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DMA Fires Opening Shot in Supreme Court Battle

9/9/14
 
By Ken Magill
 
The Direct Marketing Association today announced it has filed its opening brief in the case of DMA v. Brohl, a battle with significant ecommerce sales tax ramifications.
 
The case will be heard by the Supreme Court of the United States during its upcoming term.
 
The court will consider whether federal courts may hear constitutional challenges to state regulations that only indirectly relate to state tax laws, according to the DMA. 
 
The case arises from the DMA’s challenge of a Colorado notice law requiring out-of-state merchants to report buying-history information about their Colorado customers to the state, information it would presumably use to go after Colorado consumers who have not paid sales taxes on out-of-state online purchases.
 
The DMA initially filed a lawsuit in U.S. District Court in Colorado challenging the constitutionality of the law in July 2010. 
 
In the lawsuit, DMA contended that the Colorado law constitutes an unprecedented invasion of consumer privacy and unfairly discriminates against interstate commerce by targeting solely out-of-state merchants.
 
In March 2012, the DMA won summary judgment and a permanent injunction in U.S. District Court, ensuring that businesses would not have to comply with the Colorado law while its constitutionality was decided.
 
In October 2013, the U.S. Tenth Circuit Court of Appeals ruled that the U.S. District Court of Colorado did not have jurisdiction to hear DMA’s case – or to grant the permanent injunction.
 
The DMA seeks to overturn that ruling.
 
“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, the DMA’s vice president of state affairs, in a statement.
 
“The outcome of this case is critically important to DMA members and every business that operates across state lines,” said Thomas J. Benton, CEO/COO of the DMA, in a statement. 
 
“The Court’s decision will have a significant impact on marketers’ ability to protect their customers’ data and privacy in Colorado and in the other states nationwide.”
 
“The ability to access a neutral forum to challenge unconstitutional state laws is essential to our system of justice, and we are confident the Supreme Court will uphold that right,” said Peggy Hudson, DMA SVP of Government Affairs, in a statement. “Denying businesses that level playing field would be damaging to all remote retailers and businesses that operate in multiple states across the country.”
 
The list of organizations expected to file “Friend of the Court” briefs in support of the DMA’s position include the U.S. Chamber of Commerce, National Federation of Independent Business (NFIB), Council on State Taxation (COST), and others. 
 
The State of Colorado is required to file its brief on Oct. 17, with a reply brief from DMA due in mid-November. Oral arguments are scheduled for Dec. 8.
 
DMA v. Brohl is U.S. Supreme Court Docket No. 13-1032.
 
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