U.S. Satellite Broadcasting Co., Inc. v. Lynch
| Decision Date | 12 March 1999 |
| Docket Number | No. Civ. S-98-1838 WBS/DAD.,Civ. S-98-1838 WBS/DAD. |
| Citation | 41 F.Supp.2d 1113 |
| Court | U.S. District Court — Eastern District of California |
| Parties | UNITED STATES SATELLITE BROADCASTING COMPANY, INC., Plaintiff, v. Robert LYNCH, et al., Defendants. |
Stephen Woods White, Kronick Moskovitz Tiedemann and Girard, Sacramento, CA, Maria Colsey Heard, Pro Hac Vice, Leslie R Cohen, Pro Hac Vice, Bernard Nash, Pro Hac Vice, Dickstein Shapiro Morin and Oshinsky, Washington, DC, for plaintiff.
Marcia A. Fay, Attorney General's Office of the State of California, Sacramento, CA, for defendants.
This 42 U.S.C. § 1983 action for declaratory and injunctive relief challenges "the Boxing Act," a California law that imposes a five percent gross receipts tax on all pay-per-view telecasts of boxing, wrestling, kickboxing, and similar contests. See Cal.B. & P.Code § 18600. Plaintiff refused to pay the tax following its telecast of the Holyfield versus Tyson boxing match of June, 28, 1997, and brought this action to declare the tax unconstitutional under the First and Fourteenth Amendments and to enjoin its enforcement. Defendants, members of the State Athletic Commission ("the Commission") responsible for collecting and enforcing the tax, move for dismissal for lack of subject matter jurisdiction and for failure to state a claim, and also move for summary judgment. Fed.R.Civ.P. 12(b)(1), (6); 56. Plaintiff also moves for summary judgment.
The material facts are straightforward and undisputed. Plaintiff broadcasts programming to its subscribers by satellite. This programming includes pay-per-view telecasts of boxing, martial arts, and wrestling events. The Boxing Act requires broadcasters of such telecasts viewed in California to pay to the Commission a five percent tax on their gross receipts. See Cal.B. & P.Code §§ 18600, 18625, 18832.1 The Commission deposits the revenues in the state general fund.
On June 28, 1997, plaintiff sold pay-per-view telecasts of a live boxing contest held in Nevada between Evander Holyfield and Mike Tyson. Plaintiff sold these telecasts to subscribers in California. Defendants demanded payment of the tax required by section 18832. Plaintiff refused to pay the tax, and inquired whether a procedure existed by which it could pay the tax and then seek a refund. Defendants have not responded to this inquiry. Plaintiff has scheduled future pay-per-view telecasts of contests covered by Section 18832 which it plans to sell to subscribers in California.
Defendants' motion to dismiss for lack of jurisdiction under Rule 12(b)(1) is based upon the Eleventh Amendment and the Tax Injunction Act. The court will examine each argument in turn.
The Eleventh Amendment to the United States Constitution states that,
[t]he Judicial power of the United States shall not be construed to extend to any suit in law or equity, commenced or prosecuted against one of the United States by Citizens of another State, or by Citizens or Subjects of any Foreign State.
Though styled as an "immunity," the Eleventh Amendment limits the subject-matter jurisdiction of the federal courts. See Seminole Tribe of Florida v. Florida, 517 U.S. 44, 53, 116 S.Ct. 1114, 1122, 134 L.Ed.2d 252 (1996). It applies to suits arising under either federal or state law, and to those brought in diversity. See id. 116 S.Ct. at 1122; Pennhurst State School & Hosp. v. Halderman, 465 U.S. 89, 104 S.Ct. 900, 79 L.Ed.2d 67 (1984); see also Hans v. Louisiana, 134 U.S. 1, 10 S.Ct. 504, 33 L.Ed. 842 (1890) ().2
Under the doctrine of Ex parte Young, 209 U.S. 123, 28 S.Ct. 441, 52 L.Ed. 714 (1908), however, "[t]he Eleventh Amendment does not bar federal court actions against state officials to enjoin them from enforcing unconstitutional statutes." Capitol Industries-EMI, Inc. v. Bennett, 681 F.2d 1107, 1120 (9th Cir. 1982). While merely characterizing relief as "equitable" does not license a suit that would operate as a money judgment against the state, Edelman v. Jordan, 415 U.S. 651, 94 S.Ct. 1347, 39 L.Ed.2d 662 (1974), or a quieting of title against state interests, Idaho v. Coeur d'Alene Tribe of Idaho, 521 U.S. 261, 117 S.Ct. 2028, 138 L.Ed.2d 438 (1997), the Ex Parte Young doctrine does not require an injunction to be "totally without effect on the State's revenues." Edelman, 415 U.S. at 667, 94 S.Ct. 1347.
