In a 5-4 decision with major implications for e-commerce retailers, the Supreme Court has closed the “online sales tax loophole” by holding that a state may collect sales tax from out-of-state sellers that do not maintain a physical presence in the state. The decision, South Dakota v. Wayfair, Inc. et al., No. 17-494, 585 U.S. __ (2018), overturns two prior Supreme Court cases holding that an out-of-state seller’s duty to collect and remit tax to a consumer’s home state depended on whether the seller had a physical presence in that state. The Court found that this “Physical Presence Rule” was inconsistent with “the present realities of the interstate marketplace” and was costing states an estimated $8 to $33 billion in revenue each year. The Court also was persuaded by the notoriously low rate of consumer compliance with use taxes, and by the fact that the state law in question afforded small merchants a “reasonable degree of protection” by applying only to sellers that annually delivered more than $100,000 of goods or services or engaged in 2,000 or more separate transactions for the delivery of goods or services into the state. The dissenting opinion by Chief Justice Roberts insists that Congress, not the courts, should have undertaken the task to overturn the Physical Presence Rule and that the burden of this new tax regime will fall disproportionately on start-ups and small businesses.
On January 3, 2018, in Italian Colors Restaurant v. Becerra, the Ninth Circuit found unconstitutional a California law barring retailers from imposing surcharges on customers using credit cards. The ruling has important implications for retailers operating in California and potentially for retailers operating in several other states with similar bans on credit card surcharges. Continue Reading Ninth Circuit Clears the Way for Surcharges on Credit Card Payments in California
On June 19, 2017, the United States Supreme Court announced important constitutional limitations on state courts’ ability to exercise specific jurisdiction over nonresidents’ claims against out-of-state defendants. The Court’s nearly unanimous decision in Bristol-Myers v. Superior Court, 582 U.S. (2017) has potentially far-reaching implications for companies facing claims brought by nonresident and resident plaintiffs in states in which those companies are neither incorporated nor maintain their principal place of business. In holding that mere joinder of nonresident plaintiffs’ claims with those of resident plaintiffs does not permit a state court to exercise specific jurisdiction over an out-of-state defendant, the Court’s decision is the latest in a trend of important personal jurisdiction decisions rendered by the high court in recent years which provide companies with significant constitutional protections in terms of where plaintiffs may force companies to litigate. Continue Reading Supreme Court Again Tightens Jurisdictional Requirements for Claims Against Out-of-State Defendants
Recently, in a case that should remind retailers and their suppliers to consider their First Amendment rights as they relate to the regulation of product labeling, the Eleventh Circuit Court of Appeals held in Ocheesee Creamery LLC v. Putnam, 851 F.3d 1228, that the actions of the Florida Commissioner of Agriculture and the Chief of the Florida Bureau of Dairy Industry (the “State”) violated the dairy company’s First Amendment rights relating to use of the term “skim milk.” Continue Reading Eleventh Circuit Finds Restraint on Product Labeling Violation of First Amendment
On May 16, 2016, the United States Supreme Court rendered its decision in Spokeo, Inc. v. Robins, Case No. 13-1339, a case that businesses and the plaintiffs’ bar have been following closely, due largely to its potential effect on class actions predicated on alleged statutory violations and seeking solely statutory damages. In an opinion authored by Justice Alito, the Court held that a plaintiff must do more than plead a statutory procedural violation to establish standing; to plead an injury in fact, a plaintiff also must allege a harm that is both “concrete” and “particularized.” However, the Court did not apply its holding to the facts, instead remanding for further analysis by the Ninth Circuit. While both plaintiffs’ attorneys and defense attorneys are claiming a “victory,” Spokeo provides some ammunition for businesses that find themselves facing so-called “no-injury” class action lawsuits predicated on consumer protection statutes. Continue Reading Supreme Court Issues Decision in Spokeo v. Robins; Must Allege Concrete Injury For Technical Statutory Violations