UPMC will have to wait until the City of Pittsburgh’s challenge to its tax exemption is decided in state court before it can pursue its federal civil rights lawsuit against the city and its mayor, a judge ruled today.
UPMC had sued the city, saying it was being unconstitutionally singled out and its due process rights violated by the city’s efforts to challenge its tax exemption and collect payroll taxes.
U.S. District Chief Judge Joy Flowers Conti ruled in a 30-page opinion that the civil rights case should be postponed until the state case is decided.
“UPMC will only be entitled to [civil rights] damages if it proves that the City Defendants violated its constitutional rights by attempting to collect taxes from it by filing and publicizing a state court lawsuit that challenges its continued status” as a charity, Judge Conti wrote. “For this court to deem the City Defendants’ tax collection efforts to be unconstitutional while those efforts are the subject of litigation in state court would be the epitome of federal interference in state tax matters and would pose a real risk of disrupting the City’s administration of its tax scheme.”
She declined to dismiss UPMC’s case “out of an abundance of caution” until the state court case is concluded.
In that matter, Allegheny County Common Pleas Judge R. Stanton Wettick has asked the city to file an amended complaint to replace its initial lawsuit claiming that UPMC was not tax exempt and owed payroll taxes. UPMC had countered that it has no employees, though its subsidiaries do. The city’s amended complaint is expected to name the subsidiaries.
The city sought dismissal or a stay of the federal suit. UPMC opposed both, saying it wanted to conduct discovery before Mayor Luke Ravenstahl’s administration leaves at year’s end.
The judge ordered the city to preserve potential evidence.
Rich Lord: email@example.com, 412-263-1542 or Twitter @richelord.