393 P.3d 761
Wash.2017Background
- The Employment Security Department audited commercial trucking companies ("Carriers") and reclassified owner-operators as employees, resulting in additional unemployment tax assessments.
- The Carriers pursued administrative appeals before an ALJ; the ALJ upheld employment findings in part and remanded certain allocation issues to the Department.
- Believing a settlement had been reached, Carriers sought enforcement in superior court; subsequent jurisdictional and appellate developments followed.
- While administrative appeals were pending, Carriers and Washington Trucking Associations (WTA) sued in state court against the Department and several officials asserting (1) a 42 U.S.C. § 1983 civil‑rights claim for damages based on alleged targeted, biased audits and (2) a state common‑law claim for tortious interference with business expectancies.
- Thurston County dismissed both claims for failure to state a claim; the Court of Appeals partially reversed, but the Washington Supreme Court granted review.
- The Supreme Court reversed the Court of Appeals, holding (a) comity bars the § 1983 claim because Washington provides an adequate state remedy (administrative appeal plus judicial review), and (b) the ESA's exclusive‑remedy provision bars the tortious interference claim.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether comity (and TIA‑type concerns) bars a § 1983 suit in state court challenging state tax assessments | § 1983 is a broad remedial statute; plaintiffs may bring constitutional/damages claims against officials for biased audits | Comity/TIA principles bar state‑court relief when an adequate state remedy exists; plaintiffs may raise constitutional objections in the administrative process and on judicial review | Held: Comity bars the § 1983 claim because Washington law provides a "plain, speedy and efficient" procedural remedy permitting constitutional objections and refunds on review |
| Standard for measuring adequacy of state remedy under comity/TIA | Adequacy should include substantive access to § 1983 remedies (e.g., damages, fees, punitive damages) | Adequacy is procedural: whether the state process affords a full hearing and judicial determination to raise constitutional claims | Held: Adequacy is primarily procedural; the opportunity to raise constitutional objections on judicial review suffices even if § 1983 remedies (punitive damages/fees) are not available in the state scheme |
| Whether special circumstances (e.g., continued collection of an invalid tax) make § 1983 available | Plaintiffs point to cases allowing § 1983 where state remedies are practically ineffective | Defendant: No extraordinary circumstances here (tax not adjudged invalid and collectible refunds available) | Held: No extraordinary circumstance exists here; cases allowing § 1983 in exceptional facts do not apply |
| Whether the ESA (RCW 50.32.180) bars the Carriers' state common‑law tortious interference claim | Carriers argue tort claim can proceed based on improper motive/means distinct from assessment correctness | Department argues ESA makes Title 50 remedies exclusive for challenges to the "justness or correctness" of assessments, covering both motives/means and amounts | Held: ESA's exclusive‑remedy provision bars the tortious interference claim because the claim challenges the justness/correctness of unemployment tax assessments |
Key Cases Cited
- Fair Assessment in Real Estate Ass'n, Inc. v. McNary, 454 U.S. 100 (Supreme Court) (comity bars federal § 1983 damages in state tax cases when adequate state remedy exists)
- National Private Truck Council, Inc. v. Oklahoma Tax Comm'n, 515 U.S. 582 (Supreme Court) (comity/TIA principles bar state‑court injunctive/declaratory relief in tax challenges when state remedies are adequate)
- Rosewell v. LaSalle Nat'l Bank, 450 U.S. 503 (Supreme Court) (state procedural adequacy requires opportunity for full hearing and judicial determination of constitutional objections)
- California v. Grace Brethren Church, 457 U.S. 393 (Supreme Court) (‘‘plain, speedy, and efficient’’ state remedies focus on procedure not identical federal relief)
- Great Lakes Dredge & Dock Co. v. Huffman, 319 U.S. 293 (Supreme Court) (declaratory relief in tax cases constrained by adequate state remedies)
- Dows v. City of Chicago, 78 U.S. (11 Wall.) 108 (Supreme Court) (historical federal restraint on interference with state tax collection)
- Patel v. City of San Bernardino, 310 F.3d 1138 (9th Cir.) (exception where tax collected after state court declared it invalid; § 1983 damages allowed in limited circumstances)
- Wal‑Mart P.R., Inc. v. Zaragoza‑Gomez, 834 F.3d 110 (1st Cir.) (analysis of adequacy standard and comity in taxing context)
- Hibbs v. Winn, 542 U.S. 88 (Supreme Court) (TIA/comity do not bar third‑party challenges to tax credits when invalidation would enlarge state receipts)