Smith v. Travis County Educ. Dist. ( 1992 )

IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
_____________________
No. 92-8244
_____________________
COLEMAN H. SMITH, ET AL.,
Plaintiffs-Appellants,
Cross-Appellees,
v.
TRAVIS COUNTY EDUCATION DISTRICT, ET AL.,
Defendants-Appellees.
Cross-Appellants.
_________________________________________________________________
Appeals from the United States District Court
for the Western District of Texas
_________________________________________________________________
(August 3, 1992)
Before VAN GRAAFEILAND,* KING, and EMILIO M. GARZA, Circuit Judges.
KING, Circuit Judge:
Texas taxpayers appeal the judgment of the district court
declining to enjoin the continued collection of taxes under a
public school finance system which, the Texas Supreme Court ruled,
violates the Texas Constitution. Travis County Education District,
joined by other county education districts, the Texas Education
Agency, and the Attorney General of Texas, cross-appeal the
district court's decision, arguing that the district court lacked
jurisdiction over the claim. Concluding that the Tax Injunction
Act, 28 U.S.C. § 1341, bars the district court from entertaining
*
Senior Circuit Judge of the Second Circuit, sitting by
designation.
the taxpayers' claim, we vacate its judgment and remand with
instructions to dismiss the suit.
I.
This case involves the most recent challenge to Texas' public
school finance system.1 On January 30, 1992, the Texas Supreme
Court held that the Texas public school finance system levied ad
valorem taxes in violation of Article VII, § 1-e of the Texas
Constitution, and permitted county education districts (CEDs) to
levy ad valorem taxes without prior voter approval in violation of
Article VII, § 3 of the Texas Constitution. See Carrollton-Farmers
Branch Indep. School Dist. v. Edgewood Indep. School Dist., 826
S.W.2d 489, 524 (Tex. 1992) (Edgewood III). Because the State
Legislature was not in regular session, the Texas Supreme Court
chose to defer the effect of its ruling for 17 months to avoid
disruption to public school operations and to enable the
Legislature "to consider all options fully." Id. at 522.
Consequently, the Texas Supreme Court directed the state district
judge to re-issue an injunction that prohibits the state
Commissioner of Education and Comptroller from giving effect to
certain provisions of the Texas Education Code, but stays the
effect of this prohibition until June 1, 1993. See id. at 523 &
1
The U.S. Supreme Court upheld the validity of an earlier
version of the Texas school finance system under the U.S.
Constitution in San Antonio Indep. School Dist. v. Rodriguez, 411
U.S. 1 (1973). Since then, that version and two subsequent
modifications of the school finance system have been struck down
under the Texas Constitution. See Edgewood Indep. School Dist.
v. Kirby, 777 S.W.2d 391 (Tex. 1989) (Edgewood I); Edgewood
Indep. School Dist. v. Kirby, 804 S.W.2d 491 (Tex. 1991)
(Edgewood II); Carrollton-Farmers Branch Indep. School Dist. v.
Edgewood Indep. School Dist., 826 S.W.2d 489 (Tex. 1992)
(Edgewood III).
n.42, 524. The Texas Supreme Court also held that its ruling was
not to be used as a defense to the payment of the 1991 and 1992 CED
taxes. Id. at 522.
Two separate groups of Texas taxpayers filed suit against
Travis County Education District and other CEDs pursuant to 42
U.S.C. § 1983 in federal district court. The taxpayers sought a
declaratory judgment that the imposition and collection of the 1991
and 1992 CED taxes violated the due process clause of the
Fourteenth Amendment to the U.S. Constitution. They also sought an
injunction requiring that the State of Texas fashion an appropriate
post-deprivation remedy to the unconstitutional collection of the
1991 CED taxes already paid, and an injunction prohibiting
collection of the 1992 CED taxes. The district court consolidated
the two suits and certified plaintiff and defendant classes. The
Texas Education Agency and the Attorney General of Texas intervened
as defendants.
On May 1, 1992, the district court denied the defendants'
motions to dismiss for lack of jurisdiction. The district court
determined that collection of the 1991 taxes did not violate due
process because the Edgewood III ruling was entered after that tax
year. However, the district court declared that continued
collection of the 1992 taxes under the system violated due process.
Nevertheless, the district court denied injunctive relief on the
merits, finding that the public interest in the education of
children outweighed the injury to the taxpayers resulting from the
due process violation.
II.
The taxpayers argue that the district court erred in refusing
to award injunctive relief. On cross-appeal, the defendants
contend that the district court erred in asserting jurisdiction
over the action. Specifically, the defendants maintain that the
lack of a federal question and the Eleventh Amendment deprive the
court of jurisdiction, and alternatively, that the Tax Injunction
Act and principles of comity required the district court to abstain
from entertaining the action. Because we find it dispositive, we
consider only the defendants' contention that the Tax Injunction
Act bars jurisdiction over this action.
