Spencer v. South Carolina Tax Commission

PETITIONER:Spencer
RESPONDENT:South Carolina Tax Commission
LOCATION:We’ll Do Club

DOCKET NO.: 84-249
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: South Carolina Supreme Court

CITATION: 471 US 82 (1985)
ARGUED: Feb 27, 1985
DECIDED: Mar 27, 1985

ADVOCATES:
Henry L. Parr, Jr. – on behalf of the Petitioners
Ray N. Stevens – on behalf of the Respondent

Facts of the case

Question

Audio Transcription for Oral Argument – February 27, 1985 in Spencer v. South Carolina Tax Commission

Warren E. Burger:

Mr. Parr, you may proceed whenever you’re ready.

Henry L. Parr, Jr.:

Mr. Chief Justice, and may it please the Court:

This is not a complicated case.

Plain statutory language, legislative history, and holdings of this Court established the right of the Petitioners, Roger and Shirley Spencer, to the attorney’s fees that they seek in this case.

This case arose because the legislature of South Carolina enacted an unconstitutionally discriminatory tax statute.

That unconstitutional discrimination cost the Spencers approximately $500.

Fortunately, Congress had given the Spencers a remedy for this unconstitutional violation.

In Section 1983 the Spencers had a federal cause of action, and in 1976 Congress had enacted what is now Section 1988, giving the Spencers the availability of attorney’s fees to help them remedy constitutional deprivations just like this.

The Spencers decided to invoke their rights under Section 1988.

They brought this action.

Federal courts were not readily available to the Spencers because of the Eleventh Amendment, the principles of comity, and the Tax Injunction Act, so the Spencers brought their case in state court.

They obtained the declaration that the statute is unconstitutional, null and void, and of no further effect in South Carolina.

Unfortunately, the trial judge in this case refused to grant the Spencers the attorney’s fees–

Byron R. White:

What kind of an action did they bring?

Henry L. Parr, Jr.:

–They brought an action under Section 1983 and under the Constitution itself.

Byron R. White:

And did they purport to bring an action under state law?

Henry L. Parr, Jr.:

They invoked Section 12-47-220.

Byron R. White:

Which is what kind of an action?

Henry L. Parr, Jr.:

It is a waiver of sovereign immunity.

I don’t think it creates a cause of action itself.

Byron R. White:

But is it a refund?

Did they want a refund of taxes?

Henry L. Parr, Jr.:

Yes, Your Honor.

Byron R. White:

That’s really the state’s remedy, to sue for a refund, isn’t it?

Henry L. Parr, Jr.:

Yes, Your Honor.

Byron R. White:

And as part of that your refund was going to be based on the unconstitutionality of the law.

Henry L. Parr, Jr.:

That is correct.

Unfortunately, the trial judge did not recognize his obligation to enforce federal law and refused to consider the Spencers’ request for attorney’s fees because he believed that he must follow the state law which did not provide for attorney’s fees in this case.

He noted, however, that the Spencers had obtained only a tasteless victory, because he took notice of the substantial amount of work that had been devoted to the case and the substantial expense that the Spencers must have incurred.

There is really no question that under the Supremacy Clause, 1988 and 1983 are as much the law of the land in South Carolina state courts as they are in the federal courts.

Henry L. Parr, Jr.:

This Court has made that clear in Testa v. Katt and numerous other opinions.

There is really no legitimate distinction between–

William H. Rehnquist:

Mr. Parr, certainly there are some limits to the broad proposition I understand… for instance, the Federal Rules of Civil Procedure, although passed by Congress, are not the law in South Carolina courts, are they?

Henry L. Parr, Jr.:

–That’s correct, Your Honor.

I don’t think Congress intended for those rules to apply in federal courts… state courts.

William H. Rehnquist:

So the question is whether Congress intended Section 1983 to be mandatory on the state courts.

Henry L. Parr, Jr.:

Well, I don’t think that is the question.

In Testa v. Katt and in Mondou this Court relied on the existence of jurisdiction to create an implication of an obligation to exercise this.

It is true that under the Federal Employers’ Liability Act in Mondou, Congress had acknowledged that state courts had concurrent jurisdiction; but in Mondou this Court was careful to point out that Congress had not attempted to order state courts to enforce that act.

This Court declared that the existence of jurisdiction creates an obligation to exercise that.

Even if it were important to look into Congress’ intent, it is very clear that until the amount requirement was eliminated in federal question cases, there was a large category of 1983 actions that could only be brought in state courts.

William H. Rehnquist:

Well, you say the existence of jurisdiction creates an obligation to exercise it.

That may seem collusive to you.

It doesn’t to me.

What does that mean?

Henry L. Parr, Jr.:

It means that when a court has the judicial power to enforce a law and the law is applicable in that court’s domain, the court must enforce that law under the Supremacy Clause.

William H. Rehnquist:

Well, so that regardless of what Congress intended, that rule applied?

Henry L. Parr, Jr.:

If Congress intended to give the federal courts exclusive jurisdiction over a cause of action, the state courts would not have the obligation or the jurisdiction to enforce the law.

