Washington Trucking Ass'n v. Employment Security Department
192 Wash. App. 621
| Wash. Ct. App. | 2016Background
- Washington Trucking Association (WTA) and six member carriers sued the Washington Employment Security Department (ESD) and several ESD employees after audits reclassified owner/operators as employees, producing additional unemployment tax assessments.
- Plaintiffs alleged ESD ran an "underground economy" auditing program that predetermined results, violated auditing standards, and targeted the trucking industry to increase tax revenue.
- Three carriers appealed initial assessments to an administrative law judge (ALJ); the ALJ found disputed facts and remanded for reconsideration; settlement negotiations and a later enforcement attempt produced separate procedural litigation.
- Plaintiffs asserted (1) Section 1983 claims against individual ESD employees for constitutional violations tied to the audit process and (2) tortious interference claims against ESD for reclassifying owner/operators.
- Trial court dismissed the complaint under CR 12(b)(6)/12(c). The Court of Appeals considered standing, comity/exhaustion limits on §1983 damages, and whether tortious interference claims survive the ESA’s exclusive remedy/exhaustion rules.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| WTA standing to sue individually or associationally for §1983 and tortious interference | WTA claims injury (attorneys' fees) and seeks to represent members for industry-wide harms | ESD argues WTA lacks individual standing and cannot represent members for claims requiring individual proof | WTA lacks individual standing for both claims; associational standing to pursue tortious interference denied; associational standing for §1983 unclear on pleadings and left for further factual development |
| §1983 damages challenging state tax assessments — are §1983 claims barred by comity? | Plaintiffs say constitutional audit/process violations allow §1983 damages and §1983 need not be limited by administrative process | ESD invokes comity (Fair Assessment/National Private Truck) and adequate state remedies under ESA/APA to bar §1983 relief tied to tax amounts | Comity bars §1983 damages that are simply the amount of the challenged assessments (state remedies are adequate); §1983 may proceed for damages independent of assessment amounts (e.g., attorneys' fees, punitive damages, other non-tax losses) |
| Whether ESA/APA exclusivity or exhaustion bars tortious interference claims | Carriers contend tortious interference lies where ESD used improper motive/means, not merely misapplied tax rules | ESD argues RCW 50.32.180 and exhaustion bar claims that effectively challenge the correctness of assessments | Exclusive remedy and exhaustion bar tortious interference claims only to the extent they challenge the correctness/justness of assessments; claims based on improper motive or improper means survive |
| Sufficiency of complaint on tortious interference elements | Plaintiffs allege contractual/business expectancies with owner/operators, ESD knowledge, interference via reclassification, improper motive/means, and damages | ESD contends precedent (Elcon/Western Ports) and requirement of breach/termination defeat the claim | Complaint sufficiently alleges tortious interference with contracts/business expectancies (pleaded loss of ability to contract with owner/operators and improper motive/means) |
Key Cases Cited
- Fair Assessment in Real Estate Ass’n v. McNary, 454 U.S. 100 (1971) (comity precludes federal-court §1983 challenges that would disrupt state tax administration)
- National Private Truck Council, Inc. v. Oklahoma Tax Comm’n, 515 U.S. 582 (1995) (comity principle applies in state court; state remedies adequate bars §1983 relief attacking state taxes)
- Rosewell v. LaSalle Nat’l Bank, 450 U.S. 503 (1981) (state remedy must be plain, adequate, and complete to satisfy comity/TIA standards)
- Younger v. Harris, 401 U.S. 37 (1971) (federal courts should respect state functions and avoid undue interference)
- Elcon Constr., Inc. v. E. Wash. Univ., 174 Wn.2d 157 (2012) (elements/structure of tortious interference test in Washington)
- Pac. Nw. Shooting Park Ass'n v. City of Sequim, 158 Wn.2d 342 (2006) (tortious interference elements and analysis of improper motive/means)
- Branson v. Port of Seattle, 152 Wn.2d 862 (2004) (standing two-prong test: zone of interests and injury in fact)