No. 150, Original

In the Supreme Court of the United States
STATE OF ARIZONA, PLAINTIFF
v.
STATE OF CALIFORNIA
ON MOTION FOR LEAVE TO FILE A BILL OF COMPLAINT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

NOEL J. FRANCISCO
Solicitor General
Counsel of Record
JOSEPH H. HUNT
Assistant Attorney General
RICHARD E. ZUCKERMAN
Principal Deputy Assistant
Attorney General
EDWIN S. KNEEDLER
Deputy Solicitor General
ERICA L. ROSS
Assistant to the Solicitor
General
ALISA KLEIN
THOMAS PULHAM
JULIE CIAMPORCERO AVETTA
Attorneys
Department of Justice
Washington, D.C. 20530-0001
SupremeCtBriefs@usdoj.gov
(202) 514-2217

 TABLE OF CONTENTS

Page
Statement ...................................................................................... 1
Discussion ...................................................................................... 6
 Conclusion ................................................................................... 22
TABLE OF AUTHORITIES

Cases:
Alfred L. Snapp & Son , Inc. v. Puerto Rico ex rel.
Barez, 458 U.S. 592 (1982) ................................. 9, 13, 14, 15
Arizona v. New Mexico, 425 U.S. 794
(1976) .............................................................10, 13, 15, 16, 17
Austin v. New Hampshire, 420 U.S. 656 (1975)................. 11
Bond v. United States, 572 U.S. 844 (2014) ........................ 17
California Taxpayers Ass’n v. Franchise Tax Bd.,
118 Cal. Rptr. 3d 667 (Cal. Ct. App. 2010).......................... 5
City of Los Angeles v. Furman Selz Capital Mgmt.,
L.L.C., 17 Cal. Rptr. 3d 139 (Cal. Ct. App. 2004)........... 1, 2
Complete Auto Transit, Inc. v. Brady,
430 U.S. 274 (1977).............................................................. 18
Connecticut v. Massachusetts, 282 U.S. 660 (1931) ............. 7
Dennis v. Higgins, 498 U.S. 439 (1991) ............................... 18
Fashion Valley Mall, LLC v. County of San Diego,
98 Cal. Rptr. 3d 327 (Cal. Ct. App. 2009) ........................... 1
Franchise Tax Bd. v. Construction Laborers
Vacation Trust for S. Cal., 463 U.S. 1 (1983) ..................... 3
G. M. Leasing Corp. v. United States,
429 U.S. 338 (1977).............................................................. 21
Hans v. Louisiana, 134 U.S. 1 (1890).................................... 8
Hutchinson v. United States,
677 F.2d 1322 (9th Cir. 1982) ............................................. 21
Illinois v. City of Milwaukee, 406 U.S. 91 (1972) ............ 7, 8
(I)

 II
Cases—Continued:

Page

Jali , LLC, In re, No. 18073414 (Cal. Off. Tax App.
July 8, 2019) ............................................................. 14, 17, 19
Kimble v. Marvel Entm’t , LLC, 135 S. Ct. 2401
(2015) ...................................................................................... 8
Lojeski v. Boandl, 788 F.2d 196 (3d Cir. 1986) ................... 21
Louisiana v. Texas, 176 U.S. 1 (1900) ............................... 7, 8
Maryland v. Louisiana, 451 U.S. 725 (1981) ......... 12, 13, 14
Massachusetts v. Missouri, 308 U.S. 1 (1939).................... 10
Mississippi v. Louisiana, 506 U.S. 73 (1992)......... 6, 7, 8, 15
Missouri v. California, 139 S. Ct. 859 (2019) ................. 8, 13
Murray’s Lessee v. Hoboken Land & Improv. Co.,
59 U.S. (18 How.) 272 (1856) .............................................. 21
Nebraska v. Wyoming, 515 U.S. 1 (1995) ............................. 7
Northwest Energetic Servs., LLC v. California
Franchise Tax Bd., 71 Cal. Rptr. 3d 642
(Cal. Ct. App. 2008)............................................................... 2
Ohio v. Wyandotte Chems. Corp.,
401 U.S. 493 (1971)........................................................ 10, 13
Pennsylvania v. New Jersey, 426 U.S. 660
(1976) .................................................................. 10, 11, 16, 18
Pennsylvania v. West Virginia,
262 U.S. 553 (1923).............................................................. 14
Phillips v. Commissioner, 283 U.S. 589 (1931) .................. 21
Rakas v. Illinois, 439 U.S. 128 (1978) ................................. 18
Sachs v. United States, 59 Fed. Appx. 116
(6th Cir. 2003) ...................................................................... 21
South Carolina v. North Carolina,
558 U.S. 256, 278 (2010) ........................................................ 8
Swart Enters., Inc. v. Franchise Tax Bd.,
212 Cal. Rptr. 3d 670 (Cal. Ct. App. 2017)...... 2, 3, 5, 14, 19
Texas v. New Mexico, 462 U.S. 554 (1983)........................ 7, 8

 III
Cases—Continued:

