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    ALEXANDER, COMMISSIONER OF INTERNAL REVENUE v. “AMERICANS UNITED” INC.
    No. 72-1371.
    Argued January 7, 1974
    Decided May 15, 1974

      Powell, J., delivered the opinion of the Court, in which Burger, C. J., and Brennan, Stewart, White, Marshall, and Rehnquist, JJ., joined. Blackmun, J., filed a dissenting opinion, post, p. 763. Douglas, J., took no part in the decision of the case.

      Assistant Attorney General Crampton argued the cause for petitioner. With him on the briefs were Solicitor General Bork, Richard B. Stone, Stúart A. Smith, Ernest J. Brown, Grant W. Wiprud, and Leonard J. Henzke, Jr.

      Alan B. Morrison and Franklin C. Salisbury argued the cause and filed a brief for respondent.

      Briefs of amici curiae urging affirmance were filed by H. David Rosenbloom, Harry J. Rubin, John Holt Myers, Samuel Rabinove, and Mortimer M. Caplin for the Council on Foundations, Inc., and by Thomas F. Field for Tax Analysts and Advocates.

   Mr. Justice Powell

delivered the opinion of the Court.

Respondent is a nonprofit, educational corporation organized under the laws of-the District of Columbia as “Protestants and Other Americans United for Separation of Church and State.” Its purpose is to defend and maintain religious liberty in the United States by the dissemination of knowledge concerning the constitutional principle of the separation of church and State. In 1950, the Internal Revenue Service issued a ruling letter that respondent qualified as a tax-exempt organization under the predecessor provision to § 501 (c) (3) of the Internal Revenue Code of' 1954 (the Code), 26 U. S. C. § 501 (c) (3). As a result, the Service treated contributions to respondent as charitable deductions under the predecessor provision of § 170 (c) (2) of the Code, 26 U. S. C. § 170 (c)(2). This situation continued unchanged until April 25, 1969, when the Service issued a ruling letter revoking the 1950 ruling on the ground that respondent had.violated §§ 501 (c)(3) and 170 (c)(2)(D) by devoting a substantial part of its activities to attempts to influence legislation. Shortly thereafter, the Service issued another ruling letter exempting respondent from income taxation as a “social welfare1’ organization under Code § 501 (c) (4), 26 U. S. C. § 501 (c) (4) . The effect of this change in status was to render respondent liable for unemployment (FUTA) taxes under Code § 3301, 26 U. S. C. § 3301, and to destroy its eligibility for tax-deductible contributions under § 170.

Because the 1969 ruling letter caused a substantial decrease in its contributions, respondent and two of its benefactors initiated the instant action in the United States District Court for the District of Columbia on July 30, 1970. They sought a declaratory judgment that the Service’s administration of the lobbying proscriptions of §§501 (c)(3) and 170 was erroneous or unconstitutional and injunctive relief requiring reinstatement of respondent’s § 501 (c)(3) ruling letter. Because their objections to the Service’s action included a facial challenge to the constitutionality of federal statutes, they also requested the convening of a three-judge district court pursuant to 28 U. S. C. § 2282.

The Service moved to dismiss the action, principally on the ground that the exception in the Declaratory Judgment Act for cases “with respect to Federal taxes,” and the_prohibition in the Anti-Injunction Act against suits “for the purpose of restraining the assessment or collection of any tax,” ousted the court of subject-matter jurisdiction. The District Court accepted this argument, refused to convene a three-judge court, and dismissed the complaint in an unpublished order filed March 9, 1971. The United' States Court of Appeals for the District of Columbia Circuit affirmed the dismissal insofar as it pertained to the individual plaintiffs, but it reversed as to respondent and remanded the case to the District Court with instructions to convene a three-judge court. “Americans United” Inc. v. Walters 155 U. S. App. D. C. 284, 477 F. 2d 1169 (1973). The Service petitioned for review, and. we granted certiorari. 412 U. S. 927 (1973). We reverse.

In our opinion in Bob Jones University v. Simon, ante, p. 725, we examined the meaning'of the Anti-Injunction Act and its interpretation in prior opinions of this Court, and we reaffirmed our adherence to the two-part test announced in Enochs v. Williams Packing & Navigation Co., 370 U. S. 1 (1962). To reiterate, the Court in Williams Packing únanimously held that a pre-enforcement injunction against the. assessment or collection of taxes may be granted only (i) “if it is clear that under no circumstances could the Government ultimately prevail . . . id., at 7; and (ii) “if equity jurisdiction otherwise exists.” Ibid. Unless' both conditions are met, a suit for preventive injunctive relief must be dismissed.

In the instant case the Court of Appeals-recognized Williams Packing as controlling precedent for responds ent’s individual coplaintiffs and affirmed the dismissal of the súit as to them. 155 U. S. App. D. C., at 292, 477 F. 2d, at 1177. The court held that the relief requested by the, individual plaintiffs “relate [d] directly to the assessment and collection of taxes” and that the allegations of infringements of constitutional rights were “to no avail” in overcoming the barrier of § 7421 (a). Id.; at 291, 477 F. 2d, at 1176. The court also recognized that respondent could not satisfy the Williams Packing criteria, id., at 298, 477 F. 2d, at 1183, but concluded that respondent’s suit was without the scope of the Anti-Injunction Act and therefore. not subject to the Williams Packing test.

The court’s conclusion with regard to respondent rested on the confluence of several factors. One was the constitutional nature of respondent’s cláims. As the court noted, the thrust of respondent’s argument is not that it qualifies for a § 501 (c) (3) exemption under existing law but rather that that provision’s “substantial part” test and proscription against efforts to influence legislation are unconstitutional. Id., at 293, 477 F. 2d, at 1178. Obviously, this observation could not have beendispositive to the Court of Appeals, for this factor does not differentiate respondent, which was allowed to sue, from the individual coplaintiffs, who likewise pressed constitutional claims but who were dismissed from the action. Furthermore, decisions of this Court , make it unmistakably clear that the constitutional nature of a taxpayer’s claim, as distinct from its probability of success, is of no consequence under the Anti-Injunction Act. E. g., Bailey v. George, 259 U. S. 16 (1922); Dodge v. Osborn, 240 U. S. 118 (1916).

The other three factors identifiéd by the Court of Appeals are equally unpersuasive. . First, the court noted that respondent “does not seek in this lawsuit to enjoin the assessment or collection of its own taxes.” 155 U. S. App. D. C., at 292, 477 F. 2d, at 1177. Because respondent volunteered to pay FUTA taxes even if it obtained an injunction restoring its •§ 501 (c) (3) status, this observation, we may assume, is correct. It is also irrelevant. •Section 7421 (a) does not bar merely a taxpayer’s attempt to enjoin the collection of his own taxes. Rather, it declares in sweeping terms that “no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.” Thus a suit to enjoin the assessment or collection of anyone’s taxes triggers the literal terms of § 7421 (a). ■

Perhaps the real point of the court’s observation about respondent’s taxes was to ■ set the stage for its more pertinent conclusion that restraining the assessment or collection of taxes was “at best a collateral effect” of respondent’s action and that this suit arose “in a posture removed from a restraint on assessment or collection.” 155 U. S. App. D. C., at 294, 477 F. 2d, at 1179. We disagree. Under any reasonable construction of the statutory term “purpose,” the objective of this suit was to restrain the assessment and collection of taxes from respondent’s contributors. The obvious purpose of" respondent’s action was to restore advance assurance that donations to it would qualify as charitable deductions under § 170 that would reduce the level of taxes of its donors. Indeed, respondent would not be interested in. obtaining the declaratory and injunctive relief requested if that relief did not effectively restrain the taxation of its contributors. Thus , we think it circular to conclude, as did the Court of Appeals, that respondent’s “primary design’’ was not “to remove the burden of taxation from those presently contributing but rather to avoid the disposition of contributed funds away from the corporation.” Ibid. The latter goal is merely a restatement of the former and can be accomplished only by restraining the assessment and collection of a tax in contravention of § 7421 (a).

Finally, -the Court of Appeals emphasized that respondent had no “alternate legal remedy in the form of adequate refund litigation ....” Id., at 295, 477 F. 2d, at 1180. The court recognized, of course, that respondent does have an opportunity to litigate its claims in an action for refund of FUTA taxes but dismissed this alternative with the statement that “it is subject to certain conditions and, we feel, is so far removed from the mainstream of the action and relief sought as to hardly be considered adequate.” Id., at 294 n. 13, 477 F. 2d, at 1179 n. 13. The import of these comments is unclear. If they are. taken to mean that a refund action is, as a practical matter, inadequate to avoid the decrease in respondent’s contributions for the interim between the withdrawal of § 501 (c) (3) status and the final adjudication of its entitlement to that exemption, they are certainly accurate. This, however, is only'a statemént of irreparable injury, which is the essential prerequisite.for injunctive relief, under traditionál equitable standards and only one part of the Williams Packing test. As noted in Bob Jones, ante, at 745-746, allowing injunctive relief on the basis of this showing alone would render § 7421 (a), quite meaningless.

If, on the other hand, the court’s comments about the inadequacy of a refund action for FUTA taxes are .interpreted to mean that respondent lacks an opportunity to have its claims finally adjudicated by a court of law, we think they are inaccurate. Respondent’s liability for FUTA taxes hinges on precisely the same legal issue as - does its eligibility for tax-deductible contributions under § 170, namely its entitlement to § 501 (c)(3) status. And respondént will have a full opportunity to litigate the legality of the Service’s withdrawal of respondent’s §501 (c)(3) ruling letter in a refund suit following the payment of FUTA taxes. E. g., Christian Echoes National Ministry, Inc. v. United States, 470 F. 2d 849 (CA10 1972), cert. denied, 414 U. S. 864 (1973).

We therefore conclude that there are no valid reasons to distinguish this case from Williams Packing for purposes of § 7421 (a) or to' exempt respondent’s suit from the dual requirements enunciated in that case. The judgment is reversed.

It is so ordered.

Mr. Justice Douglas took no part in the decision of this case.

