Levy v. Pappas

CUDAHY, Circuit Judge,

concurring.

The big question here is whether the plaintiffs’ lawsuit is barred by the Tax Injunction Act (TIA), as last analyzed by the Supreme Court in Hibbs v. Winn, 542 U.S. 88, 124 S.Ct. 2276, 159 L.Ed.2d 172 (2004). The majority reads the TIA and comity as barring claims where the “plaintiff alleges that the state tax collection or refund process is singling her out for unjust treatment,” but not claims where the “plaintiff alleges that the state tax collection or refund process is giving unfair benefits to someone else.” (Op. at 762.) How exactly this distinction might work is unclear and its arguable basis in Hibbs is elusive.

Also, in evaluating whether Levy’s claim is barred by the TIA or principles of comity, the majority relies on the relief Levy seeks, rather than “how Levy has described his complaint.” (Op. at 761.) Since Levy is asking for lost profits, the majority reasons that payment of lost profits would “operate[ ] to reduce the flow of state tax revenue” and therefore is barred by Hibbs. (Op. at 762 (quoting Hibbs, 542 U.S. at 106, 124 S.Ct. 2276)). This approach seems simplistic to me. I do not think it is enough to say that Levy’s request for lost profits makes this lawsuit suspect under the TIA. In his state lawsuit and in the original federal complaint Levy asked for injunctive relief. I think this is significant and effectively distinguishes the claims in the first amended complaint, which really concerned harassment and retaliatory conduct, from those in the state lawsuit and the original federal complaint, which concerned the legitimacy of the tax refund process more broadly. I am concerned that the majority is conceding too much scope to the TIA, especially when the Supreme Court seems to be reading it fairly narrowly in Hibbs.

It is important to distinguish the present case from the action brought in state court by Levy in 1999. The defendants, and to a lesser extent, the district court, blur the distinction between the claims and relief requested in the state lawsuit and the present one. This difference is significant because, if the 1999 lawsuit had been brought in federal court, it would clearly have been barred by the TIA. That case concerned how Cook County issued tax refunds and as a remedy prescribed the issuance of tax refund checks. The first amended complaint, which is the subject of the present appeal, does not, for the most part, concern the statutory scheme pursuant to which refunds are issued and its requested relief does not involve the issuance of refund checks. The present case, or at least the § 1988 claims, primarily concerns alleged retaliatory conduct, both harassment and the launching of a criminal investigation, by various Cook County officials, most notably Pappas and Karaholios. This part of the complaint is not barred by the TIA. As the Supreme Court explained in Hibbs, the TIA bars federal courts from challenging the assessment of taxes, where assessment is narrowly defined as “recording the liability of the taxpayer” and closely tied to the collection of a tax. 542 U.S. at 100-01, 124 S.Ct. 2276. . The Court concluded that the TIA applies only to “cases in which state taxpayers seek federal-court orders enabling them to avoid paying state taxes.” Id. at 107, 124 S.Ct. 2276. These claims raised by Levy in the first amended complaint do not concern how Cook County issues refunds. Therefore, the TIA as interpreted by the Supreme Court in Hibbs does not bar the plaintiffs’ § 1983 claims.

As for the RICO claims, the plaintiffs allege three separate violations under RICO, 18 U.S.C. § 1962(a), § 1962(c) and § 1962(d). The plaintiffs’ RICO claims primarily concern the plaintiffs’ argument that Cook County has failed to issue refunds to taxpayers and has also fraudulently retained these refunds instead of turning them over to the State of Illinois pursuant to the Unclaimed Property Act. This was the crux of the 1999 state action and is clearly barred by the TIA. The district court was clearly correct in dismissing the RICO claims for lack of jurisdiction as required by the TIA.

All of this said, I do think there is a strong statute of limitations argument for barring the non-criminal investigation retaliation claims, and therefore I would affirm the district court’s grant of the defendant’s motion to dismiss. I also agree with the majority’s treatment of the criminal investigation retaliation claim, namely dismissing it on absolute immunity grounds.