William H. Rehnquist:

Well, but what if the intent of Congress was to say federal courts have jurisdiction of 1983 controversies; state courts may take jurisdiction of them if they want, but they don’t have to?

Now, it’s conceivable a Congress could have had that intent, isn’t it?

Henry L. Parr, Jr.:

It is conceivable that Congress might have had that intent, except that I don’t think Congress would have enacted Section 1983 and left a whole class of those cases without any forum in which they could be brought.

William H. Rehnquist:

But if Congress did have that particular intent in mind, it would prevail over the kind of assertion that the existence of jurisdiction obligates one to exercise or whatever it was you said, wouldn’t it?

Henry L. Parr, Jr.:

I will concede that if Congress specifically said we do not intend for state courts to have to enforce this law, that the Supremacy Clause would not require them to do so.

William H. Rehnquist:

And what if we went back, even though Congress hadn’t expressly said it, and came to the conclusion from reading the legislative debates that that was exactly what Congress intended; wouldn’t the same conclusion be required?

Henry L. Parr, Jr.:

I think it would require a very clear showing of congressional intent, and I am not aware of any extensive debate on Section 1 of the 1871 Civil Rights Act which indicates that.

In fact, this Court has noted several times that members of Congress who enacted Section 1983 anticipated enforcement in state courts.

Warren E. Burger:

Well, are you arguing, Mr. Parr, that Section 1988 is the tail of 1983 that follows the dog when it goes into state courts?

Henry L. Parr, Jr.:

I’m arguing, Your Honor, just as this Court declared in Maine v. Thiboutot, that Section 1988 attorney’s fees are part of the remedies available under Section 1983, and they come as one package.

And that the attorney’s fees part of Section 1988 is a very important part.

Congress made it very clear when it enacted the Civil Rights Attorney’s Fees Act that it wanted to encourage people to vindicate their constitutional rights, and that Congress had determined that many people would be unable to do so without the availability of attorney’s fees.

Henry L. Parr, Jr.:

Congress also made it clear that it expected in many cases those attorney’s fees to come from the states.

This is exactly the kind of case that we have today.

It’s very clear that Congress’ intent was for people like the Spencers to have attorney’s fees available to them so that they would be able to vindicate their constitutional rights.

Sandra Day O’Connor:

Mr. Parr, are there any circumstances in your view under which a state court could refuse to entertain a Section 1983 claim?

Henry L. Parr, Jr.:

It can do so when its refusal to entertain the claim does not frustrate Congress’ policy.

As this Court recognized in Herb v. Pitcairn, a court can apply a forum nonconvenience doctrine, or a court can say I don’t have jurisdiction over claims that have been brought outside of the city.

Sandra Day O’Connor:

How about failure to exhaust state administrative remedies?

Henry L. Parr, Jr.:

That is a very subtle question which this Court has yet to address and, I would like to point out, need not address in this case, and not in a category of cases like this in South Carolina, because the state court in South Carolina has said exhaustion is not required in tax cases when only constitutional and legal issues are involved.

But–

Sandra Day O’Connor:

What about a jurisdiction that does require it.

Henry L. Parr, Jr.:

–In the other cases this Court would have to look very carefully at the considerations that led to its opinion in Patsy requiring exhaustion in federal courts to see if those same considerations apply in state courts.

I think this Court would also have to look very carefully at the considerations Justice Brennan noted in his concurring opinions in McNerey to see if those same considerations apply to tax cases under 1988 in state courts.

And then the Court would–

Sandra Day O’Connor:

Well, I suppose exhaustion could be a matter of a prerequisite to state court jurisdiction, depending on how it’s set up in the state.

Henry L. Parr, Jr.:

–It could be, but if it were imposed in a way to frustrate the intent of Congress, I don’t think that the Supremacy Clause would allow a state to do that.

William H. Rehnquist:

Could a state court pass an anti-injunction act as a counterpart of the federal anti-injunction act to preclude injunctive relief when you’re seeking a tax… when you’re making a constitutional tax claim in a state court?

Henry L. Parr, Jr.:

I don’t think a state court could do that in a way that would frustrate the intent of Congress.

William H. Rehnquist:

Well, how would you know whether it frustrated the intent of Congress?

Henry L. Parr, Jr.:

You would have to have a particular case in front of you.

In this case we have Section 1988 which says that the Spencers are entitled to attorney’s fees to encourage them to vindicate their constitutional rights.

William H. Rehnquist:

Well, suppose that in your case you had sought injunctive relief from this kind of tax levy, and South Carolina had a statute saying that the courts do not enjoin the enforcement of the tax act.

You have to have some other remedy.

You can’t have an injunction.

Henry L. Parr, Jr.:

I don’t think that the statute–

Byron R. White:

South Carolina has that type of rule, doesn’t it?

Henry L. Parr, Jr.:

–Yes, Your Honor, it does have that kind of rule.

Byron R. White:

Sure.

All you can do is either… if you’re going to pay the tax, the only thing you can do is sue for a refund.

Henry L. Parr, Jr.:

Well, the supreme court of South Carolina has said that the statute prohibiting injunctions is not enforceable unless there is an adequate remedy at law, because the constitution of South Carolina gives the circuit courts general jurisdiction.

