U.S. Supreme Court TULLY v. GRIFFIN, INC., 429 U.S. 68 (1976) 429 U.S. 68

[Page 429 U.S. 68, 70]

This assessment, by necessity only an estimate, demanded that Griffin pay $218,085.37 in back taxes, interest, and penalties.[Footnote 1] Griffin moved in the federal court for a preliminary injunction to prevent steps from being taken to collect the taxes and to stay the running of the 90-day period in which it could contest the amount shown in the Notice of Determination.[Footnote 2] The defendant New York tax officials filed a cross-motion to dismiss the action for lack of jurisdiction, claiming that suit was barred by the Tax Injunction Act, 28 U.S.C. 1341, which provides:

"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."

The District Court rejected this defense, ruling that New York law does not provide Griffin "a plain, speedy and efficient remedy."

In reaching this conclusion, the federal court considered first the availability under New York law of direct review of the Notice of Determination. Under New York Tax Law 1138 (a), a taxpayer has 90 days from the receipt of a notice of determination to apply for a hearing before the Tax Commission.[Footnote 3] The Tax Commission's decision after the

[Page 429 U.S. 68, 71]

hearing is judicially reviewable "for error, illegality or unconstitutionality or any other reason whatsoever" in a proceeding under Art. 78 of New York's Civil Practice Law and Rules.[Footnote 4] Before a taxpayer may seek Art. 78 review, however, he must either prepay or post a bond for the amount of the assessment. The court found that Griffin lacked the means to do this. Although the assessment was only a gross estimate, the court assumed that the amount would not be changed unless Griffin submitted to an audit. It ruled that Griffin should not be required to "tur[n] over its books and records to a state whose authority it claims is invalid," and

[Page 429 U.S. 68, 72]

further questioned whether a New York court would entertain an Art. 78 proceeding if Griffin refused to be audited. 404 F. Supp., at 743-745.

The District Court then considered the availability of declaratory relief under 3001 of New York's Civil Practice Law and Rules.[Footnote 5] It viewed this possible avenue of relief as insufficiently "plain, speedy and efficient" because N. Y. Tax Law 1140 on its face seems to limit review of sales tax liability to the Art. 78 procedure discussed above.[Footnote 6] Although the court took note of substantial federal and New York case law holding that New York's administrative review proceedings are not in fact exclusive where a plaintiff claims that a tax is unconstitutional, the court concluded that the issue was "cloak[ed] . . . in some uncertainty." Even if Griffin could get declaratory relief, the court held, its contacts with New York were so "minimal" that "it seems unfair to make Griffin litigate in an unfamiliar forum." Finally, the court expressed "reservations" about Griffin's ability to get a preliminary injunction pending a New York court's decision in a declaratory judgment suit. 404 F. Supp., at 745-747. On the basis of this reasoning the District Court granted Griffin preliminary injunctive relief.

[Page 429 U.S. 68, 74]

New York would undermine much of the force of 28 U.S.C. 1341.

We turn then to the basic inquiry - whether under New York law there is a "plain, speedy and efficient" way for Griffin to press its constitutional claims while preserving the right to challenge the amount of tax due. This Court answered the first part of that question by its summary judgment of affirmance three years ago in Ammex Warehouse Co. v. Gallman, 414 U.S. 802. In that case, the New York Tax Commission had assessed state alcoholic beverage, tobacco, and sales taxes against two New York companies that sold cigarettes and liquor to persons about to leave the State to enter Canada. The companies brought suit in Federal District Court, claiming that the assessment of the taxes against them violated the Commerce and Import-Export Clauses of the Constitution. The three-judge District Court held that 28 U.S.C. 1341 required dismissal of the action. Ammex-Champlain Corp. v. Gallman, 72 Civ. 306 (NDNY, Mar. 15, 1973) (unreported). The court held that "[t]here is ample authority that a declaratory judgment action may be employed to challenge imposition of a tax. . . . Accordingly, Ammex may present its arguments in the state supreme court and seek a declaratory judgment from that court that application of these taxes to Ammex's export operations is unconstitutional."

[Page 429 U.S. 68, 76]

hearing.[Footnote 7] Moreover, we have no reason to believe that a New York court, acting sua sponte, would question its ability to award preliminary relief in a proper case.

The District Court cited no New York authority for its "reservations" on this score, and we have found none. To the contrary, a New York statute speaks of the availability of a preliminary injunction "in any action" where certain conditions are met. N. Y. Civ. Prac. 6301 (McKinney 1963). There are New York cases suggesting that courts may award preliminary relief in declaratory judgment actions in general, see, e. g., In re Public Serv. Comm'n v. Norton, 304 N. Y. 522, 529, 109 N. E. 2d 705, 708 (1952); Opoliner v. Joint Queensview Housing Enterp., Inc., 11 App. Div. 2d 1076, 206 N. Y. S. 2d 681 (1960), and several New York courts have done so in cases involving the collection of taxes. See, e. g., Stacy v. State, 82 Misc. 2d 181, 368 N. Y. S. 2d 448 (Sup. Ct. 1975) (sales tax); Glen Cove Theatres, Inc. v. City of Glen Cove, 231 N. Y. S. 2d 747 (Sup. Ct. 1962). See also Dun & Bradstreet, Inc. v. City of New York, supra, at 206, 11 N. E. 2d, at 731-732 (permanent injunction approved in declaratory judgment action challenging imposition of sales tax). Although we have held that uncertainty concerning a State's remedy may make it less than "plain" under 28 U.S.C. 1341, see Hillsborough v. Cromwell, 326 U.S., at 625, these New York precedents convincingly demonstrate that Griffin's fears about the availability of such preliminary relief are unfounded.[Footnote 8]

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