ROSALYN B. BELL, Judge.
Bancroft Information Group, Inc. is a Maryland Corporation which, since September 1, 1989, has published a biweekly publication circulated among the general public, known as
The Maryland Report. The Maryland Report
contains news items, legal and general intelligence, reports of current events, editorial comments, advertising matter and other miscellaneous information of public interest. Bruce Bortz is President and sole owner of Bancroft. Bancroft and Bortz together are the appellants in the instant case.
Although he was advised by appellee, the Comptroller of the Treasury, that the publication did not qualify as a newspaper and was thus subject to sales tax under the provisions of COMAR .03.06.01.04
(the regulation), Bancroft nevertheless filed with the Comptroller a refund application relating to the four previous quarters of sales tax. Bancroft attached to its refund application — which was founded on the “constitutional invalidity of tax as applied to newspaper publishers under
Arkansas Writers’ Project v.
Ragland,
481 U.S. 221, 107 S.Ct. 1722, 95 L.Ed.2d 209 (1987),”
— copies of the quarterly tax returns in question.
The Comptroller returned the application to Bancroft with a request that additional information be supplied within 45 days. Bancroft and Bortz instead brought suit in the Circuit Court for Anne Arundel County. Bancroft’s and Bortz’s complaint alleged that the Comptroller was acting beyond the scope of his authority in enacting the regulation. Bancroft and Bortz also alleged First Amendment violations by the Comptroller and asked for damages equal to the amount of sales tax Bancroft had paid, injunctive relief to halt further implementation of the regulation, and attorney’s fees under 42 U.S.C. § 1988 (1989).
Count 1 of appellants’ complaint alleged that the regulation was
ultra vires
the authority of the Comptroller. Count 2 alleged that the regulation violated the First Amendment and Equal Protection clause of the United States Constitution. Count 3 alleged deprivations of constitutionally protected personal and property rights under 42 U.S.C. § 1983 (1986) and attorney’s fees under § 1988. Each of these counts incorporated by reference the allegations contained in all other counts.
The circuit court granted the Comptroller’s Motion to Dismiss on the grounds that Bancroft and Bortz had not exhausted their administrative remedies. The circuit court also stayed any determination of constitutionality of the statute pending the exhaustion of administrative remedies. Bancroft and Bortz have appealed, contending:
—the circuit court erred in staying a facial attack on a regulation asserted to violate the First Amendment;
—the circuit court erred in dismissing on exhaustion grounds an attack on regulations affecting First
Amendment rights asserted to be
ultra vires
any statutory authorization;
—a regulation according the Comptroller discretion to determine what constitutes a nontaxable newspaper violates the First Amendment; and
—the periodicity requirement in the State regulation violates the First Amendment.
We prefer to rephrase the issues appellants’ raise and will address them as follows:
—the First Amendment challenge to the regulation and the Comptroller’s authority to promulgate that regulation;
—appellants’ § 1983 cause of action
; and
—the exhaustion of administrative remedies requirement and the circuit court’s disposition of the case.
We will hold that appellants were not required to exhaust their administrative remedies before making a First Amendment challenge to the regulation. In reviewing the portion of the regulation upon which the Comptroller based his decision, we find it to be constitutional. Furthermore, we hold that appellants are required to exhaust their administrative remedies prior to bringing any additional causes of action in the circuit court. We explain.
THE FIRST AMENDMENT
Appellants’ challenges to the regulation and the Comptroller’s exercise of authority in implementing it revolve
around what appellants consider to be the regulation’s infringement on their First Amendment rights.
Specifically, appellants attack the grant of discretion in the regulation to the Comptroller to determine what constitutes a taxable newspaper. Appellants also attack the periodicity (frequency of publication) requirement of the regulation.