Page

Texas v. United States, 809 F.3d 134
(5th Cir. 2015), aff ’d by an equally divided court,
136 S. Ct. 2271 (2016) ......................................................... 11
United States v. National Bank of Commerce,
472 U.S. 713 (1985).............................................................. 21
Wyoming v. Oklahoma, 502 U.S. 437 (1992) ...... 7, 11, 12, 13
Constitution, statutes, and regulations:
U.S. Const.:
Art. I, § 8, Cl. 3 (Commerce Clause) .................... passim
Art. III ................................................................................ 8
§ 2, Cl. 2 ........................................................................ 6
Art. IV:
§ 2, Cl. 1 (Privileges and Immunities Clause)......... 18
Amend. IV .......................................................... 5, 6, 18, 21
Amend. XIV ....................................................................... 5
Due Process Clause .......................................... passim
Equal Protection Clause ........................................... 18
Judiciary Act of 1789, ch. 20, § 13, 1 Stat. 80-81 ................... 6
28 U.S.C. 1251(a) ........................................................... 6, 8
26 U.S.C. 6332(a) ................................................................... 20
26 U.S.C. 6332(c) .................................................................... 20
26 U.S.C. 6332(d) ................................................................... 20
Cal. Const. Art. XIII, § 32 ...................................................... 5
Cal. Corp. Code (West Supp. 2019):
§ 17704.07(b)(1)-(2) ............................................................ 2
§ 17704.07(c)(1) .................................................................. 2
§ 17704.07(c)(4)-(5) (West 2014) ....................................... 2
Cal. Gov’t Code § 15670 (West Supp. 2019) .......................... 4
Cal. Rev. & Tax. Code (West 2015):
§ 20(b) (West Supp. 2019) ................................................. 4

 IV
Statutes and regulations—Continued:

Page

§17941(a) (2019 Cal. Legis. Serv. ch. 421,
§ 1 (A.B. 308)) (West) ............................................... 2, 18
§ 18670 .......................................................................... 4, 20
§ 18670(a)............................................................................ 4
§ 18670(d) ........................................................................... 4
§ 18670.5 ....................................................................... 4, 20
§ 18670.5(a)......................................................................... 4
§ 18674(a)............................................................................ 4
§ 19001 ................................................................................ 3
§ 19033 ................................................................................ 3
§ 19041 ................................................................................ 4
§ 19042 ................................................................................ 4
§ 19044(a)............................................................................ 4
§ 19045 ................................................................................ 4
§§ 19045-19047 ................................................................... 4
§ 19048 ................................................................................ 4
§ 19049 ................................................................................ 4
§ 19087 ................................................................................ 3
§ 19382 ................................................................................ 5
§ 19501 ................................................................................ 3
§ 23101(a)...................................................................... 2, 19
§ 23101(b) ......................................................................... 19
§ 23101(b)(1)-(4) ................................................................. 3
§ 23153(d)(1) (2019 Cal. Legis. Serv. ch. 421,
§ 2 (A.B. 308)) (West) ..................................................... 2
Cal. Code Regs. tit. 18 (2019):
§ 23101(a)............................................................................ 3
§ 23101(b) ........................................................................... 3

 V
Miscellaneous:

Page

Stephen M. Shapiro et al., Supreme Court Practice
(10th ed. 2013) ............................................................. 7, 9, 19

 In the Supreme Court of the United States
No. 150, Original
STATE OF ARIZONA, PLAINTIFF
v.
STATE OF CALIFORNIA
ON MOTION FOR LEAVE TO FILE A BILL OF COMPLAINT

BRIEF FOR THE UNITED STATES AS AMICUS CURIAE

This brief is filed in response to the order of this
Court inviting the Solicitor General to express the views
of the United States. In the view of the United States,
the motion for leave to file a bill of complaint should be
denied.
STATEMENT

1. a. Under California law, a limited liability company (LLC) is “a hybrid business entity” that “combines aspects of both a partnership and a corporation.”
City of Los Angeles v. Furman Selz Capital Mgmt.,
L.L.C., 17 Cal. Rptr. 3d 139, 142 (Cal. Ct. App. 2004).
“The essence of an LLC is the co-existence of partnership tax status with corporate-like limited liability.”
Fashion Valley Mall, LLC v. County of San Diego,
98 Cal. Rptr. 3d 327, 330 n.1 (Cal. Ct. App. 2009) (citation omitted). “[U]nless it elects otherwise, an LLC is
a pass-through entity for tax purposes, akin to a partnership,” in which “[p]rofits are not taxed at the entity
level but are instead passed through to members and
(1)

 2
taxed on an individual basis, thus avoiding the doubletaxation aspect” of the corporate form. Northwest Energetic Servs., LLC v. California Franchise Tax Bd.,
71 Cal. Rptr. 3d 642, 649 (Cal. Ct. App. 2008), as modified on denial of reh’g (Mar. 3, 2008). But like a corporation, an LLC has “a legal existence separate from its
members” and provides them “with limited liability to
the same extent enjoyed by corporate shareholders.”
Furman Selz Capital Mgmt., 17 Cal. Rptr. 3d at 143.
The management and control of an LLC depend on
the terms of “the parties’ operating agreement and articles of incorporation.” Swart Enters., Inc. v. Franchise Tax Bd., 212 Cal. Rptr. 3d 670, 679 (Cal. Ct. App.
2017). In a “member-managed” LLC, “[t]he management and conduct of the [LLC] are vested in the members,” and each member “has equal rights in the management and conduct of the [LLC]’s activities.” Cal.
Corp. Code § 17704.07(b)(1)-(2) (West Supp. 2019). In a
“manager-managed” LLC, “any matter relating to the
activities of the [LLC] is decided exclusively by the
managers.” Id. § 17704.07(c)(1) (West Supp. 2019).
While members “have the ability to remove the manager with a majority vote, they have no right to control
the management and conduct of the LLC’s activities.”
Swart, 212 Cal. Rptr. 3d at 679 (citing Cal. Corp. Code
§ 17704.07(c)(4)-(5) (West 2014)).
b. Any LLC “doing business” in California is subject
to a minimum franchise tax of $800 “for the privilege of
doing business in th[e] state.” Cal. Rev. & Tax. Code
§§ 17941(a), 23153(d)(1) (2019 Cal. Legis. Serv. ch. 421,
§§ 1-2 (A.B. 308)) (West). “Doing business” is defined
to mean “actively engaging in any transaction for the
purpose of financial or pecuniary gain or profit.” Id.

