Direct Marketing Association, The v. Huber

Filing 100

BRIEF in Opposition to 99 MOTION for Partial Summary Judgment Counts I and II (Commerce Clause) filed by Plaintiff Direct Marketing Association, The. (Isaacson, George) Modified on 5/31/2011 to remove duplicate generated text (mnf, ).

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 10-CV-01546-REB-CBS

The Direct Marketing Association,
Plaintiff,
v.
Roxy Huber, in her capacity as Executive
Director, Colorado Department of Revenue,
Defendant.

PLAINTIFF’S RESPONSE IN OPPOSITION TO DEFENDANT’S MOTION FOR
PARTIAL SUMMARY JUDGMENT –– COUNTS I AND II (COMMERCE CLAUSE)
______________________________________________________________________
The Plaintiff, the Direct Marketing Association (“DMA”), opposes the
Defendant’s Motion for Partial Summary Judgment –– Counts I and II (Commerce
Clause) [# 99], filed on May 6, 2011 (“Defendant’s SJ Motion”), seeking judgment as a
matter of law on the DMA’s claims that COLO. REV. STAT. ANN. § 39-21-112(3.5)(c)&(d)
(“HB 10-1193” or “the Act”) and the regulations promulgated by the Department of
Revenue to implement the Act [1 COLO. CODE REGS. § 201-1: 39-21-112.3.5 (2010)
(“the Regulations”)], violate the Commerce Clause of the United States Constitution.
The Defendant now acknowledges in her motion, as the Court concluded in its
Order Granting Preliminary Injunction [# 79], entered on January 26, 2011 (“January
26 Order”) [at 7], that the Act and the Regulations impose notice and reporting
obligations that apply solely to out-of-state retailers who do not collect Colorado sales

and use tax, but do not apply to in-state retailers. [See Defendant’s SJ Motion at 7-8
(Statement of Undisputed Facts (“Def’s SOF”) ¶¶ 5-8.] As a matter of law, the Act and
Regulations are, therefore, discriminatory. Furthermore, each of the justifications
offered by the Defendant for imposing such differential burdens on out-of-state retailers
is at odds with fundamental principles of Commerce Clause jurisprudence. Because
there are reasonable non-discriminatory alternatives to achieve the Act’s objectives [see
Plaintiff’s Motion for Summary Judgment [#98], filed on May 6, 2011(“Plaintiff’s SJ
Motion”) at 20-21 and incorporated Statement of Facts (“Plaintiff’s SOF”), ¶¶ 16, 29, 34],
the Defendant’s motion for judgment on Court I of the DMA’s First Amended
Complaint [#10], filed on July 23, 2010 (”Complaint”) must be denied, and the DMA’s
cross-motion for summary judgment should be granted.
In fact, rather than applying established Commerce Clause doctrine to the facts
of the case to defend the Act against the DMA’s constitutional challenge, the
Defendant’s motion instead presents an extended policy argument criticizing the
Supreme Court’s holding in Quill Corp. v. North Dakota, 504 U.S 298 (1992) that
retailers without a physical presence in a state may not be compelled to collect the
state’s sales and use tax. The Defendant insists that the State of Colorado should be
permitted, in reaction to Quill, to impose upon such out-of-state retailers the alternative,
burdensome and discriminatory requirements of the Act, in order to offset, or
compensate for, the sales and use tax obligations borne by in-state retailers. As the
Supreme Court has made clear, however, individual states and the courts are ill-suited
to weigh the competing local and out-of-state interests. Rather, the Supreme Court has

2

explained that it is the role of Congress, under the Commerce Clause, to balance the
competing interests at play in the regulation of interstate commerce and to craft the
details of any legislation that would expand (or limit) state taxing authority over such
commerce.
Moreover, the Defendant’s argument, that the notice and reporting obligations of
the Act and Regulations are meant to substitute for the use tax collection obligation that
the State cannot impose on out-of-state retailers under Quill, proves the DMA’s case
that the State lacks the power under the Commerce Clause to require retailers with no
physical presence in the state to comply with the requirements of Act and Regulations.
The Defendant offers no response to the DMA’s contention, and the Court’s wellreasoned conclusion in its January 26 Order [at 10], that the notice and reporting
burdens imposed under the Act are at odds with the fundamental Commerce Clause
principles. The Defendant’s motion as to Count II should, therefore, be denied, as well,
and the DMA awarded judgment as a matter of law on Count II.
PLAINTIFF’S RESPONSE TO DEFENDANT’S STATEMENT
OF UNDISPUTED FACTS
The DMA responds to each of the Defendant’s enumerated factual assertions as
follows:
1.
E-commerce in the United States has nearly tripled over the last
decade, from $1.06 trillion in 2000 to $3.16 trillion in 2008. As a result, state and
local governments and their economies experience increased evasion of sales
and use taxes and the resulting lost revenue, lost sales by Main Street vendors
who must collect sales tax, and the economically inefficient alteration of business
practices to avoid collection responsibility. States collect taxes due on Ecommerce much less effectively because vendors are often not required to
collect and remit the tax and buyer compliance with the use tax is frequently very
weak. Colorado state and local governments are estimated to fail to collect
3

hundreds of millions of dollars in sales or use tax due on E-commerce sales
between 2010 and 2012. Colorado also loses revenue that is uncollected on
remote sales, such as from mail order firms.
Plaintiff’s Response: The DMA denies the first sentence of paragraph 1 on the
grounds that the total amounts of e-commerce sales quoted by the Defendant are
disputed by competing estimates. [See Dep. Ex. 97, at 5-9 (attached to Plaintiff’s
Reply to Defendant’s Response in Opposition to Plaintiff Motion for a Preliminary
Injunction [#56] (“Plaintiff’s Reply on PI”) at Ex. H).] The DMA denies the second
sentence of paragraph 1 on the grounds that the statements made are not supported by
the source cited, which is itself an unsupported expert opinion. The DMA denies the
third sentence of paragraph 1 on the grounds that it fails to state an objective fact, but,
instead, posits a comparative relationship (“much less effectively”) without identifying to
what the comparison is made. The DMA denies the fourth sentence of paragraph 1 on
the grounds that the estimated amounts are disputed; indeed, the conclusions drawn in
the “Fox Study” have been discredited by a competing analysis conducted in 2010.
[See Dep. Ex. 97.] The DMA denies the fifth sentence of paragraph 1 on the grounds
that it fails to state an objective fact and is not supported by the source cited. The DMA
further responds that none of the assertions contained in paragraph 1 are material to
the issue of whether the Act and Regulations violate the Commerce Clause.
2.
Sales and use tax revenue historically account for approximately
one third of the State of Colorado’s General Fund.
Plaintiff’s Response: The DMA admits the statement set forth in paragraph 2, but
states that it is immaterial to whether HB 10-1193 violates the Commerce Clause.

