Ernest Joseph Franceschi, Jr., Attorney, an individual, Plaintiff-Appellant,
Betty T. Yee, President of California Franchise Tax Board in her Official Capacity; George Runner, Board Member of California Franchise Tax Board in his Official Capacity; Jean Shiomoto, Director of California Department of Motor Vehicles in her Official Capacity; Michael Cohen, Board Member of California Franchise Tax Board in his Official Capacity, Defendants-Appellees.
and Submitted November 15, 2017
from the United States District Court for the Central
District of California Christina A. Snyder No.
2:14-cv-01960-CAS-SH, District Judge, Presiding
J. Franceschi Jr. (argued), Franceschi Law Corporation, Los
Angeles, California, pro se Plaintiff-Appellant.
Matthew C. Heyn (argued), Deputy Attorney General; Stephen
Lew, Supervising Deputy Attorney General; Paul D. Gifford,
Senior Assistant Attorney General; Office of the Attorney
General, Los Angeles, California; for Defendants-Appellees.
Before: Michael Daly Hawkins, Barrington D. Parker, [*] and Sandra S.
Ikuta, Circuit Judges.
panel affirmed the district court's judgment in an action
under 42 U.S.C. § 1983, challenging the
constitutionality of California Revenue and Tax Code §
19195 (which establishes a public list of the top 500
delinquent state taxpayers) and California Business and
Professions Code § 494.5 (which provides for suspension
of the driver's license of anyone on the top 500 list).
The district court found the statutory scheme constitutional
and dismissed the action under Federal Rule of Civil
panel first held that the taxpayer was not deprived of
procedural due process based on his contention that he had an
inadequate opportunity to be heard prior to license
revocation. The panel explained that California provides tax
delinquents with a constitutionally adequate procedure to
challenge the amount of their tax delinquency, either before
or after the deprivation of a driver's license.
panel next held that the taxpayer was not deprived of
substantive due process based on his claims that the
statutory scheme impermissibly burdened taxpayer's right
to choose a profession, and that the scheme is retroactive.
The panel observed that revocation of a driver's license
does not operate as a complete prohibition on one's
ability to practice law. The panel also explained that §
494.5 does not operate retroactively because it does not
sanction taxpayer for past conduct, but for his current
refusal to discharge his tax obligations.
panel was unpersuaded by the taxpayer's equal protection
claim, that the challenged statutes impermissibly single out
taxpayers who fall within the class of California's 500
largest tax delinquents, resulting in unequal treatment of
similarly situated individuals. The panel found a rational
basis for state action against a citizen for failing to pay
two years' worth of past-due taxes (as taxpayer had
done), given California's legitimate and significant
interest in the prompt collection of tax revenue.
the panel rejected the taxpayer's contention that the
combined effect of the challenged statutes is to single out
the largest 500 tax debtors for legislative punishment,
amounting to a bill of attainder. The panel explained that
membership in the group of taxpayers subject to suspension
turns on the continuing fact of nonpayment, which a
delinquent taxpayer can rectify.
PARKER, Circuit Judge
action challenges the constitutionality of Section 19195 of
the California Revenue and Taxation Code and Section 494.5 of
the California Business and Professions Code. Section 19195
establishes a public list of the top 500 delinquent state
taxpayers who owe in excess of $100, 000. In turn, Section
494.5 provides for suspension of the driver's license of
a taxpayer on the delinquent list until full payment of the
tax obligation is arranged.
Ernest J. Franceschi, Jr., Esq. is a major tax delinquent.
Anticipating the suspension of his driver's license after
the publication of the next edition of the top 500 list-which
would include him-Franceschi sued, under 42 U.S.C §
1983, challenging Sections 19195 and 494.5 on various federal
constitutional grounds. The District Court rejected his
claims and dismissed the complaint. See Franceschi v.
Chiang, No. 2:14-cv-01960-CAS-SH, 2014 WL 12069866 (C.D.
