Apache Bend Apartments, Ltd. v. U.S. Through I.R.S.

• Decision Date: 09 April 1993
• Docket Number: No. 91-1083,91-1083
• Citation: Apache Bend Apartments, Ltd. v. U.S. Through I.R.S., 987 F.2d 1174 (5th Cir. 1993)
• Parties: -1499, 61 USLW 2625, 93-1 USTC P 50,279 APACHE BEND APARTMENTS, LTD., et al., Plaintiffs-Appellants, v. UNITED STATES of America, Acting Through the INTERNAL REVENUE SERVICE, Defendant-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1174

987 F.2d 1174

71 A.F.T.R.2d 93-1499, 61 USLW 2625,

93-1 USTC P 50,279

APACHE BEND APARTMENTS, LTD., et al., Plaintiffs-Appellants, v. UNITED STATES of America, Acting Through the INTERNAL REVENUE SERVICE, Defendant-Appellee.

No. 91-1083.

United States Court of Appeals Fifth Circuit.

April 9, 1993.

Patrick A. Barbolla, Ft. Worth, TX, for plaintiffs-appellants.

Teresa E. McLaughlin, Gary R. Allen, Chief, Gilbert S. Rothenberg, Asst. Chief, Appellate Section, Tax Div., Dept. of Justice, Washington, DC, for defendant-appellee.

Appeal from the United States District Court for the Northern District of Texas.

Before POLITZ, Chief Judge, GOLDBERG, KING, GARWOOD, JOLLY, HIGGINBOTHAM, DAVIS, JONES, SMITH, DUHE, WIENER, BARKSDALE, E. GARZA, and DeMOSS, Circuit Judges.

E. GRADY JOLLY, Circuit Judge:

In the Tax Reform Act of 1986, Congress included "transition rules," which provided specified exemptions from designated provisions of the new tax laws to a very, very few specified favored taxpayers. The plaintiff taxpayers were not among the very, very favored few. They brought this suit to scotch the wheels of the greased wagon. They allege that the transition rules violate the Uniformity Clause and the equal protection component of the Due Process Clause of the Fifth Amendment. The case comes to us for rehearing en banc on the issue of the standing of these taxpayers to bring this suit seeking to enjoin a congressional act. A panel of our court held that the plaintiffs had suffered a redressable injury under the equal protection component of the Due Process Clause and thus had standing under the rationale of Heckler v. Mathews, 465 U.S. 728, 104 S.Ct. 1387, 79 L.Ed.2d 646 (1984). The panel proceeded, however, to deny plaintiffs relief on the merits of their claims. Apache Bend Apartments, Ltd. v. United States, 964 F.2d 1556 (5th Cir.1992). ¹ The dissent argued that the plaintiffs lacked standing, because they had alleged only an abstract injury, shared by all taxpayers who did not receive transition relief. Id. at 1569-71. Prudential considerations lead us to the conclusion that the plaintiffs lack standing to challenge the constitutionality of the transition rules.

I

The Supreme Court has noted that "[t]he term 'standing' subsumes a blend of constitutional requirements and prudential considerations." Valley Forge Christian College v. Americans United for Separation of Church & State, Inc., 454 U.S. 464, 471, 102 S.Ct. 752, 758, 70 L.Ed.2d 700 (1982); see also Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975); Flast v. Cohen, 392 U.S. 83, 99, 88 S.Ct. 1942, 1952, 20 L.Ed.2d 947 (1968). To satisfy the requirements of Article III, the plaintiffs must have suffered an "injury in fact," caused by the challenged government conduct, which is likely to be redressed by the relief they seek. Lujan v. Defenders of Wildlife, --- U.S. ----, ----, 112 S.Ct. 2130, 2136, 119 L.Ed.2d 351 (1992). In addition to the constitutional requirements, the Court also has applied certain prudential principles in determining whether litigants have standing. Plaintiffs " 'generally must assert [their] own legal rights and interests,' " and their complaint must "fall within 'the zone of interests to be protected or regulated by the statute or constitutional guarantee in question.' " Valley Forge, 454 U.S. at 474-75, 102 S.Ct. at 760 (quoting Warth v. Seldin, 422 U.S. at 499, 95 S.Ct. at 2205, and Association of Data Processing Service Organizations v. Camp, 397 U.S. 150, 153, 90 S.Ct. 827, 830, 25 L.Ed.2d 184 (1970)). The Court further has stated that it will not adjudicate " 'abstract questions of wide public significance' which amount to 'generalized grievances,' pervasively shared and most appropriately addressed in the representative branches." Id. at 475, 102 S.Ct. at 760 (quoting Warth v. Seldin, 422 U.S. at 499-500, 95 S.Ct. at 2205-06).

