El Bey v. United Parcel Serv., Inc.

Decision Date20 September 2012
Docket Number11-CV-2993 (SIE)(ETB)
CourtU.S. District Court — Eastern District of New York

FEUERSTEIN, District Judge:

On June 20, 2011, pro se plaintiff Kheru Ra El Imani Bey ("plaintiff") filed a complaint in this Court against defendant United Parcel Service, Inc. ("defendant"), pursuant to 42 U.S.C. § 1983. Pending before the Court are: (1) defendant's motion to dismiss the complaint pursuant to Rules 12(b)(5) and (6) of the Federal Rules of Civil Procedure; and (2) plaintiff's motion for leave to amend the complaint pursuant to Rule 15(a) of the Federal Rules of Civil Procedure. For the reasons set forth herein, defendant's motion is granted and plaintiff's motion is denied.

I. The Complaint1

Plaintiff alleges that as of December 2009, he "properly corrected [his] name and national status on the employment records of [defendant]," (Compl., ¶ 3), to reflect that he is entitled to a tax exemption because he is a Native American of Choctaw and Cherokee lineage. (Compl., 5). According to plaintiff, defendant is "depriving [him] of [his] right to choose [his] own tax destinyby forcibly withholding taxes from [his] paycheck without [his] authorization." (Compl., at p. 2). Plaintiff seeks an order enjoining defendant from its "unlawful tax action;" recoupment of all payroll taxes withheld by defendant from his wages without his authorization; punitive damages in the amount of thirty million dollars ($30,000,000.00); and costs. (Compl., at pp. 2, 5).

II. Discussion
A. Subject Matter Jurisdiction
1. Standard of Review

Federal courts are courts of limited jurisdiction, see Mims v. Arrow Financial Services, LLC. 132 S. Ct 740, 747, 181 L. Ed. 2d 881 (2012); Exxon Mobil Corp. v. Allapattah Services, Inc., 545 U.S. 546, 552, 125 S.Ct. 2611, 162 L.Ed.2d 502 (2005), and may not preside over cases absent subject matter jurisdiction. See Exxon Mobil, 545 U.S. at 552, 125 S.Ct. 2611 (holding that federal courts may not exercise jurisdiction absent a statutory basis); Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377,114 S. Ct. 1673, 128 L. Ed. 2d 391 (1994) (holding that federal courts "possess only that power authorized by Constitution and statute * * *."); County of Nassau. N.Y. v. Hotels.com. LP, 577 F.3d 89, 91 (2d Cir. 2009) (holding that federal courts lack power to disregard the limits on their jurisdiction imposed by the Constitution or Congress). Lack of subject matter jurisdiction cannot be waived or forfeited and may be raised at any time by a party or by the court sua sponte. See Gonzalez v. Thaler, 132 S. Ct. 641, 648, 181 L. Ed. 2d 619 (2012); see also Henderson ex rel. Henderson v. Shinseki, 131 S.Ct. 1197, 1202, 179 L.Ed.2d 159 (2011) ("[F]ederal courts have an independent obligation to ensure that they do not exceed the scope of their jurisdiction, and therefore they must raise and decide jurisdictionalquestions that the parties either overlook or elect not to press. * * * Objections to subject matter jurisdiction * * * may be raised at any time.") If a court lacks subject matter jurisdiction, it must dismiss the action. See Fed. R. Civ. P. 12(h)(3); Arbaugh v. Y&H Corp., 546 U.S. 500, 514, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006); Durant, Nichols. Houston. Hodgson & Cortese-Costa. P.C. v. Dupont, 565 F.3d 56, 62-3 (2d Cir. 2009).

2. Anti-Injunction Act

Plaintiff's claim seeking to enjoin defendant from "its unlawful tax action," i.e., withholding federal taxes from his wages, is barred by the Ant-Injunction Act, 26 U.S.C. § 7421, which provides that, with exceptions not relevant here, "no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person * * *."

Section 3402(a) of the United States Internal Revenue Code, 28 U.S.C. § 3402(a), which provides that, with exceptions not relevant here, "every employer making payment of wages shall deduct and withhold upon such wages a tax * * *," is a method of collection of taxes within the meaning of Section 7421 (a). See United States v. American Friends Service Committee, 419 U.S. 7, 10, 95 S. Ct. 13, 42 L. Ed. 2d 7 (1974) (finding that the district court's "injunction against the collection of [a] tax by withholding enjoins the collection of the tax, and is therefore contrary to the express language of the [Anti-Injunction Act]."); Karas v. Katten Muchin Zavis Rosenman, a partnership, No. 04 Civ. 9570, 2006 WL 20507, at * 3 (S.D.N.Y. Jan. 3, 2006), aff'd, 2009 WL 38898 (2d Cir. Jan. 8, 2009). Under Section 3402(a), "an employer has a mandatory duty to withhold federal income tax from an employee's wages where required by applicable regulations." Bright v. Bechtel Petroleum, Inc., 780 F.2d 766, 770 (9,h Cir. 1986); seealso Edwards v. Stringer, 89 Fed. Appx. 663, 665 (10th Cir. Feb. 12, 2004) (holding that employers are "not only authorized, but also legally bound to withhold [from their employees' wages] and [to] pay federal income taxes to the Internal Revenue Service."); El Bey v. MTA/New York, No. 00 CV 2504, 2001 WL 487410, at * 2 (S.D.N.Y. May 8, 2001) ("An employer making payment of wages is statutorily required to deduct and withhold therefrom the applicable taxes.") "[T]hus, an action that seeks to enjoin an employer from collecting federal taxes is barred by [S]ection 7421(a)." Karas, 2006 WL 20507, at * 4; see also Loglia v. U.S., No. 94 Civ. 7316, 1995 WL 408265, at * 4 (S.D.N.Y. July 11, 1995); McFarland v. Bechtel Petroleum, Inc., 586 F. Supp. 907, 910 (D.C. Cal. 1984).