 3
§ 23101(a). 1 The statute specifically provides that a taxpayer “do[es] business” in California if it is organized or
commercially domiciled in the State, or if it exceeds specific thresholds for sales, property ownership, or payment of compensation there. Id. § 23101(b)(1)-(4). The
governing regulation states that “ ‘doing business’ ” “includes,” inter alia, “the purchase and sale of stocks or
bonds,” but does not include “[t]he mere receipt of dividends and interest by a corporation and the distribution of such income to its shareholders.” Cal. Code
Regs. tit. 18, § 23101(a) and (b) (2019). The California
Court of Appeal has held that an out-of-state business
is not “doing business” in California based solely on its
ownership of a .2% “passive” interest in a managermanaged LLC that is itself “doing business” in California, where the manager-managed LLC was established
before the taxpayer’s investment. Swart, 212 Cal. Rptr.
3d at 679-682.
c. The Franchise Tax Board (Board) “is a California
agency charged with enforcement of that State’s personal income tax law,” including the doing-business tax.
Franchise Tax Bd. v. Construction Laborers Vacation
Trust for S. Cal., 463 U.S. 1, 5 (1983); see Cal. Rev. &
Tax. Code § 19501. Under California law, taxes are due
at the time a taxpayer files a return. Cal. Rev. & Tax.
Code § 19001. If the Board determines that a return
discloses less than the amount due (or if the taxpayer
fails to file a return), the Board mails “notice to the taxpayer of the deficiency proposed to be assessed.” Id.
§ 19033; see id. § 19087.
A taxpayer who disagrees with a proposed assessment may file a written protest with the Board before
Where no year is provided, citations are to the West 2015 version
of the California statute.
1

 4
paying any tax. Cal. Rev. & Tax. Code § 19041. “If a
protest is filed,” the Board “shall reconsider the assessment of the deficiency” and provide an oral hearing
upon request. Id. § 19044(a). If the taxpayer remains
dissatisfied following the Board’s decision, the taxpayer
may appeal to the Office of Tax Appeals. Id. §§ 1904519047. 2 An assessment does not become final until the
conclusion of proceedings before the Office of Tax Appeals (or, if the taxpayer does not seek administrative
review, when the deadline for seeking such review has
passed). Id. §§ 19042, 19045, 19048.
When an assessment becomes final, the Board issues
a notice of tax due and a demand for payment. Cal. Rev.
& Tax. Code § 19049. If the taxpayer fails to pay the
tax, the Board may invoke its collection authority under
Cal. Rev. & Tax. Code §§ 18670 and 18670.5. As relevant here, those provisions authorize the Board to issue
a notice to the taxpayer’s bank, requiring that the bank
withhold from assets of the taxpayer the amount of “any
tax, interest, or penalties due,” and “transmit the
amount withheld” to the Board. Id. §§ 18670(a),
18670.5(a). Upon receiving such a notice, the taxpayer’s
bank must “comply * * * without resort to any legal or
equitable action in a court of law or equity,” and “is not
liable” to the taxpayer for “any amount required” to be
withheld. Id. § 18674(a). If, however, the bank fails to
comply with a collection notice, it “shall be liable for
th[e] amounts” identified by the Board. Id. § 18670(d).

The relevant statutory provisions refer to the Board of Equalization, but recent legislation transferred appellate review to the Office of Tax Appeals. See Cal. Gov’t Code § 15670 (West Supp. 2019);
Cal Rev. & Tax. Code § 20(b) (West Supp. 2019).
2

 5
Once a tax has been paid, the taxpayer (including a
member of an LLC) may bring a refund action in California state court. Cal. Rev. & Tax. Code § 19382; see
Swart, 212 Cal. Rptr. 3d at 673 (considering post-payment challenge by LLC member); California Taxpayers Ass’n v. Franchise Tax Bd., 118 Cal. Rptr. 3d 667,
676 (Cal. Ct. App. 2010) (Section 19382 “applies generally to income taxpayers, including corporate taxpayers.”); see also Cal. Const. Art. XIII, § 32 (limiting judicial review of tax cases to post-payment refund actions).
California law requires that, before filing suit, the taxpayer must present a refund claim to the Board, but the
taxpayer need not appeal to the Office of Tax Appeals.
Cal. Rev. & Tax. Code § 19382.
2. In February 2019, the State of Arizona filed a motion in this Court for leave to file a bill of complaint
against the State of California. Arizona alleges that the
Board has applied the doing-business tax to Arizonabased LLCs based solely on their “[p]assive investment
in a [California] corporation or LLC,” and that such application violates the Due Process Clause, U.S. Const.
Amend. XIV (Compl. ¶ 147; see Compl. ¶¶ 142-150) and
the Commerce Clause, U.S. Const. Art. I, § 8, Cl. 3
(Compl. ¶¶ 151-168). Arizona further alleges that the
Board’s collection procedures violate the Due Process
Clause (Compl. ¶¶ 169-179) and the Fourth Amendment
(Compl. ¶¶ 180-190). Arizona claims (Compl. ¶¶ 130133) that it has suffered “sovereign injur[ies]” from the
Board’s “incursions” into Arizona to collect the tax, and
that “California’s actions frustrate Arizona’s ability” to
regulate banks within its territory. Arizona further
claims (Compl. ¶¶ 134-135) proprietary injury flowing
from lost tax revenues, and injuries to its quasi-sovereign
interests (Compl. ¶¶ 136-141).

