Nat'l Private Truck Council v. Oklahoma Tax Comm'n

• Decision Date: 19 June 1995
• Docket Number: 94688
• Parties: NATIONAL PRIVATE TRUCK COUNCIL, INC., et al., Petitioners v. OKLAHOMA TAX COMMISSION et al
• Court: U.S. Supreme Court

515 U.S. 582

115 S.Ct. 2351

132 L.Ed.2d 509

NATIONAL PRIVATE TRUCK COUNCIL, INC., et al., Petitioners

v OKLAHOMA TAX COMMISSION et al.

No. 94-688.

Supreme Court of the United States

Argued April 18, 1995.

Decided June 19, 1995.

Syllabus ^*

In the Oklahoma state courts, petitioners successfully challenged certain state taxes as violating the dormant commerce clause. The Oklahoma Supreme Court ordered respondents to award refunds pursuant to state law, but declined to award declaratory or injunctive relief under 42 U.S.C. § 1983 or attorney's fees under § 1988. The court reasoned that because adequate remedies existed under state law, the Tax Injunction Act would have precluded petitioners from seeking an injunction in federal court; although that Act does not apply to state courts, the Oklahoma Supreme Court invoked the principle of "intrastate uniformity" to conclude that petitioners were not entitled to injunctive or declaratory relief under § 1983.

Held:

1. Section 1983 provides no basis for courts to issue injunctive or declaratory relief in state tax cases when there is an adequate remedy at law. This Court has long held that courts should adopt a hands-off approach with respect to state tax administration. Dows v. City of Chicago, 11 Wall. 108, 110, 20 L.Ed. 65. In passing § 1983, Congress did not limit this strong background principle of noninterference with state taxation. Construing § 1983 with this principle of noninterference in mind, the Court concludes that § 1983 does not call for courts—whether federal or state—to disrupt state tax administration by issuing injunctive or declaratory relief when state law furnishes an adequate legal remedy. Pp. ____.

2. Since no relief could be awarded under § 1983, no attorney's fees can be awarded under § 1988. P. ____.

879 P.2d 137 (Okl.1994), affirmed.

THOMAS, J., delivered the opinion for a unanimous Court. KENNEDY, J., filed a concurring opinion.

Richard A. Allen, Washington, DC, for petitioners.

Stanley P. Johnston, Deputy Gen. Counsel, Oklahoma Tax Com'n, Oklahoma City, OK, for respondent.

Justice THOMAS delivered the opinion of the Court.

In the Oklahoma state courts, petitioners successfully challenged certain Oklahoma taxes as violating the "dormant" commerce clause. Although the Oklahoma Supreme Court ordered respondents to award refunds pursuant to state law, it also held that petitioners were not entitled to declaratory or injunctive relief under 42 U.S.C. § 1983 and, accordingly, that they could not obtain attorney's fees under 42 U.S.C. § 1988(b) (1988 ed., Supp. V). Petitioners argue that this holding violates the Supremacy Clause, U.S. Const., Art. VI, cl. 2. We affirm.

I

In 1983, Oklahoma imposed third-structure taxes against motor carriers with vehicles registered in any of 25 States.¹ It did so in order to retaliate against those States that had imposed discriminatory taxes against trucks registered in Oklahoma. In December 1984, petitioners filed a class action in an Oklahoma trial court, arguing that the taxes violated the dormant commerce clause and the Privileges and Immunities Clause of Art. IV, § 2, cl. 1. Pursuant to state law and § 1983, petitioners sought declaratory and injunctive relief as well as refunds of taxes paid. In addition, they sought attorney's fees under both state law and § 1988.²

The trial court upheld the constitutionality of the taxes, but the Oklahoma Supreme Court reversed and held that the taxes were invalid under our dormant commerce clause jurisprudence. Private Truck Council v. Oklahoma Tax Comm'n, 806 P.2d 598 (1990). The court awarded refunds under state law, but declined to award relief under § 1983 and declined to award attorney's fees under § 1988. In so ruling, it relied on Consolidated Freightways Corp. v. Kassel, 730 F.2d 1139 (CA8), cert. denied, 469 U.S. 834, 105 S.Ct. 126, 83 L.Ed.2d 68 (1984), which held that § 1983 may not be used to secure remedies for dormant commerce clause violations.

After the Oklahoma Supreme Court's decision, we held that one of the "rights, privileges or immunities" protected by § 1983 was the right to be free from state action that violates the dormant commerce clause. See Dennis v. Higgins, 498 U.S. 439, 111 S.Ct. 865, 112 L.Ed.2d 969 (1991). Accordingly, we granted the taxpayers' petition for certiorari, vacated the judgment, and remanded the case for further consideration in light of Dennis. 501 U.S. 1247, 111 S.Ct. 2882, 115 L.Ed.2d 1048 (1991).

