Marcus v. Kansas Dept. of Revenue

• Citation: 170 F.3d 1305
• Decision Date: 23 March 1999
• Docket Number: No. 97-3313,97-3313
• Parties: 9 A.D. Cases 281, 15 NDLR P 20, 1999 CJ C.A.R. 2521 Joel MARCUS and David V. Morando, on their own behalf and all others similarly situated, Plaintiffs--Appellants, v. State of KANSAS, DEPARTMENT OF REVENUE, Defendant--Appellee.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 1305

170 F.3d 1305

9 A.D. Cases 281, 15 NDLR P 20, 1999

CJ C.A.R. 2521

Joel MARCUS and David V. Morando, on their own behalf and all others similarly situated, Plaintiffs--Appellants, v. State of KANSAS, DEPARTMENT OF REVENUE, Defendant--Appellee.

No. 97-3313.

United States Court of Appeals Tenth Circuit.

March 23, 1999.

Stephen R. Senn of Peterson & Myers, P.A., Lakeland, Florida (John J. Miller of Law Offices of John J. Miller, P.A., Overland Park, Kansas; and Robert Joseph Antonello of Antonello & Fegers, Winter Haven, Florida, with him on the briefs), for Plaintiffs-Appellants.

Joseph Brian Cox, Special Assistant Attorney General (Richard Cram with him on the brief), Legal Services Bureau, Kansas Department of Revenue, Topeka, Kansas, for Defendant-Appellee.

Before BRISCOE, McKAY, and LUCERO, Circuit Judges.

McKAY, Circuit Judge.

Plaintiffs Joel Marcus and David V. Morando appeal the district court's dismissal of their action pursuant to Federal Rule of Civil Procedure 12(b)(1). Because their claims arose under the Americans with Disabilities Act, 42 U.S.C. §§ 12101-12213, Plaintiffs asserted federal jurisdiction pursuant to 28 U.S.C. § 1331. However, the district court determined that the Tax Injunction Act, 28 U.S.C. § 1341, deprived it of jurisdiction over the subject matter of the action and accordingly dismissed the action without reaching its merits.

I.

Title II of the ADA requires public entities to ensure that "no qualified individual with a disability shall, by reason of such disability, be excluded from participation in or be denied the benefits of the services, programs, or activities" provided by the entities. 42 U.S.C. § 12132. Congress directed the Department of Justice to develop regulations to implement the public services provisions of Title II. See 42 U.S.C. § 12134(a). ¹ In accordance with Congress' mandate, the Department of Justice developed regulations requiring that where parking is provided for public buildings, a certain number of parking spaces on "the shortest accessible route of travel from adjacent parking to an accessible entrance" must be specially designated for people with disabilities. 28 C.F.R. Ch. 1, pt. 36, App. A § 4.6.2 (Accessibility Guidelines for Buildings and Facilities). The Department of Justice regulations further provide:

A public entity may not place a surcharge on a particular individual with a disability or any group of individuals with disabilities to cover the cost of measures, such as the provision of auxiliary aids or program accessibility, that are required to provide that individual or group with the nondiscriminatory treatment required by the Act or this part.

Id. § 35.130(f). The intent of this surcharge provision is to "prevent[ ] disabled persons from being denied access to ADA-mandated benefits or services because they do not have the funds to pay for them, and [to] spread[ ] the costs of such benefits or services to all taxpayers." Thrope v. Ohio, 19 F.Supp.2d 816, 819 (S.D.Ohio 1998) (citing McGarry v. Director, Dep't of Revenue, Mo., 7 F.Supp.2d 1022, 1028 (W.D.Mo.1998)).

To comply with the ADA regulations set forth above, the State of Kansas has enacted a statutory scheme governing the provision of parking accommodations for individuals with disabilities. Under the Kansas scheme, persons who qualify as "individuals with disabilities" may park in specially designated parking spaces so long as they have an identification card and display a special license plate, a permanent parking placard, or a temporary placard on or in their vehicles. See Kan. Stat. Ann. §§ 8-1,124 & 8-1,125(a). Both the license plates and the placards must "display the international symbol of access to the physically disabled." Id. § 8-1,125(a). Using a designated parking space without a special license plate or placard is punishable as a misdemeanor. See id. § 8-1,129.

