Sheffield v. State of Texas, Civ. A. No. 3-75-1065-F.

• Decision Date: 19 April 1976
• Docket Number: Civ. A. No. 3-75-1065-F.
• Citation: 411 F. Supp. 709
• Parties: Donald H. SHEFFIELD et al., v. The STATE OF TEXAS et al.
• Court: U.S. District Court — Northern District of Texas

411 F. Supp. 709

Donald H. SHEFFIELD et al., v. The STATE OF TEXAS et al.

Civ. A. No. 3-75-1065-F.

United States District Court, N. D. Texas, Dallas Division.

April 19, 1976.

Earl Luna and Thomas V. Murto, III, Dallas, Tex., for plaintiffs.

John Hill, Atty Gen., Jackson D. Wilson, II and William C. Bednar, Jr., Asst. Attys. Gen., Austin, Tex., for defendants.

Before GOLDBERG, Circuit Judge, and HILL and PORTER, District Judges.

OPINION AND ORDER

PER CURIAM.

1. NATURE OF THE CONTROVERSY: As members of the Board of Trustees and management of the Carrollton-Farmers Branch Independent School District, the Plaintiffs, both individually and as representatives of a class, which purportedly encompasses all present and future pupils of the school district as well as their parents, bring suit against the State of Texas and others charged with the administration of the Texas Minimum School Foundation Grant Program, asserting that the program distributes state funds according to a formula which is based upon erroneous land valuation. The purpose of the Texas Grant Program is to aid the local school districts of Texas in financing their educational needs, and as such, the program is designed to distribute funds to the various school districts in inverse proportion to the amount of funds each school district is capable of contributing to that state fund. Thus in general, the richer or the more capable a school district is of providing for its own needs through taxation of its own property, the less money it will receive from the Grant Program, while the reverse is true for the poor or less well financed school districts in Texas. According to Plaintiffs, the Defendants have refused to equalize grossly disparate land values set both in their district and other school districts similarly situated, even though as they allege the Defendants are under both a statutory and constitutional duty to do so. The thrust of Plaintiffs' complaint is that the valuation of land, which to a large extent dictates whether a district is to be classified as "rich" or "poor", has been determined in an arbitrary and discriminatory manner. For reasons set forth below we abstain and dismiss this case.

2. A THREE JUDGE COURT CASE: As their first procedural defense, the Defendants urge that Plaintiffs' original complaint is simply an attack on the application of what is otherwise a constitutional statute, and as such, should be decided by a single judge. We decide otherwise.

As provided by 28 U.S.C. § 2281 a single judge is prohibited from entering an injunction

restraining the action of any officer of such State in the enforcement or execution of such statute or of an order made by an administrative board or commission acting under the State statute. (emphasis supplied).

In 1923 Justice Holmes writing for the Court in Oklahoma Natural Gas Co. v. Russel, 261 U.S. 290, 43 S.Ct. 353, 67 L.Ed. 659 (1923) reasoned that when a corporation commission was empowered by state statute to set rates, and those rates were denied once by the Commission and then again by the State's highest court, which had authority to hear appeals from the corporation commission, an order of statewide significance had been entered and therefore must be challenged pursuant to the requirements of Section 2281. Subsequently the Court considered Ex Parte Bransford, 310 U.S. 354, 60 S.Ct. 947, 84 L.Ed. 1249 (1940), in which the plaintiff, in a case quite similar to the one now before the Court, brought suit seeking to enjoin the collection of certain taxes. Under the state's statutory scheme, assessments were first made by a county assessor with an appeal lying directly to a state board, which would then return the reviewed assessment to the county supervisor who would add local rates and place the "final" assessment on the tax rolls. Collection was performed at the local level with collected funds apportioned between the state and the county. The plaintiff argued that the statute was discriminatory and hence unconstitutional in that assessments were mistakenly made by the tax assessor, or alternatively, that the tax assessor misinterpreted the taxing statute and did not correctly value the property to be taxed. With that factual predicate in mind, the Court held that a three judge court is not required where the mere application of a statute is questioned.

