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  • Cook County's Motion To Dismiss in Sweetened Beverage Tax Case

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    The Daily Line
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    Motion to dismiss plaintiffs' verified complaint for injunctive relief and for declaratory judgment, filed June 29, 2017 by the Cook County State's Attorney.

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    Cook County's Motion to Dismiss in Sweetened Beverage Tax Case

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    Motion to dismiss plaintiffs' verified complaint for injunctive relief and for declaratory judgment, filed June 29, 2017 by the Cook County State's Attorney.

    Авторское право:

    © All Rights Reserved
    Скачайте в формате PDF или читайте онлайн в Scribd
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    17 просмотров28 страниц

    Cook County's Motion To Dismiss in Sweetened Beverage Tax Case

    Загружено:

    The Daily Line
    Motion to dismiss plaintiffs' verified complaint for injunctive relief and for declaratory judgment, filed June 29, 2017 by the Cook County State's Attorney.

    Авторское право:

    © All Rights Reserved
    Скачайте в формате PDF или читайте онлайн в Scribd
    Отметить как неприемлемый контент
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    IN THE CIRCUIT COURT OF COOK COUNTY, ILLINOIS COUNTY DEPARTMENT, LAW DIVISION TAX & MISCELLANEOUS REMEDIES SECTION ILLINOIS RETAIL MERCHANTS | ASSOCIATION; BERKOT, LTD. D/B/A | BERKOT SUPER FOODS; FAIRPLAY, INC. | D/B/A FAIRPLAY FOOD: | CHIQUITA FOOD MARKET, INC. D/B/A | | | FOOD MARKET-LA CHIQUIFA & TAQUIERIA: 17 50596 LEAMINGTON FOODS, INC.; TONY’S: FINER FOODS ENTERPRISES, INC. D/B/A Hon. Daniel Kubasial TONY’S FRESH MARKET; VALLI PRODUCE, INC.; AND WALT'S | LAGESTEE, INC. D/B/A | | WALT’S FOOD CENTERS, Plaintiffs, v. REVENUE; ZAHRA ALI, as Director of THE COOK COUNTY DEPARTMENT OF | the Cook County Department of Revenue; | and the COUNTY OF COOK, | Defendants. | COOK COUNTY'S 2-615 MOTION TO DISMISS PLAINTIFFS’ VERIFIED COMPLAINT FOR INJUN' RELIEF AND FOR DECLARATORY JUDGMENT. Defendants the Cook County Department of Revenue, Zahra Ali, as Director of the Cook County Department of Revenue; and the County of Cook (hereafter collectively the “County”), by their attorney, KIMBERLY M. Foxx, State’s Attomey of Cook County and her Assistant State’s Attomeys, SISAVANH B. BAKER and JAMES S. BELIGRATIS, Assistant State’s Attorneys, submit the following motion to dismiss Plaintiffs’ Verified Complaint For Injunctive Relief And For Declaratory Judgment (“Complaint”) brought pursuant to Section 2-615 of the Code of Civil Procedure (735 ILCS 5/2-615) state as follows: BACKGROUND On November 10, 2016 the County enacted the Sweetened Beverage Tax Ordinance, (“Ordinance”) Section 74-850 ef seg. of the Cook County Code of Ordinances. ‘The Ordinance became effective on March 1, 2017 and requires the tax imposed thereby to be collected beginning July 1, 2017. ‘The tax is imposed at the rate of $0.01 per ounce on the retail sale of all “sweetened beverages” in Cook-Gounty: See Section-74-852(a). The ultimate-incidence of and liability for payment of the tax is imposed upon the purchaser of the sweetened beverage, Section 74-852(b). On June 27, 2017 Plaintiffs filed their two-count Complaint in the instant action. Count I seeks a declaration that the Ordinance violates Article IX, Section 2-of the Ilinois Constitution, commonly referred to as the Uniformity Clause, while Count I seeks a declaration that the Ordinance is unconstitutionally vague. Plaintiffs also filed an emergency motion for a temporary restraining order and preliminary injunction and a memorandum (“Memorandum”) in support thereof. ARGUMENT A section 2-615 motion attacks the legal sufficiency of a complaint by alleging defects on its face, Urbaitis v. Commonwealth Edison, 143 Ill. 2d 458, 475 (1991). In ruling on a section 2- 615 motion to dismiss, the Comt must accept as true all well-pleaded facts in the complaint and all reasonable inferences which can be drawn therefrom. McGrath v, Fahey, 126 Ill. 2d 78, 90 (1988). In making this determination, the Court is to interpret the allegations of the complaint in the light most favorable to the plaintiff. Jd. The question presented by a motion to dismiss a lure to state a cause of action is whether sufficient facts are contained in the complaint for f pleadings which, if established, could entitle the plaintiff to relief. Urbaitis, 143 UI. 2d at 475. A cause of action should not be dismissed on the pleadings unless it clearly appears that no set of ‘facts can be proved under the pleadings which will entitle the plaintiff to recover. Bryson v. News Am. Publs., 174 Ml. 24.77, 86 (1996). Under the Illinois Constitution, except as limited by article VII, section 6 of the constitution, a home rule unit such as the County “may exercise any power and perform any function pertaining to its government and affairs including, but not limited to, the power to regulate for the protection of the public health, safety, morals and welfare; to license; to tax; and to incur debt.” Ill. Const. 