597 S.W.3d 169
Ky.2019Background
- Great Lakes Minerals, LLC (Delaware-formed) operates a mineral-processing plant in Greenup County, Kentucky and sold minerals to Ohio buyers; it does not have a physical presence in Ohio.
- From 2009–2016 Ohio determined Great Lakes sold over $104 million of minerals shipped to Ohio and issued a $325,000 Commercial Activity Tax (CAT) assessment; Great Lakes paid part of the assessment and protested to the Ohio Tax Commissioner.
- While administrative protest was pending, Great Lakes sued the State of Ohio and Ohio Tax Commissioner Joseph Testa (official and individual capacities) in Greenup Circuit Court seeking declaratory/injunctive relief and § 1983 damages (individual capacity).
- Ohio moved to dismiss for sovereign immunity, qualified immunity, comity, lack of personal jurisdiction, and failure to exhaust administrative remedies; the trial court denied the motion in a two‑sentence order.
- On transfer to the Kentucky Supreme Court (and after briefing post‑Hyatt III), the court reversed and remanded with instructions to dismiss all claims: sovereign immunity barred suits against Ohio and Testa in his official capacity; Testa in his personal capacity was dismissed on comity grounds (Kentucky courts deferring to Ohio courts to adjudicate questions of Ohio tax law and § 1983 liability).
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Ohio is immune from suit in Kentucky under interstate sovereign immunity | Great Lakes: sovereign immunity does not bar declaratory/injunctive relief; Hyatt II controls | Ohio: Hyatt III holds states retain sovereign immunity from private suits in other states' courts | Held: Hyatt III controls; Kentucky court must dismiss claims against Ohio (sovereign immunity applies) |
| Whether Testa is immune in his official capacity | Great Lakes: official‑capacity relief permitted against the official | Testa: official capacity is the state; entitled to same sovereign immunity as Ohio | Held: Official‑capacity claims dismissed (treated as suit against the state) |
| Whether Testa is immune in his personal capacity from § 1983 damages | Great Lakes: § 1983 permits personal‑capacity damages against officials acting under color of state law | Testa: personal immunity defenses; immunity questions depend on Ohio common law and tax law | Held: Personal‑capacity claim dismissed on comity grounds — Kentucky courts defer to Ohio courts to resolve Ohio law and immunity issues |
| Whether comity requires dismissal/abstention for a § 1983 challenge to a foreign state tax assessment | Great Lakes: § 1983 claim is cognizable here | Ohio/Testa: comity and principles from McNary counsel dismissal; foreign state courts best suited to interpret and apply their tax law | Held: Court applied comity and dismissed the personal‑capacity § 1983 claim to avoid intruding on Ohio tax administration |
Key Cases Cited
- Franchise Tax Bd. of Cal. v. Hyatt, 139 S. Ct. 1485 (2019) (states retain sovereign immunity from private suits in other States' courts)
- Franchise Tax Bd. of Cal. v. Hyatt, 136 S. Ct. 1277 (2016) (reversed excess monetary award stemming from interstate hostility concerns)
- Nevada v. Hall, 440 U.S. 410 (1979) (discussed in Hyatt decisions regarding interstate immunity doctrine)
- Fair Assessment in Real Estate Ass'n v. McNary, 454 U.S. 100 (1981) (comity bars federal § 1983 suits attacking state tax systems)
- Rehberg v. Paulk, 566 U.S. 356 (2012) (scope of immunity in § 1983 derives from common‑law immunities)
- Kentucky v. Graham, 473 U.S. 159 (1985) (official‑capacity suits are treated as suits against the governmental entity)
- Combs v. Int'l Ins. Co., 354 F.3d 568 (6th Cir. 2004) (comity and territoriality principles in choice‑of‑law contexts)
- Martin v. O'Daniel, 507 S.W.3d 1 (Ky. 2016) (Kentucky recognition that § 1983 immunities derive from state common‑law immunity doctrines)