Cruise Lines International Association Alaska et al v. The City and Borough of Juneau, Alaska et al

Filing 34

ORDER granting 24 Motion Take Judicial Notice; denying 18 Motion to Dismiss for Lack of Jurisdiction. Signed by Judge H. Russel Holland on 9/29/16. (PRR, COURT STAFF)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA

CRUISE LINES INTERNATIONAL
ASSOCIATION ALASKA, et al.,

)
)
)
Plaintiffs,
)
)
vs.
)
)
THE CITY AND BOROUGH OF JUNEAU,
)
ALASKA, et al.,
)
)
Defendants.
)
__________________________________________)

No. 1:16-cv-0008-HRH

ORDER
Motion to Dismiss
Defendants move to dismiss plaintiffs’ amended complaint.1

This motion is

opposed2 and plaintiffs move for the court to take judicial notice of four exhibits attached
to their opposition.3 Oral argument was requested and has been heard on the motion to
dismiss.

1

Docket No. 18.

2

Docket No. 23.

3

Docket No. 24.
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Background
Plaintiffs are Cruise Lines International Association Alaska and Cruise Lines
International Association. Cruise Lines International Association Alaska is a “not-for-profit
association” of twelve cruise lines which works “to build positive relationships with
communities and government agencies in Alaska, to develop strong partnerships with
communities and businesses in Alaska, and to protect its members’ legal interests.”4 The
twelve cruise lines are also members of Cruise Lines International Association, which is a
“not-for-profit organization ... that helps its members succeed by advocating for the
common interests of the cruise community and protecting its members’ legal interests in
the jurisdictions where they operate.”5
Defendants are the City and Borough of Juneau, Alaska and Rorie Watt, in his
official capacity as the City Manager.

Juneau “is a duly authorized Alaska

Municipality....”6
Plaintiffs allege that Juneau imposes two “entry fees” on cruise ship passengers: 1)
a $5.00 Marine Passenger Fee and 2) a $3.00 Port Development Fee.7 Plaintiffs allege that

4

First Amended Complaint [etc.] at 3, ¶ 4, Docket No. 28.

5

Id. at ¶ 5.

6

Id. at ¶ 6.

7

Id. at 5, ¶¶ 16-17.
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the Marine Passenger Fee was established by a voter initiative and then adopted by the
Municipality to codify the terms and to provide for the administration and collection of the
fee.8 The Ordinance provides that “the purpose of the fee [is] to address the costs to the
City and Borough for services and infrastructure rendered to cruise ships and cruise ship
passengers visiting the City and Borough.” CBJ Code 69.20.005.9 The Ordinance further
provides that “[t]he fees ... shall be placed in the marine passenger fund” and that “[t]he
proceeds of the fund shall be appropriated in support of the marine passenger ship
industry....” CBJ Code 69.20.120.10
Plaintiffs allege that the Port Development Fee was established by a municipal
resolution.11 The resolution provides that the “[p]roceeds of the fee shall be placed in the

8

Id. at ¶ 16.

9

Exhibit 1 at 1, Opposition to Defendants’ Motion to Dismiss Complaint, Docket No.
23. “Although defendant[s] ha[ve] mounted a facial attack on jurisdiction, the court can
consider documents that are proper subjects of judicial notice in deciding the motion.”
PNC Equipment Finance, LLC v. California Fairs Financing Auth., Case No. 11-06248
MMM (DTBx), 2012 WL 12506870, at *6 n.29 (C.D. Cal. Feb. 9, 2012). Plaintiffs move for the
court to take judicial notice of Exhibit 1. “Under [FRE] Rule 201, municipal ordinances are
proper subjects of judicial notice because they are not subject to reasonable dispute.” Calop
Business Systems, Inc. v. City of Los Angeles, 984 F. Supp. 2d 981, 992 (C.D. Cal. 2013).
10

Exhibit 1 at 6, Opposition to Defendants’ Motion to Dismiss Complaint, Docket No.

23.
11

First Amended Complaint [etc.] at 5, ¶ 17, Docket No. 28.
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Port Development Fund.”12 The resolution further provides that “[i]t is the intent of the
Assembly that the proceeds of the [Port Development] Fund shall be used for capital
improvements to the downtown waterfront for the provision of service[s] to the cruise ship
industry.”13
Plaintiffs allege that “[t]he Entry Fees discriminate against cruise travel over other
modes of transportation”14 and that “[t]he Entry Fees discriminate against large cruise
ships.”15 Plaintiffs also allege that “[r]evenues generated by the Entry Fees bear no
reasonable relationship to the actual costs incurred by [Juneau] to provide services to the
cruise vessels and the passengers paying the fees.”16 Plaintiffs allege that Juneau “has spent
the proceeds from the Entry Fees, or significant portions thereof, on activities that are
unrelated to and/or have not provided any benefits to passengers and vessels.”17 By way
of example, plaintiffs allege that Juneau has allocated $10 million “to build a man-made

12

Resolution of the City and Borough of Juneau, Alaska Serial No. 2552 at Section
1(c)(3), Exhibit 2 at 2, Opposition to Defendants’ Motion to Dismiss Complaint, Docket No.
23. Plaintiff moves for the court to take judicial notice of Exhibit 2. The court may take
judicial notice of this resolution for the same reason it took judicial notice of the Ordinance
in Exhibit 1. See footnote 9.
13

Id. at Section 1(c)(4).

