Charles D. LEVY and Refund Research Associates, Inc., Plaintiffs-Appellants, v. Maria PAPPAS, individually and as Treasurer of Cook County, et al., Defendants-Appellees.
No. 06-3182.
United States Court of Appeals, Seventh Circuit
Decided Dec. 21, 2007.
Argued April 11, 2007.
510 F.3d 755
Although we recognize that the district court did not have the benefit of the Supreme Court‘s decision in Rita v. United States, — U.S. —, 127 S.Ct. 2456, 168 L.Ed.2d 203 (2007), at the time of sentencing, taken at face value, the statement that in the district court guideline sentences are “presumptively correct” is wrong. Only at the appellate level is a sentence within the guidelines presumptively reasonable. Rita, 127 S.Ct. at 2465. District courts are required to sentence defendants without any preference for or against a sentence within the guidelines. Sachsenmaier, 491 F.3d at 685.
But we do not view this oral statement as indicating that the district court sentenced Mendoza under the mistaken belief that a sentence within the guidelines is presumptively correct. First, the district court‘s oral statement merely characterized the “discussion presented by able defense counsel.” The district court said several times that its views were contained in the written memorandum and that its oral statements were only a summary. Moreover, a sentencing memorandum is usually a better memorialization of the road taken by the district court in arriving at an appropriate sentence than oral statements made during the sentencing hearing. In addition to facilitating review, one of the reasons judges are called upon to write is the salutary effect that writing has upon precise and logical thinking. See Richard A. Posner, Judges’ Writing Styles (And Do They Matter?) 62 U. Chi. L.Rev. 1421, 1447-48 (1995). For these reasons we have often said that a writing is the preferred method for making findings of relevant conduct. United States v. Ortiz, 431 F.3d 1035, 1042-43 (7th Cir.2005); United States v. Arroyo, 406 F.3d 881, 889 (7th Cir.2005); United States v. Duarte, 950 F.2d 1255, 1263 (7th Cir.1991). Under these circumstances, we conclude that the written reasons in the sentencing memorandum reflect the district court‘s rationale in selecting a sentence and that they constitute the “actual reasons given” for the sentence imposed. See United States v. Ross, 501 F.3d 851, 854 (7th Cir.2007). As there is no indication in the sentencing memorandum that the district court presumed that a sentence within the guidelines range would be reasonable, we find no error in the district court‘s imposition of sentence.
III.
For the reasons stated above, the judgment of the district court is AFFIRMED.
Steven J. Plotkin (argued), Evanston, IL, for Plaintiffs-Appellants.
Louis R. Hegeman, Paul A. Castiglione (argued), Office of the Cook County State‘s Attorney, Chicago, IL, for Defendants-Appellees.
Before CUDAHY, KANNE, and DIANE P. WOOD, Circuit Judges.
WOOD, Circuit Judge.
I
The Tax Injunction Act is a somewhat unusual statute, in that it does not confer jurisdiction on the district courts, but instead it deprives them of jurisdiction they would otherwise have to hear certain challenges to state taxes. See, e.g., California v. Grace Brethren Church, 457 U.S. 393, 396, 102 S.Ct. 2498, 73 L.Ed.2d 93 (1982). The standard of review that we apply to the district court‘s decision here that the Act precludes the plaintiffs’ claims, however, is the same as we would use for any jurisdictional challenge. Our review of the legal conclusion that these claims fall within the scope of the Act‘s prohibition is de novo. Insofar as the district court found facts to support its determination, as is sometimes necessary for jurisdictional decisions, see Arbaugh v. Y & H Corp., 546 U.S. 500, 514, 126 S.Ct. 1235, 163 L.Ed.2d 1097 (2006), we review those findings of fact for clear error. United Phosphorus, Ltd. v. Angus Chem. Co., 322 F.3d 942, 946 (7th Cir.2003) (en banc). We recite the facts here in the light of these standards.
