Under an Illinois statute, real property owners who contest
their property taxes are required first to exhaust their available
administrative remedy and, if unsuccessful, are then afforded a
legal remedy requiring the payment of the taxes under protest and a
subsequent state court challenge. The customary delay from the time
of payment until the receipt of refund upon successful protest is
two years, and the refund is not accompanied by a payment of
interest. The beneficial owner of an apartment building in Cook
County, Ill., challenged the tax assessment of her property for a
certain tax year, but, after an unsuccessful administrative appeal,
refused to pay the taxes and instead brought an action in Federal
District Court for injunctive relief against petitioners (the
Treasurer and Assessor of Cook County), alleging,
inter
alia, that, by requiring her to pay taxes in excess of the
lawful amount, they deprived her of equal protection and due
process secured by the Fourteenth Amendment. The District Court
dismissed the complaint for want of jurisdiction pursuant to the
Tax Injunction Act, which prohibits federal district courts from
enjoining the assessment, levy, or collection of state taxes where
"a plain, speedy and efficient remedy may be had in the courts of
such State." The Court of Appeals reversed, holding that the Tax
Injunction Act did not bar federal district court jurisdiction
because Illinois' procedure of no-interest refunds after two years
was not "a plain, speedy and efficient remedy."
Held: The Illinois refund procedure is "a plain, speedy
and efficient remedy" within the meaning of the Tax Injunction Act,
thereby barring federal jurisdiction to grant injunctive relief.
Pp.
450 U. S.
512-528.
(a) The language of the "plain, speedy and efficient remedy"
exception appears to require a state court remedy that meets
certain minimal procedural criteria, and the Tax Injunction Act's
legislative history supports this procedural interpretation. Here,
the Illinois state court refund procedure provided the taxpayer
with a "full hearing and judicial determination" at which she might
raise any and all constitutional objections to the taxes, and
review was authorized in the higher Illinois
Page 450 U. S. 504
courts and ultimately could be obtained in this Court. She did
not allege any procedural defect in the Illinois remedy, other than
delay, that would preclude preservation and consideration of her
federal rights, but rather alleged that Illinois' failure to pay
interest on the tax refund made the remedy not "plain, speedy and
efficient." Any "federal right" she might have to receive interest
could be assert.ed in the state court legal proceeding. Pp.
450 U. S.
512-515.
(b) With respect to whether the Illinois remedy was "plain,"
respondent has not alleged that the remedy is uncertain or
otherwise unclear. There is no question that, under the Illinois
procedure, the court will hear and decide any federal claim; paying
interest or eliminating delay would not make the remedy any more
"plain." Pp.
450 U. S.
516-517.
(c) Because the Illinois remedy imposes no unusual hardship on
the taxpayer requiring ineffectual activity or an unnecessary
expenditure of time or energy, it cannot be said that it is not
"efficient." Pp.
450 U. S.
517-518.
(d) Assessing the 2-year delay in receiving a refund against the
usual time for similar litigation, such delay is not unusual and,
under the circumstances of this case, did not fall outside the
boundary of a "speedy" remedy. Pp.
450 U. S.
518-521.
(e) The Tax Injunction Act's overall purpose to limit
drastically federal district court jurisdiction to interfere with
so important a local concern as the collection of taxes is
consistent with the view that the "plain, speedy and efficient
remedy" exception to the Act's prohibition was only designed to
require that the state remedy satisfy certain procedural criteria,
and that Illinois' refund procedure meets such criteria. It would
be unreasonable to construe a statute passed with such a purpose to
mean that Congress nevertheless wanted taxpayers from States not
paying interest on refunds to have unimpaired access to the federal
courts. If Congress had meant to carve out such an expansive
exception, some mention of it would be expected, and there is none.
Pp.
450 U. S.
522-524.
(f) Although the Tax Injunction Act had its roots in federal
equity practice, nevertheless, where it appears that not every
wrinkle of such practice was codified intact, but rather that
Congress, among other things, legislated to solve an existing
problem by
cutting back federal equity jurisdiction, the
Act will not be interpreted to incorporate that portion of federal
equity practice arguably viewing a no-interest refund remedy as
inadequate. Pp.
450 U. S.
524-526.
(g) The reasons supporting federal noninterference with state
tax administration -- such as the dependency of st.ate budgets on
the receipt of local tax revenues and the havoc that would be
caused if federal injunctive relief against collection of state or
local taxes were widely
Page 450 U. S. 505
available -- are just as compelling today as they were in 1937,
when the Tax Injunction Act was passed. Pp.
450 U. S.
527-528.
604 F.2d 530, reversed.
BRENNAN, J., delivered the opinion of the Court, in which
BURGER, C.J., and WHITE, BLACKMUN, and REHNQUIST, JJ., joined.
BLACKMUN, J., filed a concurring opinion,
post, p.
450 U. S. 528.
STEVENS, J., filed a dissenting opinion, in which STEWART,
MARSHALL, and POWELL, JJ., joined, post, p.
450 U. S.
529.
JUSTICE BRENNAN delivered the opinion of the Court.
The Tax Injunction Act of 1937 provides that
"[t]he 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. The question we must decide in this case is
whether an Illinois remedy which requires property owners
contesting their property taxes to pay under protest and, if
successful, obtain a refund without interest in two years is "a
plain, speedy and efficient remedy" within the meaning of the Act.
[
Footnote 1]
I
LaSalle National Bank is trustee of a land trust for Patricia
Cook, [
Footnote 2] the
beneficial owner of property improved
Page 450 U. S. 506
with a 22-unit apartment building in the all-black low-income
community of East Chicago Heights, Ill., located in Cook County.
[
Footnote 3] Respondent alleged
that, as of January 1, 1977, her property had a fair market value
of $46,000. In accordance with a Cook County ordinance, her
property should have been assessed for property tax purposes at 33%
of fair market value -- $15,180. [
Footnote 4] Instead, for the 1977 tax year, the
Page 450 U. S. 507
County Assessor assessed the property at $52.150. As a result,
respondent's property tax liability was $6,106 instead of $1,775,
an overcharge of $4,331.
Respondent also claimed that the County Assessor "knowingly as
official policy or governmental custom maintained, adopted or
promulgated policy statements, regulations, decisions and systems
of assessment which have produced egregious disparities in
assessments throughout the County." Plaintiff's Complaint � 11,
App. 7. In particular, she cited a study of the Illinois Department
of Local Government Affairs showing that, for 1975, property in the
same class as respondent's was assessed as low as 3% and as high as
973% of fair market value. She furthermore alleged that such
disparities in assessments were "far greater in number and size in
older, inner city and county areas, owned, inhabited or used to a
larger extent by minorities and poorer people."
Ibid.
Finally, she contended that the Assessor knew that she had
previously challenged the 1974, 1975, and 1976 assessments of her
property. [
Footnote 5]
Page 450 U. S. 508
Respondent first exhausted her administrative remedy by
appealing unsuccessfully for a correction of her 1977 assessment
before the Cook County Board of Appeals. Ill.Rev.Stat., ch. 120,
594(1), 596 597 598, 599 (1977). [
Footnote 6] Her only remaining state remedy was to pay the
contested tax under protest, and then to file an objection to the
Cook County Collector's Application for Judgment before the Circuit
Court of Cook County -- in effect, a reverse suit for refund.
[
Footnote 7]
Page 450 U. S. 509
§§ 675, 716. Although Illinois' statutory refund procedure could
theoretically provide a final resolution of the dispute
Page 450 U. S. 510
within one year of payment of the tax under protest, [
Footnote 8] respondent alleged that the
customary delay from the time of payment until the receipt of
refund upon successful protest is two years. [
Footnote 9] The tax refund is not accompanied by a
payment of interest. [
Footnote
10]
Clarendon Associates v. Korzen, 56 Ill. 2d
101, 109,
306 N.E.2d
299, 303 (1973);
Lakefront Realty Corp. v.
Lorenz, 19 Ill. 2d
415, 422-423,
167 N.E.2d
236, 240-241 (1960).
Respondent refused to pay her 1977 property taxes, and instead
brought this 42 U.S.C. § 1983 action in the United States District
Court for the Northern District of Illinois, seeking preliminary
and permanent injunctive relief to prevent petitioner Rosewell
[
Footnote 11] from
publishing an advertisement of notice and the intended date of
Application for Judgment, from applying for judgment and order of
sale against her property, and from selling it. Respondent
contended that, by requiring payment of taxes 3 1/2 times the
lawful amount, petitioners deprived her of equal protection and due
process secured by the Fourteenth Amendment of the United States
Constitution, and violated state constitutional and statutory
rights as well. Respondent further alleged that she had no plain,
speedy, and efficient remedy in the Illinois courts.
Petitioners moved to dismiss, claiming that actions challenging
state tax assessments are not cognizable under
Page 450 U. S. 511
42 U.S.C. § 1983 and 28 U.S.C. § 1343, [
Footnote 12] and that Illinois' statutory refund
procedure is a plain, speedy, and efficient remedy even though it
fails to pay interest. Defendants' Motion to Dismiss, App. 11.
The District Court denied respondent's motion for a preliminary
injunction and dismissed the complaint for want of jurisdiction
under 28 U.S.C. § 1341. [
Footnote 13] App. to Pet. for Cert. 20a-21a. However, the
court enjoined petitioner Rosewell from proceeding to judgment and
order of sale against respondent's property pending appeal to the
United States Court of appeals for the Seventh Circuit. Fed.Rule
Civ. Proc. 62(c). The Court of Appeals reversed the District Court,
holding that the Tax Injunction Act did not bar federal district
court jurisdiction because Illinois' procedure of no-interest
refunds after two years was not "a plain, speedy and efficient
remedy." 604 F.2d 530, 536-537 (1979). [
Footnote 14] A petition for rehearing and suggestion
for rehearing en banc was denied.
Id. at 530. We granted
certiorari, 445 U.S. 925 (1980), and now reverse.
Page 450 U. S. 512
II
At the outset, it must be recognized that the issue we decide is
one of statutory construction. Our task is to determine whether the
Illinois refund procedure constitutes "a plain, speedy and
efficient remedy . . . in the courts of such State" within the
meaning of the Tax Injunction Act, 28 U.S.C. § 1341, thereby
barring federal jurisdiction to grant injunctive relief. Our review
of the plain language of the Act, its legislative history, and its
underlying purpose persuades us that the Court of Appeals erred in
holding that the Illinois remedy is not "a plain, speedy and
efficient remedy."
A
The starting point of our inquiry is the plain language of the
statute itself.
Reiter v. Sonotone Corp., 442 U.
S. 330,
442 U. S. 337
(1979);
62 Cases of Jam v. United States, 340 U.
S. 593,
340 U. S. 596
(1951).
See EPA v. National Crushed Stone Assn.,
449 U. S. 64,
449 U. S. 73
(1980). The Tax Injunction Act generally prohibits federal district
courts from enjoining state tax administration except in instances
where the state court remedy is not "plain, speedy and efficient."
On its face, the "plain, speedy and efficient remedy" exception
appears to require a state court remedy that meets certain minimal
procedural criteria. The Court has only occasionally sought to
define the meaning of the exception since passage of the Act in
1937. When it has done so, however the Court has emphasized a
procedural interpretation in defining both the entire phrase and
its individual word components.
