547 U.S. 332 (2006)
In 1941, Jeeps were first mass-produced for the U. S. Army by the Willys-Overland Motor Company in Toledo, Ohio.1 Nearly 60 years later, the city of Toledo and State of Ohio sought to encourage DaimlerChrysler to expand its Jeep operation in Toledo by offering local and state tax benefits for new investment.2 In 1998, DaimlerChrysler entered into a contract with the city of Toledo under which it agreed to expand its Jeep assembly plant at Stickney Avenue.3
In exchange, the city agreed to waive the property tax for the plant with the consent of the two school districts.4 DaimlerChrysler became entitled to a credit against the state franchise tax because it undertook to purchase and install new manufacturing machinery and equipment.5 Ohio levies a franchise tax upon corporations for the privilege of doing business in the state.6 A taxpayer that purchases new manufacturing machinery and equipment and installs it at sites in the State receives a credit against the franchise tax.7
Municipalities in Ohio may also offer partial property tax waivers to businesses that agree to invest in qualifying areas.8 With consent from local school districts, the partial property tax waiver can be increased to a complete exemption.9 Plaintiffs, most of whom were residents of Toledo who paid taxes to both the city of Toledo and State of Ohio, filed suit against state and local officials and DaimlerChrysler in state court.10
They alleged that the tax benefits violated the Commerce Clause and that they were injured because the tax breaks diminished the funds available to the city and State, imposing a disproportionate burden on plaintiffs.11 Defendants removed the action to the United States District Court for the Northern District of Ohio.12 Plaintiffs filed motions to remand the case to state court, expressing substantial doubts about their ability to satisfy standing requirements in federal court.13
The District Court declined to remand the case, concluding that the plaintiffs who are taxpayers have standing to object to the property tax exemption and franchise tax credit statutes under the municipal taxpayer standing rule.14 On the merits, the District Court found that neither tax benefit violated the Commerce Clause.15 The Court of Appeals for the Sixth Circuit agreed with the District Court as to the municipal property tax exemption but held that the state franchise tax credit violated the Commerce Clause.16 The Court of Appeals did not address the issue of standing.17
Defendants sought certiorari to review the Sixth Circuit's invalidation of the franchise tax credit, and plaintiffs sought certiorari to review the upholding of the property tax exemption.18 The Supreme Court granted certiorari to consider whether the franchise tax credit violates the Commerce Clause and also asked the parties to address whether plaintiffs have standing to challenge the franchise tax credit in this litigation.19
Whether state taxpayers have standing under Article III to challenge state tax or spending decisions simply by virtue of their status as taxpayers?20
No. The plaintiffs, most of whom were residents of Toledo who paid taxes to both the city of Toledo and State of Ohio, alleged that the franchise tax credit depletes the funds of the State of Ohio and imposes a disproportionate burden on them.23 This claimed injury is identical to the remote and conjectural harm rejected for federal taxpayers in Frothingham v. Mellon and extended to state taxpayers in Doremus v. Board of Ed. of Hawthorne.24 It depends on speculation about how legislators would respond to any revenue change.25
State taxpayers do not have standing under Article III to challenge the state franchise tax credit simply by virtue of their status as taxpayers.26
Related opinions on this issue
Justice Ginsburg concurs in the judgment and in the balance of the Court's opinion.27 She accepts the nonjusticiability of Frothingham-type federal and state taxpayer suits grounded in precedents such as Frothingham v. Mellon and Doremus v. Board of Ed. of Hawthorne.28
These decisions exclude from federal-court cognizance claims presenting generalized grievances not delineated by Congress.29 An exception exists for alleged violations of the Establishment Clause under Flast v. Cohen, but it has not been extended further.30 Justice Ginsburg reserves judgment on the limitations on standing declared in later cases including Simon v. Eastern Ky. Welfare Rights Organization, Valley Forge Christian College v. Americans United for Separation of Church and State, Inc., Allen v. Wright, and Lujan v. Defenders of Wildlife.31
Whether an exception to the general prohibition on taxpayer standing should exist for Commerce Clause challenges to state tax or spending decisions?32
No. The plaintiffs sought to analogize their Commerce Clause claim to the Establishment Clause challenge permitted in Flast v. Cohen.35 The Commerce Clause lacks the specific limitation on the taxing and spending power that justified the narrow Flast exception.36 Extending that exception would contradict its limited application in precedent while transforming federal courts into forums for generalized grievances.37
No exception to the general prohibition on taxpayer standing exists for Commerce Clause challenges to state tax or spending decisions.
Whether municipal taxpayers have standing to challenge a state franchise tax credit?38
No. Although plaintiffs had standing as municipal taxpayers to challenge the municipal property tax exemption, their challenge to the state franchise tax credit identifies no municipal action.41 The theory that the credit reduces distributions to local governments under Ohio Rev. Code Ann. § 5733.12 introduces an additional level of conjecture about state fiscal decisions that cannot support standing.42
Municipal taxpayers do not have standing to challenge the state franchise tax credit.43
Whether the supplemental jurisdiction recognized in Mine Workers v. Gibbs permits federal courts to exercise jurisdiction over claims that do not satisfy Article III standing requirements?44
No. Even assuming standing existed for the municipal property tax exemption claim, that standing does not extend to the state franchise tax credit claim under Mine Workers v. Gibbs.47 Doctrines such as standing originate in Article III and require separate demonstration for each claim.48 This is confirmed in Lewis v. Casey where the remedy must be limited to the inadequacy producing the established injury in fact.49
The supplemental jurisdiction recognized in Mine Workers v. Gibbs does not permit federal courts to exercise jurisdiction over claims that do not satisfy Article III standing requirements.