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Neely v. United States

argued: September 14, 1976.



Seitz, Chief Judge, and Aldisert and Gibbons, Circuit Judges.

Author: Aldisert

ALDISERT, Circuit Judge.

In 1968, the United States Supreme Court found that prosecution for failure to comply with the federal wagering tax statutes, 26 U.S.C. §§ 4401-23, encroached upon the Fifth Amendment's protection against compulsory self-incrimination. Marchetti v. United States, 390 U.S. 39, 19 L. Ed. 2d 889, 88 S. Ct. 697 (1968); Grosso v. United States, 390 U.S. 62, 19 L. Ed. 2d 906, 88 S. Ct. 709 (1968). The rule was subsequently accorded full retroactivity in United States v. United States Coin and Currency, 401 U.S. 715, 28 L. Ed. 2d 434, 91 S. Ct. 1041 (1971). And in United States v. Sams, 521 F.2d 421 (3d Cir. 1975), this court held that a district court could properly annul a wagering tax conviction even when that judgment was entered on a plea of guilty.

The present appeal arises from a dismissal of a class action complaint filed on behalf of individuals convicted and fined under the wagering tax statutes and asking for annulment of all class members' convictions as well as a return of the fines, penalties, and costs paid by class members at the time of their convictions. The major questions presented are of first impression in this court, and require us to determine whether a district court has the authority under the Tucker Act, 28 U.S.C. § 1346, to order the return of fines and costs paid under unconstitutional convictions, and whether a class action may properly lie to annul the convictions of class members and to recover the fines and costs paid by them. We answer both questions in the affirmative.


Charles A. Neely*fn1 pleaded guilty to violations of the federal wagering tax statutes in 1962 and again in 1966. He paid fines of $2050 and $2000, respectively, pursuant to those convictions. On December 12, 1973 Neely filed a complaint in federal district court "on behalf of himself and on behalf of all members of a class similarly situated." Neely properly averred that he was a class representative as defined by Rules 23(a) and 23(b)(3), F.R. Civ. P., defined the purported class, and made other necessary class action averments. The essential requested relief was twofold: (1) a request to strike the judgments of conviction and sentences entered under the wagering tax statutes; and (2) a claim for the return of all fines, penalties, and costs paid incident to the convictions.

In compliance with Rule 8(a), F.R. Civ. P., the complaint contained a statement of grounds for the court's jurisdiction: it incorporated by reference the jurisdictional bases of similar and successful individual actions filed in other district courts, as well as decisions by the United States Courts of Appeals for the Second and Fifth Circuits affirming these district court decisions.*fn2 The complaint averred that the district court in the present action had jurisdiction of the subject matter "by virtue of the cases hereinabove referred to."*fn3

On the same day that he filed the class action, Neely filed petitions at the two criminal numbered proceedings in which he had originally entered guilty pleas. These petitions, at Numbers 62-146 and 66-329 Criminal, asked for individual relief identical to that sought on behalf of the class in the class action. On March 7, 1974, District Judge Hubert I. Teitlebaum granted Neely's motion to consolidate these two proceedings at criminal numbers with the class action, but five days later Judge Teitlebaum vacated the consolidation order and noted that the proceedings at Numbers 66-146 and 66-329 were assigned to Judge Louis Rosenberg and Judge John L. Miller, respectively. By subsequent order of April 8, 1974, the class action was reassigned by Judge Teitlebaum to the Clerk of the Court, "since disposition at this time is impossible." The case was later reassigned to Judge Barron P. McCune.

Neely subsequently prevailed on his petition at Criminal No. 66-329 and the government's appeal in this court was dismissed on its motion. Neely's petition at Criminal No. 62-146 remains undecided. On June 17, 1974, shortly following a hearing by Judge McCune on government motions to dismiss and to stay discovery, 15 individuals petitioned to intervene in Neely's class action. On April 2, 1975, Neely filed a second petition to transfer and consolidate the remaining undecided petition at Criminal No. 62-146 with the class action, and on September 8, 1975, Neely moved for immediate certification of a class.

Final action in the within proceedings in the trial court took place on December 17, 1975 when the district court found and concluded that Neely as an individual asserted no Tucker Act claim in his class action complaint; that Neely could not represent the purported class because of this defect; that Neely could not consolidate his petition at Criminal No. 62-146 with the class action to assert a Tucker Act claim on his own behalf and cure the defect; that, because the class action complaint was invalid, the original filing did not toll the statute of limitations for the class; that the intervenors could not save the class action because the statute of limitations had run against them; and that, even assuming the above conclusions to be invalid, certification of the class would be denied on the basis of unmanageability. Based on these conclusions, the district court denied the motion to intervene, denied Neely's motion for certification of a class, and granted the government's motion to dismiss. Neely timely appealed.


In United States v. Sams, supra, we reserved the question whether the Tucker Act provides authority for a district court to order the return of fines and costs based upon unconstitutional convictions. This case presents the question again and, under the circumstances here presented, we have no difficulty in concluding that the Tucker Act, specifically 28 U.S.C. § 1346(a)(2), does provide such authority. We are persuaded that our conclusion is supported not only by the plain language of the statute itself, but also by relevant Supreme Court precedent and by the similar conclusions of other courts of appeals.

There are two possibly pertinent provisions of the Tucker Act. The first is § 1346(a)(1), which provides for original district court jurisdiction, concurrent with the Court of Claims, of

any civil action against the United States for the recovery of any internal-revenue tax alleged to have been erroneously or illegally assessed or collected, or any penalty claimed to have been collected without authority or any sum alleged to have been excessive or in any manner wrongfully collected under the internal-revenue laws.

The second is § 1346(a)(2), which provides, in pertinent part, for original district court jurisdiction, ...

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