Discussing the general meaning of the phrase, the Court, in
Tully v. Griffin, Inc., 429 U. S. 68,
429 U. S. 74
(1976), described its "basic inquiry" as
"whether, under New York law, there is a 'plain, speedy and
efficient' way for [the taxpayer] to press its constitutional
claims while preserving the right to challenge the amount of tax
due."
More directly, in
Great
Lakes
Page 450 U. S. 513
Dredge & Dock Co. v. Huffman, 319 U.
S. 293,
319 U. S.
300-301 (1943), the Court stated:
"[I]t is the court's duty to withhold such relief when, as in
the present case, it appears that the state legislature has
provided that on payment of any challenged tax to the appropriate
state officer, the taxpayer may maintain a suit to recover it back.
In such a suit, he may assert his federal rights and
secure a review of them by this Court. This affords an adequate
remedy to the taxpayer, and at the same time leaves undisturbed the
state's administration of its taxes."
(Emphasis added.) [
Footnote
15]
See Hillsborough v. Cromwell, 326 U.
S. 620,
326 U. S. 625
(1946) (issue is "whether the State affords full protection to the
federal rights").
What little can be gleaned from the legislative history of the
Act on the phrase "plain, speedy and efficient remedy" lends
further support to a procedural interpretation. Senator Bone, the
Act's primary sponsor, referred to the "plain, speedy and efficient
remedy" provision and then stated: "Thus, a full hearing and
judicial determination of the controversy is assured." 81 Cong.Rec.
1416 (1937). The Senate Report accompanying the Act mirrors Senator
Bone's understanding, adding that "[a]n appeal to the Supreme Court
of the United State is available, as in other cases." S.Rep. No.
1035, 75th Cong., 1st Sess., 2 (1937).
The phrase "a plain, speedy and efficient remedy" in the Tax
Injunction Act was "modeled" after verbatim language
Page 450 U. S. 514
in the Johnson Act, of 1934, [
Footnote 16] an Act prohibiting federal court
interference with orders issued by state administrative agencies to
public utilities. As Senator Bone made clear, "[m]ost of the
arguments which were used in support of the Johnson Act . . . apply
in like manner" to the Tax Injunction Act. 81 Cong.Rec. 1416
(1937). Our examination of the Johnson Act and its legislative
history reveals the same procedural emphasis as found in the Tax
Injunction Act and its legislative history. As gloss on the words
"a plain, speedy and efficient remedy," the Senate Report on the
Johnson Act spoke of state laws that provided for an appeal from
the determination of the state agency by any dissatisfied party.
S.Rep. No. 701, 72d Cong., 1st Sess., 1-2 (1932). The Senate Report
continued:
"This appeal is taken to the courts of the State, thus giving to
both sides of any controversy which may arise
a full hearing
and judicial determination of the controversy."
Id. at 2 (emphasis added).
There is no doubt that the Illinois state court refund procedure
provides the taxpayer with a "full hearing and judicial
determination" at which she may raise any and all constitutional
objections to the tax.
LaSalle National Bank v. County of
Cook, 57 Ill. 2d
318, 324,
312 N.E.2d
252, 255-256 (1974). Appeal to the higher Illinois courts is
authorized, Ill.Rev.Stat., ch. 120, § 675 (1977), and review is
ultimately available in this Court, 28 U.S.C. § 1257. Respondent
does not allege any procedural defect in the Illinois remedy, other
than delay, [
Footnote 17]
that would preclude preservation and consideration
Page 450 U. S. 515
of her federal rights, since she is free to raise her equal
protection and due process federal constitutional objections during
the Application for Judgment proceedings before the Circuit Court
of Cook County. [
Footnote
18] Rather, respondent's argument -- that Illinois' failure to
pay interest on the tax refund makes the remedy not "plain, speedy
and efficient" -- appears to address a more substantive concern.
Whether she has any "federal right" to receive interest -- a right
she has not asserted and on which we express no view -- it would
appear that she could assert this right in the state court
proceeding. The procedural mechanism for correction of her tax bill
remains the same, however, whether interest is paid or not.
[
Footnote 19]
Page 450 U. S. 516
B
A
procedural interpretation of the phrase "a plain,
speedy and efficient remedy," and the
procedural
sufficiency of Illinois' remedy, are supported further by analysis
of the phrase's individual words. According to the 1934 edition of
Webster's New International Dictionary,
plain means
"clear" or "manifest,"
speedy means "quick,"
efficient means "characterized by effective activity," and
a
remedy is the "legal means to recover a right . . . or
obtain redress for . . . a wrong." Webster's New International
Dictionary of the English Language 819, 1878, 2106, 2418 (2d
ed.1934). [
Footnote 20]
While the Court has never addressed the meaning of the word
"speedy," it has interpreted the words "plain" and "efficient."
Thus, the Court suggested that "uncertainty
Page 450 U. S. 517
concerning a State's remedy may make it less than
plain'
under 28 U.S.C. § 1341." Tully v. Griffin, Inc., 429 U.S.
at 429 U. S. 76.
Earlier cases, without making a direct connection to the word
"plain," have held that "uncertainty" surrounding a state court
remedy lifts the bar to federal court jurisdiction.
Hillsborough v. Cromwell, 326 U.S. at 326 U. S.
625-626. [Footnote
21] Respondent has made no argument that the Illinois refund
procedure is uncertain or otherwise unclear. There is no question
that, under the Illinois procedure, the court will hear and decide
any federal claim. Paying interest or eliminating delay would not
make the remedy any more "plain."
This Court's interpretation of the word "efficient" has also
stressed procedural elements. In
Tully, the Court
commented that
"a State's remedy does not become 'inefficient' merely because a
taxpayer must travel across a state line in order to resist or
challenge the taxes sought to be imposed."
429 U.S. at
429 U. S. 73. In
addition, without explicitly mentioning the word "efficient," we
have permitted federal court jurisdiction when the taxpayer's state
court remedy would require a multiplicity of suits,
Georgia
Railroad & Banking Co. v. Redwine, 342 U.
S. 299,
342 U. S. 303
(1952) (where remedy "would require the filing of over three
hundred separate claims in fourteen different counties to protect
the single federal claim asserted by [the taxpayer]"), or when the
remedy would allow a challenge against only one of many taxing
Page 450 U. S. 518
authorities,
id. at
342 U. S. 301,
342 U. S. 303
(where suit-for-refund remedy applied only to state taxes, yet
taxpayer railroad also wanted to challenge on the same basis taxes
paid to counties, school districts, and municipalities). Because
the Illinois remedy imposes no unusual hardship on respondent
requiring ineffectual activity or an unnecessary expenditure of
time or energy, we cannot say that it is not "efficient." [
Footnote 22]
This Court has never expressly discussed the meaning of the word
"speedy," an issue that is squarely presented in this case. We must
decide whether Illinois' refund after two years qualifies as a
"speedy" remedy. "Speedy" is perforce a relative concept, and we
must assess the 2-year delay against the usual time for similar
litigation. It surely is no secret that state and federal trial
courts have been beset by docket congestion and delay for many
years. [
Footnote 23]
Whether
Page 450 U. S. 519
this is a necessary, let alone a reasonable, condition of
20th-century litigation is beside the point: the fact of the matter
is that legal conflicts are not resolved as quickly a we would
like.
In 1976, the median number of days from filing a complaint to
disposition of a civil trial matter in 13 urban trial courts ranged
from 357 to 980. National Center for State Courts, Justice Delayed
10-11 (1978). [
Footnote 24]
In 7 of the 13, over 30% of the civil cases took more than two
years from start to finish.
Id. at 13. The Cook County
Circuit Court had a similar record: from 1974 to 1975, the average
time from date of filing to verdict was about 40 months. U.S.
Department of Justice State Court Caseload Statistics: The State of
the Art 7 (1978). Federal district courts have not fared much
better. As of 1980, the median time interval from filing to
disposition for civil cases going to trial was 20 months; 10% of
those took
Page 450 U. S. 520
more than 46 months. Annual Report of the Director of the
Administrative Office of the U.S. Courts 81, A-30 (1980). For the
United States District Court for the Northern District of Illinois,
the District in which respondent brought this suit, the median time
interval was 23 months, with 10 of all cases over 53 months.
Id. at A-31. [
Footnote
25]
Cast in this light, respondent's 2-year wait, regrettably, is
not unusual. Nowhere in the Tax Injunction Act did Congress suggest
that the remedy must be the speediest. [
Footnote 26] The
Page 450 U. S. 521
payment of interest might make the wait more tolerable, but it
would not affect the amount of time necessary to adjudicate
respondent's federal claims. Limiting ourselves to the
circumstances of the instant case, we cannot say that respondent's
2-year delay falls outside the boundary of a "speedy" remedy.
[
Footnote 27]
Page 450 U. S. 522
C
The overall purpose of the Tax Injunction Act is consistent with
the view that the "plain, speedy an efficient remedy" exception to
the Act's prohibition was only designed to require that the state
remedy satisfy certain procedural criteria, and that Illinois'
refund procedure meets such criteria. The 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 fiscal
operations."
Tully v. Griffin, Inc., 429 U.S. at
429 U. S. 73.
[
Footnote 28] This last
consideration was the principal motivating force behind the Act:
this 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. 81
Cong.Rec. 1415 (1937) (remarks of Sen. Bone);
Great Lakes
Dredge & Dock Co. v. Huffman, 319 U.S. at
319 U. S. 301
(Act "predicated upon the desirability of freeing, from
interference by the federal courts, state procedures which
authorize litigation challenging a tax after the tax has been
paid"). [
Footnote 29]
Page 450 U. S. 523
When it passed the Act, Congress knew that state tax systems
commonly provided for payment of taxes under protest with
subsequent refund as their exclusive remedy. The Senate Report to
the Act noted:
"It is the common practice for statutes of the various States to
forbid actions in State courts to enjoin the collection of State
and county taxes unless the tax law is invalid or the property is
exempt from taxation, and these statutes generally provide that
taxpayers may contest their taxes only in refund actions after
payment under protest. This type of State legislation makes it
possible for the States and their various agencies to survive while
long, drawn-out tax litigation is in progress."
S.Rep. No. 1035, 75th Cong., 1st Sess., 1 (1937).
See
H.R.Rep. No. 1503, 75th Cong., 1st Sess., 2 (1937).
See also
Matthews v. Rodgers, 284 U. S. 521,
284 U. S. 526
(1932).
It is only common sense to presume that Congress was also aware
that some of these same States did not pay interest on their
refunds to taxpayers, following the then-familiar rule that
interest in refund actions was recoverable only when expressly
allowed by statute. 3 T. Cooley, Law of Taxation
Page 450 U. S. 524
§ 1308, pp. 2596-2597 (4th ed.1924). [
Footnote 30] It would be wholly unreasonable,
therefore, to construe a statute passed to limit federal court
interference in state tax matters to mean that Congress
nevertheless wanted taxpayers from States not paying interest on
refunds to have unimpaired access to the federal courts. If
Congress had meant to carve out such an expansive exception, one
would expect to find some mention of it. The statute's broad
prophylactic language is incompatible with such an
interpretation.