14

First Amended Complaint [etc.] at 6, ¶ 23, Docket No. 28.

15

Id. at 7, ¶ 24.

16

Id. at ¶ 25.

17

Id. at ¶ 26.
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recreational island, elevated walkways, and infrastructure to support a whale statute
located nearly a mile away from the cruise ship docks.”18 Plaintiffs further allege that
Juneau “has ... applied proceeds from the Entry Fees to a variety of other projects and
expenses that provide general benefits to the community, but do not recoup costs incurred
by [Juneau] in providing services to vessels and passengers.”19 By way of example,
plaintiffs allege that Juneau
has appropriated Entry Fees during the period of Fiscal Year
2001 to Fiscal Year 2016 for the following:
(a)
expenses;

$22 million to fund ... general government operating

(b) $11 million to fund projects within the [Juneau] roaded
service area, which include a number of projects that benefit [Juneau]
generally and/or provide no direct benefits to the Cruise Lines’ vessels
and passengers;
(c)
$2 million for ... bus services even though individual
passengers, including Cruise Lines passengers using [the] bus
services, already pay to use [the] bus services;
(d) $594,000 for operations, maintenance, capital improvements, and expansions of the Juneau International Airport;
(e) $447,000 for upgrades to a private dock that Cruise Lines’
vessels and passengers are not able to use; and

18

Id.

19

Id. at ¶ 27.
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(f) Attorneys’ fees for outside counsel engaged to represent
[Juneau] in matters related to this litigation.[20]
Based on these allegations, plaintiffs assert four claims for relief: 1) a claim that the
Entry Fees violate the Tonnage Clause of the United States Constitution; 2) a claim that the
Entry Fees violate the Rivers and Harbors Appropriation Act of 1884, as amended, 33
U.S.C. § 5; 3) a claim that the Entry Fees violate the Commerce Clause of the United States
Constitution; and 4) a § 1983 equal protection claim. Plaintiffs seek a declaration 1) that the
Entry Fees “violate the Tonnage Clause, the Supremacy Clause (by virtue of their violation
of 33 U.S.C. § 5), and the Commerce Clause,” 2) that “[d]efendants have deprived CLIA
and its Cruise Lines members of federal rights under color of state law in violation of 42
U.S.C. § 1983;” 3) that “[d]efendants are legally barred from imposing or collecting the
Entry Fees to the extent that revenues therefrom are unlawful, excessive or otherwise
impermissible;” and 4) that “[d]efendants are legally barred from further use of Entry Fees
revenue to fund activities that are unrelated to and do not benefit the Cruise Lines’ vessels
and passengers or that do not reflect the direct cost of providing services to cruise
vessels.”21 Plaintiffs also seek to enjoin defendants 1) from “imposing or collecting the
Entry Fees to the extent that the amount thereof is excessive or otherwise impermissible;”
and 2) from “further use of the revenues from the Entry Fees to fund activities that are

20

Id. at 7-8, ¶ 27.

21

Id. at 14, ¶ 1(a)-(d).
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unrelated to and do not benefit the Cruise Lines’ vessels and passengers, or approximate
their use of [Juneau’s] port.”22
Pursuant to Rule 12(b)(1), Federal Rules of Civil Procedure, defendants now move
to dismiss plaintiffs’ amended complaint on the ground that the Tax Injunction Act
deprives the court of subject matter jurisdiction.
Discussion
“A Rule 12(b)(1) jurisdictional attack may be facial or factual.” Safe Air for Everyone
v. Meyer, 373 F.3d 1035, 1039 (9th Cir. 2004). Defendants are making a facial attack here.
“In a facial attack, the challenger asserts that the allegations contained in a complaint are
insufficient on their face to invoke federal jurisdiction.” Id. In considering a facial
challenge, the court is generally confined to the allegations in the complaint and “assumes
the truth of [the] plaintiff’s factual allegations and draws all reasonable inferences in its
favor.” Ecological Rights Foundation v. Pacific Gas and Elec. Co., 803 F. Supp. 2d 1056,
1059 (N.D. Cal. 2011). But, the court may also consider “‘additional facts ... contained in
materials of which the court may take judicial notice’” without converting a facial attack
into a factual attack. Id. (quoting Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994)).
Plaintiff bears the burden of proving that subject matter jurisdiction exists. Robinson v.
United States, 586 F.3d 683, 685 (9th Cir. 2009)).