William H. Rehnquist:

Well, what if the supreme court of South Carolina was suing for a refund as an adequate remedy; you nonetheless sought an injunction.

William H. Rehnquist:

The supreme court of South Carolina says well, the anti-injunction act prevails.

Do you think 1983 would prevent South Carolina from enforcing its anti-injunction act in those circumstances?

Henry L. Parr, Jr.:

If there were a conflict between 1983 and the anti-injunction act passed by the state legislature, 1983 would prevail.

But I would like to point out that there will not be any opportunities for increased injunctions in cases like this under Section 1983.

This Court has made very clear in L.A. v. Madrano, in Pizzo v. Goode that normal equitable principles apply in 1983 actions.

So when a taxpayer comes into state courts under 1983, in South Carolina or anywhere else, he will have to show that there is no adequate remedy at law before he can get an injunction enjoining the collection of state taxes.

Since most states provide refund actions that–

Byron R. White:

What about a declaratory judgment?

Henry L. Parr, Jr.:

–Declaratory–

Byron R. White:

Do you think that a taxpayer just couldn’t come in and say… the Spencers couldn’t have come in and just brought an action under state law to say I want a declaratory judgment that this tax provision is unconstitutional, because I don’t want them to be collecting it from me any more.

Henry L. Parr, Jr.:

–In that case a declaratory judgment would be bound by equitable principles as well if they didn’t also follow the refund system provided by state law.

And the state courts would apply normal principles of equity to determine whether a declaratory judgment was proper in that case.

But I do not think a state statute could override Section 1983… Testa makes that very clear… because the laws of Congress are supreme.

The Respondents say that the Tax Injunction Act has modified Section 1983 in this case and deprived the Spencers of their Section 1983 cause of action.

However, the legislative history of the Tax Injunction Act shows that the Respondent’s argument is wrong.

Senator Bone, the proponent of the Tax Injunction Act, described it to Congress as a very short bill affecting the jurisdiction of the federal district courts.

In the Congressional Record each time the bill was presented to Congress, it was described as a bill to affect the jurisdiction of the district courts.

The debate on that section was very limited.

There’s no indication that anybody in Congress thought they were depriving any taxpayer of any federal cause of action.

The statute itself says that the federal courts shall not have jurisdiction when a plain, speedy and efficient remedy may be had in the courts of the state.

It does not say when a remedy may be had under state law.

Senator Bone said that the statute would not deprive any taxpayer of any equitable right or his day in court.

Byron R. White:

And you wouldn’t suggest that if the Spencers had gone into federal court under 1983 they could have successfully claimed that they should be in federal court because the remedy in South Carolina was insufficient because it didn’t allow attorney’s fees?

Henry L. Parr, Jr.:

I think that the rule of Testa v. Katt would have made their argument erroneous, because it would have been clear that the state courts were obligated to enforce the federal law.

Byron R. White:

And so the Testa against Katt would have made the state… would have made the state give attorney’s fees, is that it?

Henry L. Parr, Jr.:

Would have made the state enforce Section 1988, and therefore, there would have been a remedy available in state courts.

Byron R. White:

Well, that just assumes you’re right in this case.

Henry L. Parr, Jr.:

And I would say likewise, if for some reason the state courts were not obligated–

Byron R. White:

But you wouldn’t think that just per se that the unavailability of attorney’s fees in a state remedy would just make that remedy inadequate for purposes of the Tax Injunction Act?

Henry L. Parr, Jr.:

–I would say that, Mr. Justice White.

Henry L. Parr, Jr.:

Congress has determined that when constitutional rights are at stake, attorney’s fees should be available.

This Court addressed a similar argument in Rosewell.

In that case the taxpayer said I cannot get interest, and I’m entitled to interest under federal law.

This Court said that the taxpayers could not proceed in federal court because it knew that the state courts in that case would consider any federal claim to interest.

Here, the petitioners, the taxpayers, have a federal claim to attorney’s fees; and therefore, if the state does not make that available, I think the remedy would be inadequate under the Tax Injunction Act.

As I repeat, as I said earlier, there is no risk of increased injunctions in this case if the Spencers prevail.

Normal equitable principles govern the availability of injunctive relief in tax cases in South Carolina now, and they will even if Section 1983 is made available.

There is no reason to think that taxpayers will be able to totally disrupt state tax systems by using 1983 to circumvent administrative remedies.

If Congress decides that that is a problem, this Congress can remedy that problem, as it did in the Civil Rights of Institutionalized Persons Act, which this Court noted in its opinion in Patsy.

Furthermore, this Court has never held that exhaustion does not apply in 1983 actions in state court in tax cases.

That is an issue that the Court would have to address at a proper time.

If exhaustion is advisable, the Court can simply decree in the proper case at the proper time that exhaustion is required under congressional intent and the principles which govern exhaustion.

That is not the issue before the Court in this case.

The Spencers complied with the state law and the state procedures.

They brought their case in state court so that they could get the most reliable reading of state law.

They vindicated their constitutional rights, and although it’s not in the record, anyone else who was affected by this statute.

Their victory turned out to be tasteless because the state court refused to enforce federal laws.