Other than the general vehicle registration fee charged to all automobile owners, there is no additional charge for the licence plate entitling the holder to use parking accommodations set aside for people with disabilities. See id. § 8-1,125(b). To obtain a placard and an identification card, however, qualified individuals must pay a total of $5.25, along with an additional $5.25 renewal charge every three years. The first portion of the $5.25 assessment consists of a "service fee" in the amount of $2.25 which is paid to the county treasurer. See id. § 8-145d. This portion of the assessment is imposed on all persons applying for vehicle registration or renewal, not only on individuals applying for disabled parking placards. See id. County treasurers must deposit the $2.25 into "the special fund created pursuant to K.S.A. [§ ] 8-145." Id. Section 8-145 expressly appropriates the "special fund" "for the use of the county treasurer in paying for necessary help and expenses incidental to the administration of duties in accordance with the provisions of this law and extra compensation to the county treasurer for the services performed in administering the provisions of this act." Id. § 8-145(b). If there is a balance in the fund at the close of a calendar year, the money is "withdrawn and credited to the general fund of the county." Id. The money in the general fund is then remitted to the secretary of revenue, deposited with the state treasurer, and credited to the state highway fund. See id. § 8-145(c).

The remaining portion of the $5.25 charge is authorized by statute. See id. § 8-1,125(c) ("The secretary of revenue may adopt rules and regulations prescribing a fee for placards and individual identification cards issued pursuant to this section...."). Accordingly, the Kansas Department of Revenue promulgated the following regulation:

The fee for any placard issued to a handicapped person or any person responsible for the transportation of a handicapped person pursuant to L.1986, Ch. 36, Sec. 1 shall be $2. The fee for any individual identification card issued to a handicapped person pursuant to L.1986, Ch. 36, Sec. 2 shall be $1.

Kan. Admin. Regs. § 92-51-40. The statute authorizing the collection of these funds indicates that these fees "shall not exceed the actual cost of issuance" of the identification cards and placards. See Kan. Stat. Ann. § 8-1,125(c).

Plaintiffs are citizens of the State of Kansas and both qualify as persons with disabilities within the meaning of section 8-1,124 of the Kansas Statutes. In pursuing this action, they also seek to represent a class of persons who similarly qualify as persons with disabilities under section 8-1,124. Defendant State of Kansas, Department of Revenue, is responsible for the administration of the statutory scheme at issue in this case. In their complaint, Plaintiffs alleged that Defendant's imposition of a fee for parking placards and individual identification cards violates 42 U.S.C. § 12132 of the ADA and 28 C.F.R. § 35.130(f), the regulatory surcharge provision. Plaintiffs sought injunctive and declaratory relief and repayment with interest of the monies collected by Defendant from Plaintiffs and their class members in violation of the ADA. Defendant filed a motion to stay discovery and class certification shortly after filing its answer to the complaint. Defendant argued that because the primary issues raised were ones of law and because "legal briefing or dispositive motions" would resolve these issues, discovery was unnecessary. Appellant's App. at 21B. Plaintiffs opposed the motion to stay class certification but indicated that a stay of discovery might be appropriate if the parties could stipulate to the relevant facts. The district court granted Defendant's motion to stay discovery and class certification and directed the parties to file stipulated facts. Consequently, the parties submitted a stipulation of the facts relevant to this dispute.

After Plaintiffs filed a motion for summary judgment, Defendant filed a motion to dismiss pursuant to Rules 12(b)(1) and 12(b)(6) of the Federal Rules of Civil Procedure. Defendant advanced several arguments in support of its motion. The district court granted Defendant's motion to dismiss based on the argument that the charge for the placards and identification cards was a tax and not a regulatory fee and that, as such, the Tax Injunction Act deprived the court of subject matter jurisdiction. See Marcus v. Kansas, Dep't of Revenue, 980 F.Supp. 398, 402-03 (D.Kan.1997). The Tax Injunction Act provides in full: "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." 28 U.S.C. § 1341.

In reaching its conclusion that the charge was a tax, the district court examined each component of the charge. Initially, the court noted that the $2.25 assessment collected by county treasurers as a "service fee" did not bear a relation to the cost of the service provided nor did it appear to be regulatory in nature. See Marcus, 980 F.Supp. at 402. The court also remarked that the $2.25 assessment is imposed not only on persons applying for disabled parking placards but also on all persons applying for vehicle registration. See id. The court believed that "[s]uch general application may indicate a revenue raising intent." Id. The court then stated that the remaining $2.00 for the placard and the $1.00 for the identification card, which are authorized by section 92-51-40 of the Kansas Administrative Regulations, also "bear[ ] no relation to cost." Id. The court justified this conclusion by stating that at least a portion of this money is directed to the State Highway Fund, which, "in turn, is used for expenditures that ultimately benefit the general public." Id. (citing Kan. Stat. Ann. § 68-416(b)(3)). The court concluded that, even if some portion of the fee were regulatory in nature, it could not assert jurisdiction over such portion "without 'doing...