                        FOR PUBLICATION

    UNITED STATES COURT OF APPEALS
         FOR THE NINTH CIRCUIT


 HANNAH FREDRICKSON;                               No. 13-36067
 ASHLEY KRENING;
 MAURIALEE BRACKE,                                    D.C.
        Plaintiffs-Appellants,               No. 3:13-cv-00029-HU

                   v.
                                                      OPINION
 STARBUCKS CORPORATION, a
 Washington corporation,
         Defendant-Appellee.


       Appeal from the United States District Court
                for the District of Oregon
     Malcolm F. Marsh, Senior District Judge, Presiding

              Argued and Submitted March 9, 2016
                       Portland, Oregon

                        Filed November 3, 2016

  Before: Raymond C. Fisher and Paul J. Watford, Circuit
   Judges, and Donald E. Walter,* Senior District Judge.

                     Opinion by Judge Watford


    *
      The Honorable Donald E. Walter, Senior District Judge for the U.S.
District Court for the Western District of Louisiana, sitting by designation.
2                  FREDRICKSON V. STARBUCKS

                            SUMMARY**


    Tax Injunction Act / Federal-State Comity Doctrine

    The panel reversed the district court’s judgment in a class
action brought by three Starbucks baristas challenging
Starbucks’ practice of withholding state and federal taxes
from barsitas’ paychecks based on the cash tips they receive,
and remanded with instructions to remand to state court
because all of the claims were jurisdictionally barred or
foreclosed by the comity doctrine.

    The panel held that under the Tax Injunction Act and the
Anti-Injunction Act, the district court lacked subject
jurisdiction over the plaintiffs’ claims for declaratory and
injunctive relief with respect to Starbucks’ withholding of
state and federal taxes. The panel also held that the federal-
comity doctrine barred the district court from awarding
statutory damages on the state-tax component of plaintiffs’
claims, from which the federal-tax component could not be
severed.


                             COUNSEL

Jon M. Egan (argued), Jon M. Egan PC, Lake Oswego,
Oregon, for Plaintiffs-Appellants.

Pratik A. Shah (argued), Daniel L. Nash, James E. Tysse, and
Z.W. Julius Chen, Akin Gump Strauss Hauer & Feld LLP,

    **
       This summary constitutes no part of the opinion of the court. It has
been prepared by court staff for the convenience of the reader.
                FREDRICKSON V. STARBUCKS                     3

Washington, D.C.; Gregory W. Knopp and Rex S. Heinke,
Akin Gump Strauss Hauer & Feld LLP, Los Angeles,
California; Carol J. Bernick, Christopher F. McCracken, and
Derek D. Green, Davis Wright Tremaine LLP, Portland,
Oregon; for Defendant-Appellee.


                         OPINION

WATFORD, Circuit Judge:

    This is a class action brought against Starbucks by three
baristas who used to work at the company’s coffee shops in
Oregon. They challenge the legality of Starbucks’ practice of
withholding state and federal taxes from baristas’ paychecks
based on the cash tips they receive. We must decide whether
the district court may hear this case given the constraints
imposed by the Tax Injunction Act, the Anti-Injunction Act,
and the federal-state comity doctrine.

                               I

    A familiar sight at any neighborhood Starbucks is the tip
jar near the cash register inviting customers to leave tips for
the baristas. According to the plaintiffs (and what follows is
drawn entirely from their complaint), the baristas pool the
tips left by customers and divide them up at the end of each
week. As a general practice, the baristas do not report to
Starbucks how much they receive in tips. Instead, for tax
withholding purposes, the company simply imputes 50 cents
per hour in estimated tip income to each barista and withholds
state and federal taxes from the baristas’ paychecks based on
that amount.
4               FREDRICKSON V. STARBUCKS

    The plaintiffs allege that neither state nor federal tax law
allows Starbucks to withhold taxes in this fashion. They
contend that federal law permits employers to withhold
federal taxes based on estimated tip income only in certain
circumstances not met here, and that Oregon law does not
treat the baristas’ tips as wages subject to withholding of state
taxes at all.