John Paul Stevens:

May I ask you a question about the scope of your position?

The statutory language doesn’t say they must allow fees; it says they may allow fees, as I remember it.

Henry L. Parr, Jr.:

That is correct, Justice Stevens.

John Paul Stevens:

And what is your position; that any time you make a 1983 claim, and that supposing the Court could grant relief to your client on state law grounds alone without reaching the constitutional issue, would you be entitled to fees then?

Henry L. Parr, Jr.:

Yes, you would, as this Court pointed out in Maher v. Gagne when it cited the House report on the Civil Rights Attorney’s Fees Act, when there is a substantial constitutional claim that would justify federal jurisdiction under–

John Paul Stevens:

Does that mean that in every case in which you’ve got two alternative theories… one, a state law claim that would not require reaching a constitutional issue, and also a federal constitutional claim… that it becomes the duty of the trial judge to make at least a summary appraisal of the merits of the constitutional issue in order to decide whether you’re entitled to fees?

Henry L. Parr, Jr.:

–Yes, Your Honor.

John Paul Stevens:

So that Congress, in effect, has reversed one of our principles of constitutional adjudication, that we try to avoid constitutional issues whenever we can, and says in every case when one is raised, you at least give a tentative appraisal of the merits of the claim.

Henry L. Parr, Jr.:

Congress tried to accommodate that principle to the extent that it could and also accomplish what it wanted to accomplish.

The House report said that we understand that federal courts try to avoid constitutional issues, so courts need only look to see if they were substantial.

They need not resolve them in order to determine–

John Paul Stevens:

But… and not only federal courts but state courts must always take a good, hard look at the federal constitutional claim, even though it’s perfectly clear that as a matter of state law you might have prevailed under your state constitution.

I don’t know if you could have in this case.

John Paul Stevens:

But that’s basically your position.

Henry L. Parr, Jr.:

–That is.

It’s based on the House report and this Court’s decision in Maher v. Gagne.

Harry A. Blackmun:

Mr. Parr, if you prevail here, are you assured of getting attorney’s fees?

Henry L. Parr, Jr.:

There has been no exercise of discretion in the courts below, but the rule, as this Court has acknowledged, is that attorney’s fees are normally available unless it would be unjust to award them.

This Court has acknowledged that Maher v. Gagne.

Harry A. Blackmun:

There is an element of discretion so that you might win now and still not get fees ultimately, I suppose.

Henry L. Parr, Jr.:

Our position is the discretion is very limited and that there is no evidence in this record of any unjustness in awarding attorney’s fees to the Spencers in this case.

William H. Rehnquist:

The result suggested by Mr. Justice Blackmun would make your victory even more tasteless, I suppose.

[Laughter]

Henry L. Parr, Jr.:

Yes, Your Honor.

Warren E. Burger:

Does South Carolina have any limitation that the attorney’s fee award can’t be any higher than the award in the lawsuit itself?

Henry L. Parr, Jr.:

No, Your Honor.

The South Carolina law would not give us any attorney’s fees at all because it follows the American rule regarding attorney’s fees which Congress–

Warren E. Burger:

No.

I mean that you don’t mean in this situation generally is there any South Carolina limitation on attorney’s fees when they are allowed in other–

Henry L. Parr, Jr.:

–I know of no such limitation, Mr. Chief Justice.

If there are no further questions–

Harry A. Blackmun:

–Well, of course, if you knock a statute out which reaches far longer than the Spencers.

Henry L. Parr, Jr.:

–That is our position, Mr. Justice Blackmun.

If there are no further questions–

Thurgood Marshall:

I am sure that the framers of 1983 meant for it to apply to banks.

Henry L. Parr, Jr.:

–I don’t think they were thinking about banks, Mr. Justice Marshall, but they were thinking about people, individuals whose constitutional rights had been deprived, and that is who is before the Court today.

I would like to reserve the remainder of my time, if I may.

Warren E. Burger:

Mr. Stevens.

Ray N. Stevens:

Mr. Chief Justice, and may it please the Court:

A great deal of the Court’s attention thus far has been focused on exactly what South Carolina’s courts did not do.

I think it is a very important part of this case to look at exactly what South Carolina’s courts did do.

And what they have done is that they have vindicated the federal rights of a citizen of this country and of the state of South Carolina.

We think that is all that the Constitution of this country requires.

Ray N. Stevens:

Furthermore, we think that is all that Congress has required.

What we have in this instance is a taxpayer who is essentially arguing that the Constitution gives him the authority to take a 1983 case into the state courts and obtain a tax refund.

That is just incorrect.

The authority for that position is given as a Supremacy Clause.

Well, this Court has held that the Supremacy Clause itself does not grant rights.

What it does is that it secures rights which the Constitution otherwise grants or that Congress has granted.

In this instance the Court on analogous cases has found that the Supremacy Clause should not be given the broad, expansive reading that the taxpayer does here.

And the cases that we have cited in our brief show various instances in which a state court has declined to receive a federal claim, and that this Court has found those actions to be proper.

The cases that seem to be most telling are those of Douglas v. New York, Herb v. Pitcairn, and Missouri ex rel Southern Railway v. Mayfield.