22

Id. at ¶ 2(a)-(b).
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Defendants argue that the Tax Injunction Act (TIA) deprives the court of subject
matter jurisdiction of this case. “The TIA is a limitation on the jurisdiction of federal
courts.” Bidart Bros. v. Calif. Apple Com’n, 73 F.3d 925, 928 (9th Cir. 1996). The TIA
provides that “[t]he 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.”23 28 U.S.C. § 1341. “[T]he statute has its roots in equity
practice, in principles of federalism, and in recognition of the imperative need of a State to
administer its own fiscal operations.” Tully v. Griffin, Inc., 429 U.S. 68, 73 (1976). The TIA
“bars both injunctive and declaratory relief.” Air Polynesia, Inc. v. Freitas, 742 F.2d 546,
547 (9th Cir. 1984). In order for the TIA to divest the court of jurisdiction of plaintiffs’
claims, the Entry Fees must be “taxes” for purposes of the TIA; an Alaska state court must
provide plaintiffs with a plain, speedy and efficient means to challenge the imposition of
the Entry Fees; and plaintiffs’ action must, “if successful, ... reduce the flow of [Juneau’s]
tax revenue.” Qwest Corp. v. City of Surprise, 434 F.3d 1176, 1184 (9th Cir. 2006).
The court “appl[ies] the Bidart test to determine whether a certain charge is a fee or
a tax.” Id. at 1183.
The test instructs courts to focus on three primary factors: (1)
the entity that imposes the charge; (2) the parties upon whom
23

“It is well-settled that the statute applies not only to taxes imposed by states, but
also to those imposed by municipalities.” Home Builders Ass’n of Mississippi, Inc. v. City
of Madison, Miss., 143 F.3d 1006, 1010 n.6 (5th Cir. 1998).
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the charge is imposed; and (3) whether the charge is expended
for general public purposes, or used for the regulation or
benefit of the parties upon whom the assessment is imposed.
Id.
The first Bidart factor suggests that the Entry Fees are taxes. “An assessment
imposed directly by the legislature is more likely to be a tax than an assessment imposed
by an administrative agency.” Bidart, 73 F.3d at 931. Here, the challenged assessments
were imposed by the municipal legislative governing body, not an administrative agency.
The second factor suggests that the Entry Fees are not taxes. An assessment
imposed upon a broad class of parties is more likely to be a tax than an assessment imposed
upon a narrow class.” Id. The Entry Fees are imposed upon a narrow class composed of
only large, out-of-state cruise ships. That the fees are actually paid by cruise ship
passengers, which defendants contend each year number in the hundreds of thousands,
does not mean that the fees are imposed on a broad class. What matters is that the Entry
Fees are imposed only on large, out-of-state cruise ships and are not imposed on all
citizens, all visitors to Juneau, or all vessels entering the Port of Juneau. See In re
Washington State Apple Advertising Com’n, 257 F. Supp. 2d 1274, 1279 (E.D. Wash. 2003)
(it is “relevant not that the assessments were imposed on only large apple producers as
opposed to all apple producers, but that the assessments were imposed only on apple
producers, and not on all citizens, or even all agricultural producers”).

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“Where” as here, “the first two factors are not dispositive, courts examining whether
an assessment is a tax ‘have tended ... to emphasize the revenue’s ultimate use.’” Bidart,
73 F.3d at 932 (quoting San Juan Cellular Telephone Co. v. Public Service Com’n of Puerto
Rico, 967 F.2d 683, 685 (1st Cir. 1992)). “Assessments treated as general revenues and paid
into the state’s general fund are taxes.” Id. “An assessment placed in a special fund and
used only for special purposes is less likely to be a tax.” Id.
Here, there is no dispute that the Entry Fees were placed into special funds, which
would tend to suggest that the Entry Fees are not taxes for purposes of the TIA. “However,
even assessments that are segregated from general revenues are ‘taxes’ under the TIA if
expended to provide ‘a general benefit to the public.’” Id. (quoting San Juan Cellular, 967
F.2d at 685).
Defendants argue that plaintiffs have alleged that the Entry Fees were expended to
provide a general benefit to the public. Defendants contend that the principal focus of
plaintiffs’ amended complaint is that the Entry Fees are being used for general purposes
and not purposes related to large cruise ships and their passengers. Defendants emphasize
that plaintiffs have alleged that the Entry Fees have been expended “on activities that are
unrelated to and/or that have not provided any benefits to passengers and vessels”, that
the proceeds of the Entry Fees have been “applied ... to a variety of other projects and
expenses that provide general benefits to the community”, and that the cruise passengers

