Wright v. Riveland

Decision Date11 July 2000
Docket NumberNo. 97-36074,97-36074
Parties(9th Cir. 2000) PAUL A. WRIGHT, on behalf of all similarly situated persons, Plaintiff-Appellant, v. CHASE RIVELAND, Defendant-Appellee. Office of the Circuit Executive
CourtU.S. Court of Appeals — Ninth Circuit

Chris R. Youtz and Jonathan P. Meier, Sirlanni & Youtz, Seattle, Washington, for the plaintiff-appellant.

Douglas W. Carr, Assistant Attorney General, Olympia, Washington, for the defendant-appellee.

Daniel J. Popeo, Paul D. Kamenar, and Richard A. Samp, Washington Legal Foundation, Washington, D.C.; Paul G. Cassell, University of Utah, Salt Lake City, Utah, for the amici.

Appeal from the United States District Court for the Western District of Washington, Franklin D. Burgess, District Judge Presiding; D.C. No. CV-95-05381-FDB

Before: Harry Pregerson and David R. Thompson, Circuit Judges, and Barry Ted Moskowitz,1 District Judge.

MOSKOWITZ, District Judge:

This case involves a challenge to Washington statute RCW 72.09.480 (the "Statute"), which authorizes a deduction of 35% from all funds received by inmates from outside sources. Washington inmate, Paul Wright, on behalf of himself and a class of similarly situated individuals (hereinafter collectively referred to as "the Class") appeals the district court's dismissal of the Class's Due Process and Excessive Fines claims against the Secretary of the Washington Department of Corrections (the "Department")2. The Class also appeals the district court's grant of partial summary judgment in favor of the Department, dismissing the Class's claim that mandatory deductions under the Statute violate S 206(d)(1) of the Employment Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. S 1056(d)(1). We have jurisdiction pursuant to 28 U.S.C. S 1291, and we affirm in part, reverse in part, and remand.

BACKGROUND

On October 25, 1996, the Class filed a First Amended Complaint ("Complaint") against the Department challenging the legality of the Statute, which authorizes the taking of deductions from funds received by Washington inmates from outside sources. The Statute provides, in pertinent part:

When an inmate . . . receives any funds in addition to his or her wages or gratuities, the additional funds shall be subject to the deductions in RCW 72.09.111(1)(a) . . . .

Wash. Rev. Code Ann. S 72.09.480(2) (West 1997). RCW 72.09.111(1)(a) authorizes the Secretary to deduct from incoming funds:

(i) Five percent to the public safety and education account for the purpose of crime victims' compensation;

(ii) Ten percent to a department personal inmate savings account; and

(iii) Twenty percent to the department to contribute to the cost of incarceration.

Wash. Rev. Code Ann. S 72.09.111(1)(a) (West 1997).

The Class challenged the Statute as violating their rights under the Equal Protection, Due Process, Ex Post Facto, Bill of Attainder, Double Jeopardy, Takings, and Excessive Fines Clauses of the United States Constitution. In a claim entitled "Impairment of Other Federal Rights," the Class also alleged that mandatory deductions under the Statute impaired their rights to receive certain federal benefits and funds. The Class sought to have the Statute declared unconstitutional and prayed for the disgorgement and return of any funds with interest that had been wrongly deducted from their accounts.

The Department moved to dismiss each of the Class's claims for violations of constitutional or federal law for failure to state a claim. The district court granted in part the Department's motion and dismissed all of the Class's causes of action except their "Impairment of Other Federal Rights" claim. Subsequently, both parties moved for summary judgment on the remaining claim. The Department also moved to dismiss the Class's Complaint, arguing that the Tax Injunction Act ("TIA"), 28 U.S.C. S 1341, deprived the district court of subject matter jurisdiction.

The district court denied the Department's motion to dismiss based on lack of subject matter jurisdiction and its motion for summary judgment on the impairment of federal rights claim. Instead, it granted partial summary judgment in favor of the Class and declared the Statute void to the extent that it authorized funds to be deducted from Veteran's Administration benefits received under 38 U.S.C.S 5301(a), Social Security benefits received under 42 U.S.C.S 407(a), proceeds from civil rights actions filed pursuant to 42 U.S.C. S 1983, and certain funds distributed to Native Americans under 25 U.S.C. SS 410, 1401-07, 1176 and 43 U.S.C. SS 1606(h) and 1620 (collectively, the "federal benefits"). The court, however, denied the Class's motion for summary judgment on the claim that ERISA precluded deductions by the state from benefits distributed under an ERISA-qualified pension plan (the "ERISA claim").