    The plaintiffs filed a class action against Starbucks in
Oregon state court on behalf of all current and former baristas
employed at the company’s coffee shops in Oregon. Their
complaint asserts five state-law causes of action, each
predicated on the alleged violation of an Oregon wage-and-
hour statute. See Or. Rev. Stat. §§ 652.120, 652.140,
652.610, 653.025, 653.261. Each claim alleges that
Starbucks violated state wage-and-hour laws by deducting
taxes from the baristas’ paychecks in a manner not authorized
by state or federal law, thereby failing to pay the baristas their
full wages when due.

    The plaintiffs do not seek actual damages; they have been
able to recover any taxes wrongfully withheld by filing their
annual tax returns and obtaining refunds for any over-
withholding that occurred. They instead seek statutory
damages, which differ depending on the statute invoked. As
to some of the claims, Oregon law allows an employee who
was not paid her full wages when due to recover up to 30
days of wages as a penalty. Or. Rev. Stat. §§ 652.150,
653.055. The plaintiffs seek 30 days of wages per barista for
each of those claims. As to the remaining claim, Oregon law
authorizes an employee to recover a $200 statutory penalty
for any wrongful deduction from wages. § 652.615. The
plaintiffs seek a penalty of $200 per paycheck for each
barista, on their view that the wrongful deduction provision
                FREDRICKSON V. STARBUCKS                       5

applies to each paycheck and allows for only one violation
based on the total amount wrongfully deducted.

    The complaint also requests declaratory and injunctive
relief barring Starbucks from continuing to withhold state and
federal taxes based on the imputed 50 cents per hour in tip
income. (Because nothing ultimately turns on it, we need not
decide whether the three named plaintiffs, who are no longer
employed by Starbucks, have Article III standing to seek
prospective relief.)

    Starbucks removed the case to federal court, and the
plaintiffs now concede that the Class Action Fairness Act
provides a basis for federal subject matter jurisdiction. See
28 U.S.C. § 1332(d). Shortly after removing the case,
Starbucks moved to dismiss the complaint with prejudice on
the ground that all of the plaintiffs’ claims are either
preempted by federal tax law or barred under Oregon law.
The plaintiffs opposed Starbucks’ motion and filed their own
motion requesting that the case be remanded to state court.
The district court denied the plaintiffs’ motion, granted
Starbucks’ motion, and entered judgment dismissing the case
with prejudice.

                               II

    Before we can address the merits of the district court’s
ruling, we must decide whether the district court had the
authority to hear this case. That requires us to unpack the
plaintiffs’ claims, both in terms of the relief they seek and the
theories of liability they assert. The plaintiffs seek two
distinct forms of relief: declaratory and injunctive relief on
the one hand, and statutory damages on the other. And their
claims under Oregon’s wage-and-hour statutes are predicated
6               FREDRICKSON V. STARBUCKS

on alleged violations of both state and federal tax law: They
contend that Oregon law does not authorize Starbucks to
withhold the state taxes at issue, and that federal law does not
authorize Starbucks to withhold the federal taxes at issue.

    We explain first why the district court lacks the authority
to grant declaratory and injunctive relief with respect to either
the state-tax component or the federal-tax component of the
plaintiffs’ claims. We then explain why the district court is
also foreclosed from awarding statutory damages, which
requires that the entire case be remanded to state court.

                               A

     We begin with the plaintiffs’ request for declaratory and
injunctive relief with respect to Starbucks’ withholding of
state taxes. Congress has sharply curtailed the authority of
federal courts to issue declaratory or injunctive relief that
impedes the administration of state tax laws. The Tax
Injunction Act provides: “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.” 28 U.S.C.
§ 1341. No one disputes that a plain, speedy, and efficient
remedy is available to the plaintiffs in Oregon’s courts, and
it is well settled that the Tax Injunction Act bars the entry of
declaratory judgments to the same extent that it bars the
issuance of injunctions. See California v. Grace Brethren
Church, 457 U.S. 393, 408–11 (1982). Thus, the only
question is whether the declaratory and injunctive relief the
plaintiffs seek would “enjoin, suspend or restrain”—that is,
stop—the collection of state taxes within the meaning of the
Act. Direct Marketing Association v. Brohl, 135 S. Ct. 1124,
1132–33 (2015).
                   FREDRICKSON V. STARBUCKS                              7

