The opinion of the court was delivered by: COHEN
This attack upon taxes levied by the Municipality of Philadelphia and the Commonwealth of Pennsylvania, respectively, against non-residents employed therein was initiated with the convocation of a three-judge district court, pursuant to 28 U.S.C. § 2281. Under consideration before that statutory court were the Wage and Net Profits Tax Ordinance of the City of Philadelphia,
the Pennsylvania State Income Tax
and the Executive Regulations
of the Philadelphia Naval Shipyard, a Federal reservation, the enforcement of which was sought to be enjoined and declared unconstitutional in their application to the plaintiffs and the classes which they purport to represent.
Federal jurisdiction was invoked under various sections of Title 28 U.S.C., alleging diversity of citizenship and jurisdictional amount (section 1332); a federal question (section 1331); a deprivation of civil rights (section 1343); an action arising under Executive Regulations involving damages less than $10,000 (section 1346(2)); the Declaratory Judgment Act (section 2201); and injunctive relief (sections 2281 and 2284).
All defendants moved for a dismissal of the complaint contending that jurisdiction is lacking over the persons; that a statutory prohibition bars the enjoining of state taxes, 28 U.S.C. § 1341; that the complaint fails to state a cause of action upon which relief can be granted; and that improper venue is laid.
After these issues were briefed and argued orally before that court, the motions of the defendants Commonwealth of Pennsylvania and the Honorable Milton Shapp, Governor, for dissolution of the court and for dismissal of the complaint as to them were granted for the reasons stated in the opinion of that court filed contemporaneously herewith. The motions by the remaining defendants were referred to the initiating district judge for his disposition, inasmuch as it was the determination of the three-judge court that jurisdiction in these regards was lacking.
In support of its motion to dismiss the complaint, the defendant Municipality of Philadelphia relies primarily upon the Johnson Act,
28 U.S.C. § 1341, which provides that:
"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." (Emphasis added.)
Philadelphia argues that an expeditious and fully adequate remedy exists administratively in its Courts and, as well, in those of the Commonwealth of Pennsylvania. It refers to the Philadelphia Code Section 19-1500 (1963), which provides that any person desiring to challenge a tax assessment, or seeking refund of taxes paid, may petition the Philadelphia Tax Review Board, with a right to appeal an adverse decision to courts of competent jurisdiction.
The plaintiffs, the Non-Resident Taxpayers Association and the class which it purports to represent under Fed. R. Civ. P. 23 and Fanelli, Nole, Straub, DiFilippo, Candara and Silverstein, non-resident employees of the Philadelphia Naval Shipyard, suing for themselves and others similarly situated, seek, in essence, to have the applicability of the Philadelphia Wage and Net Profits Tax Ordinance declared unconstitutional with respect to persons employed in Philadelphia but residing elsewhere; to enjoin the withholding of any such tax; and directing a refund of taxes improperly paid by such non-residents. Alternatively, they demand a realistic apportionment of taxes imposed with relation to lesser benefits derived by such non-residents, as contrasted to those bestowed upon resident taxpayers.
In resisting Philadelphia's motion to dismiss, the plaintiffs argue that the alleged "plain, speedy and efficient remedy" asserted by the Municipality is illusory at best by reason of the Pennsylvania Supreme Court's decision in Kiker v. City of Philadelphia, 346 Pa. 624, 31 A. 2d 289 (1943), cert. denied 320 U.S. 741, 64 S. Ct. 41, 88 L. Ed. 439 (1943), and by the federal case of Application of Thompson, 157 F. Supp. 93 (E.D. Pa. 1957) aff'd 258 F.2d 320 (3 Cir. 1958), cert. denied 358 U.S. 931, 79 S. Ct. 317, 3 L. Ed. 2d 303 (1959); these cases, they contend, would in effect render such a pursuit for taxpayer relief entirely futile. Plaintiffs insist that they do not seek to enjoin the taxes in general but rather to limit the collection of such local taxes to Philadelphia residents. They claim, further, that there are considerable decisional authorities
to the effect that suits for refunds do not fall within the prohibition of 28 U.S.C. § 1341. The remaining arguments of the plaintiffs, generally, are that the Philadelphia Tax Ordinance, as applied to non-resident taxpayers, is violative of due process, of equal protection of the laws, of the privileges and immunities clause of the Fourteenth Amendment, of their civil rights, and imposes an undue burden upon interstate commerce in violation of the Commerce clause.