III
For the most part, respondent rests her case on the
persuasiveness of a syllogism: the Tax Injunction Act is
coterminous with pre-1937 federal equity treatment of challenges to
state taxes; federal equity practice at that time viewed a
no-interest refund remedy as inadequate; [
Footnote 31] therefore, it must follow that the Tax
Injunction Act would view a nointerest refund remedy as inadequate,
thereby authorizing federal jurisdiction. Brief for Respondent 21.
This argument
Page 450 U. S. 525
also forms part of the basis for the Court of Appeals' decision.
604 F.2d at 533, n. 4. And even petitioners, Brief for Petitioners
40, suggest that the Tax Injunction Act is "a congressional
confirmation of the Court's prior federal equity practice in the
area of state and local taxation." [
Footnote 32]
We are unpersuaded. It is true that post-1937 Court cases have
suggested that the Tax Injunction Act recognized and sanctioned
preexisting federal equity practice.
See Moe v. Salish &
Kootenai Tribes, 425 U. S. 463,
425 U. S. 470
(1976);
Hillsborough v. Cromwell, 326 U.S. at
326 U. S.
622-623;
Great Lakes Dredge & Dock Co. v.
Huffman, 319 U.S. at
319 U. S.
298-299. But these cases do no more than confirm that
"the statute has its roots in equity practice,"
Tully v.
Griffin, Inc., 429 U.S. at
429 U. S. 73,
and that it was a longstanding rule of federal equity to keep out
of state tax matters as long as a "plain, adequate and complete
remedy" could be had at law.
Hillsborough v. Cromwell,
supra, at
326 U. S.
622-623. Nothing in our decisions suggests that every
wrinkle of federal equity practice was codified, intact, by
Congress. [
Footnote 33]
Page 450 U. S. 526
Indeed, Congress, among other things, legislated to solve an
existing problem by
cutting back federal equity
jurisdiction. Senator Bone commented that the
"
existing practice of the Federal courts to entertain
tax injunction suits make[s] it possible for foreign corporations
to withhold from a State and its governmental subdivisions taxes in
such vast amounts and for such long periods as to disrupt State and
county finances, and thus make it possible for such corporations to
determine for themselves the amount of taxes they will pay."
81 Cong.Rec. 1416 (1937) (emphasis added).
See S.Rep.
No. 1035, 75th Cong., 1st Sess., 2 (1937). He furthermore noted
that "[p]rovision is made that the bill is not to affect suits
pending at the time of its enactment." 81 Cong.Rec. at 1415. Thus,
Congress plainly did not intend to permit the federal courts, after
passage of the Tax Injunction Act, to entertain suits in all cases
cognizable by them prior to the Act. [
Footnote 34]
Furthermore, Congress did not equate § 1341's "plain, speedy and
efficient" with equity's "plain, adequate and complete." Ever since
the early days of Congress, this "plain, adequate and complete"
standard of federal equity practice had been codified into
statutory form. 1 Stat. 82. [
Footnote 35] And it was not until 1948, more than 10
years after passage of the
Page 450 U. S. 527
Tax Injunction Act, that the "Suits in Equity" statute was
repealed. 28 U.S.C. § 384 (1946 ed.) (repealed June 25, 1948).
Against this background, we will not interpret the Tax Injunction
Act as substantially redundant of § 384.
IV
Finally, we note that the reasons supporting federal
noninterference are just as compelling today as they were in 1937.
If federal injunctive relief were available,
"state tax administration might be thrown into disarray, and
taxpayers might escape the ordinary procedural requirements imposed
by state law. During the pendency of the federal suit, the
collection of revenue under the challenged law might be obstructed,
with consequent damage to the State's budget, and perhaps a shift
to the State of the risk of taxpayer insolvency. Moreover, federal
constitutional issues are likely to turn on questions of state tax
law, which, like issues of state regulatory law, are more properly
heard in the state courts."
Perez v. Ledesma, 401 U. S. 82,
401 U. S. 128,
n. 17 (1971) (BRENNAN, J., concurring in part and dissenting in
part).
The compelling nature of these considerations is underscored by
the dependency of state budgets on the receipt of local tax
revenues. In 1978, States derived over 61% of their revenue from
property, sales, income, and other taxes. Advisory Commission on
Intergovernmental Relations, Significant Features of Fiscal
Federalism 53, 56 (1980). For Illinois, the percentage was even
higher -- 67.4%.
Ibid. The property tax is by far the most
important source of tax revenue for cities and counties. For the
year 1977-1978, almost 33% of all their income nationwide came from
the local property tax; for Illinois' local governments, the amount
was greater -- 39.2%.
Id. at 78.
The experience of Cook County itself demonstrates how ominous
would be the potential for havoc should federal
Page 450 U. S. 528
injunctive relief be widely available. The county collected over
$1.5 billion in real estate taxes for the tax year 1975. Ganz &
Laswell, Review of Real Estate Assessments -- Cook County (Chicago)
vs. Remainder of Illinois, 11 John Marshall J.Prac. & Proc. 19,
and n. 2 (1977). During the same year, the number of complaints
filed with the Cook County Board of Appeals totaled 22,262.
Id. at 31, n. 61. We may readily appreciate the
difficulties encountered by the county should a substantial portion
of its rightful tax revenue be tied up in injunction actions.
[
Footnote 36] If each of
these complaints alleged entitlement to a refund of around $5,000,
as does respondent, over $113 million in revenues potentially could
be encumbered in federal court litigation.
See also City
of New York, Annual Report of the Tax Commission for Fiscal Year
1978-1979, p. 14 (1979) (41,449 applications for correction of
taxes owed concerning 48,170 parcels of land, of which 40,793
applications concerning 47,512 parcels of land involved
hearings).
Accordingly, we hold that Illinois' legal remedy that provides
property owners paying property taxes under protest a refund
without interest in two years is "a plain, speedy and efficient
remedy" under the Tax Injunction Act.
Reversed.
[
Footnote 1]
This Court expressly did not decide whether omission to provide
interest on a successful refund application rendered a state remedy
not "plain, speedy and efficient," in
Department of Employment
v. United States, 385 U. S. 355,
385 U. S. 358
(1966).
[
Footnote 2]
Patricia Cook, the real party in interest, is the beneficial
owner of Illinois Land Trust No. 44891, of which LaSalle National
Bank serves as trustee. Although she was not a named party in this
litigation, this opinion will nevertheless refer to her as the
respondent.
[
Footnote 3]
The facts as stated in this opinion are drawn largely from
respondent's complaint. For purposes of our consideration, the
allegations of the complaint are accepted as true.
Walker
Process Equipment, Inc. v. Food Machinery & Chemical
Corp., 382 U. S. 172,
382 U. S.
174-175 (1965).
[
Footnote 4]
Article IX, § 4(b), of the Illinois Constitution provides that,
subject only to limitations prescribed by the State's General
Assembly, counties with populations of more than 200,000, which
includes Cook County, may classify real property for purposes of
taxation. The classification must be reasonable, and the
assessments uniform within each class. Moreover, the level of
assessment of the highest class cannot exceed 2 1/2 times the level
of assessment of the lowest class in the county. Under authority of
the Illinois Constitution, Art. IX, § 4, the Illinois General
Assembly passed legislation requiring that any "such classification
must be established by ordinance of the county board."
Ill.Rev.Stat., ch. 120, § 501a (1977).
Pursuant to this authority, the Cook County Board of
Commissioners passed the following ordinance:
"Section 2. Real estate is divided into the following assessment
classes:"
"Class 1: Unimproved real estate."
"Class 2: Real estate used as a farm, or real estate used for
residential purposes when improved with a house, an apartment
building of not more than six living units, or residential
condominium, a residential cooperative or a government-subsidized
housing project if required by statute to be assessed in the lowest
assessment category."
"Class 3: All improved real estate used for residential purposes
which is not included in Class 2."
"Class 4: Real estate owned and used by a not-for-profit
corporation in furtherance of the purposes set forth in its charter
unless used for residential purposes. If such real estate is used
for residential purposes, it shall be classified in the appropriate
residential class."
"Class 5: All real estate not included in any of the above four
classes."
"Section 3. The Assessor shall assess, and the Board of Appeals
shall review assessments on real estate in the various classes at
the following percentages of market value:"
"Class 1: -- 22%"
"Class 2: -- 17%"
"Class 3: -- 33%"
"Class 4: -- 30%"
"Class 5: -- 40%"
Cook County, Ill., Real Property Assessment Classification
Ordinance, §§ 2, 3 (originally enacted Dec. 17, 1973, as amended
through June 6, 1977) .
Respondent's property qualified as Class 3 real estate.
[
Footnote 5]
Respondent had previously challenged her 1974, 1975, and 1976
property tax assessments, first by appealing to the Board of
Appeals, and then by objecting in December, 1975, November, 1976,
and December, 1977 respectively to the Collector's annual
Applications for Judgment. The Circuit Court of Cook County, noting
that the parties had agreed to a compromise and settlement at a
pretrial conference, Ill.Rev.Stat., ch. 120, § 675a (1977), issued
three separate judgments simultaneously on March 16, 1978, and
ordered refunds to respondent on the erroneously collected portions
of her protested tax payments, for $4,586.24, $3,656.29, and
$3,937.66 respectively. Respondent had asked for refunds of $5,700,
$4,750, and $5,452.41 for the three years.
[
Footnote 6]
To challenge a property tax assessment, a Cook County property
owner must follow a specific statutory procedure.
See
generally Ganz Laswell, Review of Real Estate Assessments --
Cook County (Chicago) vs. Remainder of Illinois, 11 John Marshall
J.Prac.Proc.19 (1977); Parham, Procedures For Obtaining Relief With
Respect To Property Tax Assessments and Rates, 61 Ill.Bar J. 306
(1973). The taxpayer may file a written complaint with the County
Assessor, and is thereafter entitled to a hearing. Ill.Rev.Stat.,
ch. 120, § 578 (1977). If no relief is obtained, the taxpayer may
appeal to the Board of Appeals of Cook County for correction of the
assessment. §§ 594(1), 596, 597, 598, 599. The Board must forward
one copy of the complaint to the County Assessor. § 59. Before
seeking a legal remedy in state court, the taxpayer must exhaust
the available administrative remedy before the Board of Appeals by
filing a complaint.
People ex rel. Korzen v. Fulton Market Cold
Storage Co., 62 Ill. 2d
443, 446-447,
343 N.E.2d
450, 452,
cert. denied, 429 U.S. 833 (1976).
[
Footnote 7]
After exhaustion of the Board of Appeals' administrative remedy,
the taxpayer's legal remedy requires payment of the tax under
protest and a subsequent court challenge. Ill.Rev.Stat., ch. 120 §§
675, 716 (1977).
See Clarendon Associates v.
Korzen, 56 Ill. 2d
101, 104,
306 N.E.2d
299, 301 (1973). The tax is due in two installments.
Ill.Rev.Stat., ch. 120, §§ 705, 705.1 (1977). The taxpayer must
file a written protest along with the second installment payment
setting forth grounds for the objection to the tax. § 675. Then,
the Collector of Cook County publishes an advertisement giving
notice and stating the date of his intended application to the
Circuit Court of Cook County for judgment fixing the correct amount
of any tax paid under protest. § 706. Although the month of October
is the apparent target date for applying for judgment, § 710,
respondent contends that the Cook County Collector's applications
are not made until late November or early December, Brief for
Respondent 14, n. 14. The Collector at the same time applies to the
Circuit Court for judgment for sale of delinquent lands and lots
whose owners have failed to pay their property tax bills. §
706.
