Barnes v. E-Systems Inc. Group Hospital Medical & Surgical Insurance Plan/Opinion of the Court

The Tax Injunction Act, 28 U.S.C. § 1341, provides: "[t]he 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." The Fifth Circuit's holding that this provision does not apply to state taxes that violate ERISA is in apparent conflict with the position taken by the Ninth Circuit. See Ashton v. Cory, 780 F.2d 816, 821-822 (CA9 1986) (Kennedy, J.). See also General Motors Corp. v. California Board of Equalization, 815 F.2d 1305, 1308 (CA9 1987) (Kennedy, J.). The question has been explicitly reserved in an opinion of this Court. Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 20 n. 21, 27 n. 31, 103 S.Ct. 2841, 2852 n. 21, 2855 n. 31, 77 L.Ed.2d 420 (1983). The establishment of an ERISA exception to the Tax Injunction Act is alone a matter of some importance to the States. In addition, however, the Fifth Circuit's basis for the exception is that there can be no "plain, speedy, and efficient remedy" in Texas courts because ERISA forbids their consideration of ERISA-preemption challenges. E-Systems, Inc., supra, at 1102. This means, apparently, that state courts cannot even grant refund relief, since we have held that refund relief alone may constitute "a plain, speedy, and efficient remedy." See, e.g., California v. Grace Brethren Church, 457 U.S. 393, 413-414, 102 S.Ct. 2498, 2510-2511, 73 L.Ed.2d 93 (1982); Rosewell v. LaSalle National Bank, 450 U.S. 503, 514-515, 101 S.Ct. 1221, 1229-1230, 67 L.Ed.2d 464 (1981). In addition, the Fifth Circuit rejected, without explanation, applicants' objection that the Eleventh Amendment forbade the district court from requiring a refund of the ERISA-preempted taxes from Texas's State Treasury. E-Systems, Inc., supra, at 1101-1102. This is also in apparent conflict with the views of the Ninth Circuit. See General Motors Corp., supra, at 1309. In my view these issues are of sufficient importance that a grant of certiorari by this Court is probable.

I also think there is a substantial possibility that the judgment below will be reversed. The Fifth Circuit's construction of the Tax Injunction Act and ERISA assumes that ERISA's creation of a private cause of action to enjoin violations of ERISA, 29 U.S.C. § 1132(a)(3), and its provision that this cause of action can be brought only in federal court, id. § 1132(e)(1), implicitly deprive the state courts of jurisdiction to entertain claims for monetary or equitable relief that rest upon the invalidity (under the Supremacy Clause) of a state statute that violates ERISA. That is not an inevitable implication, and perhaps not a likely one. The Fifth Circuit's position on the Eleventh Amendment presumably rests upon the proposition that ERISA has impliedly authorized suit against states for monetary (as well as injunctive) relief, thus abrogating state sovereign immunity. But ERISA makes no mention of monetary relief, and in any event our cases do not favor implicit abrogation of Eleventh Amendment immunity. See Dellmuth v. Muth, 491 U.S. 223, 230, 109 S.Ct. 2397, 2401, 105 L.Ed.2d 181 (1989); Atascadero State Hospital v. Scanlon, 473 U.S. 234, 242, 105 S.Ct. 3142, 3147, 87 L.Ed.2d 171 (1985).

As to the third condition, the likelihood of irreparable harm: In my view the Tax Injunction Act itself reflects a congressional judgment, with which I agree, that unlawful interference with state tax collection always entails that likelihood. It produces in all cases not merely the possibility of ultimate noncollection because of the taxpayer's exhaustion of the funds but also an interference with the State's orderly management of its fiscal affairs.

"It is upon taxation that the several States chiefly rely to     obtain the means to carry on their respective government, and      it is of the utmost importance to all of them that the modes      adopted to enforce the taxes levied should be interfered with      as little as possible.  Any delay in the proceedings of the      officers, upon whom the duty is devolved of collecting the      taxes, may derange the operations of government, and thereby      cause serious detriment to the public." Dows v. City of     Chicago, 78 U.S. (11 Wall.) 108, 110, 20 L.Ed. 65 (1871).

See also California v. Grace Brethren Church, supra, 457 U.S., at 410 and n. 23, 102 S.Ct., at 2508 and n. 23. The same may be said of the asserted Eleventh Amendment violation: directing a priority expenditure from the state treasury "may derange the operations of government, and thereby cause serious detriment to the public."

The conditions that are necessary for issuance of a stay are not necessarily sufficient. Even when they all exist, sound equitable discretion will deny the stay when "a decided balance of convenience," Magnum Import Co., supra, 262 U.S., at 164, 43 S.Ct., at 533, does not support it. It is ultimately necessary, in other words, "to 'balance the equities'-to explore the relative harms to applicant and respondent, as well as the interests of the public at large." Rostker v. Goldberg, 448 U.S. 1306, 1308, 101 S.Ct. 1, 2, 65 L.Ed.2d 1098 (1980) (Brennan, J., in chambers) (citations omitted). The likelihood that denying the stay will permit irreparable harm to the applicant may not clearly exceed the likelihood that granting it will cause irreparable harm to others. (This depends, of course, not only upon the relative likelihood that the merits disposition one way or the other will produce irreparable harm, but also upon the relative likelihood that the merits disposition one way or the other is correct.) Or the irreparable harm threatened to the applicant, while more likely, may be vastly less severe. The balancing seems to me quite easy in the present case, since I am aware of no irreparable harm that granting the stay would produce. The State's credit remains good, and I have been advised of no emergency need for the funds already paid under protest or for any funds that will be collected before termination of the litigation.

The application for stay of the judgments of the Fifth Circuit Court of Appeals is granted, pending applicants' timely filing and this Court's disposition of a petition for certiorari.