Direct Marketing Assn. v. Brohl

(Slip Opinion) OCTOBER TERM, 2014 1
Syllabus
NOTE: Where it is feasible, a syllabus (headnote) will be released, as is
being done in connection with this case, at the time the opinion is issued.
The syllabus constitutes no part of the opinion of the Court but has been
prepared by the Reporter of Decisions for the convenience of the reader.
See United States v. Detroit Timber & Lumber Co., 200 U.S. 321, 337.
SUPREME COURT OF THE UNITED STATES
Syllabus
DIRECT MARKETING ASSOCIATION v. BROHL,
EXECUTIVE DIRECTOR, COLORADO DEPARTMENT
OF REVENUE
CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR
THE TENTH CIRCUIT
No. 13–1032. Argued December 8, 2014—Decided March 3, 2015
Colorado requires residents who purchase tangible personal prop-
erty from a retailer that does not collect sales or use taxes to file a re-
turn and remit those taxes directly to the State Department of Reve-
nue. To improve compliance, Colorado enacted legislation requiring
noncollecting retailers to notify any Colorado customer of the State’s
sales and use tax requirement and to report tax-related information
to those customers and the Colorado Department of Revenue.
Petitioner, a trade association of retailers, many of which sell to
Colorado residents but do not collect taxes, sued respondent, the Di-
rector of the Colorado Department of Revenue, in Federal District
Court, alleging that Colorado’s law violates the United States and
Colorado Constitutions. The District Court granted petitioner partial
summary judgment and permanently enjoined enforcement of the no-
tice and reporting requirements, but the Tenth Circuit reversed.
That court held that the Tax Injunction Act (TIA), which provides
that federal district 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,” 28 U.S. C. §1341, deprived the District Court of jurisdiction
over the suit.
Held: Petitioner’s suit is not barred by the TIA. Pp. 4–13.
(a) The relief sought by petitioner would not “enjoin, suspend or re-
strain the assessment, levy or collection” of Colorado’s sales and use
taxes. Pp. 4–12.
(1) The terms “assessment,” “levy,” and “collection” do not en-
2 DIRECT MARKETING ASSN. v. BROHL
Syllabus
compass Colorado’s enforcement of its notice and reporting require-
ments. These terms, read in light of the Federal Tax Code, refer to
discrete phases of the taxation process that do not include informa-
tional notices or private reports of information relevant to tax liabil-
ity. Information gathering has long been treated as a phase of tax
administration that occurs before assessment, levy, or collection.
See, e.g., 26 U.S. C. §6041 et seq. Respondent portrays the notice
and reporting requirements as part of the State’s assessment and col-
lection process, but the State’s assessment and collection procedures
are triggered after the State has received the returns and made the
deficiency determinations that the notice and reporting requirements
are meant to facilitate. Enforcement of the requirements may im-
prove the State’s ability to assess and ultimately collect its sales and
use taxes, but the TIA is not keyed to all such activities. Such a rule
would be inconsistent with the statute’s text and this Court’s rule fa-
voring clear boundaries in the interpretation of jurisdictional stat-
utes. See Hertz Corp. v. Friend, 559 U.S. 77, 94. Pp. 5–9.
(2) Petitioner’s suit cannot be understood to “restrain” the “as-
sessment, levy or collection” of Colorado’s sales and use taxes merely
because it may inhibit those activities. While the word “restrain” can
be defined as broadly as the Tenth Circuit defined it, it also has a
narrower meaning used in equity, which captures only those orders
that stop acts of assessment, levy, or collection. The context in which
the TIA uses the word “restrain” resolves this ambiguity in favor of
this narrower meaning. First, the verbs accompanying “restrain”—
“enjoin” and “suspend”—are terms of art in equity and refer to differ-
ent equitable remedies that restrict or stop official action, strongly
suggesting that “restrain” does the same. Additionally, “restrain”
acts on “assessment,” “levy,” and “collection,” a carefully selected list
of technical terms. The Tenth Circuit’s broad meaning would defeat
the precision of that list and render many of those terms surplusage.
