                                                                            FILED
                            NOT FOR PUBLICATION
                                                                            DEC 07 2018
                     UNITED STATES COURT OF APPEALS                      MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS


                            FOR THE NINTH CIRCUIT


KATHY ARMSTRONG, individual; et al.,              No.   16-35422

              Plaintiffs-Appellants,              D.C. No. 6:15-cv-00114-SEH

 v.
                                                  MEMORANDUM*
GENE WALBORN, in his official
capacity as Director of the Montana
Department of Revenue,

              Defendant-Appellee.


                    Appeal from the United States District Court
                            for the District of Montana
                     Sam E. Haddon, District Judge, Presiding

                       Argued and Submitted March 6, 2018
                               Seattle, Washington

Before: RAWLINSON and CHRISTEN, Circuit Judges, and BENCIVENGO,**
District Judge.

      Plaintiff Association of Christian Schools International (the “Association”)

appeals the district court’s dismissal of its challenge to a Montana regulation,

      *
             This disposition is not appropriate for publication and is not precedent
except as provided by Ninth Circuit Rule 36-3.
      **
             The Honorable Cathy Ann Bencivengo, United States District Judge
for the Southern District of California, sitting by designation.
Admin. R. Mont. 42.4.802, that denies a tax credit for donations applied towards

religious education.1 We have jurisdiction under 28 U.S.C. § 1291. We conclude

that the comity doctrine controls and affirm the district court’s dismissal of the

Association’s action.

      In response to our request for supplemental briefing, the Association

contends that the Tax Injunction Act (TIA) does not bar its claims because the

Association is not a taxpayer seeking to avoid tax liability. See Supplemental

Letter Brief, Armstrong v. Walborn, No. 16-35422 (9th Cir. 2018), Dkt. #51. The

Supreme Court has not yet addressed whether the TIA bars third-party suits

brought by nontaxpayers. See Direct Marketing v. Brohl, 235 S.Ct. 1124, 1133 n.2

(2015). We need not determine whether the TIA bars federal court jurisdiction

over the Association’s claims because pursuant to the comity doctrine, a complaint

regarding an allegedly unconstitutional state benefits program should proceed




      1
              This memorandum concerns only the claims of the Association. A
prior memorandum concluded that the Tax Injunction Act barred federal court
jurisdiction over the claims of Plaintiffs Kathy Armstrong and Jerry Armstrong.
See Memorandum, Armstrong v. Walborn, No. 16-35422 (9th Cir. 2018), Dkt. #49
                                           2
originally in state court.2 See Levin v. Commerce Energy, Inc., 560 U.S. 413, 432

(2010) (“Because we conclude that the comity doctrine justifies dismissal of

respondent’s federal-court action, we need not decide whether the TIA would itself

block the suit.”); see also Frederickson v. Starbucks Corp., 840 F.3d 1119, 1124

(9th Cir. 2016) (holding that the Court need not determine whether the TIA barred

jurisdiction over plaintiffs’ claims for statutory damages because “the comity

doctrine establishes an even ‘[m]ore embracive’ prudential rule that federal courts

should refrain from hearing ‘claims for relief that risk disrupting the state tax

administration’” (quoting Levin, 560 U.S. at 417) (alteration in original)).

      As in Levin, “a confluence of factors” leads to the conclusion that the comity

doctrine controls here. Levin, 560 U.S. at 431. First, the Association’s complaint

demands that Montana recognize tax credits for donations supporting religiously-

affiliated educational institutions, which may require Montana to extend additional

tax credits if the Association prevails. The TIA bars federal courts from granting


      2
             The complaint and briefing leave much in doubt about how Montana’s
regulation would work in practice and whether the Association’s member schools
stand to be harmed. However, “a court may dismiss a case on a nonmerits ground
such as comity without first resolving an accompanying jurisdictional issue.”
Levin, 560 U.S. at 434 (Kennedy, A., concurring) (citing Sinochem Intern. Co. Ltd.
v. Malaysia Intern. Shipping Corp., 549 U.S. 422 (2007)). Here, we dismiss on
prudential grounds because “subject-matter . . . jurisdiction is difficult to
determine,” Sinochem Intern. Co. Ltd., 549 U.S. at 436, without a better
understanding of how Montana’s regulation would operate.
                                           3
this relief because “a federal court order requiring a state to grant a tax refund is

equivalent to an order preventing the collection of taxes.” Winn v. Killian, 307

F.3d 1011, 1017 (9th Cir. 2002) (citing Dillon v. State of Mont., 634 F.2d 463 (9th

Cir. 1980)). Other forms of relief may be available, but this would require a

federal court to evaluate legislative preferences and involve itself in Montana’s

management of its fiscal operations. See Levin, 560 U.S. at 420. The Montana

state courts are “better positioned than their federal counterparts to correct any

violation because they are more familiar with state legislative preferences and

because the TIA does not constrain their remedial options.” Id. at 431–32.

      Second, “[t]he adequacy of available [Montana] remedies is not at issue in

this case.” Fair Assessment in Real Estate Ass’n, Inc. v. McNary, 454 U.S. 100,

116 (1981). A case raising the same issues as those presented by the Association

has succeeded on the merits in state district court and is currently on appeal to the

Montana Supreme Court. See Espinoza v. Mont. Dep’t of Revenue, No. DA 17-

0492 (Mont.).

      Third, if the Association were to prevail, Montana may be required to

recognize tax credits for donations that support the Association’s religiously-

affiliated member schools. Thus, while the Association argues that it is a third-

party challenger to an allegedly unconstitutional tax scheme, it may in fact be


                                            4
“seeking federal-court aid in an endeavor to improve [its] competitive position.”

Levin, 560 U.S. at 431.

      These three factors “in combination . . . demand deference to the state

adjudicative process.” Id. at 432. Because the Association’s claims are foreclosed

by the comity doctrine, the district court properly dismissed the Association’s

action.

      AFFIRMED in part.




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                                                                            FILED
                                                                             DEC 07 2018
Armstrong v. Walborn, Case No. 16-35422                                  MOLLY C. DWYER, CLERK
                                                                          U.S. COURT OF APPEALS
Rawlinson, Circuit Judge, concurring in part

      I concur only in the portion of the disposition referring the matter to the state

court for initial determination.




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