respondent with a copy of the

complaint. The complaint must be filed within one

hundred eighty (180) days after the alleged unlawful

practice occurs.

(2) The commission or an individual designated pursuant

to its rules shall determine within thirty (30) days after

the complaint has been filed whether there is probable

78a

(3)

(4)

cause to believe the respondent has engaged in an

unlawful practice. If it is determined that there is no

probable cause to believe that the respondent has

engaged in an unlawful practice, the commission shall

issue an order dismissing the complaint and shall

furnish a copy of the order to the complainant, the

respondent, the Attorney General, and such other

public officers and persons as the commission deems

proper.

The complainant, within ten (10) days after receiving

a copy of the order dismissing the complaint, may file

with the commission an application for

reconsideration of the order. Upon such application,

the commission or an individual designated pursuant

to its rules shall make a new determination within ten

(10) days whether there is probable cause to believe

that the respondent has engaged in an unlawful

practice. If it is determined that there is no probable

cause to believe that the respondent has engaged in an

unlawful practice, the commission shall issue an order

dismissing the complaint and furnishing a copy of the

order to the complainant, the respondent, the Attorney

General, and other public officers and persons as the

commission deems proper.

If the staff determines, after investigation, or if the

commission determines after the review provided for

in subsection (3) of this section that there is probable

cause to believe that the respondent has engaged in an

unlawful practice, the commission staff shall endeavor

to eliminate the alleged unlawful practice by

conference, conciliation and persuasion. The terms of

a conciliation agreement reached with a respondent

may require him to refrain from the commission of

79a

(6)

unlawful discriminatory practices in the future and

make such further provisions as may be agreed upon

between the commission or its staff and the

respondent. Ifa conciliation agreement is entered into,

the commission shall issue and serve on the

complainant an order stating its terms. A copy of the

order shali be delivered to the respondent, the

Attorney General, and such other public officers and

persons as the commission deems proper. Except for

the terms of the conciliation agreement, neither the

commission nor any officer or employee thereof shall

make public, without the written consent of the

complainant and the respondent, information

concerning efforts in a particular case to eliminate an

unlawful practice by conference, conciliation, or

persuasion whether or not there is a determination of

probable cause or a conciliation agreement.

At the expiration of one (1) year from the date of a

conciliation agreement, and at other times in its

reasonable discretion, the commission staff may

investigate whether the terms of the agreement have

been and are being complied with by the respondent.

Upon a finding that the terms of the agreement are not

being complied with by the respondent, the

commission shall take whatever action it deems

appropriate to assure compliance.

At any time after a complaint is filed, the commission

may file an action in the Circuit Court in a county in

which the subject of the complaint occurs, or in a

county in which a respondent resides or has his

principal place of business, seeking appropriate

temporary relief against the respondent, pending final

determination of proceedings including an order or

80a

(7)

(8)

decree restraining him from doing or procuring any

act tending to render ineffectual any order the

commission may enter with respect to the complaint.

The court shall have power to grant temporary relief

or a restraining order as it deems just and proper.

Insofar as they are not inconsistent or in conflict with

the procedure and practice provided by this chapter,

the Kentucky Rules of Civil Procedure will apply to

proceedings under this chapter.

Nothing in this section shall apply to any

discriminatory housing practice.

8la

APPENDIX V

BALDWIN'S KENTUCKY REVISED

STATUTES ANNOTATED

TITLE XXVII LABOR AND HUMAN RIGHTS

CHAPTER 344. CIVIL RIGHTS

344.240. SCOPE OF AND PROCEDURE

FOR JUDICIAL REVIEW; DECREE; APPEAL

(1) Any complainant, respondent, or intervenor aggrieved

by an order of the commission, including an order

dismissing any complaint or stating the terms of a

conciliation agreement, may obtain judicial review,

and the commission may obtain an order of the court

for enforcement of its order, in a proceeding brought

in the Circuit Court in a county in which the alleged

unlawful practice which is the subject of the order or

complaint occurs or in which a respondent resides or

has his principal place of business.

(2) The proceeding for review or enforcement is initiated

by filing a complaint in the court. Copies of the

complaint shall be served upon all parties of record.

