In Re Nestle USA, Inc., Switchplace, LLC, and Nsbma, Lp
359 S.W.3d 207
| Tex. | 2012Background
- Petitioners Nestle USA, Switchplace, and NSMBA seek a declaration that the Texas franchise tax is unconstitutional, plus injunctive relief and mandamus refunds for 2008–2011.
- They did not pay under protest or seek a refund, and petitioners argue Section 24 provides original Court jurisdiction independent of Chapter 112.
- Chapter 112 generally governs taxpayer suits, requiring protest and notice provisions, and limits relief to specific actions like suits after protest or for refunds.
- In 2006, the Legislature gave this Court exclusive original jurisdiction over constitutionality challenges to the Franchise Tax Act, but Section 24 is treated as a limited exception to Chapter 112.
- The Court historically requires protest, notice, and refund processes to protect the State’s revenues and avoid disruption of the tax-collection scheme.
- The Court concludes that Section 24 does not provide a clear, unambiguous waiver of immunity sufficient to bypass Chapter 112, and thus dismisses for lack of jurisdiction.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does Section 24 create original jurisdiction independent of Chapter 112? | Nestle argues Section 24 grants exclusive original jurisdiction. | State argues Section 24 is a limited exception to Chapter 112, not a broad waiver. | No; Section 24 is not a clear waiver and cannot bypass Chapter 112. |
| Are protest-payment and refund-claim prerequisites of Chapter 112 applicable to original proceedings? | Petitioners contend prerequisites do not apply to this Court. | Chapter 112 requirements apply to taxpayer suits and original proceedings must comply. | Yes; Chapter 112 prerequisites apply, preventing mandamus/refund relief here. |
Key Cases Cited
- City of El Paso v. Heinrich, 284 S.W.3d 366 (Tex. 2009) (open-courts/sovereign-immunity reasoning in tax context)
- Tooke v. City of Mexia, 197 S.W.3d 342 (Tex. 2006) (improper waiver of immunity phrases insufficient to waive immunity)
- R Communications, Inc. v. Sharp, 875 S.W.2d 314 (Tex. 1994) (Open Courts concerns; prepayment provisions in declaratory relief constraints)
- Cobb v. Harrington, 190 S.W.2d 709 (Tex. 1945) (Suspense Statute purpose and declaratory action compatibility)
- Austin National Bank v. Shepherd, 71 S.W.2d 242 (Tex. 1934) (refunds under duress and legislative mechanisms for refunds)