Assigning “restrain” its meaning in equity is also consistent with this
Court’s recognition that the TIA “has its roots in equity practice,”
Tully v. Griffin, Inc., 429 U.S. 68, 73, and with the principle that
“[j]urisdictional rules should be clear,” Grable & Sons Metal Prod-
ucts, Inc. v. Darue Engineering & Mfg., 545 U.S. 308, 321 (THOMAS,
J., concurring). Pp. 10–12.
(b) The Court takes no position on whether a suit such as this
might be barred under the “comity doctrine,” which “counsels lower
federal courts to resist engagement in certain cases falling within
their jurisdiction,” Levin v. Commerce Energy, Inc., 560 U.S. 413,
421. The Court leaves it to the Tenth Circuit to decide on remand
whether the comity argument remains available to Colorado. P. 13.
735 F.3d 904, reversed and remanded.
Cite as: 575 U. S. ____ (2015) 3
Syllabus
THOMAS, J., delivered the opinion for a unanimous Court. KENNEDY,
J., filed a concurring opinion. GINSBURG, J., filed a concurring opinion,
in which BREYER, J., joined, and in which SOTOMAYOR, J., joined in part.
Cite as: 575 U. S. ____ (2015) 1
Opinion of the Court
NOTICE: This opinion is subject to formal revision before publication in the
preliminary print of the United States Reports. Readers are requested to
notify the Reporter of Decisions, Supreme Court of the United States, Wash-
ington, D. C. 20543, of any typographical or other formal errors, in order
that corrections may be made before the preliminary print goes to press.
SUPREME COURT OF THE UNITED STATES
_________________
No. 13–1032
_________________
DIRECT MARKETING ASSOCIATION, PETITIONER v.
BARBARA BROHL, EXECUTIVE DIRECTOR,
COLORADO DEPARTMENT OF REVENUE
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE TENTH CIRCUIT
[March 3, 2015]
JUSTICE THOMAS delivered the opinion of the Court.
In an effort to improve the collection of sales and use
taxes for items purchased online, the State of Colorado
passed a law requiring retailers that do not collect Colo-
rado sales or use tax to notify Colorado customers of their
use-tax liability and to report tax-related information to
customers and the Colorado Department of Revenue. We
must decide whether the Tax Injunction Act, which pro-
vides that federal district courts “shall not enjoin, suspend
or restrain the assessment, levy or collection of any tax
under State law,” 28 U.S. C. §1341, bars a suit to enjoin
the enforcement of this law. We hold that it does not.
I
A
Like many States, Colorado has a complementary sales-
and-use tax regime. Colorado imposes both a 2.9 percent
tax on the sale of tangible personal property within the
State, Colo. Rev. Stat. §§39–26–104(1)(a), 39–26–106(1)
(a)(II) (2014), and an equivalent use tax for any prop-
erty stored, used, or consumed in Colorado on which a
2 DIRECT MARKETING ASSN. v. BROHL
Opinion of the Court
sales tax was not paid to a retailer, §§39–26–202(1)(b), 39–
26–204(1). Retailers with a physical presence in Colorado
must collect the sales or use tax from consumers at the
point of sale and remit the proceeds to the Colorado De-
partment of Revenue (Department). §§39–26–105(1), 39–
26–106(2)(a). But under our negative Commerce Clause
precedents, Colorado may not require retailers who lack a
physical presence in the State to collect these taxes on
behalf of the Department. See Quill Corp. v. North Da-
kota, 504 U.S. 298, 315–318 (1992). Thus, Colorado re-
quires its consumers who purchase tangible personal
property from a retailer that does not collect these taxes (a
“noncollecting retailer”) to fill out a return and remit the
taxes to the Department directly. §39–26–204(1).
Voluntary compliance with the latter requirement is
relatively low, leading to a significant loss of tax revenue,
especially as Internet retailers have increasingly displaced
their brick-and-mortar kin. In the decade before this suit
was filed in 2010, e-commerce more than tripled. App. 28.
With approximately 25 percent of taxes unpaid on Inter-
net sales, Colorado estimated in 2010 that its revenue loss
attributable to noncompliance would grow by more than
$20 million each year. App. 30–31.