    We think the plaintiffs’ requested relief would do just
that. The plaintiffs want the district court to declare that
Starbucks’ withholding of state taxes on the basis of imputed
tip income is illegal under Oregon law and to enjoin
Starbucks from continuing to engage in that practice. The
Supreme Court has held that an employer’s withholding of
tax payments from wages constitutes a method of tax
“collection,” and that an order enjoining employer
withholding therefore stops collection of the tax. United
States v. American Friends Service Committee, 419 U.S. 7, 10
(1974) (per curiam). (American Friends involved the Anti-
Injunction Act, 26 U.S.C. § 7421(a), which bars actions
seeking to restrain the collection of federal taxes, but the
Court construes the two Acts in tandem. See Direct
Marketing, 135 S. Ct. at 1129.) The Third Circuit has
squarely held that the Tax Injunction Act bars actions, like
this one, seeking to enjoin an employer’s withholding of state
taxes from wages. Sipe v. Amerada Hess Corp., 689 F.2d
396, 401–03 (3d Cir. 1982). And the Fourth Circuit has held
that withholding state taxes from lottery winnings is part of
a State’s collection of taxes and therefore may not be
enjoined under the Act. International Lotto Fund v. Virginia
State Lottery Department, 20 F.3d 589, 591–93 (4th Cir.
1994). We agree with the Third and Fourth Circuits and hold
that the Tax Injunction Act bars the district court from
enjoining Starbucks’ withholding of state taxes from the
baristas’ paychecks.1

    1
      Starbucks contends that Bright v. Bechtel Petroleum, Inc., 780 F.2d
766 (9th Cir. 1986), compels a different result because the court there did
not hold that the Tax Injunction Act barred an employee’s breach-of-
contract action against his employer for withholding state taxes from his
paychecks. Bright does not control the outcome in this case. Although
Bright mentioned the Tax Injunction Act in a footnote, the court engaged
in no analysis as to whether it applied there, while at the same time
8                 FREDRICKSON V. STARBUCKS

    Our holding is consistent with the Supreme Court’s
decision in Hibbs v. Winn, 542 U.S. 88 (2004), which
explained that the Tax Injunction Act serves “state-revenue-
protective objectives” and accordingly applies only if the
requested relief would “reduce the flow of state tax revenue.”
Id. at 104, 106; see May Trucking Co. v. Oregon Department
of Transportation, 388 F.3d 1261, 1267 (9th Cir. 2004). The
Court concluded that the Act did not bar a challenge to state
tax credits because granting the relief the plaintiffs sought
(invalidation of the credits) would actually have increased,
not reduced, the flow of state tax revenue. See Hibbs,
542 U.S. at 96. Granting the declaratory and injunctive relief
requested here, by contrast, would reduce the flow of state tax
revenue: If the relief were granted, Starbucks would no
longer collect the state taxes in question and would no longer
remit those funds to Oregon’s treasury.

    It is true that the plaintiffs are not challenging the amount
in taxes ultimately owed, but that was also true in American
Friends and Sipe yet did not change the outcome. See
American Friends, 419 U.S. at 8; Sipe, 689 F.2d at 402. That
the plaintiffs concede the baristas’ tips are taxable income
under Oregon law does not alter the revenue-reducing effect
of the relief they seek. Even though the plaintiffs may owe
the same amount in taxes at the end of the year regardless of
whether Starbucks collects those taxes through withholding,
that does not mean Oregon’s tax revenue would remain the
same in the absence of withholding. If withholding were
enjoined, Oregon would no longer receive taxes on the
baristas’ tip income unless the baristas report that income on


holding that the Anti-Injunction Act did apply with respect to the
analogous claim against the withholding of federal taxes. See id. at 770,
771 n.6.
                FREDRICKSON V. STARBUCKS                       9

their tax returns and have the money to pay the taxes owed
when it comes time to file their returns. There is no basis for
us to assume that would happen. Indeed, it is for this very
reason that States collect taxes through paycheck withholding
in the first place. Because the requested declaratory and
injunctive relief would stop, not merely inhibit, the flow of
tax revenue into Oregon’s coffers, the Tax Injunction Act
strips the district court of jurisdiction to award such relief.
See Direct Marketing, 135 S. Ct. at 1133.

