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Schreiber v. Lugar

decided: July 14, 1975.

WILLIAM M. SCHREIBER, ET AL., PLAINTIFFS-APPELLEES,
v.
RICHARD G. LUGAR, AS MAYOR OF THE CONSOLIDATED CITY OF INDIANAPOLIS, INDIANA, ET AL., DEFENDANTS-APPELLANTS



Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division - No. IP73-C-610 CALE J. HOLDER, Judge.

Fairchild, Chief Judge, McAllister, Senior Circuit Judge,*fn* and Stevens, Circuit Judge.

Author: Stevens

STEVENS, Circuit Judge.

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);*fn1 and (2) whether the proposed expenditure abridges the rights of the citizens of Indianapolis to the Equal Protection of the Laws.

I.

Plaintiffs-appellants are citizens and taxpayers of the consolidated City of Indianapolis, Marion County, Indiana.*fn2

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).*fn3 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).*fn4 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."*fn5 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 million*fn6 or $440,000,*fn7 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, 42 L. Ed. 444, 18 S. Ct. 98; Wheless v. St. Louis, 180 U.S. 379, 382, 45 L. Ed. 583, 21 S. Ct. 402; Rogers v. Hennepin County, 239 U.S. 621, 622, 60 L. Ed. 469, 36 S. Ct. 217; Clark v. Paul Gray, Inc., 306 U.S. 583, 589, 83 L. Ed. 1001, 59 S. Ct. 744.*fn8 And, more recently, in Snyder v. Harris, 394 U.S. 332, 22 L. Ed. 2d 319, 89 S. Ct. 1053, 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.*fn9

There is an early case, Brown v. Trousdale, 138 U.S. 389, 34 L. Ed. 987, 11 S. Ct. 308, 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."*fn10 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.*fn11

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 ...


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