Mr. Justice Blackmun,

dissenting.

Finding myself in solitary dissent in this “tax” case, I am somewhat diffident about expressing views contrary to those the Court apparently has reached so easily. I do so only because I am disturbingly aware of the overwhelming power of the Internal Revenue Service. This power is such that its mere exercise often freezes tax status so as to endanger. the existence of philan-° thropic organizations and the public benefits they secure, merely because the path to judicial review is so discouragingly -long and expensive. I write primarily, therefore, to express what I feel is a. needed word of caution about governmental power where the means to challenge that power are unfavorable and unsatisfactory at best. •

I

“Americans United” Inc. (AU) is a District of Columbia nonprofit educational corporation organized in 1948. For almost 18 years AU was formally recognized by the Service as. exempt from federal income tax under § 501 (c) (3) of the Internal Revenue Code of 1954, 26 IT. S. C. §501 (c)(3), and its predecessor, § 101 (6) of the Internal Revenue Code of 1939.

On April 25, 1968, however, the Commissioner of Internal Revenue revoked AU’s letter-ruling exemption on the ground that the organization -no longer met the' requirements of § 501 (c) (3) and, instead, was an “action” organization, within the definition of Treasury Regulations §§ 1.501 (c)(3)-! (c)(3)(i) and (iv)^, in that a substantial part of its activities was devoted to the pursuit of objectives to influence legislation App. 7-10. The loss of its § 501- (c) (3) status, however; did not result in AU’s becoming subject to federal income tax. This was because AU qualified as a civic league or other prgahization to which § 501 (c) (4) has -application.

The result, nevertheless, was distinctly adverse to AU in two respects. A contribution to the organization no longer was deductible-by the donor under §§170(a)(l) and (c)(2)(D) of the 1954 Code, 26 U. S.. C. §§170 (a)(1) and (c)(2)(D), the latter of which closely parallels but is not identical with § 501 (c) (3). As a matter of much less concern, AU also became subject to federal unemployment tax under § 3301 of the Code, 26 U. S. C. § 3301, for exemption therefrom for § 501 organizátions is limited to those that qualify under §-501 (c)(3). § 3306 (c) (8) of the 1954 Code,'26 U. S. C'. § 3306 (c)'(8). AU has paid federal unemployment taxes,' and has stipulated that it will continue to do so.

As a result of the revocation of its § 501 (c)(3) status, contributions by donors to AU declined sharply so that for the first time the organization was not able to raise enough funds to cover its expenses. AU and two of its benefactors then sought relief by the present suit. They have alleged that the substantiality test of §§ 501 (c) (3) and 170.(c)(2)(D) created an unconstitutional disparity between large and small organizations; that the Commissioner revoked AU's exemption ruling punitively; that it was unconstitutional to. penalize First Amendment activity in this manner; and that §501 (c) (3)’s “substantial” and “propaganda” standards were unconstitutionally vague. AU sought reinstatement on the IBS Cumulative List of Organizations so that contributions to it would be deductible by donors under §§ 170 (a)(1) and (c)(2)(D).

II

The Anti-Injunction Act, § 7421 (a) of the Code, 26 U. S. C. § 7421 (a), reads in part:

,“[N]o suit for the purpose of. restraining the assessment or collection of any tax shall be maintained in any court by any person, whether or not such person is the person against whom such tax was assessed.”

In considering § 7421 (a), a two-step analysis is necessary: (1) When does the statute apply? (2) When it is applicable, under what circumstances is an exception permitted? It seems to me that the Court overlooks the first question in order to apply mechanically the criteria for an exception to the application of § 7421 (a).

The threshold question, obviously, is whether the present litigation is a “suit for the purpose of restraining” any tax. It is. conceded that AU has no income tax liability. and will have none regardless of the outcome of this litigation. . AU has paid,, and will continue to pay, federal unemployment taxes. Its Assumption of FICA tax liability is frozen and cannot now be terminated.

It is in the context of this fixed and certain status as to all these federal taxes — income, unemployment, FICA — that “the purpose” of the present litigation, within the meaning of § 7421 (a), must be ascertained. AU. asserts that the purpose is to determine its charitable status so far as benefactors are concerned. Indeed, one surely must concede that, within the literal import of the statute’s words, the suit is not one “for the purpose of restraining . . . any tax.” It is, instead, a suit to assure the continuance of contributions utilized to sus-' tain AU’s operations.

I would not attribute to Congress, however, so simplistic a prohibition in § 7421 (a) as to enable an organization to circumvent the statutory barrier by a subjective protestation of the purpose for which an injunction is sought. In order to ascertain legislative intent, it is nepessary to consider effect as well as purpose and thús to bring objective criteriá into the analysis. See Recent Development, 73 Col. L. Rev. 1502, 1508-1510 (1973). '

In Bob Jones University v. Connolly, 472 F. 2d 903, 906 (1973), the Fourth Circuit concluded that when the withdrawal of an exemption “would ultimately result in potentially greater tax revenues,” thé obvious purpose of a suit to enjoin the withdrawal is. to prevent the assessment of tax, and § 7421 (a) would be applicable. Thus, “purpose” was equated with ultimate tax effect. Crenshaw County Private School Foundation v. Connally, 474 F. 2d 1185, 1188 (CA5 1973), pet. for cert. pending No. 73-170, has a similar focus. In the present ease the Court of Appeals took a different approach:

“The restraint upon assessment and collection is. at best a collateral effect of the action, the primary design not being to remove the burden of taxation from those presently contributing but rathu to avoid' the. disposition .of contributed funds away from the corporation.” 155 U. S. App. D. C. 284, 293-294, 477 F. 2d 1169, 1178-1179.

In. this view, applicability of the statute depends on the direct effect the relief sought would have on the plaintiff and not on--the system as a whole.

■ As has been noted, the result of the injunction sought here would not directly inhibit the collection of tax from AU. It is'also highly speculative what collateral effect, if any at all, the suit could possibly have on the federal revenue. If the assertion that AU’s contributions have dried up is to. be .accepted, as I suspect it must be, I would presume that its erstwhile contributors have found other objects for their bounty, that' is, other organizations whose names remain on the Service’s vitally important Cumulative List. When nothing more than possible collateral effect on the revenues is involved, the Court’s wide-ranging test of applicability of •§ 7421 (a), announced today, is, for me, too attenuated and too removed to be encompassed within the intendment of the statute’s phrase, “for the purpose of restraining the assessment or collection of any tax.”

In Enochs v. Williams Packing & Navigation Co., 370 U. S. 1 (1962), this Court observed that the object of §7421 (a) “is to withdraw jurisdiction from the . . . courts to entertain suits seeking injunctions prohibiting the collection of federal taxes,” and “to permit the United States to assess and collect taxes alleged'to be due without judicial intervention, and to require that the legal right to the disputed sums be determined in a suit for refund.” Id., at 5 and 7. There undoubtedly, is appropriate concern about the underlying danger “that a multitude of- spurious suits, or even of suits withj^ossible merit, would so interrupt the/free flow oi> reveñues as-to jeopardize the Nation’s fiscal stability. See, e. g., State Railroad Tax Cases, 92 U. S. 575, 613-614 (1876); Cheatham v. United States, 92 U. S. 85, 89 (1876). Certainly, precollection- suits could threaten planning and budgeting. But I do not -perceive how the injunction desired in this case interferes with the area of concern that is the subject of § 7421 (a). Any potential ■ increase in revenues because donors no longer may contribute to AU and thereby obtain a § 170 (a) (1)-deduction is, at best, only minor and speculative and is neither significant, nor controlling. I, therefore,' would accept “direct effect on the plaintiff” as a component to be considered in the ascertainment of the true “purpose” of the suit, within the meaning and reach of § 7421.(a).

I do not wish to indicate disapproval of Williams Packing'. There a taxpayer sought' to enjoin the collection of faxes. As the basis for equitable jurisdiction, it asserted that it would.be thrown into bankruptcy if it were required to pay the taxes it challenged. The Court carefully noted that, there may. well be situations where “the central purpose of the Act is inapplicable and . . . the attempted collection may be enjoined.” 370 U. S., at 7. To be sure, the Court narrowly confined exceptions to § 7421 (a) to instances where the plaintiff would suffer irreparable injury and where it was “clear that under no circumstances could the Government ultimately prevail.” Ibid. If, however, this test is met, then the “manifest purpose” of the statute — to permit the collection of taxes without judicial intervention^ — is “inapplicable.” The Court thus made it .clear that there was an element, in addition to the traditional equity considerations, previously spelled out in Miller v. Standard Nut Margarine Co., 284 U. S. 498 (1932), that must be presr ent in order to avoid the proscription of the Anti-Injunction Act.'

Williams Packing, of course, on its facts, is clearly’ distinguishable from this case. There the purpose of the suit was directly to restrain the collection of social security and unemployment taxes allegedly past due from that taxpayer. Here the avowed purpose is not to restrain, tax collection but to assure ATI’s restoration to the Cumulative List. In Williams Packing it was the incidence of taxation that was challenged and the irreparable injury of prospective payment of the tax was claimed as the equitable basis for the injunction. Nothing remotely resembling that is present here. To read Williams Packing as broadly-as the Court does today is to make § 7421 (a) more restrictive than the Court in Williams Packing or Congress intended. ' The result is that § 7421 (a) becomes an absolute bar to any and . all injunctions, irrespective of tax liability, of purpose or effect of the suit, or of the character of the Service’s action.

There is a further consideration. Arguably, where the challenged governmental action is not one intended to produce revenue but, rather, is one to accomplish a broad-based policy objective through the medium of fedéral taxation, the application of § 7421 (a) is inappropriate. Obviously, § 501 (c)(3) -is not designed tb raise money. Its purpose, rather, is' to. assure the existence of truly-philanthropic organizations and the continuation of the important public benefits they bestow.

