Hexom v. Oregon Dept. of Transp.

• Decision Date: 18 May 1999
• Docket Number: No. 98-35500.,98-35500.
• Citation: 177 F.3d 1134
• Parties: Charles R. HEXOM, Plaintiff-Appellant, v. OREGON DEPARTMENT OF TRANSPORTATION; Grace Crunican, Director of the Oregon Department of Transportation, Defendants-Appellees.
• Court: U.S. Court of Appeals — Ninth Circuit

177 F.3d 1134

Charles R. HEXOM, Plaintiff-Appellant, v. OREGON DEPARTMENT OF TRANSPORTATION; Grace Crunican, Director of the Oregon Department of Transportation, Defendants-Appellees.

No. 98-35500.

United States Court of Appeals, Ninth Circuit.

Submitted April 16, 1999.¹

Decided May 18, 1999.

Kent B. Thurber, Davis Wright Tremaine, Portland, Oregon, for the plaintiff-appellant.

Richard D. Wasserman, Assistant Attorney General, Salem, Oregon, for the defendants-appellees.

Before: D.W. NELSON, FERNANDEZ and FLETCHER, Circuit Judges.

FERNANDEZ, Circuit Judge:

Charles R. Hexom filed this action against the Oregon Department of Transportation² for the purpose of enjoining the DOT from imposing a $4 fee for the issuance of or renewal of disabled person parking permits in the form of individual placards or decals. See Or.Rev.Stat. §§ 811.602, 811.640 (1998). He asserted that the fee violated the provisions of the Americans with Disabilities Act. See 42 U.S.C. §§ 12101-12213. The district court determined that the fee was a tax. It, therefore, found that the Tax Injunction Act stripped it of jurisdiction. See 28 U.S.C. § 1341. Thus, it dismissed the complaint. See Fed.R.Civ.P. 12(b)(1). Hexom appealed. We reverse and remand.

BACKGROUND

Oregon has provided special parking places and privileges for disabled persons. It also has provided for the issuance of special license plates and of individual placards, which are portable and which can, therefore, be used on any car. The license plates and placards enable policing of parking space usage in order to assure that the spaces will not be used by persons who have no need for them. See Or.Rev. Stat. §§ 811.615-811.620 (1998). The placard can be used in the vehicle of a person who is not disabled when he is transporting a disabled person and, thus, adds flexibility for the benefit of disabled people. See Or.Rev.Stat. § 811.625 (1998).

Not surprisingly, the placard program does impose some costs on the State of Oregon and, more particularly, on the DOT. Oregon has chosen to defray those costs by charging a fee of $4 for the issuance of the placard. See Or.Rev.Stat. § 811.640 (1998). That fee results in the issuance of a permit that is good for four years before it needs to be renewed. See Or.Rev.Stat. §§ 807.130, 807.400, 811.605 (1998). In explaining the need for the fee to the legislature, the then administrator of the DOT told that body that the program would create "a need for two additional permanent positions at the division" as well as a number of temporary ones. He indicated that "the $4 fee will cover the cost of the program." The legislature agreed.

It is the imposition of that fee which has generated this litigation because Hexom asserts that no fee whatsoever can be charged. The district court, however, never reached the merits of that claim. It decided, instead, that it lacked subject matter jurisdiction to do so. This appeal followed.

STANDARD OF REVIEW

"The existence of subject matter jurisdiction is a question of law reviewed de novo." Bidart Bros. v. California Apple Comm'n, 73 F.3d 925, 928 (9th Cir. 1996). It is the burden of plaintiffs to persuade the federal courts that subject matter jurisdiction does exist. See Thornhill Publ'g Co., Inc. v. General Tel. & Electronics Corp., 594 F.2d 730, 733 (9th Cir.1979).

JURISDICTION

We have jurisdiction pursuant to 28 U.S.C. § 1291. What we must decide in this case is whether the district court had jurisdiction.

The district court's jurisdiction turns on the application of the TIA, 28 U.S.C. § 1341, which sententiously provides that "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 remedy may be had in the courts of such State." Nothing could be more direct than that simple imperative sentence, but we must ask, as others have before us, what exactly is a tax?³ The answer, unfortunately, is considerably longer than either § 1341 itself or the question.

Not every exaction by state authorities is a tax. That much is certain. Congress did not intend to remove federal court jurisdiction whenever some state revenue might be affected somehow. Rather, it sought to avoid interference that would "threaten the flow of general revenue to or the budgets of state governments." Bidart, 73 F.3d at 930. That interference could "damage ... the State's budget, and perhaps . . . shift to the State ... the risk of taxpayer insolvency." Id. (internal quotation marks and citations omitted). Thus, we have "appropriately distinguished between assessments that if enjoined would threaten the flow of central revenues of state governments and assessments that are not so critical to general state functions." Id.

