United Gas Pipe Line Co. v. Whitman

• Citation: 595 F.2d 323
• Decision Date: 21 May 1979
• Docket Number: No. 78-2089,78-2089
• Parties: UNITED GAS PIPE LINE COMPANY, Plaintiff-Appellant, v. Arvis E. WHITMAN, Sheriff and Ex-Officio Tax Collector, Bienville Parish, Louisiana, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

Page 323

595 F.2d 323

UNITED GAS PIPE LINE COMPANY, Plaintiff-Appellant, v. Arvis E. WHITMAN, Sheriff and Ex-Officio Tax Collector Bienville Parish, Louisiana, Defendant-Appellee.

No. 78-2089.

United States Court of Appeals Fifth Circuit.

May 21, 1979.

Malcolm S. Murchison, Ray A. Barlow, Michael R. Mangham, Shreveport, La., for plaintiff-appellant.

Whitten & Blake, Leon H. Whitten, Jonesboro, La., Neil H. Mixon, Jr., D. Irvin Couvillion, Baton Rouge, La., for defendant-appellee.

Appeal from the United States District Court for the Western District of Louisiana.

Before THORNBERRY, CLARK and RUBIN, Circuit Judges.

CHARLES CLARK, Circuit Judge:

The issue on this appeal is whether a federal district court has jurisdiction to hear a suit for the refund of state taxes when a state statute provides that tax refund actions may be maintained in either state or federal courts. We hold that the Tax Injunction Act of 1937, 28 U.S.C. § 1341, bars district court jurisdiction over state refund suits, and that the bar applies even though the state itself has consented to the maintenance of refund suits in a federal forum.

I.

The appellant, United Gas Pipe Line Company ("United"), is an interstate pipeline company that stores some of its natural gas from Texas and the Gulf of Mexico in underground formations located within Louisiana. The gas is stored in Louisiana while awaiting transportation to out-of-state destinations. United paid, under protest, ad valorem taxes on the stored natural gas to the Sheriff of Bienville Parish, Louisiana, the ex-officio tax collector for the parish. United then brought this action for a refund of the ad valorem taxes, claiming that their imposition was an impermissible burden on interstate commerce. On the same day that United filed its suit in the federal district court, United commenced a refund action in the Second Judicial District Court for the Parish of Bienville, Louisiana, raising the same commerce clause objection to the ad valorem taxes. But for the difference in forum, the state and federal actions were identical. At the time of this appeal the state suit was still pending. The federal district court held that it had jurisdiction to hear the suit, but it dismissed the action on grounds of abstention. ¹

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

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. ²

A Louisiana statute, however, provides that tax refund suits may be brought in state courts "or in the federal courts in any case where jurisdiction is vested in any of the courts of the United States." La.Rev.Stat.Ann. § 47:2110.

United asserts that a tax refund suit does not "enjoin, suspend or restrain the assessment, levy or collection" of any state tax and thus does not fall within the bar of section 1341. United further argues that even if a refund suit does come within the interdiction of section 1341, the Louisiana statute which authorizes refund suits in federal court is a waiver by Louisiana of section 1341's protection against federal interference of state tax affairs, thus lifting whatever jurisdictional bar would otherwise exist. We disagree with both of United's contentions and hold that the district court did not have jurisdiction over United's refund action.

II.

The policies embodied in section 1341, our own past precedent construing the statute, and the practical effect of a tax refund suit on state tax administration all require that we hold that tax refund suits fall within the statute's prohibition.

A.

The starting point for analysis of the scope of section 1341 is the recognition that the statute transformed what had previously been a judicially devised rule of restraint into a congressionally imposed limitation on jurisdiction. The Supreme Court has characterized the statute as a "broad jurisdictional barrier" in which "Congress gave explicit sanction to the pre-existing federal equity practice." Moe v. Confederated Salish & Kootenai Tribes, 425 U.S. 463 at 470, 96 S.Ct. 1634 at 1640, 48 L.Ed.2d 96. See also Tully v. Griffin, Inc., 429 U.S. 68, 73, 97 S.Ct. 219, 222, 50 L.Ed.2d 227 (1976). The leading case on section 1341 in this circuit, Bland v. McHann, 463 F.2d 21 (5th Cir. 1972), Cert. denied, 410 U.S. 966, 93 S.Ct. 1438, 35 L.Ed.2d 700 (1973), described the statute as "an explicit congressional limitation on the jurisdiction of the federal courts," a limitation in which "Congress recognized and gave sanction to the judicial practice" existing prior to the statute's enactment. 463 F.2d at 24, 26.