In hopes of stopping this trend, Colorado enacted legis-
lation in 2010 imposing notice and reporting obligations
on noncollecting retailers whose gross sales in Colorado
exceed $100,000. Three provisions of that Act, along with
their implementing regulations, are at issue here.
First, noncollecting retailers must “notify Colorado
purchasers that sales or use tax is due on certain purchases
. . . and that the state of Colorado requires the purchaser
to file a sales or use tax return.” §39–21–112(3.5)(c)(I);
see also 1 Colo. Code Regs. §201–1:39–21–112.3.5(2)
(2014), online at http://www.sos.co.us/CRR (as visited Feb.
27, 2015, and available in the Clerk of Court’s case file).
The retailer must provide this notice during each transac-
Cite as: 575 U. S. ____ (2015) 3
Opinion of the Court
tion with a Colorado purchaser, ibid., and is subject to a
penalty of $5 for each transaction in which it fails to do so,
Colo. Rev. Stat. §39–21–112(3.5)(c)(II).
Second, by January 31 of each year, each noncollecting
retailer must send a report to all Colorado purchasers who
bought more than $500 worth of goods from the retailer in
the previous year. §39–21–112(3.5)(d)(I); 1 Colo. Code
Regs. §§201–1:39–21–112.3.5(3)(a), (c). That report must
list the dates, categories, and amounts of those purchases.
Colo. Rev. Stat. §39–21–112(3.5)(d)(I); see also 1 Colo.
Code Regs. §§201–1:39–21–112.3.5(3)(a), (c). It must also
contain a notice stating that Colorado “requires a sales or
use tax return to be filed and sales or use tax paid on
certain Colorado purchases made by the purchaser from
the retailer.” Colo. Rev. Stat. §39–21–112(3.5)(d)(I)(A).
The retailer is subject to a penalty of $10 for each report it
fails to send. §39–21–112(3.5)(d)(III)(A); see also 1 Colo.
Code Regs. §201–1:39–21–112.3.5(3)(d).
Finally, by March 1 of each year, noncollecting retailers
must send a statement to the Department listing the
names of their Colorado customers, their known addresses,
and the total amount each Colorado customer paid for
Colorado purchases in the prior calendar year. Colo. Rev.
Stat. §39–21–112(3.5)(d)(II)(A); 1 Colo. Code Regs. §201–
1:39–21–112.3.5(4). A noncollecting retailer that fails to
make this report is subject to a penalty of $10 for each
customer that it should have listed in the report. Colo.
Rev. Stat. §39–21–112(3.5)(d)(III)(B); see also 1 Colo. Code
Regs. §201–1:39–21–112.3.5(4)(f).
B
Petitioner Direct Marketing Association is a trade asso-
ciation of businesses and organizations that market prod-
ucts directly to consumers, including those in Colorado,
via catalogs, print advertisements, broadcast media, and
the Internet. Many of its members have no physical
4 DIRECT MARKETING ASSN. v. BROHL
Opinion of the Court
presence in Colorado and choose not to collect Colorado
sales and use taxes on Colorado purchases. As a result,
they are subject to Colorado’s notice and reporting
requirements.
In 2010, Direct Marketing Association brought suit in
the United States District Court for the District of Colo-
rado against the Executive Director of the Department,
alleging that the notice and reporting requirements violate
provisions of the United States and Colorado Constitu-
tions. As relevant here, Direct Marketing Association
alleged that the provisions (1) discriminate against inter-
state commerce and (2) impose undue burdens on inter-
state commerce, all in violation of this Court’s negative
Commerce Clause precedents. At the request of both
parties, the District Court stayed all challenges except
these two, in order to facilitate expedited consideration. It
then granted partial summary judgment to Direct Market-
ing Association and permanently enjoined enforcement of
the notice and reporting requirements. App. to Pet. for
Cert. B–1 to B–25.
Exercising appellate jurisdiction under 28 U.S. C.
