City of Chicago v. StubHub, Inc.
2011 Ill. LEXIS 1823
| Ill. | 2011Background
- Illinois enacted the Ticket Sale and Resale Act to regulate online ticket resales and consumer protections for internet auction listing services.
- Chicago amended its amusement tax to require reseller’s agents to collect and remit taxes on resales; a 'reseller’s agent' includes brokers and similar intermediaries.
- StubHub operates as an internet auction listing service, hosting user listings and collecting service fees from buyers and sellers.
- The City sought to compel StubHub to collect/remit the amusement tax on Illinois Chicago events, asserting the reseller’s agent role.
- The federal Seventh Circuit certified, and the Illinois Supreme Court answered, that municipalities may not require electronic intermediaries to collect amusement taxes on resold tickets.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Is StubHub a reseller's agent under Chicago's ordinance? | City contends StubHub provides resale services for owners and should collect tax. | StubHub argues it is a mere venue, not an agent, under agency principles and statutorily certified as non-agent. | Yes; StubHub is a reseller's agent under the ordinance. |
| May municipalities require electronic intermediaries to collect amusement taxes on resold tickets? | City asserts home rule authority and statutory power to collect taxes via intermediaries. | StubHub says state law permits alternatives and precludes municipal collection obligations on platforms. | No; the state has a vital interest and exclusive control over tax collection via intermediaries; municipalities cannot impose such duties. |
| Does the Illinois Ticket Sale and Resale Act preempt home rule authority in this area? | City argues Act does not foreclose local collection by intermediaries and that home rule can coexist. | State contends Act envisions a state-regulated regime with opt-out features for platforms, implying preemption of local collection duties. | The Act does not authorize municipalities to require collection by intermediaries; state regulation governs. |
Key Cases Cited
- City of Chicago v. StubHub, Inc., 624 F.3d 363 (7th Cir. 2010) (certified questions about taxation of online intermediaries)
- S. Bloom, Inc. v. Korshak, 52 Ill.2d 56 (1972) (municipal power to collect taxes via distributors or intermediaries)
- Kalodimos v. Village of Morton Grove, 103 Ill.2d 483 (1984) (framework for determining local vs statewide concerns under home rule)
- Roman v. City of Chicago, 184 Ill.2d 1 (1998) (vital state policy and preemption under home rule)
- Scadron v. City of Des Plaines, 153 Ill.2d 164 (1992) (limits on preemption and the vital state policy approach)
- Citizen Utilities Co. of Illinois v. Village of Bolingbrook, 158 Ill.2d 133 (1994) (comprehensive regulation and home rule interaction)
- Create, Inc. v. City of Evanston, 85 Ill.2d 101 (1981) (landlord-tenant regulation and home rule congruence with state action)
- Mulligan v. Dunne, 61 Ill.2d 544 (1975) (home rule taxation context within Illinois precedents)
- John Sexton Contractors Co. v. County of Cook, 75 Ill.2d 494 (1979) (environmental regulation as a potential vital state policy example)