15 Or. Tax 335 | Or. T.C. | 2001
Decision rendered May 17, 2001.
Appeal pending. *337
Plaintiff TVKO (TVKO) seeks a declaratory judgment that ORS
On March 13, 1999, TVKO broadcast a television program that included a heavyweight championship boxing match held in New York City. TVKO distributed the program to cable operators for transmission on a pay-per-view basis. Four thousand eight hundred four orders were received in Oregon for the program. By letter dated July 8, 1999, the Oregon Boxing and Wrestling Commission demanded that TVKO pay $14,450.46 as a gross-receipts tax on the boxing event. TVKO declined on the grounds that ORS
Statutory Scheme
The legislature has found that:
*338"* * * [T]he boxing and wrestling industry in this state should be regulated in order to protect the best interests of both contestants and the public." ORS
463.018 (1).
Chapter 463 contains the statutes regulating and taxing the boxing and wrestling industry. The relevant provisions for this case are set forth below, beginning with ORS
"A person who holds the distribution rights to a pay-per-view telecast of a boxing or wrestling event that occurs within or outside this state and who sells the ability to receive the telecast to a person who charges an admission for the right to view the telecast in this state."
"No person shall act as a promoter of either boxing or wrestling until the person has been licensed pursuant to this chapter." ORS
"Any person licensed under this chapter who holds distribution rights to a pay-per-view telecast of a boxing or wrestling event that occurs within or outside this state and who sells the ability to receive the telecast to a person who charges an admission fee for the right to view the telecast in this state shall within 72 hours after an event:
"(a) File with the superintendent a written report on a form provided by the superintendent. The report shall include the number of orders sold to persons charging an admission fee for the right to view the telecast in this state and the total gross receipts from such sales.
"(b) Pay a tax equal to six percent of the total gross receipts for a sale. The tax must be paid by cashier's check or money order payable to the department and attached to the report required under paragraph (a) of this subsection." ORS
463.320 (4).
In summary, because taxpayer held distribution rights for a pay-per-view telecast of a boxing match, taxpayer is a "promoter" who must be licensed, and as a licensee must pay a tax on the gross receipts from sales in Oregon.
The parties agree that the Tax Court has jurisdiction over TVKO's claim that ORS
ORS
"* * * the tax court shall be the sole, exclusive and final judicial authority for the hearing and determination of all questions of law and fact arising under the tax laws of this state. * * *" (Emphasis added.)
That subsection also lists a number of specific state statutes, such as ORS chapter 462 relating to racing taxes, that do impose taxes but are expressly identified by the legislature as "not tax laws of this state." ORS
1,2. The jurisdiction conferred by ORS"Except as permitted under section 2, amended Article VII, Oregon Constitution, this section and ORS
305.445 , no person shall contest, in any action, suit or proceeding in the circuit court or any other court, any matter within the jurisdiction of the tax court."
"Whenever it appears that any person has violated or is threatening to violate any of the provisions of this chapter or of the rules adopted under this chapter, the Attorney General at the request of the Superintendent of State Police may cause a civil suit to be instituted in the circuit court for injunctive relief to restrain such person from continuing the violation." (Emphasis added.)
By providing for injunctive relief to be obtained in the circuit court, did the legislature indicate an intent that jurisdiction ofall questions under chapter 463 should be located in the circuit court?
In construing a statute, the court first looks to the text and context of the law. PGE v. Bureau of Labor and Industries,
Some sections within chapter 463 are disparate in nature. For example, ORS
If the legislature had wanted to restrict jurisdiction over the tax provisions of the boxing and wrestling statutes, it could have amended ORS
When legislative history does not provide clarification, the court then attempts to determine what the legislature would have done had it thought of the problem. PGE,
By providing that the superintendent can request injunctive relief, the legislature focused on the regulatory provisions of ORS chapter 463. For regulatory provisions, injunctive relief is appropriate where after-the-fact criminal prosecution is inadequate. Injunctive action may prevent repeated violations in cases of unlicensed conduct, especially when the conduct may endanger public health or safety. See, e.g.,Martin,
5. That the legislature intended the Tax Court to have jurisdiction over the tax provisions of ORS chapter 463 is the more plausible and reasonable conclusion. "It is appropriate to reject a proposed construction that leads to absurd results in favor of a construction that remains faithful to the language of the statute but leads to no such consequence." J.L. Ward Co. v. Landscape Contractors Board,
Defendants contend that the Tax Court does not have jurisdiction over TVKO's claims under ORS
The licensing requirement of ORS
6. In Jarvill v. City of Eugene,
"* * * On the other hand, a precondition to taxation does not arise under the tax laws if jurisdiction to decide that precondition has been affirmatively located in another court or if a decision on the precondition has substantial non-tax consequences." Sanok v. Grimes,
294 Or. 684 ,697 ,662 P.2d 693 (1983), aff'd306 Or. 259 (1988).
In Sanok, the Oregon Supreme Court held that tort claims cannot be combined with tax claims because the tort claims are affirmatively located outside the Tax Court's jurisdiction.