§1292(a)(1), the United States Court of Appeals for the
Tenth Circuit reversed. Without reaching the merits, the
Court of Appeals held that the District Court lacked juris-
diction over the suit because of the Tax Injunction Act
(TIA), 28 U.S. C. §1341. Acknowledging that the suit
“differs from the prototypical TIA case,” the Court of Ap-
peals nevertheless found it barred by the TIA because, if
successful, it “would limit, restrict, or hold back the state’s
chosen method of enforcing its tax laws and generating
revenue.” 735 F.3d 904, 913 (2013).
We granted certiorari, 573 U. S. ___ (2014), and now
reverse.
II
Enacted in 1937, the TIA provides that federal district
Cite as: 575 U. S. ____ (2015) 5
Opinion of the Court
courts “shall not enjoin, suspend or restrain the assess-
ment, 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.” §1341. The question before us is
whether the relief sought here would “enjoin, suspend or
restrain the assessment, levy or collection of any tax under
State law.” Because we conclude that it would not, we
need not consider whether “a plain, speedy and efficient
remedy may be had in the courts of ” Colorado.
A
The District Court enjoined state officials from enforcing
the notice and reporting requirements. Because an in-
junction is clearly a form of equitable relief barred by the
TIA, the question becomes whether the enforcement of the
notice and reporting requirements is an act of “assess-
ment, levy or collection.” We need not comprehensively
define these terms to conclude that they do not encompass
enforcement of the notice and reporting requirements at
issue.
In defining the terms of the TIA, we have looked to
federal tax law as a guide. See, e.g., Hibbs v. Winn, 542
U.S. 88, 100 (2004). Although the TIA does not concern
federal taxes, it was modeled on the Anti-Injunction Act
(AIA), which does. See Jefferson County v. Acker, 527
U.S. 423, 434–435 (1999). The AIA provides in relevant
part that “no suit for the purpose of restraining the as-
sessment or collection of any tax shall be maintained in
any court by any person.” 26 U.S. C. §7421(a). We as-
sume that words used in both Acts are generally used in
the same way, and we discern the meaning of the terms in
the AIA by reference to the broader Tax Code. Hibbs,
supra, at 102–105; id., at 115 (KENNEDY, J., dissenting).
Read in light of the Federal Tax Code at the time the TIA
was enacted (as well as today), these three terms refer to
discrete phases of the taxation process that do not include
6 DIRECT MARKETING ASSN. v. BROHL
Opinion of the Court
informational notices or private reports of information
relevant to tax liability.
To begin, the Federal Tax Code has long treated infor-
mation gathering as a phase of tax administration proce-
dure that occurs before assessment, levy, or collection.
See §§6001–6117; §§1500–1524 (1934 ed.); see also §1533
(“All provisions of law for the ascertainment of liability to
any tax, or the assessment or collection thereof, shall be
held to apply . . . ”). This step includes private reporting of
information used to determine tax liability, see, e.g.,
§1511(a), including reports by third parties who do not
owe the tax, see, e.g., §6041 et seq. (2012 ed.); see also
§§1512(a)–(b) (1934 ed.) (authorizing a collector or the
Commissioner of Internal Revenue, when a taxpayer fails
to file a return, to make a return “from his own knowledge
and from such information as he can obtain through tes-
timony or otherwise”).
“Assessment” is the next step in the process, and it
refers to the official recording of a taxpayer’s liability,
which occurs after information relevant to the calculation
of that liability is reported to the taxing authority. See
§1530. In Hibbs, the Court noted that “assessment,” as
used in the Internal Revenue Code, “involves a ‘recording’
of the amount the taxpayer owes the Government.” 542
U.S., at 100 (quoting §6203 (2000 ed.)). It might also be
understood more broadly to encompass the process by
which that amount is calculated. See United States v.
Galletti, 541 U.S. 114, 122 (2004); see also Hibbs, supra,
at 100, n. 3. But even understood more broadly, “assess-
ment” has long been treated in the Tax Code as an official
action taken based on information already reported to the
taxing authority. For example, not many years before it
passed the TIA, Congress passed a law providing that the
filing of a return would start the running of the clock for a
timely assessment. See, e.g., Revenue Act of 1924, Pub. L.
