518 F. 2d 1099 - Schreiber v. G Lugar

The questions presented are (1) whether in a taxpayers' action to enjoin the expenditure of $4.4 million for the construction of an indoor sports arena in Indianapolis, Indiana, "the matter in controversy exceeds the sum or value of $10,000" within the meaning of 28 U.S.C. § 1331(a);1 and (2) whether the proposed expenditure abridges the rights of the citizens of Indianapolis to the Equal Protection of the Laws.

Plaintiffs-appellants are citizens and taxpayers of the consolidated City of Indianapolis, Marion County, Indiana.2

They allege that the construction of the stadium was not authorized by Indiana law and, accordingly, the use of federal revenue sharing funds would violate the Local Fiscal Assistance Act of 1972 (Revenue Sharing Act).3 Their complaint is filed on behalf of all citizens and taxpayers of Indianapolis; jurisdiction of the statutory claim was predicated on 28 U.S.C. § 1331(a).4 The district court assumed jurisdiction but dismissed the complaint for failure to state a claim upon which relief could be granted.

Although not raised by the parties, we are confronted at the outset with the necessity of determining the existence of federal jurisdiction, see Carson v. Allied News Co., 511 F.2d 22, 23 (7th Cir. 1975); for it is clear on the face of the record that "no single member of the class will stand to suffer in the amount of Ten Thousand ($10,000) Dollars."5 In order to satisfy the statutory jurisdictional amount requirement, it is necessary to aggregate the claims of the members of the plaintiffs' class. Such aggregation, if permissible, would result in an alleged injury of either $4.4 million6 or $440,000,7 depending on how one analyzes the claim. In either event, the question is whether such aggregation is permissible in a taxpayers' suit.

That question has repeatedly been answered in the negative by the Supreme Court. In Russell v. Stansell, 105 U.S. 303, 26 L.Ed. 989, various landowners whose property was subject to assessment to pay a judgment owed Stansell by the Levee Board of Mississippi sought to enjoin the collection of the assessment. In dismissing the appeal from the dissolution of the injunction, the Court concluded:

While the appellants, and those whom they have been chosen to represent, are all interested in the question on which their liability to the appellee depends, they are separately charged with the several amounts assessed against them. There is no joint responsibility resting on them as a body.

105 U.S. at 304. Later cases involving attempts to enjoin the collection of assessments or taxes have followed Russell in holding that aggregation is not to be permitted. Ogden City v. Armstrong, 168 U.S. 224, 232, 18 S.Ct. 98, 42 L.Ed. 444; Wheless v. St. Louis, 180 U.S. 379, 382, 21 S.Ct. 402, 45 L.Ed. 583; Rogers v. Hennepin County, 239 U.S. 621, 622, 36 S.Ct. 217, 60 L.Ed. 469; Clark v. Paul Gray, Inc., 306 U.S. 583, 589, 59 S.Ct. 744, 83 L.Ed. 1001.8 And, more recently, in Snyder v. Harris, 394 U.S. 332, 89 S.Ct. 1053, 22 L.Ed.2d 319, the Court held that the 1966 amendments to the Federal Rules of Civil Procedure did not modify the general rule that the separate claims of multiple plaintiffs cannot be aggregated to satisfy the jurisdictional amount requirement.9

There is an early case, Brown v. Trousdale, 138 U.S. 389, 11 S.Ct. 308, 34 L.Ed. 987, which, standing alone, would indicate that aggregation is permissible in certain taxpayer litigation. In that case, plaintiffs, taxpayers in Muhlenburg County, Kentucky, filed suit in the state court to enjoin county officials from collecting taxes to be used to pay the interest on bonds issued for an allegedly improper purpose, and also to enjoin the bondholders from collecting interest. Some of the bonds were held by Kentucky citizens and others by citizens of Tennessee. Two defendant bondholders, citizens of Tennessee, removed the case to the United States Circuit Court for the District of Kentucky, asserting federal jurisdiction on the basis of diversity of citizenship. The circuit court accepted jurisdiction and dissolved the injunction which had been issued by the state court.

On appeal, the Supreme Court reversed, holding that federal jurisdiction was lacking because citizens of Kentucky were on both sides of the controversy. In reaching this result, the Court first stated that it was appropriate to treat the "grievance complained of" as "common to all the plaintiffs and to all whom they professed to represent."10 This step in the Court's reasoning was, no doubt, a holding that the aggregation of the taxpayers' claims in that case was proper; it was, however, a holding that led to the same ultimate conclusion namely an absence of federal jurisdiction as would have been produced by a contrary ruling on the aggregation question. Possibly for that reason the Brown analysis of the aggregation question has not been followed in any later Supreme Court cases.11

It is also true, however, that Brown has not been expressly repudiated, and that Professor Moore has read Brown as establishing a separate class of taxpayer actions with respect to which aggregation of claims is appropriate.