Cal. Aug. 4, 2014). Franceschi appeals and we affirm.
is an attorney who has been licensed to practice law in
California since 1984. Appellee Betty Yee is the chairwoman
of the California Franchise Tax Board (the
"FTB"); appellees George Runner and
Michael Cohen are members of the FTB; and appellee Jean
Shiomoto is the director of the California Department of
being a member of the bar for many years, Franceschi failed
to file any California state income tax returns between 1995
and 2012 and failed to pay any state income taxes, penalties,
or interest for those years, contending that he owed none.
For each of those years, the FTB gave written notice of
proposed deficiency assessments of taxes, interest and
penalties (an "NPA").
Revenue and Taxation Code sets forth a framework under which
a delinquent taxpayer, like Franceschi, has multiple
opportunities to challenge deficiency assessments. Cal. Rev.
& Tax Code § 19031, et seq. At the outset,
the FTB is required to send the taxpayer notice of the
proposed deficiency assessment for any tax deficiency it
proposes to assess. Id. § 19033(a). The
taxpayer may then file a protest within sixty days.
Id. § 19041(a). If the taxpayer files a
protest, the FTB must reconsider the assessment and, if the
taxpayer so requests, grant the taxpayer a hearing on the
deficiency. Id. § 19044(a). If the deficiency
is not resolved at this stage, a taxpayer has further
recourse by appealing to the State Board of Equalization.
Id. § 19045. After the State Board of
Equalization rules on the matter, a still dissatisfied
taxpayer can then petition the State Board of Equalization
for rehearing. Id. § 19048.
further, a taxpayer has an additional opportunity to be heard
on the validity of his or her tax delinquency by paying the
taxes and filing a claim for refund with the FTB.
Id. § 19382. Utilization of this procedure here
would have permitted Franceschi to both challenge the
original assessments and to retain his driver's licence
while doing so. If the FTB denied the claim he could have
sued for a refund in California Superior Court. Franceschi
concedes that he did not avail himself of any of these
multiple remedial procedures.
however, a taxpayer like Franceschi fails to protest the NPA
within sixty days, the proposed deficiency assessment becomes
final. Id. § 19042. Once the assessment becomes
final, the FTB can demand payment and the amount owed becomes
a lien on the taxpayer's real property in California.
Id. §§ 19049, 19221.
compiles a list of the top 500 tax delinquents in the state
(the "Top 500 List"). Id. §
19195(a). Specifically, Section 19195 directs the FTB to
"make available as a matter of public record at least
twice each calendar year a list of the 500 largest tax
delinquencies in excess of one hundred thousand dollars
($100, 000)[.]" Id. Prior to placing a delinquent
taxpayer on the Top 500 List, the FTB is required to provide
thirty days' notice to the taxpayer. Id. §
19195(d). If within thirty days after this notice, the
delinquent taxpayer does not remit the amount due or make
arrangements with the FTB for payment, the delinquent
taxpayer is named on the Top 500 List. Id.
for this appeal, effective January 1, 2012, Section 494.5 was
enacted to provide that a state governmental licensing entity
"shall suspend" a license if a licensee's name
is included on the Top 500 List. Cal. Bus. & Prof. Code
§ 494.5(a)(1). Specifically, Section 494.5 provides
that, on at least ninety days' notice, the California
Department of Motor Vehicles "shall suspend" the
driver's license of any licensee whose name is included
on the Top 500 List. Id. § 494.5(a)(2), (b)(1),
(f)(1). Within this notice period, a delinquent
taxpayer can challenge inclusion and seek to avoid revocation
of a driver's license by (1) presenting a written
submission that the tax delinquency was paid, (2) entering
into a payment agreement, or (3) demonstrating financial
hardship. Id. § 494.5(h).
cumulative tax deficit encompasses the years 1995 through
2012. After the enactment of Section 494.5 in 2012, the FTB,
in April 2012, March 2013, and March 2014, served him with
NPAs for the years 2010 through 2012. Franceschi then had
sixty days to protest these additional proposed deficiencies.
He took no steps to do so.
Franceschi alleges that he received notice from the FTB dated
February 2014 indicating that he was to be included in the
next publication of the Top 500 List because he owed $242,
276.73 in back taxes. Franceschi further alleges that he
anticipated that the DMV ...