Once the Collector's Application for Judgment is filed with the
Circuit Court, the taxpayer must file a written objection to the
application within a period of time specified by the judge, stating
his reasons for challenging the tax. The taxpayer may raise
constitutional challenges to the assessment in his objection.
LaSalle National Bank v. County of Cook, 57 Ill. 2d
318, 324,
312 N.E.2d
252, 255-256 (1974). After the filing of the objection, the
court must hold a settlement conference between the two sides
within 90 days. Ill.Rev.Stat., ch. 120, § 675a (1977). If no
settlement is reached, the court must, upon demand of either party,
set the matter for hearing within 90 days of the conference, and
decide the case. §§ 675a, 716. Finally, the court enters judgment
and orders a refund for any or all of the tax erroneously paid by
the taxpayer. §§ 675, 716. The dissatisfied taxpayer may appeal any
such judgment to the higher courts of Illinois. § 675.
Illinois courts grant equitable relief by way of injunction
against collection of property taxes only when the tax is
unauthorized by law or when the tax is levied on exempt properties,
LaSalle National Bank v. County of Cook, supra at 323, 312
N.E.2d at 255, on the basis that the state statutory refund
procedure is an adequate legal remedy.
Ibid. It has been
suggested, however, that, in certain cases of fraudulently
excessive assessments, the statutory remedy will be found
inadequate and an equitable remedy will lie.
See Clarendon
Associates v. Korzen, supra at 108, 306 N.E.2d at 303.
Accord, Chicago Sheraton Corp. v. Zaban, 71 Ill. 2d
85, 92-93, 373 N.E.2d 1318, 1322,
appeal dism'd, 439
U.S. 998 (1978);
LaSalle National Bank v. County of Cook,
supra at 323, 312 N.E.2d at 255;
28 East Jackson
Enterprises, Inc. v. Cullerton, 523 F.2d 439, 441-442 (CA7
1975),
cert. denied, 423 U.S. 1073 (1976). Neither
petitioners nor respondent suggests that respondent could have
obtained equitable relief.
[
Footnote 8]
For instance, respondent's 1976 tax protest was resolved within
one year from the date of payment. Plaintiff's Complaint � 14, App.
9.
[
Footnote 9]
For purposes of their motion to dismiss in Federal District
Court, petitioners agreed that the delay was two years. Tr. of Oral
Arg. 9.
[
Footnote 10]
Respondent claimed that, based on an 85% average prime rate for
the 3-year period during which she paid taxes under protest, she
lost approximately $2,000 of potential interest on the use of her
money. Plaintiff's Complaint � 14, App. 8-9.
[
Footnote 11]
Respondent sued Edward J. Rosewell, the Treasurer of Cook
County, and Thomas M. Tully, the County Assessor.
[
Footnote 12]
Petitioners likewise urge here that the District Court lacked
jurisdiction under 28 U.S.C. § 1343(3). Since the "Question
Presented" in their petition for certiorari did not refer to this
issue, Pet. for Cert. 2, we question that it is even properly
before us In any event, our resolution of the case makes it
unnecessary to address this additional contention.
[
Footnote 13]
The District Court stated:
"1. The availability of equitable and declaratory relief in the
Illinois state court provides the plaintiff with a 'plain, speedy
and efficient' remedy.
Tully v. Griffin, 429 U. S. 68
(1976)."
"2. The nonpayment of interest on refunds pursuant to Sections
675 and 716 of Chapter 120, Illinois Revised Statutes, does not
render the remedy in Illinois courts not 'plain, speedy and
efficient.'"
App. to Pet. for Cert. 20a-21a.
[
Footnote 14]
The Court of Appeals also held that the availability of a § 1983
action in state court does not bar federal jurisdiction under the
Tax Injunction Act. 604 F.2d at 540. Because of the result in this
case, we do not reach this issue.
[
Footnote 15]
Although the issue in
Great Lakes concerned the
availability of federal declaratory relief, rather than the scope
of the Tax Injunction Act itself, the decision was predicated on
"[t]he considerations which persuaded federal courts of equity not
to grant relief . . . and which led to the enactment of the [Tax
Injunction] Act." 319 U.S. at
319 U. S. 300.
We have no doubt that, had the case presented an injunction suit,
the Court would have found it precluded under the Tax Injunction
Act.
[
Footnote 16]
The Johnson Act, 28 U.S.C. § 1342 (emphasis added), states in
pertinent part:
"The district courts shall not enjoin, suspend or restrain the
operation of, or compliance with, any order affecting rates
chargeable by a public utility and made by a State administrative
agency or a ratemaking body of a State political subdivision,
where"
"
* * * *"
"(4)
A plain, speedy and efficient remedy may be had in the
courts of such State."
[
Footnote 17]
This argument is discussed
infra at
450 U. S.
518-521.
[
Footnote 18]
Although respondent could have raised federal constitutional
claims in her objection to the Collector's Application for
Judgment, she expressly declined to do so in her prior objections
in 1974, 1975, and 1976. For example, her objection to the 1976 tax
bill stated: "Objector reserves to the federal courts the
adjudication of its rights under the United States Constitution. .
. ." Objections for 1976, p. 8, 8. She did claim that the ordinance
and assessment were violations of equal protection and due process
under the Illinois Constitution.
Id. at 9, � 11.
[
Footnote 19]
The dissent construes our opinion to mean that "a state remedy
which could not possibly afford any relief or which had the
potential for only nominal relief would defeat federal
jurisdiction."
Post at
450 U. S. 537
(footnote omitted). The dissent thus concludes that, under our
view, "a computerized calculation accompanied by a preprinted
rejection slip would qualify as a
plain, speedy and efficient
remedy.'" Post at
450 U. S. 530. But our opinion suggests nothing of the
kind. We explicitly state that a state remedy must "provid[e] the
taxpayer with a `full hearing and judicial determination' at which
she may raise any and all constitutional objections to the tax."
Supra at 450 U. S. 514.
The dissent's hypothetical computercard remedy would hardly meet
this requirement.
The Tax Injunction Act embodied Congress' decision to transfer
jurisdiction over a class of substantive federal claims from the
federal district courts to the state courts, as long as state court
procedures were "plain, speedy and efficient" and final review of
the substantive federal claim could be obtained in this Court.
Under the Illinois refund procedure, a taxpayer may raise all
constitutional objections, including those based on the State's
failure to pay interest or to return all unconstitutionally
collected taxes, in the Illinois legal refund proceeding,
supra at
450 U. S. 514,
after which the litigants have an opportunity to seek review in
this Court. The Act contemplates nothing more.
[
Footnote 20]
Neither the opinion below nor the brief for respondent specifies
whether the remedy fails because it is not "plain," not "speedy,"
not "efficient," or not a "remedy" at all. The superficial
linguistic difficulty of describing interest payments in these
terms can be readily observed. Indeed at oral argument,
respondent's counsel had some difficulty deciding under which of
the words the Illinois remedy foundered:
"QUESTION: Do you equate inadequate with inefficient?"
"MR. FOX: Yes, sir. 'Inadequate' has been used commonly in the
federal court, sir, Mr. Chief Justice, with the 'PS&E,' plain,
speedy, and efficient."
"
* * * *"
"QUESTION: Well, what you're saying, it seems to me, is that you
treat 'efficient' as a synonym for 'adequate.' And this remedy is
not efficient, that is, adequate, because it isn't speedy."
"MR. FOX: Nor is it plain."
"
* * * *"
"QUESTION: Well, I'm not sure what it means. Plain or fancy
wouldn't make much difference. The important thing is whether it's
speedy and whether it's adequate. And speedy and adequate are
really interrelated, aren't they?"
"MR. FOX: I believe so; yes. I think they are subsumed, that
speedy is subsumed under the word adequate, which seems to be more
generic."
Tr. of Oral Arg. 28, 34, 35.
[
Footnote 21]
In
Hillsborough, the Court concluded that, because it
was at best "speculative" whether the New Jersey courts followed
the federal constitutional rule that a State may not
"impos[e] on him against whom the discrimination has been
directed the burden of seeking an upward revision of the taxes of
other members of the class,"
326 U.S. at
326 U. S. 623;
see Sioux City Bridge Co. v. Dakota County, 260 U.
S. 441,
260 U. S.
445-447 (1923), federal jurisdiction would lie. In
addition, protection of federal rights was uncertain because the
State Board of Tax Appeals had no right to pass on constitutional
questions, the allowance of a writ of certiorari to that Board from
the New Jersey Supreme Court was only discretionary, and the
refusal of a writ was not judicially reviewable by the Court of
Errors and Appeals. 326 U.S. at
326 U. S.
625-626.
[
Footnote 22]
A remedy to contest a tax that requires repetitive suits on the
same issue in succeeding years may not be "efficient." However, on
the record properly before us, the Illinois remedy has not shown
itself not "efficient." It is true that respondent appealed
unsuccessfully to the Board of Appeals for four straight years,
1974, 1975, 1976, and 1977,
see n 5,
supra, but it was not until after her
1977 appeal that the Circuit Court of Cook County rendered its
judgment. Therefore, neither the County Assessor nor the Board had
yet had the benefit of a judicial determination to weigh in their
considerations. Further resort to the Illinois statutory refund
remedy would become unnecessary should subsequent assessments
reflect the Circuit Court's judgment of the correct assessment.
Respondent informs us, however, that her 1978 and 1979 tax
assessments were set at the 1977 discriminatory level, despite a
complaint filed with the Assessor for 1978 and appeals to the Board
for both years. Brief for Respondent 2. Together with her previous
four appeals, respondent notes that she has been forced to take
remedial action for six successive years.
Id. at 31, n.
27. Because these additional facts are not part of the record
before us, we have not considered them. Respondent may present
these new facts in her pending suit in Federal District Court to
enjoin collection of her 1978 property tax.
See id. at
2.
[
Footnote 23]
For instance, discussing the New York state courts in 1839,
David Dudley Field noted that "[s]peedy justice is a thing unknown;
and any justice, without delays almost ruinous, is most rare."
Vanderbilt, Improving the Administration of Justice -- Two Decades
of Development, 26 U.Cin.L.Rev. 155, 157 (1957). Many have long
since lamented the seeming inseparability of judicial proceedings
and delay.
See, e.g., National Center for State Courts,
Justice Delayed 2 (1978); Lagging Justice, 328 Annuals Am.Acad.Pol.
& Soc.Sci. (1960); Vanderbilt,
supra; Warren, Delay
and Congestion in the Federal Court, 42 J. Am.Jud.Soc. 6, 7-8
(1958); Congestion and Delay: A Selected Bibliography of Recent
Materials 1953-1958, in Proceedings of the Attorney General's
Conference on Court Congestion and Delay in Litigation 212-245
(1958).
[
Footnote 24]
For over half of the 13 courts surveyed, the median number of
days was over a year and a half. National Center for State Courts,
Justice Delayed 10-11 (1978). Delay has been a particularly
pronounced problem for state trial courts located in metropolitan
centers.
