Unpublished Disposition, 875 F.2d 319 (9th Cir. 1986)

MEMORANDUM^* 

Kenneth J. Salter, pro se, appeals from the dismissal of an action under 42 U.S.C. § 1983 (1982) against Gerald H. Goldberg, Glenn L. Rigby, L. Rich, and unknown other employees of the California Franchise Tax Board (the Tax Board). Salter contends that the defendants denied him due process and equal protection of the law in assessing and collecting a state income tax deficiency and in ordering his employer to change his tax withholding status. The Supreme Court's decision in Fair Assessment in Real Estate Ass'n, Inc. v. McNary, 454 U.S. 100 (1981), controls this case. We affirm.

FACTS AND PROCEEDINGS BELOW

In 1984, Salter, a citizen of the United Kingdom and a resident of California, lived in Los Angeles County and worked for the Security Fire Protection Company. On August 7, 1984, the Tax Board sent Salter a notice indicating that he owed $764.07 in state income tax for the 1983 tax year. Salter alleges that he responded to this notice but received no reply. On September 11, 1984, September 14, 1984, and October 23, 1984, the Tax Board sent Salter three additional, and progressively more insistent, deficiency notices. These notices came to include not only the original $764.07 deficiency, but also a large deficiency for the 1982 tax year. Salter alleges that he also responded to these three notices but received no reply.

On November 29, 1984, the Tax Board sent Salter a notice indicating that he owed a total of $3,469.17 and stating that, if he failed to pay the amount or failed to appear at the Tax Board's offices in El Monte, California, by December 14, 1984, the Tax Board would seize his assets or garnish his wages. The notice, however, did not say whom Salter should contact at the Tax Board's offices nor did it instruct him to bring any records.

On December 10, 1984, Salter went to the Tax Board's offices and spoke with Mrs. Angelo. Mrs. Angelo stated that she needed to see Salter's tax returns for 1982 and 1983 before she could help him. When Salter explained that he did not have any tax returns, Mrs. Angelo allegedly refused to continue talking to him. She also refused to allow him to see her supervisor. Salter then left the offices.

That evening, Salter sent an unusual letter to the Tax Board in which he attempted to explain why he did not have to pay state income taxes. It stated: "What makes wages, which are the return of labor, income within the law? Your social security number. If you do not have a social security number, your wages are not income." The letter then proclaimed: "My participation in social security was obtained by fraudulent means and therefore the contract is null and void since its inception. I am ready to argue in court both the state and federal issues." The Tax Board did not respond.

On March 26, 1985, the Tax Board issued an Earnings Withholding Order for Taxes (EWOT) to Salter's employer, instructing him to garnish Salter's wages. Although the employer should have given Salter "Part 3" of this order, which explained that Salter had a right to request a hearing, the employer allegedly failed to do so. Salter, in any event, did not request a hearing and the garnishment order took effect.

On April 12, 1985, Salter sent a letter to the Tax Board again arguing that California could not tax him because he did not have a valid social security number. The letter asked the Tax Board to send Salter the names of the persons who authorized the garnishment of his wages. On April 30, 1985, Salter sent a letter to the Tax Board again explaining his taxation theory. This letter concluded: "You would be wise to return my money and lift [the garnishment] order immediately." Salter sent yet another similar letter on June 10, 1985.

On June 18, 1985, Salter received his first response from the Tax Board. This response, which was a letter answering his April 12 inquiry, explained that the Tax Board uses a computer to generate garnishment orders. The letter named R. Murphy as the current "Program Manager." Salter received no response to his other letters.

On September 28, 1985, Salter sent a letter to defendant Rigby, the Tax Board's chief counsel, in which he explained the preceding course of events, argued that he did not owe any taxes, and threatened to sue Tax Board employees under 42 U.S.C. § 1983 (1982) for denying him due process of law. Salter received no response.

On November 4, 1985, defendant Rich sent Salter's employer a letter instructing him to disregard Salter's W-4 Form, which indicated that Salter was exempt from income tax withholding. The letter told the employer to withhold income from Salter as though he were a single and had one dependent. On November 12, 1985, Salter sent letters to Rigby and Rich stating that Rich had no valid reason for sending the November 4 letter and asking them to retract the withholding instruction. On December 26, 1985, having received no response, Salter sent two more letters to Rigby and Rich indicating that he would sue them.

On August 4, 1986, Salter filed a complaint in the United States district court against Rigby, Rich, and Goldberg, who was the Tax Board's chief administrative officer. The complaint also sought to include unknown other employees of the Tax Board as additional defendants. Salter, designating the suit as a Sec. 1983 action, alleged that the defendants had violated his Fourteenth Amendment rights to due process and equal protection of the law by failing to exercise their statutory duties as employees of the Tax Board. He contended, in particular, that the defendants "knowingly, intentionally and maliciously" had refused to grant him administrative hearings and to initiate investigations required by the Cal.Rev. & Tax.Code and the Cal.Gov't Code. Salter also alleged that they had given hearings to similarly situated plaintiffs but selectively had ignored him. Salter asked for $300,000 in regular damages, $900,000 in punitive damages, and costs.