The circuit court stayed further proceedings on appellants’ action with respect to the First Amendment challenges to the regulation, pending appellants’ exhaustion of all other claims. In delivering its ruling, the court declared:
“COURT: Well, of course, unfortunately I’ve probably had too much exposure to this type of case before. I did have another one very similar with the Pennysaver and got to read all of those Supreme Court cases on the question, but what it really boils down to I think is that the — I think under the existing law the comptroller does have a right to have regulations with regard to what is or isn’t a newspaper. He also can promulgate those regulations so they apply, and, of course, a publication has the right to contest that, but before you contest it, I think you have to establish yourself as a — as fitting within the category of something that’s been denied. We don’t even have anything here where there’s been a refund claim made and denied. All it was sent back for further information, and so I think what you’re really asking for is a premature advisory opinion as to whether this category of bi-weekly publication is — is unconstitutionally being denied it status as a newspaper, but I think there’s certainly some other thing that or some other basis that the comptroller could find that might be a reason for his denial of your status as a newspaper. I don’t think you call yourself a newspaper. You call yourself a bi-weekly newsletter. You have volumes and issues that apparently appear to be of a nature to be put together as a book
which is another requirement that it not be, and so there are a lot of things that are at issue here other than the fact that it’s a bi-weekly publication, and I’m not going to make a preliminary advisory decision or allow anyone to jump ahead of the process that requires some kind of a evidentiary hearing after a denial. Of course, the comptroller may say you’re all right, once you file a — whatever supporting documentation he says you should, and that’s his privilege, but I don’t think it’s for the courts to intervene at this point so I think it’s premature and will grant the Motion to Dismiss.
“[ASSISTANT ATTORNEY GENERAL]: Thank you, Your Honor.
“COURT: I will stay the portion about the facial constitutional challenge if you want to just keep that open while you determine whether or not you’re a newspaper or otherwise.
“[ASSISTANT ATTORNEY GENERAL]: Your Honor, then I assume you’re dismissing on the exhaustion ground and not the ripeness ground?
“COURT: Yeah.
“[ASSISTANT ATTORNEY GENERAL]: Okay.
“[APPELLANTS’ COUNSEL]: Do I understand Your Honor’s ruling is that the counts other than the facial constitutionality are dismissed and the facial constitutionality is stayed?
“COURT: Stayed pending the determination of whether every other category of qualification as a newspaper is approved. First of all, you’ve got to have some kind of a denial or exhaustion of administrative remedy. Somebody has to do something.”
The issuance of a stay lies “within the sound discretion of the trial court” and will not be disturbed on appeal absent an abuse of that discretion.
Dodson v. Temple Hill Baptist Church, Inc.
254 Md. 541, 546, 255 A.2d 73 (1969). In the instant case, the circuit court stayed the determination of the constitutional issues, pending the
exhaustion of administrative remedies. Where First Amendment interests are raised, however, they must be vindicated prior to the disposition of other claims.
Dombrowski v. Pfister,
380 U.S. 479, 486, 85 S.Ct. 1116, 1120, 14 L.Ed.2d 22 (1965).
In addition, where differential taxation implicates the First Amendment the case becomes constitutionally suspect. Courts are then required to look for suppression of the expression of particular ideas or viewpoints.
Leathers v. Medlock,
— U.S.-, 111 S.Ct. 1438, 113 L.Ed.2d 494 (1991). Absent a compelling justification, the government may not exercise its taxing power to single out a small group of the press.
Leathers,
111 S.Ct. at 1443.
See also Grosjean v. American Press Co.,
297 U.S. 233, 244-49, 56 S.Ct. 444, 446-49, 80 L.Ed. 660 (1936). Ordinarily, we would remand this case to the circuit court for a disposition of the First Amendment issues. We choose, however, in the interest of judicial economy and to avoid the possibility of another appeal, to address the First Amendment issues raised by appellants. Rule 8-131(a);
Aetna Cas. & Sur. Co. v. Brethern Mut. Ins. Co.,
38 Md.App. 197, 214, 379 A.2d 1234 (1977).
Appellants contend that the regulation on its face is violative of their First Amendment rights. They argue that the regulation allows the Comptroller too much discretion to decide what qualifies as a newspaper and is thus exempt from the sales tax. Appellants in their brief complain:
“Neither Maryland Report nor other aspiring publishers can do more than guess at what about it, other than its periodicity, offends the Comptroller. Perhaps the paper it is printed on is not flimsy enough____ Perhaps
it omits too many of the typical contents of a true newspaper — reports of Women’s Sodality meetings, information about the fishing season for pickerel and the bounty paid for porcupine ears, recipes for Calvert County turnip soup, and advertisements of execution sales.”
Appellants rely on
Arkansas Writers’ Project,
481 U.S. at 221, 107 S.Ct. at 1723, to bolster their position that the regulation violates the First Amendment. We disagree.