1970, art. VII, § 6(a). The Illinois Supreme Court has consistently held that Article VII, §6(a) confers upon home rule units a broad taxing power, noting that “the framers of the 1970 Constitution considered the power to tax as essential to effective home rule and intended that power be broad.” Town of Cicero v. Fox Valley Trotting Club, Inc., 65 TM. 2d 10, 17 (1976), citing Mulligan v, Dunne, 61 Ill, 2d 544, 548 (1975). Of course, the General Assembly “may ..., preempt the exercise of a unit of local government's home rule powers by expressly limiting that authority.” Palm v. 2800 Lake Shore. Drive Condominium Association, 2013 IL 110505, { 31 (citing Sehilferstrom Homes, Inc. v. City of Naperville, 198 Il. 2d 281, 287 (2001)). Under article V1l, section 6(h), “[t]he General Assembly may provide specifically by law for the exclusive exercise by the State of any power or function of a home rule unit other than a taxing power.” lll. Const. 1970, art. VIL, § 6(h). (Emphasis supplied.) With respect to the power to tax, “[tJhe General Assembly by a law approved by the vote of three-fifths of the members elected to each house may deny ot limit the power to tax....” Ill. Const. 1970, art. VII, § 6(g). 1 The Ordinance pertains to the County's “government and affairs” under Article VIL, Section 6(a) of the Constitution, In Palm v. 2800 Lake Shore Drive Condo Ass'n, 2013 IL 110505, the Ilinois Supreme Court set forth @ test to determine whether a matter pertains to a home rule unit’s government and affairs and is subject to legislation: (1) whether the subject pertains to local government and affairs under article VII, Section 6(a) or, instead, is the subject of a vital state policy, and then, if the subject pertains to local government, (2) whether the legislature expressly preempted the local exercise of power. Palm, 2013 IL 110505 4 36, Applying Palm, the Ordinance pertains to the County's “government and affairs” for purposes of Section 6(a). For purposes of section 6(a), what must pertain to a home rule unit's “government and affairs” in a case involving a home rule tax is the power to tax itself. See, 0.8, Town of Cicero ¥. Fox Valley Trotting Club, Inc., 65 Ml. 2d 10, 19 (1976) (in which the Supreme Court agreed with the home rule unit's assertion that “the power to tax is a power which pertains to the government and affairs of Cicero.") See also Mulligan v. Dunne, 61 Ill. 2d 544, 548 (1975) (Cook County tax ordinance which did not conflict with any other constitutional provision held to “[concem] the government and affairs of no other taxing body or unit of government.”) The County's taxing authority pertain to local government and the Legislature has, not expressly preempted the exercise of taxing authority in the Ordinance. Thus, the Ordinance pertains to Cook County's “government and affairs” for purposes of section 6(a). ‘The Ordinance is structured similarly to the County's alcoholic beverage tax (Code Section 74-350 er seq.), the County's tobacco tax) (Code Section 74-430 et seq,); the County’s Gasoline and Diesel Fuel Tax (Code Section 74-470 et seq.), the City of Chicago’s cigarette tax (Mun, Code Section 3-42-010) and the City of Chicago's bottled water tax (Mun. Code Section 3-43-010 et seq.), all of which impose the tax upon the consumer and have survived several legal challenges. See, e.g., Mulligan v. Dunne, 61 Ill. 2d 544, 545 (1975) (rejecting challenge to Cook County’s alcoholic beverage tax that tax violated Article VIL, § 6 of the Illinois Constitution and the due process and equal protection clauses of the Illinois and United States constitutions); Mlinois Wine & Spirits Co. v. County of Cook, 191 Ill. App. 34 924, 925 (1 Dist. 1989) (rejecting occupation tax, equal protection and extraterritoriality challenges to Cook County’s alcoholic beverage tax); S, Bloom, Inc. v. Korshak, 52 I. 2d 56, 62 (1972) (rejecting occupation tax challenge to City of Chicago's cigarette tax ordinance); American Beverage Association v. City of Chicago, 404 Ill. App. 34 