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who pay the fee “have no interest in and derive no benefit from projects that [Juneau] may
build or complete in the future.”24
Plaintiffs do not dispute that they have alleged that the Entry Fees have been used
for general purposes, but they argue that it is the intended “ultimate use” of the Entry Fees
that governs here, not their allegations about defendants’ misuse of the Entry Fees. And
contrary to defendants’ contention, the court may consider the intended use of the Entry
Fees. See Hexom v. Oregon Dep’t of Transp., 177 F.3d 1134, 1138 (9th Cir. 1999) (quoting
Hager v. City of West Peoria, 84 F.3d 865, 870 (7th Cir. 1996)) (“[t]he question ... is not
simply where the money is deposited at some point; it is what the purpose or use of the
assessment truly is. As the Seventh Circuit has pointed out, ‘[r]ather than a question solely
of where the money goes, the issue is why the money is taken’”).
Plaintiffs have alleged that the Entry Fees are levied “to fund capital improvements
to port facilities” and “for capital projects said to be port-related.”25 The ordinance and the
resolution which enacted the Entry Fees both provide that the fees were to be used for
specific purposes and not for general purposes. The Marine Passenger Fee ordinance
provides that the fees should be used “for services and infrastructure rendered to cruise

24

First Amended Complaint [etc.] at 7-8, ¶¶ 26-28, Docket No. 28.

25

Id. at 5, ¶¶ 15, 17.
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ships and cruise ship passengers visiting” Juneau. CBJ Code 69.20.005.26 The Port
Development Fee Resolution provides that the fees “shall be used for capital improvements
to the downtown waterfront for the provision of service[s] to the cruise ship industry.”27
Plainly, the Entry Fees were intended to be used for special purposes and to benefit the
narrow class upon which they were imposed (large cruise ships and their passengers) and
not the general public. That plaintiffs have alleged that the Entry Fees were misused to
benefit the general public does not mean that the fees should be considered taxes for
purposes of the TIA.
This case is similar to Qwest Communications Corp. v. City of Berkeley, 146 F. Supp.
2d 1081 (N.D. Cal. 2001). There, the plaintiff challenged a franchise fee imposed on
telecommunications companies that used the defendant’s public rights-of-way. Id. at 1088.
The defendant “relie[d] on Qwest’s own pleadings to argue that the Fee Schedule exacts
taxes, not regulatory fees. It cites allegations made by Qwest that the fees exacted are
classic franchise fees designed to generate general municipal revenues, and do not recover
any actually incurred costs.” Id. at 1092 (citation omitted). The court rejected the
defendant’s argument because “[t]hese allegations are included to demonstrate why the

26

Exhibit 1 at 1, Opposition to Defendants’ Motion to Dismiss Complaint, Docket No.

23.
27

Resolution of the City and Borough of Juneau, Alaska Serial No. 2552 at Section
1(c)(4), Exhibit 2 at 2, Opposition to Defendants’ Motion to Dismiss Complaint, Docket No.
23.
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fees violate § 253(c) of the” Federal Telecommunications Act and instead the court looked
“to the Fee Schedule itself, which gives ample description of the purpose and use for the
fees.” Id.
Similarly here, plaintiffs have included their allegations about how the fees were
misused as factual support for their claims. Thus, rather than solely looking to plaintiffs’
allegations to determine whether the Entry Fees are taxes, the court has looked to the
legislation that enacted the Entry Fees, which provides that the fees are to be used for a
specific purpose and not to benefit the general public.
As defendants point out, the Entry Fees were intended to, and do, raise revenue for
Juneau rather than defray administrative expenses. But the Entry Fees were not intended
to raise general revenue. Rather, the Entry Fees were placed in special funds and were
intended to raise revenue to be used for purposes specifically related to large cruise ships
and their passengers. That plaintiffs have alleged that the Entry Fees were misused and
were actually used to benefit the general public does not change the fact that the ultimate
use of the Entry Fees was intended to be only for the benefit of the narrow class on which
the fees were imposed. Thus, the third Bidart factor suggests that the Entry Fees are not
taxes.
In sum, two of the three Bidart factors weigh in favor of the Entry Fees not being
considered taxes for purposes of the TIA. The court therefore concludes that the Entry Fees

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are not taxes. Because the Entry Fees are not taxes,28 the court is not divested of its subject
matter jurisdiction pursuant to the TIA.
Conclusion
Plaintiffs’ motion to take judicial notice29 is granted.
Defendants’ motion to dismiss30 is denied.
DATED at Anchorage, Alaska, this 29th day of September, 2016.
/s/ H. Russel Holland
United States District Judge

28

Because the Entry Fees are not taxes, the court need not consider whether plaintiffs
have a plain, speedy, and efficient remedy in state court or whether, if plaintiffs are
successful, their action would reduce the flow of Juneau’s tax revenue.
29

Docket No. 24.

30

Docket No. 18.
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