Within thirty (30) days after the service of the

complaint upon the commission or its filing by the

commission, or within such further time as the court

may allow, the commission shall transmit to the court

the original or a certified copy of the entire record

upon which the order is based, including a transcript

of testimony, which need not be printed. By

stipulation of all parties to the review proceeding, the

82a

(3)

(4)

record may be shortened. The findings of fact of the

commission shall be conclusive unless clearly

erroneous in view of the probative and substantial

evidence on the whole record. The court shall have

power to grant such temporary relief or restraining

order as it deems just, and to enter an order enforcing,

modifying and enforcing as modified, or setting aside

in whole or in part the order of the commission, or

remanding the case to the commission for further

proceedings.

Except for a discriminatory housing practice, if the

commission has failed to schedule a hearing in

accordance with KRS 344.210(1) or has failed to issue

an order within one hundred eighty (180) days after

the complaint is filed, the complainant, respondent,

Attorney General, or an intervenor may petition the

Circuit Court in a county in which the alleged

unlawful practice set forth in the complaint occurs or

in which the petitioner resides or has his principal

place of business for an order directing the

commission to take such action. The court shall

follow the procedure set forth in subsection (2) so far

as applicable.

The court shall not consider any matter not considered

by, nor any objection not raised before, the

commission, unless the failure of a party to present

such matter to or raise such objection before the

commission is excused because of good cause shown.

A party may move the court to remand the case to the

commission in the interests of justice for the purpose

of adducing additional specified and material

evidence and seeking findings thereon, provided he

83a

shows good cause for the failure to adduce such

evidence before the commission.

(5) The jurisdiction of the Circuit Court shall be

exclusive and its final judgment or decree shall be

subject to review by the Court of Appeals as provided

by the Rules of Civil Procedure. The commission's

copy of the testimony shall be available to all parties

for examination without cost during business hours at

the commission's office in Frankfort.

(6) A proceeding under this section must be initiated

within thirty (30) days after a copy of the order of the

commission is received, unless the commission is the

petitioner or the petition is filed under subsection (3).

If no proceeding is so initiated, the commission may

obtain a decree of the court for enforcement of its

order upon showing that a copy of the petition for

enforcement was served on the respondent.

(7) If before the expiration of sixty (60) days after the

date of the commission order is entered for a

discriminatory housing practice and no petition for

review has been filed under subsection (1) of this

section, any person entitled to under the

discriminatory housing practice order may petition for

a decree enforcing the order in the Circuit Court for

the county in which the discriminatory housing

practice is alleged to have occurred.

(8) Except for subsection (3) of this section, all

provisions in this section shall apply to orders issued

in a discriminatory housing practice proceeding.

84a

APPENDIX W

BALDWIN'S KENTUCKY REVISED

STATUTES ANNOTATED

TITLE XXVII LABOR AND HUMAN RIGHTS

CHAPTER 344. CIVIL RIGHTS

344.270. COMMISSION OR COURT NOT

TO TAKE JURISDICTION OVER CLAIM

FOR UNLAWFUL PRACTICE WHILE

CLAIM PENDING BEFORE THE OTHER BODY;

FINAL DETERMINATION EXCLUSIVE

The commission shall not take jurisdiction over any claim of an

unlawful practice under this chapter while a claim of the same

person seeking relief for the same grievance under KRS

344.450 is pending. A state court shall not take jurisdiction

over any claim of an unlawful practice under this chapter while

a claim of the same person seeking relief for the same

grievance is pending before the commission. A final deter-

mination by a state court or the commission of a claim alleging

an unlawful practice under KRS 344.450 shall exclude any

other action or proceeding brought by the same person based on

the same grievance.

85a

APPENDIX X

[KENTUCKY COMMISSION ON

HUMAN RIGHTS LETTERHEAD]

October 15, 1993

Louisville Country Club

PO Box 6028

Louisville, Kentucky 40206

RE: Cleveland v. Louisville Country Club

KCHR Complaint No. 256-PA

Dear Sir:

In accordance with the KRS 344.200(1), the Kentucky

Commission on Human Rights is hereby serving you with a

copy of the enclosed complaint which has been filed with this

agency by Commissioner Mae Cleveland. Also enclosed is a

copy of the Kentucky Civil Rights Act, and a copy of our

regulations.

The Commission is the state agency charged with

handling claims of discrimination in public accommodations

made unlawful by the Kentucky Civil Rights Act, KRS

344.130. When a complaint is filed with the Commission, the

Commission staff is required by law to conduct a prompt,

thorough and impartial i

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.