Direct Marketing Association v. Brohl

Association; preserve legal victory their concern- ment ed International Law contracts, yers Association; ing interpretation they their Government Fi Association; ones to seek sub- have been the nance Officers should Tax (now Foundation, par- stitute OXY’ssuccessor the real Amicus Curiae. interest) Fed. ty as the defendant. See No. 12-1175. (b) 43(a)(1), (any R.App. party P. can file Appeals, United States Court of substitute); motion to Maier v. Lucent Tenth Circuit. (7th Techs., Inc., 120 F.3d n. 1 Cir.1997) (substitution parties appro- Feb. priate party “when a transfers its interest company in the involved in the property

suit.”) Then the successor could deter-

mine whether it wished continue appeal. when Yet the successor intervene, plaintiffs opposed

moved any inequitable

motion. If there is conduct

here, strategy it is who plaintiffs, any appeal to prevent judg-

wished of the

ment in by arguing its favor mootness but

opposing intervention. ASSOCIATION,

DIRECT MARKETING

The, Plaintiff-Appellee, BROHL, capacity

Barbara in her Ex Director, Depart

ecutive Revenue, Defendant-Appel

ment of

lant, Commission;

Multistate Tax Interested Professors; Industry The Retail Association; Litiga

Leaders Retail Inc.; Center,

tion Colorado Retail

Council; National Governors Associa

tion; National Conference of State

Legislatures; Council of State Gov

ernments; National Association

Counties; Cities; League National Mayors;

United States Conference of City/County Manage-

International Jr., Parsons, Johnson, A. Ronald Ab- Parsons,

dallah, LLP, Bollweg & Sioux Falls, Dakota, South for Amicus Curiae Association, National Governors National Conference State Legislatures, Council Governments, of State National Associa- Counties, tion of League National of Cit- ies, Mayors, United States Conference of International City/County Management Association, Municipal International Law- Association, yers and Government Finance Officers Association. Hecht,

Helen Lila Disque, and Sheldon Laskin, Commission, Multistate Tax Wash- DC, ington, for Amicus Curiae Multistate Tax Commission. White, Industry

Deborah Retail Leaders Center, and Litigation Association Retail VA; Arlington, Tom Goldstein and Eric Citron, Russell, P.C., Goldstein & Bethes- da, MD, for Amicus Retail Industry Curiae Association, Litigation Leaders Retail Yarger, Frederick R. Solicitor General Center, Inc. and Retail Colorado Council. Coffman, General, (Cynthia Attorney H. Henchman, D. Joseph Foundation, Tax Scoville, Stephanie Lindquist Assis- Senior DC, Washington, Joseph P. Kennedy, General, Sullivan, Attorney tant Grant T. Ives, LLC, Kennedy Kennedy & Albu- General, Assistant Solicitor Brett Claudia Mexico, querque, New Amicus for Curiae Goldin, General, First Attorney Assistant Tax Foundation. Domenico, General, Daniel D. Solicitor Staff, Snyder, BRISCOE, GORSUCH, Melanie J. Chief of him Before briefs), MATHESON, Attorney Office Gen- Judges. Circuit Denver, Colorado, CO, for eral the State of MATHESON, Judge. Circuit appearing Defendant-Appellant. (Matthew George S. Isaacson P. Schae- I. INTRODUCTION n

fer, briefs), with him on the & Brann neighborhood When a in Den- bookstore Isaacson, Lewiston, ME, appearing for book, a ver it sells must sales tax Plaintiff-Appellee. buyer from that payment and remit Shanske, Darien University of Califor- Department the Colorado of Revenue nia, Law, Davis, CA, Davis School Kirk (“Department”). When Barnes & Noble Stark, California, J. An- University Los sells a book over the Internet to a Colora- Law, CA, School geles, Angeles, Los it buyer, do must collect tax from sales Morrison, Alan B. George Washington buyer and remit. But when Amazon sells Law, University Washington, School a book over the Internet Colorado DC, for Amicus Curiae Interested buyer, has no to collect obligation sales Professors. largely product tax. situation is This Soronen, Director, Lisa Executive State of the Court’s decision Center, DC, Dakota, Local Legal Washington, & North Corp. v. (1992), challenged violating this law as which net—has L.Ed.2d the dormant Commerce Clause. that, under the dormant