Another very1'important factor deserving.consideration in this context is the hazard of vesting in the Commissioner virtual'plenipotentiary power-over philanthropic organizations. Although there can be little question that .the Commissioner, under § 7805 (a) o.f the. Code, 26 U. S. C. 17805 (a), is properly vested with,broad powers to “prescribe all needful rules and regulations for the enforcement” of the tax laws, there is nothing, in .the Code that suggests that he must be fully insulated! from challenge when effectuating social policy.

- AU has charged unconstitutional treatment pursuant to an unconstitutional provision. These «re claims peculiarly within the province, of courts and not of the Executive’s administrative officers. : The Court’s opinion' makes clear that a claim of this kind is now precluded from judicial determination until such time as the Court concludes that the Government could not ultimately prevail on the merits. Unless' and until that conclusion is reached, the philanthropic organization is at -the mercy of the Commissioner for the period of time — usually a substantial one — it takes for a claim to be filed and to work its way through the adjudicative process in the guise of a refund suit with its myriad pitfalls. And even this route is possible only if the organization has a tax that has been paid. See Part III, infra.

The Court in Bob. Jones University, ante, at 729-730, acknowledges that “appearance on the Cumulative List is a prerequisite to successful fund raising for most charitable organizations.” The program of exemption by letter.ruling, therefore; is tantamount to a licensing procedure. If the Commissioner’s authority were limited by a clear statutory definition of § 501 (c)(3)’s require-: ment of “no substantial part/’ or by an objective definition of what is “charitable,” there would be less concern about possible. administrative abuse. But' where the philanthropic organization is concerned, there appears to be little to circumscribe the almost unfettered power of the Commissioner. This may be very well so long as one subscribes to the particular brand of social policy the Commissioner happens to be advocating at the time (a social policy the. merits of which I make nio attempt tQ evaluate), but application of our tax laws should not operate in so fickle a fashion. Surely, social policy in the first instance is a matter for legislative concern. To the extent these determinations are reposed in the authority of the Internal Revenue Service, they should have the 'system of checks and balances provided- by judicial review before an organization that, for years has been favored with an exemption ruling is imperiled by an allegedly unconstitutional change of- direction on the part of the Service.

When ah organization which has appeared on- the Cumulative List seeks to enjoin what it claims is its illegal removal from that List and has no direct income tax liability or a de minimis collateral liability, the injunction, in my view, should not be within the prohibition of §7421 (a).

111

Concluding, as I have, that § 7421 (a) is not a bar to an injunction by AU, the traditional equitable considerations of irreparable injury and adequate alternative remedy must determine whether injunctive relief is appropriate. This is an inquiry independent of the question whether the Anti-Injunction Act applies, and is no different from the inquiry as to when injunctive relief is appropriate outside the tax field. See, for example, Public Service Comm’n v. Wycoff Co., 344 U. S. 237, 240-241 (1952); Beacon Theatres, Inc. v. Westover, 359 U. S. 500, 506-507 (1959). AU makes a vigorous and pressing- claim that it is and will be irreparably injured by the loss of contributions since donors no longer receive an income tax deduction, and that this loss is completely unrecoverable even were AU ultimately to prevail on the merits. The Court in its opinion, ante, at 761-762, seems to accept the fact of irreparable injury here, just as the Court of Appeals recognized its presence as virtually inevitable. 155 U. S. App. D. C., at 292, 477 F. 2d, at 1177. Even where it has been found that § 7421 (a) bars a suit, it has been recognized that revocation of exempt status is an irreparable injury that otherwise satisfies the condition for the granting of injunctive relief. See, for example, Bob Jones University v. Connally, 472 F. 2d, at 906.

In addition to irreparable injury, the plaintiff must show that he. has, no adequate remedy at law. Wilson v. Shaw, 204 U. S. 24, 31 (1907). The Commissioner suggests that a plaintiff organization usually has three alternative remedies, any one of which is adequate: an income tax refund suit, a federal unemployment tax or FICA tax refund suit, and an accommodation suit by a selected donor in the' form of testing- his claim to a charitable deduction_under §§170 (a)(1) and (c)(2)(D).

In- AU’s case the Commissioner, of course, cannot and does not contend that the income tax refund suit alternative is available. AU received § 501 (c) (4) status, upon revocation of its § 501 (c) (3) exemption, ánd it is not subject to federal income tax so long as it retains § 501 (c)(4) status. Whenever that alternative is available, .as in Bob Jones University, ante, p. 725, such availability not only indicates the existence of a remedy at law but that the direct effect of an injunction would be to restrain the collection of taxes.

■ An FICA tax refund suit is not available as an alternative to AU, since AU has made • its election under §3121 (k)(l)(A) and that election is now irrevocable. See n. 3, supra. Although AU conceivably might bring a refund suit for federal unemployment taxes, the real question, and a substantial one, is whether that remedy is adequate for AU and is an effective route for the determination of the issues involved. •

A suit for refund of federal unemployment tax, authorized under § 7422 of the Code, 26 U. S. C. § 7422, and with a period of limitations imposed by. § 6532 (a), is' directly geared to a determination of the technical aspects of FUTA liability and not to the larger constitutional issues. At most, the refund suit is an artificial vehicle to adjudicate questions other than entitlement to refund; its focus is on liability and not on. eligibility under §§ 170 (a)(1) and (c)(2)(D). It is most doubtful, also, that potential contributors would regard a favorable outcome in such, a suit as possessing the reliability of a favorable letter ruling. Assuming that.AU could litigate its constitutional claims in an FUTA.refund suit, see Christian Echoes National Ministry, Inc. v. United States, 470 F. 2d 849 (CA10 1972), cert. denied, 414 U. S. 864 (1973), there are other obstacles in its path.

The suit, for refund may not be maintained until a claim for refund has been filed. § 7422. The federal unemployment tax is imposed on an annual basis; thus, no refund can be claimed until the expiration of the year for which the tax is paid. Section 6532 (a)(1), as usual, precludes the suit until the claim is denied or six months have passed from the date of filing. Once suit is instituted, the Government has at least 60 days to answer the complaint. Under optimum conditions and with cooperation, the minimum period of time required to achieve the objective through the refund suit is one to two years from: the timé of revocation. This is the delay if the organization wins and no Government appeal is taken. If an appeal follows, the delay in ultimate resolution drags on. E. g., Christian Echoes, supra, where the ruling was revoked in 1966 and final judicial review wqs concluded only in 1973. While this is perhaps to be expected, and must be endured, in an ordinary tax refund suit, a delay of this magnitude defeats the adequacy of remedy when a philanthropic organization’s very existence is at stake.

There are still other hazards. When small sums are at issue, as with AU’s FUTA liability, the Government inadvertently or intentionally may concede the refund. This is not unlikely, for sound administration may not warrant the time and expense necessary to contest a claim of small amount when vital issues and conceivably profound precedents are at stake. Church of Scientology v. United States, 485 F. 2d 313 (CA9 1973), illustrates the Government’s effort to win dismissal of a case when a refund had been made. See also Mitchell v. Riddell, 402 F. 2d 842 (CA9 1968), appeal dismissed and cert. denied, 394 U. S. 456 (1969). Theie is little doubt that the Commissioner possesses the authority to make the refund and moot- the suit if he chooses not to litigate the underlying issues. Although I agree with the Commissioner that to do so in a situation like that in the instant case -would amount to bad faith, Brief for Petitioner 35 n. 25, it would be almost impossible for an organization to‘prove bad faith where, as here, the sum at issue is minimal and inadvertence' or sound administration could be a valid reason for the refund.

Additionally, there is a substantial question whether an organization’s eventual victory in a refund suit would accomplish its goal.. The Commissioner has asserted that “normal practice is to issue a favorable ruling upon the application of an organization which has prevailed in a court suit,” Reply Brief for Petitioner 34 — 35, n. 31. Still, the IRS Exempt Organizations Handbook states:

.“An organization which obtains a Tax Court or Federal coürt decision holding it to be exempt must file an exemption application and establish its right to exemption before the Service will recognize its exemption for years subsequent to those involved in the court decision.” Department of Treasury, Internal Revenue Manual, Part XI, c. (11) 671, ¶ 270.

Whatever the internal ..practice may be, the published procedures cast serious doubt on the adequacy of the refund suit to resolve the organization’s- urgent problem. The revenue ruling has prospective application, whereas a court determination operates retrospectively, to the extent the pleadings and proof and the applicable statute of limitations permit. Thus, the scope of relief available in a refund suit' is also uncertain. The organization is then faced with the- dilemma of choosing between a so-called pre-assessment suit, which the Court says it cannot bring, and a refund suit that decides little' more than the correctness of a particular year’s tax liability (which in this case has been paid and is of little or no concern).

.The staged suit by a “friendly” donor is the Commis•sioner’s other suggestion. The donor’s suit suffers the same time problems. The organization is off . the Cumulative List at least until the donor establishes his entitlement to a §§.170 (a)(1) and. (c) (2) (D) deduction. This suit also may be mooted. Moreover, litigation by the accommodating donor does not permit the organization to assert its rights and interests. Could the donor make the First Amendment and equal protection claims- that .AU seeks to have determined? Not only must AIT rely on a contributor to raise issues for. it, but it must find á donor who is-willing both to contribute and to undertake the task of litigation. This strains largesse to the extreme, particularly since the suit will subject the donor to routine .full audit of his own return.

L conclude that neither course is an adequate remedy for an' irreparably harmed organization to vindicate its .claims. ■ Thus, equitable relief in the form of an injunction is not inappropriate.

IY

The last issue is whether the amended complaint presented a substantial' constitutional question om the merits justifying the convening of a three-judge court under 28 U. .S. C. § 2282. The test was enunciated in Ex parte Poresky, 290 U. S. 30, 32 (1933), and restated in Goosby v. Osser, 409 U. S. 512, 518 (1973), and in Hagans v. Lavine, 415 U. S. 528, 542-543 (1974), The Court of Appeals in the present case said that “the possibility of success is- not so certain as to merit the Enochs exception with respect to § 7421 (a), yet not so frivolous or foreclosed as to merit denial of the § 2282 motion.” 155 U. S. App. D. C., at 298, 477 F. 2d, at 1183. Fd0/ not differ with that determination.

