83 F.3d 1208 (10th Cir. 1996), 94-3428, Kaul v. Stephan

Docket Nº:94-3428.
Citation:83 F.3d 1208
Party Name:Kathy L. KAUL, Plaintiff-Appellant, v. Robert T. STEPHAN, Attorney General, Defendant-Appellee.
Case Date:April 30, 1996
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

Page 1208

83 F.3d 1208 (10th Cir. 1996)

Kathy L. KAUL, Plaintiff-Appellant,


Robert T. STEPHAN, Attorney General, Defendant-Appellee.

No. 94-3428.

United States Court of Appeals, Tenth Circuit

April 30, 1996

Page 1209

[Copyrighted Material Omitted]

Page 1210

Appeal from the United States District Court for the District of Kansas (D.C. No. 91-CV-4118).

Pantaleon Florez, Jr., of Florez & Frost, Topeka, KS, for Plaintiff-Appellant.

Deanne Watts Hay, of Sloan, Listrom, Eisenbarth, Sloan & Glassman, Topeka, KS (Martha A. Peterson, of Sloan, Listrom, Eisenbarth, Sloan & Glassman, with her on the brief), for Defendant-Appellee.

Before EBEL, McKAY, and HENRY, Circuit Judges.

EBEL, Circuit Judge.

Appellant Kathy L. Kaul, a Citizen Band Potawatomi Indian, operates a general store on the Prairie Band Potawatomi Indian Reservation (the "Reservation") in Kansas. After learning that the Kansas Department of Revenue believed Kaul was violating state taxation laws, Appellee Robert Stephan, the then-Kansas Attorney General, assigned a member of his staff to investigate Kaul's business. When the investigation revealed that Kaul did not have a valid sales tax identification number, Stephan participated in a search of Kaul's store pursuant to two search warrants, which resulted in the seizure of 5,300 cartons of cigarettes. The state prosecuted Kaul for possessing cigarettes without the required tax indicia, but a jury acquitted her of the charges. Kaul then brought this action pursuant to 42 U.S.C. § 1983 against Stephan, arguing that he violated her Fourth Amendment right to be free from unreasonable searches and seizures. The district court granted summary judgment for Stephan, holding that Stephan did not personally participate in any unconstitutional activity, and, even if Stephan's actions were unconstitutional, he was shielded by qualified immunity. On appeal, Kaul challenges both of these conclusions. For the reasons stated below, we AFFIRM.


Kaul, a Citizen Band Potawatomi Indian, owns the Indian Country Lumber and General

Page 1211

Store, which is located within the Prairie Band Potawatomi Indian Reservation in Jackson County, Kansas. Prior to opening her store on November 1, 1990, Kaul submitted a business tax application to the Kansas Department of Revenue in October 1990. In the application, she alleged that she was exempt from sales tax because her store would operate on an Indian Reservation. The Department of Revenue did not issue Kaul a sales tax identification number because the department's policy at the time was that retailers operating on Indian reservations were exempt from the requirement of collecting and remitting Kansas retailers' sales tax. However, such an exemption was not enumerated in the Kansas Retailers' Sales Tax Act, K.S.A. § 79-3601 et seq.

In late May or early June of 1991, officials of the Kansas Department of Revenue, including the general counsel for the Department of Revenue, Mark Burghart, and the Secretary of Revenue, Mark Beshears, met with Stephan to request his assistance in prosecuting Kaul for failing to collect and remit Kansas retailers' sales taxes. The revenue department officials told Stephan that they believed Kaul was in violation of Kansas tax statutes and subject to prosecution under Kansas' criminal tax statutes. Neither Beshears nor Burghart disclosed to Stephan the department's policy of not taxing sales made on Indian reservations, nor did they tell Stephan that Kaul had applied for a tax identification number and that no number was issued because the department considered her exempt.

Stephan assigned the matter to Deputy Attorney General Edward Van Petten. On June 18, 1991, Van Petten applied for a search warrant to search and seize from Kaul's store records kept in the normal course of retail business. The application alleged a violation of K.S.A. § 79-3615(g), which establishes a criminal penalty for "any person who willfully fails to make a return or to pay any tax imposed under the Kansas retailers' sales tax act...." 1 In support of the application, Van Petten attached an affidavit executed by Mark Ciardullo, bureau chief of the business tax bureau of the revenue department, which affirmed that Kaul did not have a Kansas retailers' sales tax registration certificate and that Kaul was not remitting Kansas' retailers' sales tax. A state district court judge issued the warrant on the same day.