held doctrine, require Law uncon argues DMA Colorado presence in that having physical no retailer stitutionally discriminates un to Barnes opposed e.g., Amazon state — duly interstate commerce. The burdens remit tax on collect and & Noble—to agreed arguments, district with both court there. it makes the sales DMA, summary granted judgment to states, Quill, many including enjoined Department Faced with permanently Colorado, rely on themselves purchasers enforcing from Law. See Di pur- tax on pay Huber, a use their calculate and No. 10-cv- Mktg. rect Ass’n retailers do 01546-REB-CBS, from chases 2012 WL But few 2012). tax. (D.Colo. not collect sales *10-11 Mar. Defen despite their pay the use or elsewhere Brohl, dant-Appellant Barbara Executive explo- to do so.1 With the legal obligation Department, appeals.2 Director of e-commerce, the states’ ina- growth sive jurisdiction We have under U.S.C. retailers to compel to bility § reverse the Colorado 1291. We because cost state and local tax has collect sales discriminate against not nor revenue dis- governments significant unduly does it burden com- retailers, must advantaged in-state who merce. point tax sale. Jus- “may Kennedy recently said well tice II. BACKGROUND serious, continuing injustice by faced be a History A. Factual many States.” Direct other Colorado — (“Brohl II”), imposed a sales tax since Colorado v. Brohl Mktg. Ass’n -, tax The 191 1935 and a use since 1937. taxes (2015) J., (Kennedy, paid tax complementary. concur The sales is paid at the of sale use tax is ring). point and the used, stored, when is con- property to attempted address In tax sumed within Colorado but sales was by a law non-compliance enacting tax paid not a retailer. to See Colo.Rev.Stat. Law”) (“Colorado imposes notice -204(1). 39-26-104, -202, approving §§ retailers that do obligations on system under the dor- sales-use Plaintiff-Appellee tax. collect sales Clause, mant (“DMA”) Marketing Direct Association —a Court described as follows: organizations that group of businesses system effect thus catalogs, practical via advertise- products market media, readily perceived. Inter- One of ments, conditioned broadcast Defendant-Appellant Sup dispute precise Support ae parties rate of non- in 1. The out, points porting Mktg. Department Reversal Direct Ass'n v. compliance. As the Brohl, (10th argued Sept. 12-1175 Cir. compliance that DMA en- No. rate cites the 75% 29, 2015) (estimating use-tax com and use on all household compasses both sales taxes 0-5%, sales, pliance excluding pur vehicle including motor those retailers Internet notes, chases). Department any figure theAs presence physical must collect with significantly record would lower reports compliance re- rate on taxes. compliance for sales than the rate tax 98.3% obligation sales with no collection mote retail out, es. is, recently.pointed Kennedy as Justice Mktg. Ass’n v. Brohl See Direct 4%. court, II"), (2015) (“Brohl lawsuit filed in district When this was J., Roxy Huber. Ms. (Kennedy, concurring); also the executive director was see Brief later substituted as the defendant. et al. as Curi- Brohl was Governors Ass’n Amici National retail To its effects must be that sellers assist the collecting use tax Washington to helped compete will be from purchasers, in-state most seemingly equality terms of with retail upon deal- unaware of their tax responsibility,3 the in other exempt ers states who are from legislature passed a law in 2010 any tax or corresponding a sales burden. imposes obligations three on retailers effect, Another or at least another ten- that do not collect sales taxes —“non-col must dency, be to avoid likelihood of (1) lecting to retailers”4: send a “transac state, upon drain the revenues of the tional notice” to purchasers informing buyers being longer tempted place no they subject them that bemay to Colora orders in their other states the effort see Colo.Rev.Stat. tax, § do’s use 39-21- escape payment of the tax on local 112(3.5)(c)(I); 1 Regs. § Colo.Code 201- sales. (2) 1:39-21-112.3.5(2);5 to send Colorado Co., Silas Mason purchasers goods who buy from the retail Henneford 81 L.Ed. 814 totaling er more than an “annual $500 dates, purchase summary” with the catego collecting for The methods sales and use ries, and purchases, amounts reminding vary. subject taxes In-state retailers them of obligation pay their use taxes sales tax collection are tasked assort- purchases, on those § Colo.Rev.Stat. 39- requirements example, ed obtaining a —for 112(3.5)(d)(I); 1 license, Regs. Colo.Code calculating taxes, state and local 21— 201-1:39-21-112.3.5(3); § accounting exemptions, send collecting the tax, Department filing return, an annual remitting the tax “customer in- to the state, keeping report” listing certain records. In- formation their customers’ names, any addresses, state retailers are also for liable sales and total amounts they taxes do not collect and be sub- spent, § Colo.Rev.Stat. 39-21- ject to fines or criminal penalties 112(3.5)(d)(II); for non- Regs. § Colo.Code 201- compliance. 1:39-21-112.3.5(4). DMA objected to requirements these and brought suit compel Because Colorado cannot out-of- against the Executive Director of the De- physical presence state retailers without a partment. taxes, state to the state re- quires purchasers themselves calculate History B. Procedural use purchases and remit taxes on their DMA challenge filed a facial to the from Colo- regimes The retailers. rado Law in federal district differ court 2010. greatly compliance effectiveness— Among claims,6it extremely high, with the sales tax is other contended that the with compliance extremely the use tax is Law violates dormant Com- low. it Clause because discriminates Heckman, Gamage exempt 3. J. See David & Devin A from the notice obli- Way Better Forward State Taxation E- 201-1:39-21-112.3.5(l)(a)(iii). gations. § Id. for Commerce, 92 B.U. L.Rev. requirement 5. The transactional notice can be "non-collecting 4. A is defined retailer” as “a ways, including satisfied in various an online goods purchas retailer that sells to Colorado window, pop-up slip, packing or other ers and does not collect Colorado sales methods. Regs. § tax.” 1 Colo.Code 201-1:39- 21-112.3.5(1)(a)(i). Retailers who made less brought originally eight DMA $100,000 6. claims for re- gross than in total sales in Colora lief, including previous First and Fourteenth Amend- year, do in calendar and who challenges, summary reasonably expect ment its gross but motion for the current $100,000, year judgment calendar to be less than included the two dormant (Dist.Ct.Colo. 13CV34855, unduly 22-23 Feb. burdens interstate against and 2014) (unpublished). rejected commerce. argument DMA’s that the Colorado 30, 2012, the district court On March undue com- placed an burden summary to DMA on granted judgment Quill’s merce, holding declining to extend Huber, grounds. 2012 WL both regulatory regarding collection permanently The court en- *10-11. Id. 24-30. measures. joined Department enforcing from 1, 2014, July On Law. Id. for granted petition DMA’s certiorari. held, panel August On this response development, the Colorado jurisdiction lacked the district court stayed proceedings and did state court challenge under the Tax In- hear DMA’s parties’ resolve cross-motions (“TIA”). junction Mktg. Act See Direct summary judgment. On March (“Brohl I”), 735 F.3d Ass’n v. Brohl held the TIA did not Supreme Court (10th Cir.2013); § 28 U.S.C. 1341. jurisdiction federal strip the courts remanded the case to the district court We hear DMA’s and reversed Brohl challenge to dismiss DMA’s claims dissolve II, I. at 1131. It remand- Brohl I, injunction. Brohl F.3d permanent proceedings. ed case for further rejected Tenth a re- at 921. The Circuit wake of II’s In the Brohl determination Mktg. quest for en banc review. Direct jurisdictional inappli- that the TIA’s bar is (10th Brohl, No. Ass’n 12-1175 Cir. Oct. cable, squarely presented we are now 2013) (unpublished). chal- two dormant Commerce Clause 10, 2013, the district court On December lenges decided the federal district court DMA’s claims and dissolved the dismissed parties in Brohl I. before our decision thereafter, injunction. Shortly permanent briefs, and supplemental have submitted eight the remainder of DMA’s dismissed argument September we heard oral prejudice. claims without Department DMA then sued the in state petitioned court. It also for certiorari to III. DISCUSSION Court, Supreme seeking review of proceeds parts. Our discussion three Tenth of its Circuit’s dismissal claims First, present an overview the dor- we of based on TIA. Second, mant Commerce Clause doctrine. 18, 2014, February On the state district rule analyze bright-line recognized we preliminarily enjoined court enforcement it is to tax determine limited of the on Third, based DMA’s ar- review DMA’s dor- collection. we gument facially discriminated mant and con- Commerce Clause claims against interstate commerce violation of clude the Colorado Law not discrimi- unduly the dormant Commerce Clause. Direct nate burden interstate Revenue, Mktg. Dep’t v. Colo. No. commerce.7 Ass’n of challenges. We pre- Department argues Clause 1134. "this Commerce are S.Ct. at only challenges ap- not dismiss this based on sented those this Court should case comity. Supreme peal. Consistent with U.S. Court precedent, affirmatively Department II, Supreme Brohl noted this comity reliance waived on the doctrine.” "comity agrees. of Supp. Aplee. court's discussion doctrine” in Aplt. Br. at 23. DMA left "it Tenth Supp. non-jurisdictional Brohl I and to the Circuit to Br. at 59. On matter, argu- prudential comity decide case on remand whether we do dismiss this comity grounds. ment remains available to Colorado.” A. Dormant Commerce Clause merce Clause is express grant both an of power to Congress and an implicit limit on The Constitution does not contain a power of state and government. local provision called the dormant Commerce Comptroller See Treasury Md. v. Clause.8 The doctrine derives from Arti of Wynne, —, 1787, 135 S.Ct. I, 8, cle Section Clause 3—the Commerce — (2015); 191 L.Ed.2d 813 Kleinsmith provides Clause itself—which that “Con (10th v. Shurtleff, 571 F.3d Cir. gress power shall have ... regu [the] [t]o 2009). late commerce ... among the several States.” As to scope matters -withinthe The focus of a dormant Commerce the Commerce power, Congress Clause Clause challenge is whether a state regulate, choose to thereby preempt improperly interferes with interstate com so, ing doing the states from see Gade v. primary merce. The concern is economic Ass’n, Mgmt. Nat’l Solid Wastes 505 U.S. protectionism. Lynn See W. Creamery, 88, 96-98, L.Ed.2d 73 Inc. Healy, 186, 192, v. 512 U.S. 114 S.Ct. (1992); Rice v. Santa Fe Elevator Corp., 2205, (1994) 129 L.Ed.2d 157 (quotations 218, 230, 331 U.S. 67 S.Ct. 91 L.Ed. omitted) (“Th[e] ‘negative’ aspect of the (1947), or to authorize the states to Commerce Clause prohibits pro economic Rahrer, regulate, see In re 140 U.S. is, tectionism —that regulatory measures (1891); 11 S.Ct. 35 L.Ed. 572 designed to benefit in-state economic inter Benjamin,

