798 F.3d 1228
9th Cir.2015Background
- Guam amassed chronic budget deficits and withheld payment of conceded income-tax overpayments for years, creating a large backlog of refund claims.
- Guam created an informal “expedited refund” process (no formal rules) to prioritize certain claimants; in practice it was arbitrary and favored those with connections.
- A class of Guam taxpayers sued Guam and territorial officials under the Organic Act, 48 U.S.C. § 1421i (tax claim), and under 42 U.S.C. § 1983 (equal protection challenge to the expedited program); the district court certified the class.
- The district court granted summary judgment to the taxpayers on both claims, enjoined the expedited-refund program, and ordered that valid, non-audited refund claims be paid within six months of filing (or due date), and awarded attorney’s fees.
- Guam appealed, arguing (inter alia) that § 1983 did not apply (officials are not “persons” and acts were not under color of territorial law) and that the six-month injunction was legally erroneous and interfered with budgetary discretion.
- The Ninth Circuit affirmed: officials are § 1983 “persons” for prospective relief, their actions were under color of territorial law, the equal-protection and Organic Act violations stood, and the six-month injunction was within the court’s discretion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether territorial officials are “persons” under § 1983 for official-capacity prospective-relief suits | Officials are persons for purposes of injunctive relief under § 1983 | Guam: Ngiraingas II implies officials are not § 1983 persons; §1983 inapplicable | Officials are § 1983 persons for prospective relief (Ada controlling); Ada binds Ninth Circuit |
| Whether defendants acted “under color of” territorial law | Expedited program was created/administered by Guam officials using territorial authority | Guam: authority derived from federal statutes (Organic Act), so actions were under color of federal law, not territorial law | Actions were under color of territorial law; the relevant test is authority exercised by territorial officers |
| Equal Protection claim re expedited refunds (arbitrariness/favoritism) | Program was standardless, resulted in arbitrary, connection-based favoritism violating equal protection | Guam did not contest factual findings; argued § 1983 inapplicable | Court affirmed summary judgment for plaintiffs — program violated equal protection |
| Validity and scope of six-month refund deadline in injunction | Six months is a reasonable, specific benchmark (aligns with 26 U.S.C. §6532 pendency period) to avoid vague timing and enable enforcement | Guam: §6532 is only a suit-limitation, not a payments deadline; six months interferes with budgetary discretion | Six-month payment requirement was not an abuse of discretion; the court used §6532 as a reasonable, enforceable benchmark and the injunction stands |
Key Cases Cited
- Ngiraingas v. Sanchez, 495 U.S. 182 (1990) (Supreme Court analysis that territory itself is not a “person” under § 1983; limited discussion of officials)
- Guam Soc. of Obstetricians & Gynecologists v. Ada, 962 F.2d 1366 (9th Cir. 1992) (officials are § 1983 “persons” for prospective/injunctive relief)
- Ex parte Young, 209 U.S. 123 (1908) (official-capacity suits for prospective relief are not treated as suits against the state/government)
- Will v. Michigan Dep’t of State Police, 491 U.S. 58 (1989) (official-capacity suits for money damages are treated as suits against the state and officials are not "persons" for such damages claims under § 1983)
- West v. Atkins, 487 U.S. 42 (1988) (definition of acting under color of state law: exercise of power possessed by virtue of state law)
- Tongol v. Usery, 601 F.2d 1091 (9th Cir. 1979) (state/territorial officials implement federal regulation but can still act under color of state law when enforcing it)
- Pistor v. Garcia, 791 F.3d 1104 (9th Cir. 2015) (identifying elements of a § 1983 claim and that statutory questions about who is a “person” are substantive, not jurisdictional)