I, of course, imply no opinion on the merits of the underlying controversy.

. Since I cannot join the Court’s reversal of the Court of Appeals’ judgment, I respectfully dissent.

       The predecessor provision of Code §501 (c)(3) was-§101(6) of the Internal Revenue Code of 1939. Section 501 (c) (3) describes the following as organizations exempt from federal income taxes by-virtue of § 501 (a):
      “Corporations, and any, community chest, fund, or foundation, organized and operated exclusively for religion’s, charitable, scientific, testing for public safety, literary, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation, and which does not participate in, or intervene in (includifig the publishing or distributing of statements), any political campaign on behalf of any candidate for public office.”

       The predecessor provision of § 170 (c) (2) of ther Code was § 23 (o) (2) of the Internal Revenue Code of 1939. Section 170 (c)(2) defines a “charitable contribution” for purposes of § 170 (a), the charitable deduction; provision, to mean a contribution or gift to or for the use of:.
      “A corporation, trust, or community chest, fund, or foundation—

        “(A) created or organized in the United States or in any possession thereof, or under the law of the United States, any State, the District of Columbia, or'any possession of the United States; ■
      “(B) organized and operated exclusively for religious, charitable; scientific, literary, or educational purposes or for the prevention of cruelty to children or animals;
      “(C) no part of the net earnings of which inures to the benefit of any private shareholder or individual; and
      “(D) no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation, and which does not participate in, or intervene in (including the publishing or distributing of statements), .any political campaign on behalf of any candidate for public office.”
      The differences between the requirements of §§501 (c)(3) and 170 (c) (2) are minor and are not involved in this litigation.

       Section 501 (e)(4) lists the following organizations as qualifying under the §501 (a) exemption from federal income taxes:
      . “Civic leagues or organizations not organized for profit but operated exclusively for the promotion of social welfare, or local associations of employees, the membership of which is limited to ■the employees of a designated person or persons in a particular municipality,- and the net earnings of- which are devoted exclusively to charitable, educátional, or recreational purposes.”

       See Code §3306 (c)(8), 26 U. S. C. §3306 (c)(8). Respondent began paying' FUTA taxes in February 1970 and has stated its willingness to continue to do so in light of its relatively insubstantial liability for such taxes. The Service reports that respondent paid $981.13 in FUTA taxes for the year Í969, $1,052.60 for 1970, $889.09 for 1971, and $1,131.36 for 1972. Brief for Petitioner 4 n. 2.
      Ordinarily, respondent’s shift from §501 (c)(3) status to §501 (c)(4) status would also have meant that it would become subject to federal social security (FICA) taxes, since § 501 (c) (3) organizations are exempt from such taxes but § 501 (c) (4) organizations are not. Code § 3121 (b) (8) (B), 26 U. S. C. § 3121 (b) (8) (B). This distinction is not involved here’, however, because respondent in prior ’ years voluntarily elected to pay FICA taxes although it held § 501 (c) (3) status. This election had been in effect for more than eight years, which rendered respondent incapable of terminating its election to pay FICA taxes even if it had retained its §501 (c)(3) status. Code §3121 (k)(l)(D), 26 U. S. C. §3121 (k)(l)(D).

       Federal jurisdiction, was founded on 28 U. S. C. §§1331 and 1340 and on § 10 of the Administrative Procedure Act, now 5 U. S. C. §§ 701-706.

       The amended complaint identified five claims: (1) that the lobbying proscriptions of §§ 501 (c) (3) and 170 (c) (2) (D) and the Service’s administration of them were unconstitutional due to the restrictions imposed on the exercise of First Amendment rights of political advocacy by respondent and its contributors; (2) that the “substantial part” test of these provisions denied equal protection of the laws in conflict with the Due Process Clause of the Fifth Amendment, by allowing large tax-exempt organizations to engage in a greater quantum of lobbying activity than is. allowed to smaller organizations; (3) that this disparity in the absolute amounts of lobbying activity allowed large and small § 501 (c) (3) organizations enabled certain large churches to engage in more lobbying in favor of government aid to church schools than respondent could bring to bear in opposition, thereby violating the plaintiffs’ rights under the Establishment and Free Exercise Clauses of the First Amendment; (4) that the statutory standards of “substantial part” and “propaganda” were so lacking in specificity that they constituted an invalid delegation of legislative power to the Service; and (5) that the Service acted arbitrarEy and capriciously in revoking respondent’s § 501 (c)(3) exemption. The last two contentions apparently were not advanced in the Court of Appeals. There the argument centered on the.“discriminatory” aspects of the “substantial part” test identified above as claim (2).

       Specifically, respondent and its coplaintiffs sought to have the exemption clauses of § 501 (c) (3) severed from the remainder cf that section and declared unconstitutional.

       The federal tax exception to the Declaratory Judgment Act .appears in 28 U. S. C. § 2201:
      “In a case of actual controversy within its jurisdiction, except with respect to Federal taxes, any court of thé United States, upon the filing of an appropriate pleading, may -declare the rights, and other legal relations of any interested party seeking such declaration, whether or not relief is or could bé sought. Any such declaration shall have the force and effect of a final judgment or decree and shall be reviewable as such.” (Emphasis added.)

       The Anti-Injunction Act (Income Tax Assessment) is set forth in Code § 7421. (a), 26 U. S. C. § 7421 (a):
      “Except as provided in sections 6212 (a) and (c), 6213 (a), and 7426 (a) and (b)(1), no suit for the purpose of restraining the assessment or collection of any tax shall be maintained in any court .by any person, -whether, or not such person is the person against' whom such tax was assessed.”-
      None of the exceptions is relevant to this case.

       The Court of Appeals also held that the scope of the “except with respect to Federal taxes” clause of the Declaratory Judgment Act, see n. 8,' supra, is coterminous with the Anti-Injunction Act ban against suits “for the purpose of restraining the assessment or collection of any tax” despite the broader phrasing of the former provision. 155 U. S. App. D. C. 284, 291, 477 F. 2d 1169, 1176. While we take no position on this issue, it is in any event clear that the federal tax exception to the Declaratory Judgment Act is at least as broad as the prohibition of the Anti-Injunction Act. Because we hold that the latter Act bars the instant suit, there is no occasion to deal separately with the former. See Bob Jones University v. Simon, ante, at 732-733, n. 7.

       The portion of § 7421 (a) beginning with “by any person” was addéd to the Act in 1966. See Bob Jones University v. Simon, ante, at 731-732, n. 6. As we noted there, however, the “by any person” phrase reaffirms the plain meaning of the original language of the Act.

       Alternatively, this suit was intended to reassure private foundations that they could make contributions to respondent without risk of tax liability under Code § 4945 (d) (5), 26 U. S. C. § 4945 (d) (5). In this respect, the purpose of this action was to restrain the assessment of taxes against such foundations.

       That respondent has voluntarily paid FUTA taxes rather than challenging their imposition via a refund suit does not alter this conclusion. A taxpayer cannot render an available review procedure an inadequate remedy at law by voluntarily forgoing it. See Graham v. Du Pont, 262 U. S. 234 (1923).
      It should also be noted' that this case cannot be distinguished from Bob Jones, ante, p.- 725, on the ground that petitioner in that case in theory will be subject to federal income faxes upon termination of its §501 (c)(3) status, whereas respondent in this case will not, given that it has established § 501 (c) (4) status. Refund suits for federal income taxes and for FUTA (or FICA) taxes are fungible in the present context. So long as the imposition of a federal tax, without regard to its nature, follows 'froim the Service’s withdrawal of § 501 (c) (3) status, a refund suit following the" collection of that tax is an appropriate vehicle for litigating the legality of the Service’s actions iinder §501 (c)(3). As noted in Bob Jonesl ante, at 748 n. 22, we.need not decide now the range of remedies available, in such a refund suit, which,- unlike this suit, is brought pursuant to congressiónalfy authorized procedures.

       We think our reading of § 7421 (a) is compelled by the language and apparent congressional purpose uf this statute. The consequences of the present regime for §’501 (c)(3) organizations can be harsh indeed, as Mr, Justice Blackmun ably articulates in his dissenting'opinion today. As we noted in Bob Jones, ante, at 749-750, this may well be a subject meriting congressional consideration.

       AU’s exemption ruling, under § 101 (6) of the 1939 Code, was issued July 3, 1950. Section 501 reads in pertinent part as follows:
      “§ 501. Exemption from tax-, oh corporations, certain trusts, etc.
      “(a) Exemption from taxation.
      “An organization, described in subsection (c) . . . shall be exempt from taxation under this subtitle unless such exemption is denied under section 502 or 503.
      “(c) List of exempt organizations.
      “The following organizations are"*referred to in subjection (a):
      “(3)-.Corporations, and any community chest,’ fund, or foundation, organized and operated exclusively for religious, charitable, scientific, testing for public safety, literary, or educational purposes, or for the prevention of cruelty to children or animals, no part of the net earnings of which inures to the benefit of any private shareholder or individual, no substantial part of. the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation, and which does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of any candidate for public office.”

       Section 501 (c)(4) relates to:
      “(4) Civic leagues or organizations not organized for profit but operated éxelusively .for.-the promotion of social welfare, or local associations of employees, thé membership of which is limited to the- employees of a designated person -or persons in a particular municipality, and the net earnings of which are devoted exclusively to charitable, educational, or recreational purposes.”