The Supreme Court faced a similar set of facts in
Arkansas Writers’ Project.
In that case, Arkansas had imposed a tax on receipts from sales of tangible personal property, but exempted numerous items, including newspapers and some magazines, such as “religious, professional, trade and sports journals.” The Arkansas Writers’ Project, Inc. (Writers) published a general interest monthly magazine,
Arkansas Times,
with a circulation of approximately 28,-000. The magazine included articles on a variety of subjects, including religion and sports. The Commissioner of Revenue of Arkansas (Commissioner) refused the Writers refund application. The Arkansas State Chancery Court granted the Writers summary judgment, construing the magazine exemption to include
Arkansas Times.
The Arkansas Supreme Court reversed, holding that the magazine exemption applied only to religious, professional, trade, or sports periodicals. The United States Supreme Court reversed the Arkansas Supreme Court, holding that the Arkansas sales tax scheme was unconstitutional because of its “selective application” to magazines.
Arkansas Writers’ Project,
481 U.S. at 233, 107 S.Ct. at 1729. After examining how the Arkansas tax was directed at what was printed in the periodical, the Court held that Arkansas “has advanced no compelling justification for selective, content-based taxation of certain magazines.”
Arkansas Writers’
Project,
481 U.S. at 234, 107 S.Ct. at 1730. Admittedly,
Arkansas Writers’ Project
possesses some similarities to the case now before us. We hold, however, that it is distinguishable.
In the instant case, the Comptroller returned appellants’ refund application with a request for additional information. Prior to the return of the refund application, the Comptroller, in November, 1988, informed appellants by letter that the Maryland Report would not qualify as a newspaper for the sales tax exemption. The Comptroller wrote in pertinent part:
“A
definition of the term ‘newspaper’ is provided in Sales Tax Regulation .05, a copy of which is enclosed herewith. Among other things, the regulation has a threshold requirement that a publication must be published and distributed no less frequently than once each week in order to be a newspaper. This is a requirement which the legislature has specifically considered on a number of occasions in recent years but declined to alter.
“Since your proposed publication will not meet the frequency of publication requirement of the regulation, it will not be a newspaper for sales tax purposes.”
Additional correspondence between appellants and the Comptroller, presented as exhibits at trial, focused on the frequency of publication requirement of the regulation.
Therefore, unlike
Arkansas Writers’ Project,
the denial of the refund in this case was based, not on what was published in the newsletter, but on how many times it was circulated. Here, the Comptroller did not determine
The Maryland Report’s
tax status based on its content — which the Supreme Court found constitutionally offensive in
Arkansas Writers’ Project.
Instead, he based his determination on how many times it was published. This is a content-neutral criteria, which does not “restrict expression because of its message, its ideas, its subject matter or its content.”
Arkansas Writers’ Project,
481 U.S. at 229, 107 S.Ct. at 1727, quoting
Police Dept. of Chicago v. Mosley,
408 U.S. 92, 95, 92 S.Ct. 2286, 2289, 33 L.Ed.2d 212 (1972). Thus, it does not raise the same type of constitutional suspicion.
In determining whether a tax violates the First Amendment, the Supreme Court looks for “[regulations which permit the government to discriminate on the basis of the content of the message.”
Arkansas Writers’ Project,
481 U.S. at 230, 107 S.Ct. at 1728. “The First Amendment’s hostility to content-based regulation extends not only to restrictions on particular viewpoints, but also to prohibition of public discussion of an entire topic.”
Consolidated Edison Co. v. Public Serv. Comm’n of New York,
447 U.S. 530, 537, 100 S.Ct. 2326, 2333, 65 L.Ed.2d 319 (1980). Thus, the test becomes whether the tax is directed at the content or ideas espoused by the publication or whether it is content-neutral.
In
Leathers,
which was a challenge to the Arkansas tax on cable television, the Supreme Court concluded
“that differential taxation of speakers, even members of the press, does not implicate the First Amendment unless the tax is directed at, or presents the danger of suppressing, particular ideas. That was the case in
Grosjean, Minneapolis Star [& Tribune Co. v. Minnesota Comm’r of Revenue,
460 U.S. 575, 103 S.Ct. 1365, 75 L.Ed.2d 295] [(1983)], and
Arkansas Writers’,
but it is not the case here. The Arkansas Legislature has chosen simply to exclude or exempt certain media from a generally applicable tax. Nothing about that choice has ever suggested an interest in censoring the expressive activities of cable television. Nor does anything in this record indicate that Arkansas’ broad-based, content-neutral sales tax is likely to stifle the free exchange of ideas. We conclude that the State’s extension of its generally applicable sales tax to cable television services alone, or to cable and satellite services, while exempting the print media, does not violate the First Amendment.”