 6
In opposition to the motion, California contends that
this case does not warrant an exercise of this Court’s
original jurisdiction (Br. in Opp. 10-22), that Arizona’s
claims “could not practicably be resolved in aggregate
form in an original jurisdiction action,” and that, in any
event, those “claims fail” (id. at 22).
DISCUSSION

The motion for leave to file a bill of complaint should
be denied because this is not an appropriate case for the
exercise of this Court’s original jurisdiction, which the
Court has repeatedly stated should be exercised only
“sparingly.” Mississippi v. Louisiana, 506 U.S. 73, 76
(1992) (citation omitted). Arizona does not assert the
types of interests that would warrant such an exercise,
and the issues Arizona seeks to present can be adequately raised and litigated by Arizona entities that are
actually subject to the tax. In addition, Arizona’s Due
Process and Commerce Clause claims would more appropriately be considered on developed factual records
concerning affected entities and with the benefit of authoritative interpretations of the relevant statutes by
the California courts. Arizona’s Fourth Amendment
claim also does not warrant an exercise of this Court’s
original jurisdiction because it similarly seeks to advance personal rights and does not otherwise warrant
an exercise of original jurisdiction.
1. a. The Constitution includes within this Court’s
original jurisdiction “all Cases * * * in which a State
shall be Party.” U.S. Const. Art. III, § 2, Cl. 2. Since
the First Judiciary Act, Congress has provided by statute that this Court has “original and exclusive jurisdiction of all controversies between two or more States.”
28 U.S.C. 1251(a); see Judiciary Act of 1789, ch. 20, § 13,

 7
1 Stat. 80-81; see also Stephen M. Shapiro et al., Supreme Court Practice § 10.1, at 618-621 (10th ed. 2013).
But although that jurisdiction is exclusive, the Court
has “interpreted the Constitution and [Section] 1251(a)
as making [its] original jurisdiction ‘obligatory only in
appropriate cases,’ ” Mississippi, 506 U.S. at 76 (quoting Illinois v. City of Milwaukee, 406 U.S. 91, 93
(1972)), and therefore “as providing [the Court] ‘with
substantial discretion to make case-by-case judgments
as to the practical necessity of an original forum in this
Court,’ ” ibid. (quoting Texas v. New Mexico, 462 U.S.
554, 570 (1983)).
In exercising that discretion, this Court has “said
more than once” that its original jurisdiction should be
invoked only “ ‘sparingly,’ ” observing that original jurisdiction “ ‘is of so delicate and grave a character that
it was not contemplated that it would be exercised save
when the necessity was absolute.’ ” Mississippi, 506 U.S.
at 76 (quoting Wyoming v. Oklahoma, 502 U.S. 437, 450
(1992), and Louisiana v. Texas, 176 U.S. 1, 15 (1900)).
The Court therefore has expressed “reluctance to exercise original jurisdiction in any but the most serious of
circumstances.” Nebraska v. Wyoming, 515 U.S. 1, 8
(1995); see Connecticut v. Massachusetts, 282 U.S. 660,
669 (1931) (“[T]his Court will not exert its extraordinary
power to control the conduct of one State at the suit of
another, unless the threatened invasion of rights is of
serious magnitude and established by clear and convincing evidence.”).
b. Arizona (Br. in Support 36) and its amici (Researchers Amici Br. 5-7) invite the Court to reconsider
its well-established conclusion—reaffirmed several times
over more than 40 years—that the exercise of original
jurisdiction in controversies between States under

 8
28 U.S.C. 1251(a) is discretionary. This Court recently
declined a similar invitation, see Missouri v. California,
139 S. Ct. 859 (2019), and it should do so here as well.
The Court’s interpretation of Article III and the statute
is grounded in the historical understanding that original
jurisdiction over suits between States arose from the
“ ‘extinguishment of diplomatic relations between the
States,’ ” and was therefore intended by “the framers of
the Constitution” to be available only when absolutely
necessary. Louisiana v. Texas, 176 U.S. at 15 (quoting
Hans v. Louisiana, 134 U.S. 1, 15 (1890)). The Court’s
interpretation is also supported by structural limits on
the court’s ability “to assume the role of a trial judge,”
South Carolina v. North Carolina, 558 U.S. 256, 278
(2010) (Roberts, C.J., concurring in the judgment in
part and dissenting in part); the Court’s duty to attend
to its appellate docket, see City of Milwaukee, 406 U.S.
at 93-94; and the doctrine of stare decisis, see Kimble v.
Marvel Entm’t, LLC, 135 S. Ct. 2401, 2409 (2015).
2. This is not one of the rare cases that warrants the
exercise of this Court’s original jurisdiction. In deciding whether to exercise jurisdiction, the Court considers “ ‘the nature of the interest of the complaining
State,’ focusing on the ‘seriousness and dignity of the
claim,’ ” and whether there exists an alternative forum
“in which the issue[s] tendered” to the Court “ ‘may be
litigated.’ ” Mississippi, 506 U.S. at 77 (citations omitted). Both factors weigh against the exercise of jurisdiction here.
a. This Court has explained that “[t]he model case
for invocation of this Court’s original jurisdiction is a
dispute between States of such seriousness that it would
amount to casus belli if the States were fully sovereign.”
Mississippi, 506 U.S. at 77 (quoting Texas, 462 U.S. at

