Apache Bend Apartments, Ltd. v. United States of America, Acting Through the Internal Revenue Service ( 1993 )

E. GRADY JOLLY, Circuit Judge:

In the Tax Reform Act of 1986, Congress included “transition rules,” which provided specified exemptions from designated provisions of the new tax laws to a very, very few specified favored taxpayers. The plaintiff taxpayers were not among the very, very favored few. They brought this suit to scotch the wheels of the greased wagon. They allege that the transition rules violate the Uniformity Clause and the equal protection component of the Due Process Clause of the Fifth Amendment. The case comes to us for rehearing en banc on the issue of the standing of these taxpayers to bring this suit seeking to enjoin a congressional act. A panel of our court held that the plaintiffs had suffered a re-dressable injury under the equal protection component of the Due Process Clause and thus had standing under the rationale of Heckler v. Mathews, 465 U.S. 728, 104 S.Ct. 1387, 79 L.Ed.2d 646 (1984). The panel proceeded, however, to deny plaintiffs relief on the merits of their claims. Apache Bend Apartments, Ltd. v. United States, 964 F.2d 1556 (5th Cir.1992).¹ The dissent argued that the plaintiffs lacked standing, because they had alleged only an abstract injury, shared by all taxpayers who did not receive transition relief. Id. at 1569-71. Prudential considerations lead us to the conclusion that the plaintiffs lack standing to challenge the constitutionality of the transition rules.

I

The Supreme Court has noted that “[t]he term ‘standing’ subsumes a blend of constitutional requirements and prudential considerations.” Valley Forge Christian College v. Americans United for Separation of Church & State, Inc., 454 U.S. 464, 471, 102 S.Ct. 752, 758, 70 L.Ed.2d 700 (1982); see also Warth v. Seldin, 422 U.S. 490, 498, 95 S.Ct. 2197, 2205, 45 L.Ed.2d 343 (1975); Flast v. Cohen, 392 U.S. 83, 99, 88 S.Ct. 1942, 1952, 20 L.Ed.2d 947 (1968). To satisfy the requirements of Article III, the plaintiffs must have suffered an “injury in fact,” caused by the challenged government conduct, which is likely to be redressed by the relief they seek. Lujan v. Defenders of Wildlife, — U.S. -, -, 112 S.Ct. 2130, 2136, 119 L.Ed.2d 351 (1992). In addition to the constitutional requirements, the Court also has applied certain prudential principles in determining whether litigants have standing. Plaintiffs “ ‘generally must assert [their] own legal rights and interests,’ ” and their complaint must “fall within ‘the zone' of interests to be protected or regulated by the statute or constitutional guarantee in question.’ ” Valley Forge, 454 U.S. at 474-75, 102 S.Ct. at 760 (quoting Warth v. Seldin, 422 U.S. at 499, 95 S.Ct. at 2205, and Association of Data Processing Service Organizations v. Camp, 397 U.S. 150, 153, 90 S.Ct. 827, 830, 25 L.Ed.2d 184 (1970)). The Court further has stated that it will not adjudicate “ ‘abstract questions of wide public significance’ which amount to ‘generalized grievances,’ pervasively shared and most appropriately addressed in the representative branches.” Id. at 475, 102 S.Ct. at 760 (quoting Warth v. Seldin, 422 U.S. at 499-500, 95 S.Ct. at 2205-06).

The prudential principle barring adjudication of “generalized grievances” is closely related to the constitutional requirement of personal “injury in fact,” and the policies underlying both are similar. See Valley Forge, 454 U.S. at 475, 102 S.Ct. at 760. “In both dimensions it is founded in concern about the proper — and properly limited — role of the courts in a democratic society.” Warth v. Seldin, 422 U.S. at 498, 95 S.Ct. at 2205. Prudential principles are judicial rules of self-restraint, founded upon the recognition that the political branches of government are generally better suited to resolving disputes involving matters of broad public significance. Id. at 499-500, 95 S.Ct. at 2205-06; see also Lujan, — U.S. at -, 112 S.Ct. at 2136. The judicial power to adjudicate constitutional questions is reserved for those instances in which it is necessary for the vindication of individual rights. See id. at -, 112 S.Ct. at 2145; Valley Forge, 454 U.S. at 473-74, 102 S.Ct. at 759; Gladstone Realtors v. Village of Bellwood, 441 U.S. 91, 99-100, 99 S.Ct. 1601, 1608, 60 L.Ed.2d 66 (1979). The foundations for the judiciary’s policy of avoiding the unnecessary resolution of constitutional issues were described in Rescue Army v. Municipal Court of City of Los Angeles, 331 U.S. 549, 571, 67 S.Ct. 1409, 1421, 91 L.Ed. 1666 (1947):