    Our holding is also consistent with the scope of the Tax
Injunction Act outlined by the Supreme Court in Direct
Marketing.        The plaintiffs there challenged the
constitutionality of certain notice and reporting requirements
designed to facilitate Colorado’s collection of sales and use
taxes. Id. at 1128. The Court held that, although the notice
and reporting requirements “may improve Colorado’s ability
to assess and ultimately collect its sales and use taxes,” the
Tax Injunction Act is “not keyed to all activities that may
improve a State’s ability to assess and collect taxes.” Id. at
1131. Instead, the Court held, the Act is “keyed to the acts of
assessment, levy, and collection themselves, and enforcement
of the notice and reporting requirements is none of these.” Id.
(emphasis added). Here, the plaintiffs challenge their
employer’s withholding practices. As explained above, an
employer’s withholding of taxes constitutes a method of tax
“collection,” and an order enjoining that withholding stops
collection of the tax. American Friends, 419 U.S. at 10.
Accordingly, this case falls within the scope of the Tax
Injunction Act contemplated by Direct Marketing.

    For similar reasons, we conclude that the district court
lacks jurisdiction to issue declaratory or injunctive relief with
respect to Starbucks’ withholding of federal taxes. The Anti-
10              FREDRICKSON V. STARBUCKS

Injunction Act—the counterpart to the Tax Injunction Act
applicable to federal taxes—provides that “no suit for the
purpose of restraining the assessment or collection of any tax
shall be maintained in any court by any person,” subject to
several exceptions that do not apply here. 26 U.S.C.
§ 7421(a). Like the Tax Injunction Act, the Anti-Injunction
Act applies to claims for declaratory as well as injunctive
relief. See Hansen v. Department of Treasury, 528 F.3d 597,
601 (9th Cir. 2007). As noted above, the Supreme Court has
squarely held that the Anti-Injunction Act bars actions against
an employer’s withholding of federal taxes from wages.
American Friends, 419 U.S. at 10; see Maxfield v. U.S. Postal
Service, 752 F.2d 433, 434 (9th Cir. 1984). Our analysis of
the bar imposed by the Tax Injunction Act with respect to the
state-tax component of the plaintiffs’ claims applies equally
under the Anti-Injunction Act to the federal-tax component of
their claims. The district court therefore lacks jurisdiction to
issue declaratory and injunctive relief with respect to
Starbucks’ withholding of state or federal taxes.

                               B

    We next consider whether the district court had the
authority to entertain the plaintiffs’ claims for statutory
damages. Those claims are again predicated on Starbucks’
alleged violation of both state and federal tax law.

    As to the state-tax component of the plaintiffs’ claims, the
Supreme Court has not yet decided whether the Tax
Injunction Act bars claims for damages. That is a question
we need not resolve because an award of statutory damages
is precluded here by the federal-state comity doctrine.
                FREDRICKSON V. STARBUCKS                    11

    In cases involving state taxes, the comity doctrine
establishes an even “[m]ore embracive” prudential rule that
federal courts should refrain from hearing “claims for relief
that risk disrupting state tax administration.” Levin v.
Commerce Energy, Inc., 560 U.S. 413, 417 (2010). The
comity doctrine extends to claims seeking damages based on
the same federalism concerns animating the Tax Injunction
Act’s limits on declaratory and injunctive relief. Fair
Assessment in Real Estate Association, Inc. v. McNary,
454 U.S. 100, 107, 115–16 (1981); Marvin F. Poer & Co. v.
County of Alameda, 725 F.2d 1234, 1236 (9th Cir. 1984);
Sipe, 689 F.2d at 403–04. That the plaintiffs seek to recover
only statutory damages, and not the tax amounts said to be
improperly collected, does not matter. Fair Assessment itself
involved a claim for punitive damages in addition to actual
damages, 454 U.S. at 106, and the alleged damages in Sipe
included statutory penalties, 689 F.2d at 399–400.

    Any award of statutory damages here would have the
same disruptive effect as entry of a declaratory judgment or
issuance of an injunction, thereby undermining the state-
revenue-protective objectives of the Tax Injunction Act. See
May Trucking Co., 388 F.3d at 1274. To award statutory
damages, the district court would first have to declare that
Oregon law prohibits Starbucks’ practice of withholding state
taxes on the basis of imputed tip income, and Starbucks
would of course cease doing so in order to avoid future
liability. See Fair Assessment, 454 U.S. at 113. The
impermissible end result, as with declaratory or injunctive
relief, would be to stop the flow of tax revenue into Oregon’s
coffers.