Prudential Ins. Co. v. 328 U.S. by ests burdening competi 408, 429-31, 66 S.Ct. 90 L.Ed. 1342 tors.”); City Philadelphia v. Jer New sey, 437 U.S. If Congress is preempt- silent—neither (1978) (“The crucial inquiry, ing nor consenting to state regulation— therefore, must be directed to determining and a attempts regulate state in the face whether .basically [a state protec law] silence, Court, of that going measure, tionist or whether it fairly can (9 Wheat) back to v. Ogden, Gibbons viewed as a law legitimate directed to local 1, 231-32, 238-39, 6 L.Ed. 23 concerns, with upon effects interstate com (Johnson, J., concurring), Cooley incidental.”); merce that Kleins Wardens, (12 How.) Bd. Port mith, (“The F.3d 299, 318-19, (1851), 13 L.Ed. 996 has inter- jurisprudence Court’s under the dormant preted the Commerce to limit Commerce Clause ‘is driven concern regulation of interstate by ap- commerce about protectionism.’” economic (quoting plying negative implications of the Davis, Dep’t Revenue Ky. v. great Clause—“these silences 328, 337-38, 170 L.Ed.2d Constitution,” Sons, of the H.P. Hood & (2008))). 685 Mond, 525, 535, Inc. v. Du 336 U.S. 69 657, (1949); As to regulation S.Ct. 93 the state L.Ed. 865 see issue this White case, Inc., up v. Mass. Council to now Emp’rs, Congress Constr. has been silent— 1042, 460 U.S. it preempted 103 S.Ct. 75 has not or consented to the (1983). L.Ed.2d Accordingly, the Com- question Colorado Law.9 The then is brief, explicitly Nowhere does the Constitution supplemental 9. As DMA has noted in its limit state interference with interstate com- parties “since the first filed their briefs in this except very specific limitations in Arti- 2012, Congress case in has increased its al- I, 10, prevent cle Section which states from ready scrutiny Aplee. active of the issue.” coining money imposing exports duties on Supp. Br. at 50. imports. legitimate even-handedly to effectuate affirmative the Constitution’s whether interest, and its effects on power Congress public local of the commerce grant incidental, it to circumscribe interpreted interstate commerce should judiciary’s answer imposed Law. The upheld unless the burden will be If final. we need not be question clearly excessive on such commerce is law, pass can its own Congress uphold the putative local benefits.” relation to the if Law. Or the Colorado preempt law and Church, Inc., 137, Bruce 397 U.S. Pike v. under law is unconstitutional we decide the (1970). 844, 142, 25 L.Ed.2d 90 S.Ct. doctrine, Clause the dormant Commerce frequently survive this Pike “State laws authorizing legislation can enact Congress Davis, 339, 553 U.S. at scrutiny....” Newfound/Owatonna, mines which tional interstate rison, ted). an extensive nondiscriminatory alternatives.” cations for commerce Congress to seek cannot be advances a 137 L.Ed.2d 852 In that regulation challenge 520 U.S. The case sense, to do what we adequately served commerce pass discriminatory restrictions on legitimate law.10 As a body of dormant Commerce party would only if the state shows that discriminates a different result. (1997) (quotations omit judicial decision deter- “required will survive constitu 581, 117 S.Ct. ‘strictest Inc. v. Town Court has local have struck down. general need to by reasonable purpose scrutiny.’” produced matter, against Camps justifi go 1590, Har “it requirement and not a tax. fully to an here because this case involves risprudence to review state state stated that a services ^[3] activity adapted its dormant Commerce Clause sit, commerce, 1076, S.Ct. Inc. v. taxing below, Finally, 1801.11 activity commerce. is not discriminate provided by the State.” L.Ed.2d 326 constitutional if it State, Brady, Complete with a substantial nexus 1076. As discussed more ^[4] on interstate ^[2] 430 U.S. Complete is Auto does fairly fairly (1977), taxes on inter related to the “[1] 274, apportioned, Auto commercial Court the Court is applied Id. at Tran apply has ju Envtl. Sys., Dep’t Inc. v. Or. Waste B. Scope 93, 101, 114 Quality, 511 U.S. S.Ct. largely case The outcome of this turns (1994) (quoting Hughes v.

128 L.Ed.2d 13 Quill. scope on the We conclude Oklahoma, 322, 337, 99 441 U.S. S.Ct. tax col- (1979)). applies narrowly to sales and use 1727, 60 L.Ed.2d 250 following explains lection. The discussion Nondiscriminatory state laws also conclusion, arrive at this which how we they impose when an can be invalidated both DMA’s claim for discrimina- affects burden on interstate commerce. undue and for undue burden. tion Lines, Inc., Navajo Freight See Bibb v. Hess, Depart Inc. v. In National Bellas 3 L.Ed.2d S.Ct. Revenue, ment regulates “Where the statute — nied, —, Reuters Westlaw search of 10. A Thomson (2015), recently ac this court February Commerce Clause” on "Dormant 2016, knowledged type dormant Com a third produced a list of 56 United States involving those "certain merce Clause cases: Supreme Court decisions. price price affirmation laws control cate 'extraterritorial' conduct.” This Energy Legal Epel, 793 control In & Env't Inst. 11. 1169, (10th Cir.2015), appeal. gory apply to this cert. de- does not F.3d 1172 (1967), (1) Supreme 18 L.Ed.2d the mant Commerce Clause when the tax: applied addressed whether Illinois could re- “is activity Court to an awith substantial (2) quire a Delaware-based mail-order busi- State,” nexus with taxing the fairly “is (3) physical presence with no Illinois apportioned,” ness “does not discriminate use taxes sales to Illinois cus- pay against commerce,” interstate “is 753-54, Id. at 87 S.Ct. 1389. The tomers. fairly provided related to the services only seller’s connection with Illinois was Quill the State.” The Id. Court decided through common carrier and U.S. mail. based on first step Complete the of the at Id. 87 S.Ct. 1389. The Court con- Auto test. 504 U.S. at a requirement cluded that such violated 1904.13 It determined the dormant Com the Commerce Clause. merce Clause and Bellas Hess create a safe harbor wherein “vendors whose Quill, Supreme

In the Court revisited connection with customers in the taxing holding of Bellas Hess. The Court is by State common carrier or the United addressed whether North Dakota could mail States ... are free from state-im “require an out-of-state mail-order house posed duties to sales and use tax that has neither nor represen- outlets 315, 112 es.” Id. at (quotations S.Ct. 1904 tatives in pay the State collect and a use omitted). Quill and brackets The Court goods purchased tax for use within the relied on Bellas Hess to make a stare State.” 504 1904. that recognized decisis decision the physi supplies sold office “through catalogs presence cal rule a “bright-line” as flyers, test. advertisements in peri- national 314-18, 112 Id. at odicals, S.Ct. 1904. Id. at telephone calls.” The Supreme S.Ct. 1904. Court of II, In Supreme Brohl charac- Court North Dakota had determined terized as establishing principle requirement was because constitutional “may not require retailers who social, economic, “the tremendous commer- physical presence lack a in the State to cial, legal past quar- innovations of the collect these taxes on behalf [state].” ter-century holding have rendered” the added). at 1127 (emphasis Jus- (quotations Bellas Hess “obsolete.” Id. II, Kennedy’s tice concurrence Brohl omitted). disagreed.12 Supreme Court 135 S.Ct. at echoed the numerous Quill’s Quill, commentators have criticized applied who Court bright-line four-part physical presence test.14 Complete test from Auto Tran Even sit, though has not S.Ct. 1076. The over- test focuses on a ruled it has not “practical physi- statute’s effect” extended and, rather than language,” presence beyond its “formal cal rule as the realm of sales above, a tax noted sustains under the dor- and use collection.

12.The Court did overrule did Bellas Hess on a 13. The Court not address whether step North Dakota use tax violated the third separate issue. Bellas Hess had held that the test, Complete of the Auto which asks whether requirement Illinois use tax had violated due a state tax discriminates that, process principles. The Quill court held commerce. “to extent that our decisions have indicat- requires phys- ed the Due Process Clause See, III, e.g., Baez H. Beau The Rush to the presence imposition State ical in a for the Blurring Quill’s Goblin Market: The Two tax, duty to collect a we overrule those Tests, Seattle Nexus U.L.Rev. 581-82 holdings by developments superseded (2006); Hellerstein, Deconstructing Walter process.” of due Debate Over State Taxation Electronic Com S.Ct. 1904. merce, J.L. & Harv. Tech. 549-50

