Paeste v. Government of Guam, No. 13-15389 (9th Cir. 2015)
Annotate this CaseGuam taxpayers filed a class action suit against Guam and its officers, alleging that Guam violated the tax provisions of the Organic Act of Guam, 48 U.S.C. 1421i, by failing timely to refund overpayments, and, via a claim brought under 42 U.S.C. 1983, the taxpayers also challenged the arbitrary expedited refund program as a violation of equal protection. The district court granted summary judgment to the taxpayers on both claims, entered a permanent injunction both ending the expedited refund program and requiring Guam to pay approved refunds in a timely manner, and awarded substantial attorney’s fees and costs. The court concluded that Guam's section 1983 arguments did not implicate subject matter jurisdiction, but nonetheless, the court exercised its discretion in considering Guam's section 1983 arguments; the official-capacity defendants in this case are “persons” within the meaning of section 1983 for purposes of prospective relief; even if the territorial officials had been obliged by federal law to institute the arbitrary expedited refund process - which they most certainly were not - they were empowered to act only in their capacities as territorial officers; and the district court did not abuse its discretion in requiring that Guam pay refunds within six months once Guam determines that the requests are valid and not subject to investigation or audit. Accordingly, the court affirmed the judgment.
Court Description: Civil Rights. The panel affirmed the district court’s summary judgment and permanent injunction in a class-action brought by Guam taxpayers against Guam and several of its officers in their official capacities alleging (1) that defendants violated the tax provisions of the Organic Act of Guam, 48 U.S.C. § 1421i, by failing timely to refund income tax overpayments, and (2) in a claim brought pursuant to 42 U.S.C. § 1983, that Guam’s expedited tax refund program violated plaintiffs’ equal protection rights. On appeal, Guam challenged the taxpayers’ equal protection claim as not cognizable under 42 U.S.C. § 1983, arguing that no defendant was a “person” within the meaning of § 1983 and that the challenged actions were not taken under “color of territorial law.” Guam asserted that it could raise the definition of “person” for the first time on appeal because it implicated subject matter jurisdiction. The panel held that the question of whether a party is a person under § 1983 is not a jurisdictional question but rather a statutory one and therefore Guam’s § 1983 arguments did not implicate subject matter jurisdiction. The panel, however, exercised its discretion to consider the arguments. Determining that it was bound by Guam Society of Obstetricians & Gynecologists v. Ada , 962 F.2d 1366, 1371 (9th Cir. 1992), the panel held that the official-capacity PAESTE V. GOV’T OF GUAM 3 defendants were “persons” within the meaning of § 1983 for purposes of prospective relief. Addressing the merits, the panel held that the district court did not abuse its discretion in issuing a permanent injunction that required Guam to pay refunds within six months once it determined that the requests were valid and not subject to investigation or audit. The panel held that the six-month provision was well-supported and within the court’s broad discretion in fashioning relief. The panel noted that Guam raised no substantive challenge to the district court’s holding that Guam violated equal protection, nor to its holding that Guam violated the Organic Act.
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