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3.
The United States Department of the Treasury, Internal Revenue
Service has conducted research on the income tax gap, the “aggregate amount
of true tax liability imposed by law for a given tax year that is not paid voluntarily
and timely.” This research indicates that compliance with tax laws dramatically
increases when a third party reports taxable activity to the taxing authority.
Plaintiff’s Response: The DMA admits that the United States Department of
Treasury has prepared a report relating to federal income taxes entitled “Update on
Reducing the Federal Tax Gap and Improving Voluntary Compliance,” a copy of which
the Defendant has submitted to the Court. The DMA denies that the Department of
Treasury report is material to the collection of state use taxes or the issue of whether
HB 10-1193 violates the Commerce Clause. The DMA further denies that the language
quoted in the first sentence of paragraph 3 appears on page 6 of the report. The DMA
also denies that pages 12-16 of the report support the statement contained in the
second sentence of paragraph 3.
4.
Retailers utilizing direct marketing methods need not have facilities,
employees, or property in a state to sell to consumers in the state.
Plaintiff’s Response: The DMA admits the facts set forth in paragraph 4.
5.
Many direct marketers have no physical presence in Colorado, but
sell products and services to Colorado consumers from outside the state using
instrumentalities of interstate commerce.
Plaintiff’s Response: The DMA admits the facts set forth in paragraph 5.
6.
Retailers with a physical presence in Colorado are required under
Colorado law to obtain a sales tax license from DOR and to collect and remit
Colorado sales tax to DOR on all non-exempt, retail sales.
Plaintiff’s Response: The DMA admits the facts set forth in paragraph 6.
5

7.
Effective March 1, 2010, Colorado enacted House Bill 10-1193,
codified at Colorado Revised Statutes Section 39-21-112(3.5), imposing new
notice and reporting obligations upon “each retailer that does not collect
Colorado sales tax.”
Plaintiff’s Response: The DMA admits the facts set forth in paragraph 7.
8.
Under the Law, out-of-state retailers that agree to collect Colorado
sales tax, even though they have no obligation to do so under Colorado law and
the United States Constitution, are not required to comply with the requirements
for the notice and reporting requirements of the Law.
Plaintiff’s Response: The DMA admits the facts set forth in paragraph 8.
9.
Of the Internet retailers listed in the publication Top 500 Internet
Retailers, at least 39 do not have a physical presence in the State of Colorado
but nevertheless collect Colorado sales tax.
Plaintiff’s Response: The DMA denies that the source cited establishes the facts
asserted in paragraph 9. The DMA also objects that the statement itself would not be
admissible for the truth of the matter asserted, and therefore may not be relied upon
pursuant to Fed. R. Civ. P. 56(c)(2). The statement is also immaterial to whether the
Act and Regulations violate the Commerce Clause.
10.
Because the Law exempts retailers with less than $100,000 in
gross annual sales in Colorado, the vast majority of retailers in the country are
not subject to the Law.
Plaintiff’s Response: The DMA denies that the “vast majority of retailers in the
country” are not subject to the Act “because of” the exemption in the Regulations for
retailers with gross sales under $100,000, since the vast majority of retailers in the
country neither have a physical presence in Colorado nor sell to Colorado consumers

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via direct marketing. The statement is also immaterial to whether the Act and
Regulations violate the Commerce Clause. The DMA further notes that the Defendant’s
expert witness, Dieter Gable, estimates that as many as 10,000 small Internet retailers
are subject to the law. [See Plaintiff’s Reply on PI, Ex. C, Deposition of Dieter Gable
(“Gable Deposition”), at 96:25 – 102:15.]
11.
The Law provides leeway for variance in approaches to
compliance, allowing affected retailers to comply with reasonable efforts.
Plaintiff’s Response: The DMA objects that the assertion in paragraph 11
reflects an opinion and a conclusion of law, not a statement of fact. The assertion is
therefore not admissible and may not be relied upon pursuant to Fed. R. Civ. P.
56(c)(2). The assertion is also immaterial to whether the Act and Regulations violate
the Commerce Clause.
12.
There are many ways a retailer can comply with the Transactional
Notice requirement –– from a linking notice or popup window at the time of the
online purchase, to slipping the notice in as a packing slip for delivery, or other
workarounds. DMA’s expert estimates a packing insert costs less than ten cents
per package.
Plaintiff’s Response: The DMA objects to the assertion set forth in the first
sentence of paragraph 12 on the grounds that it reflects an opinion and conclusion of
law, rather than a statement of fact. The assertion is therefore not admissible and may
not be relied upon pursuant to Fed. R. Civ. P. 56(c)(2). The DMA admits the assertion
contained in the second sentence of paragraph 12. The DMA further responds that the
assertions contained in paragraph 12 are immaterial to whether the Act and Regulations
violate the Commerce Clause.
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13.
DOR has provided acceptable sample language for the
Transactional Notice, which retailers may use.
Plaintiff’s Response: The DMA admits that the DOR has prepared sample
language for the Transactional Notice that is acceptable to the DOR, but denies that
such language is acceptable to affected DMA members. The DMA further responds
that the assertion set forth in paragraph 13 is immaterial to whether the Act and
Regulations violate the Commerce Clause.
14.
Data for the Annual Purchase Summary and Customer Information
Report already exists. Retailers track customer data in very detailed ways and
store that data.
Plaintiff’s Response: The DMA denies that “[d]ata for the Annual Purchase
Summary and Customer Information Report already exists” and denies that the source
cited supports this assertion. It is self-evident that the data which affected retailers are
required to include in Annual Purchase Summaries to customers and in the Customer
Information Report submitted to the Department is newly created with each purchase
transaction and, therefore, does not “already exist.” The DMA admits that retailers track
and store some customer data, but denies that the sources cited support the assertions
set forth in the second sentence of paragraph 14. The DMA further responds that the
assertions contained in paragraph 14 are immaterial to whether the Act and Regulations
violate the Commerce Clause.
15.
Because the Law only requires the Annual Purchase Summary for
customers who spend more than $500 annually, Mr. Barry estimates that
retailers would have to create reports for fewer than 20% of Colorado
purchasers, and it could be as low as 10%.
8

Plaintiff’s Response: The DMA admits that Mr. Barry estimates that retailers
would need to create an Annual Purchase Summary for 10-20% of Colorado
purchasers, although a report regarding every Colorado purchaser, regardless of
purchase level, must be filed with the Department in the Customer Information Report of
any retailer that is required to prepare at least one Annual Purchase Summary.
16.
DOR has provided instructions and templates to assist retailers with
preparing and electronically filing the Annual Purchase Summary.
Plaintiff’s Response: The DMA admits the assertion set forth in paragraph 16.
PLAINTIFF’S STATEMENT OF RESPONSIVE UNDISPUTED FACTS
In response to the facts and arguments asserted by the Defendant in support of
her motion for summary judgment, the DMA presents the following undisputed facts
(“Plaintiff’s RSOF”), in addition to those set forth in the Plaintiff’s SJ Motion:
36.