682, 691 (1% Dist. 2010) (rejecting occupation tax and uniformity clause challenges); Archer Daniels Midland Co. v. City of Chicago, 294 I. App. 34 186, 191-193 (1" Dist: 1997) (rejecting occupation tax and uniformity clause challenges to City of Chicago’s gasoline tax); see also Commercial National Bank v. Chicago, 89 Ill. 2d 45, 58, 63 (1982) (noting that the delegates to the 1970 Illinois Constitutional Convention believed that home rule units could validly enact taxes upon gasoline, liquor and “food, drugs, etc.,” provided that the tax involves a transfer of tangibie personal property: and its legal incidence is actually on the consumer.) (Emphasis supplied.) Il. The tax imposed by the Ordinance is not preempted. As noted above, the General Assembly.“by a law approved by the vote of three-fifths of. the members elected to each house may deny or limit the power to tax....” IM, Const. 1970, art VIL, § 6(g). No statute currently prohibits home rule counties from imposing a tax on sweetened beverages. Accordingly, the General Assembly has not preempted the County from enacting the tax. TT, The tax imposed by the Ordinance does not violate the Uniformity Clause. Article IX § 2 of the Illinois Constitution, otherwise known as the Uniformity Clause, provides: In any law classifying the subjects or objects of non-property taxes or fees, the classes shall be reasonable and the subjects and objects within each class shall be 1 Illinois courts have characterized food and beverages as “tangible personal property.” See, ¢.g., American Beverage Association v. City of Chicago, 404 Ill, App. 3d 682, 687 (2010); Miller v, Department of Revenue, 15 Ml. 2d 323, 325 (1958) 5 taxed uniformly, Exemptions, deductions, credits, refunds and other allowances shall be reasonable. IN]. Const. 1970, art. IX, §2. Mlinois courts have held that to survive scrutiny under the uniformity clause, a non- property tax classification, such as the one at issue in the case at bar, must satisfy pass a two- pronged test. First, the tax classification must be based on a “real and substantial difference” between the items taxed and those not taxed, Second, the classification must be reasonably related to the object of the legislation or to public policy. Arangold Corp. v. Zehnder, 204 Tl, 2d 142, 153 (2003). The first prong of the Uniformity Clause analysis requires the taxing body to “produce a justification for its classifications.” ° [Arangold, 204 Ill, 2d] at 156 (quoting Geja's Cafe ». Metropolitan Pier & Exposition Authority, 153 Ul 24 239, 248 (1992)). This does not mean, however, thatthe taxing body has an evidentiary burden or is requited to produce facts to justify the classification, Arangold, 204 Ill. 2d at 156; Midwest Gaming & Entertainment, LLC ¥ County of Cook, 2015 IL App (Ist) 142786, 102. A minimum standard of reasonableness is all that is required. See Allegro Services v. Metropolitan Pier & Exposition Authority, 172 1. 2d 243, 253 (1996). ‘The court's inquiry regarding the proffered justification is narrow, and ‘[i]f fa set of facts “can be reasonably conceived that would sustain it, the classification must be upheld.” * Empress Casino Joliet Corp. v. Giannoulias, 231 Ml. 24 62, 73 (2008) (citing Geja’s Cafe, 153 Ill. 2d at 248). Once the taxing body has offered a justification for the classification, the plaintiff then has the burden to persuade the court that the defendant's explanation is insufficient as a matter of law of unsupported by the facts. Arangold, 204 Ill 2d at 156; Sun Life Assurance Co. of Canada v, Manna, 227 Ill, 2d 128, 136-37 (2007); Midwest Gaming, 2015 IL App (1st) 142786 at § 102. {othe instant case, Plaintiffs contend that the Ordinance violates the Uniformity Clause (Complaint at $¥ 34-45) because it taxes “ready-to-drink, pre-made sweetened beverages,” such as those that come in a bottle or fiom a chilled beverage dispensing machine but does not tax “on-demand, custom sweetened beverages” such as those mixed by a server or are hand-made. (Complaint at 36) Plaintiffs attack a subset of one of the seven exceptions to the definition of “Sweetened Beverage,” namely number 3 which provides an exception to “beverages to which a Purchase can add, or can request that a retailer add, calorie sweetener or non-calorie sweetener.” See Section 74-851. Plaintiffs contend that the Ordinance’s classifications of such taxed (ie, ready to drink) and untaxed (i, band-mixed dnd thus, nor ready to drink) beverages are identical and are therefore not based on “real and substantial differences” and moreover, thatthe

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