## Facts

- Ohio historically supplied natural gas to consumers through local distribution companies (LDCs), but later permitted retail competition from independent natural gas marketers (IMs).
- Ohio tax law provided three tax exemptions available to LDCs but not to IMs.
- IMs alleged the exemptions discriminated against them and their customers in favor of LDCs, violating the Commerce Clause and the Equal Protection Clause.
- The IMs filed in federal court seeking declaratory and injunctive relief invalidating the exemptions.
- The IMs did not seek to reduce their own tax liability; they sought to eliminate LDCs’ favored treatment, which would tend to increase competitors’ tax burdens or otherwise alter the state’s tax scheme.

## Issues

1. Whether federal courts should decline jurisdiction under the federal comity doctrine over a challenge to allegedly discriminatory state taxation when the plaintiffs seek to invalidate competitors’ tax exemptions rather than lower their own taxes.
2. Whether comity can require abstention even when the Tax Injunction Act does not bar the requested declaratory and injunctive relief.
3. Whether Ohio provided an adequate state-court remedy such that the suit should proceed, if at all, in state court.

## Decision

- The Supreme Court reversed the Sixth Circuit and held that comity required the federal courts to decline jurisdiction.
- The Court ruled that challenges to allegedly discriminatory state tax treatment must ordinarily proceed first in state court when the state provides a plain, adequate, and complete remedy.
- The Court held comity is broader than the Tax Injunction Act and can bar federal adjudication even if the Act does not apply.
- The case was remanded with instructions consistent with dismissal on comity grounds, leaving plaintiffs to pursue any available state-court remedies.

## Legal Principles

- Federal comity restrains lower federal courts from hearing claims that risk disrupting state tax administration, especially challenges to the constitutionality of state taxation affecting commercial activity.
- Comity is an independent, judge-made limit that can apply beyond the Tax Injunction Act’s statutory bar on suits restraining state tax assessment, levy, or collection.
- A taxpayer’s discriminatory-tax claim belongs in state court even when styled as “leveling up” by invalidating competitors’ tax exemptions, because the requested relief can restructure state tax policy choices and remedies.
- When a state provides a plain, adequate, and complete remedy to litigate federal constitutional objections to state taxation, federal courts should not provide original jurisdiction over such disputes.

## Conclusion

The Court required dismissal of the federal action because comity bars federal-court adjudication of discriminatory state tax challenges—regardless of whether the plaintiff seeks to lower its own taxes or increase a competitor’s tax burden—so long as the state courts provide an adequate forum for relief.


Levin v. Commerce Energy, Inc., 560 U.S. 413 (2010)