The policy’s ultimate foundations, some if not all of which also sustain the jurisdictional limitation, lie in all that goes to make up the unique place and character, in our scheme, of judicial review of governmental action for constitutionality. They are found in the delicacy of that function, particularly in view of possible consequences for others stemming also from constitutional roots; the comparative finality of those consequences; the consideration due to the judgment of other repositories of constitutional power concerning the scope of their authority; the necessity, if government is to function constitutionally, for each to keep within its power, including the courts; the inherent limitations of the judicial process, arising especially from its largely negative character and limited resources of enforcement; withal in the paramount importance of constitutional adjudication in our system.

We find it unnecessary to decide whether the plaintiffs have alleged a redressable injury sufficient to satisfy the requirements of Article III of the Constitution, because even if we assume that they have, it is clear that the prudential principles apply with particular force here, and preclude our adjudication of the constitutional issues raised by the plaintiffs.

The transition rules apply only to a very, very few taxpayers who requested such relief from Congress. The plaintiffs, claiming to lack political access, did not request such relief. In this lawsuit, they do not seek transition relief for themselves, but ask only that transition relief be denied to the favored taxpayers.² Accordingly, they concede that any palpable injury they may suffer as the result of their own unabated tax liability cannot be redressed by the relief they seek. Therefore, “unequal treatment” is the only injury upon which the plaintiffs rely in support of their claim to standing. They contend that a decision in their favor will redress that injury, and give them the satisfaction of knowing that all taxpayers are being treated equally in accordance with the Constitution.

The following prudential concerns convince us that the plaintiffs have not alleged an injury that is appropriate for judicial resolution.

A

First, it is important to note that the plaintiffs are not seeking to litigate their own tax liability, but the tax liability of taxpayers granted transition relief. The favored taxpayers, who are the only persons whose tax liability would be affected by the relief that the plaintiffs seek, are not before our court, and are thus unable to express their views.

In Louisiana v. McAdoo, 234 U.S. 627, 34 S.Ct. 938, 58 L.Ed. 1506 (1914), the Supreme Court ordered the dismissal of a suit by the State of Louisiana, which, as a sugar producer, was challenging the tariff rates applied to sugar imported from Cuba. The Court stated that the maintenance of such actions “would operate to disturb the whole revenue system of the Government,” and that “[interference [by the courts] in such a case would be to interfere with the ordinary functions of government.” Id. at 632, 633, 34 S.Ct. at 940, 941.

In Simon v. Eastern Kentucky Welfare Rights Organization, 426 U.S. 26, 96 S.Ct. 1917, 48 L.Ed.2d 450 (1976), the Government relied on McAdoo in support of its contention that persons whose own tax liabilities are not affected could not litigate someone else’s tax liability. Because the Court ruled that the plaintiffs lacked standing on other grounds, it expressed no opinion on the applicability of McAdoo. Id. at 36-37 & n. 14, 96 S.Ct. at 1923 & n. 14). Justice Stewart, however, in his concurring opinion stated: “I cannot now imagine a case, at least outside the First Amendment area, where a person whose own tax liability was not affected ever could have standing to litigate the federal tax liability of someone else.” Id. at 46, 96 S.Ct. at 1928.

Although it is unnecessary for us to decide whether a taxpayer has standing to litigate another taxpayer’s tax liability and, if so, under what circumstances, we believe that the concerns expressed in McAdoo are applicable here. Congress has erected a complex structure to govern the administration and enforcement of the tax laws, and has established precise standards and procedures for judicial review of tax matters. Even if the plaintiffs succeeded in gaining the relief they seek—nullification of the transition rules—the affected taxpayers, who are not parties, would remain free to challenge any deficiencies asserted. Moreover, our decision would constitute binding precedent only in this Circuit. It is obvious that the relief the plaintiffs seek, if granted, would seriously disrupt the entire revenue collection process.