See generally Virtue, The Two Faces of Janus:
Delay in Metropolitan Trial Courts, in Lagging Justice, 328 Annals
Am.Acad.Pol. & Soc.Sci. 125 (1960). This results in part from
an observed correlation between population and calendar congestion.
Institute of Judicial Administration, Calendar Status, in
Proceedings of the Attorney General's Conference on Court
Congestion and Delay in Litigation 196 (1958). For example, in
1958, the average time from the beginning of suit until the
commencement of jury trial was 18.8 months for counties with
populations over 750,000, 11.4 month for counties between 500,000
and 750,000, and 5.6 months for counties under 500,000.
Ibid.
[
Footnote 25]
Current statistics are only the latest in a long history of
delay and congestion in federal and state courts. Congress
discussed the problem of congestion in federal district courts in
connection with the Tax Injunction Act itself. 81 Cong.Rec. 1417
(1937) (remarks of Sen. Bone) (citing portions of Report on the
Johnson Act deemed applicable to the Tax Injunction Act). For the
year ending June 30, 1930, 37.7% of federal question law cases
terminated without a jury in 13 selected Federal District Courts
took 12 months or more to complete. American Law Institute, A Study
of the Business of the Federal Courts, Pt. II, p. 87 (1934). In
1942, the median time interval for civil nonjury trials from filing
to disposition in all federal district courts was 12.3 months.
Annual Report of the Director of the Administrative Office of the
U.S. Courts, Table 9 (1942). The median time for New York's
Southern District was 25 months.
Ibid.
Unfortunately, state court statistics on civil litigation in the
1930's and 1940's are virtually nonexistent. The Institute of
Judicial Administration conducted the first major compilation of
state civil case data in 1953.
See U.S. Dept. of Justice,
State Court Caseload Statistics: The State of the Art 15, 22
(1978). Even the latest information on state court time intervals
is more complete for appellate than trial litigation.
See
National Center for State Courts, State Court Caseload Statistics:
Annual Report 1976 (1980).
[
Footnote 26]
Part of the problem of delay inheres in the very nature of state
tax administration. There has yet to be devised a taxing system
universally viewed as speedy enough to resolve complaints. This is
largely because
"[t]he procedures for mass assessment and collection of state
taxes and for administration and adjudication of taxpayers'
disputes with tax officials are generally complex, and necessarily
designed to operate according to established rules."
Perez v. Ledesma, 401 U. S. 82,
401 U. S. 128,
n. 17 (1971) (BRENNAN, J., concurring in part and dissenting in
part).
The property tax is especially vulnerable to criticism over its
administration. Unlike state income or sales taxes, that usually
can be calculated automatically from the taxpayer's income or the
price of a good or service, the property tax is levied on the value
of real estate. This element necessarily introduces a degree of
subjective individualized judgment by the assessor that would
understandably give rise to frequent taxpayer challenges and place
pressure on the appellate review procedures.
See generally
O. Oldman & F. Schoettle, State and Local Taxes and Finance
262-265 (1974); Advisory Commission on Intergovernmental Relations,
The Property Tax in a Changing Environment 3-20 (1974); H. Aaron,
Who Pays the Property Tax ?, 59-67 (1975); Pomp, What Is Happening
to the Property Tax, 15 Assessors Journal 107, 108-116 (1980).
[
Footnote 27]
The dissent relies on four factors which it believes "combine to
make the Illinois remedial scheme demonstrably unjust."
Post at
450 U. S.
538-541. Leaving aside the issue whether the phrase
"demonstrably unjust" describes the proper inquiry, these four
factors boil down to the same two elements of delay and failure to
pay interest addressed in this Court's opinion. The dissent's first
factor -- "the tax assessments themselves reveal gross inequities,"
post at
450 U. S. 539
-- merely states that respondent has alleged a constitutional
violation, surely not a ground for federal court jurisdiction here.
The second -- that overassessment continues "notwithstanding [the
taxpayer's] formal protests and the manifest error in the original
assessment,"
ibid. -- would appear to require error-free
administration that even the best procedures could not guarantee.
Indeed, absent a judicial determination of the correct assessment,
it is not surprising that respondent's "formal protests" failed to
persuade the Assessor and Board of Appeals of their "manifest
error."
See n 22,
supra. Here, respondent's challenges to the three tax
years were resolved within two years in a single court proceeding.
Those challenges explicitly were not based on federal
constitutional grounds, and it is hardly the duty of federal courts
to intervene in state law tax questions.
N 18,
supra. As we suggest,
n 22,
supra, the Federal District
Court in respondent's pending 1978 litigation may evaluate her
latest claim in light of the "efficient" prong of our analysis, now
that the Assessor and Board of Appeals are aware of the Circuit
Court of Cook County's adjudication, and apparently have
nevertheless repeated their prior assessment practices.
The dissent's third factor -- delay -- and fourth factor --
failure to pay interest -- are addressed above.
[
Footnote 28]
The Tax Injunction Act was only one of several statutes
reflecting congressional hostility to federal injunctions issued
against state officials in the aftermath of this Court's decision
in
Ex parte Young, 209 U. S. 123,
209 U. S.
155-156 (1908) (holding that the Eleventh Amendment does
not bar federal courts from enjoining unconstitutional actions of
state officers).
See generally Perez v. Ledesma, supra at
401 U. S.
106-115 (BRENNAN, J., concurring in part and dissenting
in part).
See also S.Rep. No. 1035, 75th Cong., 1st Sess.,
1 (1937) ("This legislation does not introduce a new principle,
since the Congress has passed statutes of similar import").
[
Footnote 29]
The Court of Appeals suggested that the purpose of the Act was
to prevent out-of-state corporations, through diversity suits, from
delaying payment of state taxes during the pendency of federal
litigation while in-state citizens would have to pay first and then
litigate in state courts. 604 F.2d at 535. It is true that the
drafters of the Act were particularly concerned with this practice
of out-of-state corporations. S.Rep. No. 1035,
supra at
1-2; 81 Cong.Rec. 1416 (1937) (remarks of Sen. Bone). But the
expansive language of the statute belies the notion that Congress
was concerned exclusively with this problem. If Congress had wanted
solely to address this issue, it surely would have done so by
limiting the Act's jurisdictional bar to suits brought in federal
diversity jurisdiction.
In addition, the Court of Appeals' narrow interpretation of the
Act's purpose might have the perverse effect of making the Act
moot. In 1938, one year after its passage, this Court held that
federal courts in diversity suits must apply the general case law,
as well as statutory law, of the State.
Erie R. Co. v.
Tompkins, 304 U. S. 64
(1938). If federal courts followed the State's equity law, then
out-of-state corporations contesting taxes would be treated no
differently from in-state citizens.
See Note, The Tax
Injunction Act and Suits for Monetary Relief, 46 U.Chi.L.Rev. 736,
743, n. 37 (1979).
[
Footnote 30]
One source suggested that the "apparent weight of authority"
supported the opposite rule -- that interest was allowable even in
the absence of a statute. Annot., 112 A.L.R. 1183-1184 (1938). But
even that source acknowledged the existence of the contrary view,
one that "ha[d] been asserted somewhat more frequently in recent
cases."
Id. at 1184.
Accord, Annot., 57 A.L.R.
357-364 (1928).
[
Footnote 31]
See Educational Films Corp. v. Ward, 282 U.
S. 379,
282 U. S. 386,
n. 2 (1931);
Hopkins v. Southern California Telephone Co.,
275 U. S. 393,
275 U. S.
399-400 (1928);
Procter & Gamble Distributing
Co. v. Sherman, 2 F.2d 165,
166 (SDNY 1924). These cases' treatment of a no-interest refund
remedy was undercut by later cases. Without expressly addressing
the issue, the Court in two cases decided the same day,
Matthews v. Rodgers, 284 U. S. 521,
284 U. S. 528
(1932) (Mississippi refund remedy);
Stratton v. St. Louis
Southwestern R. Co., 284 U. S. 530,
284 U. S. 534
(1932) (Illinois refund remedy), found adequate two state refund
remedies that apparently did not pay interest,
Gulf, M. &
O. R. Co. v. Webster County, 194 Miss. 660, 662, 13 So. 2d
644, 645 (1943);
Lakefront Realty Corp. v.
Lorenz, 19 Ill. 2d
415, 422-423,
167 N.E.2d
236, 240-241 (1960). Therefore, prior federal equity practice
is a two-sided sword.
[
Footnote 32]
Commentators agree that this issue has never been definitively
resolved. P. Bator, P. Mishkin, D. Shapiro, H. Wechsler, Hart &
Wechsler's The Federal Courts and the Federal System 979 (2d
ed.1973); Berry, A Federal Forum for Broad Constitutional
Deprivation by Property Tax Assessment, 65 Calif.L.Rev. 828,
833-834 (1977). Most believe that the Act is not equivalent to
prior federal equity practice, although they do not agree on the
quantity and quality of difference.
See, e.g., Comment, 93
Harv.L.Rev. 1016, 1021-1022 (1980) (Act reduces scope of equity);
Comment, Jurisdiction to Enforce Federal Statutes Regulating State
Taxation: The Eleventh Amendment-Section 1341 Imbroglio, 70 Yale
L.J. 636, 643 (1961) (Act limited relief available under equity);
Note, Federal Court Interference with the Assessment and Collection
of State Taxes, 59 Harv.L.Rev. 780, 783-784 (1946) (Act limited
equity to relief from procedural defects in state courts).
[
Footnote 33]
Of course, this is not to say that prior federal equity cases
may not be instructive on whether a state remedy is "plain, speedy
and efficient." And even where the Tax Injunction Act would not bar
federal court interference in state tax administration, principles
of federal equity may nevertheless counsel the withholding of
relief.
See Great Lakes Dredge & Dock Co. v. Huffman,
319 U. S. 293,
319 U. S. 301
(1943) (Act not "a mandatory withdrawal from [federal equity
courts] of their traditional power to decline jurisdiction in the
exercise of their discretion").
[
Footnote 34]
Senator Bone noted that the Tax Injunction Act "does not take
away any equitable right of a taxpayer, or deprive him of a day in
court," because a "full hearing and judicial determination of the
controversy" remained assured. 81 Cong.Rec. 1416 (1937).
See S.Rep. No. 1035, 75th Cong., 1st Sess., 2 (1937);
H.R.Rep. No. 1503, 75th Cong., 1st Sess., 2 (1937). This statement
was merely declaratory of the Act's general continuation of an
exception to its broad jurisdictional bar against federal
injunctive relief.
[
Footnote 35]
"[S]uits in equity shall not be sustained in either of the
courts of the United States, in any case where plain, adequate and
complete remedy may be had at law."
§ 16, 1 Stat. 82.
[
Footnote 36]
It is true that, if we found the Illinois remedy inadequate
because of its failure to pay interest, the State or county could
avoid any problems of federally enjoined tax payments by choosing
to pay interest.
See United States v.
Livingston, 179 F. Supp.
9, 15 (EDSC 1959) (three-judge court),
aff'd per
curiam, 364 U. S. 281
(1960). But Congress surely did not intend that the threat of
federal injunctive relief be used as a lever to force States to
appropriate funds for interest payable to their taxpayers.
JUSTICE BLACKMUN, concurring.
