Supreme Court to Hear DMA Case Against Colorado Tax Law
Washington, DC, July 1, 2014—The Supreme Court of the United States today announced that it will hear a case brought by the Direct Marketing Association (DMA) relating to a Colorado law imposing a notice and reporting scheme on remote sellers that do not collect state sales tax. In granting a writ of certiorari in the case of Direct Marketing Association v. Brohl, the Supreme Court agreed to consider the question of whether the federal courts may decide constitutional challenges to state tax regulations affecting only out-of-state businesses.
"We are pleased that the Supreme Court has agreed to hear this important case," said Peggy Hudson, DMA's senior vice president of government affairs. "DMA began this fight four years ago with the goal of protecting consumer privacy by safeguarding businesses from being forced to divulge their customers' purchase history to the State of Colorado. Along the way, the fight has broadened to encompass not only issues of privacy, but also fundamental constitutional questions about access to federal courts."
In July 2010, DMA filed a lawsuit in U.S. District Court in Colorado challenging the constitutionality of a new Colorado notice and reporting law that requires out-of-state merchants to turn over to the Department of Revenue (DOR) confidential purchase history information regarding their Colorado customers. In the lawsuit, DMA contends that the Colorado law constitutes an unprecedented invasion of consumer privacy and unfairly discriminates against interstate commerce by targeting solely out-of-state merchants.
Over the past four years, both federal and state courts have agreed with DMA's position on the substantive issues presented in its lawsuit, Direct Marketing Association v. Brohl. In March 2012, DMA won summary judgment and a permanent injunction in U.S. District Court, ensuring that businesses would not have to comply with the problematic Colorado law while its constitutionality was decided.
In October 2013, the U.S. Tenth Circuit Court of Appeals, without addressing the substantive merits of the case, determined that the U.S. District Court of Colorado did not have jurisdiction to hear DMA's case - or to grant the permanent injunction. "The judicial blow by the Tenth Circuit not only forced DMA to refile its case in Colorado State court, but also raised constitutional issues regarding restricting businesses' access to federal courts in order to challenge the constitutionality of state regulatory laws," said Christopher Oswald, DMA's vice president of state affairs.
While re-filing and securing a preliminary injunction at the state level, DMA and its members also decided to appeal the Tenth Circuit's ruling to the U.S. Supreme Court. In February 2014, DMA filed with the U.S. Supreme Court a petition for a writ of certiorari to review the lower court decision. In its filing, DMA asserts that the Tenth Circuit court's decision is at odds with both the intent of Congress and the decisions of other circuit courts regarding federal jurisdiction in matters affecting interstate commerce.
"It is vital that businesses have the ability to access federal courts when challenging state actions that interfere with the Commerce Clause," said Hudson. "Federal courts are by definition expert in constitutional issues and the proper neutral arbiters through which businesses can challenge states in which they have no physical presence. Today's announcement by the U.S. Supreme Court is a huge step toward ensuring that every business in America enjoys the full judicial access provided by the U.S. Constitution."
DMA looks forward to presenting its arguments before the Supreme Court when it convenes for its next term in the fall of 2014.
About Direct Marketing Association (DMA)
The Direct Marketing Association (www.thedma.org) is the world's largest trade association dedicated to advancing and protecting responsible data-driven marketing. Founded in 1917, DMA represents thousands of companies and nonprofit organizations that use and support data-driven marketing practices and techniques. DMA provides the Voice to shape policy and public opinion, the Connections to grow members' businesses and the Tools to ensure full compliance with ethical and best practices as well as professional development.
In 2012, the Data-Driven Marketing Economy (DDME) added $156 billion in revenue to the U.S. economy and fueled more than 675,000 jobs. The real value of data is in its exchange across the DDME: 70 percent of the value of the DDME—$110 billion in revenue and 478,000 jobs—depends on the ability of firms to exchange data across the DDME.