In the 2011 legislative session, the Colorado General Assembly enacted,

and the Colorado Governor signed into law, Colorado Senate Bill 11-223 (“SB 11-223”).
SB 11-223 amends the Colorado sales and use tax law, COLO. REV. STAT. ANN. § 39-26105, by adding a new paragraph (1)(g)(I), which provides: “Notwithstanding any other
provision of this Section, the amount retained by a vendor to cover the vendor’s
expense in collecting and remitting tax pursuant to this section shall not exceed an
amount equal to two and twenty-two one-hundredths percent of all sales tax reported on
any return made on or after July 1, 2011, but prior to July 1, 2014.”
37.

Under SB 11-223, in-state Colorado retailers registered as vendors to

collect sales and use tax are entitled to retain a portion of the sales and use tax the
9

vendors collect from Colorado purchasers, in order to cover the expense of collecting
and remitting Colorado sales tax.
38.

Out-of-state retailers that do not collect Colorado sales and use tax

receive no compensation from the State of Colorado for the costs of compliance with
the notice and reporting obligations of the Act and Regulations.
ARGUMENT
I.

THE DEFENDANT’S MOTION ON COUNT I OF THE PLAINTIFF’S
COMPLAINT FOR DISCRIMINATION AGAINST INTERSTATE COMMERCE
SHOULD BE DENIED.
The test for determining whether a state law discriminates against interstate

commerce is straightforward: if the law imposes “differential treatment of in-state and
out-of-state economic interests that benefits the former and burdens the latter,” either
on its face, or in its effect, it is discriminatory. [Oregon Waste Sys., Inc. v. Department
of Envtl. Quality, 511 U.S. 93, 99 (1994); Hughes v. Oklahoma, 441 U.S. 332, 336
(1979).] Once it is established that a law imposes such differential burdens on out-ofstate companies, the burden shifts to the State to prove that the law has a legitimate
local purpose that cannot be achieved through reasonable nondiscriminatory
alternatives. [Hughes, 441 U.S. at 336-37; United Haulers Ass’n, Inc. v. OneidaHerkimer Solid Waste Authority, 550 U.S. 330, 338-39 (2007) (the Defendant must
affirmatively show that there are “no other means” to advance a legitimate local purpose
for the law) (emphasis added).]

10

A. The Act and Regulations Impose Differential Burdens On Out-of-State
Retailers That Are Not Imposed on In-State Retailers.
There is no genuine dispute that HB 10-1193 imposes costs and burdens upon
out-of-state retailers that are not imposed upon in-state retailers. [See Plaintiff’s SJ
Motion, at 16-19.] Indeed, the Defendant acknowledges as much in her motion.
[Defendant’s SJ Motion at 5, 7-8; Def’s SOF, ¶¶ 6-8.]1 The Act and Regulations require
retailers that do not collect Colorado sales and use tax to provide Colorado purchasers
with the Transactional Notice and Annual Purchase Summaries, and to file with the
Department an annual Customer Information Report. [Id. at 5-6.] Because retailers
located within Colorado are required under Colorado law to collect Colorado sales and
use tax – an obligation for which Colorado law provides compensation [Plaintiff’s RSOF,
¶¶ 36-37] – all “non-collecting retailers” subject to the law are, by definition, located
outside the state. Each of the Act’s notice and reporting obligations, as confirmed by
the testimony of the Defendant’s own expert, Dieter Gable, will require affected retailers
to incur compliance costs that in-state retailers are not required to bear [Plaintiff’s SOF,

1

In opposing the DMA’s Motion for Preliminary Injunction, the Defendant previously
argued that the Act and Regulations are non-discriminatory on the grounds that they apply
equally to in-state retailers that fail to comply with their statutory obligation to collect sales tax,
as well as to out-of-state retailers that do not collect use tax because they are protected from a
collection obligation under the Supreme Court’s decision in Quill Corp. v. North Dakota. [See
Defendant’s Response in Opposition to Plaintiff’s Motion for a Preliminary Injunction
[#50] at 20-21.] The DMA has demonstrated the fallacy of that argument, and the Court
expressly rejected it in granting the DMA’s motion for a preliminary injunction. [January 26
Order at 7.]
In her motion for summary judgment, the Defendant now abandons the pretext that the
Act and Regulations “regulate even-handedly” within the meaning of the Commerce Clause, and
instead argues that the Court must evaluate the discriminatory burdens of HB 10-1193 as
simply one facet of the State’s overall sales and use tax system which serve to compensate for
the obligation imposed on Colorado retailers to collect and report Colorado sales tax. This new
argument by the Defendant is equally unavailing under established Supreme Court precedent,
as discussed herein.

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¶¶ 22, 26], or face monetary penalties for failing to satisfy such obligations. Thus, as
the Court concluded in its January 26 Order [at 7], HB 10-1193 imposes differential
burdens on out-of-state retailers.
B. The Defendant Offers No Evidence of Non-Discriminatory Alternatives.
In light of the admittedly disparate burdens imposed on out-of-state retailers by
the Act and Regulations, in order to prevail on Count I the Defendant must show that
there are no reasonable non-discriminatory alternatives to achieve the objectives of the
law. The Defendant, however, cites to no undisputed facts [see generally Def’s SOF],
and presents no argument that there are no such alternative measures the state could
adopt. As the facts cited by the DMA in its motion for summary judgment show,
however [Plaintiff’s SOF, ¶¶ 16, 29, 34] and as the Court concluded in its January 26
Order [at 8], such non-discriminatory alternatives are evident. The Defendant’s motion
on Count I must, therefore, be denied.
C. The Defendant’s Arguments That The Law Is Non-Discriminatory
Because It Purportedly Advances The Objectives of the Commerce
Clause Are Inconsistent With Basic Commerce Clause Doctrine.
Lacking any basis for defending the Act under the established Commerce Clause
test for discriminatory state laws, the Defendant instead asserts that HB 10-1193 is nondiscriminatory on the grounds that: (1) the law is not “protectionist” [Defendant’s SJ
Motion at 11]; (2) the Act purportedly gives retailers a “choice” between accepting the
burdens of use tax collection or complying with the law [id. at 13-14]; and (3) the Act
and Regulations do not favor in-state retailers over out-of-state retailers because
Colorado sales and use tax law, viewed “holistically,” imposes sales tax collection