       Although, under § 3121 (b) (8) (B) of the 1954 Code, 26 U. S. C. §3121 (b)(8)(B), AU was not required to pay tax imposed by the Federal Insurance Contributions Act so long as it was exempt under §501 (c)(3), it had elected to do so, as was its privilege under §3121 (k)(l)(A),-26 U. S. C. §3121 (k)(l)(A). Termination .of this accepted responsibility for tax requires two • years’ advance .written notice- and cannot be effected at all after an organization .has been subjected to 'the-tax eight years or more. '§3121 (k) (1) (D), 26 U. S. C. §3121 (k)(1)(D). AU has been so taxed for more than eight years. Thus,, it is u.nable'to terminate its responsi-. bility for tax under the FICA even- if it were to continue as a. § 501 (c) (3) organization. •

       AU paid-$981.13 in federal unemployment tax for 1969; $1,052.60 for 1970; $889.09 for 1971; and • $1,131.36 ' fori 1972. Brief for Petitioner 4 n. .2,

       The amended complaint requested both declaratory and injunc-tive' relief. The latter, however, would be .fully adequate and a declaratory judgment, as such, would' not be needed. Accordingly, I am concerned only, with the applicability of the Anti-Injunction. Act, § 7421 (a) of the Code, 26 U. S. C. § 7421 (a).
      The Commissioner has asserted that the Declaratory Judgment Act, 28 U. S. C. §§ 2201-2202, also provides a jurisdictional barrier to the suit because its general applicability i.s limited by the phrase, “except with respect to Federal taxes.” While not reaching the question, I would agree with the Court’s observation in the companion case, Bob Jones University v. Simon, ante, at 732-733, n. 7, that questions exist as to the scope of § 2201 and as to whether it is coterminous with § 7421 (a).
      The Commissioner also asserts that the doctrine of sovereign immunity bars the present action; I do not agree. The suit, as the Court of Appeals noted, 155 U. S. App. D. C. 284, 295, 477 F. 2d 1169, 1180, falls within the immunity doctrine’s exceptions enunciated in Dugan v. Rank, 372 U. S. 609, 621-622 (1963): “(1) action by officers beyond their statutory powers-and (2) even though within the scope of their authority, the powers themselves .or the manner in which they are exercised are constitutionally void.” Here, the claim, is made that § 501 (c)(3) is unconstitutional, and that the Commissioner administers the section in an unconstitutional manner.

        In Green v. Connolly, 330 F. Supp. 1150 (DC 1971), the court granted relief • against Treasury officials comparable to that sought here. Inasmuch-as the defense of sovereign immunity is. jurisdictional, United States v. Sherwood, 312 U. S. 584, 586 (1941), this Court’s summary, affirmance of the Green case sub nom. Coit v. Green, 404 U. S. 997 (1971), affords pertinent precedent.

       Some courts have endorsed this approach. In McGlotten v. Connolly, 338 F. Supp. 448 (DC 1972), a suit to enjoin, among "other things, the continuation of tax exempt status of organizations that excluded nonwhites from membership, Chief Judge Bazelon, in writing for a three-judge District Court, stated:
      “Plaintiff’s action has nothing to do with the collection or'assessment, of taxes. He does not contest the amount of his own tax, nor does he seek to limit the amount of tax revenue collectible by ■the United States. ... In the present case, the central purpose [of the statute] is clearly inapplicable.” Id., at 453-454 (footnotes omitted).
      See also Green v. Connolly, 330 F. Supp. 1150 (DC), aff’d per curiam sub nom. Coit v. Green, 404 U. S. 997 (1971), where the three-judge court did not mention § 7421 (a) specifically but permitted the suit and granted. relief; Bob Jones University v. Connolly, 472 F.2d 903, 907-908 (CA4 1973) (dissenting opinion). And see the opinion of the Court, of Appeals in the present ease. 155 U. S. App. D. C., at 293-294, 477 F. 2d, at 1178-1179.
      The purpose of the IRS action of itself is not controlling. The Court has found that “taxes” in the nature of a penalty were not within the meaning of. §7421 (a), Hill v. Wallace, 259 U. S. 44 (1922); Lipke v. Lederer, 259 U. S. 557 (1922), and-has rejected, as well, the contention' that an injunction could issue against a. regulatory tax as opposed to a revenue measure. Sonzinsky v. United States, 300 U. S. 506 (1937). The Court relies on Bailey v. George, 259 U. S. 16 (1922), for the principle that , even the collection of an unconstitutional tax cannot be enjoined. All these situations, however, have a factor in common with Williams Packing tha; is absent from the pfesent suit: AU does not seek to restrain the Government’s act ofrollecting any tax that it owes.

         Commissioner Alexander spoke to this effect in remarks to the American Society • of Association Executives in New Orleans August 29, 1973:
      “The IRS recognizes that the exempt organization provisions of the law must be interpreted and administered in light of their special purpose and their place in the tax law.. .Their purpose is, «oí to raise revenue. Rather, they are designed-to act as a guardian. They .insure that exempt organization assets will be put .to the approved uses contemplated in the law.. Their application callsv for' an extraordinary degree-of care and-judgment.” BNA Daily Tax Report, Aug. 30, 1973, p. J-1.

       The value of philanthropic organizations- must- be balanced against . the revenue-raising objectives of the tax laws. Some of the factors to be weighed iH this balance are reflected in the 1965. Treasury Department Report on Private Foundations:
      “Private philanthropic organizations can possess important characteristics which modern government necessarily lacks. They may. be many-centered, free of administrative superstructure,- subject, tq the readily exercised control of individuals with widely diversified views and interests. ' Such' characteristics give these organizations great opportunity to’initiate thought and action, to experiment with new and untried ventures, to dissent from prevailing attitudes, and to act quickly and flexibly. Precisely because they can be initiated and controlled by á single person or a' small group, they may evoke great intensity of . interest and dedication of energy. These values, in themselves, justify the tax exemptions ■ and deductions which the law provides for) philanthropic activity'.'
      ' “Private foundations play a significant part in the work of philanthropy. While, the -foundation is a relatively modern development, its predecessor, the trust, has ancient vintage. Like its antecedent, the foundation permits a donor to commit to special uses the funds which he gives to charity..... In these ways, foundations have enriched and strengthened the pluralism of our social order.
      “Private foundations have also preserved fluidity arid',, provided impetus for change within the structure of American philanthropy. Operating charitable organizations tend to establish and work, within defined patterns. . . . The assets of private foundations, on the other hand, are frequently free of commitment to specific operating programs or projects; and that freedom permits foundations relative ease in the shift of their focus of interest and their financial support from one charitable area to another. New ventures can be assisted, new areas explored, new concepts developed, new causes'advanced. Because of its unique flexibility, then, the private foundation can constitute a powerful instrument for evolution, growth, and iiriprovement in the shape and direction of charity.”- Senate Committee on Finance, 89th Cong., 1st Sess., 12-13 (Comm. Print 1965).

       The Commissioner states that the majority of organizations exempt under § 501 (c) (3) operate at a loss so that no income tax liability would result if their exemptions were revoked. Bob Jones University v. Simon, Brief for Petitioner 23 n. 22.

       As has been noted, one of AU’s claims is that “substantial” and “propaganda,” as these words áre employed in § 501 (c) (3), are unconstitutionally vague. There are no clear, objective criteria by which the Commissioner draws his conclusions with respect to these terms. Moreover, the § 501 (c) (3) revocation is arrived at by, the Commissioner not solely by construing the language of § 501 (c) (3), but by his assertion, that that section and §§170 (a)(1) and (c)(2)(E) are- in pari ¿materia. Thus, the idiosyncrasies of the word “charitable” in § 170 (a)(1) are engrafted'upon, and entwined with, the “organized and operated exclusively for religious, charitable . .or educational purposes” standard of §501 (c)(3). This • is nowhere compelled by statute, but is the, product of the Commissionex’s discretionary application and interpretation.

       In Bob Jones University, ante, at 740, the Court suggests, that so long as an; action of the Service reSeets “a good-faith effort to enforce the technical reo s'-ements of the tax laws,” the presence of a collateral motive does not render the Anti-Injunction Act inapplicable. I do not perceive just where the good-faith inquiry is made. It certainly is not made at the determination {whether a suit is for the purpose of restraining taxes. It is doubtful, that it is made in determining whether there are any circumstances under which the Government may ultimately prevail on the merits. Moreover, for me, there" is a distinct question as to the meaning of the Court’s phrase, “a good-faith effort to enforce the technical require7 ments of the tax laws.” Is innovation in effectuating social policy a good-faith effort to enforce technical requirements? Is a threat to revoke a, university’s exemption ruling made in good faith when it rests on the proposition that the institution does not comply with government-approved admission standards?

       The Court assumes the ready availability of an FUTA refund suit. Ante, at 762-763, n. 13. It is curious, however, that the Commissioner did not assert this possibility in the earlier stages of the litigation. It was suggested, apparently, only after the main briefing in the Court of Appeals.' Tr. of Oral Arg. 36-37. It is also noteworthy that in discussing the problem former Commissioner Thrower has stated:
      “There is no practical possibility of quick judicial appeal at the present. If we deny tax exemption or the benefit to the organization of its donors having the assurance of deductibility of contributions, the organization must either create net taxable income or other tax liability for itself as a litigable issue, or find a donor who as a guinea pig is willing to make a contribution, have it disallowed, and litigate the disallowance.” Thrower, IRS Is Considering Far Reaching Changes in Ruling on Exempt Organizations, 34 J. of Taxation 168 (1971).
      Whether proeedurally feasible or not, there is some indication that such suits are not common practice.

       In Christiün Echoes a nonprofit religious corporation sued for refund of FICA taxes in an aggregate amount exceeding,8103,000 paid over seven taxable years. The purpose of the suit, of course, was to recover the taxes paid, but constitutional challenges to § 501 (c)(3) were the basic legal arguments. There is no suggestion in the court’s opinion that Christian Echoes’ primary concern was with the loss of contributions; this, however, must have been of relative importance.

       Former Commissioner Thrower, in the article cited' above, stated that “the issue under the best of circumstances could hardly come before a court until at least a year after the tax year in which the issue crisps. Ordinarily, it would take much longer for the case of the organization’s status to be tried.” - 34 J. of Taxation 168.
      The former Commissioner also made significant remarks with respect to the need for judicial determination of issues involved in this case that will be precluded by the Court's interpretation of § 7421':
      "This is an extremely unfortunate situation for several reasons. First, it offends my sense of justice for undue delay to be imposed on one who needs a prompt decision. Second, in practical effect it gives a greater finality to IRS decisions than we would want or Congress intended. Third, it inhibits the growth of a body of case law interpretive of the exempt organization provisions that could guide the IRS in its further deliberations.” Ibid.

