Halstead Bead, Inc. v. Lewis
| Decision Date | 23 May 2022 |
| Docket Number | CIVIL ACTION NO. 21-2106 |
| Citation | 604 F.Supp.3d 342 |
| Parties | HALSTEAD BEAD, INC. v. Kimberly LEWIS et al. |
| Court | U.S. District Court — Eastern District of Louisiana |
Sarah R. Harbison, Pelican Institute for Public Policy, New Orleans, LA, Jacob Huebert, Pro Hac Vice, Liberty Justice Center, Chicago, IL, Joseph Henchman, Pro Hac Vice, Tyler Leandro Martinez, Pro Hac Vice, National Taxpayers Union Foundation, Washington, DC, Timothy Sandefur, Pro Hac Vice, Goldwater Institute, Phoenix, AZ, for Halstead Bead, Inc.
Patrick M. Amedee, Catherine Chambers Masterson, Joseph Zachary Landry, Patrick M. Amedee, Attorney at Law, Thibodaux, LA, for Amanda Granier.
Drew M. Talbot, Rainer Anding & Talbot, Baton Rouge, LA, Patrick M. Amedee, Patrick M. Amedee, Attorney at Law, Thibodaux, LA, for Donna Drude.
Ross Forrest Lagarde, Jeffrey G. Lagarde, Alexander L. Reed, Ross F. Lagarde, APLC, Slidell, LA, for Jamie Butts.
Michael G. Gee, Porteous, Hainkel & Johnson, Thibodaux, LA, for Lafourche Parish.
Russell J. Stutes, Jr., Russell Joseph Stutes, III, Stutes & Lavergne, LLC, Lake Charles, LA, Antonio Charles Ferachi, Louisiana Department of Revenue, Baton Rouge, LA, Lucius L. Morris, II, Louisiana Department of Revenue Office of Legal Affairs, Baton Rouge, LA, for Kevin Richards.
Michael G. Gee, Mallory Fields Maddocks, Porteous, Hainkel & Johnson, Thibodaux, LA, for Lafourche Parish Government.
SECTION: H(4)
ORDER AND REASONS
Before the Court is Defendants Jamie Butts, Donna Drude, and Amanda Granier's Motion to Dismiss Plaintiff's Complaint Pursuant to Rule 12 (Doc. 43). For the following reasons, this Motion is GRANTED .
This case arises out of Plaintiff Halstead Bead, Inc.’s constitutional challenge to Louisiana's laws governing sales and use taxes.1 Under Louisiana law, sales and use taxes are charged by retailers as part of the sales price that the buyer pays. The retailer has the duty to collect and remit to the state the amount charged to the buyer per the applicable tax rates.2 The Louisiana Constitution and corresponding state laws allow parishes and even political subdivisions within the parishes, such as school boards and the like, to set the rates of their local sales and use taxes.3 Because of the allegedly onerous regulatory burden of complying with the various parish-by-parish and intra-parish tax requirements, Plaintiff challenges this tax scheme as unconstitutional under both the Commerce Clause and the Due Process Clause of the Fourteenth Amendment.4
Plaintiff is an Arizona corporation that sells jewelry-making supplies to wholesale and retail customers across the country, including in Louisiana. Plaintiff has no physical presence in Louisiana; all of its employees and inventory are located in Arizona. Plaintiff sells its wares online via the company's website or its toll-free number. It ships all of its goods directly to customers, using common carriers for deliveries. Most of Plaintiff's sales are wholesale, which are not subject to sales and use taxes. However, Plaintiff also has retail sales, which are subject to sales and use taxes. For shipping and taxation purposes, Plaintiff's retail buyers provide their billing and shipping addresses as part of the transaction; no other documentation is required.
Plaintiff challenges Louisiana's sales and use tax laws for remote sellers like itself. State law defines a remote seller as a retail seller without physical presence in Louisiana who sells tangible personal property or services for delivery there.5 Once a remote seller crosses a threshold number of sales in Louisiana, its legal obligation to collect and remit sales and use taxes to the appropriate authority is triggered.6 A remote seller meets that threshold if during the previous or current calendar year either its gross revenue from Louisiana sales—wholesale or retail—exceeds $100,000 or it completes 200 or more separate transactions in the state.7
Once a remote seller exceeds this threshold, it must register with the Louisiana Sales and Use Tax Commission for Remote Sellers ("the Remote Sellers Commission").8 The Remote Sellers Commission handles the administration and collection of all sales and use taxes on sales by remote sellers.9 After registering, a remote seller must begin collecting sales and use taxes and remitting them to the Commission each month.10 Although local sales and use tax rates differ by parish and even by political subdivision, the Remote Sellers Commission is the sole collector of all sales and use taxes for remote sellers like Plaintiff.11 Using the address where the goods or services are to be shipped, a qualifying remote seller must collect from its retail customers the tax based on the appropriate rate, minus any exemptions or exclusions, and remit that amount to the Remote Sellers Commission on a monthly basis.