 9
571 n.18). The Court has agreed to exercise that jurisdiction “most frequently” to consider disputes “sounding in sovereignty and property, such as those between
states in controversies concerning boundaries, and the
manner of use of the waters of interstate lakes and rivers.” Supreme Court Practice § 10.2, at 622 (collecting
cases). The Court “has also exercised original jurisdiction in cases sounding in contract, such as suits by one
state to enforce bonds or other financial obligations of
another state,” or “to construe and enforce an interstate
compact.” Ibid.
Arizona’s asserted interests do not fall into any of
those categories. Instead, Arizona contends that California’s assessment and collection of its $800 doingbusiness tax from Arizona-based LLCs (1) infringes Arizona’s sovereign interests in the recognition of its borders and its ability to regulate Arizona banks; (2) “inflict[s] proprietary harm to Arizona’s treasury by converting otherwise-taxable income into a non-taxable deduction” (Br. in Support 17); and (3) injures Arizona’s
quasi-sovereign interests in securing the benefits of
federalism and the economic well-being of its residents.
See id. at 15-18. None of those asserted interests justifies the exercise of this Court’s original jurisdiction.
i. Arizona first contends (Br. in Support 15, 17) that
by assessing and collecting the doing-business tax from
Arizona residents, California engages in “perpetual,
low-grade” “cross-border incursions into Arizona.” Arizona is correct that States have a sovereign interest in
the “maintenance and recognition of [their] borders.”
Alfred L. Snapp & Son , Inc. v. Puerto Rico ex rel. Barez,
458 U.S. 592, 601 (1982). But Arizona has not identified
any case suggesting that one State’s taxation of another
State’s residents violates that interest—much less that

 10
it amounts to the type of grievous violation of sovereignty that would support the exercise of original jurisdiction. To the contrary, this Court has recognized that
“[a]s our social system has grown more complex, the
States have increasingly become enmeshed in a multitude of disputes with persons living outside their borders,” including “clash[es] over the application of state
laws concerning taxes,” and it has rejected the argument that it should be the “principal forum for settling
such controversies.” Arizona v. New Mexico, 425 U.S.
794, 798 (1976) (per curiam) (quoting Ohio v. Wyandotte
Chems. Corp., 401 U.S. 493, 497 (1971)).
Arizona relatedly asserts (Br. in Support 17) that
California’s collection efforts frustrate “Arizona’s ability to regulate banks located in its borders.” This
Court, however, has declined to exercise original jurisdiction in cases based on asserted regulatory conflicts
where the plaintiff State fails to “show[]” that the
States’ regulatory regimes are “mutually exclusive.”
Massachusetts v. Missouri, 308 U.S. 1, 15 (1939). Arizona points to no regulation that it cannot enforce due
to California’s collection of its doing-business tax.
ii. Arizona next contends (Br. in Support 16-17) that
California’s taxation of Arizona residents causes it to
suffer “proprietary harm” in the form of lost tax revenue. In particular, Arizona alleges (Compl. ¶ 66) that
when an Arizona-based LLC pays the California doingbusiness tax, Arizona loses tax revenues because that
payment is a “deductible business expense under Arizona law.”
This Court rejected a similar theory of injury in
Pennsylvania v. New Jersey, 426 U.S. 660 (1976) (per
curiam). There, Pennsylvania sought to file a complaint
against New Jersey, and Maine, Massachusetts, and

 11
Vermont sought to file a complaint against New Hampshire, alleging that the defendant States’ taxes “diverted [income tax] from [the plaintiff States’] respective treasuries.” Id. at 663; see id. at 662. Although the
Court had already held the New Hampshire tax unconstitutional, see Austin v. New Hampshire, 420 U.S. 656
(1975), it denied the States leave to file their complaints.
Pennsylvania, 426 U.S. at 664. The Court explained
that the injuries to the plaintiff States’ fiscs were not
“direct[]” but rather “result[ed] from decisions by their
respective state legislatures” to offer credits for income
taxes paid to other States. Id. at 663-664.
Arizona contends (Reply Br. 8 n.6) that Pennsylvania is distinguishable because it involved a “tax credit”
while Arizona law allows “deductions.” But Arizona
does not explain why that difference should matter.
Whatever the precise mechanism, any injury to Arizona’s treasury is caused by operation of an Arizona law
that reduces the amount of tax owed to the State.
“Nothing required” Arizona to offer this deduction to
its residents, “and nothing prevents” it “from withdrawing” that benefit. Pennsylvania, 426 U.S. at 664. 3
Nor is Arizona correct (Br. in Support 16-17; Reply
Br. 8-9) that this case is more similar to Wyoming v.
Oklahoma than it is to Pennsylvania. In Wyoming, the
challenged statute required Oklahoma’s utilities—
which previously had “purchased virtually 100% of their
coal requirements from Wyoming sources”—to instead
Arizona’s reliance (Reply Br. 8 n.6) on Texas v. United States,
809 F.3d 134, 157-159 (5th Cir. 2015), aff ’d by an equally divided
court, 136 S. Ct. 2271 (2016), is misplaced. That case concerned
whether a particular injury provided Texas with standing to sue the
United States—not whether it would be a sufficient basis for this
Court’s exercise of original jurisdiction.
3