Defendants argue that because plaintiff seeks to enjoin the Commission from enforcing a tax obligation which plaintiff has already incurred under California law, plaintiff's lawsuit does not seek "prospective" injunctive relief within the meaning of the Ex parte Young exception. In Capitol Industries-EMI, the Ninth Circuit permitted a suit to enjoin the California Franchise Tax Board from collecting seven years worth of back taxes. The court rejected Eleventh Amendment immunity, finding that the case fell "squarely within the doctrine of Ex Parte Young." Capitol Industries-EMI, 681 F.2d at 1120. "In such cases, the Eleventh Amendment does not preclude access to the federal courts." Id. On the issue of Eleventh Amendment immunity, this case cannot be distinguished from Capitol Industries-EMI. Accordingly, the Eleventh Amendment does not bar the instant suit.3
The Tax Injunction Act provides that "[t]he 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. When they apply, these simple words constitute a "broad jurisdictional barrier" to either declaratory or injunctive actions against a state taxation scheme. Arkansas v. Farm Credit Services of Cent. Arkansas, 520 U.S. 821, 117 S.Ct. 1776, 1779, 138 L.Ed.2d 34 (1997).
In order for the Tax Injunction Act to preclude jurisdiction, the state must offer the taxpayer a "plain, speedy and efficient" means of challenging or recovering the tax. 28 U.S.C. § 1341. "Succinctly put, the state remedy is `plain' as long as the remedy is not uncertain or unclear from the outset; `speedy' if it does not entail a significantly greater delay than a corresponding federal procedure; and `efficient' if the pursuit of it does not generate ineffectual activity or unnecessary expenditures of time or energy." U.S. West, Inc. v. Nelson, 146 F.3d 718, 725 (9th Cir.1998) (). A scheme whereby a taxpayer pays the tax under protest and then appeals to the state for a refund constitutes a "plain, speedy and efficient remedy." Jerron West v. California State Bd. of Equalization, 129 F.3d 1334, 1338 (9th Cir.1997). Thus, the availability to plaintiff of a remedy under California law will determine the applicability of the Tax Injunction Act.
California, however, has its own jurisdictional bar against challenging the assessment of a tax.
No legal or equitable process shall issue in any proceeding in any court against this State or any officer thereof to prevent or enjoin the collection of any tax. After payment of a tax claimed to be illegal, an action may be maintained to recover the tax paid, with interest, in such a manner as may be provided by the Legislature.
Cal. Const. art. xiii, § 32 ("Section 32"). Section 32 both bars all actions for declaratory or injunctive relief from a tax, and gives the legislature exclusive control of whether and under what conditions a taxpayer may recover a tax paid under protest. Woosley v. California, 3 Cal.4th 758, 789, 13 Cal.Rptr.2d 30, 838 P.2d 758 (1992).
In light of Section 32, the court cannot find a "plain" cause of action or procedure by which this tax, if paid, might be recovered under California law. The court looks first to the Boxing Act itself. That law contains no express scheme for the refunding or challenging of an illegal or erroneous tax. See Cal.B. & P.Code §§ 18600 et seq. In this sense, the Boxing Act differs from the statutory scheme for the recovery of taxes collected by the Board of Equalization. See Cal.Rev. & Tax Code §§ 6901, 6902, 6932; see also Jerron West, 129 F.3d at 1338 ().
The court looks next to Cal.B. & P.Code § 158, which defendants claim creates a procedure for recovering the tax. Section 158, however, applies to "application fees, license fees or penalties" collected by the Department of Consumer Affairs or its Director. See Cal.B. & P.Code §§ 100-471 (Department of Consumer Affairs). The Boxing Act tax is collected by the State Athletic Commission and thus, by its very terms, § 158 does not apply.
Finally, the court looks to Cal.Gov.Code § 13143, which provides that in general:
[w]henever any law which provides for fees or payments to a state agency does not authorize, as provided in this article, the refund of erroneous or excessive payments thereof, refunds may be made by the state agency which collected the fee or payment of any or all amounts received ...
Cal.Gov.Code § 13143 (emphasis supplied). Defendants argue that in light of Woosley v. California, which did not concern Cal. Gov.Code § 13143, the court should "imply" a cause of action for plaintiff under that section, despite the strong language of Section 32 to the contrary. Defendants argue that § 13143 is similar to the Code sections at issue in Woosley. Defendants' arguments have no merit.
Woosley involved a lawsuit to recover vehicle license fees and sales and use taxes collected under the Revenue Code and the Vehicle Code. Express refund procedures exist for both kinds of payments. With regard to the license fee, the Revenue Code provides:
[w]henever...
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