Paeste v. Gov’t of Guam

Taxpayers of territories are citizens under 42 U.S.C. §1983 and have rights to damages.

The Guam government in need of money began to not pay back tax refunds. With certain groups of people in desperate need of their tax refunds Guam initiated a special program to give priority to certain groups receiving their tax refunds. Corruption infiltrated this program and relatives of the certain departments, who should have been the lowest priority to receive their tax refunds, were now receiving their refunds before the groups with the highest priority. The district court placed a 6-month injunction on the tax refund program. On appeal, the Ninth Circuit found that Guam’s argument, that tax payers are not “people” under 42 U.S.C. § 1983, was not a jurisdictional question, but a statutory question. The panel explained that there is binding case law has held that tax payers are citizens under 42 U.S.C. § 1983. The panel further found that Guam’s argument could not be taken under color of law. Finally, the panel found that the district court correctly ruled in favor of a 6-month injunction. The panel found that no abuse of discretion occurred, because Guam’s solution to not pay valid requests for tax refunds and in turn paying out to those with political connections was illegal. AFFIRMED.