12

obligations on in-state retailers that are comparable to the notice and reporting
obligations imposed on out-of-state retailers under the Act and Regulations. [Id. at 1516]. Each of the Defendant’s contentions is, however, at odds with fundamental
Commerce Clause principles.
1. The Supreme Court Has Made Clear that State Laws that Impose
Increased Burdens on Out-of-State Companies Are, by Definition,
Discriminatory and “Protectionist” for Purposes of the Commerce
Clause.
The Defendant argues that Act and Regulations do not run afoul of the
Commerce Clause because they are not “protectionist.” It is a bedrock principle of the
dormant Commerce Clause, however, that a state law may not discriminate against
interstate commerce either facially or in effect. [New Energy Co. v. Limbach, 486 U.S
269, 280 (1988) (striking down law that discriminated against out-of-state companies on
its face); Hunt v. Washington State Apple Advert. Comm’n, 432 U.S. 333, 350, 354
(1977).] (striking down law that had the practical effect of discriminating against out-ofstate producers).] Requiring a “protectionist” intent to discriminate by the State “would
mean that the Commerce Clause of itself imposes no limitations on state action . . .
save for the rare instance where a state artlessly discloses an avowed purpose to
discriminate against interstate goods.” [Hunt, 432 U.S. at 350.] Indeed, the Defendant’s
argument that HB 10-1193 must be upheld because it lacks a “protectionist” motive has
been repeatedly rejected as a basis for defending a law as non-discriminatory. [See,
e.g., City of Philadelphia v. New Jersey, 437 U.S. 617, 626 (1978) (state effort to “deny
that [a law] was motivated by financial concerns or economic protectionism” fails
because “whatever [the state’s] ultimate purpose, it may not be accomplished by
13

discriminating against articles of commerce coming from outside the State”); West Lynn
Creamery, Inc. v. Healy, 512 U.S. 186, 205 (rejecting argument that a state law that
imposed additional burdens on out-of-state businesses was constitutionally-permissible
because it was not protectionist); American Trucking Ass’n, Inc. v. Whitman, 437 F.3d
313, 321 (3rd Cir. 2006) (purpose of a law is not relevant to whether a statute is
discriminatory); McNeilus Truck and Mfg., Inc. v. Ohio Ex Rel. Montgomery, 226 F.3d
429, 443 (6th Cir. 2000) (“we need not ascribe an economic protection motive” to
invalidate the law under the Commerce Clause).
State laws that impose differential, and greater, burdens on out-of-state
companies than they impose on in-state companies are, by their very nature,
“protectionist” for purposes of the Commerce Clause. Indeed, laws that raise the cost of
doing business for out-of-state businesses, while leaving the costs of in-state business
unaffected, impose the “most obvious” form of discrimination against interstate
commerce, because the “increased costs imposed by the statute would tend to shield
[in-state interests]” from the competition of out-of-state businesses. Hunt, 432 U.S. at
350-51. For that reason, laws that “explicitly impose costs on the citizens and
businesses of other states while exempting [the state’s] own citizens from those same
costs” are facially discriminatory under the Commerce Clause. American Trucking
Ass’n, 437 F.3d at 321, 322; Used Tire Int’l., Inc. v. Diaz-Saldana, 155 F.3d 1, 3 (1st Cir.
1998) (a law that “imposes burdens, costs and risks” on out-of-state interests that are
not borne by in-state companies, discriminates against interstate commerce, “no matter
how laudatory its purpose.”) The Defendant’s contention that the Act and Regulations

14

are somehow consistent with Commerce Clause principles despite imposing disparate,
and increased, burdens on out-of-state retailers, fails.
2. The Defendant’s Argument that the Act Gives Out-of-State
Retailers The “Choice” Of Avoiding HB 3659’s Notice and
Reporting Requirements by Surrendering Their Constitutional
Rights Turns Commerce Clause Doctrine On Its Head.
The Defendant next asserts that the Act and Regulations are non-discriminatory
because “non-collecting retailers may choose between two alternatives: either collecting
and remitting sales tax or complying with the notice and reporting requirements of the
Law.” [Defendant’s SJ Motion at 14.] The Defendant’s “choice” argument would
convert one of the Act’s central constitutional flaws into its greatest virtue. The
purported “choice” offered to out-of-state retailers with no physical presence in Colorado
is the option of either surrendering their rights guaranteed under the Commerce Clause
not to be subject to the obligation to collect state and local use taxes (the Quill doctrine)
or, instead, complying with the even more onerous notice and reporting requirements of
the Act and Regulations. As the DMA demonstrated in its motion for summary
judgment, the Constitution forbids a state from requiring a business to surrender
important rights in order to be free from discrimination under the Commerce Clause.
[Bendix Autolite Corp. v. Midwesco Enters. Inc., 486 U.S. 888, 893 (1988).] Likewise, a
state may not, consistent with the Commerce Clause, demand that a company accept
regulatory burdens as if it were a resident of the state as a condition of receiving equaltreatment under state law. [Granholm v. Heald, 544 U.S. 460, 475 (2005); Fulton Corp.
v. Faulkner, 516 U.S. 325, 333 n.3 (1996).]

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Far from creating a choice for out-of-state retailers of whether to collect and remit
Colorado sales and use taxes (indeed, out-of-sate retailers already had that option
before HB 10-1193 was enacted), by adopting the Act and Regulations, the State of
Colorado seeks to compel retailers who have declined to collect Colorado sales tax
voluntarily, to give-up their constitutional rights not to collect such taxes. Although the
Defendant argues that the retailer’s decision in the face of such coercion is a “choice,”
the Constitution precludes such oppressive and discriminatory measures against
interstate commerce.2
The ability of a member of a group targeted by discriminatory state requirements
to “opt-out” of the group and thereby avoid discrimination, does not make the law nondiscriminatory. [See, e.g., American Trucking Ass’n, 437 F.3d at 321 (the creation of a
limited exception for certain out-of-state entities does nothing to cure the discriminatory
nature of a law).] Moreover, the argument that out-of-state retailers “could avoid the
strictures” of the Act and Regulations, if only they would agree to behave like in-state
retailers, and collect Colorado use tax “turn[s] the ‘availability of nondiscriminatory
alternatives’ test on its head.” [McNeilus, 226 F.3d at 444.] In response to a charge of
discrimination, the Defendant cannot argue that the best alternative is for out-of-state
companies to change their lawful business practices. [Id. (“[T]he existence of
2

Nor can the state justify imposing such onerous burdens on out-of-state retailers on the
grounds that in-state retailers purportedly have no choice whether to comply with their statutory
obligation to collect and remit sales taxes under state law. By locating their businesses in the
state, Colorado retailers necessarily subject themselves to the regulatory authority of the state.
Retailers with no physical presence in Colorado must likewise comply with the tax laws of their
home states, while Colorado businesses are neither required to collect sales and use taxes, nor
to comply with notice and reporting obligations of the kind imposed under Colorado HB 10-1193,
in states where they lack a physical presence.