B

The injury of unequal treatment alleged by the plaintiffs is shared in substantially equal measure by a “disfavored class” that includes all taxpayers who did not receive transition relief. Like myriad taxpayers who did not request transition relief, the plaintiffs have not suffered any direct injury in the sense that they personally asked for and were denied a benefit granted to others. We acknowledge that “standing is not to be denied simply because many people suffer the same injury.” United States v. Students Challenging Regulatory Agency Procedures (SCRAP), 412 U.S. 669, 687, 93 S.Ct. 2405, 2416, 37 L.Ed.2d 254 (1973). Nevertheless, the Supreme Court has made it clear that “when the asserted harm is a ‘generalized grievance’ shared in substantially equal measure by all or a large class of citizens, that harm alone normally does not warrant exercise of jurisdiction.” Warth v. Seldin, 422 U.S. at 499, 95 S.Ct. at 2205; see also Schlesinger v. Reservists Committee to Stop the War, 418 U.S. 208, 220-21, 94 S.Ct. 2925, 2932, 41 L.Ed.2d 706 (1974).³

Among the reasons underlying the rule barring adjudication of generalized grievances is the recognition that other governmental institutions may be more competent to address questions of wide public significance. The Supreme Court has stated that “[vindicating the public interest (including the public interest in government observance of the Constitution and laws) is the function of Congress and the Chief Executive.” Lujan, — U.S. at-, 112 S.Ct. at 2145. In addition, the rule is intended to assure that important constitutional issues will be presented by litigants with a personal stake in the outcome, Sierra Club v. Morton, 405 U.S. 727, 740, 92 S.Ct. 1361, 1369, 31 L.Ed.2d 636 (1972), and will be resolved in a specific factual context, in which the court can fully comprehend the consequences of its actions. Valley Forge, 454 U.S. at 472, 102 S.Ct. at 758.

Because all taxpayers have an interest in the fair administration of the tax laws, the plaintiffs’ stake in the outcome of this dispute is no greater than any other taxpayer’s. “The proposition that all constitutional provisions are enforceable by any citizen simply because citizens are the ultimate beneficiaries of those provisions has no boundaries.” Schlesinger, 418 U.S. at 227, 94 S.Ct. at 2935. The existence of injured parties who might not wish to bring suit is not irrelevant — more is required for invocation of the judicial power than “important issues and able litigants.” Valley Forge, 454 U.S. at 489, 102 S.Ct. at 768. “The assumption that if [the plaintiffs] have no standing to sue, no one would have standing, is not a reason to find standing.” Schlesinger, 418 U.S. at 227, 94 S.Ct. at 2935.

C

The relief sought by the plaintiffs is, essentially, the comfort of knowing that the Internal Revenue Service will not be allowed to enforce laws passed by Congress for the purpose of benefiting only those taxpayers who have political influence. Just as the injury alleged by the plaintiffs is shared by all taxpayers — except those who received transition relief— the relief that they seek would benefit the same class in substantially equal measure. Therefore, the plaintiffs have failed to demonstrate that the relief they seek would personally benefit them in a tangible way. See Lujan, — U.S. at-, 112 S.Ct. at 2143; Valley Forge, 454 U.S. at 480 n. 17, 102 S.Ct. at 763 n. 17; Warth v. Seldin, 422 U.S. at 508, 95 S.Ct. at 2210.⁴

D

The injury of inequality alleged by the plaintiffs essentially is nothing more than a claim to “an asserted right to have the Government act in accordance with law.” Allen v. Wright, 468 U.S. 737, 754, 104 S.Ct. 3315, 3326, 82 L.Ed.2d 556 (1984). The Supreme Court has repeatedly rejected standing under such circumstances. E.g., Whitmore v. Arkansas, 495 U.S. 149, 160, 110 S.Ct. 1717, 1725, 109 L.Ed.2d 135 (1990) (citizen suit to prevent criminal’s execution on the basis of “the public interest protections of the Eighth Amendment”); United States v. Richardson, 418 U.S. 166, 176-77, 94 S.Ct. 2940, 2946, 41 L.Ed.2d 678 (1974) (taxpayer suit challenging the Government’s failure to disclose the expenditures of the Central Intelligence Agency); Ex parte Levitt, 302 U.S. 633, 634, 58 S.Ct. 1, 1, 82 L.Ed. 493 (1937) (suit contending that Justice Black’s appointment to the Supreme Court violated the Ineligibility Clause, Art. I, § 6, cl. 2); Frothingham v. Mellon, 262 U.S. 447, 488-89, 43 S.Ct. 597, 601, 67 L.Ed. 1078 (1923) (taxpayer suit challenging the propriety of certain federal expenditures); Fairchild v. Hughes, 258 U.S. 126, 129-30, 42 S.Ct. 274, 275, 66 L.Ed. 499 (1922) (suit challenging the propriety of the process by which the Nineteenth Amendment was ratified).