On remand, the Oklahoma Supreme Court once again held that petitioners were not entitled to relief under § 1983. 879 P.2d 137 (1994). The court noted that because adequate remedies existed under state law, the Tax Injunction Act, 28 U.S.C. § 1341, would have precluded petitioners from seeking an injunction in federal court. 879 P.2d, at 140-141. Although the Tax Injunction Act does not apply in state courts, the Oklahoma Supreme Court relied upon the principle of "intrastate uniformity" to conclude that a state court need not grant injunctive or declaratory relief under § 1983 when such remedies would not be available in federal court. Id., at 141 (quoting Felder v. Casey, 487 U.S. 131, 153, 108 S.Ct. 2302, 101 L.Ed.2d 123 (1988)). We granted certiorari to resolve a conflict among the state courts as to whether, in tax cases, state courts must provide relief under § 1983 when adequate remedies exist under state law.³

II

We have long recognized that principles of federalism and comity generally counsel that courts should adopt a hands-off approach with respect to state tax administration. Immediately prior to the enactment of § 1983, the Court articulated the reasons behind the reluctance to interfere:

"It is upon taxation that the several States chiefly rely to obtain the means to carry on their respective governments, and it is of the utmost importance to all of them that the modes adopted to enforce the taxes levied should be interfered with as little as possible." Dows v. City of Chicago, 11 Wall. 108, 110, 20 L.Ed. 65 (1871).

Since the passage of § 1983, Congress and this Court repeatedly have shown an aversion to federal interference with state tax administration. The passage of the Tax Injunction Act in 1937 is one manifestation of this aversion. See 28 U.S.C. § 1341 (1988 ed.) (prohibiting federal courts from enjoining the collection of any state tax "where a plain, speedy and efficient remedy may be had in the courts of such State"). We subsequently relied upon the Act's spirit to extend the prohibition from injunctions to declaratory judgments regarding the constitutionality of state taxes. See Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293, 63 S.Ct. 1070, 87 L.Ed. 1407 (1943). Later, we held that the Tax Injunction Act itself precluded district courts from awarding such declaratory judgments. See California v. Grace Brethren Church, 457 U.S. 393, 407-411, 102 S.Ct. 2498, 2507-2509, 73 L.Ed.2d 93 (1982).

The reluctance to interfere with state tax collection continued in McKesson Corp. v. Division of Alcoholic Beverages and Tobacco, Fla. Dept. of Business Regulation, 496 U.S. 18, 110 S.Ct. 2238, 110 L.Ed.2d 17 (1990), in which we confirmed that the States are afforded great flexibility in satisfying the requirements of due process in the field of taxation. As long as state law provides a " 'clear and certain remedy,' " id., at 51, 110 S.Ct., at 2258 (quoting Atchison, T. & S.F.R. Co. v. O'Connor, 223 U.S. 280, 285, 32 S.Ct. 216, 217, 56 L.Ed. 436 (1912)), the States may determine whether to provide predeprivation process (e.g., an injunction) or instead to afford post-deprivation relief (e.g., a refund), 496 U.S., at 36-37, 110 S.Ct., at 2250-2251. See also Harper v. Virginia Dept. of Taxation, 509 U.S. ----, ----, 113 S.Ct. 2510, 2519, 125 L.Ed.2d 74 (1993). Of particular relevance to this case, Fair Assessment in Real Estate Assn., Inc. v. McNary, 454 U.S. 100, 116, 102 S.Ct. 177, 186, 70 L.Ed.2d 271 (1981), held that because of principles of comity and federalism, Congress never authorized federal courts to entertain damages actions under § 1983 against state taxes when state law furnishes an adequate legal remedy.

Seeking to overcome the longstanding federal reluctance to interfere with state taxation, petitioners invoke the Supremacy Clause and the straightforward proposition that it requires state courts to enforce federal law, here §§ 1983 and 1988. When they have jurisdiction, state courts have been compelled to provide federal remedies, notwithstanding the existence of less intrusive state-law remedies. See, e.g., Monroe v. Pape, 365 U.S. 167, 183, 81 S.Ct. 473, 482, 5 L.Ed.2d 492 (1961). Accordingly, petitioners argue that we should require the Oklahoma Supreme Court to award equitable and declaratory relief under § 1983 and attorney's fees under § 1988.

For purposes of this case, we will assume without deciding that state courts generally must hear § 1983 suits.⁴ But this does not necessarily mean that, having found a violation of federal law, state courts must award declaratory and injunctive relief under § 1983 in tax cases. Though federal courts are obliged to hear § 1983 claims, it is clear that they may not award damages or declaratory or injunctive relief in state tax cases when an adequate state remedy exists. See Fair Assessment, supra, at 116, 102 S.Ct., at 186; Great Lakes Dredge & Dock Co. v. Huffman, supra, at 293, 63 S.Ct., at 1070; Matthews v. Rodgers, 284 U.S. 521, 525, 52 S.Ct. 217, 219, 76 L.Ed. 447 (1932); 28 U.S.C. § 1341 (1988 ed.).

As we explain more fully below, the background presumption that federal law generally will not interfere with administration of state taxes leads us to conclude that Congress did not authorize injunctive or declaratory relief under § 1983 in state tax cases when there is an adequate remedy at law.⁵

III

Petitioners correctly point out that the Tax Injunction Act does not prohibit state courts from entertaining § 1983 suits...