Schneider Transport, Inc. v. Cattanach

• Decision Date: 17 August 1981
• Docket Number: No. 80-2246,80-2246
• Parties: SCHNEIDER TRANSPORT, INC., a Wisconsin Corporation, Plaintiff-Appellant, v. Dale CATTANACH, individually and as Secretary of the Wisconsin Department of Transportation, and his agents, employees, successors in office, assistants and all others acting in concert or cooperation with him or at his direction or under his control, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 128

657 F.2d 128

SCHNEIDER TRANSPORT, INC., a Wisconsin Corporation, Plaintiff-Appellant, v. Dale CATTANACH, individually and as Secretary of the

Wisconsin Department of Transportation, and his agents,

employees, successors in office, assistants and all others

acting in concert or cooperation with him or at his

direction or under his control, Defendants-Appellees.

No. 80-2246.

United States Court of Appeals, Seventh Circuit.

Argued April 16, 1981.

Decided Aug. 17, 1981.

Edward A. Dudek, Milwaukee, Wis., for plaintiff-appellant.

John W. Calhoun, Wis. Dept. of Justice, Madison, Wis., for defendants-appellees.

Before BAUER, Circuit Judge, PECK, Senior Circuit Judge, ^* and CUDAHY, Circuit Judge.

BAUER, Circuit Judge.

Plaintiff-appellant's complaint sought to enjoin the imposition of almost $800,000 in vehicle registration fees sought by the State of Wisconsin. The complaint also sought declaratory relief. The district court dismissed the complaint for lack of subject matter jurisdiction under the Declaratory Judgment Act, 28 U.S.C. § 2201. We affirm, but for a different reason. We hold that appellant's complaint is barred by the Tax Injunction Act, 28 U.S.C. § 1341.

I

Trucking companies in interstate commerce are often regulated by the several states in which they operate. Registering of trucks is a common method of raising revenue and regulating the industry. The result, however, is that every truck carries many registration plates, creating administrative and regulatory problems for the states and the trucking firms. To deal with these problems, the American Association of Motor Vehicle Administrators drafted the International Registration Plan ("IRP"). The purpose of the plan is to "implement the concept of one registration plate for one vehicle" and to apportion fees among states. International Registration Plan (hereinafter "IRP"), Art. I, P C. Under the IRP, a trucking company need register its interstate trucks in only one "base jurisdiction." Fees due the other states in which it operates are computed according to a formula based on the miles traveled in each state and on the state's rate formula. IRP, Art. III.

The IRP defines "base jurisdiction" as

the jurisdiction where the registrant has an established place of business, where mileage is accrued by the fleet and where operational records of such fleet are maintained or can be made available in accordance with the provisions of Article XIV, A(2).

IRP, Art. II, P C(1).

Plaintiff-appellant Schneider Transport, Inc. ("Schneider") is a Wisconsin corporation with its principal place of business in Green Bay, Wisconsin. Prior to 1978, Schneider registered its fleet of 1300 trucks and trailers in Wisconsin. Wisconsin ratified the IRP in 1978. Thereafter, Schneider registered its fleet in Illinois, using a facility in Streator, Illinois as its place of business. Schneider alleged in its complaint that its Streator terminal is "an established place of business of Schneider within the meaning of Article II, Section C(1), of the IRP." Plaintiff's Complaint, P 10. ¹ Illinois issued the registration plates and forwarded to the Wisconsin Department of Transportation about $245,000 in proportional registration fees based on the miles traveled by Schneider's fleet in Wisconsin. Had Wisconsin been Schneider's base jurisdiction, Schneider would have owed an additional $797,711.85 in fees. ²

The Wisconsin Department of Transportation conducted an investigation of Schneider. Its officials discovered that the Streator facility was no more than a "driver's room." ³ Schneider's only offices for dispatching, repairs, personnel, storage, and administration remained in and around Green Bay. Affidavit of James A. Crawmer (Nov. 19, 1979).

On June 7, 1978, the Wisconsin Secretary of Transportation, defendant-appellee Dale Cattanach, notified Schneider that it was improperly using Illinois as its base jurisdiction. His letter informed Schneider that it must transfer its base jurisdiction to Wisconsin and pay the almost $800,000 in fees within 72 hours. Schneider alleged that the Department threatened enforcement action, "subjecting Schneider and its drivers to the imposition of fines" and other penalties. Plaintiff's Complaint P 18. The Department admitted that it agreed not to begin enforcement actions until June 15, 1978. Defendants' Answer P 11.

On June 15, 1978, Schneider filed this action for declaratory and injunctive relief. Schneider alleged federal claims under the interstate commerce, due process, and full faith and credit clauses. It attached a pendent state claim for breach of the IRP.