The Philadelphia Wage and Net Profits Tax Ordinance has been construed to be constitutional in its application to non-resident persons who derive income from within the geographical limits of the Muncipality of Philadelphia. Kiker v. City of Philadelphia, supra, at page 624 of 346 Pa. at page 297 of 31 A. 2d; Application of Thompson, supra, at page 98 of 157 F. Supp. In Kiker, it was determined as well, that federal employees at the Philadelphia Naval Shipyard at League Island
were subject to the Philadelphia Wage Tax Ordinance, even though some of the employees used a ferry boat to cross the Delaware River from its east bank on the New Jersey shore to the west bank of the river at the shipyard, never setting foot in Philadelphia during the course of their employment. And the same argument made here regarding the apportionment of taxes without equally related benefits was also refuted.
The identical conclusion was reached in Thompson, some 14 years later, by the United States District Court for the Eastern District of Pennsylvania. There, a delinquent, non-resident taxpayer was arrested by Philadelphia authorities at his place of employment in the Naval Shipyard; thereafter, he sought release by habeas corpus proceedings challenging the constitutionality of the tax as applied to him. The validity of the tax was sustained and his petition for release denied.
We appreciate the impasse which seems to confront the plaintiffs when faced with these two authorities. Plaintiffs seek to bypass them, arguing that resort to the Pennsylvania Courts would be an expensive and needlessly time-consuming exercise in futility, so that relief if sought at all must be had in the federal courts. Careful consideration has been given to Kiker and Thompson and it should be observed that many of the constitutional issues raised here were not posed there. No matter how reluctant we may be to judicially assess a sovereign's tax laws, or one of its duly authorized subdivisions, we must be mindful of the admonition in Zwickler v. Koota, 389 U.S. 241, 251, 88 S. Ct. 391, 397, 19 L. Ed. 2d 444 (1967), that federal district courts cannot order abstention " . . . simply to give state courts the first opportunity to vindicate the federal claim." The ordinance in question is not of an uncertain nature nor is it obviously susceptible of the limiting construction ascribed to it by the non-resident plaintiffs. Harman v. Forssenius, 380 U.S. 528, 534-537, 85 S. Ct. 1177, 14 L. Ed. 2d 50 (1965). We are confronted with a clear and unambiguous local ordinance and federal regulations that allegedly impair the fundamental constitutional and civil rights of a broad class of citizens; the immediacy of the problem is evident and the plaintiffs request declaratory relief. Aside from any consideration of injunctive relief, ".. a federal district court has the duty to decide the appropriateness and merits of the declaratory request . . . ." Zwickler, supra, at page 254, 88 S. Ct. at page 399.
Consequently, this court is compelled to determine the federal claims raised by the plaintiffs. In so doing, we find that all but the civil rights contention were laid to rest in the early cases of Shaffer v. Carter, 252 U.S. 37, 40 S. Ct. 221, 64 L. Ed. 445 (1920) and Travis v. Yale & Towne Mfg. Co., 252 U.S. 60, 40 S. Ct. 228, 64 L. Ed. 460 (1920). In Shaffer, an Oklahoma State Income Tax, and in Travis, a New York State Income Tax, as applied to non-residents, were involved. The court in Shaffer ruled that a state income tax (here, a local income tax), which was levied upon resident and non-resident taxpayers alike, was not violative of non-residents' rights of ...