The Tax Injunction Act 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.
28 U.S.C. § 1341. "[T]his legislation was first and foremost a
vehicle to limit drastically federal district court jurisdiction to
interfere with so important a local concern as the collection of
taxes." Rosewell v. LaSalle Nat'l Bank, 450 U.S. 503, 522 (1981).
Thus, "the Tax Injunction Act imposes an equitable duty on federal
district courts to refrain from exercising jurisdiction over claims
arising from state revenue collection except when state remedies
could prevent a taxpayer from asserting a federal right." McQueen
v. Bullock, 907 F.2d 1544, 1547 (5th Cir. 1990) (footnote omitted),
cert. denied, 111 S. Ct. 1308 (1991). This restraint emerges from
"the scrupulous regard [of the federal courts] for the rightful
independence of state governments . . . and a proper reluctance to
interfere by injunction with their fiscal operations." Matthews v.
Rodgers, 284 U.S. 521, 525 (1932).
The district court held that the Tax Injunction Act did not
prevent it from entertaining the taxpayers' action because the
Texas Supreme Court's decision in Edgewood III "eliminates the
possibility of a state remedy" by specifying that its ruling could
not be used as a defense to the payment of taxes under the
invalidated scheme. The defendants contend that the district court
improperly assumed jurisdiction over the taxpayers' action. The
defendants maintain that the district court focused on whether the
taxpayers would receive relief in state court on their claim,
instead of the inquiry that the Tax Injunction Act requires:
whether the state provided a plain, speedy and efficient remedy for
the taxpayers. Because Texas makes adequate judicial procedures
available for the taxpayers to bring their federal claim, the
defendants argue, the Tax Injunction Act precludes their action.
The Tax Injunction Act bars federal district courts from
granting declaratory as well as injunctive relief in cases
challenging state tax systems. California v. Grace Brethren
Church, 457 U.S. 393, 408 (1982) (citing Great Lakes Dredge & Dock
Co. v. Huffman, 319 U.S. 293, 299 (1943)). Further, "taxpayers are
barred by the principles of comity from asserting § 1983 actions
against the validity of state tax systems in federal court." Fair
Assessment in Real Estate Ass'n v. McNary, 454 U.S. 100, 116
(1981). Therefore, the Tax Injunction Act bars the district court
from asserting jurisdiction unless the State fails to supply a
plain, speedy and efficient remedy for the taxpayers' claim.
The inquiry into whether a plain, speedy and efficient remedy
exists focuses on whether a state provides a procedural vehicle
that affords taxpayers the opportunity to raise their federal
constitutional claims. Rosewell, 450 U.S. at 512-13 (citing Tully
v. Griffin, Inc., 429 U.S. 68, 74 (1976), and Huffman, 319 U.S. at
300-01 (1943)). A state provides a plain, speedy and efficient
remedy when it provides taxpayers "with a 'full hearing and
judicial determination,'" with ultimate review available in the
United States Supreme Court pursuant to 28 U.S.C. § 1257.
Rosewell, 450 U.S. at 514 (quoting S. Rep. No. 701, 72d Cong., 1st
Sess., 1-2 (1932)) (citation omitted).
The taxpayers do not allege that the state fails to furnish a
procedural avenue for them to pursue their federal due process
claim. Indeed, they initiated state court actions before bringing
their claim in federal court. These actions are still pending.
Rather, the taxpayers argue that because Edgewood III prevents them
from using the Texas Supreme Court's ruling as a defense to the
nonpayment of taxes under the public school finance system, it
appears unlikely that they will succeed on the merits of their
federal claim in state court. This argument provides no basis for
circumventing the jurisdictional bar imposed by the Tax Injunction
Act. See Franchise Tax Bd. v. Alcan Aluminum, 493 U.S. 331, 340-41
(1990); Rosewell, 450 U.S. at 512-17; see also Redd v. Lambert, 674
F.2d 1032, 1036 (5th Cir. 1982) ("There is no indication that
Congress intended that the lower federal courts would provide
supplemental relief whenever a litigant does not receive all the
relief he seeks in state court."). The taxpayers have not
demonstrated that the state courts have refused to entertain their
federal claim in their pending state court actions. Nor do they
show that their state remedy is uncertain or speculative. See
Alcan Aluminum, 493 U.S. at 340. Accordingly, we hold that the Tax
Injunction Act bars the district court from exercising jurisdiction
over the taxpayers' claim. In view of this holding, we need not
address other errors in the district court's opinion.
III.
For the foregoing reasons, we VACATE the opinion and judgment
of the district court and REMAND with instructions to dismiss the
suit pursuant to 28 U.S.C. § 1341. Costs shall be borne by the
taxpayers, plaintiffs-appellants herein.