Robinson Protective Alarm Co. v. City of Philadelphia

• Decision Date: 28 July 1978
• Docket Number: No. 77-2218,77-2218
• Citation: 581 F.2d 371
• Parties: ROBINSON PROTECTIVE ALARM COMPANY, Wells Fargo Alarm Services, a Division of Baker Protective Services, Inc., Honeywell Protection Services, a Division of Honeywell, Inc., Sheppard Alarm Co., Inc., Burns Electronic Security Services, Inc., Appellants, v. CITY OF PHILADELPHIA, Lennox Moak, Charles Dorfman, Robert Silver and Edgar P. Grim.
• Court: U.S. Court of Appeals — Third Circuit

Page 371

581 F.2d 371

ROBINSON PROTECTIVE ALARM COMPANY, Wells Fargo Alarm Services, a Division of Baker Protective Services, Inc Honeywell Protection Services, a Division of Honeywell Inc., Sheppard Alarm Co., Inc., Burns Electronic Security Services, Inc., Appellants, v. CITY OF PHILADELPHIA, Lennox Moak, Charles Dorfman, Robert Silver and Edgar P. Grim.

No. 77-2218.

United States Court of Appeals Third Circuit.

Argued May 2, 1978.

Decided July 28, 1978.

Steven R. Waxman, Bolger & Picker, Philadelphia, Pa., for appellants.

Sheldon L. Albert, City Sol., Stewart M. Weintraub, Michael Karasik, and Richard S. Kohn, Asst. City Sol., Philadelphia, Pa., for appellees.

Before SEITZ, Chief Judge, and VAN DUSEN and ROSENN, Circuit Judges.

OPINION OF THE COURT

VAN DUSEN, Circuit Judge.

Section 9-303 of the Philadelphia Code regulates the construction and use of underground wires beneath the City's streets. Section 9-303(4)(a) provides:

"In consideration of privileges granted, every private alarm signal system licensee shall pay to the City, on the 15th of each month, 5% Of his gross earnings, whether collected or not, during the previous month from the exercise, directly or indirectly, of the privileges granted by special ordinance."

Central alarm station companies ¹ furnish fire and/or burglar alarm services by transmitting signals from their customers' properties to central alarm stations over underground wires. Five such central alarm station companies have obtained, or seek to obtain, a special ordinance from the City of Philadelphia, as required under § 9-303, to operate their services by contracting for the use of existing underground lines maintained by Bell of Pennsylvania. These five central alarm station companies ² brought suit against the City of Philadelphia ³ in the United States District Court for the Eastern District of Pennsylvania, challenging the collection of moneys under § 9-303(4)(a). The gist of the plaintiffs' complaint is that § 9-303(4) (a) applies only to licensed central alarm stations and not to other similarly situated users of Bell of Pennsylvania's underground wires. The central alarm station companies assert in their complaint that exacting fees from them, but not from other purchasers of Bell of Pennsylvania's services which involve transmissions along underground wires violates the equal protection and due process clauses of the Fourteenth Amendment of the United States Constitution, Article VIII, Section 1, of the Constitution of the Commonwealth of Pennsylvania, and the state's Sterling Act, as amended, 53 P.S. § 15971(a). The complaint prayed for appropriate declaratory, equitable and legal relief. ⁴

The district court, by bench memorandum and order of July 21, 1977, dismissed plaintiffs' complaint on motion by the defendants on the ground that the Tax Injunction Act, 28 U.S.C. § 1341 (1976), deprived the court of subject matter jurisdiction. We affirm.

The Tax Injunction Act 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."

Plaintiffs' appeal from the district court's order of dismissal raises two issues of statutory construction: (1) whether § 9-303(4)(a) of the Philadelphia Code is a tax under State law," and (2) whether the central alarm station companies are afforded a "plain, speedy and efficient" state remedy. ⁵

I.

The central alarm station companies argue that amounts payable pursuant to § 9-303(4)(a) are not taxes under state law and hence suits to restrain their collection are beyond the prohibitory scope of 28 U.S.C. § 1341. The plaintiffs rely on the Pennsylvania Supreme Court's characterization of the nature of payments made under a predecessor City ordinance to § 9-303(4)(a):

"But the consideration exacted in the ordinance is neither a tax nor a license fee; it is in the nature of an annual rental to be paid for the privilege of the use of space under the streets . . . ."

City of Philadelphia v. Holmes Electric Protective Co., 335 Pa. 273, 278, 6 A.2d 884, 887 (1939). Plaintiffs contend that this state judicial construction of the predecessor ordinance in the context of determining a municipality's immunity from the bar of state statutes of limitation should be binding in determining the application of a federal statute which explicitly restricts the subject matter jurisdiction of federal courts. The issue before us is whether Congress intended that the scope of the Tax Injunction Act's term "tax under State law" be given a uniform construction as a matter of federal law or a variable construction by reference to or incorporation of state law.