       See Note, Procedural Due Process Limitations on the Suspension- of Advanced Assurance: of Deductibility, 47 S. Cal. L. Rev. 427 11974), for a detailed discussion of constitutional considerations of IRS letterrrulitig revocation without .a hearing.'

       The contention that the remedies suggested by the Commissioner are inadequate is supported by most of the commentator^ who have addressed the issue since these cases were decided in the Courts of Appeals. See Note, Constitutional Implications of Withdrawal of Federal Tax Benefits From Private Segregated Schools, 33 Md. L. Rev. 51, 53 (1973)’; Note,.The Loss of Privileged Tax Status, and Suits to Restrain- Assessments, 30 Wash. & Lee L. Rev. 573, 590 (1973); Comment, Avoiding the Anti-Injunction Statute in Suits to Enjoin Termination of Tax-Exempt Status, 14 Wm. & Mary L. Rev. 1014, 1025 (1973); Recent Development, 73 Col. L. Rev. 1502, 1513-1514 (1973); Notes, 46 Temp. L. Q. 596, 601 (1973).


source: Caselaw Access Project

author:
Me. Justice Powell
      Mr. Justice Douglas,

license: Public Domain

text:
    DILLARD et al. v. INDUSTRIAL COMMISSION OF VIRGINIA et al.
    No. 73-5412.
    Argued March 26, 1974
    Decided May 15, 1974
    Powell, J., delivered the opinion of the Court, in which Burger, C. J., and Brennan, Stewart, White, Marshall, Blackmun, and ' Rehnquist, JJ., joined. Douglas, J., filed a dissenting .opinion, post, p. 799.

      John M. Levy argued the cause- for appellants. With him on the briefs was George S.- Newman.

      Stuart H.. Dunn, Assistant Attorney General of Virginia, argued the cause for appellees Industrial Commission of Virginia and individual Commissioners. With him on the brief were Andrew P. Miller, Attorney General, and William É. .O’Neill, Jr. J. Robert Brame III argued the causé for appellee Aetna Casualty & Surety Co. With him on the brief were William H. King and Willard I. Walker

        J. Albert Woll, Bernard. Kleiman, Stephen P. Berzon, and Stefan M. Rosenzweig filed a brief for American Federation of Labor and Congress of Industrial Organizations et al. as amici curiae urging reversal.

        James F. Fitzpatrick and David Bonderman filed a brief for the American Insurance Assn, et al. as amici curiae urging affirmance.

   Me. Justice Powell

delivered, the opinion of the Court.

Appellants seek to establish that, under the Due Process Clause of the Fourteenth Amendment-, Virginia may not permit the suspension of workmen’s compensation benefits without a prior adversary hearing. A three-judge United States District Court, over one dissent, rejected appellants’ constitutional arguments. 347 F. Supp. 71 (ED Va. 1972). We noted probable jurisdiction. 414 U. S. 1110 (1973). Although the parties have focused primarily on the due process issue, the briefs and oral arguments have indicated that under state law a claimant whose workmen’s compensation benéfits have been suspended may have them reinstated by a state trial court pending a full administrative hearing on the merits of his claim. If this is an accurate reading of state law, it is in all probability unnecessary to address any questions of federal constitutional law in this case. Accordingly, the case must be remanded to the District Court for reconsideration.

I

This litigation has centered on the role of the Industrial Commission of Virginia (Commission) in overseeing relationships between workmen’s compensation claimants and employers or the employers’ insurance. companies. Although the Virginia system for workmen’s compensation is controlled in all significant respects by an extensive statutory scheme referred to as the Act, Va. Code Ann. § 65.1-1 et seq. (1973 and Supp. 1973), it operates in a largely voluntary manner through memoranda of agreement between disabled workmen and employers or insurance companies. Compensation is paid out of private funds, in some cases through self-insurance by employers but for the most part through coverage by private insuranee companies. All agreements between employees and employers or insurance companies must be approved by the Commission, which may extend its imprimatur “only when the Commission, or any member thereof, is clearly of the opinion that the best inteiests of the employee or his dependents will be served thereby . . . .” § 65.1-93.

In most instances the parties agree voluntarily on entitlement to benefits. When this does not occur, the Commission will grant a hearing to resolve the disagreement, § 65.1-94, and will make an award if found to be due. § 65.1-96. The Commission’s awards are subject to review by appeal to the Virginia Supreme Court and, if unchallenged, are conclusive until changed by the Commission. § 65.1-98. The Commission has no enforcement power per se. Rather, the Act provides:'

“Any party in interest may file in the circuit or corporation court of the county or city in which the injury occurred, or if it be in the city of Richmond then in the circuit or law and equity court of such city, a certified copy of a memorandum of agreement approved by the Commission, or of an order or decision of the Commission, or of an award of .the Commission unappealed from, or of an award of the Commission affirmed upon appeal, whereupon the court, or the judge thereof in vacation, shall render judgment in accordance therewith and notify the parties. Such judgment shall have the same effect, and all proceedings in relation thereto shall thereafter be the same, as though such judgment had been rendered in a suit duly heard and determined by the court____” § 65.1-100.

The state courts have construed their enforcement duty under § 65.1-100 as purely ministerial. They do not inquire into whether a claimant’s condition continues to justify compensation. Rather, they sinlply enforce agreements and awards that have been approved and not formally rescinded by the Commission. Thus, a workmen’s compensation claimant in Virginia has at his disposal a ready mechanism in the state trial courts to enforce any facially valid award or agreement. Since judicial enforcement is a ministerial act, this relief appears to be available with a minimum of delay or procedural difficulty.

Termination of benefits due to a change in a claimant’s condition, like the commencement of benefits in the first instance, is a product of voluntary agreement in most cases. But when a dispute arises over a claimant’s condition and his continued entitlement to benefits, the only avenue open to an employer for extinguishing a claimant’s enforcement rights under § 65.1-100 of the Act appears in § 65.1-99. See Bristol Door Co. v. Hinkle, 157 Va. 474, 161 S. E. 902 (1932). This section provides, in relevant part: ' '

• “Upon its own motion or upon the application of any party in interest, on the ground of a change in condition, the Industrial Commission ■ may review any award and on such review may make an award ending, diminishing or increasing the compensation previously awarded .... No such review shall affect such award as regards any moneys paid . . . .” Va. Code Ann. § 65.1-99 (1973) .

Although it may be indisputable that a claimant is no longer entitled to benefits due to a change in his condition, if the claimant refuses to terminate voluntarily an award or agreement, an employer or insurer appears to have no defense against a state court enforcement action until there is a formal determination by the Commission under this section. E. g., Manchester Bd. & Paper Co. v. Parker, 201 Va. 328, 111 S. E. 2d 453 (1959). If an employer or insurance company meets the requirements established by the Commission for invoking its review under this section, the Commission in due course will conduct a hearing, with notice and the right to participate extended to. all parties. At such a hearing, the. enn ployer or insurer bears the burden of proving a change in a claimant’s condition that' justifies rescission of an award or agreement. E. g., Virginia Oak Flooring Co. v. Chrisley, 195 Va. 850, 80 S. E. 2d 537 (1954); J. A. Foust Coal Co. v. Messer, 195 Va. 762, 80 S. E. 2d 533 (1954).

.The last sentence of the above quotation from.§ 65.1-99 prevents an employer or insurance company from recovering benefits erroneously paid prior to the Commission’s formal termination of an award or agreement. See Gray v. Underwood Bros., 164 Va. 344, 182 S. E. 547 (1935). Accordingly, an employer or insurer with cause to beliéve that a claimant is nó longer entitled to benefits has an obvious, incentive unilaterally to cease payment' at the time it'seeks-a § 65.1-99 hearing before the,Commission.If the Commission ultimately holds in its favor, the employer or insurer will not be required to pay any further benefits, and it will have protected itself against unmerited payments in the period -prior to the Commission’s, full, hearing. If the-Commission rules against it, it will be required to reinstate benefits retroactively 'to the date of the application for a hearing, but at least it will have avoided-paying benefits for which there was no true legal obligation.

In order to police this. tendency of employers and insurers to terminate first and .litigate later, the. Com- - mission promulgated its Rule 13. See Manchester Bd. & Paper Co. v. Parker, supra Rule 13 sets forth certain requirements that an employer or insurer must meet, with precision, see ibid., before it can obtain the § 65.1-99 hearing which is a prerequisite .to formal termination of an award or agreement, on the ground of change in condition. For example, the Rule requires employers and insurers to continue benefits up to a defined date. And ■since April 1, 1972, the Rule has imposed the following requirements on such applications:

“All applications by an employer or insurer shall be under oath and shall not be deemed filed and benefits shall not be suspended until the supporting evidence which constitutes a legal basis for changing the existing award shall have been reviewed by the Commission, or such of its employees as may be designated for that purpose, and a determination made that probable cause exists to believe that a change in condition has occurred.”

Thus, under Rule 13, as amended, an employer or insurer must pay benefits up to a certain date, must make application under oath, and must submit “supporting evidence which constitutes a legal basis for changing the existing award . . . .” If these requirements are met and if the Commission finds that “probable cause exists to believe that a change in condition has occurred . . . ,” the employer or insurer will be accorded a hearing that may lead to rescission of the prior award or agreement. If the Rule 13 requirements are not met, the request for a hearing will be denied, and the award, or agreement at issue.will remain subject to enforcement in the state courts.

Appellant Dillard was the original named plaintiff in this class action under 42 U. S. C. § 1983. He contended that the Due Process Clause of the Fourteenth Amendment prevented Virginia from permitting the suspension of workmen’s compensation benefits'without notice to the claimant and an adversary hearing at the time the Commission makes a probable cause determination pursuant to RuleH3. A three-judge United States District Court, over one dissent, rejected this argument on the merits. 347 F. Supp. 71 (ED Va. 1972). Dillard appealed, but then settled his claim, and we remanded the case for a determination of mootness. 409 U. S. 238 (1972). In an unreported order, the District Court subsequently permitted the intervention of appellant Williams' and reinstated its published opinion. Williams then appealed, bringing up the due process arguments initially ■espoused by Dillard. .