16

alternatives is a burden [of proof] for the state that precludes using the discriminatory
method that it has chosen, not a way to shift blame to the [out-of-state seller] for the
manner in which it runs its business.”).]
3. The Supreme Court Has Made Clear that Laws that Impose
Additional Burdens Solely on Out-of-State Companies Inherently
Favor In-State Companies.
The Defendant next argues that the notice and reporting obligations imposed
under the Act and Regulations are not discriminatory on the grounds that they do not,
when viewed in the context of Colorado’s overall sales and use tax system, actually
favor in-state retailers. Here again, the Defendant misconstrues fundamental
Commerce Clause jurisprudence. It has been understood for more than 150 years that
“the imposition of a differential burden on any part of the stream of commerce . . . is
invalid, because . . . it will result in a disadvantage to the out-of-state producer.” [West
Lynn Creamery v. Healy, 512 U.S. 186, 202 (1994) (emphasis added).] As the Court
noted in granting the DMA’s request for a preliminary injunction, “the degree of a
differential burden or charge on interstate commerce ‘is of no relevance to the
determination whether a State has discriminated against interstate commerce.’”
[January 26 Order at 6, citing Oregon Waste Systems, 511 U.S. at 100 n. 4.] Laws
which impose additional obligations on out-of-state businesses that are not imposed on
in-state businesses have the effect, by the very fact of such differential burdens, of
favoring in-state interests over out-of-state interests. [Hunt, 432 U.S. at 350.]3

3

The Commerce Clause, of course, imposes no limitation on a state’s power to impose
regulatory obligations on in-state companies, and therefore does not prevent a state from
imposing greater burdens on in-state interests than on out-of-state interests. Of necessity, a

17

To support her argument that a discriminatory law may pass constitutional
muster even when it imposes demonstrably disparate burdens on out-of-state
companies that are not imposed on in-state companies, the Defendant argues that the
Commerce Clause “requires consideration of the challenged law in the context of other
related laws.” [Defendant’s SJ Motion at 15.] The authorities cited by the Defendant do
not, however, support her “holistic approach” to Commerce Clause jurisprudence. In
West Lynn Creamery, the plaintiffs challenged the combined effect of two components
of a Massachusetts scheme for regulating the dairy industry. The State argued that
because each of two components of the law, viewed separately, were within the
regulatory power of the State under existing Commerce Clause doctrine, then the two
components, taken together, could not violate the Commerce Clause. The Supreme
Court rejected this argument, finding that the combined effect of the two components
clearly discriminated against interstate commerce. [512 U.S. at 201.]
In this case, the Act and Regulations are not, considered independently of other
provisions of Colorado law, constitutionally valid; rather, they plainly impose disparate
burdens solely on out-of-state retailers. Nothing in West Lynn Creamery supports the
Defendants contention that the discriminatory effects of the Act and Regulations may be
excused by searching out competing burdens imposed on in-state interests under other
provisions of Colorado’s sales and use tax code.
state only contravenes the Commerce Clause by subjecting out-of-state interests to
requirements not borne by in-state interests, as the test for discrimination set forth by the
Supreme Court in Oregon Waste Systems makes clear. The State may not, however, justify
imposing additional burdens solely on out-of-state businesses on the grounds that those
differential obligations do not, in fact, have the effect of “favoring” in-state interests. A state law
could never, under the Defendant’s theory, discriminate against interstate commerce on its face.

18

Similarly, in South Central Bell Telephone Co. v. Alabama, 526 U.S. 160 (1999),
also cited by the Defendant, the Supreme Court rejected the argument advanced by the
State of Alabama that provisions of its franchise tax that applied solely to out-of-state
companies were not, in fact, discriminatory, because other provisions of the Alabama
Tax Code imposed different and (the state argued) offsetting tax burdens on in-state
businesses. 526 U.S. at 169. Thus, South Central Bell, like West Lynn Creamery,
shows that a facially non-discriminatory state law may, nevertheless, be shown to have
discriminatory effects when understood as part of a larger statutory scheme. The cases
cited by the Defendant do not show that a demonstrably discriminatory law, like the Act,
which imposes obligations solely upon out-of-state business, will only run afoul of the
Commerce Clause if no offsetting burdens on in-state interests can be located
elsewhere in the State’s law.4
D.

The Defendant’s Thinly-Veiled Attempt to Invoke The Compensatory
Tax Doctrine Fails.

All of the Defendant’s arguments in support of her claim for summary judgment
on Count I of the DMA’s complaint alleging discrimination against interstate commerce
rely, to varying degree, on the Defendant’s contention that the Act and Regulations are
permissible because they impose burdens on affected out-of-state retailers that
compensate for the for the obligation imposed upon in-state retailers to collect and remit
4

The Defendant’s reliance on Matthews v. Department of Revenue, 562 P.2d 415 (Colo.
1977) is also misplaced. In Matthews, a provision of Colorado use tax law that was not
discriminatory on its face was found to violate the Commerce Clause when considered together
with a contrasting provision in Colorado’s sales tax law. Once again, while facially constitutional
provisions may be shown to be discriminatory when understood in light of other laws, it is not
the case not that a demonstrably discriminatory law may be excused by taking a more “holistic
view” of state laws.

19

Colorado sales taxes.5 Indeed, the core of the Defendant’s entire defense of the Act is
that “[a]ny challenge to the Law on dormant Commerce Clause grounds must weigh the
relative burdens of Colorado’s sales and use tax scheme on non-collecting retailers as
compared to collecting retailers, rather than viewing in isolation the Law’s application to
out-of-state retailers.” [Defendant’s SJ Motion at 16.] The Defendant offers no citation
for this proposition, because it is simply incorrect as a matter of law: a state may not
defend a law that imposes increased burdens on out-of-state retailers as being nondiscriminatory under the Commerce Clause on the grounds that the state also imposes
other, different burdens upon their in-state competitors under different laws.
Indeed, the only narrow, and utterly inapplicable, caveat to this fundamental
principle is the so-called “complementary” or “compensatory” tax doctrine, most recently
addressed (and rejected) by the Supreme Court in South Central Bell. [See 526 U.S. at
169-70.] Indeed, the Defendant’s reliance upon South Central Bell, and her citation to
several other cases discussing the compensatory tax theory,6 belies the fact that the
Defendant’s entire case is grounded in the doctrine.