1138 impose a tax collection that did not American Tar- laws in discussion

This court’s merely de these decisions obligation, but Inc. v. Giani is instructive Advertising, get Quill and do not in points of law scribe point: on this con holding to other actually extend its Quill Hess concern Both Bellas Tankers, City v. Inc. Polar texts. See of entities. levy of taxes upon out-of-state Valdez, 11, 2277, 1, 174 557 129 S.Ct. Quill repeatedly Supreme Court Quill’s due (2009) (invoking 1 L.Ed.2d Bellas preserving that it was stressed Tonnage case analysis in a Clause process ’ the area of rule ‘in Hess bright-line that “a nondomi- assertion support to Act The Utah use taxes.’ sales and n constitutionally ciliary jurisdictio re- registration licensing imposes has a property when that property The Bel- not tax burdens. quirements, jurisdiction, that nexus with substantial Hess/Quill bright-line rule is there- las when a nexus is established and such inapposite. fore of the substantial avails itself taxpayer Cir.2000) (10th 1241, (quot 1255 F.3d 199 in that carrying on business of privilege 1904) 316, ing omitted)); Mead- jurisdiction” (quotations omitted).15 (citations Revenue, Dep’t Corp. v. Ill. Westvaco of 1498, 16, 170 553 argues DMA Quill (2008) sup- (invoking 404 L.Ed.2d Quill in three cases reviewing state cited Quill's Quill require physical-presence recognized is clude circuits have 15. Other showing a Commerce ment for substantial See Sam Francis to state taxes. limited only and sales applies to use nexus Christies, Inc., 1320, 1324 784 F.3d v. Found. corpo franchise and to business taxes not Labs., Cir.2015); (9th Inc. v. Cavend Ferndale Dir., Lanco, taxes.”); Inc. v. ration net income Cir.1996). (6th ish, 494 79 F.3d 176, 380, Taxation, A.2d N.J. 908 Div. 188 Moreover, authority weight lim- of state Quill (2006) pro (concluding 176-77 Quill's requirement to physical presence imposing corporation a state from hibit taxes, opposed other kinds and use sales non-present physically busi tax on business See, Corp. Dep’t e.g., v. Lamtec of taxes. Comm’n, nesses); Geoffrey, Tax Inc. v. S.C. 788, 838, Revenue, 246 P.3d 794 170 Wash.2d (1993) & n. 4 S.E.2d S.C. "[tjhere (en banc) (2011) (stating in dicta require (concluding physical-presence Quill suggests language in extensive Quill also only applies ment of Bellas Hess requirement should be physical presence taxes). Penney Nat'l But see J.C. and use sales opposed taxes” as to sales and use Johnson, (Tenn. restricted v. 19 S.W.3d Bank taxes); Corp. occupation KFC to business ("Any distinctions Ct.App.1999) constitutional Revenue, Dep’t 792 N.W.2d v. Iowa pre and excise taxes the franchise between (''[W]e (Iowa 2010) physical hold that contemplated in use taxes here and the sented required under the dormant presence Quill is not pur are not within Bellas Hess and discern.”). United States Consti- Clause of the view this court to legislature the Iowa ap in order for interpret tution generally These cases earned impose an income tax on revenue use taxes for two exclusively to sales and ply First, corporation arising from the they emphasize an out-of-state relevant here. reasons Quill itself, intangibles by located franchisees "we language use of its which stated taxes, Iowa.”); Geoffrey, not, types Inc. State of within the our review of other have Revenue, physical-presence N.E.2d re 453 Mass. Comm’r the same articulated (explaining ”[t]he Bellas Hess established quirement 94-95 'physi- U.S. at discussed and use taxes.” 504 Court's decision Quill’s Second, they highlight under the com- cal-presence' requirement S.Ct. 1904. or rooted in the mail context of sales decisis rationale clause in the stare income); reli taxes,” Bellas Hess—a royalty industry’s Tax reliance on der not taxes N.A., Bank, of other in the context W.Va. interest absent ance v. MBNAAm. Comm’r (2006) ("[W]e Corp., N.W.2d at 324. KFC con- taxes. See 640 S.E.2d When, here, proposition the the of port target regu- “[t]he state and the Due Process Clause im lation alleges discrimination and undue parallel burden, distinct but limitations on a pose analysis proceeds the as follows: tax power to out-of-state activi State’s directly When a state statute regulates ties,” Quill’s process then on due relying or against discriminates interstate com- holding); Newfound/Owatonna, Camps merce, or its is when effect to favor in- Inc., 572 n. U.S. at state economic over interests out-of- Quill (citing string-cite the propo interests, state generally we have struck Congress may “repudiate sition down the inqui- statute without further modify” substantially Commerce Clause ry. When, however, a statute has jurisprudence). indirect effects interstate commerce foregoing actually None of the cases in- regulates and evenhandedly, we have ex- Quill’s vokes dormant Commerce Clause amined whether State’s interest analysis due analysis only process its and legitimate and whether the burden on — congressional authority discussion of clearly interstate commerce exceeds the —and they do not demonstrate that ex- local benefits----In either situation the beyond actual tends collection taxes critical consideration is overall effect Indeed, by out-of-state retailers. of the on both statute local and inter- suggest cases cited DMA state activity. beyond not been extended that context. Corp. Brown-Forman Distillers v. N.Y. sum, Quill applies we conclude nar- Auth., Liquor State rowly to and has not been extended be- (1986) (citations 90 L.Ed.2d 552 yond collection. The district court omitted). erred in otherwise. In the holding follow- 1. Discrimination section,

ing we address how conclusion We turn first to DMA’s discrimina affects DMA’s claims.

tion claim. A state generally law violates C. DMA’s Claims the dormant if Commerce Clause it dis or in criminates —either its face court granted The district sum practical against interstate com effects— mary judgment grounds: on two the Colo Hughes, merce. 441 U.S. at (1) impermissibly rado Law discriminates against unduly burdens interstate grounds,

commerce. As to both we review a. court order District grant summary judg a district court’s court district determined the Colo- novo, evaluating de the evidence “in ment against rado Law discriminates interstate light non-moving most favorable to the in violation of commerce the Commerce Utah, v. party.” Sabourin Univ. Clause. that “the Act (10th Cir.2012) determined (quotations F.3d omitted). Regulations directly regulate and dis- challenges We also review constitutionality criminate out-of-state retailers of a statute de novo. Utah, and, therefore, Paiute commerce.” Shivwits Band Indians (10th Cir.2005). Huber, 428 F.3d at *4.16It noted WL state) stopped saying presence 16. The district court short mortar out- —in facially discriminatory, (those noting: physical was of-state retailers with no presence the state who make sales to Regulations On their face the Act and the Rather, state). the Act distinguish do not customers between instate retailers (those physical presence with a brick focuses on the distinction between retailers —a the local law, both terms of doing [the statute] “all retailers that under from the selling flowing to Colora benefits statute in Colorado business li alterna- nondiscriminatory sales tax unavailability obtain purchasers must do and remit the sales local inter- preserve tives adequate cense and must sale,” (citing id. Hughes, to each at *6 applicable (quoting tax at Id. ests stake.” - 39-26-103, -104, -106, 1727). 336, §§ Colo.Rev.Stat. 441 99 The court U.S. at S.Ct. criminal 204), penalties face and and civil briefly the interests identified canvassed (citing non-compliance, id. Colo.Rev. and non- by Department proposed 39-26-103(1)(a), 39-21-118(2), §§ Stat. by discriminatory alternatives identified (4)). precludes It further noted DMA, rec- ultimately concluded “[t]he require these imposing from the state essentially to evidence ord contains no out-of-state retail penalties ments legitimate interests ad- show that presence Colora physical ers without the defendant cannot be served by vanced 315, at 112 (citing 504 U.S. do. Id. adequately by reasonable nondiscriminato- 1904). S.Ct. The ry alternatives.” Id. court concluded carry failed to its burden that, Department recognized al- court district analysis granted on the discrimination only to Law refers though Colorado *7. Id. at summary judgment DMA. collect “any that does not Colorado retailer 39-21-112, tax,” § sales Colo.Rev.Stat. Analysis b. Quill guaran- law and state combination applies only to out- provision that this tees A statute discriminate Huber, 2012 WL of-state retailers. on its face or against interstate commerce concluded, Carbone, The court *4-5. practical effect. See C & A Act by the words of the provided Clarkstown, “the veil Inc. v. 511 U.S. Town of thin Regulations support is too 114 L.Ed.2d 399 S.Ct. 128 Regu- the Act the conclusion that “The burden show discrimina regulate in-state and out-of-state lations party challenging tion on the rests ” evenhandedly.” Id. at *4. retailers validity Hughes, the statute.... party U.S. at 99 S.Ct. 1727. If the pointed out Although Department state law its burden challenging the meets voluntarily retailers that some out-of-state discriminatory, to show that the statute is sales and remit Colorado tax virtually per Or. “is se invalid.” to the subject are Colorado therefore not Waste, S.Ct. Law, the court determined the De district properly When the Colorado Law is not condition an out-of- partment “may n context, legal viewed in its factual and rights retailer’s on its state reliance DMA carried its of show has not burden accept the retailer a dif requirement ing against interstate com discrimination burden, when that bur particularly ferent merce. unique den is to out-of-state retailers.” (citing Corp. v. Mid