Here, TVKO is challenging the validity of a licensing statute and its administrative rule. There is no question that jurisdiction of that statute is in the circuit court. Also, the statute and the rule are not a precondition for determining liability for taxation. There is also no doubt that a nonlicensed promoter would be as liable for the gross-receipts tax as a licensed promoter. Further, a decision concerning the constitutionality of ORS
First Amendment Analysis
The First Amendment to the United States Constitution states in part:
*344 7. That prohibition on government action is made applicable to the states by virtue of the Fourteenth Amendment to the United States Constitution. Grosjean v. American Press Co.,"Congress shall make no law * * * abridging the freedom of speech, or of the press * * *."
"Cable television provides to its subscribers news, information, and entertainment. It is engaged in `speech' under the First Amendment, and is, in much of its operation, part of the `press.' * * *" Leathers v. Medlock,499 U.S. 439 ,444 ,111 S.Ct. 1438 ,113 L.Ed.2d 494 ,502 (1991) (citations omitted).
As one of the forms of media protected by the First Amendment, if a tax is imposed on cable television or some portion of cable television alone, the tax is suspect.
"* * * [D]ifferential taxation of First Amendment speakers is constitutionally suspect when it threatens to suppress the expression of particular ideas or viewpoints. Absent a compelling justification, the government may not exercise its taxing power to single out the press. * * *" Id. at 447,8. In this case, the licensing requirements and taxes are imposed upon telecasts or transmissions of only boxing or wrestling matches. Where taxes are imposed on particular content, those taxes are subject to strict scrutiny. See Turner Broadcasting System v. FCC,113 L.Ed.2d at 503 (citations omitted).
"* * * Our precedents thus apply the most exacting scrutiny to regulations that suppress, disadvantage, or impose differential burdens upon speech because of its content. * * *" Id. (citations omitted).
Under the strict-scrutiny test, the tax of ORS
"A statute is presumptively inconsistent with the First Amendment if it imposes a financial burden on speakers because of the content of their speech. * * *" Simon *345 Schuster v. Crime Victims Bd.,502 U.S. 105 ,115 ,112 S.Ct. 501 ,116 L.Ed.2d 476 ,486-87 (1991) (citations omitted).
The state has a legitimate interest in regulating boxing matches in Oregon. It may enact such laws, rules, or regulations as it deems necessary or good to protect the public's health and welfare. However, the statutes in question seek to do more. ORS
Defendants assert that boxing is not speech but is a form of conduct not intended to convey any message. Defendant therefore concludes that the televising of such conduct is not subject to the same standards as speech. To quote an outdated but pertinent thought, "the medium is the message." See Paul Levinson, Digital McLuhan, 35 (1999). What Defendants seek to regulate and tax is not the event but communications of and about the event. That is no different than if a newspaper or magazine had printed pictures of the boxing match.
"* * * For the power to prohibit or to regulate particular conduct does not necessarily include the power to prohibit or regulate speech about that conduct. * * *" New Orleans Broadcasting v. U.S.,527 U.S. 173 ,193 ,119 S.Ct. 1923 ,144 L.Ed.2d 161 ,180 (1999) (citations omitted).
Defendants also contend the tax is narrowly imposed and, like a narrowly-tailored restriction, passes constitutional muster. Defendants argue that the tax does not raise revenue for the general fund, but "instead pays for the regulation of the industry in which taxpayer does business." (Defs' Reply to Ptf's Opp'n to Cross-Mot for Summ J at 9.) Defendants err in failing to recognize that TVKO is not in the business of promoting boxing or wrestling matches in Oregon. Defendants' own brief asserts:
"Plaintiff, however, has never broadcast an event from Oregon, has not alleged that it plans to broadcast an event *346 from Oregon, has not held a production meeting in Oregon, and does not allege that it plans to hold any production meetings in Oregon." (Id. at 2.)
Thus, by Defendants' own assertions, TVKO's only connection with Oregon is selling or transmitting television images and sound of a boxing match that took place outside of Oregon. Clearly, Oregon has no jurisdiction to regulate boxing matches held outside the state. Therefore, with regard to Oregon and such boxing matches, TVKO is not in the business of providing boxing or wrestling matches but is in the business of televising programs. Notwithstanding the state's attempt to define a promoter to include holders of television distribution rights, it cannot change the facts.
9. In summary, a tax imposed on television transmissions of boxing matches held outside of Oregon violates the First Amendment of the United States Constitution. Boxing matches that take place in New York, the Philippines, or Africa are clearly beyond Oregon's jurisdiction to regulate. The televising of such a boxing match is not promotion of boxing, subject to regulation by Oregon. The state's imposition of a tax on such can only be intended to regulate communication, something the state may not do in the absence of a compelling interest. It has shown no such interest. Now, therefore,
IT IS ORDERED that Plaintiff's Motion for Summary Judgment is granted in part and denied in part, and
IT IS FURTHER ORDERED that Defendants' Cross-Motion for Summary Judgment is denied. Costs to neither party.