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Judge denies request to dismiss cruise lawsuit

By Sam DeGrave, Juneau Empire

October 3, 2016

A U.S. District Court judge has denied the City and Borough of Juneau’s request to dismiss the complaint Cruise Lines International Association Alaska filed in April, alleging the city has misused marine passenger fees.

On Thursday, Judge H. Russel Holland issued a written ruling in which he determined the city’s motion for dismissal had a leg to stand on, so to speak. But in order to dismiss the case, it would’ve needed more.

Michael Penn, Juneau Empire Cruise ship passengers walk in the rain back to their ship in early September.

Michael Penn, Juneau Empire
Cruise ship passengers walk in the rain back to their ship in early September.

The city’s motion for dismissal hinged on the Tax Injunction Act, a federal law that prohibits U.S. District Courts from enjoining or otherwise stopping the collection of “any tax under state law where a plain, speedy and efficient remedy may be had in the courts of such state,” the law reads.

Every cruise ship passenger who comes through Juneau has to pay a $5 marine passenger fee and $3 port development fee. CLIAA argues that the city has misused the revenue these fees generated by building a $10 million man-made island incorporated in the downtown seawalk.

Juneau attorney Robert Blasco, who is representing the city in the ongoing suit, argued that CLIAA’s council treated the fees as if they were a tax in their complaint.

“We don’t agree that that’s a correct factual statement, but if that’s what they’re saying, this court doesn’t have jurisdiction,” Juneau City Attorney Amy Mead told the Empire Monday, explaining the motion for dismissal.

In order to determine whether the entry fees Juneau charges cruise ship passengers are legal taxes, or (as their name implies) fees, Judge Holland had to apply the Bidart Test, a legal test consisting of three criteria.

In order to be considered a tax, a charge must meet at least two of the test’s three requirements. It must be administered by a legislative governing body. It must be imposed on a broad class of parties. And/or it must be used for general purposes, not to subsidize specific projects.

In this case, “it all boiled down to the third prong of that test,” Mead said.

In the motion for dismissal, Blasco argued that the cruise passenger entry fees — as described by CLIAA in its complaint — met all of Bidart Test’s criteria. Judge Holland found that the entry fees only met the first.

Now that the motion for dismal has been denied, Mead said the trial will proceed at a quicker pace. Though the city is prepared to defend itself, Mead said it would rather have done so in state court and not federal court, which explains the motion for dismissal.

“In the end, the judge said that this case should stay in federal court,” Mead said. “We weren’t sure how that was going to go one way or the other, but we believe this is a matter of local import and that the case should have been heard at a local level — in state court.”

Neither Blasco nor Herbert H. Ray Jr., an attorney for CLIAA, responded to Empire queries by press time Monday afternoon.

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