Id. Bendix Autolite (1) We consider: whether the Colorado Enters., Inc., wesco inter- facially against Law discriminates (1988)). 2218, 100 L.Ed.2d commerce, and the Colo- whether effect is favor in-state rado Law’s direct subjected therefore The district court inter- economic interests over out-of-state scrutiny, stage the law to strict which justify burden falls on the State to ests. “the

who collect Colorado sales and those Id. sales who do not collect Colorado tax. Facially against commerce, i. The Does Not done Colorado Against Interstate Discriminate statutory so based on language explicitly See, identifying geographical distinctions. e.g., Corp. General Motors Tracy, -facially Law is not dis- The Colorado n. criminatory. applies to certain retailers purchasers (1997) (“[I]f but goods that sell a State discrimi- taxes. do not collect nates out-of-state interests 39-21-112(3.5)(c)(I); § Colo.Rev.Stat. drawing geographical distinctions between Regs. § Colo.Code 201—1:39—21— entities that otherwise similarly situat- 112.3.5(l)(a)(i). face, On its the law does ed, such facial discrimination will sub- distinguish between in-state and out- ject high judicial to a level of scrutiny even im- of-state economic interests. It instead if it legitimate is directed toward a health poses differential treatment based on -safety goal”). For example, the whether the retailer collects Colorado Court Oregon said the statute at issue sales or use taxes. Some out-of-state re- facially Waste was discriminatory because retailers, collecting tailers are some are imposed higher surcharge disposal a not. “generated solid waste out-of-state” Although the title of the statute— generated than solid waste in-state. 511 Concerning An Act of Sales Collection 96, 99-100, U.S. S.Ct. 1345. The by and Use Taxes on Sales Made Out-Of- Colorado Law makes no such geographic State Retailers —mentions out-of-state re See, e.g., distinction. Corp. Exxon v. Gov tailers, Supreme Court has cautioned Md., ernor 437 U.S. 98 S.Ct. title of a limit statute “[t]he cannot (1978) 57 L.Ed.2d 91 (concluding a statute plain meaning of the inter text. For facially did not discriminate prohibiting pretive purposes, it is of when it producers prod refiners of petroleum or light ambiguous sheds some word or operating ucts from retail service stations phrase.” Dep’t Yeskey, Pa. of Corr. in Maryland, though producers even no or U.S. 118 S.Ct. 141 L.Ed.2d state); refiners were located in Hunt (1998) (quotations and alterations Comm’n, Apple v. Wash. State Advert. omitted). Here, the words of statute 53 L.Ed.2d ambiguous. are not refers to text (1977) (finding a facially neutral law “[e]ach retailer does not collect Colo requiring apples “all closed containers of tax,” distinguishes rado sales which be sale, sold, shipped into the offered tween those entities that collect Colorado sales tax and those that Colo. grade appli- do not. See State bear no other than the (d)(1)(A), §§ 39-21-112(c)(I), Rev.Stat. grade (quotations cable or standard” (II)(A). rely will not We on the statute’s omitted)). above, explained As the Colora- plain limit the meaning title to of the text. distinguishes do Law between retail- those Moreover, Colorado ers sales and use when the Court facially a law do concluded discriminates and those that not.17 -, Wynne, - U.S. 17. DMA contends the Colorado Law fails omitted). consistency (quotations internal test. The test "looks to 191 L.Ed.2d of the tax been Com structure at issue to see whether The test has confined to dormant application by every its identical State in the review of state taxes. because, place inapplicable again, Union would interstate at a here commerce therefore disadvantage compared imposes re with commerce in- the Colorado Comptroller Treasury Md. v. quirement, trastate." a tax. actors, discrimination, “alter[] and the must state result facial In the absence of discriminate in-state nonetheless balance between competitive law state commerce its direct interstate against (quo- firms.” Id. at 1041 Kleinsmith, 571 at 1040 omitted).18 F.3d effects. See tations neutral its terms (noting “may a law interstate discriminate

and still 1) arguments on differential DMA’s Hunt, commerce”); treatment next consider 2434. therefore We matter, is incor- As DMA preliminary the Colorado Law. direct effects of (a) “any

rect that differential treatment” Is ii. The Law Not and out-of-state entities between in-state In Its Discriminatory violation the dormant establishes a Direct (b) Effects Clause, and may violate dor Three A Law should be viewed in isolation. “when its effect is mant Commerce Clause are instructive. principles over favor in-state economic interests Brown-Forman, First, has re out-of-state interests.” differential In this treat peatedly indicated adversely “the consideration is the inquiry, critical ment affect must local effect the statute both overall of com to the benefit of intrastate commerce Id. activity.” We conclude trigger dormant Commerce “ not favor in-state the Colorado Law In ‘dis regard, concerns. that not and is discriminato economic interests simply crimination’ means differential inry its effects. eco treatment of in-state and out-of-state “ that former nomic interests benefits the said, ‘The previously We have Waste, 511 the latter.” burdens Or. directly spoken to Supreme Court has not Kleinsmith, 1345; 99, U.S. at 114 S.Ct. showing required question of what (“Discriminatory laws are 571 F.3d at 1040 where, discriminatory effect prove ” treatment those that ‘mandate differential face,’ here, on its a statute is evenhanded inter of economic in-state Kleinsmith, 1040 (quoting F.3d at 571 ests that the former and burdens benefits Baldacci, v. Cherry Vineyard, Hill LLC ” Heald, (quoting v. latter.’ Granholm Cir.2007)). (1st But we 505 F.3d 36 460, 472, 1885, 161 544 125 S.Ct. U.S. claiming held discrimina party have “the (2005))). reason, that L.Ed.2d 796 For a put tion has the burden to evidence of treatment that benefits or does differential discriminatory effect on commerce that is not out-of-state interests is not affect probative, merely not color- ‘significantly ” dormant Commerce violation All. (quoting able.’ Id. 1040-41 States, Dakota Clause. North v. United 430 40 Gwadosky, Auto. v. F.3d Mfrs. 423, 439, Cir.2005)). 109 (1st 495 110 S.Ct. U.S. party claiming dis (1990) (“A regime regulatory L.Ed.2d 420 that crimination must show state which Government local and burdens out-of- so favors Federal benefits actors Exxon, Kleinsmith, plaintiff light “In Mr. Kleinsmith should 18. In we determined the presented sufficient to estab- produced had not evidence least that the work have evidence discriminatory effect he had lish because being performed was done he had now failed to show the state law at issue how attorneys Utah.” Id. at who are residents of competitive "alters the balance between resi- burden here. 1043. DMA bears similar attorneys.” dent and nonresident Id. at 1042.

1143 be considered to producers cannot discriminate of-state marketers had it.”). collect it. Id. 117 S.Ct. 811. The Court said the in-state and out-of- light of the In Colorado consumers’ state companies similarly were not situat- obligations or preexisting pay ed and did have to be treated they from a purchase goods taxes whether 298-99, 310, same. Id. at 117 S.Ct. 811. retailer, collecting non-collecting the re Here, non-collecting out-of-state retail- obligation give in porting itself does not similarly ers are not situated in- to the retailers a competitive advantage. state retailers, who must comply tax We further note the Court has upheld reporting requirements differential obli collection and gations apportionment formulas for are' not on the imposed out-of-state non- see, corporations, e.g., non-resident Under collecting retailers. Chamberlain, Typewriter wood Co. v. 254 Third, despite myopic DMA’s 113, 118-20, L.Ed. 165 view contrary, to the the Supreme Court (1920); Container Corp. Am. Fran has repeatedly stressed that laws are not Bd., 159, 169-70, chise Tax - isolation, to be understood but in their (1983), broader Lynn context. West Cream administrative mechanisms to facilitate tax ery, expressly the Court declined to “ana collection, see, e.g., Travis v. Yale & Towne lyze separately parts two integrated an Co.,