In Valley Forge, the Court stated that the “assertion of a right to a particular kind of Government conduct, which the Government has violated by acting differently, cannot alone satisfy the requirements of Art. Ill without draining those requirements of meaning.” 454 U.S. at 483, 102 S.Ct. at 764. Were we to accept the plaintiffs’ claim of standing alone in this case, there would be no principled basis upon which to deny standing to any taxpayer wishing to challenge any of the countless provisions of the federal tax laws which treat some taxpayers more favorably than others. See id. at 489-90 & n. 26,102 S.Ct. at 768 n. 26; Frothingham v. Mellon, 262 U.S. at 487, 43 S.Ct. at 601. Such a broad expansion of standing would enable the courts “to assume a position of authority over the governmental acts of another and co-equal department,” id. at 489, 43 S.Ct. at 767, and to become “virtually continuing monitors of the wisdom and soundness of Executive action.” Allen v. Wright, 468 U.S. at 760, 104 S.Ct. at 3329 (citation omitted). The Supreme Court has emphatically expressed its “unwilling[ness] to countenance such a departure from the limits on judicial power.” Valley Forge, 454 U.S. at 490, 102 S.Ct. at 768.

II

The plaintiffs’ allegations of inequality resulting from the transition rules present “ ‘abstract questions of wide public significance’ which amount to ‘generalized grievances,’ pervasively shared and most appropriately addressed in the representative branches.” Valley Forge, 454 U.S. at 475, 102 S.Ct. at 760 (quoting Warth v. Seldin, 422 U.S. at 499-500, 95 S.Ct. at 2206). The Supreme Court has made it clear that such “abstract injury in nonobservance of the Constitution” is not judicially cognizable. See Schlesinger, 418 U.S. at 223 n. 13, 94 S.Ct. at 2933 n. 13. We therefore conclude that the plaintiffs lack standing to challenge the constitutionality of the transition rules.

III

The holding of the district court that plaintiffs had standing to bring this action is REVERSED, and consequently its judgment dismissing the complaint is therefore

AFFIRMED.

1 . The district court concluded that the plaintiffs had standing to raise their claims, but held that the transition rules were constitutional. 702 F.Supp. 1285 (N.D.Tex.1988).

2 . The plaintiffs allege no competitive injury such as that alleged by the plaintiffs in Iowa Des-Moines Nat'l Bank v. Bennett, 284 U.S. 239, 52 S.Ct. 133, 76 L.Ed. 265 (1931), cited by the dissenters.

3 . The dissenters argue that the prudential standing principle is inapplicable to this case, because "The plaintiffs’ grievance is certainly no more general than the cognizable grievance raised by the male plaintiff in Heckler v. Mathews, [465 U.S. 728, 104 S.Ct. 1387, 79 L.Ed.2d 646 (1984) ], who alleged the injury of unequal treatment under Social Security rules that granted men lesser benefits than similarly situated women.” We pointedly disagree.

The plaintiff in Heckler, a retired postal worker, applied to the Social Security Administration (SSA) "for husband’s benefits on his wife’s account." 465 U.S. at 734, 104 S.Ct. at 1392. The SSA informed him that, because he was not dependent on his wife for one-half of his support, the spousal benefits that he might otherwise have been entitled to receive would be offset entirely by his Postal Service pension under then-existing Social Security rules. Id. at 735, 104 S.Ct. at 1393.