In Enochs v. Williams Packaging & Navigation Co., 370 U.S. 1, 82 S. Ct. 1125, 8 L. Ed. 2d 292 (1962), the Supreme Court recognized a single, narrow exception to the Anti-Injunction Act's limitation of judicial interference in the collection of federal taxes which applies only when a party seeking to enjoin the collection of federal taxes demonstrates: (1) that "under the most liberal view of the law and the facts, the United States cannot establish its claim," Id. at 7, 82 S. Ct. 1125; and (2) that "equity jurisdiction otherwise exists," Smith v. Shulman, 333 Fed. Appx. 607, 608 (2d Cir. June 17, 2009), i.e., that the taxpayer will suffer irreparable harm and does not have an adequate remedy at law. See Mullings v. C.I.R., No. CV-95-4159, 1996 WL 576999, at * 4 (E.D.N.Y. July 24, 1996), aff'd, 112 F.3d 504 (2d Cir. 1997); Karas, 2006 WL 20507, at * 3; Deitz v. Trustco Bank, No. l:05-cv-0676, 2005 WL 1871184, at * 2 (N.D.N.Y. Aug. 3, 2005); Celauro v. U.S., I.R.S., 371 F. Supp. 2d 219, 223 (E.D.N.Y. 2005). "Otherwise, the only route available to challenge an allegedly wrongful withholding is to commence a suit for a tax refund" pursuant to 26 U.S.C. § 7422(a). Karas, 2006 WL 20507, at * 3; see also Smith, 333 Fed. Appx.at 608 (holding that prior to commencing an action in federal court seeking a refund of income tax paid, a taxpayer is "statutorily required [pursuant to 26 U.S.C. § 7422(a)] to file an administrative claim and pay the tax in full * * *.")

Plaintiff has not demonstrated that "under no circumstances could the Government ultimately prevail," Williams Packaging, 370 U.S. at 7, 82 S. Ct. 1125, in collecting federal taxes on his wages, or that he will suffer irreparable harm by paying federal taxes on his wages. Moreover, there is an adequate remedy available to him from the alleged wrongful withholding of any federal taxes upon his wages, as set forth in 26 U.S.C. § 7422(a). Accordingly, the Williams Packaging exception to the Anti-Injunction Act is not applicable. Therefore, plaintiff's claim seeking to restrain defendant from withholding federal taxes from his wages is sua sponte dismissed without prejudice for lack of subject matter jurisdiction.

3. Tax Injunction Act

The Tax Injunction Act, 28 U.S.C. § 1341, which provides that federal 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," prohibits federal courts from interfering with the collection of state taxes.2 See Karas, 2006 WL 20507, at * 4; see Levin v. Commerce Energy, Inc., 130 S. Ct. 2323, 2335, 176 L. Ed. 2d 1131 (2010) ("[T]he [TaxInjunction Act] stands in the way of any decree that would 'enjoin * * * collection of [a] tax under State law."'); Hibbs v. Winn, 542 U.S. 88,104, 124 S. Ct. 2276, 159 L. Ed. 2d 172 (2004) ("Just as the [Anti-Injunction Act] shields federal tax collections from federal-court injunctions, so the [Tax Injunction Act] shields state tax collections from federal court restraints."); Jefferson County, Ala. v. Acker. 527 U.S. 423, 433, 119 S. Ct. 2069, 144 L. Ed. 2d 408 (1999) (holding that the Tax Injunction Act "bars anticipatory relief, suits to stop * * * the collection of taxes.")

Like Section 3402(a) of the United States Internal Revenue Code, Section 671(a)(1) of the New York Tax Law, which provides that "[e]very employer maintaining an office or transacting business within this state and making payment of any wages taxable under this article shall deduct and withhold from such wages * * * a tax * * *," imposes upon employers a mandatory duty to withhold state income tax from an employee's wages. Thus, an action that seeks to enjoin an employer from collecting state taxes is barred by the Tax Injunction Act, so long as there is a "plain, speedy and efficient remedy" available to the taxpayer in state court.

The phrase "plain, speedy and efficient remedy" in the Tax Injunction Act "was only designed to require that the state remedy satisfy certain procedural criteria," Rosewell v. LaSalle Nat. Bank, 450 U.S. 503, 522, 101 S. Ct. 1221,67 L. Ed. 2d 464 (T981); see also Long Island Lighting Co. v. own of Brookhaven, 889 F.2d 428, 431 (2d Cir. 1989), and must be construed narrowly. See California v. Grace Brethren Church, 457 U.S. 393, 413, 102 S. Ct. 2498, 73 L. Ed. 2d 93 (1982)....

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