Northwest Airlines, Inc. Federal Express Corporation American Airlines, Inc. And Delta Airlines, Inc. v. Tennessee State Board of EqualizationNorthwest Airlines, Inc. Federal Express Corporation American Airlines, Inc. And Delta Airlines, Inc. v. Tennessee State Board of Equalization
Northwest Airlines, Federal Express, American Airlines, and Delta Airlines appeal the district court’s dismissal of their action seeking to enjoin Tennessee’s method of taxing air carrier property physically located in Tennessee. The аir carriers complain that Tennessee’s tax scheme violates 49 U.S.CApp. § 1513(d), part of the Airport and Airway Improvement Act of 1982, by discriminating against interstate commerce. Specifically, the carriers assert that Tennessee’s systеm of taxation imposes an unfairly high levy on their loading equipment, access gates, and machinery.
Tennessee’s State Board of Equalization moved to dismiss the plaintiffs’ claim for lack of subject matter jurisdiction, arguing that the Tax Injunction Act,
All non-exempt tangible personal property located in Tennessee is subject to ad valorem taxation. Tenn. Const, of 1870, art. II, § 28 (1979). Different types of personal property are taxed at varying proportions of their value.
Id.;
Our first step in determining the adequacy of the state remedy for the air carriers’ claim is to identify the applicable review procedure under Tennessee law. To that end, this panel certified the following questions to the Tennessee Supreme Court:
1. Does Tennessee provide any forum to the air carriers other than a hearing before the State Board of Equalization, provided by Tennessee Codе Annotated § 67-5-1328, With review of its decision by a petition to review to the Middle Division of the Court of Appeals under Tennessee Code Annotated § 4-5-322(b)(l)?
2. As an alternative to the review provided by Tennessee Code Annotated § 4-5-322(b)(1), does Tennessee law authorize the airlines to pay the tax under protest and sue for a refund in circuit court?
3. If Tennessee provides an alternative forum, what is that forum and what must the carriers do proeedurally to have their claim heard?
4. If Tennеssee has an alternative forum (or fora), what bodies, if any, have jurisdiction to review the decision?
The court may affirm the decision of the agency or remand the case for further proceedings. The court may reverse or modify the decision if thе rights of the petitioner have been prejudiced because the administrative findings, inferences, conclusions, or decisions are:
(1) In violation of constitutional or statutory provisions;
(2) In excess of the statutory authority of the agency;
(3) Made upon unlawful procedure;
(4) Arbitrary or capricious or characterized by abuse of discretion or clearly unwarranted еxercise of discretion; or
(5) Unsupported by evidence which is both substantial and material in light of the entire record.
In determining the substantiality of evidence, the court shall take into account whatever in the record fairly detracts frоm its weight, but the court shall not substitute its judgment for that of the agency as to the weight of the evidence on questions of fact.
The air carriers contend that Tennessee’s review procedure does not provide them with a “plain, speеdy, and efficient” remedy as required by the Tax Injunction Act,
The Tax Injunction Act provides that “[t]hе 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.”
We believe, however, that the peculiar facts of the instant case present a rare exception to the general rule. According to
Hillsborough v. Cromwell,
The Board argues, correctly, that the Tennеssee review procedure need not provide a remedy to the carriers that is as substantively adequate as the remedy potentially available in the federal courts.
Rosewell,
In Huber, the cоurt noted that even if recent, adverse state supreme court precedent were dispositive of the plaintiffs’ claims, the plaintiffs could still seek review of those claims in the Supreme Court of the United States. The decision in Huber, however, dealt with the issue of whether the review process for the disposition of a question of law in the state courts met the requirements of the Tax Injunction Act. Even if the plaintiffs in a given case were faced with a dispos-itive state court precedent on a question of law, that precedent would not bind the United States Supreme Court in its subsequent review. In the instant case, the issue is whether the state process for the disposition of a question of fact meets the requirements of the Act. We believe that this is an issue of procedural, rather than substantive, adequacy. Even if the United States Supreme Court were to grant review in a case involving a state court disposition of a question of fact, the Court would not cоnsider de novo the weight of the evidence relating to that disposition. Consequently, the Court would be bound by the factual determination reached in the state process. Thus, the district court’s reliance on Huber is not supported by the facts before us.
On the unique facts of this case, we hold that the Tennessee review process does not meet the “minimal procedural criteria” described in
Rosewell
that would bar this action from the district court under the Tax Injunction Act. Specifically, the Board of Equalization has taken a positiоn in pending litigation inconsistent with that of the air carriers in this case, precluding it from properly considering the evidence submitted by the airlines
For the foregoing reasons, the judgment of the district court is reversed.
Notes
. At the time this appeal was taken, the Board was a defendant in two federal suits brought by railroad companies under the Railroad Revitalization and Regulatory Reform Act of 1976,
. We emphasize that the Board's position is not based on a decision reached in a judicial or quasi-judicial capacity, but a position that it has adopted solely as a litigant. See n. 1, supra.