Joseph Maraia v. City of Cranston CV-98-173-B 05/08/98
UNITED STATE DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Joseph Maraia, et a l .
v. Civil No. 98-173-B
City of Cranston, et a l .
MEMORANDUM AND ORDER
The plaintiffs in this class action pay sewer fees to the
City of Cranston, Rhode Island. They filed their complaint
against the city and several of its officials in state court.
The complaint concerns the city's agreement to lease its sewer
facility to a private corporation in exchange for a $48,000,000
loan and other consideration. Pursuant to the agreement, the
city's sewer fee payers will be reguired to repay the loan and
cover the corporation's costs of operating the sewer facility.
Plaintiffs argue that the city is using the loan proceeds to pay
debts unrelated to the operation of the sewer system. They also
claim that the city violated state and federal law by entering
into the agreement and accepting the loan without first holding a city-wide vote. Among other forms of relief, plaintiffs seek an
injunction barring the city council from raising sewer fees to
repay the allegedly illegal loan.
Defendants removed the case to federal court relying on the
fact that the compliant contains claims based on federal law.
See 28 U.S.C.A. § 1441(b) (West 1994). Plaintiffs now seek to
have the case remanded. Their primary argument is that the Tax
Injunction Act ("TIA"), 28 U.S.C.A. § 1341 (West 1994), deprives
the court of subject matter jurisdiction.
I.
The TIA provides that "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.A. § 1341. The Act
constitutes a jurisdictional bar to claims that fall within its
scope. Cumberland Farms, Inc. v. Tax Assessor, 116 F.3d 943, 945
(1st Cir. 1997). Accordingly, a removed case must be remanded to
state court if the claims on which federal jurisdiction is based
are subject to the TIA. See Bank of New England Old Colony, N.A.
v. Clark, 986 F.2d 600, 604 (1st Cir. 1993) (affirming remand of
removed case based on Tax Injunction Act). Two conditions must be present before the TIA will deprive a
federal court of subject matter jurisdiction: first, the
jurisdictional claim must seek to "enjoin, suspend or restrain
the assessment, levy or collection of a tax"; second, a "plain,
speedy and efficient remedy" for the alleged violation must be
available in state court. 28 U.S.C.A. § 1341; Cumberland Farms,
116 F.3d at 945. As I explain below, I cannot determine whether
the Act applies in this case because the record is insufficient
to permit a reliable determination as to whether Cranston's sewer
fee constitutes a "tax."
Plaintiffs have failed to offer any evidence or argument to
support their assertion that Cranston's sewer fee is a tax under
the TIA, and defendants rely exclusively on a Rhode Island
Supreme Court ruling that addresses the issue of whether a sewer
fee is a tax in a very different context.1 Costello v. Ricci,
121 R.I. 509 (R.I. 1979). However, since the guestion of what
1 Rhode Island General Laws § 45-3-12 (1991) establishes certain procedural reguirements that must be met before a town can dispose of land or impose a tax. The plaintiffs in Costello argued that a town could not impose new sewer fees without complying with these procedural reguirements. In rejecting this argument, the court relied on the fact that the legislature had passed a separate authorizing statute for sewer fees. See, e.g., R.I. Gen. Laws § 45-14-1; 121 R.I. at 511-12. The court buttressed its conclusion by noting that other states generally do not regard a sewer charge as a tax. Id. at 512
-3- constitutes a tax under the TIA is a matter of federal law.
Trailer Marine Transp. Corp. v. Rivera Vazquez, 977 F.2d 1, 5
(1st Cir. 1992), the Rhode Island Supreme Court's discussion of
the subject in a very different context is of limited value in
resolving the issue presented in this case.
The First Circuit Court of Appeals has observed that it is
often difficult to distinguish exactions that gualify as a tax
under the TIA from those that do not. Cumberland Farms, 116 F.3d
at 94 6; Trailer Marine Transp., 97 7 F.2d at 5; San Juan Cellular
Tel. Co. v. Public Serv. Comm'n of Puerto Rico, 967 F.2d 683, 685
(1st Cir. 1992). Among the factors that may prove to be helpful
in making this distinction in this case are: (1) whether the fee
is designed primarily to raise revenue rather than to serve a
regulatory function or to defray the cost of a service; (2)
whether the fee is assessed against only the users of the
service; (3) whether the amount of the fee is determined based on
usage; (4) whether the service for which the fee is assessed
benefits the general public; and (5) whether the proceeds
generated by the fee are deposited into a general fund. See
generally, Cumberland Farms, 116 F.3d at 946; Trailer Marine
Transp., 977 F.2d at 5; San Juan Cellular, 967 F.3d at 686; see
also Folio v. Citv of Clarksburg, 134 F.3d 1211, 1217 (4th Cir. 1998); Collins Holding Corp. v. Jasper County, 123 F.3d 797, 800
(4th Cir. 1997); Hager v. West Peoria, 84 F.3d 865, 870 (7th Cir.