Law enforcement officers, including Stephan, then proceeded to Kaul's store to execute the warrant. While executing the warrant at Kaul's store, a revenue department agent observed cigarettes for sale without the required tax stamp attached. Van Petten then applied for a second search warrant, this time alleging a violation of K.S.A. § 79-3321(a), which makes it "unlawful for any person ... [t]o possess, except as otherwise specifically provided by this act, more than 200 cigarettes without the required tax indicia being affixed as herein provided." 2 The warrant was issued and executed that afternoon, resulting in the seizure of approximately 5,300 cartons of untaxed cigarettes from Kaul's store. Stephan assisted the law enforcement officers by carrying several boxes of cigarettes out of Kaul's store.

Kaul alleges that during the search, she showed Stephan two letters written by the Department of Revenue which she claims exempt her from state taxation, although Stephan denies seeing these letters until he was deposed in connection with this case. The first letter, dated June 23, 1989, is a letter from Burghart to attorney Lance Burr. It states that the Department of Revenue's policy at that time was that it could not require certain "Indian Nations" to collect and remit excise taxes to Kansas. The second letter, dated November 7, 1990, is from Burghart to an employee of the Georgia-Pacific Corporation. The letter states that the revenue department was reviewing whether it had advised taxpayers that the

Page 1212

sale of goods by Kansas retailers to businesses on the Potawatomi Indian Reservation (such as Kaul's business) are exempt from Kansas sales tax. The letter also acknowledged Georgia-Pacific Corporation's request for a private letter ruling. Kaul alleges that despite showing these letters to Stephan, he decided to proceed with the search of her store.

The state brought criminal misdemeanor proceedings against Kaul in Kansas district court, charging her with failure to make a retail sales tax return in violation of K.S.A. § 79-3615(g) and possessing more than 200 cigarettes without the required tax in dicia in violation of K.S.A. § 79-3321. The state moved to dismiss the K.S.A. § 79-3615(g) charge, which the court granted. A jury acquitted Kaul of the K.S.A. § 79-3321 charge.

Kaul then brought this Section 1983 action in United States District Court against Stephan, arguing that Stephan violated her Fourth Amendment right against unconstitutional searches and seizures. The district court granted Stephan's summary judgment motion and dismissed the action on the grounds that: (1) Stephan neither participated in any arguably illegal conduct nor could be liable as a supervisor for his staff's conduct; and (2) Qualified immunity would shield Stephan from any liability arising out of Kaul's claims because any law prohibiting Stephan's actions was not clearly established. Kaul now appeals.

Standard of Review

In Wolf v. Prudential Ins. Co. of America, 50 F.3d 793 (10th Cir.1995), we expressed the standard of review applicable to a district court's decision to grant summary judgment as follows:

We review the grant or denial of summary judgment de novo, applying the same legal standard used by the district court pursuant to Fed.R.Civ.P. 56(c). Summary judgment is appropriate if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law. When applying this standard, we examine the factual record and reasonable inferences therefrom in the light most favorable to the party opposing summary judgment. If there is no genuine issue of material fact in dispute, then we next determine if the substantive law was correctly applied by the district court.

While the movant bears the burden of showing the absence of a genuine issue of material fact, the movant need not negate the non-movant's claim, but need only point to an absence of evidence to support the non-movant's claim. If the movant carries this initial burden, the non-movant may not rest upon its pleadings, but must set forth specific facts showing a genuine issue for trial as to those dispositive matters for which it carries the burden of proof. An issue of material fact is genuine if a reasonable jury could return a verdict for the non-movant.

50 F.3d at 796 (citations omitted).


Kaul argues that Stephan is subject to Section 1983 liability because he violated her Fourth Amendment right to be free from unreasonable searches and seizures. Section 1983 provides in relevant part that:

[e]very person who, under color of [any law of] any State ... 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.

Here, Kaul alleges that Stephan deprived her of her Fourth Amendment rights because: (1) when he and his staff applied for and executed the search warrants, they lacked probable cause to believe that Kansas law prohibited Kaul's possession on an Indian...

To continue reading