We have had occasion to distinguish mere fees from taxes. We touched on that distinction in Union Pac. R.R. Co. v. Public Util. Comm'n, 899 F.2d 854 (9th Cir. 1990). In that case, we were faced with a levy that was placed upon railroad corporations. It was contended that the levy constituted a discriminatory tax. See id. at 855-56. We said: "The Oregon levy is designed to recoup the costs of a regulatory program from members of the industry regulated, rather than to raise general revenues...." Id. at 859. We then determined that the levy was not a tax. See id. at 861. That commonsense approach militates for a determination that the $4 fee in question here is not a tax either, but courts have applied a somewhat more elaborate form of reasoning to the TIA.

The decision that has become a leading case in this area was issued by the First Circuit a few years ago. See San Juan Cellular Tel. Co. v. Public Serv. Comm'n, 967 F.2d 683, 685 (1st Cir.1992). That case applied a statute much like the TIA. The question before the court was whether a periodic fee imposed by Puerto Rico was a tax. If it was, the district court was prohibited from considering an action which challenged the fee. See id. at 684-85. The court pointed out that:

Courts have had to distinguish "taxes" from regulatory "fees" in a variety of statutory contexts. Yet, in doing so, they have analyzed the legal issues in similar ways. They have sketched a spectrum with a paradigmatic tax at one end and a paradigmatic fee at the other. The classic "tax" is imposed by a legislature upon many, or all, citizens. It raises money, contributed to a general fund, and spent for the benefit of the entire community. The classic "regulatory fee" is imposed by an agency upon those subject to its regulation. It may serve regulatory purposes directly by, for example, deliberately discouraging particular conduct by making it more expensive. Or, it may serve such purposes indirectly by, for example, raising money placed in a special fund to help defray the agency's regulation-related expenses.

Courts facing cases that lie near the middle of this spectrum have tended (sometimes with minor differences reflecting the different statutes at issue) to emphasize the revenue's ultimate use, asking whether it provides a general benefit to the public, of a sort often financed by a general tax, or whether it provides more narrow benefits to regulated companies or defrays the agency's costs of regulation.

Id. at 685 (citations omitted). Based upon that framework, the court determined that the fee it was dealing with was not a tax. See id. at 686. It pointed out that the money was not for general governmental purposes, that the funds were actually for use by a particular agency, and that there was little reason to think that the money would ultimately be used for general fund purposes. See id. at 686-87.

First Circuit cases since San Juan Cellular have reached similar conclusions. See Trailer Marine Transp. Corp. v. Rivera Vazquez, 977 F.2d 1, 6 (1st Cir.1992) (where a fee was directed to a special fund for special purposes, and an injunction would pose "no threat to the central stream of tax revenue," it was not a tax); cf. Cumberland Farms, Inc. v. Tax Assessor, 116 F.3d 943, 946-47 (1st Cir.1997) (where collection of a levy was assigned to the state tax assessor and the legislature called the charge a general revenue raising device, it was a tax). Other courts have agreed with the First Circuit's approach. See Marcus v. Kansas Dep't of Revenue, 170 F.3d 1305, 1311 (10th Cir.1999); Collins Holding Corp. v. Jasper County, 123 F.3d 797, 800 (4th Cir.1997); Hager v. City of West Peoria, 84 F.3d 865, 870-72 (7th Cir.1996); cf. Miami Herald Publ'g Co. v. City of Hallandale, 734 F.2d 666, 670-71 (11th Cir.1984).

We, too, have agreed with the First Circuit's approach. In Bidart, 73 F.3d at 930, we first set forth the language from San Juan Cellular that we have already quoted in this opinion. We then distilled the essence of the San Juan Cellular approach to cases which are at neither pole of the spectrum. We said:

The San Juan Cellular test calls for the consideration of three primary factors in determining whether an assessment is a tax: (1) the entity that imposes the assessment; (2) the parties upon whom the assessment is imposed; and (3) whether the assessment is expended for general public purposes, or used for the regulation or benefit of the parties upon whom the assessment is imposed.

Id. at 931. We applied those standards and determined that the levies in question were not taxes because they were imposed by a non-legislative body, were segregated from California's general funds, and were not spent for the benefit of the public at large. See id. at 933.

Before turning to consider the placard fee, we pause to emphasize that the cases, Bidart among them, take a practical and sensible approach. They do not apply a set of rigid rules or elements and then reach a mechanical conclusion. In Bidart itself, we noted that when we are considering the more elusive cases, which are nearer to the midpoint between the paradigmatic tax and the paradigmatic regulatory fee, the factors we...