The Fifth Circuit Court of Appeals considered precisely this issue in Tramel v. Schrader, 505 F.2d 1310 (5th Cir. 1975). In that case the court considered whether 28 U.S.C. § 1341 barred a suit to enjoin the collection of special street improvements assessments which were alleged to be violative of the plaintiff's federal constitutional rights. Texas state courts had defined these special assessments as other than "taxes." Id. at 1314-15. The Tramel court denied any controlling effect to state courts' distinctions between taxes and special assessments. The court reasoned that "(t)he proper question is not what the Texas courts have said the Texas legislature meant when it used the term ('taxes') but what Congress meant when it used the term." Id. at 1315 n.7. The Tramel court deemed it particularly inappropriate to draw on state definitions of taxes in contexts wholly different from the context of the Tax Injunction Act. In light of the particular purposes of the Tax Injunction Act, ⁶ the Tramel court concluded that the special street improvements assessments were the type of revenue collection Congress intended to insulate from federal court interference and hence were taxes under 28 U.S.C. § 1341.

We agree with the approach taken by the Fifth Circuit Court of Appeals in Tramel that the meaning of the term "tax under state law" in 28 U.S.C. § 1341 should be determined as a matter of federal law by reference to congressional policies underlying the Tax Injunction Act, rather than by adoption of state tax labels developed in entirely different legal contexts. The Holmes decision, for example, labelled the City's ordinance as other than a tax in recognition of state policies unrelated to the purposes of the Tax Injunction Act. It is unlikely Congress meant for the federal courts to define the scope of the Tax Injunction Act and their own jurisdiction by adopting state labels from contexts inapposite to application of 28 U.S.C. § 1341.

Congress has on a few occasions expressly adopted or incorporated state law with recognition of its variable content to serve as the source of substantive, albeit non-uniform, federal law. But in instances of express incorporation, Congress evidences a particular purpose in conforming federal substantive standards of conduct to those which are applicable locally, while preserving the federal nature of the law for subject matter jurisdiction purposes. ⁷ For example, the Federal Tort Claims Act, 28 U.S.C. § 1346(b) (1970), confers exclusive original jurisdiction in federal district courts over negligence actions against the United States, and calls explicitly for the application of the "law of the place where the act or omission occurred." Similarly, The Assimilative Crimes Act, 18 U.S.C. § 13 (1976), explicitly incorporates state criminal law as the governing federal law in federal enclaves. See United States v. Sharpnack, 355 U.S. 286, 78 S.Ct. 291, 2 L.Ed.2d 282 (1958). In both statutes Congress explicitly adopted state law as federal law to preserve federal question jurisdiction by means other than enactment of a comprehensive federal tort or criminal code.

By contrast, in enacting the Tax Injunction Act, Congress did not intend to conform federal substantive law to state standards of individual conduct. 28 U.S.C. § 1341 is strictly a jurisdictional provision that withholds from federal courts their power to adjudicate certain controversies which might fall within other congressional grants of jurisdiction. The power to withhold from the federal courts original jurisdiction otherwise authorized in Article III is vested in Congress. U.S.Const., Art. III, § 2. Congress' power to implement or limit federal courts' jurisdiction is so fundamental that we decline to infer a congressional intent to leave a jurisdictional provision dependent on state law absent an unambiguous and express incorporation by statute.

We do not believe 28 U.S.C. § 1341 expressly and unambiguously incorporates state judicial labels as to what are or are not taxes for purposes of state statutes completely unrelated to the policies of federal jurisdiction. The modifying clause "under State law" should be plainly read to differentiate between state and federal taxes, not to adopt state law labels as to which revenue collections are taxes for state law purposes.

Congress intended that the Tax Injunction Act be uniformly applied, consistent with the principles of federalism, comity and non-interference with state fiscal affairs embodied in the Act. See Tully v. Griffin, 429 U.S. 68, 73, 97 S.Ct. 219, 50 L.Ed.2d 227 (1976). These policies have been previously elaborated upon by this court in Garrett v. Bamford, 538 F.2d 63 (3d Cir.), Cert. denied, 429 U.S. 977, 97 S.Ct. 485, 50 L.Ed.2d 585 (1976), and by the Fifth Circuit in Tramel. One jurisdictional purpose of the Tax Injunction Act was to deprive out-of-state corporations of an advantage over state taxpayers in being able to threaten localities with protracted injunctive litigation in federal courts which induced the localities to compromise their tax claims. In-state taxpayers usually had to pay their disputed taxes and sue for a refund in state court. Congress intended that the ...