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United States v. City of Pittsburgh

March 5, 1985

UNITED STATES OF AMERICA AND JORDAN LILIENTHAL APPELLEES
v.
CITY OF PITTSBURGH, A MUNICIPAL CORPORATION AND STEPHEN A. SCHILLO, TREASURER OF THE CITY OF PITTSBURGH APPELLANTS



Appeal from the United States District Court for the Western District of Pennsylvania (D.C. Civ. No. 83-1737)

Author: Seitz

Before: SEITZ, GIBBONS and SLOVITER, Circuit Judges.

SEITZ, Circuit Judge.

The defendants, the City of Pittsburgh and its treasurer Stephen Schillo (collectively the "City"), appeal from an order granting summary judgment in favor of the plaintiffs, the United States and Jordan Lilienthal. The order declared that Jordan Lilienthal, a federal court reporter, was not subject to the City's business privilege tax. Subject matter jurisdiction in the district court was asserted pursuant to 28 U.S.C. § 1345 (1982). This court has appellate jurisdiction under 28 U.S.C. § 1291 (1982).

I.

The following facts are undisputed. Plaintiff Jordan Lilienthal is a federal court reporter in Pittsburgh. Pennsylvania. He was appointed to that position by the United States District Court for the Western District of Pennsylvania under the authority granted by 28 U.S.C. § 753(a) (1982). As a federal court reporter, Lilienthal is a federal employee and an officer of the court. For his services, he is compensated in two ways. First, he is paid a salary. 28 U.S.C. § 753(e) (1982). Second, he may charge fees for preparing transcripts that are requested by any party. 28 U.S.C. § 753(f) (1982).

The City charges a business privilege tax equal to 5 mills on every dollar of gross receipt of every business in the city, other than certain exempted businesses. The City contends that federal court reporters conduct a "business" in selling transcripts and are subject to the tax. The United States, however, contends that federal court reporters are carrying out the business of the United States and are immune from the business privilege tax by reason of the supremacy clause of the constitution. There is no contention that a court reporter's salary is subject to the tax. The United States and Lilienthal filed this action in the district court seeking declaratory and injunctive relief.

The district court, upon cross motions for summary judgment, declared the imposition of the tax on Lilienthal's transcript income to be inconsistent with the supremacy clause and granted judgment in his and the United States' favor. The City then timely filed this appeal.

II. Jurisdiction in the District Court

The City contends that the district court lacked subject matter jurisdiction over this action. Jurisdiction in the district court was asserted pursuant to 28 U.S.C. § 1345 which provides that the district court shall have original jurisdiction over all civil actions brought by the United States. The City argues that section 1345 was an improper basis for jurisdiction because the United States lacks standing to challenge the tax assessment against Lilienthal. If further asserts that Lilienthal on his own could not invoke the jurisdiction of the district court.

We need not reach the latter contention that Lilienthal lacked an independent basis for bringing this action because we believe that the district court properly held that the United States had standing to bring this action under section 1345. In United States v. Lewisburg Area School District, 539 F.2d 301 (3d Cir. 1976), we held that the United States had standing to assert its claim that the residents and employees of a federal enclave were immune from the imposition of certain state taxes. We stated that "it has been established that the United States may bring suit to protect its sovereign interests notwithstanding the lack of any immediate pecuniary interest in the outcome of the litigation." Id. at 305.

In this case, the United States asserts that the city's business privilege tax interferes with the operation of the federal judicial system. As such, it has alleged an injury to its sovereign rights sufficient to have standing to sue in the district court. See also United States v. Nevada Tax Commission, 439 F.2d 435 (9th Cir. 1971) (United States has standing to bring action asserting that its contractors were immune from state tax).

III. Abstention

The City contends that the district court should have abstained from deciding the question of a constitutional tax immunity because a possible resolution of a state law issue in a pending state court action could obviate the the necessity of the constitutional adjudication. See Railroad Commission v. Pullman Co., 312 U.S. 496, 85 L. Ed. 971, 61 S. Ct. 643 (1941). The district court refused to abstain on the basis of the Pullman doctrine because there were important issues of ...


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