5

See Defendant’s SJ Motion at 6 (the Act “promotes a level playing field for in-state and
out-of-state retailers’); 11 (“Colorado businesses are at a competitive disadvantage because
they must collect sales tax on their in-store and online sales”); 11-12 (the “function of
complementary sales and use taxes schemes is ‘to put local retailers subject to the sales tax on
a competitive parity with out-of-state retailers exempt from the sales tax . . . by reducing the
artificial competitive advantage currently enjoyed by non-collecting retailers due to the safe
harbor created by [National Bellas Hess and Quill]”); 13 (the Act “allows non-collecting retailers
the ability to choose to be subject to the same burden imposed on their in-state competitors”)
(underline in original); 16 (“the DMA cannot prove that burdens upon out-of-state non-collecting
retailers as a result of the Law outweigh burdens upon collecting retailers”).
6
See, e.g., Defendant’s SJ Motion at 3 (citing Henneford v. Silas Mason Co., 300 U.S.
577 (1937)); 5 n.1 (citing Associated Industries of Missouri v. Lohman, 511 U.S. 641 (1994));
and 12 (citing Boston Stock Exchange v. State Tax Comm’n, 429 U.S. 318 (1977)).

20

As explained by the Supreme Court in Oregon Waste Systems, the concept of a
“compensatory tax” is “merely a specific way of justifying a facially discriminatory tax as
achieving a legitimate local purpose that cannot be achieved through nondiscriminatory
means.” [511 U.S. at 102 (citation omitted).] Under the compensatory tax doctrine, “a
facially discriminatory tax that imposes on interstate commerce the rough equivalent of
an identifiable and ‘substantially similar’ tax on intrastate commerce does not offend the
negative Commerce Clause.” Id. at 102-03.7

As with any purported justification for a

discriminatory tax, the state bears the burden of proving that the exception applies. Id.
at 103. The compensatory tax doctrine, however, is utterly unavailing to the Defendant,
for several reasons:


First and foremost, the Act and Regulations do not impose a tax, as the
Defendant herself emphasizes. [See Defendant’s SJ Motion at 6 (“The Law
imposes neither tax liability nor any obligation to collect and remit sales tax”).]
Therefore, the doctrine simply does not apply.



Moreover, the compensatory tax doctrine, as the Supreme Court has made
clear, is simply one way for the State to carry its burden of proving that there are
no reasonable non-discriminatory alternatives to a discriminatory tax. Since
there are demonstrable non-discriminatory alternatives to the Act and

7

Although dating back over 100 years, the only viable example of a properly
“compensatory” tax is a state or local use tax which, although facially discriminatory because its
applies only to purchases made outside the state (and therefore not subject to state sales tax),
does not run afoul of the Commerce Clause because it so closely tracks, and directly
complements, the state sales tax. [Oregon Waste Systems, 511 U.S. at 105 (citing Henneford v.
Silas Mason Co., 300 U.S. 577 (1937)).]

21

Regulations, the Defendant cannot use the “compensatory” tax argument, even
by analogy, to show that there are no such alternatives.


As with any justification for a discriminatory law, the State has the burden of
proof under the doctrine. The failure of the State to carry its burden on any
element of the test is “fatal” to the State’s effort to justify a discriminatory tax law.
Oregon Waste Systems, 511 U.S at 104; Fulton Corp., 561 U.S. at 344. For
example, the State is required to indentify the intrastate tax burden for which it
seeks to compensate, and to show that the tax burden imposed on interstate
commerce is roughly equivalent. The Defendant has done neither in arguing that
the requirements of the Act are non-discriminatory when weighed against the
sales tax obligations of in-state retailers. The Defendant has offered no evidence
(and the record is devoid of information) as to the nature and amount of the
burdens borne by in-state retailers. Thus, there would be no way of determining
whether the non-tax notice and reporting obligations imposed upon out-of-state
retailers approximate the sales tax obligations imposed on in-state retailers,
assuming any comparison between such different burdens was possible at all.8

8

The burdens imposed on out-of-state retailers by the Act and Regulations are
established by the undisputed facts. Those burdens include compliance costs [Plaintiff’s SOF
¶¶ 22, 26], penalties for non-compliance, and lost business [Plaintiff’s SOF ¶ 31.] With regard to
the decline in sales faced by out of state retailers who are required by the Act to report their
customers’ purchasing information to the Department, the Defendant critiques the Plaintiff’s
survey of Colorado consumers, but she offers no competing survey evidence or other facts to
refute the results of the DMA’s survey. It is well-established that the results of a survey are
admissible if the survey was conducted according to generally accepted survey methodology.
[Brunswick Corp. v. Sprinit Reel Co., 832 F.2d 513, 522 (10th Cir. 1987); see also Hodgdon
Power Co. v. Alliant Techsystems, Inc., 512 F.Supp.2d 1178, 1181 (D. Kan. 2007) (listing
factors). The Plaintiff’s expert, Dr. Adler, affirmed in his original declaration ([#19] ¶¶ 4, 6-10),

22



Furthermore, the Defendant ignores the fact that Colorado retailers are (or soon
will be) compensated for the burden of collecting and remitting Colorado sales
and use taxes through the vendor allowance enacted in HB 11-223. [Plaintiff’s
RSOF ¶¶ 36, 37.] Any comparison of the burdens between in-state retailers
required to collect Colorado sales and use tax and out-of-state retailers who are
required to comply with the discriminatory notice and reporting obligations
imposed by the Act and Regulations would also have to take account of the
collection allowance for in-state retailers. Moreover, if one goal of the Act and
Regulations is “competitive parity” between in-state and out-of-state retailers
who do not collect sales tax, the collection allowance represents yet another
demonstrable, non-discriminatory alternative to the discriminatory notice and
reporting obligations imposed on out-of-state retailers under the Act.



Finally, the Defendant again fails to recognize that the protection of interstate
commerce from unduly burdensome regulation secured by the physical presence
requirement of Quill is a “two-way street” that benefits Colorado retailers, as well,
with reference to the tax laws of other states. In supposedly seeking to reduce
the “artificial competitive advantage currently enjoyed by non-collecting retailers
due to the safe harbor created by” Bellas Hess and Quill [Defendant’s SJ Motion
at 12], Colorado imposes on out-of-state retailers a set of notice and reporting
obligations that its own, in-state retailers are not required to bear when

and again during his deposition (e.g., Adler Dep. at 94:3 – 97:17), that the DMA’s survey was
conducted in accordance with accepted survey methodology.  