Since the 1937 statute was intended as a codification of judicial practice prior to its passage, both the Supreme Court and this court have found it useful to draw on the background of pre-1937 decisions in interpreting the purposes and policies which underlie it. See, e. g., Tully v. Griffin, supra, 429 U.S. at 73, 97 S.Ct. at 222; Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293, 297-299, 63 S.Ct. 1070, 1072-1073, 87 L.Ed. 1407 (1943); Bland v. McHann, supra, 463 F.2d at 26-27. Two pre-enactment cases are of particular importance in determining whether tax refund suits should be regarded as within the jurisdictional bar of section 1341, First National Bank v. Board of County Commissioners, 264 U.S. 450, 44 S.Ct. 385, 68 L.Ed. 784 (1929), and Matthews v. Rodgers, 284 U.S. 521, 52 S.Ct. 217, 76 L.Ed. 447 (1932).

First National Bank involved an action brought in federal court for the recovery of certain state taxes on the grounds that they were collected in violation of the due process and equal protection clauses. The Supreme Court held that the federal suit was barred because the taxpayers had not pursued state administrative remedies. In Bland we stated that First National Bank "alone would seem to effectively preclude the action here for a refund if the state remedy is adequate." 463 F.2d at 26.

Matthews v. Rodgers, also discussed in Bland, involved a Mississippi tax of one hundred dollars payable in advance "by 'every individual . . . engaged in the business of buying or selling cotton for himself.' " 284 U.S. at 523, 52 S.Ct. at 218. The complainants alleged that the tax was an unconstitutional burden on interstate commerce, and they sought an injunction from a three-judge district court against state officials to prevent collection of the tax. The Supreme Court held that "If the remedy at law is plain, adequate, and complete, the aggrieved party is left to that remedy in state courts, from which the cause may be brought to this Court for review if any federal question be involved." Id. at 526, 52 S.Ct. at 220. The Court then analyzed what has ever since been the central focus of suits brought in federal courts involving state taxation the adequacy of the state remedy:

(The complainants) may pay the tax to the collecting officer under protest, and, under the laws of Mississippi, may maintain a suit at law for its recovery on the ground that it was exacted in violation of the Constitution of the United States. That such a procedure saves to the taxpayer his federal right, and if available, will defeat the jurisdiction of federal courts to enjoin the collection of the tax, has long been the settled rule of this Court. ³

Id. at 526, 52 S.Ct. at 220.

The primary significance of Rodgers, however, is that it was not grounded simply in the traditional rule that equitable remedies are not available when adequate remedies exist at law, but rather in the far broader concept of federalism that states should be free from federal interference in the administration of their own fiscal affairs. The Court articulated this policy of non-interference as a "scrupulous regard for the rightful independence of state governments." Id. at 525, 52 S.Ct. at 219. In Bland we recognized that this "scrupulous regard" for state autonomy was an independent rationale in Rodgers, separate from simple notions of equitable restraint. 463 F.2d at 26.

The first significant decision after enactment of the statute was Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293, 63 S.Ct. 1070, 1073, 87 L.Ed. 1407 (1943). Great Lakes perpetuated the policies of restraint exemplified by First National Bank and Rodgers when it applied that restraint in a suit for declaratory judgment, a context outside of the traditional equitable rules governing injunctions, and by relying heavily on the special concerns of federalism in the area of state tax administration. See Bland, supra, 463 F.2d at 26-27 and n.21. "Interference with state internal economy and administration," the Court stated, "is inseparable from assaults in the federal courts on the validity of state taxation." 319 U.S. at 298, 63 S.Ct. at 1073. We summarized the Great Lakes holding in Bland by stating that "where the state remedy is plain, adequate and complete it is the duty of federal courts to withhold declaratory relief, and to remit the taxpayers to the state courts with ultimate review in the Supreme Court." 463 F.2d at 26. Prior to Bland, we held in City of Houston v. Standard-Triumph Motor Company, 347 F.2d 194 (5th Cir. 1965), that, although Great Lakes itself did not explicitly rule that declaratory judgment actions were jurisdictionally barred by section 1341, we construed the statute as including declaratory judgment actions among its jurisdictional prohibitions. 347 F.2d at 201.

The concept that section 1341 is not a narrow statute aimed only at injunctive interference with tax collection, but is rather a broad restriction on federal jurisdiction in suits that impede state tax administration, has continued to gain credence in the federal courts. The Supreme Court recently stated that "(t)he statute has its roots in equity practice, in principles of federalism, and in recognition of the imperative need of a State to administer its own...