Mathews filed a class action suit against the Secretary of the SSA, seeking a declaratory judgment that the application of the Social Security rules operated to deprive him and "other nonde-pendent men” of equal protection under the laws. Women with federal pensions who were not dependent on their husbands for one-half of their support were — unlike similarly situated men — not at risk of losing their spousal benefits under the Social Security rules. The grievance asserted in Heckler, therefore, was that the Social Security rules discriminated against Mathews and other nondependent husbands. Mathews specifically sought benefits for himself, arguing that the severability provision (which would prevent a court from redressing the inequality by increasing the benefits payable to husbands) was also unconstitutional.

Whether Mathews had asserted a "generalized grievance” implicating prudential standing principles was not an issue in Heckler. Indeed, the Court observed in a footnote that, "because [Mathews] personally has been denied benefits that similarly situated women receive, his is not a generalized claim of the right possessed by every citizen, to require that the Government be administered according to law.” 465 U.S. at 741 n. 9, 104 S.Ct. at 1396 n. 9 (emphasis added). Unlike the plaintiffs in the case before us, Mathews was asserting his equal protection argument in the context of litigating his right to receive

Social Security benefits. The only question about Mathews’ standing was whether, given the fact that benefits could not be extended to him because of the severability clause, his injury was redressable (only one component of establishing standing to sue). The Supreme Court in Heckler held that, because Mathews’ injury was redress-able by withdrawing benefits from similarly situated nondependent women, the standing requirements to raise the equal protection claim were satisfied.

Id. at 739-40, 104 S.Ct. at 1395.

Here our prudential concerns are not focused on redressibility; our attention is directed to the plaintiffs' alleged injury of unequal treatment. In this respect, the injury alleged by the plaintiffs is distinguishable in many significant respects from the particularized injury alleged in Heckler, and those differences fully support our prudential concerns. First, the plaintiffs here were not personally denied benefits under the transition rules. See, e.g., id. at 741 n. 9, 104 S.Ct. at 1396 n. 9. As far as we can tell, they never even sought such benefits. Second, our plaintiffs are not raising an equal protection argument in the context of litigating their own tax liability. Instead, the plaintiffs effectively are litigating — by seeking to increase — the tax liability of those who are favored under the transition rules; yet, they allege no competitive injury. Third, the Court in Heckler specifically noted that the discrimination in that case could cause serious noneconomic injury by stigmatizing members of the disfavored group as innately inferior, a type of noneconomic injury plainly not present in this case. See 465 U.S. at 739, 104 S.Ct. at 1395. We expressly do not decide today whether the Heckler rationale applies only to injuries subject to heightened scrutiny, but only suggest that prudential concerns are significantly more compelling in our case.

Fourth, we emphasize that the injured class in Heckler was far more specifically defined than the amorphous class in this case. When the injured class is so ill-defined and inspecific, prudential considerations are of greater concern. The dissenters vainly attempt to narrow the class only to those taxpayers whose tax liability was affected by the changes in the 1986 tax code. Because the transition rules arbitrarily granted windfall benefits — the consequences of which are borne by all taxpayers — to a favored few on an ad hoc basis we find it exceedingly difficult to view the class of discrimina-tees, i.e., those who received unequal treatment, so narrowly. Moreover, we find it wholly contradictory — and indeed revealing of the inherent weakness in their argument for a non-generalized injury — that the dissenters find it necessary to cast the class of injured citizens in terms of economic injury when the only redressable injury alleged is a non-economic one — unequal treatment. In any event, the plaintiffs’ grievance is not any more particularized — for purposes of prudential standing principles — because the plaintiffs allege themselves to be similarly situated with the beneficiaries of the 1986 transition rules. To demonstrate a particularized grievance, at least in the context of challenging Congress' formulation of the tax laws, something more concrete is required.

When the excess verbiage of the dissent has been shorn so that the essence of this case may be plainly seen, the plaintiffs only assert a generalized right to even-handed administration of tax laws, a right that they share with all taxpayers. This claim is exactly the sort of generalized grievance that, in our view, we should refrain from addressing under prudential standing principles.

4 . The dissenters suggest that, because of the Anti-Injunction Act, nullification of the transition rules is the only procedural avenue available to the plaintiffs. We think this argument is patently incorrect. For example, whatever the merits of their claim, the plaintiffs could have sued for a refund in the district court, claiming the benefits of the transition rules for themselves. In that case, the plaintiffs would, at least, be litigating their own tax liability.