23

transacting business in other states. Thus, far from competitive parity, the State
seeks an advantage for Colorado retailers over their out-of-state competitors.9
II.

WEIGHING THE COMPETING INTERESTS AT STAKE IN THE REGULATION
OF INTERSTATE COMMERCE IS THE ROLE OF CONGRESS, NOT
COLORADO, OR THE COURTS.
The complexities inherent in balancing the relative burdens imposed on local and

interstate interests demonstrates why the Commerce Clause reserves to Congress, and
not the States, or the Courts, the role of regulating interstate commerce. Indeed,
individual states have no interest in balancing the competing interests of interstate
commerce and out-of-state businesses against the interests of in-state companies, nor
is it their domain. States will be inclined, through the natural workings of the local
political process, to favor in-state companies over out-of-state businesses.
Congress, by contrast, can properly balance all of the competing interests, and
can fine-tailor laws regulating interstate commerce in a way that even federal courts
cannot. As the Supreme Court has recognized,
Congress has the capacity to investigate and analyze facts beyond anything the
Judiciary could match, joined with the authority of the commerce power to run
economic risks that the Judiciary should confront only when the constitutional or
statutory mandate for judicial choice is clear.

9

Because the Act is discriminatory, there is no need for the Court to consider the
Defendant’s additional argument under the test of Pike v. Bruce Church, Inc., 397 U.S 137
(1970), that the “incidental effects” of the Act on interstate commerce are not clearly excessive
in relation to the local benefits achieved by the law. In fact, the burdens imposed on interstate
commerce – at least an additional $2,500 to $6,000 in compliance costs per company in the first
year, and an additional roughly $1,000 per company per year thereafter, incurred by an
estimated 10,0000 companies, according to the Defendant’s own expert, for a total cost in the
tens of millions of dollars – are grossly excessive in comparison to the $4.7 million annual
revenue estimate for the law. [Plaintiff’s SOF ¶¶ 25-28.]

24

General Motors Corp. v. Tracy, 519 U.S. 278, 309 (1997); see also Minneapolis Star &
Tribune Co. v. Minnesota Comm’r of Revenue, 460 U.S. 575, 589-90 (1983) (“courts as
institutions are poorly equipped to evaluate with precision the relative burdens of
various methods of taxation”). Indeed, the Court has cautioned, specifically with regard
to weighing the comparative burdens of state tax laws on in-state and out-of-state
businesses, that courts are ill-suited, and should generally decline to “engage in
elaborate analysis of real-world economic effects . . . or to consider subtle
compensatory tax defenses.” [General Motors, 519 U.S. at 308-09 (citing Fulton Corp.,
516 U.S. at 341-42 and Oregon Waste Systems, 511 U.S. at 105); see also American
Trucking Ass’n v. Scheiner, 483 U.S. 266, 289 (1987) (declining to “plunge . . . into the
morass of weighing comparative tax burdens”).]
Balancing the competing interests of the free flow of interstate commerce against
state and local taxing prerogatives in the area of direct marketing sales requires such
careful analysis. As the Court recognized in Quill, the danger of inconsistent state laws
across the thousands of state and local taxing jurisdictions in the United States10
implicates core principles of the Commerce Clause and justifies the “bright line” physical
presence standard to prevent undue burdens on interstate commerce. Potentially
daunting complexities for interstate businesses arise with regard to both the proper tax
treatment of transactions, and the burdens of tax reporting and administration across
10

The number of state and local taxing jurisdictions in the United States has grown
dramatically since the Supreme Court first recognized the physical presence requirement in
Bellas Hess in 1967. The Court noted then that there were over 2,300 such jurisdictions [386
U.S. at 759 n.12]; at the time Quill was decided in 1992 there were over 6,000. [Quill, 504 U.S at
313 n.6] Today it is widely-acknowledged that there are over 7,500 state and local jurisdictions
in the United States that impose some form of sales or use tax. [See, e.g., WALTER HELLERSTEIN
& JOHN A. SWAIN, STREAMLINED SALES AND USE TAX 2-4 (2005).]

25

multiple jurisdictions. In Colorado, for example, there are dozens of “home rule”
municipalities that administer their own sales tax systems and can tax at varying rates
different products and services than the state. States and localities often have wildly
differing requirements with regard to not only tax rates, taxable products, and
exemptions, but also such matters as the tax treatment of shipping and handling
charges imposed by remote sellers for the delivery of products.11 By viewing the issue
on national scale, Congress can properly determine whether, and in what manner, to
require a more uniform tax base, single-form reporting, etc.
Likewise, in the area of tax administration, expanded state tax jurisdiction could
subject direct marketers to audits by numerous different state and local taxing
authorities each year. Whether to impose, as a condition of expanded state and local
taxing power, a system of consolidated tax audits conducted by a company’s homestate, similar to the system adopted under the International Fuel Tax Agreement, is the
kind of determination that is properly reserved to Congress under the Commerce
Clause. Congress, and not the individual States, is best-suited to evaluate the degree
of uniformity and simplification to be required of state tax laws, consistent with the
interests of interstate commerce secured by the Commerce Clause.

11

Recognizing the inconsistency of state and local sales and use tax systems in the
United States, 44 states have agreed to participate in a project whose objective is to simplify
and make more uniform state sales and use taxes. Colorado is the only state with a sales/use
tax that has declined to participate in the Streamlined Sales and Use Tax Project. (Five states
do not have a state level sales/use tax.) [See the “Quick Links” state map appearing at
http://www.streamlinedsalestax.org/index.php?page=About-Us.] A bill that would provide for
Congressional endorsement of the Streamlined Sales and Use Tax Agreement, which has been
adopted by 24 of the 44 participating states, was introduced in Congress in 2010. [See Plaintiff’s
SOF ¶ 30.] Colorado has not adopted the simplification measures proposed in the SSUTA.

26

III.