The last case cited in particular says that the doctrine of forum nonconvenience, which is purely one that the state had adopted at its convenience for the parties, is one that the state may use and refuse to hear a federal cause of action.

We think that in this instance the Supremacy Clause would not demand that the state of South Carolina entertain the 1983 action.

The question that must be asked is does the state rule that is being applied, is it applied neutrally, or does it single out federal causes of action and prohibit the state from hearing those?

We think that the correct application of that rule in South Carolina is that we have a neutral rule.

The neutral rule that we use is the subject matter jurisdiction of our own courts.

Our courts have jurisdiction over tax matters only in those instances in which the taxpayer brings an action paid under protest and then sues within 30 days to recover his money.

That is not an unusual position.

This Court has recognized such an argument in the case of Testa v. Katt and Mondou v. New York.

In those particular cases this Court has said that the federal claim need not be heard unless its ordinary jurisdiction as prescribed by local law is appropriate to the occasion.

Well, what is the ordinary jurisdiction in South Carolina which is appropriate to the occasion?

Well, here our courts have held in at least three specific cases that if the courts did not have jurisdiction over declaratory judgments, it does not have jurisdiction over injunctive relief; it has jurisdiction only over those cases where there is a payment under protest, and an action is brought to recover.

So in this instance we think South Carolina has applied a very neutral rule.

It excludes all state actions, and it likewise would exclude all federal actions.

William H. Rehnquist:

But here there was a statement under protest and an action to recover, wasn’t there?

Ray N. Stevens:

That’s correct, Your Honor.

But the reason there was a payment under protest is that was the taxpayer’s choice.

He chose to use a state remedy to get into court, and that is what our court heard his claim under, a pure state remedy.

He also filed, along with his state remedy, the 1983 remedy.

It is that remedy that our court would not have taken jurisdiction over had it come in solely by itself.

William H. Rehnquist:

Well, but is it a sufficient answer, as you suggest, this neutral principles point that you’re… if Congress had said in so many words the state courts of South Carolina must entertain 1983 actions?

Ray N. Stevens:

Your Honor, that point is well taken.

Ray N. Stevens:

If Congress had said that, then the state courts would not have any discretion.

The matter would be heard in the state of South Carolina.

But that is a critical question for this court, and the question is has Congress decided the states must hear 1983 actions.

And we submit to the Court that they have not.

The question is not can they; the question is have they done it.

Well, in this particular instance, the first thing that we look at is the literal language of 1983.

Well, on the face of that statute, it does not say that one must hear these actions in state court.

So after having reviewed the literal action, then we would next proceed to the legislative history and decide if there is anything in that history that would lead one to the conclusion that Congress required states to hear 1983 actions, and especially those involving state tax disputes.

Warren E. Burger:

Well, did I understand you to say that the state court did acknowledge this as a 1983 action as part of its conclusion?

Ray N. Stevens:

The opinion of our South Carolina supreme court does not expressly answer that question.

The claim, the complaint that was filed does allege the 1983 remedy.

Our courts–

Warren E. Burger:

Well, what did the trial court think it was doing?

Ray N. Stevens:

–The trial court thought that it was giving relief under the payment under protest provision of 12-47-220.

Warren E. Burger:

And not 1983?

Ray N. Stevens:

And not 1983, no, sir.

It has been our contention from the beginning of the case that the courts did not have jurisdiction under 1983.

After having reviewed the legislative… the mere language of the statute, we looked at the legislative history.

This Court has delved into the legislative history on several occasions, Monroe v. Pape being a fairly thorough undergoing of 1983’s legislative history.

One of the primary purposes that this Court found that Monroe v. Pape said that 1983 was enacted for was to provide a federal remedy in a federal court.

Well, the legislative history was again looked into in the case of Patsy v. The Board of Regents of the State of Florida.

In this case again this Court found numerous reasons for deciding that there was sufficient congressional intent for a federal remedy.

And, in fact, one of the reasons this Court found was that 1983 was designed to throw open the doors of the United States courts.

Well, we surmise from that sort of legislative history that Congress was looking to intending a federal remedy in a federal court.

It was not intending to make 1983 mandatory in the state court.

And, in fact, this Court, after some–

Byron R. White:

Do you think South Carolina in this case could have… say the South Carolina, court said well, we understand you’re alleging a violation of the Constitution as part of your suit for a refund, but we just don’t entertain federal constitutional claims in our courts.

Ray N. Stevens:

–Your Honor, they could not have said that and survived constitutional muster.

Byron R. White:

Well, I know, but would they… why couldn’t they have said that, which would have meant the remedy was inadequate, and the taxpayers go to federal court?

Do you think he could have… the taxpayer could have said you must hear my constitutional claim; I’m not asking you to hear it under 1983; I just insist you hear it as part of my refund claim.

Byron R. White:

Do you think that South Carolina court would have had to have heard it?

Ray N. Stevens:

They would have had to have heard it if he had satisfied the jurisdictional requirements of the state and 12-47-220, the South Carolina–

Byron R. White:

Well, at least your submission certainly is that South Carolina entertains constitutional claims all the time.

Ray N. Stevens:

–That’s exactly right.