Adopting a magistrate's conclusions and adding several conclusions of its own, the district court dismissed Salter's complaint on essentially four grounds. The court held that the Eleventh Amendment, the doctrine of Parratt v. Taylor, 451 U.S. 527 (1981), and the doctrine of comity announced in Fair Assessment in Real Estate Ass'n, Inc. v. McNary, 454 U.S. 100 (1981), barred Salter's action on jurisdictional grounds. The court ruled further that, even if it could take jurisdiction, the facts alleged in the complaint did not state a cause of action against the defendants. Salter timely appealed to this court. The defendants, in response, have asked for sanctions under Fed. R. App. P. 38.

JURISDICTION

The district court, as noted above, decided that it did not have jurisdiction. This court has jurisdiction to review that determination under 28 U.S.C. § 1291 (1982).

STANDARD OF REVIEW

This court reviews de novo the dismissal of a complaint for lack of subject matter jurisdiction, see Peter Starr Prod. Co. v. Twin Continental Films, Inc., 783 F.2d 1440, 1442 (9th Cir. 1986), and for failing to state a claim, see Forth Vancouver Plywood Co. v. United States, 747 F.2d 547, 552 (9th Cir. 1984).

DISMISSAL ON GROUNDS OF COMITY

The district court correctly concluded that the principle of comity, as announced in Fair Assessment in Real Estate Ass'n, Inc. v. McNary, 454 U.S. 100 (1981), bars Salter's action. We need not address the other defenses relied upon by defendants. In Fair Assessment, the plaintiffs brought a Sec. 1983 suit seeking actual and punitive damages from individual employees of a state tax commission. They claimed that the defendants, by over-assessing their property and treating them unequally from other taxpayers, had deprived them of their rights to equal protection and due process under the Fourteenth Amendment. Id. at 105-06. The Supreme Court invoked the principle of comity and dismissed the action, explaining that federal actions challenging the validity of state taxation systems excessively would interfere with the independence of state governments. See id. at 115-16. The Court held that "taxpayers [with challenges such as the those of plaintiffs] must seek protection of their federal rights by state remedies, provided of course that those remedies are plain, adequate, and complete, and [that the taxpayers] may ultimately seek review of the state decisions in this Court." Id. at 116 (footnote omitted).

Salter cannot distinguish his action from the action dismissed in Fair Assessment. Like the plaintiffs in that case, he has named individual state employees as defendants, he has alleged violations of due process and equal protection, and he has asked for damages as a remedy. His suit, as a result, would interfere equally with the state taxation system. Salter, nevertheless, contends that Fair Assessment should not control this action for three reasons. We disagree.

First, Salter argues California does not provide an adequate remedy for his claim. Although the defendants respond that Salter could pursue a tax refund action under Cal.Rev. & Tax.Code Sec. 19082 (West 1983), such an action is inadequate. Salter seeks damages, regular and punitive, and costs, not merely a refund of taxes paid. While his claims may have no merit, Salter could not even present them in a Sec. 19082 tax refund action. See id. (allowing only the refund of amounts paid).

California, nevertheless, does provide an adequate remedy. The California Supreme Court expressly has held that plaintiffs may assert Sec. 1983 claims in state court. See Williams v. Horvath, 16 Cal. 3d 834, 837, 548 P.2d 1125, 1127, 129 Cal. Rptr. 453, 455 (1976). Salter, therefore, could ask the California courts for all of the relief that he is asking from this court. See Sinclair & Valentine Co. v. County of Los Angeles, 201 Cal. App. 3d 1021, 1027, 247 Cal. Rptr. 568, 572 (1988) (stating that "it appears taxpayers may, in state courts at least, seek the recovery of damages under 42 United States Code section 1983 to redress the unconstitutional administration of a state or local tax system...."). The Fair Assessment decision recognizes that a Sec. 1983 action in a state court may provide a plain, adequate, and complete remedy. See 454 U.S. at 116 (noting that Missouri, the taxing state, allowed Sec. 1983 claims in its courts).

Second, Salter contends that no state remedy suffices because California law grants absolute immunity to public employees for injuries caused in assessing or collecting a tax or in interpreting or applying any law relating to a tax. See Mitchell v. Franchise Tax Bd., 183 Cal. App. 3d 1133, 1136, 228 Cal. Rptr. 750, 752 (1986); Cal. Gov't Code Sec. 860.2 (West 1980). Salter overlooks the Supremacy Clause. Federal law, not California law, governs the immunity of defendants in federal constitutional tort actions brought against state officials. See Tower v. Glover, 467 U.S. 914, 920 (1984); P. Bator, D. Meltzer, P. Mishkin, & D. Shapiro, Hart and Wechsler's The Federal Courts and the Federal System 1293 (3d ed. 1988). Had Salter brought this action in state court federal law, the same law this court applies in similar settings, would have been employed.

Third, Salter argues that he has no reason to believe that the state courts will treat him any better than the Tax Board. He contends that, after unsuccessfully having sought procedural redress from the Tax Board over fifteen months, he should not have to pursue remedies in the state system. While we understand the depth of Salter's exasperation, the teaching of Fair Assessment controls.

OTHER ISSUES

Because we conclude that the district court properly dismissed the case on the basis of Fair Assessment, we find it inappropriate and unnecessary to review the district court's determinations that the Eleventh Amendment and Parratt v. Taylor, 451 U.S. 527 (1981), also bar this action as well as its determination that Salter's complaint fails to state a claim against the defendants. We note, however, that Salter's arguments on these issues are not frivolous. We, therefore, decline to impose sanctions upon Salter under Fed. R. App. P. 38. Salter is not a practicing attorney, and although he did not prevail on this appeal, he has not engaged in sanctionable conduct.

AFFIRMED.