1996).
As I cannot determine on the present record how, if at all,
these or other factors may affect the resolution of this
question, I deny the plaintiffs' motion to remand without
prejudice insofar as it is based on the TIA. On or before June
15, 1998, plaintiffs shall file a motion for summary judgment
addressing the applicability of the TIA. Said motion shall be
supported by affidavits or other materials that satisfy the
requirements of Fed. R. Civ. P. 56(e). Discovery on matters
unrelated to this issue shall be stayed until further order of
the court.
II.
Plaintiffs also argue that a remand is warranted for several
other reasons. As I explain below, the arguments are devoid of
merit.
A.
Plaintiffs argue that the court lacks subject matter
jurisdiction even if the TIA is inapplicable. As plaintiffs have
pleaded nonfrivolous claims based on federal law, the court has subject matter jurisdiction over these claims pursuant to 28
U.S.C.A. § 1331 (West 1993). It also has supplemental
jurisdiction over the state law claims pursuant to 28 U.S.C.A. §
1367 (West 1993). Further, removal was warranted pursuant to 28
U.S.C.A. § 1441(b) as the complaint contains claims arising under
federal law.
B.
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Joseph Maraia v. City of Cranston CV-98-173-B 05/08/98
UNITED STATE DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE
Joseph Maraia, et a l .
v. Civil No. 98-173-B
City of Cranston, et a l .
MEMORANDUM AND ORDER
The plaintiffs in this class action pay sewer fees to the
City of Cranston, Rhode Island. They filed their complaint
against the city and several of its officials in state court.
The complaint concerns the city's agreement to lease its sewer
facility to a private corporation in exchange for a $48,000,000
loan and other consideration. Pursuant to the agreement, the
city's sewer fee payers will be reguired to repay the loan and
cover the corporation's costs of operating the sewer facility.
Plaintiffs argue that the city is using the loan proceeds to pay
debts unrelated to the operation of the sewer system. They also
claim that the city violated state and federal law by entering
into the agreement and accepting the loan without first holding a city-wide vote. Among other forms of relief, plaintiffs seek an
injunction barring the city council from raising sewer fees to
repay the allegedly illegal loan.
Defendants removed the case to federal court relying on the
fact that the compliant contains claims based on federal law.
See 28 U.S.C.A. § 1441(b) (West 1994). Plaintiffs now seek to
have the case remanded. Their primary argument is that the Tax
Injunction Act ("TIA"), 28 U.S.C.A. § 1341 (West 1994), deprives
the court of subject matter jurisdiction.
I.
The TIA provides that "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.A. § 1341. The Act
constitutes a jurisdictional bar to claims that fall within its
scope. Cumberland Farms, Inc. v. Tax Assessor, 116 F.3d 943, 945
(1st Cir. 1997). Accordingly, a removed case must be remanded to
state court if the claims on which federal jurisdiction is based
are subject to the TIA. See Bank of New England Old Colony, N.A.
v. Clark, 986 F.2d 600, 604 (1st Cir. 1993) (affirming remand of
removed case based on Tax Injunction Act). Two conditions must be present before the TIA will deprive a
federal court of subject matter jurisdiction: first, the
jurisdictional claim must seek to "enjoin, suspend or restrain
the assessment, levy or collection of a tax"; second, a "plain,
speedy and efficient remedy" for the alleged violation must be
available in state court. 28 U.S.C.A. § 1341; Cumberland Farms,
116 F.3d at 945. As I explain below, I cannot determine whether
the Act applies in this case because the record is insufficient
to permit a reliable determination as to whether Cranston's sewer
fee constitutes a "tax."
Plaintiffs have failed to offer any evidence or argument to
support their assertion that Cranston's sewer fee is a tax under
the TIA, and defendants rely exclusively on a Rhode Island
Supreme Court ruling that addresses the issue of whether a sewer
fee is a tax in a very different context.1 Costello v. Ricci,
121 R.I. 509 (R.I. 1979). However, since the guestion of what
1 Rhode Island General Laws § 45-3-12 (1991) establishes certain procedural reguirements that must be met before a town can dispose of land or impose a tax. The plaintiffs in Costello argued that a town could not impose new sewer fees without complying with these procedural reguirements. In rejecting this argument, the court relied on the fact that the legislature had passed a separate authorizing statute for sewer fees. See, e.g., R.I. Gen. Laws § 45-14-1; 121 R.I. at 511-12. The court buttressed its conclusion by noting that other states generally do not regard a sewer charge as a tax. Id. at 512
-3- constitutes a tax under the TIA is a matter of federal law.