 12
purchase at least 10% of their coal from Oklahoma.
502 U.S. at 440, 445; see id. at 442-444. This Court held
that Wyoming’s challenge presented “an appropriate
[case] for the exercise of [its] original jurisdiction” because the Oklahoma statute “directly affect[ed] Wyoming’s ability to collect severance tax revenues” on its
coal. Id. at 450-451. By contrast, here, Arizona’s alleged injury is indirect: California’s doing-business tax
affects its tax revenues only because it has chosen to
provide a deduction from taxable income for the amount
its residents pay to California. And contrary to the situation in Wyoming, California’s tax does not specifically target Arizona residents. See id. at 443-444.
Arizona’s reliance on Maryland v. Louisiana,
451 U.S. 725 (1981), is similarly misplaced. See Br. in
Support 16. There, the Court exercised original jurisdiction over a challenge by nine States and the federal
government to a Louisiana law imposing a tax on gas
produced on federal lands offshore and brought into
Louisiana for processing. Maryland, 451 U.S. at 728,
731, 734, 736 n.12. The Court explained that the plaintiff States were “directly affected in a ‘substantial and
real’ way” because they were “substantial consumers of
natural gas,” and the tax was “clearly intended to be
passed on to the ultimate consumer,” id. at 736-737.
Here, Arizona acknowledges that it does not pay the
California tax. See, e.g., Br. in Support 22.
iii. Finally, neither of Arizona’s asserted “quasisovereign” interests justifies an exercise of this Court’s
original jurisdiction. Br. in Support 18 (citation omitted).
Arizona first contends that the assessment and collection of California’s doing-business tax from Arizonabased LLCs “denie[s] Arizona its ‘rightful status within

 13
the federal system,’ ” and denies its residents “the benefits” thereof. Br. in Support 18 (quoting Snapp,
458 U.S. at 607). The government, however, is aware of
no case in which this Court has held that a State may
invoke the Court’s original jurisdiction simply by raising such generalized federalism concerns. Snapp was
not such a case, as it arose in district court. See 458 U.S.
at 598-599. And to the extent Arizona suggests that a
Commerce Clause challenge necessarily presents “a
claim of sufficient ‘seriousness and dignity’ ” to warrant
exercise of this Court’s original jurisdiction (Br. in Support 16 (quoting Wyoming, 502 U.S. at 451); see id. at
18), that is incorrect. The Court has repeatedly denied
motions to file bills of complaint that alleged a violation
of the Commerce Clause. See, e.g., Missouri v. California, 139 S. Ct. 859; Arizona, 425 U.S. at 795-798. Indeed, if merely pleading a Commerce Clause claim justified exercise of this Court’s original jurisdiction, the
Court would face the “quandary” of “opt[ing] either to
pick and choose arbitrarily among similarly situated litigants or to devote truly enormous portions of [the
Court’s] energies to” original matters. Wyandotte,
401 U.S. at 504.
Arizona also relies on its “quasi-sovereign interest”
in the economic well-being of its residents. Br. in Support 18 (quoting Snapp, 458 U.S. at 607). Arizona has
not, however, demonstrated that any economic injury to
Arizona taxpayers “affects [its] general population
* * * in a substantial way,” Maryland, 451 U.S. at 737,
much less that such injury is on par with that in prior
cases in which this Court has exercised original jurisdiction. Arizona asserts that “an estimated 13,333
Arizona-based LLCs” are “subject to the California ‘doing business’ tax based solely on passive investments in

 14
California-Operating LLCs.” Compl. ¶ 65. Assuming
that number is accurate, Arizona’s claim is not comparable to those over which this Court has previously exercised original jurisdiction. 4 For example, in Pennsylvania v. West Virginia, 262 U.S. 553 (1923), the complaint alleged that the challenged West Virginia provision would “largely curtail or cut off the supply of natural gas” from West Virginia to the plaintiff States, injuring the “many” “public institutions and government
agencies” that used such gas, “imperil[ing] the health
and comfort” of the plaintiffs’ citizens, and “halt[ing] or
curtail[ing] many industries” within those States. Id. at
581, 583-585; see id.at 591; see also, e.g., Maryland,
451 U.S. at 744 (challenged tax was “intended to be and
is being passed on to millions of consumers in over 30
States”). 5

It is unclear whether Arizona’s estimate is accurate, since it may
include LLCs that would not be subject to California’s doing-business
tax under the governing judicial and administrative decisions. See
Swart Enters., Inc. v. Franchise Tax Bd., 212 Cal. Rptr. 3d 670, 679682 (Cal. Ct. App. 2017) (holding that a “quintessential passive investor” with a .2% share of a California LLC could not “be deemed
to be ‘doing business’ in California” solely on that basis); In re Jali,
LLC, No. 18073414 (Cal. Off. Tax App. July 8, 2019), slip op. 5 (explaining that application of the tax depends on “a fact-intensive inquiry”).
5
Arizona suggests that the alleged impact of the California tax
compares favorably to the “787 temporary job opportunities” at issue in Snapp. Reply Br. 9 (citation omitted). But Snapp was not an
original jurisdiction case, and the Court acknowledged that “[t]here
may indeed be special considerations that call for a limited exercise
of [its] jurisdiction” in original cases, which “may not apply to a similar suit brought in federal district court.” 458 U.S. at 603 n.12. In
addition, Snapp rejected as “too narrow” a focus on the number of
job opportunities, in light of Puerto Rico’s interest in protecting all
4

 15
b. Original jurisdiction is unwarranted in this case
for the additional reason that Arizona’s claims can be—
and have been—raised by other parties in California
state court. See Arizona, 425 U.S. at 796-797; Mississippi, 506 U.S. at 76. As described above, see pp. 3-5,
supra, taxpayers who are subject to California’s doingbusiness tax based on their investments in California
LLCs may challenge those taxes through state administrative procedures and, if unsuccessful, bring refund
actions in California state court, asserting the same constitutional claims raised in Arizona’s complaint.
Such taxpayers are the most natural plaintiffs, because they are directly affected by California’s doingbusiness tax. And indeed, two currently pending class
actions challenge the application of the tax to “out-ofstate passive members” of California LLCs based on
the Due Process and Commerce Clauses. See Second
Am. Class Action Compl. ¶¶ 2, 30, The Rasmussen Co.
v. California Franchise Tax Bd., No. 16-554150 (Cal.
Super. Ct. Apr. 9, 2019); Class Action Compl. ¶ 30, Wein
Realty, LLC v. California Franchise Tax Bd., No.
CGC-19-576007 (Cal. Super. Ct. May 14, 2019). If those
class actions succeed, Arizona’s interests “will have
been vindicated.” Arizona, 425 U.S. at 797. If they fail,
the taxpayers may seek review through this Court’s ordinary certiorari process. Cf. ibid.
Arizona contends that such state-court actions “do
not provide an adequate alternative forum” because a
private-party suit “necessarily would be unavailable to
Arizona itself, which therefore would not have its interests ‘directly represented.’ ” Br. in Support 22-23 (citation omitted). But Arizona cannot bring a refund action
of its “residents from the harmful effects of discrimination” “along
ethnic lines.” Id. at 609. Arizona alleges no similar interest here.