Brown v. Trousdale, holding that the claims of all the taxpayers could be aggregated, and Russell v. Stansell, refusing to allow aggregation of taxpayers' claims are consistent on the analysis that where a public right was involved claims could be aggregated, but not when personal claims were in issue.

3B J. Moore, Federal Practice P 23.13 at 23-2961 (1974).12

We are unable to accept Professor Moore's interpretation of Brown as indicating that the aggregation of taxpayers' claims is permissible if a public right is involved. No such rule is suggested by the Brown opinion itself. Moreover, that interpretation of Brown cannot be reconciled with the Supreme Court's later holding in Scott v. Frazier, 253 U.S. 243, 40 S.Ct. 503, 6 L.Ed. 883. In that case, 42 taxpayers sought, on behalf of all North Dakota taxpayers, to restrain member of the North Dakota Industrial Commission from paying out certain public funds and issuing bonds, contending that two amendments to the State Constitution and the statutes authorizing payments were null and void. The essence of plaintiffs' challenge was that the defendants would be using these public funds for private purposes in violation of the Fourteenth Amendment. On appeal from the district court's dismissal, in part for want of jurisdictional amount (258 F. 669, 671-674 (D.N.D.1919)), the Supreme Court affirmed in a memorandum opinion, stating:

There is no allegation that the loss or injury to any complainant amounts to the sum of $3,000. It is well settled that in such cases as this the amount in controversy must equal the jurisdictional sum as to each complainant. Wheless v. St. Louis, 180 U.S. 379, (21 S.Ct. 402, 45 L.Ed. 583); Rogers v. Hennepin County, 239 U.S. 621, (36 S.Ct. 217, 60 L.Ed. 469).

253 U.S. at 244, 40 S.Ct. at 503.

Scott is clearly inconsistent with the earlier decision in Brown. In each case plaintiffs brought suit on behalf of all taxpayers within the relevant taxing body, challenging the legality of governmental activity that would affect all in a similar manner. Neither case was limited to an attempt to restrain the collection of a tax or assessment for just a single year; in both, the validity of the underlying expenditure of public funds was challenged. The grievance was common to all. The relief sought could not be legally injurious to any of the taxpayers. In each the interests of the unnamed class members were identical to those of the named plaintiffs. The cases are factually indistinguishable.

Since the Court's opinion in Scott completely ignored Brown13 and instead cited and relied upon two cases involving suits brought directly to enjoin the collection of taxes or assessments,14 we cannot accept the suggestion that the Court intended to establish two different classes of taxpayer class actions, one in which aggregation would be permissible and the other in which it would not. We are not persuaded that a workable distinction may be drawn between those taxpayer actions which are brought to vindicate public rights or interests and those in which only private interests are at stake; for in every such action the taxpayer necessarily is asserting a public, as well as a private, interest in avoiding the unlawful expenditure of public funds.15

Contrary to Professor Moore, other commentators have concluded that Brown has been overruled sub silentio by the later decisions. See 2 Barron & Holtzoff, Federal Practice and Procedure § 569, at 117 (1970 Supp.); Note, "Taxpayer Suits and the Aggregation of Claims: The Vitiation of Flast by Snyder," 79 Yale L.J. 1577, 1583 n. 41 (1970); Note, "Taxpayers' Suits: A Survey and Summary," 69 Yale L.J. 895, 920 (1960); Note, "Aggregation of Plaintiffs' Claims to Meet the Jurisdictional Minimum Amount Requirement of the Federal District Courts," 80 U.Pa.L.Rev. 106, 109 (1931). See also Fuller v. Volk, 351 F.2d 323, 327-328 (3rd Cir. 1965), in which aggregation was denied plaintiffs who sought to enjoin the expenditure of state funds in support of school desegregation plans.

Consequently, we hold that plaintiffs may not aggregate their claims, and, since none of them individually may satisfy the amount in controversy requirement, the district court did not have jurisdiction over their statutory claim.16II.

Alternatively, plaintiffs attempted to predicate federal jurisdiction on 28 U.S.C. § 1343(3) by asserting a violation of 42 U.S.C. § 1983. If we understand it correctly, the claim is that plaintiffs have a statutory right to have public funds disbursed lawfully, and that any violation of that right is also a deprivation of a right secured by the Equal Protection Clause of the United States Constitution.17 In short, any violation of statutory law is, ipso jure, also a violation of the Fourteenth Amendment. If this expansive theory is adequate to create federal jurisdiction over this dispute, federal judges surely have bootstraps that will enable them to stand on their own shoulders. The civil rights claim is frivolous. Consequently, that claim should have been dismissed for want of jurisdiction. Bell v. Hood, 327 U.S. 678, 682-683, 66 S.Ct. 773, 90 L.Ed. 939; Stream Pollution Control Board of the State of Indiana v. United States Steel Corp., 512 F.2d 1036, 1040-1041 (7th Cir. 1975).

The order of the district court dismissing the complaint on the merits is vacated and the case is remanded with directions to dismiss for want of jurisdiction.