Leathers,
— U.S. at-, 111 S.Ct. at 1447.
There is nothing in the record of the case now before us to indicate that the frequency of publication requirement in the regulation is directed toward the suppression of ideas.
It merely requires that a publication be “published and distributed no less frequently than once each week” before it can qualify for tax exempt status as a newspaper. We hold, therefore, that the frequency of publication requirement, upon which the Comptroller based his decision to deny appellants’ refund, passes constitutional muster.
APPELLANTS’ § 1983 CHALLENGE
Count 3 of appellants’ original Complaint asserts a claim under 42 U.S.C. § 1983. Appellants argue that, as a matter of federal law, states cannot generally require litigants to exhaust administrative remedies prior to filing a claim in state court seeking relief under 42 U.S.C. § 1983 for violation of federal rights.
Felder v. Casey,
487 U.S. 131, 108 S.Ct. 2302, 101 L.Ed.2d 123 (1988). Appellants have, however, incorrectly interpreted the law.
In
Patsy v. Florida Board of Regents,
457 U.S. 496, 502-07, 102 S.Ct. 2557, 2560-63, 73 L.Ed.2d 172 (1981), the Supreme Court discussed at length the historical background of § 1983. Quoting
Ex Parte Virginia,
100 U.S. 339, 346, 25 L.Ed.2d 676 (1880), the Court said:
“The very purpose of § 1983 was to interpose the federal courts between the States and the people, as guardians of the people’s federal rights — to protect the people from unconstitutional action under color of state law, ‘whether that action be executive, legislative, or judicial.’ ”
After a complete review of the history of § 1983, the Supreme Court concluded in
Patsy,
457 U.S. at 507, 102 S.Ct. at 2563:
“This legislative history supports the conclusion that our prior decisions, holding that exhaustion of state administrative remedies is not a prerequisite to an action under § 1983, did not misperceive the statutory intent: it seems fair to infer that the 1871 Congress did not intend that an individual be compelled in every case to exhaust state administrative remedies before filing an action under § 1 [the predecessor to § 1983] of the Civil Rights Act.”
The Comptroller argues that either a state or a federal court can, in the context of a tax case, require exhaustion of administrative remedies prior to the hearing of a § 1983 challenge. The Comptroller bases his conclusion on
Fair Assessment in Real Estate Association v. McNary,
454 U.S. 100, 102, 102 S.Ct. 177, 179, 70 L.Ed.2d 271 (1981). The Supreme Court in
McNary
addressed the issue of whether a damages action could be brought in federal court under § 1983 to redress an allegedly unconstitutional administration of Missouri’s tax system. The Court contrasted the well-established policy calling for restraint by the federal court in deciding cases that affect state tax systems with the § 1983 policy enunciated in
Patsy,
that actions may be brought in federal court without first exhausting state administrative remedies. The Court ultimately held that the principle of comity
barred state taxpayers from asserting § 1983 action in federal court prior to the exhaustion of state administrative remedies.
McNary,
454 U.S. at 105, 102 S.Ct. at 180. This holding acknowledges the appropriateness of resolving § 1983 tax claims according to the procedures established by the states, including exhaustion of administrative remedies.
McNary,
454 U.S. at 108, n. 5, 102 S.Ct. at 181.
McNary
involved a
federal
court challenge to a
state’s
administration of its own tax scheme. The instant case, on the other hand, involves a
state
court challenge to a
state
tax system, where the principle of comity does not apply. The question thus presented is whether the
McNary
rationale applies in these circumstances. While no Maryland decisions have resolved the issue, the Supreme Court of Oregon recently addressed it in
Nutbrown v. Munn,
311 Or. 328, 811 P.2d 131 (1991), stating that the holding in
McNary
“does not mean that a
state
must, as a matter of federal law, impose a similar exhaustion requirement before it permits
its
courts to entertain such actions; neither Congress nor the federal courts has purported to control state trial procedure in such a way. What it does mean, we believe, is that a state
may
impose such a requirement
without offending
federal law.” (Emphasis in original)
Nutbrown,
811 P.2d at 138. Thus, under this reasoning, the state may, in a § 1983 action, require a complaining taxpayer first to exhaust available state administrative remedies. This is in keeping with the notions of judicial efficiency and economy.