Byron R. White:

As part of the refund claim.

Ray N. Stevens:

That’s exactly right.

And as this Court pointed out in Rosewell, that is one of the… as a matter of fact, that’s probably the criteria for determining if a state has an adequate remedy; that is, does the state allow the taxpayer to present any and all constitutional claims that he thinks he’s entitled to.

Well, if a state does that, their remedy is adequate.

That is exactly what South Carolina does.

And, in fact, in this very case additional constitutional claims were raised… equal protection, right to travel, privileges and immunities.

All of them were heard in the South Carolina court.

Byron R. White:

You say that as long as South Carolina doesn’t turn down federal constitutional claims, it may decide just not to award attorney’s fees.

Ray N. Stevens:

Yes, sir, in this instance, until–

Byron R. White:

Or in any other instance that the legislature… if the South Carolina legislature says in no case… everybody pays his own attorney’s fees, no fee shifting at all in any case, you would say that should go for federal constitutional claims as well.

Ray N. Stevens:

–Yes, sir, until Congress directs otherwise.

Warren E. Burger:

Yes, yes.

Well, will you… in response to my question to Mr. Parr, I said… and I’ll ask you now… do you think when 1983 is in the state court, 1988 does not follow it?

Ray N. Stevens:

Your Honor, my position would be that if 1983 comes into the state court, 1988 does follow it.

And your–

Warren E. Burger:

You’re saying then that 1983 wasn’t in the state court here.

Ray N. Stevens:

–That’s correct.

Warren E. Burger:

But the court of… what did the state supreme court say about that?

Ray N. Stevens:

The state supreme court said that 1983 was, as I recall the decision, was in the complaint but that it did not hear the complaint because it already had given a remedy under the state statute, and its language was not all that specific.

But it is our understanding the reason the court did not give it is for jurisdictional reasons as well as the fact that the state had an adequate remedy.

Your Honor, your analogy made earlier about the 1983 dog with the tail of 1988, when these matters are brought into state courts for state taxes, we have much the situation of the 1988 tail wagging the 1983 dog.

In our courts we have an adequate remedy–

Warren E. Burger:

That is true in a great many 1983 cases where the attorney’s fees vastly exceed what’s involved economically; is that not so?

Ray N. Stevens:

–That is so, Your Honor.

But my point in this instance is that in those instances, Congress has decided that those states or those matters need be heard, but in this case our question has Congress decided these things must be heard in the state courts.

One reason for finding that it need not be heard in state court is that we already have a remedy, and it is a remedy that Congress has recognized.

Ray N. Stevens:

What we would like to point out to the Court is that in this Title 28 United States Code 1341, more commonly known as the anti-injunction statute, Congress recognized that states had a rather elaborate and vast system of handling state tax disputes.

In that system payment under protest was the primary vehicle for returning state taxes to the taxpayer.

In addition to that, the Congress recognized that states required exhaustion of administration remedies before they could proceed to court.

In a similar type of atmosphere, this Court in Smith v. Robinson and in Middlesex v. Sea Clammers has found that where Congress knew of a particular remedy, there is an intent that Congress wanted that remedy to be used, and that 1983 not necessarily be the remedy that the individual could pursue.

We think a similar approach is warranted in this instance.

Since Congress was well aware of the states’ remedies, it recognized those remedies, and therefore, there is an intent for Congress to say that the 1983 remedy was not required to be used in state tax disputes.

Further pursuing that line of argument, for a moment let’s look at what might happen if 1983 is allowed into the state tax system.

First of all, it seems to me that it does violence to the very purposes for which 28 U.S.C. 1341 was enacted.

The purpose behind 1341 was to prohibit the disruption of state and county finances.

And, in fact, what was happening was that foreign corporations would be able to establish diversity jurisdiction, thereby entering into federal court, obtain an injunction, and would, in effect, be litigating with the state on the basis of injunctions.

The corporation would not have to pay the taxes up front, and the state would be denied the use of the revenues during the entire time of the process.

Well, some of the very large corporations in fact, for lack of a better word, were sort of holding the states hostage.

They were using this as a weapon to compromise the amount of the tax.

Well, if 1983 is now available in the state court for state taxes, the same result can occur.

He may came into state court, simply say I do not wish to pay the tax on various constitutional grounds, and then obtain an injunction from the state court.

The taxpayers say well, he could not get an injunction.

Well, to me that’s a rather anomalous argument.

On one hand he is saying to the court I don’t have to recognize the existence of adequate state remedies when I come into court under 1983, but once I am in the court under 1983, I recognize that I cannot get an injunction because there’s an adequate state remedy.

That seems somewhat circular to me.

If he comes into court under 1993, he brings in all of the attributes of 1983.

The very language of the statute says that it may be filed in suits of equity as well as it law.

If he can file them in equity, then he is able to obtain injunctions in the state court.

So he will be defeating the very purpose for which 1341 was enacted.

Secondly, under 1341 Congress was well aware of the need for states to have exhaustion of administrative remedies–

Byron R. White:

So you think the policy and indeed the content of the anti-injunction act just ought to be applied to the 1983 remedy in state courts?