Levy was the president and sole shareholder of RRA, an Illinois corporation that has since been dissolved. RRA was engaged in the business of assisting taxpayers in obtaining real estate tax refunds. RRA would examine tax records to determine which taxpayers were entitled to real estate tax refunds, but had not yet received their money. Levy would contact these taxpayers in an effort to convince them to enter into an agreement with RRA whereby RRA would agree to file for a refund on behalf of the taxpayer, and the taxpayer would agree to pay RRA one-third of the money recovered.
In February 1999, Levy filed a lawsuit in Illinois state court against Maria Pappas in her official capacity as Treasurer of Cook County, alleging a conspiracy through which Cook County retained millions of dollars in tax overpayments instead of refunding the amounts to taxpayers or turning over the money to the state of Illinois. After he filed that suit, he alleges, Pappas and other Cook County officials began to retaliate against him personally and against RRA. Specifically, Levy asserts that the Cook County officials placed obstacles in RRA‘s path to make it difficult for RRA to collect tax refunds for its clients, and that they caused a criminal investigation to be instigated against Levy.
Before the state court lawsuit was filed, RRA typically received requested refund checks approximately 35 days after it filed a refund application. After the lawsuit began, this period ballooned up to approximately 145 days. Levy also began having problems getting refund checks delivered directly to RRA. On one occasion in May 1999, when Levy arrived to collect a set of refund checks, a clerk told Levy that the checks could not be released because the office had lost the forms that authorized the Treasurer‘s office to release the checks to him instead of to the taxpayers themselves. Levy did not have copies of the authorization forms, and the Treasurer‘s office refused to release the checks to him based on copies of the contracts between the clients and RRA. It appears that the Treasurer‘s office still has some of these checks, but it is not clear what happened to the rest.
On or about May 25, 1999, Peter Karaholios, then Counsel for the Treasurer, told Levy that RRA did not have the right to conduct its business and that liens filed by RRA were invalid. After this point, refund checks were no longer delivered to RRA. By August 2002, Cook County Assessor James M. Houlihan arranged that checks issued to RRA clients would be mailed directly to the client, rather than to RRA.
Employees of the Treasurer‘s office made it difficult for Levy to get information. In April 1999, James Crawley (then Assistant General Counsel and later Counsel for Treasurer Pappas) informed Levy that incomplete applications for refunds would not be accepted and that the Treasurer‘s office did not have the personnel to find the “correct CR number” for Levy‘s applications. Because Levy was being forced to provide complete applications, Levy submitted a freedom-of-information request to inspect the CR book, which contains records of all certificates of error that have been authorized by the County Assessor. The Treasurer‘s office responded that Levy needed to specify a tax year and to pay a copying charge; Levy parried with a request to view the files in person. The Treasurer‘s office did nothing. Some time around August 1999, Levy was unable
In August and September 2001, Levy had difficulty reviewing other records at the Treasurer‘s office. The Treasurer‘s office maintains and keeps CR books and JR books (which contain information about whether the authorized refunds have actually been paid). Levy wanted access to these books both in order to conduct RRA‘s business and to obtain evidence for his state court case. When he asked to inspect the CR and JR books, however, he was told he could not. Levy wrote a letter to Martha Mills, Chief Counsel for the Treasurer, who responded that Levy would be given access to the books. But as of the time when he filed his federal action, Levy had not been given access to the books. Levy alleges that Mills (and the other employees who failed to provide Levy with access to the books) acted at Pappas‘s direction. Another FOIA request related to Levy‘s state court suit was stymied, because, Levy believes, Pappas and her employees in the Treasurer‘s office knew that Levy was behind it. Also, telephone calls by Levy and RRA clients went unreturned while the Treasurer‘s office returned phone calls placed by refund-seekers not represented by RRA.
As if these bureaucratic obstacles were not enough, the County defendants also allegedly retaliated against Levy with threats of criminal action. Around the same month when Levy filed his state court case, Karaholios told Levy that he (Karaholios) had been a prosecutor and that he was going to put Levy out of business. Levy interpreted the comment as a threat to institute criminal charges. In October 2000, Levy was at the Treasurer‘s office. In the presence of Pappas, Crawley, and Deputy Treasurer William Korukulis, Karaholios told Levy that Levy was “committing fraud by submitting refund applications using Refund Research‘s FEIN number instead of the taxpayer‘s social security number.” Karaholios added that Pappas planned to submit the applications to the State‘s Attorney and file a complaint. Pappas picked up the refund applications Levy had with him, waved them at Levy and said, “This is fraud. I‘m going to take this to the State‘s Attorney.”