The district court issued a temporary restraining order on June 16 and a preliminary injunction on July 11. The orders restrained the Secretary of Transportation from collecting any registration fees. On August 21, 1980, however, the court dismissed Schneider's complaint and dissolved its injunction. The court held that it lacked subject matter jurisdiction under the Declaratory Judgment Act, 28 U.S.C. § 2201, because Schneider alleged only federal defenses and no federal claims. The court only commented briefly on the Tax Injunction Act, 28 U.S.C. § 1341. It held that the Act did not bar Schneider's complaint because the Wisconsin "remedies are not necessarily efficient." On October 17, 1980, the district court granted Schneider's motion for a stay pending appeal.

II

The Tax Injunction Act of 1937, 28 U.S.C. § 1341, provides:

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.

It is well settled that allegations of deprivations of constitutional rights do not render the Act inapplicable. Huber Pontiac, Inc. v. Whitler, 585 F.2d 817, 819-20 (7th Cir. 1978); Gray v. Morgan, 371 F.2d 172, 175 (7th Cir. 1966), cert. denied, 386 U.S. 1033, 87 S.Ct. 1484, 18 L.Ed.2d 596 (1967). If the Act applies, therefore, this suit must be dismissed. Schneider contests the applicability of the Act on five grounds: (1) that registration fees are not taxes; (2) that the fees imposed under the IRP are not taxes "under state law;" (3) that the remedy under Wisconsin law for refunds of taxes is not "efficient;" (4) that its suit seeks to enjoin a sanction for non-payment; and (5) that its suit is covered by a court-made exception to the Act because it has shown extraordinary irreparable injury and because "under no circumstances" could Wisconsin prevail in this action. We consider each of these contentions.

A

The Act applies to any "tax." Although not denominated as such, the registration fees are imposed for revenue-raising purposes, a characteristic of any tax. Commercial Credit Corp. v. Schneider, 265 Wis. 264, 61 N.W.2d 499, 501 (1953). The fees are deposited in a segregated fund, the state transportation fund, Wis.Stat. § 25.40, for transportation purposes, including highway construction. Wis.Stat. § 20.395. The revenues from the fund "are deposited into funds other than the general fund and are available for the purposes for which such funds are created." Wis.Stat. § 20.001(2)(d). Schneider's argument that the fees are "regulatory licensing fees" is belied by these provisions. See State of Wisconsin v. Yellow Freight System, Inc., 96 Wis.2d 484, 487-92, 292 N.W.2d 361 (1980), aff'd. 101 Wis.2d 142, 303 N.W.2d 834 (1981) (comparing permit fees, whose purpose is to identify authorized vehicles for regulatory purposes, with registration fees, whose purpose is to raise revenue and to identify vehicles to aid law enforcement). See also Britton Motor Service v. Dammann, 14 F.Supp. 634, 635 (W.D.Wis.1936) ("the registration fee ... is a tax devoted exclusively to highway needs").

B

Schneider claims that the fees are not assessed "under State law" because vehicles registered pursuant to the IRP are exempt from registration in Wisconsin. Wis.Stat. § 341.05(5). However, the International Registration Plan has no independent force of law, but must be adopted by the legislature of each signatory state. Wisconsin has authorized its Secretary of Transportation to "ratify and do all things necessary to effectuate" the IRP. Wis.Stat. § 341.405. ⁴ Once so adopted, the IRP is enforceable as a Wisconsin statute. See State of Wisconsin v. Yellow Freight System, Inc. Indeed, it is obvious that the exemption from registration in section 341.05(3) was necessary to avoid a conflict with the IRP, which provides that

Vehicles registered as provided in Section A of this Article shall be deemed fully registered in all jurisdictions where proportionally registered for any type of movement or operation....

IRP, Art. V, P B. Registration under the IRP is in lieu of registration under Wisconsin law. State of Wisconsin v. Yellow Freight Systems, Inc., 303 N.W.2d at 839. It is not, as Schneider suggests, an abdication of Wisconsin's authority to tax vehicles subject to the IRP. Supplemental Brief of Appellant at 5 n.2. Indeed, the amount of the registration fees due can be determined only with reference to the Wisconsin registration rate schedules. IRP, Art. III, P A. ⁵ We therefore hold that the tax sought by Wisconsin is imposed "under State law."

C

Schneider also argues that the remedy provided by Wisconsin law is inefficient. Wis.Stat. § 345.08 provides:

No suit shall be maintained in any court to restrain or delay the collection or payment of the taxes levied or the fees imposed or enacted in chs. 341 to 349. The aggrieved tax payer shall pay the tax or fee as and when due and, if paid under protest, may at any time within 90 days from the date of such payment sue the state in an action at law to recover the tax or fee so paid. If it is finally determined that such tax or fee or any part thereof was wrongfully collected for any reason, the department of administration shall issue a warrant on the state treasurer for the amount of such tax or fee so...