Lewiston law firm to argue before U.S. Supreme Court in online retailer case
Contributed / Brann & Isaacson
Attorneys Matthew Schaefer, left, and George Isaacson of Lewiston-based Brann & Isaacson are representing the Direct Marketing Association in U.S. Supreme Court Monday.
When attorneys George Isaacson and Matthew Schaefer of Lewiston-based Brann & Isaacson appear before the U.S. Supreme Court on Monday, they will be arguing for a case that holds high stakes for online retailers across the nation.
Isaacson and Schaefer told Mainebiz on Friday that they are representing the Direct Marketing Association in a case that seeks to overturn a ruling by a federal appeals court that would require out-of-state companies to turn over customer transaction information to the state of Colorado if they don’t collect state sales tax. The Direct Marketing Association is the country’s largest trade association that represents online retailers and catalog companies.
Isaacson, who will speak before the U.S. Supreme Court for the first time, was expected to deliver his oral argument at 10 a.m. Monday. He and the opposing side, represented by a deputy assistant attorney general for Colorado, will each have 30 minutes to speak.
Isaacson and Schaefer said the case, Direct Marketing Association v. Brohl, arises from a number of states seeking to force sales tax collection on out-of-state companies that don’t have a physical presence there. They said those companies, including Amazon.com, are protected by a 1992 U.S. Supreme Court decision.
As the Direct Marketing Association’s law firm, Brann & Isaacson successfully defended in U.S. District Court against the 2010 Colorado law that would have required out-of-companies to turn over customer transaction information if they don’t voluntarily collect sales tax, saying that it was unconstitutional and would create a burden on interstate commerce.
“The objective of Colorado was coercing online retailers to collect the sales tax,” said Schaefer, who noted that it was acknowledged as a main tactic by the state.
As for the reporting requirement, Isaacson said “it’s not only compromising of the relationship between companies and customers but it’s also burdensome.”
After the Direct Marketing Association’s initial legal victory, the state of Colorado took the case to a federal appeals court, which decided to overturn the lower federal court’s decision, saying that the federal Tax Injunction Act prohibits federal courts from acting to “enjoin, suspend or restrain the assessment, levy or collection” of a state tax.
Isaacson and Schaefer said the Direct Marketing Association is now challenging that ruling in U.S. Supreme Court, arguing that because the 2010 Colorado law does not impose or require the collection of a tax, federal courts are not prohibited from hearing cases on it.
“The [appeals court] has taken a very broad reading on any matter that relates to a state tax system, saying it is protected from being challenged in federal court,” Isaacson said.
Isaacson said he believes the Direct Marketing Association has a strong case, noting that it has already won a preliminary injunction against the 2010 Colorado law in state court. He said this case is important because it’s about allowing businesses to access federal courts when they seek to challenge state laws that are only tangentially related to tax collection.
“If you’re a Maine company engaged in business around the company and believe a state is interfering with your constitutional rights and business, a federal court is a neutral forum and an important protection,” Isaacson said. “When you block access [to a federal court], I think you’re depriving businesses of an important constitutional protection.”
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