In April 2001, Amy Huang (a supervisor with the Financial Crimes Investigations Unit of the State‘s Attorney‘s office) sent letters to more than 500 clients of RRA. The letters stated in part:
Our office is currently conducting a Criminal Grand Jury investigation pertaining to a complaint received from the Cook County Treasurer‘s office. According to records provided by the Cook County Treasurer‘s office, you filed a Certificate of Error Refund Application ... and designated Refund Research Associates, Inc. as Power-of-Attorney to complete the refund application process. In order for this office to complete its investigation into said matter, please review the attached application and contact [us] if the information is incorrect. Our office would like to talk with you regarding the refund you have filed through Refund Research Associates, Inc.
At least once, a representative of the State‘s Attorney‘s office went to the home of an RRA client to ask the client to verify his signature; the client did so. In May 2001, an RRA client telephoned the Treasurer‘s office and spoke to an employee, Ilene Psarras. When the client asked about the status of her refund, Psarras told the client that checks payable to RRA were not being released because RRA was
In 2004, Levy and RRA filed the present action in federal court. The amended complaint named Cook County and the following officials as defendants: Maria Pappas, the Treasurer of Cook County; William Korukulis, the Deputy Treasurer of Cook County; Martha Mills, the Chief Counsel for the Treasurer of Cook County; James Crawley, Counsel for the Treasurer of Cook County; Peter Karaholios, prior Counsel for the Treasurer of Cook County; James M. Houlihan, Assessor of Cook County; and Richard H. Devine, the State‘s Attorney for Cook County. All of the individual defendants were sued in both their official and individual capacities. Invoking
II
The district court concluded that most of the plaintiffs’ claims were barred by the Act and comity interests. The Act reads as follows:
The district courts shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under State law where a plain, speedy and efficient remedy may be had in the courts of such State.
Nothing in Hibbs suggested that the Court was overruling its decision in Fair Assessment in Real Estate Ass‘n v. McNary, 454 U.S. 100, 102 S.Ct. 177, 70 L.Ed.2d 271 (1981), an earlier opinion that discussed the related limits that comity doctrines impose on the adjudication of certain claims in federal court. Id. at 107 (basing decision on comity and declining to reach the question of whether the Act would also bar the suit). Hibbs cited Fair Assessment in a list of cases that fell “within § 1341‘s undisputed compass” (despite the fact that Fair Assessment itself was based on comity). 542 U.S. at 106. In Fair Assessment, the plaintiffs brought a
[has] thus far barred federal courts from granting injunctive and declaratory relief in state tax cases [but b]ecause we decide today that the principle of comity bars federal courts from granting damages relief in such cases, we do not decide whether th[e Tax Injunction] Act, standing alone, would require such a result.
Id. at 107. The Hibbs Court noted without any hint of disapproval that the Fair Assessment opinion “relied upon ‘principles of comity’ to preclude original federal-court jurisdiction only when plaintiffs have sought district-court aid in order to arrest or countermand state tax collection.” 542 U.S. at 107 n. 9.