On November 19, 1997, the Class appealed the dismissal of their Due Process and Excessive Fines claims and the denial of their summary judgment motion on the ERISA claim. However, we concluded that the district court's order was not then appealable because no final order had been entered. We therefore remanded the action on May 3, 1999 but retained jurisdiction to dispose of the appeal once the district court entered an appealable final or interlocutory order. On January 28, 2000, the district court entered summary judgment in favor of the Department on the ERISA claim and certified finality pursuant to Federal Rule of Civil Procedure 54(b) as to all claims except the issue of disgorgement of funds. We now have jurisdiction to entertain this appeal.

DISCUSSION
I. The District Court's Subject Matter Jurisdiction

The Department argues that, pursuant to the TIA, the district court did not have subject matter jurisdiction to resolve this dispute. The TIA prohibits a district court from "enjoin[ing], suspend[ing] or restrain[ing] 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. S 1341. Whether a deduction constitutes a "tax" within the meaning of the TIA depends on: (1) the entity that imposes the deduction; (2) the parties on whom the deduction is imposed; and (3) whether the funds collected from the deduction are expended for general public purposes, or used for the regulation or benefit of the parties on whom the deduction is imposed. See Bidart Bros. v. California Apple Comm'n, 73 F.3d 925, 931 (9th Cir. 1996). Federal law determines whether an assessment qualifies as a "tax " for purposes of the TIA. See American Landfill, Inc. v. Stark/ Tuscarawas/Wayne Joint Solid Waste Management Dist. , 166 F.3d 835, 837 (6th Cir. 1999).

Based on the factors articulated in Bidart Bros., we conclude that the 35% deduction provided for by the Statute is not a "tax" under the TIA. Although the Washington state legislature enacted the Statute, the 35% deduction is only imposed on a select group of people: those inmates who receive funds from outside sources. See Bidart Bros., 73 F.3d at 931 ("An assessment imposed upon a broad class of parties is more likely to be a tax than an assessment imposed upon a narrow class."). Additionally, the funds are not currently paid to the tax collector or the state's general fund. Instead, the 5% and 10%3 portions of the 35% deduction are used to benefit a segment of the population consisting of the victims of crime and the inmates themselves, respectively. See Trailer Marine Transport Corp. v. Rivera Vazquez, 977 F.2d 1, 5-6 (1st Cir. 1992) (holding that an accident compensation statute, which imposed the costs of motor vehicle accidents on the vehicle owners and which assured compensation for the victims of these accidents, was not a tax for purposes of the TIA).

Moreover, the remaining 20% of the 35% deduction is used to defray the cost of incarcerating the inmates, and is thus more akin to a regulatory fee than a tax. See San Juan Cellular Tel. Co. v. Public Serv. Comm'n, 967 F.2d 683, 685 (1st Cir. 1992) (explaining that the classic "regulatory fee" serves regulatory purposes by, among other things,"raising money placed in a special fund to help defray the agency's regulation-related expenses"); see also Edye v. Robertson, 112 U.S. 580, 590 (1884) (holding that a statute, which imposed a duty of fifty cents per passenger on ship owners who brought immigrants into the United States and was used to defray both the expense of regulating immigration and the care of such immigrants, was not a "tax"). Although the general public may ultimately receive an incidental benefit from the 5% and 20% portions of the 35% deduction, the direct recipients of the funds are limited to a select group. See Rosenberger v. Rector and Visitors of Univ. of Va. , 515 U.S. 819, 841 (1995) (stating that a mandatory $14 student fee paid into a special fund to pay for the cost of printing newspapers published by various student groups was not a "tax"). Based on our application of the Bidart Bros. factors, we conclude that the deductions provided for by the Statute do not constitute a "tax" within the meaning of the TIA. The district court therefore had jurisdiction to adjudicate the Statute's validity.

II. Dismissal of the Class's Due Process and Excessive Fines Claims

We review de novo the district court's dismissal of the Class's due process and excessive fines claims for failure to state a claim. See Steckman v. Hart Brewing, Inc., 143 F.3d 1293, 1295 (9th Cir. 1998). If support exists in the record, the dismissal may be affirmed on any proper ground, even if the district court did not reach the issue or relied on alternative grounds. See id. "[A] complaint should not be dismissed unless it appears beyond a doubt that plaintiff can prove no set of...

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