Mfg. 40 S.Ct. regulation,” and said it is “the pro entire (1920).19 L.Ed. gram simultaneously ... in burdens Second, equal requires treatment terstate commerce and fa discriminates in similarly those be treated alike. situated vor producers.” of local 512 U.S. at City Living See Cleburne v. Cleburne 2205; see also Ala. Dep’t of Ctr., 432, 439, (“CSX ”), Transp., Revenue v. CSX Inc. II (1985) (stating under the L.Ed.2d — —, U.S. S.Ct. 191 Clause, Equal Protection “all simi persons (2015) (“It is undoubtedly cor alike”). larly situated should be treated rect ‘tax’ (singular) that the must discrimi Conversely, disparate is not un treatment not nate —but it does discriminate it unless equal treatment or if discrimination the differently treats railroads from other sim subjects similarly of the treatment are not ilarly taxpayers situated without principle equal pro situated. This basic suffi Dakota, justification.”);20 cient North 495 law applies tection to whether a state law (“[T]he U.S. at 110 S.Ct. ques 1986 against discriminates out-of-state actors regulation tion a state whether discrimi relative in-state actors. Mo General against nates the Federal Government Corp. v. Tracy, tors 519 117 S.Ct. U.S. Rather, cannot be in viewed isolation. (1997), 136 L.Ed.2d 761 regulatory system entire upheld an should be ana exempt Ohio statute that gas lyzed natural whether it companies ed local distribution determine is discrimi (“LDCs”) regard from sales and use tax while out- natory with to the economic bur- Although 19. Travis involved a claim under the II was not a CSX dormant Commerce 20. Clause, case, Act, Privileges analyzing Clause but in the 4-R and the Su- Immunities from Court borrowed dormant Commerce preme Wynne recently Court in relied on Tra- precedent explain a law should be vis to resolve a claim under the it assessed in context determine whether Wynne, See Clause. 135 S.Ct. at 1799-1800 Dye (citing Id. at Gregg discriminates. 1143 Travis, 75, 79-80, (citing 252 U.S. at 472, 479-80, ing Query, Co. v. 228). (1932)). S.Ct. L.Ed. 1232 taxes, omitted)); (quotations making remit the Colorado Law’s that

dens result.” Query, Gregg Dyeing only impose Co. function to new notice and 479-80, L.Ed. responsibilities on out-of-state reporting action, (“What is is that state required that need not retailers in-state retailers another, agency one or or through whether perform. one, or more than through one enactment matter, initial we with disagree anAs with the restrictions of shall be consistent Department that out-of-state retailers’ There is no de the Federal Constitution. option collect remit sales having the and that the in mand that Constitution taxes makes the Colorado Law nondis any one stat put requirements shall its criminatory. unequivocally holds fit, them as it distribute sees ute. physi out-of-state retailers without result, totality, if the taken within cal presence the state need not power.”). the state’s constitutional tax. sales See helps determine context broader out-of- privileges competitive “alters the bal- whether regard, pos and the state retailers in-state and ance between they give up sibility might choose to Kleinsmith, F.3d at 1041 firms.” privilege comply rather than with omitted). Here, reporting (quotations Law make challenged Colorado does not designed are to increase requirements Bendix, the Colorado Law constitutional. preexisting obli- compliance with 893, 108 S.Ct. 2218. only to retailers that gations, apply required to comply not are otherwise Quill applies only to But the collection of tax collection and greater burden taxes, and use and the sales DMA not shown Colo- reporting. Law require collection discriminatory eco- imposes rado remittance of and use taxes. In- nomic burden out-of-state vendors stead, imposes reporting notice and obli- backdrop when viewed gations. Those obli- notice collecting tax collection re- retailers’ gations discriminatory they if And as discussed porting obligations. in- constitute “differential treatment of below, fully even if we limit our more state and out-of-state economic interests analysis to the notice re- comparative that benefits former and burdens the imposed collecting porting obligations latter,” Waste, 511 U.S. at Or. vendors, non-collecting DMA has thereby the com- “alter[] failed to show the Colorado Law unconsti- petitive balance between in-state and out- tutionally against interstate discriminates firms,” Kleinsmith, of-state 571 F.3d commerce. omitted). (quotations DMA has not produced significant probative es- evidence 2) Quill discriminatory effect tablishing discriminatory such treatment. the Colorado Law works a dis- Whether effect on interstate commerce criminatory 3) Comparative regulation Quill. reach of The Depart- turns the and DMA’s burden ment is not discriminato- contends comparative analy- if Even we limit our ry because retailers can either imposed regulatory requirements sis to the (a) comply with notice on in-state retailers and out-of-state retail- (b) requirements or and remit taxes ers, DMA has not demonstrated the Colo- like in-state retailers. DMA contends unconstitutionally rado Law discriminates argument Quill protects out- fails because against interstate commerce. having of-state retailers from to collect and taxes, to out of collecting provision addition section confin- trust, holding remaining them in liable ing withholding at source to the in- any use tax a for sales and due on transac- come of nonresidents is unsubstantial. - tion, 39-26-105, §§ see Colo.Rev.Stat. provision any That does not in wise in- 118(1), comply instate retailers must crease the burden the tax upon nonresi- including numerous requirements, obtain- dents, merely but recognizes fact that license; ing a calculating the state and toas them the state no imposes personal accounting any local tax due while for tax liability, and hence adopts a convenient filing return; exemptions; remitting the it.”). substitute for State; maintaining tax various point any DMA not does evidence §§ records. See Colo.Rev.Stat. 39-26-101 establishing notice and reporting to -129. requirements non-collecting out-of- reporting require- Of these notice and state retailers are more burdensome than ments, compelled in-state retailers can be requirements the regulatory in-state re- to collect and remit while sales taxes non- tailers already face. DMA Because collecting out-of-state cannot. retailers not carried its signif- burden and identified Quill, 112 S.Ct. 1904. icant probative discrimination, evidence of But not establish that out-of- Kleinsmith, see 571 F.3d at it has regulatory state retailers are free from all not established the Colorado Law dis- requirements only tax collection and lia- — criminates in direct effects. (“Un- bility. See id. at Hess, ... der Bellas [without vendors presence in physical state] are free Because we conclude the Colorado Law state-imposed from duties to collect sales discriminatory, is not “it is virtually [not] added)). (emphasis and use taxes.” invalid,” se per and it need survive As recently Court ex- Waste, scrutiny. strict Or. 511 U.S. at II:

plained CSX 114 S.Ct. 1345. State laws that are not ordinary English does not accord with discriminatory must nevertheless not un- usage say a tax discriminates duly burden interstate commerce. See against a rail carrier if a rival who is Davis, 128 S.Ct. 1801. exempt that tax pay from must another comparable tax from which the rail car- Undue D. Burden true, rier is If exempt. that were both unduly Whether a state law burdens competitors could claim disfa- separate inquiry commerce is a against vored-—discriminated —relative from whether state law discriminates negative each other. Our interstate commerce. In proposition eases endorse the explained that an tax first parties additional on third step of justify Complete an Auto discriminatory otherwise test —whether a alternative, tax. We think that an “is to an applied activity tax with a sub- roughly equivalent possible is one the taxing stantial nexus with State” —the justification disparity that renders a tax Quill step on which the decision was nondiscriminatory. based, the reach taxing “limit[s] of state (citations authority so as to ensure state taxa- omitted); S.Ct. at 1143 see Travis, unduly tion does not burden interstate also 252 U.S. at 40 S.Ct. 228 (“The that an commerce.” contention unconstitutional 504 U.S. at discrimination noncitizens arises 1904. S.Ct. in Regulations inextricably are related court decided the undue

The district Quill’s the basis that kind to con- purpose issue on and the burdens burden basis, Quill.” DMA limits its bright-line applied. rule in Id. On that the demned Quill to and also argument undue burden im- court the Colorado Law determined Act is the discrimi- states “[b]ecause com- posed an undue burden on interstate natory, generally applied the to even- test merce. Id. at *9. regulations plainly apply does not

handed case,” Br. n. 8 Aplee. Supp.