   As Starbucks notes, the plaintiffs do not aim to invalidate
Oregon’s tax laws as unconstitutional or to drag state officers
12              FREDRICKSON V. STARBUCKS

into federal court to defend those laws, factors that
contributed to the comity concerns in Fair Assessment. Id. at
115–16. But the damages relief sought by the plaintiffs
would nonetheless “halt” a part of Oregon’s tax scheme. Id.
at 115. The fact that the plaintiffs seek to disrupt this scheme
by attempting to enforce their own interpretation of state tax
law rather than asserting a federal constitutional challenge
actually strengthens the case for comity. Precisely because
the plaintiffs’ claims turn solely on the proper interpretation
of state law, there is no federal interest involved in the
dispute, which Oregon’s courts are better equipped to resolve
given their greater familiarity with the nuances of state tax
law. Nor does the fact that the plaintiffs have sued a private
employer rather than state officials change the analysis, for
Starbucks has been sued—and is before the court defending
its tax withholding practices—only in its role as the State’s
“private collection agent[].” Brennan v. Southwest Airlines
Co., 134 F.3d 1405, 1411 (9th Cir. 1998) (alteration omitted).

     Starbucks’ reliance on Bright v. Bechtel Petroleum, Inc.,
780 F.2d 766 (9th Cir. 1986), is again unavailing. There, an
employee alleged that his employer’s withholding of state and
federal taxes breached his employment contract, and we
refused to remand his claim challenging the withholding of
state taxes to state court. We declined to invoke the comity
doctrine because the “state income taxation system [was] not
at issue” in the case. Id. at 771. Resolution of the plaintiff’s
challenge to the withholding of state taxes turned entirely on
the validity of his challenge to the withholding of federal
taxes, because a state regulation directed the plaintiff’s
employer to withhold state taxes from his paycheck if the
employer was required to withhold federal taxes. We first
determined that the plaintiff’s federal withholding challenge
was utterly frivolous. We then held that, to conserve judicial
                FREDRICKSON V. STARBUCKS                      13

resources, the district court properly disposed of the
plaintiff’s equally frivolous challenge to state-tax withholding
without remanding that portion of the case to state court. Id.
Bright did not involve a dispute, like this one, over the proper
interpretation of state law—a dispute, as we have said, that is
best left to the Oregon courts to resolve.

    What remains is the federal-tax component of the
plaintiffs’ claims for statutory damages. We need not decide
whether the jurisdictional bar imposed by the Anti-Injunction
Act extends to the plaintiffs’ requested damages relief
because the plaintiffs may not pursue the federal-tax
component of their claims on a stand-alone basis. The
plaintiffs have pleaded each of their claims in a unitary
fashion such that the improper withholding of either state or
federal taxes would entitle each class member to the same
indivisible statutory penalty. For some of their claims, the
plaintiffs seek a single statutory penalty of 30 days’ wages for
each barista, which each barista may recover only once
regardless of whether their wages were subject to improper
deductions for state taxes, federal taxes, or both. The same is
true for the $200 statutory penalty per paycheck, which the
plaintiffs assert may be recovered only once for the total
amount wrongfully deducted. Thus, the plaintiffs’ claims for
damages cannot be severed into separate state-tax and
federal-tax components; for each claim, the plaintiffs have
pleaded two theories of liability for the same relief to cure the
same wrong. Starbucks concedes this point in its brief,
acknowledging that “each of the five counts alleged in the
complaint weaves predicate federal- and state-law theories
into a unitary state-law claim that must be heard in either
state or federal court, but not both.”

                      *        *         *
14             FREDRICKSON V. STARBUCKS

    Under the Tax Injunction Act and the Anti-Injunction
Act, the district court lacks subject matter jurisdiction over
the plaintiffs’ claims for declaratory and injunctive relief.
The federal-state comity doctrine bars the district court from
awarding statutory damages on the state-tax component of the
plaintiffs’ claims, from which the federal-tax component
cannot be severed.         Because all of the claims are
jurisdictionally barred or foreclosed by the comity doctrine,
the entire action must be remanded to state court. See
28 U.S.C. § 1447(c); Hawthorne Savings F.S.B. v. Reliance
Insurance Co. of Illinois, 421 F.3d 835, 852 (9th Cir. 2005).

    We reverse the district court’s judgment and remand with
instructions to remand the case to state court.

     REVERSED and REMANDED.