Appellant Williams was injured in the course of employment in April 1972. In May 1972, the Commission approved an agreement between Williams and his employer’s insurance company, one of the appellees herein, for the payment of weekly compensation benefits. In October 1972, the insurance company applied under Rule 13 to the Commission for a hearing to determine whether Williams’ disability had ended. Simultaneously, the insurer discontinued payments. Within a few days the Commission made an ex parte determination that probable cause existed to believe that a change in Williams’ condition had occurred. At this point, Williams made no effort to petition a state court under § 65.1-100 .of the Act to reinstate benefits pending the Commission’s full hearing. In December 1972, the Commission conducted an -adversary hearing, concluded thát the insurance company had not met its burden of proojt, and reinstated benefits. Oh April 17, 1973, the insurance company again petitioned the Commission, claiming a change in Williams’ condition. The. Commission once more found probable cause on an ex parte basis, and the company for the second time terminated benefits. .Williams again did not resort to the state trial courts for, an enforcement order. Approximately two months later, the District Court permitted Williams to intervene in this lawsuit and, as noted, reinstated its published opinion. Williams then brought this appeal.

Williams’ constitutional attack on the Virginia system for suspending workmen’s compensation benefits is premised on the assumption that Rule 13, as amended, permits an employer or insurer to shield itself from a state court enforcement Suit under § 65.1-100 of the Act in the interim between á probable cause determination by the Commission. and the Commission’s ultimate full hearing under § 65.1 — 99 of the Act. Williams in essence reads the phrase of Rule 13 providing that “benefits shall not be suspended” prior to meeting the requirements of the Rule as meaning that benefits may successfully be suspended once those requirements have been met. If this reading of Rule 13 is incorrect, the complexion of this case changes dramatically, because it is then within the power of a claimant to reinstate benefits simply, by petitioning a state trial court to perform a ministerial duty. It may well be that this perfunctory enforcement power is so readily available that a claimant could render any suspension of benefits de minimis. If so, those in appellants’ class may not be able to establish a constitutionally significant injury under any reading of the Due Process Clause of the Fourteenth Amendment.

Every indication in the record and in the state authorities is that Williams had at his disposal a state court enforcement right that he simply failed to utilize. See n. 4, supra. As the Commission declared in its motion to dismiss before the District Court:

“Virginia’s statutory framework does not authorize the termination of benefits as alleged by plaintiff, it permits only the initiation of a procedure by which benefits may ultimately be terminatéd. Should plaintiff be. dissatisfied with the temporary cessation of benefits pending an administrative hearing, he is entitled by the provisions of § 65.1-100 to reduce his award to judgment in an appropriate court of record and compel the resumption of benefits. It should be noted that in such a case the court has no discretion ■ and must enter judgment against the employer or his insurer.” (Emphasis in original; citations omitted.) .

One of the appellees makes the same point in its brief, and Williams’ counsel conceded at oral argument that, if read literally, § 65.1-100 of the Act permits no other result. Counsel attempted to overcome this concession by arguing that the Virginia courts have not interpreted Rule 13 recently and that they might today hold that the Rule overrides the language of § '65.1 — 100. This argument plainly has no merit, since the Commission is without power to promulgate a rule that would repeal a section of the Act. Moreover, it is obvious that the Commission had no such purpose. Rule 13 was designed to protect employees, see Manchester Bd. & Paper Co. v. Parker, 201 Va, 328, 111 S. E. 2d 453 (1959), not to deprive them of rights existing under the Act. It establishes barriers that an employer or insurer must surmount before it may obtain the § 65.1-99 hearing that is a prerequisite to extinguishing a claimant’s right to enforce an award or agreement in state court. The Rule is designed to. serve as a screening device for eliminating obviously unmeritdrious applications for hearings filed by insurers and employers. It is not am-" authorization for an employer or insurer to suspend payments with assurance that a claimant may not have them reinstated under § 65.1-100 of the Act.

The District Court itself noted that Rule 13 probably ddeS ndt permit ar employer or insurer to escape § 65.1-100 of the Act. It reached appellants1 federal constitutional claim only by assuming, arguendo, “that the Rule is authority for the employer or.insurer to terminate payments . . ...” 347 F. Supp., at 75. Based.on what has been brought to our attention and our review of state-•law, such an assumption in all likelihood would be. inaccurate. In any event, that court must resolve any doubts on. the issue before reaching appellants’ federal claim. If there is significant doubt about the status of state law, the court should consider abstention, as the state law question may well be dispositive. E. g., Lake Carriers’ Assn. v. MacMullan, 406 U. S. 498 (1972). If, as appears to be the case, state law clearly provided Williams an adequate state court remedy he did not pursue, then the .court will be presented' with a wholly, different issue from the one it decided. Assuming it is also established that the Commission’s Rule 13 procedures are necessarily ex_parte, then the only question is whether the interruption, if any, of benefits between the time of suspension and the time a claimant obtains reinstatement of benefits by petitioning the state courts is of any controlling significance. If the court determines that a claimant as a general rule may obtain reinstatement of benefits without undue delay following a finding of probable cause by the Commission under’ Rule 13, then the court should dismiss the complaint.

We indicate no view on the question decided by the District Court — whether the suspension of benefits without notice and . an adversary hearing denies due process of law, where the funds at issue are private, not public, where the State requires a finding of probable cause and other procedural safeguards short of a prior adversary hearing, and where a full hearing follows suspension of benefits by a period on the average of one month. The judgment is vacated, and the case is remanded for reconsideration in accordance with this opinion.

It is so ordered.

Mr. Justice Douglas,

dissenting.

This case involves a class action brought on behalf of all persons who, as a result of sustaining employment-related injuries, are recipients of benefits under the Virginia Workmen’s Compensation Act, Va. Code Ann. § 65.1-1 et seq. The action challenges the constitutionality under the Due Process Clause of the Fourteenth Amendment of that part of the Act allowing a termination of benefit payments by the employer or insurer as a result of an asserted change in condition prior to a full hearing on the alleged change before the Commission. The complaint prayed for an injunction to restrain enforcement of that part of the Act. A three-judge District Court was convened, 28 U. S. C. § 2281, and the challenged portions of the Act were found constitutional, one judge dissenting. 347 F. Supp. 71 (ED Va. 1972).

The Act provides a system allowing the employer and the employee to escape personal injury litigation for on-the-job injuries; it provides for the payment of compensation under fixed rules. Once the Industrial Commission approves an award of benefits, the Commission or. any party in interest may move for review of the award “oh the ground of a change in condition.” Va. Code Ann. § 65.1-99. According to the Commission’s Rule 13, all such applications by an employer or insurer to decrease or terminate benefits “ ‘require that an ex parte inquiry be held by the Commission to determine whether probable cause exists for a change in the award, before any benefits may be temporarily suspended pending a full hearing.’ ” 347 F. Supp., at 79.

Suspension of benefits awarded by the Commission is thus permitted upon an ex parte determination that “probable cause” for termination exists. The parties here do not dispute that the full hearing conducted by the Commission before final termination, with notice and opportunity for all parties to be heard, satisfies the requirements of due procéss. At issue is the ex parte suspension of benefits of a Commission’s award prior to that final hearing. The Court does not reach the constitutionality of the suspension, because a claimant, whose benefits have been so suspended, may bring suit in a state court to have them reinstated, pursuant to Va. Code Ann. § 65.1-100.

T disagree that the opportunity for a claimant to counteract a termination of benefits payable under an award of the Commission by instituting a state court action is an answer to the constitutional challenge to the termination. The issue here is the necessity of a hearing before termination of benefits. Any state remedy which places upon the worker the burden of going to court to redress a termination which has already occurred is simply not in point. It places the burden of affirmative action upon that segment of society least able to bear it at a time which could not be less opportune. As Judge Merhige said below in dissent: “Judges need not blind' themselves to what they know as mén. ' I cannot help but believe that the average workingman in Virginia, who has' sustained an injury resulting in a substantial reduction of his weekly income/ suffers a grave and immediate loss. . . . The very thought that the ex parte proceeding permitted by Rule 13 may result in a cessation of milk delivery, or electric power, or fuel to a working ftian and his family, shocks my conscience.”- 347 F. Supp., at 81. The opportunity for working-class men .and women in that grave situation to enter state court and do battle with the corporate employers and insurers who have already terminated their benefits without a hearing is no meaningful solution to their problem.

Since I find the state remedy inapposite, I dissent from the remand to consider its impact.

       The Act defines the relevant employment relationships, §§ 65.1-3 to 65.1-5, types of compensable disabilities, §§ 65.1-7 and 65.1-46, levels of compensation, §§ 65.1-54 to 65.1-57, 65.1-65 to 65.1-65-.1, and 65.1-70 to 65.1-71, and the like. Participation in the- Virginia system is mandatory for all employees and employers covered by the Act. § 65.1-23, as amended. The Act has been in force since 1918. Its history and general structure are described in the District Court’s opinion. See 347 F. Supp. 71, 72-73 (ED Va. 1972).

       An amicus brief mdicates that in the years 1967 to 1971 approximately 95% of all claims for workmen’s compensation were resolved by voluntary agreement. Brief for American Insurance Association et al, 10.

       The Virginia Supreme Court accords substantial weight/to the Commission’s findings of fáct, e. g., LeWhite Constr. Co. v. Dunn, 211 Va. 279, 176 S. E. 2d 809 (1970), and restricts its review primarily to questions of law. Cf. Brown v. Fox, 189 Va. 509, 54 S. E. 2d 109 (1949).

