Natural gas suppliers sued Ohio, claiming its tax system benefits local gas distributors unfairly, interfering with interstate commerce and violating the Equal Protection Clause of the Constitution. The Sixth Circuit ruled that the Tax Injunction Act (TIA), a federal law designed to keep federal courts out of many of these kinds of cases, does not prevent a federal court from deciding this one, nor does the principle of "comity," which encourages federal courts to defer to state courts. Several other federal appeals court agreed with this interpretation of the TIA, but one did not.
On June 1, 2010, the Supreme Court ruled that the comity doctrine applies and this case must proceed in state court. The Court ruled that both the comity doctrine and the Tax Injunction Act operate to constrain federal courts from interfering in the states' ability to impose taxes to fund their governments' operations. Even where a state tax law discriminates, the Court said that it generally defers to state courts to fashion a remedy that provides for equal treatment. State courts are in a better position to know what their state legislative preferences are, and the state enjoys wide regulatory latitude when it comes to commercial matters. Manufacturers prefer to go to federal court when challenging a state's laws, but discriminatory tax laws will be particularly difficult to challenge in federal court after this ruling.