Abuzaid v. Woodward
2013 U.S. App. LEXIS 16607
| 2d Cir. | 2013Background
- Plaintiffs Abuzaid and Kassem owned newsstands selling cigarettes in New York and engaged with the state cigarette tax/stamp regime.
- Undercover sting operations in 2004–2005 led to arrests and criminal convictions of Abuzaid and Kassem for evading or unlawfully stamping cigarettes.
- In Nov. 2006 the NY Department of Taxation and Finance assessed penalties under NY Tax Law § 481(1)(b)(i) for possessing unlawfully stamped cigarettes.
- Plaintiffs filed suit in Nov. 2008 seeking to block collection of § 481(1)(b)(i) penalties as unconstitutional double punishment.
- The district court granted a permanent injunction prohibiting collection; the Commissioner appealed.
- The Second Circuit reversed, holding § 481(1)(b)(i) is a civil penalty, comity barred injunctive/declaratory relief, and the case should be dismissed with prejudice.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Civil vs. criminal penalty under § 481(1)(b)(i)? | Abuzaid argued penalty is criminal punishment. | Commissioner argued penalty is civil. | Penalty is civil; no double jeopardy. |
| Does comity bar federal relief in this case? | District court could grant relief without unduly interfering with state tax administration. | Comity bars federal relief that interferes with state tax enforcement. | Comity barred injunctive/declaratory relief. |
| May the court dismiss the suit on the merits with prejudice without violating comity? | Affirmative, if meritless. | Dismissal on the merits would not interfere with state administration. | Dismissal with prejudice on the merits is proper. |
Key Cases Cited
- Levin v. Commerce Energy, Inc., 130 S. Ct. 2323 (2010) (comity bars relief that disrupts state tax administration)
- Fair Assessment in Real Estate Ass’n, Inc. v. McNary, 454 U.S. 100 (1981) (comity limits federal relief in state tax matters)
- Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293 (1943) (federal restraint in state tax matters)
- Mendoza-Martinez v. California, 372 U.S. 169 (1963) (framework for civil vs. criminal penalties)
- Rose v. Lundy, 455 U.S. 509 (1982) (exhaustion doctrine in habeas petitions; gradual shift toward merits-first approach)
- Granberry v. Greer, 481 U.S. 129 (1987) (comity and procedural sequencing in review)
- Younger v. Harris, 401 U.S. 37 (1971) (principles of abstention and state interests)