68–176, §277(a), 43 Stat. 299. Thus, assessment was
Cite as: 575 U. S. ____ (2015) 7
Opinion of the Court
understood as a step in the taxation process that occurred
after, and was distinct from, the step of reporting infor-
mation pertaining to tax liability.
“Levy,” at least as it is defined in the Federal Tax Code,
refers to a specific mode of collection under which the
Secretary of the Treasury distrains and seizes a recalci-
trant taxpayer’s property. See 26 U.S. C. §6331 (2012
ed.); §1582 (1934 ed.). Because the word “levy” does not
appear in the AIA, however, one could argue that its
meaning in the TIA is not tied to the meaning of the term
as used in federal tax law. If that were the case, one
might look to contemporaneous dictionaries, which defined
“levy” as the legislative function of laying or imposing a
tax and the executive functions of assessing, recording,
and collecting the amount a taxpayer owes. See Black’s
Law Dictionary 1093 (3d ed. 1933) (Black’s); see also
Webster’s New International Dictionary 1423 (2d ed.
1939) (“To raise or collect, as by assessment, execution, or
other legal process, etc.; to exact or impose by authority
. . . ”); §§1540, 1544 (using “levying” and “levied” in the
more general sense of an executive imposition of a tax
liability). But under any of these definitions, “levy” would
be limited to an official governmental action imposing,
determining the amount of, or securing payment on a tax.
Finally, “collection” is the act of obtaining payment of
taxes due. See Black’s 349 (defining “collect” as “to obtain
payment or liquidation” of a debt or claim). It might be
understood narrowly as a step in the taxation process that
occurs after a formal assessment. Consistent with this
understanding, we have previously described it as part of
the “enforcement process . . . that ‘assessment’ sets in
motion.” Hibbs, supra, at 102, n. 4. The Federal Tax Code
at the time the TIA was enacted provided for the Commis-
sioner of Internal Revenue to certify a list of assessments
“to the proper collectors . . . who [would] proceed to collect
and account for the taxes and penalties so certified.”
8 DIRECT MARKETING ASSN. v. BROHL
Opinion of the Court
§1531. That collection process began with the collector
“giv[ing] notice to each person liable to pay any taxes
stated [in the list] . . . stating the amount of such taxes
and demanding payment thereof.” §1545(a). When a
person failed to pay, the Government had various means
to collect the amount due, including liens, §1560, distraint,
§1580, forfeiture, and other legal proceedings, §1640.
Today’s Tax Code continues to authorize collection of taxes
by these methods. §6302 (2012 ed.). “Collection” might
also be understood more broadly to encompass the receipt
of a tax payment before a formal assessment occurs. For
example, at the time the TIA was enacted, the Tax Code
provided for the assessment of money already received by
a person “required to collect or withhold any internal-
revenue tax from any other person,” suggesting that at
least some act of collection might occur before a formal
assessment. §1551 (1934 ed.) (emphasis added). Either
way, “collection” is a separate step in the taxation process
from assessment and the reporting on which assessment is
based.
So defined, these terms do not encompass Colorado’s
enforcement of its notice and reporting requirements. The
Executive Director does not seriously contend that the
provisions at issue here involve a “levy”; instead she por-
trays them as part of the process of assessment and collec-
tion. But the notice and reporting requirements precede
the steps of “assessment” and “collection.” The notice
given to Colorado consumers, for example, informs them of
their use-tax liability and prompts them to keep a record
of taxable purchases that they will report to the State at
some future point. The annual summary that the retailers
send to consumers provides them with a reminder of that
use-tax liability and the information they need to fill out
their annual returns. And the report the retailers file
with the Department facilitates audits to determine tax
deficiencies. After each of these notices or reports is filed,
Cite as: 575 U. S. ____ (2015) 9
Opinion of the Court
the State still needs to take further action to assess the
taxpayer’s use-tax liability and to collect payment from
him. See Colo. Rev. Stat. §39–26–204(3) (describing the
procedure for “assessing and collecting [use] taxes” on the
basis of returns filed by consumers and collecting retail-
ers). Colorado law provides for specific assessment and
collection procedures that are triggered after the State has
received the returns and made the deficiency determina-
tions that the notice and reporting requirements are
meant to facilitate. See §39–26–210; 1 Colo. Code Regs.
