LEWISTON — A local attorney won the first case he argued before the highest court in the country.

The U.S. Supreme Court ruled unanimously Tuesday in favor of George Isaacson’s client, Direct Marketing Association, a group based in New York and Washington.

“It’s a pinnacle experience in a lawyer’s life,” Isaacson said Tuesday from his Main Street office at Brann and Isaacson. “It’s very gratifying that you get a 9-0 decision.”

It’s the first time in nearly 10 years that a Maine attorney in private practice has argued a case before the nation’s highest court.

“It’s a pretty rare event,” Isaacson said.

Isaacson appeared with co-counsel and firm partner Matthew Schaefer before the court in December, when Isaacson presented his appeal of a decision by the 10th Circuit Court of Appeals in Denver, Colo., which had dismissed his case by ruling that a lower federal court had no jurisdiction over the matter and didn’t have the authority to decide constitutional and factual questions in the underlying case.

Writing for the court, Justice Clarence Thomas issued an opinion that focused on an interpretation of the Tax Injunction Act, which provides that federal courts “shall not enjoin, suspend or restrain the assessment, levy or collection of any tax under state law where a plain, speedy and efficient remedy may be had in the courts of such state.”

The circuit court had cited that law in dismissing Isaacson’s lawsuit in federal court because the state of Colorado was attempting to collect a state tax.

At issue was whether companies that engage in interstate business can have access to federal courts to determine federal constitutional questions. The lower appeals court as well as the state of Colorado had shut the door to a large group of constitutional cases from having a hearing in federal court, Isaacson said.

“We believe that federal court is a more neutral forum and a more experienced forum for dealing with complex constitutional issues,” he said.

Thomas wrote that the “TIA is not keyed to all activities that may improve a state’s ability to assess and collect taxes. Such a rule would be inconsistent not only with the text of the statute, but also with our rule favoring clear boundaries in the interpretation of jurisdictional statutes.”

He went on: “The TIA is keyed to the acts of assessment, levy and collection themselves and enforcement of the notice and reporting requirements is none of these.”

The Supreme Court sent the case back to the Denver federal appeals court to consider the case on underlying constitutional issues now that the matter of jurisdiction has been decided.

Isaacson said he believes the U.S. Supreme Court decision was the highest hurdle he and his clients faced in this lawsuit.

Five years ago, Colorado enacted a law aimed at requiring catalog companies and Internet merchants that are located outside the state and don’t collect Colorado sales tax to report the names of their customers as well as certain information about their transactions to the Colorado Department of Revenue.

The law also would require out-of-state retailers to provide notices to Colorado customers concerning their sales tax obligations. The state passed the law in light of a 1992 U.S. Supreme Court case involving North Dakota in which the court ruled that an out-of-state retailer that makes sales to customers in a particular state, but doesn’t have a retail or other physical presence there, can’t be compelled to collect state sales tax.

Colorado’s 2010 law was an apparent effort by that state’s legislature to skirt that 1992 Supreme Court court ruling.

The Direct Marketing Association, the largest national and international trade association representing catalog companies and electronic merchants, hired Isaacson’s firm to challenge the constitutionality of Colorado’s 2010 law. Isaacson’s firm filed a complaint in federal court in Denver alleging several constitutional violations. The complaint claimed the state law discriminated against interstate commerce because the requirement of collecting and conveying customer information only applied to out-of-state merchants. The suit also charged violations of right to privacy under the U.S. Constitution.

Those are the issues that will now be decided by the lower federal appeals court.

Isaacson’s firm took the matter to court before the state law took effect. A federal judge agreed with the Direct Marketing Association that the law violated the so-called federal “commerce clause” and imposed a preliminary injunction, effectively preventing the law from being implemented. That was followed eventually by a permanent injunction.

The case was appealed to the 10th Circuit Court of Appeals in Denver.

That court declined to rule on the underlying facts of the case and their constitutionality, deciding instead to dismiss the case on the basis that the federal district court in Denver had no jurisdiction to decide the case.

A 1937 federal statute called the Tax Injunction Act required taxpayers in any given state to challenge state tax assessments in that state’s courts. Federal courts lacked the jurisdiction to stop states from assessing and collecting state taxes.

The federal appeals court pointed to that federal statute as reason to vacate the lower federal court’s ruling and dismiss the case.

Isaacson took the case to a state court in Colorado, which issued a preliminary injunction on the same grounds as had the federal district court in Denver. At the same time, Isaacson’s firm filed a request that the U.S. Supreme Court rule on the 10th Circuit Court of Appeals’ decision to dismiss the case.

“We believe that the Tax Injunction Act did not apply to a case by a non-taxpayer that is not protesting any tax assessment,” he said, “but is, instead, protesting a regulatory obligation, in this case, state law that says you need to turn over information to the Department of Revenue.”

Because the out-of-state merchants Isaacson represents are not taxpayers or would-be taxpayers in Colorado, Isaacson argued before the U.S. Supreme Court that the Tax Injunction Act doesn’t apply to them.

Challenging the constitutionality of the 2010 state law doesn’t fall with the purview of the 1937 federal law, Isaacson said.

Thomas agreed in writing the court’s unanimous opinion.

One of the reasons the U.S. Supreme Court court likely accepted the case is that two other federal circuit courts had taken opposing stances to the Denver federal appeals court ruling, Isaacson said. Two dozen states had signed on as “friends of the court” supporting Colorado in this case; and many organizations aligned with Direct Marketing Association had filed briefs supporting Isaacson’s arguments.

“We are pleased that the Supreme Court has protected access to federal court on important constitutional issues affecting businesses throughout the country,” Isaacson said Tuesday. “The court agreed with our arguments that the Tax Injunction Act does not bar federal court jurisdiction over challenges to burdensome and intrusive state law information-reporting obligations by companies that are not contesting a tax assessment,” he said. “This is a significant victory for the Direct Marketing Association and for all interstate businesses that value access to federal courts.”

[email protected]


Only subscribers are eligible to post comments. Please subscribe or to participate in the conversation. Here’s why.

Use the form below to reset your password. When you've submitted your account email, we will send an email with a reset code.