U.S. v. State of Ohio, 78-3241

• Decision Date: 27 December 1979
• Docket Number: No. 78-3241,78-3241
• Citation: 614 F.2d 101
• Parties: 27 Cont.Cas.Fed. (CCH) 80,061 UNITED STATES of America, Plaintiff-Appellee, v. State of OHIO, Defendant-Appellant.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 101

614 F.2d 101

27 Cont.Cas.Fed. (CCH) 80,061

UNITED STATES of America, Plaintiff-Appellee, v. State of OHIO, Defendant-Appellant.

No. 78-3241.

United States Court of Appeals, Sixth Circuit.

Argued Oct. 4, 1979.

Decided Dec. 27, 1979.

William J. Brown, Atty. Gen., John C. Duffy, Jr., Asst. Atty. Gen., Columbus, Ohio, for defendant-appellant.

James C. Cissell, U.S. Atty., Columbus, Ohio, M. Carr Ferguson, William L. Shraberg, Gilbert E. Andrews, William A. Whitledge, Tax Div., Dept. of Justice, Washington, D.C., for plaintiff-appellee.

Before LIVELY and MERRITT, Circuit Judges, and PECK, Senior Circuit Judge.

PECK, Senior Circuit Judge.

This is an appeal from an order of the district court staying proceedings of the Ohio Board of Tax Appeals.

The district court's order was in aid of its jurisdiction of an action brought by the United States, seeking a declaratory judgment of the illegality of a tax assessed by the Ohio Tax Commissioner.

The government's action had been filed at the request of the Departments of the Army, Navy, and Air Force; the Civil Defense Preparedness Agency; the National Aeronautics and Space Administration; and the Federal Highway Administration. These governmental agencies had entered into contracts with various private corporations; under these agreements, each contractor was required to purchase, on behalf of the United States, various items of personal property. Although the property acquired was to be used by the contractors in the performance of their government contracts, title to the property was to vest in the United States at the time of delivery of the property to the contractors by the various vendors.

On August 18, 1977, the Tax Commissioner of the State of Ohio levied sales and use tax assessments against the contractors. All of the assessments were based on the sale or use of property within the State of Ohio. Exactly one month after the assessments were made, they were challenged before the Ohio Board of Tax Appeals by three of the four government contractors against whom the assessments had been made.

On November 22, 1977, the United States Attorney for the Southern District of Ohio filed a complaint in that district alleging that the taxes assessed against the government contractors were improper under Ohio law. ¹ A declaration of that impropriety was sought under 28 U.S.C. §§ 1345 and 2201 (1976). ² On February 23, 1978, the district court, finding that it "appeared" that the United States had a "pecuniary interest in the proceedings pending before the Board of Tax Appeals of the State of Ohio," ordered those proceedings stayed in aid of the federal court's jurisdiction of the action filed by the United States. This appeal from that order followed.

In the course of this appeal, many issues have been raised by the parties which it is unnecessary or premature for this Court to address. The United States raised for the first time on appeal the argument that the taxes assessed by the State of Ohio against the contractors were, under McCulloch v. Maryland, 17 U.S. 315, 4 Wheat. 316, 4 L.Ed. 579 (1819), unconstitutional state taxation of the federal government. For its part, the State of Ohio first challenged the statutory authority of the United States attorney to bring the declaratory judgment action, when the tax assessments the United States sought to have declared unlawful were against private contractors, and not the federal government; Ohio thereby apparently challenged the standing of the United States to seek a declaratory judgment of the illegality of the assessments. Second, the State questioned the power of district courts to stay the proceedings of a state tax board. In so doing Ohio relied on 28 U.S.C. § 1341 (1976), which 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.

None of these issues raised by the parties is a proper ground for a decision of this Court on this appeal.

The United States' complaint did not assert that the state tax assessments were based on unconstitutional state laws; rather, the government alleged that by the assessments Ohio violated its own laws. The district court's jurisdiction of these state-law questions was predicated only upon the United States' presence as plaintiff in the proceeding. Nevertheless, the submerged question of the constitutionality of the state taxation was bound to surface in the course of this litigation, as it did in this appeal.

Since this lurking constitutional question might be avoided by the Ohio Tax Appeals Board's own interpretation of Ohio tax law, and since there is no indication that the question of the constitutionality of the state taxes could not be raised in the state forum, we hold that abstention by the district court from exercise of jurisdiction of the declaratory judgment action was proper under both the Pullman and Younger abstention doctrines.

In Railroad Commission v. Pullman Co., 312 U.S. 496, 61 S.Ct. 643, 85 L.Ed. 971 (1941), the issue was whether the Texas Railroad Commission had the authority under state law to issue an order which may have violated the Fourteenth Amendment. Since the constitutional question needed to be reached only if the Commissioner's order was found valid under state law, the Supreme Court held that it was proper to defer exercise of federal jurisdiction until uncertain state-law issues were clarified in the state courts. The possibility of friction between state and federal government could thus be avoided, and the district court would not be required to make a constitutional determination based on speculative interpretation of state law.

Younger v. Harris, 401 U.S. 37, 91 S.Ct. 746, 27 L.Ed.2d 669 (1971), held that federal courts should not enjoin pending state criminal prosecutions unless the federally protected rights of the party seeking the injunction would very likely not be vindicated within the state judicial system. Four years after Younger, this doctrine was applied to civil proceedings initiated by the state, which were "akin" to criminal prosecutions. Huffman v. Pursue, Ltd., 420 U.S. 592, 95 S.Ct. 1200, 43 L.Ed.2d 482 (1975). Finally, in Juidice v. Vail, 430 U.S. 327, 97 S.Ct. 1211, 51 L.Ed.2d 376 (1977), the Court held that "the principles of Younger and Huffman are not confined solely to the types of state actions which were sought to be enjoined in those cases." Id. at 430 U.S. 334, 97 S.Ct. 1217.

There are, then, at least two separate strands of federal abstention doctrine. Pullman counsels abstention when statutory interpretation in state forums might eliminate constitutional questions; Younger stresses respect for "comity and federalism," that is, proper deference to a state's interest in ongoing proceedings in its own forums, and deference to a state judiciary's power to consider constitutional claims. See Ohio Bureau of Employment Services v. Hodory, 431 U.S. 471, 97 S.Ct. 1898, 52 L.Ed.2d 513 (1977). In deciding whether to apply the Younger doctrine, "the only pertinent inquiry is whether the state proceedings afford an adequate opportunity to raise the constitutional claims . . .." Moore v. Sims, 442 U.S. 415, 430, 99 S.Ct. 2371, 2381, 60 L.Ed.2d 994 (1979). Accord, Flynt v. Leis, 574 F.2d 874 (6th Cir. 1978), Rev'd on other grounds, 439 U.S. 438, 99 S.Ct. 698, 58 L.Ed.2d 717 (1979).

We are unable to understand the Government's argument that immediate access to a federal forum is needed in this case, simply because the United States cannot be required to submit to the state tax board's jurisdiction. This does not mean that the United States could not intervene in the state proceedings nor that the contractors could not raise constitutional questions in those proceedings. Further, the fact that the state litigation is before an administrative body and not a state court is without legal significance. Ohio's legislators have entrusted appeals from the Tax Commissioner's orders to an expert administrative body. This serves to show that the questions of state law raised in such appeals are particularly inappropriate for adjudication in such a non-specialized forum as a ...