I join the Court's opinion, but I must confess that, in doing
so, I participate in the decision with a distinct lack of
enthusiasm. I am aware of just how frustrating it can be for a
conscientious property taxpayer who encounters what appears
Page 450 U. S. 529
to him to be unfairness, arbitrariness, delay, and an inadequacy
of redress even though he might ultimately prevail on his basic
contentions about existing property tax assessment and collection
methods. Nearly every municipality encounters like criticism.
JUSTICE STEVENS' dissent, however, indicates that Cook County's
system surely is not one of the better ones.
But the Tax Injunction Act was passed for a specific purpose,
and I very much doubt that the cure, although it may provide a
headache, is worse than the disease.
The Court's opinion demonstrates, I think, that the remedy
provided by Illinois law qualifies, though perhaps only barely, as
"plain, speedy and efficient" within the meaning of the Tax
Injunction Act, and that federal jurisdiction to grant injunctive
relief is therefore statutorily barred. Illinois -- and
particularly Cook County -- may have little reason to be proud of
the system, but it seems to pass muster under the Act. One might
well hope, even though forlornly, that that system and its
administration will be improved so that uncomfortable and
distressing litigation like this case need not be pursued.
JUSTICE STEVENS, with whom JUSTICE STEWART, JUSTICE MARSHALL,
and JUSTICE POWELL join, dissenting.
In its discussion of the jurisdictional question presented by
this case, the Court correctly assumes that the administration of
Cook County's system of taxing real property has violated
respondent's federal constitutional rights. The question is whether
she must be denied equitable relief in a federal court because
Illinois affords her "a plain, speedy and efficient remedy."
Year after year, Cook County requires respondent to pay a tax
that is three times as great as the amount actually due, and then,
after a 2-year delay, the county refunds the overassessment without
interest. Because the outcome of this annual ritual is predictable,
the taxpayer's remedy is "plain"
Page 450 U. S. 530
and because only about 705 of the Nation's litigation is
processed more rapidly, the remedy is also "speedy and efficient."
That is the consequence of the Court's view that Congress was
concerned with nothing more than "minimal procedural criteria" when
it enacted the Tax Injunction Act. [
Footnote 2/1] In my view, the substance of the State's
remedy must also be considered. If the substance of the remedy is
irrelevant, a computerized calculation accompanied by a preprinted
rejection slip would qualify as a "plain, speedy and efficient
remedy." Because I am persuaded that a reading of the federal
statute that would lead to such an absurd result is manifestly
incorrect, and because the Illinois refund remedy cannot fairly be
characterized as adequate, I respectfully dissent.
I
If one reads the 1937 Act against its historical background, the
conclusion is inescapable that Congress did not intend an
inadequate state remedy to oust a federal court of jurisdiction
over a taxpayer's constitutional claim. This Court has often
recognized that the statute has its roots in preexisting equity
practice.
Moe v. Salish & Kootenai Tribes,
425 U. S. 463,
425 U. S. 470
(1976);
Great Lakes Dredge & Dock Co. v. Huffman,
319 U. S. 293,
319 U. S. 298
(1943).
See also Tully v. Griffin, Inc., 429 U. S.
68,
429 U. S. 73
(1976). [
Footnote 2/2] Both the
statutory and the judicial predecessors
Page 450 U. S. 531
of the Tax Injunction Act emphasized the substance of the state
remedy. Section 16 of the Judiciary Act of 1789) provided that
"suits in equity shall not be sustained in either of the courts
of the United States in any case where plain, adequate and complete
remedy may be had at law."
1 Stat. 82. In 1932, the Court, while recognizing the force of
this rule of equity in suits to enjoin the collection of state
taxes, nevertheless indicated the importance of the substance of
the state remedy:
"The effect of [Section 16 of the Judiciary Act of 1789], which
was but declaratory of the rule in equity, established long before
its adoption, is to emphasize the rule and to forbid in terms
recourse to the extraordinary remedies of equity
where the
right asserted may be fully protected at law. See Deweese
v. Reinhard, 165 U. S. 386,
165 U. S.
389;
New York Guaranty Co. v. Memphis Water
Co., 107 U. S. 205,
107 U. S.
214."
"The reason for this guiding principle is of peculiar force in
cases where the suit, like the present one, is brought to enjoin
the collection of a state tax in courts of a different, though
paramount, sovereignty. The scrupulous regard for the rightful
independence of state governments which should at all times actuate
the federal courts, and a proper reluctance to interfere by
injunction with their fiscal operations, require that such relief
should be denied in every case
where the asserted federal right
may be preserved without it. Whenever the question has been
presented, this Court has uniformly held that the mere illegality
or unconstitutionality of a state or
Page 450 U. S. 532
municipal tax is not in itself a ground for equitable relief in
the courts of the United States. If the
remedy at law is plain,
adequate, and complete, the aggrieved party is left to that
remedy in the state courts. . . ."
Matthews v. Rodgers, 284 U. S. 521,
284 U. S. 525.
(Emphasis added.) [
Footnote
2/3]
The legislative history of the Tax Injunction Act does not
support the notion that Congress intended the Act to alter the
standard by eliminating consideration of the substance of the state
remedy. The principal sponsor of the Act, Senator Bone, indicated
that the statute assured "a full hearing and judicial determination
of the controversy." 81 Cong.Rec. 1416 (1937).
See also
S.Rep. No. 1035, 75th Cong., 1st Sess. 2 (1937) (hereinafter 1937
Senate Report). The terms "full hearing" and "judicial
determination" surely imply that the remedy may not be an empty
ritual. Indeed, Senator Bone emphasized that "the bill does not
take away any equitable right of a taxpayer, or deprive him of a
day in court." 81 Cong.Rec. 1416 (1937).
See also 1937
Senate Report at 2. [
Footnote 2/4]
The legislative history does not justify the Court's miserly
reading of the statute.
Page 450 U. S. 533
The conclusion that the substance of the state remedy must be
considered does not rest on the premise that Congress codified
intact every "wrinkle" of federal equity practice. Clearly,
Congress intended the Tax Injunction Act to restrict the equity
jurisdiction of the federal courts. Specifically Congress wanted to
eliminate the abuse of diversity jurisdiction by foreign
corporations which were able to frustrate the state taxing process
by obtaining injunctions in federal court. [
Footnote 2/5] Moreover, as the Court recognizes,
ante at
450 U. S. 522,
n. 28, the Act was a response to what was perceived as an
unwarranted expansion of federal jurisdiction in suits to enjoin
state officers that had developed in the wake of
Ex parte
Young, 209 U. S. 123
(1908). [
Footnote 2/6] The Tax
Injunction Act shifted the focus
Page 450 U. S. 534
of the federal courts from a determination of whether the
complainant had an adequate remedy at law to a consideration of
whether he had a sufficient remedy -- either in equity or at law --
in the state courts. [
Footnote 2/7]
Although Congress thus gave important protection to state tax
administration by cutting back federal equity jurisdiction, there
is no reason to believe that Congress intended the expansion of the
types of remedies that defeat federal jurisdiction to be
accompanied by a drastic relaxation of the scrutiny given to those
remedies. [
Footnote 2/8] If
Congress did intend such a relaxation, the Tax Injunction Act's
roots in equity are shallow indeed.
This Court has consistently employed the equity adequacy
Page 450 U. S. 535
standard in construing the Tax Injunction Act. In 1944 -- only
seven years after the Act was passed -- the Court stated that the
District Court had jurisdiction because of "the uncertainty
surrounding the adequacy of the Connecticut remedy."
Spector
Motor Service, Inc. v. McLaughlin, 323 U.
S. 101,
323 U. S.
105-106. In 1946, in
Hillsborough v. Cromwell,
326 U. S. 620,
326 U. S. 625,
the Court held that "uncertainty" as to whether the state remedy
"affords full protection to the federal rights" was sufficient to
demonstrate that the remedy was not adequate. [
Footnote 2/9] And recently, in
Tully v.
Griffin, Inc., 429 U.S. at
429 U. S. 74,
the Court indicated that, to be sufficient under the statute, the
remedy must permit the taxpayer "to press its constitutional claims
while preserving the right to challenge the amount of the tax due."
[
Footnote 2/10] Thus, our cases
support the theory
Page 450 U. S. 536
that Congress, rather than making an unexplained and drastic
change in the traditional equity standard as to adequacy, assumed
that the prior standard would apply. [
Footnote 2/11]
This interpretation of the Tax Injunction Act and its history is
consistent with the purposes of the Act. By including the "plain,
speedy and efficient" exception to the statutory
Page 450 U. S. 537
prohibition of federal equity jurisdiction, Congress indicated
its clear intent to preserve federal court jurisdiction unless some
state remedy existed. If the federal courts are limited by the Tax
Injunction Act to a consideration of the procedural mechanics of
the state remedy, and are forbidden to consider the substance of
such a remedy, then a state remedy which could not possibly afford
any relief or which had the potential for only nominal relief would
defeat federal jurisdiction. [
Footnote 2/12] This "form over substance"
interpretation renders the exception contained in the Act
meaningless, because there would be little purpose in denying a
federal remedy to a litigant and sending him to state court to
pursue a state remedy -- albeit a quick and certain one -- that
provided no relief. [
Footnote
2/13] A futile state remedy is not significantly different from
no remedy at all. Similarly, an inadequate state remedy is not
analytically different from a state procedure that provides a
remedy as to only a portion of the litigant's claims. Such an
incomplete remedy will not defeat federal jurisdiction.
Georgia
Railroad & Banking Co. v. Redwine, 342 U.
S. 299,
342 U. S. 303
(1952). [
Footnote 2/14]
Therefore, in my view, if the
Page 450 U. S. 538
state remedy does not provide adequate protection to the federal
right, a federal remedy continues to be available. [
Footnote 2/15]
II
The inadequacy of the Illinois procedure is much more than a
mere failure to pay interest on overassessments. If we take the
allegations of the complaint as true, as we must,
Page 450 U. S. 539
it is apparent that four factors combine to make the Illinois
remedial scheme demonstrably unjust.
First, the tax assessments themselves reveal gross inequities.
Not only was respondent's property admittedly assessed at 3 times
its proper assessment value, but other properties in the same class
have been assessed at widely divergent rates, ranging from a tiny
fraction of actual value to amounts approximately 10 times the true
worth. [
Footnote 2/16] The
county's practices apparently give the tax assessor a license to
engage in arbitrary and invidious discrimination.
Second, because the overassessment of respondent's property was
repeated year after year, notwithstanding her formal protests and
the manifest error in the original assessment, it is apparent that
the county's procedures do not adequately avoid the risk of
repetitive error. [
Footnote 2/17]
The case might well be different if it revealed an isolated mistake
affecting only one
Page 450 U. S. 540
tax year: but an evaluation of the State's remedy must involve
consideration not only of the fairness of the refund procedure, but
also of the taxpayer's ability to prevent the same mistake from
being made year after year. [
Footnote
2/18]
Third, although the 2-year period which the county requires to
process a refund claim might well be tolerable if its remedy were
adequate in all other respects, that time period aggravates each of
the other shortcomings. [
Footnote
2/19] Indeed, like the fourth factor -- the failure to pay
interest -- it actually provides the county with an incentive to
make overassessments, because the county has the cost-free use of
the taxpayer's money while her claim is being processed.