The prudential principle barring adjudication of "generalized grievances" is closely related to the constitutional requirement of personal "injury in fact," and the policies underlying both are similar. See Valley Forge, 454 U.S. at 475, 102 S.Ct. at 760. "In both dimensions it is founded in concern about the proper--and properly limited--role of the courts in a democratic society." Warth v. Seldin, 422 U.S. at 498, 95 S.Ct. at 2205. Prudential principles are judicial rules of self-restraint, founded upon the recognition that the political branches of government are generally better suited to resolving disputes involving matters of broad public significance. Id. at 499-500, 95 S.Ct. at 2205-06; see also Lujan, --- U.S. at ----, 112 S.Ct. at 2136. The judicial power to adjudicate constitutional questions is reserved for those instances in which it is necessary for the vindication of individual rights. See id. at ----, 112 S.Ct. at 2145; Valley Forge, 454 U.S. at 473-74, 102 S.Ct. at 759; Gladstone Realtors v. Village of Bellwood, 441 U.S. 91, 99-100, 99 S.Ct. 1601, 1608, 60 L.Ed.2d 66 (1979). The foundations for the judiciary's policy of avoiding the unnecessary resolution of constitutional issues were described in Rescue Army v. Municipal Court of City of Los Angeles, 331 U.S. 549, 571, 67 S.Ct. 1409, 1421, 91 L.Ed. 1666 (1947):

The policy's ultimate foundations, some if not all of which also sustain the jurisdictional limitation, lie in all that goes to make up the unique place and character, in our scheme, of judicial review of governmental action for constitutionality. They are found in the delicacy of that function, particularly in view of possible consequences for others stemming also from constitutional roots; the comparative finality of those consequences; the consideration due to the judgment of other repositories of constitutional power concerning the scope of their authority; the necessity, if government is to function constitutionally, for each to keep within its power, including the courts; the inherent limitations of the judicial process, arising especially from its largely negative character and limited resources of enforcement; withal in the paramount importance of constitutional adjudication in our system.

We find it unnecessary to decide whether the plaintiffs have alleged a redressable injury sufficient to satisfy the requirements of Article III of the Constitution, because even if we assume that they have, it is clear that the prudential principles apply with particular force here, and preclude our adjudication of the constitutional issues raised by the plaintiffs.

The transition rules apply only to a very, very few taxpayers who requested such relief from Congress. The plaintiffs, claiming to lack political access, did not request such relief. In this lawsuit, they do not seek transition relief for themselves, but ask only that transition relief be denied to the favored taxpayers. ² Accordingly, they concede that any palpable injury they may suffer as the result of their own unabated tax liability cannot be redressed by the relief they seek. Therefore, "unequal treatment" is the only injury upon which the plaintiffs rely in support of their claim to standing. They contend that a decision in their favor will redress that injury, and give them the satisfaction of knowing that all taxpayers are being treated equally in accordance with the Constitution.

The following prudential concerns convince us that the plaintiffs have not alleged an injury that is appropriate for judicial resolution.

A

First, it is important to note that the plaintiffs are not seeking to litigate their own tax liability, but the tax liability of taxpayers granted transition relief. The favored taxpayers, who are the only persons whose tax liability would be affected by the relief that the plaintiffs seek, are not before our court, and are thus unable to express their views.

In Louisiana v. McAdoo, 234 U.S. 627, 34 S.Ct. 938, 58 L.Ed. 1506 (1914), the Supreme Court ordered the dismissal of a suit by the State of Louisiana, which, as a sugar producer, was challenging the tariff rates applied to sugar imported from Cuba. The Court stated that the maintenance of such actions "would operate to disturb the whole revenue system of the Government," and that "[i]nterference [by the courts] in such a case would be to interfere with the ordinary functions of government." Id. at 632, 633, 34 S.Ct. at 940, 941.

In Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976), the Government relied on McAdoo in support of its contention that persons whose own tax liabilities are not affected could not litigate someone else's tax liability. Because the Court ruled that the plaintiffs lacked standing on other grounds, it expressed no opinion on the applicability of McAdoo. Id. at 36-37 & n. 14, 96 S.Ct. at 1923 & n. 14). Justice Stewart, however, in his concurring opinion stated: "I cannot now imagine a case, at least outside the First Amendment area, where a person whose own tax liability was not affected ever could have standing to litigate the federal tax liability of someone else." Id. at 46, 96 S.Ct. at 1928.

Although it is unnecessary for us to decide whether a taxpayer has standing to litigate another taxpayer's tax liability and, if so, under what circumstances, we believe that the concerns expressed in McAdoo are applicable here. Congress has erected a complex structure to govern the administration and enforcement of the tax laws, and has established precise standards and procedures for judicial review of tax matters. Even if the plaintiffs succeeded in gaining the relief they seek--nullification of the transition rules--the affected taxpayers, who are not parties, would remain free to challenge any deficiencies asserted. Moreover, our decision would constitute binding precedent only in this Circuit. It is obvious that the relief the plaintiffs seek, if granted, would seriously disrupt the entire revenue collection...