Other circuits have understood Hibbs to be consistent with Fair Assessment. In May Trucking Co. v. Ore. Dep‘t of Transp., 388 F.3d 1261 (9th Cir.2004), the Ninth Circuit held that “the dispositive question in determining whether the Act‘s jurisdictional bar applies is whether ‘federal court relief ... would have operated to reduce the flow of state tax revenue.‘” Id. at 1267 (quoting the Hibbs passage discussed above). This standard also applies in the Second and Tenth Circuit cases, which Levy cites, but which are not particularly helpful to him. See Luessenhop v. Clinton County, 466 F.3d 259, 268 (2d Cir.2006); Okla. ex rel. Okla. Tax Comm‘n v. Int‘l Registration Plan, Inc., 455 F.3d 1107, 1112 (10th Cir.2006). In Luessenhop, the Second Circuit dealt with whether “a taxpayer‘s challenge that the notice of foreclosure provided by the taxing authority of a state is constitutionally inadequate“; it was not concerned with whether the tax assessed or the process of taxation was problematic. 466 F.3d at 261. In Oklahoma Tax Commission, the Tenth Circuit dealt with what was essentially a contract dispute involving the governmental recipients of revenue, some of which was tax revenue. Again, this was not a dispute about the tax or the taxation process. 455 F.3d at 1112.
As for comity, Hibbs commented that prior cases in this area are “not fairly cut loose from their secure, state-revenue-protective moorings.” Id. at 107. The Court then quoted Rosewell v. La Salle Nat‘l Bank, 450 U.S. 503, 527-28, 101 S.Ct. 1221, 67 L.Ed.2d 464 (1981), which held that “we may readily appreciate the difficulties encountered by the county should a substantial portion of its rightful tax revenue be tied up in injunction actions.” Hibbs, 542 U.S. at 107. Thus, Hibbs does not reject the use of comity to bar federal district court jurisdiction in broad strokes, but it does restrict comity to cases that could tie up “rightful tax revenue.” Applying this standard, Hibbs found that comity was not a reason to refrain from acting, because relief would have increased the state‘s tax revenues and would not have tied up any state tax revenues as in Fair Assessment.
In the end, it is not how Levy has described his complaint, but what relief he ultimately seeks, that matters. We must determine whether his claims are more
The rest of the claims are, as the district court concluded, “essentially a complaint about the loss of tax refunds” and “about delayed refunds and defendants’ ultimate refusal to issue taxpayer refund checks.” The complaint repeatedly alleges lost profits as the primary injury suffered. Levy‘s business was obtaining tax refunds on behalf of RRA‘s clients. To the extent that this business was harmed by the failure to receive refunds, the relief sought would “operate[] to reduce the flow of state tax revenue.” To the extent the plaintiffs’ business was harmed by delaying refunds or even sending checks directly to taxpayers, the relief sought for this would tie up “rightful tax revenue” by freezing some money in the County‘s tax coffers and “arrest[ing] ... state tax collection,” putting the County‘s system of administering refunds at the mercy of the federal courts. The relief Levy is seeking goes to the heart of the County‘s ability to control its tax revenue by managing its real estate tax refunds. It would have a negative impact on the County‘s ability to rely on its own tax revenue. This is exactly what the Court was worried about in Fair Assessment.
When a plaintiff alleges that the state tax collection or refund process is singling her out for unjust treatment, then the Act and comity bar the federal action, as in Fair Assessment. When a plaintiff alleges that the state tax collection or refund process is giving unfair benefits to someone else, then according to Hibbs the Act and comity are not in play. This case falls on the Fair Assessment side of the line. The district court correctly held that the Act and comity bar its jurisdiction over the plaintiffs’ claims in Counts I through V, with one exception: the criminal investigation. Any relief the court could give there would have no impact on the County‘s tax revenues and thus is not barred by either the Act or comity. With those threshold questions out of the way, we turn to the remainder of the arguments relating to this claim.
III
A
We begin our assessment of the plaintiffs’ retaliation allegations with the question of RRA‘s standing to bring a
RRA points to no case allowing a corporation (or anyone) to sue under
B
That leaves Levy‘s retaliation claim. The district court held that he failed to state a claim against most of the defendants in their individual capacities and against all of the defendants in their official capacities. It ruled that his remaining claims against defendants Pappas and Karaholios in their individual capacities were time-barred. We begin with a comment on the statute of limitations and then consider the remaining arguments. The applicable statute of limitations here, which we borrow from Illinois, is two years. See
The district court characterized Levy‘s injury as one that was based on a discrete act and thus accrued at a particular time. We are not so sure. An ongoing criminal investigation is less like a singular event, such as being fired from a job or being beaten by a police officer, than it is like being denied medical treatment, or suffering from a hostile environment, or being maliciously prosecuted over an extended period of time. At this stage of the litigation, however, we need not make a definitive ruling on this issue. Even if we assume that Levy has successfully alleged a continuing injury and thus is not barred by the statute of limitations, his retaliation claims must be dismissed on other grounds.