Finally, the failure to pay any interest at all, in combination
with the foregoing factors, makes it a virtual certainty that the
taxpayer's ultimate recovery will be worth only a fraction of the
actual harm caused by the county's wrong. Cases decided prior to
the Tax Injunction Act indicated that state remedies which did not
provide for the payment of interest were not sufficient to defeat
federal equity jurisdiction.
See Educational Films Corp. v.
Ward, 282 U. S. 379,
282 U. S. 386,
n. 2 (1931);
Hopkins v. Southern California Telephone Co.,
275 U. S. 393
(1928);
Nutt v. Ellerbe, 56 F.2d
1058, 1062
Page 450 U. S. 541
(EDSC 1932) (three-judge court);
Procter & Gamble
Distributing Co. v. Sherman, 2 F.2d
165 (SDNY 1924).
See also Lockwood, Maw, &
Rosenberry, The Use of the Federal Injunction in Constitutional
Litigation, 43 Harv.L.Rev. 426, 435 (1930). [
Footnote 2/20] Post-Act cases provide support for the
contention that a refund must provide interest in order to defeat
federal jurisdiction.
United States v.
Livingston, 179 F. Supp.
9, 15 (EDSC) (three-judge court),
aff'd per curiam,
364 U. S. 281
(1960);
United States v. Department of
Revenue, 191 F.
Supp. 723, 726-727 (ND Ill.),
vacated, 368 U. S.
30 (1961). [
Footnote
2/21]
Page 450 U. S. 542
It is not necessary in this case, however, to decide whether the
failure to pay interest alone would render a state remedy
inadequate. [
Footnote 2/22] Few
remedies fully compensate the victim of official wrongdoing, but
surely one would not characterize a remedy that could never exceed
one-half or two-thirds of the amount taken as a complete and
adequate remedy. Yet if a county may collect 3 to 10 times the
amount of tax that a citizen owes and use the excess for two years
without paying any interest, the value of that which is ultimately
returned is not complete or adequate compensation for the value of
what was unjustly taken. [
Footnote
2/23]
Page 450 U. S. 543
The Court seems to assume that the nonpayment of interest has no
effect on the amount of time that will be spent in processing
refund claims. [
Footnote 2/24] In
my opinion, the Court is quite wrong. When no interest is paid --
or when the rate of interest on judgments is significantly lower
than the prevailing market rate -- the law rewards the dilatory
defendant who can postpone the ultimate day of reckoning for as
long as possible. The same powerful market forces are at work when
a public body is the defendant. Whether or not one agrees with the
opinion of the Court of Appeals that the payment of interest is an
essential ingredient of any adequate refund remedy, it seems
perfectly clear that, given the factors disclosed by this record,
the remedy afforded by Illinois is indeed inadequate. [
Footnote 2/25]
It follows that federal jurisdiction is not defeated by the Tax
Injunction Act, and the judgment of the Court of Appeals should
therefore be affirmed.
[
Footnote 2/1]
"On its face, the 'plain, speedy and efficient remedy' exception
appears to require a state court remedy that meets certain minimal
procedural criteria."
Ante at
450 U. S.
512.
"The procedural mechanism for correction of her tax bill remains
the same, however, whether interest is paid or not."
Ante
at
450 U. S.
515.
"A
procedural interpretation of the phrase 'a plain,
speedy and efficient remedy,' and the
procedural
sufficiency of Illinois' remedy, are supported further by analysis
of the phrase's individual words."
Ante at
450 U. S.
516.
"This Court's interpretation of the word
efficient' has also
stressed procedural elements." Ante at 450 U. S.
517.
[
Footnote 2/2]
In
Salish & Kootenai Tribes, the Court stated that,
through enactment of § 1341, Congress "gave explicit sanction to
the preexisting federal equity practice." 425 U.S. at
425 U. S. 470.
In
Great Lakes Dredge & Dock Co., the Court described
the restraints imposed on federal equity jurisdiction prior to the
passage of the Tax Injunction Act and noted that "Congress
recognized and gave sanction to this practice of federal equity
courts by the [Tax Injunction] Act." 319 U.S. at
319 U. S. 298.
In
Tully v. Griffin, Inc., the Court again noted that "the
statute has its roots in equity practice. . . ." 429 U.S. at
429 U. S.
73.
[
Footnote 2/3]
In
Educational Films Corp. v. Ward, 282 U.
S. 379 (1931), the Court indicated that the substance of
the remedy was important by stating that the absence of interest on
a refund rendered a state remedy inadequate.
Id. at
282 U. S. 386,
n. 2.
See also Hopkins v. Southern California Telephone
Co., 275 U. S. 393
(1928).
[
Footnote 2/4]
Although Congress omitted the word "adequate" from its
description of a state remedy that would defeat federal
jurisdiction, the omission may have been an oversight, or the
inclusion of such a word may well have been considered unnecessary.
Black's Law Dictionary 1163 (5th ed.1979) defines "remedy" as
"[t]he means by which a right is enforced or the violation of a
right is prevented, redressed, or compensated." A court cannot
insure that the federal rights are "enforced," or the violation of
such rights "prevented, redressed, or compensated," without a
consideration of the substance of the state remedy. Moreover, the
word "efficient," which was defined as "characterized by effective
activity," may have been intended to require an effective remedy.
See Webster's New International Dictionary of the English
Language 819 (2d ed.1934).
[
Footnote 2/5]
The 1937 Senate Report at 1-2, stated:
"If those to whom the Federal courts are open may secure
injunctive relief against the collection of taxes, the highly
unfair picture is presented of the citizen of the State being
required to pay first and then litigate, while those privileged to
sue in the Federal courts need only pay what they choose and
withhold the balance during the period of litigation."
"The existing practice of the Federal courts in entertaining tax
injunction suits against State officers makes it possible for
foreign corporations doing business in such States to withhold from
them and their governmental subdivisions taxes in such vast amounts
and for such long periods of time as to seriously disrupt State and
county finances. The pressing-needs of these States for this tax
money is so great that, in many instances, they have been compelled
to compromise these suits, as a result of which substantial
portions of the tax have been lost to the States without a judicial
examination into the real merits of the controversy."
The Johnson Act, 28 U.S.C. § 1342, upon which the Tax Injunction
Act was modeled, and its legislative history reflect the same
concern. The Johnson Act specifically deprived district courts of
jurisdiction to enjoin the operation of, or compliance with, public
utility rates when the jurisdiction of the federal court was based
solely on diversity.
Ibid.; see S.Rep. No. 701, 72d Cong.,
1st Sess., 7-13 (1932).
[
Footnote 2/6]
See P. Bator, P. Mishkin, D. Shapiro, & H.
Wechsler, Hart & Wechsler's The Federal Courts and the Federal
System 978 (2d ed.1973) (hereinafter Bator, Mishkin, Shapiro, &
Wechsler); C. Wright, Federal Courts 215-217 (3d ed.1976)
(hereinafter Wright).
[
Footnote 2/7]
Under prior federal equity practice, a state equitable remedy
would not defeat the equity jurisdiction of the federal courts.
Bohler v. Callaway, 267 U. S. 479,
267 U. S.
486-488 (1925) (state equitable remedy to enjoin
collection of excessive assessment would not defeat federal equity
jurisdiction).
See Stratton v. St. Louis Southwestern R.
Co., 284 U. S. 530,
284 U. S.
533-534 (1932). Such an equitable remedy, however, would
bar federal jurisdiction under the Act.
See Garrett v.
Bamford, 538 F.2d 63, 68 (CA3),
cert. denied, 429
U.S. 977 (1976);
Horn v. O'Cheskey, 378 F.
Supp. 1280 (NM 1974). As originally enacted, the statute
deprived the district courts of jurisdiction whenever a "plain,
speedy, and efficient remedy may be had
at law or in
equity in the courts of such State." 50 Stat. 738 (emphasis
added). The phrase "at law or in equity" was dropped as
"unnecessary" in the 1948 revision of the statute. H.R.Rep. No.
308, 80th Cong., 1st Sess., A120 (1947).
See 17 C. Wright,
A. Miller, & E. Cooper, Federal Practice and Procedure § 4237,
p. 420 (1978) (hereinafter Wright, Miller, & Cooper).
[
Footnote 2/8]
The Court is correct when it asserts that the Act was not
intended to permit the federal courts to entertain suits in all
cases cognizable by them prior to the Act. Given the restrictions
on equity jurisdiction clearly intended by Congress, the Act was
not redundant of § 16 of the Judiciary Act of 1789, 1 Stat. 82.
Thus, the fact that the broader jurisdiction permitted by the Suits
in Equity Act existed for 10 years after the passage of the Tax
Injunction Act,
see ante at
450 U. S.
526-527, does not indicate that Congress did not intend
the prior equity standard to apply to a determination of the
adequacy of state remedies under the Tax Injunction Act.
[
Footnote 2/9]
The Court correctly notes that the
Cromwell Court held
that, because it was unclear whether the New Jersey courts would
follow the constitutional rule, established by this Court in
Sioux City Bridge Co. v. Dakota County, 260 U.
S. 441,
260 U. S.
445-447 (1923), that a State may not require the party
suffering discrimination to seek an upward revision of the taxes of
other members of the class, there was such "uncertainty surrounding
the adequacy of the state remedy as to justify the District Court
in retaining jurisdiction of the cause." 326 U.S. at
326 U. S. 626.
Although the Court reasons that this "uncertainty" demonstrates
that the remedy was not procedurally "plain,"
ante at
450 U. S.
516-517, the Court fails to note that the
Cromwell Court clearly indicated that, even if the remedy
were a certain one, it would be insufficient to defeat federal
jurisdiction. After noting that "a long line" of New Jersey
decisions "held that a taxpayer who has been singled out for
discriminatory taxation may not obtain equalization by reduction of
his own assessment," and that "[h]is remedy is restricted to
proceedings against other members of his class for the purpose of
having their taxes increased," the Court stated that, "[o]n the
basis of that rule, it is plain that the state remedy is not
adequate to protect respondent's rights under the federal
Constitution." 326 U.S. at
326 U. S. 624. Thus, the Court was clearly concerned
about the substance of the state remedy.
[
Footnote 2/10]
The Court interprets this language to convey a procedural
requirement declaratory judgment challenging the imposition of the
tax accompanied by a preliminary injunction tolling the time period
within which the taxpayer could challenge the amount of the
assessment, if such a remedy existed, was clearly substantively
adequate.
[
Footnote 2/11]
Our decisions construing the Tax Injunction Act noted that the
Act was a recognition of the prior equity practice.
Tully v.
Griffin, Inc., 429 U. S. 68,
429 U. S. 73
(1976);
Moe v. Salish & Kootenai Tribes, 425 U.
S. 463,
425 U. S. 470
(1976);
Great Lakes Dredge & Dock Co. v. Huffman,
319 U. S. 293,
319 U. S. 298
(1943). Although the Court states that commentators agree that the
issue of whether the Tax Injunction Act was a confirmation of prior
equity practice has never been "definitively resolved,"
ante at
450 U. S. 525,
n.
32 most commentators do
agree that this Court has used the equitable and statutory
standards interchangeably.