Trailer Marine Transp. Corp. v. Rivera Vazquez, 977 F.2d 1, 5
(1st Cir. 1992), the Rhode Island Supreme Court's discussion of
the subject in a very different context is of limited value in
resolving the issue presented in this case.
The First Circuit Court of Appeals has observed that it is
often difficult to distinguish exactions that gualify as a tax
under the TIA from those that do not. Cumberland Farms, 116 F.3d
at 94 6; Trailer Marine Transp., 97 7 F.2d at 5; San Juan Cellular
Tel. Co. v. Public Serv. Comm'n of Puerto Rico, 967 F.2d 683, 685
(1st Cir. 1992). Among the factors that may prove to be helpful
in making this distinction in this case are: (1) whether the fee
is designed primarily to raise revenue rather than to serve a
regulatory function or to defray the cost of a service; (2)
whether the fee is assessed against only the users of the
service; (3) whether the amount of the fee is determined based on
usage; (4) whether the service for which the fee is assessed
benefits the general public; and (5) whether the proceeds
generated by the fee are deposited into a general fund. See
generally, Cumberland Farms, 116 F.3d at 946; Trailer Marine
Transp., 977 F.2d at 5; San Juan Cellular, 967 F.3d at 686; see
also Folio v. Citv of Clarksburg, 134 F.3d 1211, 1217 (4th Cir. 1998); Collins Holding Corp. v. Jasper County, 123 F.3d 797, 800
(4th Cir. 1997); Hager v. West Peoria, 84 F.3d 865, 870 (7th Cir.
1996).
As I cannot determine on the present record how, if at all,
these or other factors may affect the resolution of this
question, I deny the plaintiffs' motion to remand without
prejudice insofar as it is based on the TIA. On or before June
15, 1998, plaintiffs shall file a motion for summary judgment
addressing the applicability of the TIA. Said motion shall be
supported by affidavits or other materials that satisfy the
requirements of Fed. R. Civ. P. 56(e). Discovery on matters
unrelated to this issue shall be stayed until further order of
the court.
II.
Plaintiffs also argue that a remand is warranted for several
other reasons. As I explain below, the arguments are devoid of
merit.
A.
Plaintiffs argue that the court lacks subject matter
jurisdiction even if the TIA is inapplicable. As plaintiffs have
pleaded nonfrivolous claims based on federal law, the court has subject matter jurisdiction over these claims pursuant to 28
U.S.C.A. § 1331 (West 1993). It also has supplemental
jurisdiction over the state law claims pursuant to 28 U.S.C.A. §
1367 (West 1993). Further, removal was warranted pursuant to 28
U.S.C.A. § 1441(b) as the complaint contains claims arising under
federal law.
B.
Plaintiffs assert that the court should remand the case to
state court pursuant to 28 U.S.C.A. § 1441(c). Where, as in this
case, a federal claim is properly removed pursuant to 28 U.S.C.A.
§ 1441 (b), the court lacks discretion to remand said claim
pursuant to § 1441(c). Further, plaintiffs' state law claims
cannot be remanded pursuant to § 1441 (c) because they are not
"separate and independent."
C.
Plaintiffs contend that abstention is required pursuant to
Younger v. Harris, 401 U.S. 37 (1971), and its progeny. The
simple answer to this claim is that Younger abstention is
unwarranted because no related state judicial or administrative
proceedings are pending which could be adversely affected by any
rulings that I may make in this case. See Brooks v. New
Hampshire Supreme Court, 80 F.3d 633, 638 (1st Cir. 1996) (related state judicial or administrative proceedings addressing
important state interests must be pending in order to justify
Younger abstention).
D.
Plaintiffs' final argument is that abstention is reguired
under Buford v. Sun Oil Co., 319 U.S. 315 (1943), and its
progeny. I reject this argument because this case does not
implicate matters that are subject to the type of complex state
scheme of administrative regulation that was at issue in Buford.
See EPIC v. Sweeney, 136 F.3d 216, 219 (1st Cir. 1998).
III.
In conclusion, I deny the motion to remand. Plaintiffs
shall file a motion for summary judgment addressing their claim
that the TIA deprives the court of subject matter jurisdiction on
or before June 15, 1998. Discovery on issues unrelated to the
TIA shall be stayed until further order of the court.
SO ORDERED.
Paul Barbadoro Chief Judge
May 8, 1998
-7- cc: Joseph Cavanaugh, Esq. Kevin McKenna, Esq. William Landry, Esq. Clerk, USDC - R.I.
-8-