Plaintiff has never met the threshold number of sales in Louisiana and is therefore not subject to the tax laws that it challenges. Rather, Plaintiff alleges that it deliberately halted its sales before reaching the threshold because of the anticipated burden of complying with the parish-by-parish requirements of local sales and use taxes.12 In November of 2021, Plaintiff filed suit against the following defendants in their official capacities: Kimberly Lewis, Louisiana Secretary of Revenue13 ; Amanda Granier, Sales Tax Collector of Lafourche Parish; Donna Drude, Sales and Use Tax Administrator of Tangipahoa Parish; and Jamie Butts, Sales Tax Auditor of Washington Parish. Plaintiff also named the Parishes of Lafourche, Tangipahoa, and Washington as defendants. Plaintiff asserts two constitutional claims. The first alleges that the parish-by-parish requirements of the sales and use tax laws violate the Commerce Clause by discriminating against and unduly burdening interstate commerce.14 The second avers that those same requirements also violate the Due Process Clause by lacking any reasonable relationship with the value gained from them.15
Plaintiff seeks a declaratory judgment that certain parish-by-parish requirements, constitutional provisions, and state laws are unconstitutional, both on their face and as applied to Plaintiff.16 Plaintiff also seeks a permanent injunction to prevent Defendants "from enforcing local sales and use tax registration and reporting requirements, against out-of-state sellers ... [and] against Halstead Bead's eCommerce business."17 Finally, Plaintiff prays for nominal damages, costs, and attorney's fees under 42 U.S.C. §§ 1983 and 1988.
Before the Court is Defendants Granier, Drude, and Butts's Motion to Dismiss. Defendants argue that this Court lacks subject matter jurisdiction because Plaintiff lacks standing and because the Tax Injunction Act and comity preclude jurisdiction. Defendants also argue that Plaintiff fails to state a claim under Federal Rule of Civil Procedure 12(b)(6). Plaintiff opposes. Oral argument was held on March 17, 2022.
A Rule 12(b)(1) motion challenges the subject matter jurisdiction of a federal district court. "A case is properly dismissed for lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the case."18 In ruling on a Rule 12(b)(1) motion to dismiss, the court may rely on (1) the complaint alone, presuming the allegations to be true, (2) the complaint supplemented by undisputed facts, or (3) the complaint supplemented by undisputed facts and by the court's resolution of disputed facts.19 The proponent of federal court jurisdiction—in this case, the Plaintiff—bears the burden of establishing subject matter jurisdiction.20
If at any time the court determines that it lacks subject matter jurisdiction, the court must dismiss the action.21 "A case is properly dismissed for lack of subject matter jurisdiction when the court lacks the statutory or constitutional power to adjudicate the case."22 As a prerequisite to jurisdiction, the U.S. Constitution requires, at a minimum, that a case present an actual "case or controversy" as defined by Article III.23 Standing is one aspect of this constitutional requirement,24 so a lack of standing deprives the court of subject matter jurisdiction.25 The party seeking to invoke federal jurisdiction has the burden of establishing standing.26
To survive a Rule 12(b)(6) motion to dismiss, a plaintiff must plead enough facts "to state a claim for relief that is plausible on its face."27 A claim is "plausible on its face" when the pleaded facts allow the court to "draw the reasonable inference that the defendant is liable for the misconduct alleged."28 A court must accept the complaint's factual allegations as true and must "draw all reasonable inferences in the plaintiff's favor."29 The court need not, however, accept as true legal conclusions couched as factual allegations.30 To be legally sufficient, a complaint must establish more than a "sheer possibility" that the plaintiff's claims are true.31 If it is apparent from the face of the complaint that an insurmountable bar to relief exists and the plaintiff is not entitled to relief, the court must dismiss the claim.32 The court's review is limited to the complaint and any documents attached to the motion to dismiss that are central to the claim and referenced by the complaint.33
Defendants challenge this Court's subject matter jurisdiction to entertain this action and to provide the relief Plaintiff seeks. Because the Court holds that the Tax Injunction Act divests subject matter jurisdiction over Plaintiff's claims, it does not address the parties’ 12(b)(6) arguments.34 The Court first analyzes the Tax Injunction Act, followed by comity.
The Tax Injunction Act ("TIA") provides in its entirety, "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...
To continue reading
Request your trial