Town of Ball et al., Plaintiffs-appellants, v. Rapides Parish Police Jury et al., Defendants-appellees, 597 F.2d 43 (5th Cir. 1979)

The question on this appeal is whether the Tax Injunction Act of 1937, 28 U.S.C. § 1341, bars an action by a municipal corporation to enjoin the collection of a state tax when the municipality was not incorporated until after the enactment of the tax and until after the expiration of the state limitation period for bringing challenges to the tax. We hold that the municipality does not have a plain, speedy and efficient state remedy and that its suit is therefore not barred by section 1341.

On September 19, 1967, the citizens of Rapides Parish, Louisiana, approved a referendum authorizing the imposition of a sales tax within the Parish. The referendum proposal provided for the distribution of the proceeds from the sales tax among the Parish police jury, school board, and various towns, cities and villages within the Parish. The exact percentage share of the tax revenues which each of the legal entities within the Parish would receive was specifically set forth in the proposal.¹ 

Nearly five years after the tax was enacted, the town of Ball, Louisiana, became incorporated within Rapides Parish. Since Ball was not an incorporated municipality at the time the sales tax was adopted, it was not included in the distribution scheme for the revenue generated by the tax. A Louisiana statute provides that challenges to the validity of a tax promulgated as the result of a Parish referendum must be made within 60 days of the date of the election. La.Rev.Stat.Ann. § 39:518. The prescriptive 60-day period ran long before Ball came into existence as a municipal corporation, and all parties concede that Ball may not challenge the Parish tax scheme in the courts of Louisiana. See Andrieux v. East Baton Rouge Parish School District, 254 La. 819, 227 So. 2d 370 (La.Sup.Ct.1969).

Ball brought suit in federal district court claiming that the tax distribution scheme violated the equal protection and due process clauses of the fourteenth amendment, and sought three alternative forms of relief: the right to share in all revenue produced from the tax since the date of Ball's incorporation in 1972, the right to receive its proper share of the tax revenues for the current and all future tax years, and an injunction barring collection of the tax for so long as its distribution scheme remains unconstitutional.

The district court held that Ball's action was barred by the Tax Injunction Act of 1937, 28 U.S.C. § 1341. We reverse.

The Tax Injunction Act of 1937, 28 U.S.C. § 1341, provides:

The district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State.

We pretermit any decision on whether at least a part of the relief which Ball seeks from the Rapides Parish sales tax distribution formula could be granted without enjoining, suspending or restraining the Parish sales tax itself.²  We hold, however, that Louisiana law does not afford Ball a plain, speedy and efficient remedy in the courts of the state, and that Ball's suit is therefore not barred by section 1341.

The Louisiana procedure which allows a challenge to a Parish sales tax by bringing suit in state court within 60 days of the ratification election would normally be a plain, speedy and efficient state remedy for the purposes of section 1341. Henry v. Metropolitan Dade County, 329 F.2d 780, 781 (5th Cir. 1964). A taxpayer may not circumvent the state procedure by allowing the state limitation period to run and then claiming the lack of an adequate state remedy:

The expiration of time in which the state suit might have been brought does not result in the destruction of the plain and simple remedy principle specified in the Johnson Act. To hold otherwise would allow any disgruntled taxpayer to simply wait until the statute of limitations had run in the state courts and then bring suit in the federal court.

Henry v. Metropolitan Dade County, supra, 329 F.2d at 781.

The plight of the town of Ball, however, is unique. Because it did not exist as a legal entity in 1967, it never has had and never will have an opportunity to bring its equal protection and due process objections to the tax distribution scheme before the courts of Louisiana. Taxwise, the town is a forlorn, illegitimate child of the state law under which it was created: it may neither share in the special Parish sales tax revenues which its citizens are required to pay nor fight for a portion of those revenues in the state courts. In these circumstances the procedure set forth in La.Rev.Stat.Ann. § 39:518 is not a plain, speedy and efficient remedy. Indeed, for the town of Ball, no law of the State of Louisiana provides any remedy at all.

It is no answer to say that the citizens who resided in what is now the town of Ball could have challenged the tax scheme in 1967. It is not the private citizens but the town itself as a distinct legal entity, authorized to be incorporated within the bounds of Rapides Parish, that now seeks a share of that Parish's sales tax revenues. Because the town itself has from its inception been without a state remedy, its suit in federal court is outside the bar of section 1341.³ 

REVERSED.