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Keywords

injunctioncorporationlevydeclaratory judgment
injunctionmotioncorporationappelleelevy

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Tully v. Griffin, Inc., 429 U.S. 68, 97 S.Ct. 219, 50 L.Ed.2d 227

Facts

Griffin, Inc., a Vermont corporation operating a furniture store, was determined by the New York Department of Taxation and Finance to be 'doing business' in New York and required to collect sales taxes from New York customers. After Griffin refused to allow a tax audit, the Department issued a Notice of Determination demanding payment of back taxes. Griffin filed a suit in federal court seeking to prevent the collection of these taxes, claiming it violated constitutional provisions.

The appellee, Griffin, Inc., is a Vermont corporation that operates a furniture store in Arlington, Vt., six miles from the New York-Vermont border.

Issue

Whether New York provides a 'plain, speedy and efficient' remedy to an out-of-state corporation that seeks to challenge New York's assessment of sales taxes against it.

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

Rule

The Tax Injunction Act, 28 U.S.C. § 1341, prohibits federal district courts from enjoining the assessment, levy, or collection of state taxes where 'a plain, speedy and efficient remedy may be had in the courts of such State.'

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.

Analysis

The Supreme Court analyzed whether New York law offered Griffin an adequate remedy to challenge the tax assessment. The Court found that New York's procedures, including the ability to seek a declaratory judgment and obtain a preliminary injunction, allowed Griffin to contest the constitutionality of the tax while preserving its right to challenge the amount due. The Court emphasized that the mere requirement to litigate in New York did not undermine the adequacy of the remedy.

Since New York provides a 'plain, speedy and efficient' means for the redress of Griffin's constitutional claims, the District Court should not have granted injunctive relief.

Conclusion

The Supreme Court concluded that the District Court erred in granting injunctive relief, as New York provided an adequate remedy for Griffin's claims. The Court vacated the lower court's decision and remanded the case with instructions to dismiss the complaint.

Its judgment granting Griffin's motion for a preliminary injunction is vacated, and the case is remanded to that court with instructions to dismiss the complaint.

Who won?

New York prevailed in the case because the Supreme Court determined that the state provided sufficient legal remedies for Griffin to challenge the tax assessment, thus making the federal injunction improper.

New York provides a 'plain, speedy and efficient' means for redress of retailer's constitutional claim while at the same time preserving retailer's right to challenge the amount of taxes due.

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