Friday, October 11, 2013

Litigation News: Colorado and Cook County Update

We have written frequently about the DMA case challenging Colorado’s notice and reporting law. The law, which requires remote sellers to inform consumers of their obligation to self-report sales and use tax and which also requires sellers to hand over Colorado customers’ names to the state’s Department of Revenue, was declared unconstitutional in 2012 by the United States District Court in Denver. See DMA v. Brohl, 2012 WL 1079175 (D. Colo. Mar. 30, 2012). The Court issued an injunction barring enforcement of the law. But, in August, the Tenth Circuit found that the District Court did not have jurisdiction over the case, and issued a decision calling for the case to be remanded to the District Court with instructions to dissolve the injunction. The DMA subsequently filed a petition for rehearing en banc by the Tenth Circuit, thereby staying implementation of the decision. But, on October 1, that petition was denied. As a result, the Court of Appeals’ mandate was issued on October 9. The District Court has not yet implemented the Tenth Circuit’s order, however, so for the time being the injunction remains in place--at least until the District Court acts. In response to the ruling, the DMA intends to refile its challenge to the law in state court in Colorado and seek a new injunction from the state court to prevent enforcement of a law that the federal District Court has found to be unconstitutional on its face. Brann & Isaacson’s George Isaacson and Matthew Schaefer represent the DMA in the case.

Meanwhile, we wrote in July about Judge Lopez Cepero of the Cook County Circuit Court issuing a preliminary injunction which barred Cook County from enforcing its recently enacted use tax. On October 4, the Appellate Court stayed the preliminary injunction, but on October 8, Judge Lopez Cepero granted the plaintiffs’ motion for summary judgment. The judge’s ruling will be issued in written form today and effectively is a permanent injunction barring Cook County from enforcing the use tax. It remains uncertain, however, whether the County will appeal this decision.

We will continue to update our readers on these and other cases throughout the country.

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