We find the reasoning of the Oregon Court to be persuasive. The requirement that taxpayers exhaust their administrative remedies, prior to filing in court, allows the agencies and courts with the most expertise in the state’s tax system to resolve a complaint as quickly as possible.
Dows v. Chicago, 78
U.S. (11 Wall.) 108, 110, 20 L.Ed. 65 (1871).
THE STAY
Appellants also contend that the circuit court erred in granting a stay on the constitutional questions, pending their exhaustion of administrative remedies. Appellants argue that the net effect of the stay is to compel them to litigate factual issues through two administrative agencies — the Comptroller and the Tax Court — which would result in substantial expenditure. Appellants claim this is especially onerous in light of the fact that the circuit court or this Court may ultimately find the tax regulations unconstitutional. Since, however, we have determined that the portion of regulation upon which the Comptroller based its decision is constitutional on its face, we need not discuss any further the effect of the stay on appellants’ constitutional challenge.
Appellants also argue that the circuit court erred in dismissing, on exhaustion grounds, their attack on the
Comptroller’s discriminatory administration of the regulation. Appellants rely on
State Department of Assessments v. Clark,
281 Md. 385, 404-05, 380 A.2d 28 (1977), to bolster their position that, when a statute is being administered in a discriminatory fashion and the agency was afforded an opportunity to abate the discrimination, the statute could then be attacked by a declaratory judgment. Appellants claim that they did not go directly to court, but called upon the Comptroller, by both refund application and letter, to correct the discrimination and adopt a proper, nondiscriminatory regulation. Appellants claim that both the refund application and the letter were met with unresponsive replies and, therefore, exhaustion of administrative remedies is not required under
Clark.
Appellants’ reliance on
Clark,
however, is misplaced.
The law governing the appeal of tax cases is well settled. The Maryland Uniform Declaratory Judgment Act, which is found in Md.Cts. & Jud.Proc.Code Ann. § 3-409(b) (1974, 1989 Repl.Vol.), specifically provides:
“If a statute provides a special form of remedy for a specific type of case, that statutory remedy shall be followed in lieu of a proceeding under this subtitle.”
Section 13-514 of Md.Tax-Gen.Code Ann. (1988) states:
“Unless a person has exhausted all available administrative remedies before the appropriate tax determining agency, the person may not appeal to the Tax Court.” Also, Md.Tax-Gen.Code Ann. § 13-505 (1988) provides:
“A court may not issue an injunction, writ of mandamus, or other process against the State or any officer or employee of the State to enjoin or prevent the assessment or collection of a tax under this article.”
Section 13-505, read in conjunction with § 13-514 and § 3-409(b) of the Cts.
&
Jud.Proc. Article, demonstrates the Legislature’s intent that tax disputes be resolved through the procedures established in Md.Tax-Gen.Code Ann. §§ 13-510 through 13-529 (1988).
Clark
merely held that, when an administrative agency provides a wholly discretion
ary, non-reviewable procedure by which an aggrieved citizen may request relief from agency action, the requirement of administrative exhaustion is fully met by invoking that procedure. If the agency then refuses to grant the citizen relief, a declaratory judgment action may immediately be commenced, attacking the regulation.
Clark,
281 Md. at 404, 380 A.2d 28.
Clark,
stated:
“[W]here there is a full opportunity ... to protest ... to administrative agencies and adequate provisions for judicial review of the agencies’ action, a court shall not take jurisdiction unless the administrative remedies have been exhausted____”
Clark,
281 Md. at 404, 380 A.2d 28. Thus, under the holding in
Clark,
administrative exhaustion is required pri- or to judicial review of agency action.
JUDGMENT AFFIRMED. CASE REMANDED TO THE CIRCUIT COURT FOR ANNE ARUNDEL COUNTY WITH INSTRUCTIONS TO REMAND THE CASE TO THE APPROPRIATE ADMINISTRATIVE AGENCY. COSTS TO BE PAID THREE-FOURTHS BY APPELLANTS AND ONE-FOURTH BY APPELLEE.