See Bator, Mishkin, Shapiro,
& Wechsler 979 ("the three major Supreme Court opinions seem to
use the terms interchangeably"); Wright 216-217 ("Although it can
be argued that the remedy need not be
adequate' in the
traditional equity sense in order to defeat federal jurisdiction,
the Supreme Court has regarded `plain, speedy, and efficient' as
meaning the same thing as `adequate'" (footnote omitted)); Wright,
Miller, & Cooper § 4237, pp. 420-421 ("plain, speedy and
efficient" remedy "has been equated with `adequate' in describing
the remedy"); Berry, A Federal Forum for Broad Constitutional
Deprivation by Property Tax Assessment, 65 Calif.L.Rev. 828,
833-834 (1977) (Supreme Court decisions "implied a continuing
concern over the fairness of state proceedings and the narrowness
of state equitable relief. Since 1937, substitution of the
efficiency language for adequacy language `has generally been
ignored'"); Note, Federal Court Interference with the Assessment
and Collection of State Taxes, 59 Harv.L.Rev. 780, 784-785 (1946)
(arguing that "Congress intended to permit jurisdiction only where
there were procedural limitations in the state remedy and not where
substantive defects of law were alleged," but noting that "[t]here
has been a definite failure to distinguish between inadequacy of
remedy created by uncertainty as to the substantive outcome of any
suit, and the fact that the taxpayer has available a complete
judicial means of litigating the controversy in the state courts .
. .").
[
Footnote 2/12]
For example, the Court notes that the "procedural mechanism" for
the recovery of respondent's tax bill would be the same whether
interest is paid or not.
Ante at
450 U. S. 515.
The procedural mechanism would also be the same if the state
statute prohibited any refund in excess of 10% of the amount
claimed.
[
Footnote 2/13]
The purpose of insuring that a state remedy meets minimal
procedural standards is to prevent States from erecting procedural
barriers that would make the taxpayer's recovery of a refund so
difficult as to be worthless.
See, e.g., Georgia Railroad &
Banking Co. v. Redwine, 342 U. S. 299,
342 U. S. 303
(1952) (remedy requiring taxpayer to bring over 300 suits in 14
counties inadequate). If the state remedy is substantively
inadequate, however, the purpose underlying the requirement of a
procedurally adequate remedy disappears.
[
Footnote 2/14]
In
Redwine, the plaintiff railroad sought to enjoin
collection of
ad valorem taxes assessed by the State and
every county, school district, and municipality through which the
railroad's lines ran. The State argued that a suit for refund after
payment of taxes, a remedy available only with respect to taxes
payable to the State, would be a "plain, speedy and efficient"
remedy under the statute. Noting that such a refund would apply to
less than 15% of the total taxes in controversy, the Court held
that the remedy would not defeat federal jurisdiction, and stated
that "[a]n adequate remedy as to only a portion of the taxes in
controversy does not deprive the federal court of jurisdiction over
the entire controversy."
Id. at
342 U. S. 303,
and n. 11.
[
Footnote 2/15]
Lower federal courts have recognized that the statute codified
the prior adequacy standard.
See Garrett v. Bamford, 538
F.2d at 67 ("the decisions indicate that
plain, speedy and
efficient' means no more than the prior equity standard of
`adequacy'"); Dillon v. Montana, 634 F.2d 463, 466-467
(CA9 1980) (recognizing that Congress gave explicit sanction to
preexisting equity practice and stating that "[t]he remedial
certainty contemplated by § 1341 is that a state forum be empowered
to consider claims that a tax is unlawful, and to issue adequate
relief"); United Gas Pipe Line Co. v. Whitman, 595 F.2d
323, 325 (CA5 1979) ("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"); Charles R. Shepherd, Inc. v.
Monaghan, 256 F.2d 882, 884 (CA5 1958) (federal court has no
jurisdiction under the Tax Injunction Act if "an adequate remedy is
provided for the recovery back if improperly collected"); see
also Louisville & Nashville R. Co. v. Public Service
Comm'n, 631 F.2d 426 (CA6 1980) (state remedy limited to
seeking upward revision of other taxpayers' assessments did not bar
federal court jurisdiction under § 1341), cert . denied,
post, p. 959; Alnoa G. Corp. v. City of Houston, 563
F.2d 769, 772 (CA5 1977) (if potential opportunities for abuse in
the form of arbitrary city council decisions reassessing taxpayer's
property became reality, "the adequacy of the state remedy might
then be seriously questioned"), cert. denied, 435 U.S. 970
(1978); Helmsley v. City of Detroit, 320 F.2d 476, 481
(CA6 1963) (remedy was "adequate and complete"); Bland v.
McHann, 463 F.2d 21, 26-27 (CA5 1972), cert. denied,
410 U.S. 966 (1973). Cf. Clement, Discrimination in Real
Property Assessment: A Litigation Strategy for Pennsylvania, 36
U.Pitt.L.Rev. 285, 289 (1974).
[
Footnote 2/16]
According to a study conducted by the Illinois Department of
Public Affairs and cited in respondent's complaint, these
assessments ranged from 3% of actual value to 973% of actual value.
See ante at
450 U. S. 507;
App. 7. The Court assumes,
ante at
450 U. S. 528,
that the amount of respondent's refund claim is typical, and the
Court notes that such disputed assessments may provide the county
with an additional $113 million each year. But federal court
litigation could encumber this entire amount only if it is assumed
that all refund claimants could make a showing of inequitable
assessment sufficient to obtain a federal court injunction. This
assumption highlights an ironic contrast between the Court's
indifference to the financial impact of the gross overassessments
on the individual taxpayer, who has no lawful method of preventing
such overassessments, and the Court's concern with a temporary
delay in the collection of county revenues that the State could
easily avoid by providing an adequate remedy.
[
Footnote 2/17]
In order to conclude that respondent is powerless to prevent
repetition of erroneous assessments, it is not necessary to
consider respondent's assertion, not made part of the record, that
the 1978 and 1979 assessments indicate that the discrimination
against her has continued. Brief for Respondent 2. The four
consecutive overassessments, from 1974 through 1977, sufficiently
demonstrate the repetitive nature of the injury to respondent.
See App. 8.
[
Footnote 2/18]
In
Garrett v. Bamford, supra at 71-72, the court held
that, because adjustment of the taxpayer's taxes in one year would
not prevent repetition of disparate assessments in succeeding
years, and because the discriminatory assessment pattern was
allegedly systematic and intentional, the lack of potential
in
futuro relief was a factor contributing to the inadequacy of
the state remedy.
[
Footnote 2/19]
The Court reasons that the fact that respondent had to bring
repetitive suits to challenge the repeated overassessments is, at
least in part, attributable to the fact that the Board of Appeals,
in considering respondent's appeals from the overassessments, did
not have the benefit of the Circuit Court judgment, rendered in
1977, holding that the assessor had overassessed respondent's
property and awarding her a refund.
Ante at
450 U. S. 518,
n. 22. That fact, however, merely underscores the cumulative effect
of the delay and the taxpayer's inability to avoid repeated
mistakes. The delay of the judicial determination, in addition to
postponing vindication of the taxpayer's rights, fosters repetition
of the error.
[
Footnote 2/20]
The Court notes that the Court, in two pre-Act cases,
Matthews v. Rodgers, 284 U. S. 521,
284 U. S. 525
(1932), and
Stratton v. St. Louis Southwestern R. Co.,
284 U. S. 530
(1932), without expressly reaching the issue, upheld the adequacy
of state remedies that "apparently" did not include interest.
Ante at
450 U. S. 524,
n. 31. In light of the fact, however, that none of the parties
argued that the failure to pay interest rendered the remedy
inadequate, and the fact that the Court did not address the failure
to pay interest in either case, such cases are scant authority for
the proposition that the prior federal equity cases are a
"two-edged sword."
See Brief for Appellants, Brief for
Appellants on Reargument, Brief for Appellees, and Supplemental
Brief for Appellees on Reargument in
Matthews v. Rodgers,
O.T. 1931, No. 84; Supplemental Brief for Appellant, Additional
Brief for Appellees, Memoranda of Authority on Equity Jurisdiction
for Appellees, and Pet. for Rehearing in
Stratton v. St. Louis
Southwestern R. Co., O.T. 1931, No. 178.
[
Footnote 2/21]
In
Livingston, the three-judge court stated:
"It is well-settled that a right to recover taxes illegally
collected is not an adequate remedy if it does not include the
right to recover interest at a reasonable rate for the period
during which the taxpayer's money is withheld. Even if existence of
the right be merely cast in substantial doubt, the remedy is not
plain or adequate."
"
* * * *"
"South Carolina may allow interest upon refunds of taxes or not,
as she chooses. If she does not make clear the existence of the
right to recover such interest, however, she necessarily opens the
door to equitable relief to taxpayers and forecloses a remission of
the parties to the legal remedy provided by her statutes."
179 F.Supp., at 15. (Footnote omitted.) In
United States v.
Department of Revenue, the court held that a state requirement
that a bond be posted which did not provide for recoupment of the
cost of the bond was analogous to the failure to award interest on
refunds, and therefore was not an adequate state remedy.
See
also Wright, Miller, & Cooper § 4237, p. 423.
[
Footnote 2/22]
In some cases, failure to pay interest would certainly not be
enough to render a remedy inadequate. If the amount of the interest
were small, either because the amount of the refund was small or
the time necessary to obtain the refund was short, then the failure
to pay interest would not be a substantial defect in the remedy.
See Group Assisting Sewer Proposal-Ansonia v. City of
Ansonia, 448 F. Supp.
45, 47 (Conn.1978);
Abernathy v.
Carpenter, 208 F.
Supp. 793, 796-797 (WD Mo.1962),
aff'd per curiam,
373 U. S. 241
(1963).
See also Comment, 93 Harv.L.Rev. 1016, 1023-1024
(1980).
[
Footnote 2/23]
In
Procter & Gamble Distributing Co. v.
Sherman, 2 F.2d 165
(SDNY 1924), Judge Learned Hand held that the uncertainty of the
availability of a refund rendered a remedy inadequate. He further
noted:
"But quite independently of such doubts, the relief is
inadequate because of the express refusal to allow interest. . . .
While I have been referred to no decision on the point, it seems to
me plain that it is not an adequate remedy, after taking away a
man's money as a condition of allowing him to contest his tax,
merely to hand it back, when, no matter how long after, he
establishes that he ought never to have been required to pay at
all. Whatever may have been our archaic notions about interest, in
modern financial communities, a dollar to-day is worth more than a
dollar next year, and to ignore the interval as immaterial is to
contradict well-settled beliefs about value. The present use of my
money is, itself, a thing of value, and, if I get no compensation
for its loss, my remedy does not altogether right my wrong."
Id. at 166.
[
Footnote 2/24]
"The payment of interest might make the wait more tolerable, but
it would not affect the amount of time necessary to adjudicate
respondent's federal claims."
Ante at
450 U. S.
520-521.
[
Footnote 2/25]
Because I would rely on the cumulative effect of the four
factors discussed, and not on the failure to pay interest alone, to
hold that the state remedy is inadequate, there is no need to
respond to the Court's point,
ante at
450 U. S. 523,
that Congress must have been aware that many States did not pay
interest on tax refunds. Congress may have been aware that some
States did not pay interest on refunds, and may have even
sanctioned the practice, but there is no reason to believe that
Congress implicitly approved the inadequate remedy provided by Cook
County in this case.