Case development since the Bransford decision is difficult to compartmentalize into principled rules which are susceptible of easy application.¹ Generally however the more localized the decision or regulation promulgated by the state the less likely the courts will be to find statewide policy under attack. See e. g. Herkness v. Irion, 278 U.S. 92, 49 S.Ct. 40, 73 L.Ed. 198 (1928); Bd. of Regents v. New Left Ed. Project, 404 U.S. 541, 92 S.Ct. 652, 30 L.Ed.2d 697 (1972). There are of course grey areas where it is unclear when a plaintiff is challenging the impact of an administrative order requiring a three judge court, and when such a challenge is to the unconstitutional application of an otherwise constitutional provision, requiring only a single judge. The perplexity of the problem lies in the fact that an individual administrative determination can be a manifestation of a much more general statewide policy as well as simply a decision of the individual case.² For example in Alabama Pub. Serv. Com. v. Southern R. Co., 341 U.S. 341, 71 S.Ct. 762, 95 L.Ed. 1002 (1951) the simple refusal by a commissioner to allow a railroad company to abandon service was held sufficient to require the attention of a three judge court. Even an order by an individual in state government empowered to decide policy on a statewide basis is properly the subject of a three judge court. Sands v. Wainwright, 491 F.2d 417, 427 (5th Cir. 1973); Gilmore v. Lynch, 400 F.2d 228, 230 (9th Cir. 1968).

In the present case Plaintiffs assert in their original complaint that the Defendants have:

systematically refused and continue to refuse to perform their duties to equalize the value of property for the school districts so that each will obtain its appropriate share of the state funds for the Foundation School Program, in violation of the due process and equal protection clauses. (emphasis supplied)

and Plaintiffs pray that the Court

hold that the plan of the State of Texas and the implementation of the statute mentioned hereinabove constitutes an illegal plan and scheme of taxation. (emphasis supplied)

We agree that the complaint states that a "systematic scheme or plan" for financing school districts in general is being attacked and that it is archetypical of the circumstances envisaged by Congress for the application of the three judge court device. Phillips v. U. S., 312 U.S. 246, 61 S.Ct. 480, 85 L.Ed. 800 (1941). That position is substantiated by the fact that Plaintiff defines the term "Defendants", inter alia, as the State of Texas, the Governor and the Commissioner of Education. The dominant theme of Plaintiffs' original complaint is that there has been a fundamental policy decision by the State to allow reported values of land to stand in spite of the fact that they fail to portray actual market values.

If there remains some doubt as to whether the original complaint is attacking a statewide order, there can be no such doubt that the amended complaint, which alleges that the state equalization panel was following a criteria established by the state commission when it refused Plaintiffs' requested adjustments, is attacking such an order. We conclude, therefore, that Plaintiffs have pled a case within the ambit of Section 2281, either in their original complaint or in their amended complaint and we hereby grant leave to file the amended complaint. Unlike Bransford, the Plaintiffs are not attacking the valuation placed upon their property, perhaps mistakenly by a tax assessor, but rather they are attacking a statewide policy which they say expressly fails to equalize erroneous land valuation. It is the statutorily mandated or perhaps sanctioned failure to correct the alleged mistake and not the mistake itself, which is being challenged and which makes this matter, an appropriate one for consideration by a three judge court.

3. VENUE AND ABSTENTION: The State next moves to dismiss on two grounds: (1) that venue is improper, and (2) that this Court should abstain from prematurely deciding a question of constitutional significance when state court statutory interpretation may solve the controversy. At the outset we note that venue, having a statutory heritage, should be considered and decided prior to a determination of whether this Court should abstain. While abstention is based upon broad notions of comity and federalism, it is still simply a judicially created concept used to allocate proper decision-making authority between the federal and state courts. A court does not always abstain because it is required to do so but does so in certain limited circumstances because in those fact situations, it is more just and efficient in the long run to leave some matters to the state courts.³

VENUE: Whether venue is proper in this case turns upon two rules of equal dimension contained in 28 U.S.C. § 1391 and highlighted in the following excerpt:

A civil action wherein jurisdiction is not founded solely on diversity of citizenship may be brought only in the judicial district where all defendants reside, or in which the claim arose. (emphasis supplied).

The State first contends that the complaint outlines a cause of action against individuals acting in their official capacities and hence that venue is properly in the state capitol, Austin, their official residence. See, e. g., Trueman Fertilizer Co. v. Larson, 196 F.2d 910 (5th Cir. 1952). That initial thrust is parried by the Plaintiffs, who argue that once an individual defendant has been alleged to have violated the law — due process and equal protection in this case— he transcends his...