       See Richmond Cedar Works v. Harper, 129 Va. 481, 492-493, 106 S. E. 516, 520 (1921):
      “Section 62 [the predecessor to § 65.1-100 of the Act] was clearly enacted for the purpose of providing a means not only of enforcing an award- which had been affirmed on . . . appeal, but also all other final awards of the commission from which' there had', been no appeal, as well as all agreements between the parties approved by the commission. When this section is invoked, however, the rights of the claimants have already been established. The proceeding then resembles a motion under our statute for execution upon a forthcoming, or delivery bond. . . . [A]ll of the rights of the parties having been previously litigated and determined, the court is required to render judgment in accordance either with (a) the agreement of the parties, which has been approved by the commission, (b) an award of the commission which has not been appealed from, or (c) an award of the commission which has been previously affirmed upon appeal. At this stage of the proceeding, the court is vested with no discretion; the statute is mandatory, and the refusal to render such judgment as that section requires could be compelled by mandamus. . . . The order of the court' under section 62 in rendering judgment so that execution may be had, is the exercise of a ministerial function, and the mere method provided by the legislature for enforcing the collection by legal process of the amount already legally ascertained to be due . . . .”

      Accord, Parrigen v. Long, 145 Va. 637, 134 S. E. 562 (1926).

       Although § 65.1-99 refers specifically to awards, it. has been interpreted as applying also to voluntary agreements that have been approved by the Commission. See Manchester Bd. & Paper Co. v. Parker, 201 Va. 328, 111 S. E. 2d 453 (1959).

       In the Manchester case, a claimant and an insurance company entered into an agreement to pay benefits, which the Commission approved. The employee then returned to work, rendering himself technically ineligible for benefits. The insurance company suspended payments and commenced proceedings leading to a determination under what is now § 65.1 — 99 of the Act, but it failed to adhere precisely to the requirements of the Commission under that section. One year after the employee returned to work, the Commission refused to rescind the agreement, concluding that the insurance company had failed to comply with § 65.1-99 as implemented by the Commission. On appeal; the'Virginia Supreme Court affirmed. It held that § 65.1-99 was the exclusive statutory means for rescinding an agreement approved by the Commission and that émployers and insurance .companies failed to follow that section at their own risk, without regard to the actual status of a claimant. '' '

         There is no dispute in the instant case, thát the .full hearing the Commission ultimately conducts before it formally terminates an award or agreement under § 65.1-99 of the Act satisfies the requirements of the Due Process Clause of the Fourteenth Amendment. Appellants’'attack has been directed only at suspensions of benefits prior to the Commission’s -final ’ hearing.-

       “The reason for the rule is stated in.the opinion of the Commission as follows:
      “ ‘More than thirty years ago when it was found by the Commission that some employers were arbitrarily disregarding the effect of outstanding awards and terminating payments directed by such awards, [Rule 13] . . . was promulgated.. . . , The Rule has since been continuously in force.’ ” 201 Va., at 331, 111 S. E. 2d, at 456.
      Rule 13 was promulgated pursuant to the general rulemaking authority .vested in the Commission by the Act. Section 65.1-18 of the Act provides, in part: “The Commission may make rules, not inconsistent with this Act, for carrying out the provisions of this Act,” The state courts have held that Rule 13 is a valid exercise of the Commission’s rulemaking authority. See Manchester Bd. & Paper Co. v. Parker, supra.

       Commission Rule 13 provides:
      . “Applications for Review on Ground of Change in Condi-' tion. — Applications for' review under § 65.1-99 of the Act must be in writing and state the-ground relied upon for relief. Reviews of awards on the ground of a change in condition shall be determined as of the date' of the filing of the' application in the offices of the Commission, except as provided in paragraphs two and three hereof.
      - “All applications for hearing by an employer or -insurer under .§ 65.1 — 99 shall show the date through which compensation benefits have been-paid. No application shall be considered by the Commission until all compensation under the outstanding award has been paid to.the date such application is filed with-the Commission. Except,' that in' any case in which the employee has actually returned to work or has refused employment (§65.1-63), medical attention (§65.1-88), or medical examination (§65.1-91), compensation may be terminated as of the date the employee returned to work or refused employment, medical attention or medical examination, or as of a date fourteen’ days prior to the date the application is filed, whichever is later. In such cases the application will be considered and determined, as of the date of return to work, or refusal, or as of a date fourteen days prior to the date the application is filed, whichever is later. All applications by an employer or insurer shall be under oath and shall not be deemed filed and benefits shall not be suspended until the supporting evidence which constitutes a legal basis for changing the existing award shall have been reviewed by the Commission, or such of its employees as may be designated for that purpose, and a determination made that , probable cause exists to believe that a change in condition has occurred.
      “All applications for hearing by an employee on the ground of further work incapacity shall be considered and determined as of the date incapacity for work actually begins, or as of a date fourteen days prior to the date the application is filed, whichever is later.”

       State proceedings relating to Williams’ entitlement to benefits continued after he was permitted to. intervene in this case. In September 1973, following an adversary hearing,' the Commission formally terminated Williams’ right to benefits. Williams appealed the Commission’s ruling to the Virginia Supreme Court. On that appeal, he apparently sought review only of the accuracy of the Commission's determination that he was no longer disabled. In an unreported order issued in December 1973, the Virginia Supreme Court affirmed the Commission’s ruling. Williams then filed a petition for certiorari in this Court seeking review of the state, court holding. That petition, which is pending, No. .73-6431, Williams v. Richmond Guano Co., does not raise the same constitutional arguments that Williams has advanced on this appeal. Indeed, although the same counsel represented Williams on certiorari and on the instant appeal, the petition makes no mention of this case. In light of our disposition of the instant case, we need not decide whether Williams might have addressed his present federal constitutional arguments to the Virginia Supreme Court cm its review of the final order of the' Commission.

       See Brief of Appellee Aetna Casualty and Surety Co. 5:
      . “Applicants usually cease paying compensation at the time they file the application based on a change of condition, but the actual’ award is changed only by order of the Commission following a full hearing or agreement of the parties. Although the award speaks in terms of continuing ‘during incapacity,’ incapacity can be challenged only before the Commission. Therefore, the employee can enforce payments, even after the Commission finds ‘probable cause’ to believe a change has occurred and schedules a hearing just as he can enforce an ’award against a recalcitrant employer who suspends payments without probable cause.”

       Tr. of Oral Arg. 53.

        Id., at 52, 53, 55.

       See n. 8, supra.

       The Commission states that the purpose of Rule 13 is to require employers and insurer's "to submit sufficient information to the Commission of-the ultimate merit of the suspension that the possibility of fraudulent, frivolous or arbitrary suspensions is eliminiated [sic] and the likelihood of suspénsion in non-fraudulent but otherwise non-meritorious■ cases is- minimized.” Metion to Affirm 3. - An amicus brief indicates that in about one-third of all Rule 13 applications the Commission finds no probable cause and thus does riot permit employers or insurers.to have a § 65.1-99 hearing. Brief for American Insurance Association et al. 14.

       The court declared:
      “Nowhere in the Rule does it' authorize or. direct the employer or insurer to cease payments before a full hearing. It merely provides the Commission will.not hear the petition of the employer or insurer asserting any change in condition if payments under the award have not been made up to the date the application is deemed filed, with an admonition that benefits shall not be suspended until the supporting evidence submitted with the petition has been reviewed and it is determined probable cause, exists to believe a change.has occurred, and if a finding of probable cause is made, the application will then be deemed filed. Here again, it does - not authorize or direct suspension of payments, but merely provides .the insurer .or employer may not have a hearing on an alleged change of condition unless and until the provisions .of the Rule are compliéd with.-”' 347 E. Supp;, at 74r-75 (emphasis in original).

       There is also á question in the record whether a probable cause determination'by the Commission under Rule 13 is necessarily ex parte and whether a claimant is in’fact denied notice .of such a proceeding. The District Court noted this at the outset of its opinion:
      “The determination of ‘probable cause' • is to be made from an examination of ‘supporting evidence which constitutes a legal basis’ for- changing the existing -award. Nowhere does the Rule say the determination may be made without notice to the employee and a chance to be heard.. The mere fact that such an inference may exist — a determination without notice to the employee and an opportunity to be heard — does not render' the language objectionable on its face. . . . The [April 1, 1972] amendment to the Rule is new and the evidence does not indicate what the Commission will require in 'the way of supporting evidence to constitute a legal basis for establishing probable cause to believe a change in condition has occurred.” 347 F. Supp., at 75 (citation omitted).
      Moreover, we were informed at oral argument that as a matter of practice insurance companies and the Commission regularly inform claimants that a probable cause determination is pending. Tr. of Oral Arg. 43-44. It was also asserted that the Commission would take into account submissions by a claimant when it makes a probable cause determination. Id., at 44. An amicus brief indicates that: ■ '
      “An employee may, under the present Rule 13, file a written statement or submit evidence opposing the probable cause determination. However, in fact this rarely occurs because the employee normally does not have access to the employer’s evidence and because the Commission acts rapidly without waiting to receive any submission from the employee. (However, if an employee does send in information even after probable cause is found, the Commission will evaluate the information. If the information indicates that payment-should not be suspended, the Commission informs"the carrier and-the carrier then continues payments to the claimant).” Brief for American Insurance Association et al. 13-14.
      If a claimant receives notice of a Rule 13 -application and if the Commission will. receive and evaluate his counter-affidavits or medical evidence, the constitutional challenge, to the Virginia system would arise in a different light even if no recourse to the state courts were available under § 65.1-100 of the Act. As it did with regard to the’ question of the impact of ’Rule 13 on a claimant’s right to reinstate benefits by resort to the state trial courts, the District Court bypassed this question of state law. It “assum[ed] that the Rule does not provide for notice and a hearing to the employee prior to termination of the award ... . .” 347 F. Supp., at 75. The court should have resolved its doubts on this issue before addressing appellants’ federal constitutional argument.

       See n. 17, supra.

       In Sniadach v. Family Finance Corp., 395 U. S. 337- (1969), wages earned could not be seized under garnishment by a creditor without prior notice and opportunity to be heard. By the same token, in the present case entitlement to an award made by the Commission should not be taken ex parte but only after prior notice and opportunity to be heard if procedural due process is to control as it must by reason of the Fourteenth Amendment.