 16
because “Arizona has not paid any taxes directly to California,” id. at 22—underscoring that it is not the most
natural plaintiff to challenge the doing-business tax to
begin with. Moreover, the basis on which Arizona seeks
to proceed is closely akin to raising claims as parens patriae for its citizens who are subject to the tax. See Reply Br. 9. But this Court in Pennsylvania rejected that
theory, observing that if its original jurisdiction “could
be invoked to resolve what are, after all, suits to redress
private grievances, [its] docket would be inundated.”
426 U.S. at 665. Instead, private suits are the proper
way to vindicate such interests. In any event, this Court
has found it sufficient that a private action would permit
litigation of “the same constitutional issues” as would an
original action, even if not pursued by the same party.
Arizona, 425 U.S. at 796.
Nor do Arizona’s other assertions (Br. in Support 2223) regarding the purported insufficiency of state-court
proceedings support an original jurisdiction action. Arizona suggests (id. at 22) that “the $800-tax is insufficient incentive for taxed entities to litigate these issues
fully.” But that is contrary to recent decisions like
Swart, and the existence of pending class actions further demonstrates that taxpayers are able to file suits
to protect their interests.
Arizona also argues (Br. in Support 22) that “requiring individuals to file suit in California state courts
would perversely perpetuate the due process[]” and
“personal jurisdiction” problems that it claims are associated with the doing-business tax. But regulated entities often challenge regulations in the courts of the
State that has imposed them. In Arizona, for example,
this Court denied leave to file a bill of complaint claim-

 17
ing, inter alia, that application of a New Mexico tax “denies Arizona citizens due process,” in light of a pending
suit in New Mexico state court raising the same issue.
425 U.S. at 795.
Finally, Arizona suggests (Br. in Support 22; Reply
Br. 11-12) that California courts are unwilling or unable
to meaningfully address the claims at issue here. But
the fact that California courts might seek to resolve taxpayers’ claims on statutory rather than constitutional
grounds (see Reply Br. 11) does not suggest that those
courts provide an inadequate forum. See, e.g., Bond v.
United States, 572 U.S. 844, 855 (2014) (considering statutory argument first in light of the “ ‘well-established
principle * * * that normally the Court will not decide
a constitutional question if there is some other ground
upon which to dispose of the case”) (citation omitted).
To the extent Arizona contends (Br. in Support 22-23)
that the Board has not properly applied the decision in
Swart, it provides no basis for assuming that the Office
of Tax Appeals and California courts are unable to address that concern in the first instance. Cf. In re Jali,
LLC, No. 18073414 (Cal. Off. Tax App. July 8, 2019), slip
op. 5 (rejecting the Board’s “bright-line legal standard
for distinguishing between an active and a passive ownership interest”).
3. The nature of Arizona’s claims also counsels
against an exercise of this Court’s original jurisdiction.
a. Arizona contends (Compl. ¶¶ 142-168) that California’s assessment of its doing-business tax against
certain Arizona businesses violates the Due Process
Clause and the Commerce Clause, and it further argues
(Compl. ¶¶ 169-190) that California’s collection of the
tax from those Arizona entities violates the Due Process
Clause and the Fourth Amendment. But to the extent

 18
the California law applies to particular Arizona residents, the impact of the law is directly upon them, not
the State, and in this context the cited provisions of the
Constitution—including the Commerce Clause, see
Dennis v. Higgins, 498 U.S. 439, 447 (1991), and the
Fourth Amendment, see Rakas v. Illinois, 439 U.S. 128,
134 (1978)—are personal to and more appropriately
raised by those entities directly affected, not the State.
Cf. Pennsylvania, 426 U.S. at 665 (rejecting Pennsylvania’s claims regarding taxes collected by New Jersey
from its residents under the Privileges and Immunities
and Equal Protection Clauses because “both Clauses
protect people, not States”).
b. In addition, resolution of any Due Process and
Commerce Clause claims regarding assessment of the
doing-business tax against particular Arizona entities
would benefit from a more developed factual record and
an authoritative construction of the relevant state statutes and regulations by the California Supreme Court.
Arizona’s challenges to the tax’s assessment hinge on
its contention that “[m]ere passive ownership in a
California-Operating LLC, without more, is insufficient” to satisfy either the “ ‘minimum contacts’ ” requirement of the Due Process Clause, or the “ ‘substantial nexus’ ” requirement of the Commerce Clause, as
described in Complete Auto Transit, Inc. v. Brady,
430 U.S. 274 (1977). Compl. ¶¶ 147, 148, 155, 158. On
its face, the California statute would not appear to permit taxation solely on that basis. Instead, Section 17941
imposes the minimum franchise tax on any LLC “doing
business in this state,” Cal. Rev. & Tax. Code § 17941(a)
(2019 Cal. Legis. Serv. ch. 421, § 1 (A.B. 308)) (West),
defined to mean “actively engaging in any transaction
for the purpose of financial or pecuniary gain or profit,”

