Dewitt Dillon, Cross-Appellants v. The State of Montana, Cross-Appellees

The State of Montana appeals a district court judgment which declared American Indians (Indians) residing on the federally recognized Crow Indian Reservation (Reservation) exempt from Montana’s personal income tax, enjoined collection, and ordered refunds of taxes paid. The court denied exemption status to those Indians whose incomes were earned on the Reservation but who resided elsewhere and they cross appeal. Montana argues that the Tax Injunction Act, 28 U.S.C. § 1341 , denies federal jurisdiction over the Indians’ complaint. We agree and accordingly reverse.

I.

The Indians filed this suit in 1973 under 42 U.S.C. § 1983 , claiming that the state could not constitutionally tax their income earned on the Reservation. Their complaint sought an injunction prohibiting collection of the state income tax, refund of taxes paid over the last five years, and contained class allegations. Federal subject matter jurisdiction was alleged pursuant to 28 U.S.C. § 1343 (3). On June 6, 1976, the district court found that it had jurisdiction.

The court certified the case as a class action with six subclasses. Three of the subclasses included Indians all of whom reside off but earn income on…