It just shouldn’t be available.

Ray N. Stevens:

–Your Honor, that is correct, because the question before the Court is did Congress require 1983.

Well, if the intent of Congress is expressed in 1341, to prevent the very things that 1983 can be used for in the state court, that negates any sort of intent that Congress required states to hear these actions in their own courts.

The administrative exhaustion remedy would do great violence to states.

Many times taxes are resolved, disputes are resolved before proceeding to the courts due to administration exhaustion requirements.

Ray N. Stevens:

Well, as this Court has found in Patsy, the administration, exhaustion of administrative remedies need not be pursued.

That sort of idea, when expressed in terms of state taxes, would lead to a great deal of confusion and unnecessary burden to the state courts.

Again, that is a reason why Congress did not intend to make 1983 mandatory.

Byron R. White:

What remedy short… if you don’t want to pay… is there an administrative remedy if you don’t want to pay your tax first?

Can you go to a tax court or something, or a commission?

Ray N. Stevens:

In South Carolina we have a relatively new statute called the Administrative Procedures Act statute.

And after having an administrative hearing, you may appeal that administrative hearing to the circuit courts of our State.

Byron R. White:

And keep your taxes unless you lose.

Ray N. Stevens:

Not necessarily, Your Honor.

The provision in our Administrative Procedures Act says that the state may continue to do whatever it is it was going to do.

You may have to petition to the circuit court to prevent them from doing it.

What would happen in state tax areas is that the state would go ahead and collect its money because of the very vital concern the state has for having its revenue during the time that litigation is going on.

Byron R. White:

So for all practical purposes, there’s only one remedy really: pay and sue.

Ray N. Stevens:

That’s correct, Your Honor.

I do not wish to mislead the Court.

There is another remedy called a claim for refund, but that is a situation where the state already has the money, and you are filing a claim for refund asking to get it back.

And when that is denied, then you–

Byron R. White:

That’s an administrative–

Ray N. Stevens:

–It has much of the characteristics of an administrative function, yes, Your Honor.

Byron R. White:

–And if you get it turned down, then you bring your suit for a refund.

Ray N. Stevens:

That’s correct.

But in both instances the state already has its money.

One of the additional points that we think is important for deciding: did Congress require states to hear 1983 actions is that of there being the requirement of a clear statement when Congress wishes to intrude into a fundamental state area.

I cannot conceive of a more fundamental area than the ability of a state to raise its own taxes.

If that is the case, then where is the clear statement in 1983 that it is to be made mandatory upon the state?

I do not believe that there is a clear statement to that effect in 1983.

And in a similar vein, when Congress seeks to waive the sovereign immunity of a state, it also must do so by clear language.

Well, in this particular instance, this Court in Quern v. Jordan has found that 1983 does not contain a clear statement necessary to waive the state sovereign immunity in a federal court.

That decision, of course, is based on the Eleventh Amendment, and at is of course recognized that the Eleventh Amendment is not applicable in state courts.

But the Eleventh Amendment does contain the very germ of truth which is critical to this case; that is, that states retain sovereign immunity when it is going to be sued in its own court.

Ray N. Stevens:

The state ought to have the right to not be sued in its own court unless Congress has clearly said you may be sued in your own courts.

Well, the effect of Quern v. Jordan is to ‘say there is not a clear statement in 1983 to waive sovereign immunity because it is not there.

We think the same rule applies in the state court, that the state is not to be sued unless that statement is in the legislation.

In summary, what we would like to present to this Court are basically two things.

First of all, in order for 1983 to be found to be mandatory upon the states, there has to be either a constitutional source for that rule, or there has to be congressional authority for that rule.

The Constitution does not provide that source, because that source has been presented to this Court as being the Supremacy Clause.

The Supremacy Clause itself does not mandate that states hear 1983.

All that it requires is that they apply federal law when they are hearing the particular claims of the taxpayer.

And South Carolina has done that.

They applied the federal privileges and immunities provisions of the United States Constitution.

Secondly, in order for 1983 to become mandatory in the state tax system, there has to be congressional direction to that effect.

The legislative history, the literal language of 1983 does not support such a contention.

It is our view that 1983 in a state tax matter was never intended by Congress, and in fact, there are adequate remedies in the state which provide the taxpayer to vindicate any and all constitutional rights that he may have.

John Paul Stevens:

May I ask one question before you–

Ray N. Stevens:

Yes, sir.

John Paul Stevens:

–I don’t know if the complaint is in the papers before us or not, but were there separate counts when the complaint was filed, one based on 1983 and another on Georgia provisions?

Ray N. Stevens:

Your Honor, there were numerous counts in the complaint.

1983 was identified as a particular count.

John Paul Stevens:

Did the factual allegations in the 1983 count differ in any respect from those on which the Court granted relief?

It seems to me that sometimes these things are kind of formalistic.

They basically made a federal constitutional claim in more than one count.

Ray N. Stevens:

Yes.

John Paul Stevens:

One of which was a 1983 count, and another was a Georgia–

Ray N. Stevens:

Yes, sir.

That’s–

John Paul Stevens:

–I mean a South Carolina–

Ray N. Stevens:

–Yes, sir.