 19
id. § 23101(a) (emphasis added), or engaging in particular activities or transactions within the State, id.
§ 23101(b).
Insofar as the California statutes are interpreted to
trigger the tax in some circumstances based on some
share of passive ownership in an LLC that itself meets
the statutory requirements, these circumstances have
not been fleshed out. While the California Supreme
Court has not authoritatively construed the text of the
statute, the California Court of Appeal has expressly rejected the argument that “the term ‘doing business’
should be interpreted broadly to include” minor “passive investment[s]” in manager-managed LLCs. Swart
Enters., Inc. v. Franchise Tax Bd., 212 Cal. Rptr. 3d
670, 674 (Cal. Ct. App. 2017); see also In re Jali, slip op.
5. To the extent that the specific factual scenarios presented in Arizona’s complaint, Compl. ¶¶ 67-118, are not
covered by the reasoning in Swart and decisions such as
In re Jali by the Office of Tax Appeals, that Office in
the first instance and the California courts are best situated to determine, based on factual records developed
in specific cases, whether the doing-business tax applies
to those scenarios; if so, the California courts can proceed to consider whether such application complies with
the Due Process and Commerce Clauses. See Br. in
Opp. 7-8 & n.7; cf. Supreme Court Practice § 4.10, at 262
(noting, in the context of certiorari jurisdiction, this
Court’s “reluctan[ce] to grant review of cases turning
on state statutes * * * where state decisions on the issues are nonexistent or are in confusion”).
c. Arizona’s challenges to California’s collection of
the doing-business tax likewise do not warrant exercise
of this Court’s original jurisdiction, quite apart from the
other considerations discussed above supporting denial

 20
of leave to file. As discussed above, if a taxpayer fails
to pay a tax assessment that has become final, the
Board may issue a notice to the taxpayer’s bank, requiring that it withhold the amount of the tax and any penalties due and remit it to the Board. Cal. Rev. & Tax.
Code §§ 18670 and 18670.5. That procedure is similar
in certain respects to federal levy procedures, which
permit the IRS to serve a notice of levy upon a custodian
of a delinquent taxpayer’s property, including the taxpayer’s bank, and require (with limited exceptions) that
within 21 days of service, the “bank * * * shall surrender * * * any deposits (including interest thereon)” of
the taxpayer to the Internal Revenue Service. 26 U.S.C.
6332(a) and (c); see 26 U.S.C. 6332(d) (penalizing custodian’s failure to comply).
i. Arizona first contends that California’s collection
procedure violates the Due Process Clause, because the
bank deposits of Arizona residents are considered to be
domiciled in Arizona, see Compl. ¶ 170, and California
purportedly “lacks personal jurisdiction over th[ose]
out-of-state funds,” Br. in Support 32. As Arizona concedes, however (ibid.; see Compl. ¶ 173), that claim rises
or falls with its argument that assessment of the tax itself violates due process—a contention more appropriately considered on developed factual records concerning Arizona entities subject to the tax. See pp. 18-19,
supra.
Arizona further contends (Compl. ¶ 179) that the collection provisions contravene the Due Process Clause
because banks cannot challenge withholding notices in
court. But so long as “adequate opportunity is afforded
for a later judicial determination of the legal rights [of
the taxpayer], summary proceedings to secure prompt

 21
performance of pecuniary obligations to the government have been consistently sustained.” Phillips v.
Commissioner, 283 U.S. 589, 595 (1931); see id. at 596597; cf. United States v. National Bank of Commerce,
472 U.S. 713, 727 (1985) (“[A] bank served with a [federal] notice of levy has two, and only two, possible defenses for failure to comply with the demand: that it is
not in possession of property of the taxpayer, or that the
property is subject to a prior judicial attachment or execution.”). Arizona provides no reason why that rule
should not apply here.
ii. Arizona next contends (Compl. ¶¶ 180-190) that
California’s notices of withholding constitute “warrantless seizures” that violate the Fourth Amendment. In
the context of the federal levy provisions, however, this
Court has held that the Fourth Amendment “has no reference to civil proceedings for the recovery of debts,”
Murray’s Lessee v. Hoboken Land & Improv. Co.,
59 U.S. (18 How.) 272, 285-286 (1856), unless the tax collection efforts violate the taxpayer’s privacy, G. M.
Leasing Corp. v. United States, 429 U.S. 338, 351-358
(1977). Applying this principle, several courts of appeals have held that a levy on a taxpayer’s funds deposited with a third-party financial institution does not implicate the Fourth Amendment. See, e.g., Lojeski v. Boandl, 788 F.2d 196, 199-200 (3d Cir. 1986) (en banc);
Hutchinson v. United States, 677 F.2d 1322, 1328 (9th
Cir. 1982); see also Sachs v. United States, 59 Fed.
Appx. 116, 119 (6th Cir. 2003) (no Fourth Amendment
violation where IRS levied upon brokerage firm holding
taxpayer’s securities). This argument likewise provides
no basis for an exercise of original jurisdiction.

 22
 CONCLUSION

For the foregoing reasons, the motion for leave to
file a bill of complaint should be denied.
Respectfully submitted.
NOEL J. FRANCISCO
Solicitor General
JOSEPH H. HUNT
Assistant Attorney General
RICHARD E. ZUCKERMAN
Principal Deputy Assistant
Attorney General
EDWIN S. KNEEDLER
Deputy Solicitor General
ERICA L. ROSS
Assistant to the Solicitor
General
ALISA KLEIN
THOMAS PULHAM
JULIE CIAMPORCERO AVETTA
Attorneys

DECEMBER 2019