in this at 23 Analysis 2. Pike, at (citing Quill solely DMA on its undue relies 844).21 address undue bur- We therefore claim, burden and the district court limited Quill on and do not reach a den based Quill. undue analysis its burden to We Pike, balancing at analysis under conclude that the Colorado Law does not 142, 90 S.Ct. 844. impose an undue burden on interstate Quill light is not binding commerce.22 1. District Court Order Supreme and deci- Court Tenth Circuit determined the district court Colo- only construing narrowly apply sions to unduly rado Law burdens interstate com- the duty to and remit taxes. of the dormant violation Com- Quill earlier, As limited to explained Quill merce Clause. It noted counsels the context of In narrow tax collection. looking beyond language the formal of a II, Brohl the Court not considering practical its effect. statute Quill establishing the characterized 1904. See principle “may require that a state not Although narrowly itself focused on physical lack a presence retailers who taxes, the district not- sales and court the to collect these on behalf of State taxes “require[s] that the Law out- ed Colorado (em- Department,” the at 1127 maintain, gather, of-state retailers added), phasis it also concluded that the information, provide and to notices report reporting requirements notice to their Colorado customers and to the Law do not a form of constitute purpose sole [Department],” “[t]he collection, id. at As the 1130-31. requirements is to the col- these enhance analy- stated in TIA repeatedly its by of use the State lection taxes of Colora- sis, Huber, require Law do.” 2012 WL at *8. As result, assess, levy, court “that out-of-state retailers to district concluded by imposed the Act and the collect use tax on behalf of Id. Colorado. burdens footnote, argues supplemental DMA same Colora- DMA’smotion to file briefs after 21. testimony expert do’s shows burdens im- case was remanded Court, non-collecting provide posed parties on we "directed] retailers —"an esti- briefing $25 $60 million Commerce Clause claims mated million in the first full annually any parties ... issues consider year, $10 other million thereafter”—(cid:127) pertinent appeal “grossly compared to this on remand.” Direct excessive” to the ini- Brohl, (10th Mktg. No. at *1 $12.5 Ass'n tial annual revenue of million estimated 13, 2015) (unpublished) (emphasis Apr. Cir. Aplee. to result from Colorado Law. added). Supp. Br. at 8. The district 23 n. court did not analyze claims under the DMA’s Pike balanc- test, ing single and DMA’s sentence is inade- We note that the Colorado state district quate present balancing argument a Pike court that addressed whether the Colorado appeal. imposes DMA also "refers the Court” to an undue burden under argument Mktg. DMA’s came Direct section of brief filed to the same conclusion. Ass’n, 13CV34855, granted id. 2 n. but when we No. 28-30. (“The keyed TIA is to the acts of at 1131 IV. CONCLUSION assessment, levy, and them- collection Applying record, the law to the we hold selves, notice and and enforcement of the Colorado does not violate these.”). requirements reporting is none dormant Commerce Clause because it does The determined “the notice and re- not discriminate unduly or burden porting requirements precede steps interstate commerce. We therefore re ” ‘collection,’ part in be- ‘assessment’ verse the granting district court’s order each “[a]fter cause of these notices or re- summary judgment and fur remand for ,to filed, ports the State still needs take ther proceedings consistent opin with this further action to assess the use- taxpayer’s ion. by noting We conclude liability payment and to collect from Quill in Court’s observation Congress him.” Id.23 power” holds the “ultimate and is “better result, Quill As —confined qualified “whether, to resolve” the issue of of sales sphere and use tax collection—is when, what and to extent the States controlling. logic not The Brohl II Court’s burden interstate with a duty [retailers] any I reversing precludes for Brohl other use taxes.” [sales and] TIA panel’s result. reversed the deter 318, 112 1904.25 precisely mination because it determined in sought litigation the relief —invali GORSUCH, Judge, concurring. Circuit dating Colorado Law—would not “en suspend assessment, join, or restrain the agree I everything the court has levy any or collection of tax under State said and write few acknowledge a Id. at 1127 (quoting .law.” U.S.C. points my additional that have influenced 1341). § holding in II cannot Brohl thinking in this case. squared with the district court’s deter past order legal our decisions often mination that the functional Colorado Law present control the outcome of disputes. taxes, ly compels the collection of see Hu law, sug- Some criticize this feature of our ber, 2012 WL at *8. The Court’s gesting respect judicial for precedent conclusion Brohl II controls. DMA’s judges with invests dead too much authori- II success Brohl leads to demise of ty They contend, too, over citizens. living argument its undue burden here. judges it invites current to avoid Having determined is not control- thinking for themselves and to succumb case, ling identify in the instant cannot we “judicial instead in Je- somnambulism.” any good sponte reason to sua extend the Frank, rome Law and the Modern Mind bright-line rule of to the notice and But in our legal judges order requirements reporting distinguish politicians by themselves from Law. Because the Law’s notice is, they apply the oath take to law as reporting requirements regulatory reshape they not to the law as it to wish subject and are not to the rule bright-line taking judicial judges be. And in this ends the oath inqui- undue burden ry.24 necessarily profess do not a conviction that Department "seriously lenge summary 23. The did judgment con- its motion requirements arguments appeal. tend” notice and levy. constituted Id. grant 25.We the motions for leave to file ami- point, requirements regulatory 24. At this ci and the motion for leave briefs to file only satisfy requirements, process joint reply support due must of the motions for leave process and DMA has not made a due chal- to file briefs. amici decided, dissenting Mktg. rightly part part); is but Direct every precedent —Brohl, —, a that profess do conviction v. they must and Ass’n U.S. 135 S.Ct. power (2015) (Ken that failed to attach justice system 1124, 1134-35, a 191 L.Ed.2d 97 similar- precedent, to one that surrendered J., But, concurring). the nedy, plaintiffs wildly different fates ly persons situated to us, Quill remind remains on the books' and judges, of at the hands unconstrained duty-bound are to it. about we follow And worthy of the hardly be name. would plaintiffs surely right: that much the are Quill obliged are to out we follow of fideli appeal a claim At of this is the center fact, precedent our ty system to of whether or precedent. the power about the oper- profess not we in the in which we asked to confidence decision whole field doc- may ate commerce clause a today itself. For while court in rare —dormant to an artifact of be said might circumstances overrule a decision of its trine — all, judicial After the Com- precedent. devise, court own course never' I of the is found Article the to a usurp power overrule decision of it the grants Congress Constitution Supreme the Court. adopt regulating laws inter- authority to plain enough, With that much ques- Meanwhile, commerce. in dormant exactly tion remains what requires Article III courts commerce clause cases (reading) us. Later courts faced dormant) (anything but have claimed (writing) guidance from earlier courts down state laws even power strike some to questions in- sometimes face how best to direction. congressional in the absence terpret guidance. that And parties See, Treasury Md. e.g., Comptroller of today wildly before us offer ac- different — —, Wynne, U.S. Quill. narrowly, counts of everyone Most (2015) (Scalia, J., 1808, 191 L.Ed.2d 813 Quill’s agrees holding that forbids states Camps Newfound/Owatonna, dissenting); from imposing sales and use collection Harrison,

Inc. v. Town of physical on that a pres- duties firms lack 614-17, 1590, 137 L.Ed.2d 852 117 S.Ct. everyone agrees ence in-state. And J., (Thomas, dissenting). And the go law doesn’t far. quite Colorado’s attempt topple in this case plaintiffs’ requires While in-state brick- al- statutory depends scheme Colorado’s and-mortar firms to and use entirely power most claim about the taxes, it mail asks out-of-state order of a dormant commerce clause deci- single supply internet firms de- reports Dakota, Quill Corp. sion: v. North signed enable the state itself to collect Indeed, question. taxes in suggests statutory scheme careful- Everyone acknowledges before us consciously ly stops (just) short all among most contentious of Quill’s doing holding what forbids. Every- clause dormant commerce cases. note, plaintiffs hardly But that is acknowledges one before us that it’s been obligation precedent the end of it. Our many years of criticism over target obliges only prior us to abide case’s including many from many quarters, from holding but also to careful afford consider- Maj. members of the Court. See (the “ratio reasoning ation deciden- n. 14 Op. (citing scholarly litera- di”) surely And our ture); which rests. J., prior reasoning (Scalia, respect decision’s concurring part 321-33, must be its zenith in the id. at when decision concurring judgment); J., (White, concurring Court. In- S.Ct. 1904 emanates from deed, usually our court has that it will grown up said interests that had ance around ratio) (not just Indeed, even to dicta it. expressly defer the Court acknowl See, in Supreme edged found Court decisions. very that Bellas Hess might well States, 774 e.g., Tokoph v. United F.3d differently have been decided under “con Cir.2014). (10th 1300, 1303-04 And build- temporary jurispru Commerce Clause insight plaintiffs argue this that ing and like Complete dence” cases Auto Quill’s ratio, if not respect holding, Transit, for Brady, 274, Inc. v. 430 U.S. 97 requires us to strike down Colorado’s law. (1977). Quill, 311, 1076 504 S.Ct. U.S. at all, note, plaintiffs After Colorado’s 1904; Hamilton, Billy Re cf. regulatory scheme to facilitate seeks the membrance Things Not So Past: The by requir- of sales and taxes collection Story Quill Decision, Behind the 59 St. satisfy out-of-state ing firms various (2011). Mag. Tax Notes 807 The Court reporting obligations and notice expressly acknowledged also that states —burdens severity in their to those comparable asso- constitutionally impose can regula and underlying with collecting ciated taxes tory burdens on out-of-state firms that are themselves. comparable more or less to sales and use Quill, tax collection See duties. 504 U.S. a but argument, my