THE DEFENDANT’S OWN ARGUMENTS DEMONSTRATE THAT THE STATE
OF COLORADO LACKS THE AUTHORITY TO IMPOSE THE ACT’S NOTICE
AND REPORTING OBLIGATIONS ON RETAILERS WITH NO PHYSICAL
PRESENCE IN THE STATE.
In Count II of the Complaint, the DMA asserts that the State of Colorado lacks

the authority under the Commerce Clause to require retailers with no physical presence
in the state to comply with the notice and reporting obligations of the Act and
Regulations. In seeking summary judgment on Count II, the Defendant argues that the
DMA seeks a “regulatory-free zone to which its members are not entitled under existing
Commerce Clause precedent.” [Defendant’s SJ Motion at 23.] The Defendant is wrong.
As set forth in the DMA’s cross-motion for summary judgment, the DMA asserts
that out-of-state retailers with no physical presence in Colorado have the right, under
the Commerce Clause, to be free, not from all forms of state regulation, but from
discriminatory and unduly burdensome regulation of the kind imposed under the Act.12
The question of whether the Act and Regulations impose such undue burdens on
interstate commerce is determined with reference to well-established principles of
Commerce Clause jurisprudence which underlie and inform numerous Supreme Court
and lower federal court decisions, relied upon by the DMA in support of both its motion
for preliminary injunction, and its motion for summary judgment. [See Plaintiff’s SJ
Motion at 21-25; Plaintiff’s Motion for Preliminary Injunction at 23-27.]
As those principles relate to direct marketers engaged in the sale of goods
delivered via common carrier and U.S. mail (or digitally over the Internet), the Supreme
12

The DMA does not dispute that out-of-state retailers may be required to comply with a
wide variety of non-discriminatory state laws, so long as those laws do not run afoul of
constitutional protections.

27

Court’s decisions in Quill and National Bellas Hess v. Department of Revenue, 386 U.S.
753, 759 (1967), as well as the Tenth Circuit’s decision in ACLU v. Johnson, 194 F.3d
1149 (1999), have particular relevance, because they embody the proper application of
core “structural” concerns of the Commerce Clause to a segment of commerce that is
“inherently interstate.” National Bellas Hess, 386 U.S. at 759. Indeed, this case, like
Quill, involves the imposition of onerous, and potentially conflicting, reporting burdens
that attach to every sales transaction. As this Court noted in granting the DMA’s
request for a preliminary injunction, “the burdens imposed by the Act and Regulations
are inextricably related in kind and purpose to the burdens condemned in Quill.”
[January 26 Order at 10.]13
The Defendant acknowledges that the classification of “non-collecting retailers”
targeted by the Act and Regulations is expressly “a function of the Supreme Court’s
holdings in Quill and Bellas Hess.” [Defendant’s SJ Motion at 14.] Furthermore, she
contends, the Act “promotes competitive parity by reducing the artificial competitive
advantage” for such retailers purportedly created by the Quill and Bellas Hess
decisions. [Id. at 12.] By conceding that the Act is both designed to, and functions as, a
set of substitute obligations for the use tax collection obligations expressly held
unconstitutional under Quill, the Defendant proves why the Act and Regulations

13

The Defendant’s argument that the “main rationale” for the holding in Quill was stare
decisis is simply wrong, and demonstrates the Defendant’s continued misunderstanding of the
true significance of Quill. Rather, the Court in Quill detailed the core Commerce Clause
principles that underlie the “substantial nexus” requirement of Complete Auto Transit, Inc. v.
Brady, concluding that the “bright line” rule of physical presence “furthers the ends of the
dormant Commerce Clause.” [504 U.S. at 314.] The Court went on to find stare decisis to be
an important additional factor [id. at 316-17], but it was not, as the Defendant contends, the
primary basis for the Court’s ruling.

28

similarly unduly burden the same transactions in interstate commerce (i.e., sales by outof-state retailers delivered via mail and common carrier to in-state residents.)
The Defendant’s citations to state court decisions holding that the “bright line”
rule of Quill does not apply in the context of state corporate income taxes are simply
irrelevant. [See Defendant’s SJ Motion at 26.] The Act and Regulations do not impose
annual corporate income tax filing obligations on out-of-state retailers; they impose
notice and reporting obligations associated with each and every sales transaction made
by a retailer. The Tenth Circuit’s decision in American Target Advertising, Inc. v. Giani
likewise is not controlling, or even relevant, because it involved scrutiny of a Utah
statute that bears no similarity, either in terms of subject matter or degree of potentially
inconsistent and burdensome regulation of interstate commerce, to the onerous and
extensive notice and reporting obligations imposed by the Act. [See 199 F.3d 1241,
1246 (10th Cir. 2000) (upholding a Utah law requiring “all professional fundraising
consultants to register with the state and obtain a permit.”)]
The Defendant’s further argument that Quill is at odds with “contemporary
Commerce Clause jurisprudence” is also wrong. [Defendant’s SJ Motion at 28.] The
“structural concerns” of the Commerce Clause embodied by the Quill decision are
timeless and lie at the very heart of Commerce Clause doctrine. Indeed, the
unconstitutionality of the Colorado law in light of the core Commerce Clause principles
set forth in Quill has been described in an article in a leading tax journal as “compelling.”
[Prof. Edward A. Zelinsky, The Siren Song of “Amazon” Laws: The Colorado Example,
STATE TAX NOTES (March 7, 2011) at 695-700 (commenting on this Court’s January 26

29

Order).] Moreover, the continuing vitality of Quill in limiting state efforts to regulate
interstate commerce is highlighted by the Supreme Court’s recent decision Hemi Group
LLC v. City of New York, 130 S.Ct. 983 (2010), in which the Court rejected an effort by
the City to find a creative way to “end-run its lack of authority” under Quill. [Id. at 994,
995 (Roberts, J., majority; Ginsburg, J. concurring).] Because the State of Colorado
lacks the authority under the Commerce Clause to accomplish its own end-run around
Quill by imposing burdensome notice and reporting obligations on out-of-state retailers
with no physical presence in the state, the Defendant’s motion for summary judgment
on Count II should be denied.
CONCLUSION
For the foregoing reasons, the DMA respectfully requests that the Court deny the
Defendant’s motion for summary judgment, and grant the DMA’s motion.

Dated: May 27, 2011

s/ George S. Isaacson
George S. Isaacson
Matthew P. Schaefer
BRANN & ISAACSON
184 Main Street, P. O. Box 3070
Lewiston, ME 04243−3070
Tel.: (207) 786−3566
Fax: [phone]
E-mail: [e-mail]
[e-mail]
Attorneys for The Direct Marketing
Association

30

CERTIFICATE OF SERVICE
I hereby certify that on May 27, 2011, I electronically filed the foregoing, Plaintiff’s
Response in Opposition to Defendant’s Partial Motion for Summary Judgment ––
Counts I and II (Commerce Clause), using the CM/ECF system, which will send
notification of such filing to counsel of record:
Jack Wesoky
Senior Assistant Attorney General
[e-mail]
Stephanie Lindquist Scoville
Senior Assistant Attorney General
[e-mail]
Melanie J. Snyder
Assistant Attorney General
[e-mail]
State of Colorado
1525 Sherman Street, 7th Floor
Denver, CO 80203
Attorneys for Defendant

s/ George S. Isaacson
George S. Isaacson

31