C
The dispositive question is whether there is any defendant against whom Levy can assert his retaliation claim, insofar as it is based on the criminal investigation. In a
In the end, however, only the State‘s Attorney has the power to initiate criminal proceedings, and he has absolute immunity for these core prosecutorial functions. Imbler v. Pachtman, 424 U.S. 409, 431, 96 S.Ct. 984, 47 L.Ed.2d 128 (1976). Even taking as true all of Levy‘s allegations, nothing the other officials could have done could either force the State‘s Attorney to prosecute or compel him to refrain from prosecution. The complaint does not allege that the officials were suborning perjury or otherwise obstructing justice. At most, it appears to claim that Levy was defamed when the investigators contacted his clients and told them about the investigation, and when the officials accused him of fraud. That is not enough to state a claim against them for any role they may have had in the criminal investigation.
D
Finally, Levy‘s claim against Cook County as an entity runs into trouble at the outset with service of process. The district court found that he had failed to comply with
The Supreme Court discussed that theory of official liability in St. Louis v. Praprotnik, 485 U.S. 112, 126-27, 108 S.Ct. 915, 99 L.Ed.2d 107 (1988). The official sued there was the person with final policymaking authority with respect to the challenged action taken against the plaintiff. Id. at 127. Here, Levy relies on Illinois law to show that Pappas and Houlihan have final policymaking authority for their respective offices. But no Illinois law gives the County Treasurer or Assessor “final policy-making authority” over launching criminal investigations, which is the only
IV
We have no need to reach the defendants’ res judicata argument. The judgment of the district court is AFFIRMED.
CUDAHY, Circuit Judge, concurring.
The big question here is whether the plaintiffs’ lawsuit is barred by the Tax
Also, in evaluating whether Levy‘s claim is barred by the TIA or principles of comity, the majority relies on the relief Levy seeks, rather than “how Levy has described his complaint.” (Op. at 761.) Since Levy is asking for lost profits, the majority reasons that payment of lost profits would “operate[] to reduce the flow of state tax revenue” and therefore is barred by Hibbs. (Op. at 762 (quoting Hibbs, 542 U.S. at 106)). This approach seems simplistic to me. I do not think it is enough to say that Levy‘s request for lost profits makes this lawsuit suspect under the TIA. In his state lawsuit and in the original federal complaint Levy asked for injunctive relief. I think this is significant and effectively distinguishes the claims in the first amended complaint, which really concerned harassment and retaliatory conduct, from those in the state lawsuit and the original federal complaint, which concerned the legitimacy of the tax refund process more broadly. I am concerned that the majority is conceding too much scope to the TIA, especially when the Supreme Court seems to be reading it fairly narrowly in Hibbs.
It is important to distinguish the present case from the action brought in state court by Levy in 1999. The defendants, and to a lesser extent, the district court, blur the distinction between the claims and relief requested in the state lawsuit and the present one. This difference is significant because, if the 1999 lawsuit had been brought in federal court, it would clearly have been barred by the TIA. That case concerned how Cook County issued tax refunds and as a remedy prescribed the issuance of tax refund checks. The first amended complaint, which is the subject of the present appeal, does not, for the most part, concern the statutory scheme pursuant to which refunds are issued and its requested relief does not involve the issuance of refund checks. The present case, or at least the
As for the RICO claims, the plaintiffs allege three separate violations under
All of this said, I do think there is a strong statute of limitations argument for barring the non-criminal investigation retaliation claims, and therefore I would affirm the district court‘s grant of the defendant‘s motion to dismiss. I also agree with the majority‘s treatment of the criminal investigation retaliation claim, namely dismissing it on absolute immunity grounds.