It’s reasonable like 311-12, 314-15, 112 S.Ct. 1904. And the colleagues I believe a there’s reason it’s expressly acknowledged Court that this wrong. exceptional The reason lies in the dichotomy (impermissible) sales Quill’s narrowness of If the ratio. Court —between and use tax obligations collection (per suggested had that state laws missible) comparable tax and regulatory commanding firms to pretty burdens —is “artificial” and “formal sales and use taxes dormant violated com- this, Id. respect istic.” Given all they clause doctrine because are too Quill’s reasoning surely burdensome, means we must agree then I would we respect the Bellas Hess rule it obliged be retained. would to ask whether Colora- just But as surely it means we are comparable under imposes do’s a burden. obligation no Quill’s to extend that rule to compa But ratio doesn’t in the sound com- regulatory obligations. rable tax and parability of burdens —it instead and all respect precedent, itself about the due fact, In this much is itself a matter of about the doctrine of decisis and stare precedent many for this court others respect due still earlier decision. See already nothing have held Quill, 317, 1904; 504 U.S. at S.Ct. 112 id. regulatory forbid states from imposing 320, (Scalia, J., 112 S.Ct. 1904 concur- comparable severity tax duties of to sales ring part concurring in the judg- See, and use tax duties. e.g., collection ment); Brohl, (Kennedy, 135 S.Ct. at 1134 Advert., Giani, Target Am. Inc. v. 199 J., concurring). (10th 1241, Cir.2000), F.3d 1255 cert. de nied, 811, 34, 531 121 S.Ct. This proves distinction decisive. Some (2000); L.Ed.2d 14 Corp. KFC v. Iowa years Quill, before in National Bellas Revenue, 308, Hess, Dep’t 792 N.W.2d Inc. 324-28 Department v. Revenue — (Iowa denied, Illinois, 2010), —, cert. 753, 1389, 386 U.S. S.Ct. 97, 181 (mem.); (1967), L.Ed.2d 26 L.Ed.2d 505 Court Revenue, Capital Comm’r One Bank v. impose held states could not use tax 76, (2009), 453 Mass. collection duties on 899 N.E.2d 84-86 out-of-state firms. denied, openly Court cert. 557 U.S. S.Ct. reconsidered (2009); Tax ultimately decision chose retain its 174 L.Ed.2d 553 Comm’r v. N.A., Bank, protect rule —but did so the reli- MBNA Am. W.Va. (2006), afoul principle denied rado’s law runs 232-34 cert. 640 S.E.2d Servs., N.A. v. Tax may sub FIA Card states not discriminate out-of- nom Comm’r, firms, principle often associated (2007). Creamery, Healy, Inc. Lynn with West 129 L.Ed.2d prec rare for And the extent that there’s highly “distinguished” as edents to suffer anything that’s uncontroversial about dor- unprece it isn’t Hess—but fate Bellas jurisprudence it mant commerce clause ago Years Take baseball. dented. anti-discrimination may be Holmes, principle, through the Su Justice speaking for even critics dormant commerce effectively im held baseball preme it often laws and clause doctrine endorse even mune from the federal antitrust reasoning they suggest might textually “exhibition[ ] so that it find a more did crossing teams by professional in base ball” home other constitutional comfortable involve “commerce state lines didn’t E.g., Newfound, 520 provisions. Camps Club States.” Federal Baseball among the J., 610, (Thomas, 117 S.Ct. 1590 U.S. Balt., League v. Nat’l Inc. dissenting). Prof'l 208-09, Clubs, 42 259 U.S. Baseball any But claim of discrimination in this (1922). Since then S.Ct. 66 L.Ed. 898 rejected. ha- easily plaintiffs case is recognized Court has showing to notice ven’t come close offering “exhibitions” organizations other places burdens Colorado engage in interstate in states do various out-of-state mail order and internet retail- subject and are to antitrust commerce compare unfavorably to the ers adminis- Shubert, E.g., United States v. scrutiny. imposes trative burdens the state on in- 230-31, S.Ct. brick-and-mortar retailers must who though long L.Ed. 279 But If anything, collect sales and taxes. reasoning of Federal rejected since by asking us strike down Colorado’s Baseball, Supreme Court has still chor law, mail order internet continuing holding sen to retain itself— comparable retailers don’t seek treatment effectively immune from baseball rule rivals, their in-state brick-and-mortar laws, if of re now out antitrust treatment, they seek more favorable spect the reliance interests the Federal competitive advantage, judicially a sort of par engendered decision in that Baseball sponsored arbitrage “tax opportunity or Yankees, industry. ticular Toolson v. N.Y. shelter.” Inc., J., (White, concurring part curiam). And, L.Ed. (per dissenting part). course, has since base Congress codified exemption. 15 U.S.C. special ball’s See course, Of the mail order and internet § it is rule now 26b. So that the baseball that, respond plaintiffs might retailer itself, having lost applies only baseball propriety, they whatever its are entitled to every game played. it has away competitive advantage over their brick- competitors and-mortar thanks to Bellas point at this doesn’t

Accepting Quill. Hess and And about that much to declare law un- require us Colorado’s I (again) cannot It is a fact—if disagree. constitutional, question remains wheth- analytical oddity Hess an Bellas er com- principle some other dormant —that juris- branch of dormant commerce clause might. their merce clause doctrine For guarantees competitive benefit part identify prudence one other plaintiffs (only) potential candidate, simply that Colo- to certain firms because of the or- suggesting ganizational they choose to form form assume around them or erode over time (e.g., while the mainstream dormant com- Louisiana, Montejo jurisprudence clause associated with 2079, 173 (2009)). Lynn prevent- West is all about Creamery Quill’s very And reasoning ratio de- —its ing discrimination between firms.1 And deliberately designed cidendi —seems plaintiffs might complain well that the ensure precedential that Bellas Hess’s is competitive they enjoy advantage will be land would would, never but expand if diluted our decision In- this.case. anything, away wash with the tides of deed, my if and I colleagues are correct time. may impose states notice and report- I respectfully concur. ing burdens on mail order and internet retailers comparable to the sales and use they

tax collection obligations impose on (all?)' firms, many

brick-and-mortar states

can be expected to follow Colorado’s lead

and enact statutes like one now before

us. me,

But this result too seems to as it my does to colleagues, entirely consistent SCHAFFER, Diana Sue with the all, demands of After precedent. Plaintiff-Appellant, by admittedly reinforcing an “formalistic” and “artificial” distinction between sales CORPORATION; LAKE SALT CITY B. obligations

and use tax collection and other Cameron, Gail in her individual ca comparable duties, regulatory and tax pacity; Ashley Hollingshead, impose comparable invited states to her capacity; individual TIMOTHY way, Quill might duties. In this be said to STUMM, capacity, expiration have attached a sort his individual date for Defendants-Appellees. mail order and internet vendors’ reliance by interests on Bellas rule perpet- Hess’s No. 14-4112. uating its rule being for the time while also encouraging ways states over time to find United States of Appeals, achieving comparable results through Tenth Circuit. different way means. In this too 2, 2016. March perhaps hardly unprecedent- unusual but ed, for precedential while some islands

manage indefinitely to survive even when by contrary (e.g.,

surrounded a sea of Baseball), good

Federal many others

disappear when reliance interests never that, oddity An anything, grow if majority seems to lars in sales in 2014 while vast day, thought for if it were ever small businesses no online recorded sales at mail-order were small retailers businesses Amazon.com, Inc., Report all. See Annual (constitutionalized, less) meriting protec- no (2014); Lunka, Ryan SEC Form 10-K at 17 tion from behemoth brick-and-mortar enter- Retail, Retail Data: About 100 Stats eCom prises, thought evaporated must have 9, 2015), Marketing Digital (July merce & long ago. Anecdotal evidence to be sure but https://www.nchannel.com/blog/retail-data- leader, today's consider: e-commerce retail ecommerce-statistics/. Amazon, nearly ninety recorded billion dol-

Case Details

Case Name: Direct Marketing Association v. Brohl

Court Name: Court of Appeals for the Tenth Circuit

Date Published: Feb 22, 2016

Citation: 814 F.3d 1129

Docket Number: 12-1175

Court Abbreviation: 10th Cir.