That’s correct.

Thank you.

Warren E. Burger:

Do you have anything further, Mr. Parr?

Henry L. Parr, Jr.:

Yes, Your Honor.

I do have just a few comments to make.

In response to your questions, I would like to point out that the trial court, as noted in its opinion on page 18-A of the petition for certiorari, stated that plaintiffs have consolidated actions under 12-47-220 of the South Carolina code and an action under 42 U.S.C. Section 1983 and 1988.

So the trial court in this case did recognize that it had a 1983 action before it.

Byron R. White:

But it didn’t address it.

Henry L. Parr, Jr.:

It did not address it.

Byron R. White:

Or decide… or purport to decide under it.

Henry L. Parr, Jr.:

That is correct.

The supreme court said the trial court did not address the Section 1983 claim.

The supreme court did this not because of any analysis of Testa v. Katt or the Supremacy Clause.

It simply noted that this Court had not yet ruled on that precise issue.

In response to the Respondent’s contention that this is not a Section 1983 case, Congress has clearly made Section 1983 available when there are deprivations of constitutional rights.

I don’t think Congress should be required to make a specific list of all the possible deprivations of constitutional rights.

1983 could not be any more clear.

Also, as this Court noted in Maine v. Thiboutot, Congress intended for fees to be available in state courts.

This Court pointed out that if fees were not available in state courts, federalism concerns would be raised, because there are 1983 cases which cannot be brought into federal courts, and those 1983 plaintiffs would be forced to come into state court without the attorney’s fees that Congress meant for those plaintiffs to have.

The Respondents have attempted to expand the intent of Congress in the Tax Injunction Act far beyond what the legislative history indicates.

The Tax Injunction Act is not like the statutes the Court faced in Sea Clammers and Smith v. Robinson.

It is a very short bill.

It had only one purpose, and that was to deprive federal district courts of jurisdiction in certain kinds of cases under certain circumstances.

Congress was not trying to create a comprehensive remedial scheme.

Our arguments regarding injunctions not being available in state court any more than they already are are based on Section 1983.

Congress has not attempted to alter the equitable principles which governed the availability of injunctive relief.

Therefore, if 1983 actions are available in state court, those same principles will apply.

Exhaustion is not an issue in this case.

Although Respondents have fears of exhaustion and circumvention of state remedies, that is not the question before the Court.

There was no failure to exhaust here.

The Court can address that in a future case.

Warren E. Burger:

If I understood your friend correctly, he suggested… and maybe I didn’t understand him correctly… that 1983 actions in the state courts are in the category of cases that the state court can take or leave.

They can enforce 1983 or they can refuse to do it.

Henry L. Parr, Jr.:

I think that is what the Respondents have said.

The Supreme Court of South Carolina has said that 1983 is not available whenever it supplements the remedies that are available under state law, which would render 1983 redundant in most cases, and deprive people like the Spencers of the attorney’s fees that Congress meant for the Spencers to have.

The Respondents have raised an issue of sovereign immunity.

This Court has ruled in Hutto v. Finney that there is no sovereign immunity problem regarding the availability of attorney’s fees.

Warren E. Burger:

Well, as Justice Marshall suggested, probably Congress in enacting 1983 wasn’t thinking about banks and bankers so much as it was thinking about some other people.

Henry L. Parr, Jr.:

That’s right.

Including people like the Spencers, as this Court pointed out in Monroe v. Pape.

And the issues regarding whether sovereign immunity had been pierced by Section 1983 are not really in this case.

The Spencers obtained a declaratory judgment despite the state’s argument that there was no jurisdiction.

The state supreme court in this case affirmed a declaration that the statute was unconstitutional.

As this Court noted in Pullian v. Allen, Congress clearly meant for people like the Spencers to have attorney’s fees, even though some doctrine of immunity might bar damages relief or other types of relief.

If there are no… oh, I would like to address one further point.

In cases where Congress’ intent is unclear about the obligation of state courts, Testa makes the rule clear.

In Testa v. Katt and Mondou there was no specific ruling, by Congress of whether the state courts were required to enforce the federal statutes.

This Court ruled in both cases that the Supremacy Clause answered the question in those cases and required the state court to enforce them.

The refusal to enforce the Spencers’ federal rights in this case is not based on a lack of jurisdiction.

It is based on state policy.

The Supremacy Clause does not permit the legislature of South Carolina to instruct its courts to award only the remedies that the state legislature wishes plaintiffs to have.

Sandra Day O’Connor:

What do you rely on specifically for the determination that Congress wanted to require states to entertain 1983 actions instead of just allowing them to?

Henry L. Parr, Jr.:

My argument is not based on discernible intent to require states to entertain them.

My argument is based on Congress, intent that 1983 actions be available in state courts, and then applying the rule of Testa that when Congress has given state courts concurrent jurisdiction over a federal cause of action, without making any sore findings state courts are obligated to enforce those federal causes of action.

That is a well-established principle, and I think Congress follows it when it enacts federal causes of action.

If there are no further questions–

Warren E. Burger:

Very well.

Thank you, gentlemen.

The case is submitted.

We will hear arguments next in Mitchell against Forsyth.