Stasko v. The City of Chicago
997 N.E.2d 975
Ill. App. Ct.2013Background
- Chicago imposed a 9% amusement tax on charges to view amusements (including football) under Chicago Municipal Code §4-156; the City notified PSL holders that transfers of Permanent Seat Licenses (PSLs) were taxable.
- Bears (as agent for the Lakefront Improvement Fund/Chicago Park District) sold PSLs beginning in 2002; PSLs grant a revocable, personal right to purchase season tickets for a specific seat but do not by themselves admit the holder to games.
- Plaintiffs (original purchasers and subsequent transferees) sought a class-wide declaratory judgment, refunds and an injunction, arguing PSLs are not admission fees, are tangible personal property (so preempted by 65 ILCS 5/8-11-6a), or alternatively that the tax is time-barred or otherwise improper.
- The trial court granted summary judgment to the City as to original sales (Bears→patron) and granted plaintiffs summary judgment as to subsequent resales (patron→patron); after reconsideration the court concluded the City may tax original sales and that the tax is not preempted, and denied leave to file a second amended complaint.
- On appeal the appellate court dismissed one premature appeal, retained jurisdiction over the Rule 304(a) appeal, and affirmed: the amusement tax applies to PSL sales/transfers and the trial court did not abuse discretion in denying amendment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether PSLs are tangible personal property such that §8-11-6a preempts the City’s home-rule amusement tax | PSLs are like tickets or brokered ticket sales (Mr. B’s) and thus tangible personal property; tax is preempted | PSLs are intangible, revocable licenses/rights to purchase tickets; sale is a charge to view an amusement and not preempted | PSLs are intangible revocable privileges to buy tickets; §8-11-6a does not preempt the amusement tax |
| Whether the amusement tax is an occupation tax (thus requiring state authorization) | Tax on PSLs is effectively a tax on services/occupations (similar to Chicago Health Clubs) | The tax targets charges for admission to amusements, not an occupation; incidence falls on patrons | The tax is not an occupation tax; it taxes the privilege to view amusements and is a valid home-rule exercise |
| Whether the ordinance’s language (“admission fees or other charges paid for the privilege to enter…”) covers PSL prices | PSLs do not confer entry rights; they merely allow purchase of season tickets, so PSL fees are outside “admission fees” | PSLs are a prerequisite to purchasing a seat’s season tickets and thus are part of the admission-related charges | The Court read “other charges” to include PSL fees: PSL price is a charge for the privilege of viewing the amusement and is taxable |
| Whether the trial court abused discretion by denying leave to file a second amended complaint (adding takings, due process, equal protection claims) | Amendment would cure defects and add Takings Clause and other claims; leave was appropriate | Amendments would be futile (tax lawful) and plaintiffs failed to obtain leave for some counts; counts filed without leave are nullities | Denial affirmed: takings claim fails (PSL not real property); counts added without leave are null and amendment on main claim would be futile |
Key Cases Cited
- Pielet v. Pielet, 2012 IL 112064 (summary judgment review and cross-motions principles)
- NDC LLC v. Topinka, 374 Ill. App. 3d 341 (statutory construction review)
- Commercial National Bank of Chicago v. City of Chicago, 89 Ill. 2d 45 (home-rule taxing power and limits)
- Kerasotes Rialto Theater Corp. v. City of Peoria, 77 Ill. 2d 491 (amusement tax not an occupation tax)
- Fox Valley Trotting Club, Inc. v. Town of Cicero, 65 Ill. 2d 10 (distinguishing amusement taxes from occupation taxes)
- Chicago Health Clubs, Inc. v. Picur, 124 Ill. 2d 1 (membership fees held an occupation tax; distinguished)
- Soderholm v. Chicago National League Ball Club, Inc., 225 Ill. App. 3d 119 (season ticket is a revocable license)
- Colorcraft Corp. v. Department of Revenue, 112 Ill. 2d 473 (essence-of-transaction test: service v. sale of tangible goods)
- First Nat’l Bank of Springfield v. Department of Revenue, 85 Ill. 2d 84 (transaction substance guides tangible/intangible characterization)
- Mr. B’s, Inc. v. City of Chicago, 302 Ill. App. 3d 930 (ticket-broker decision cited by plaintiffs; court finds it unpersuasive)
- Empress Casino Joliet Corp. v. Giannoulias, 231 Ill. 2d 62 (takings clause does not apply to taxation)