§201–1:39–21–107(1) (“The statute of limitations on as-
sessments of . . . sales [and] use . . . tax . . . shall be three
years from the date the return was filed . . . ”).
Enforcement of the notice and reporting requirements
may improve Colorado’s ability to assess and ultimately
collect its sales and use taxes from consumers, but 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 interpreta-
tion of jurisdictional statutes. See Hertz Corp. v. Friend,
559 U.S. 77, 94 (2010). The TIA is keyed to the acts of
assessment, levy, and collection themselves, and enforce-
ment of the notice and reporting requirements is none of
these.1
——————
1 Our decision in California v. Grace Brethren Church, 457 U.S. 393
(1982), is not to the contrary. In that case, California churches and
religious schools sought “to enjoin the State from collecting both tax
information and the state [unemployment] tax,” based, in part, on the
argument that “recordkeeping, registration, and reporting require-
ments” violate the Establishment Clause by creating the potential for
excessive entanglement with religion. Id., at 398, 415. We held that
the TIA barred that suit. Id., at 396. But nowhere in their brief to this
Court did the plaintiffs in Grace Brethren Church separate out their
request to enjoin the tax from their request for relief from the record-
keeping and reporting requirements. See Brief for Grace Brethren
Church et al., in California v. Grace Brethren Church, O. T. 1981, No.
10 DIRECT MARKETING ASSN. v. BROHL
Opinion of the Court
B
Apparently concluding that enforcement of the notice
and reporting requirements was not itself an act of “as-
sessment, levy or collection,” the Court of Appeals did not
rely on those terms to hold that the TIA barred the suit.
Instead, it adopted a broad definition of the word “re-
strain” in the TIA, which bars not only suits to “enjoin . . .
assessment, levy or collection” of a state tax but also suits
to “suspend or restrain” those activities. Specifically, the
Court of Appeals concluded that the TIA bars any suit
that would “limit, restrict, or hold back” the assessment,
levy, or collection of state taxes. 735 F.3d, at 913. Be-
cause the notice and reporting requirements are intended
to facilitate collection of taxes, the Court of Appeals rea-
soned that the relief Direct Marketing Association sought
and received would “limit, restrict, or hold back” the De-
partment’s collection efforts. That was error.
“Restrain,” standing alone, can have several meanings.
One is the broad meaning given by the Court of Appeals,
which captures orders that merely inhibit acts of “assess-
ment, levy and collection.” See Black’s 1548. Another,
narrower meaning, however, is “[t]o prohibit from action;
to put compulsion upon . . . to enjoin,” ibid., which cap-
tures only those orders that stop (or perhaps compel) acts
of “assessment, levy and collection.”
To resolve this ambiguity, we look to the context in
which the word is used. Robinson v. Shell Oil Co., 519
U.S. 337, 341 (1997). The statutory context provides
several clues that lead us to conclude that the TIA uses
the word “restrain” in its narrower sense. Looking to the
company “restrain” keeps, Jarecki v. G. D. Searle & Co.,
367 U.S. 303, 307 (1961), we first note that the words
——————
81–31 etc., pp. 34–38. Grace Brethren Church thus cannot fairly be
read as resolving, or even considering, the question presented in this
case.
Cite as: 575 U. S. ____ (2015) 11
Opinion of the Court
“enjoin” and “suspend” are terms of art in equity, see Fair
Assessment in Real Estate Assn., Inc. v. McNary, 454 U.S.
100, 126, and n. 13 (1981) (Brennan, J., concurring). They
refer to different equitable remedies that restrict or stop
official action to varying degrees, strongly suggesting that
“restrain” does the same. See Hibbs, 524 U.S., at 118
(KENNEDY, J., dissenting); see also Jefferson County, 572
U.S., at 433.
Additionally, as used in the TIA, “restrain” acts on a
carefully selected list of technical terms—“assessment,
levy, collection”—not on an all-encompassing term, like
“taxation.” To give “restrain” the broad meaning selected
by the Court of Appeals would be to defeat the precision of
that list, as virtually any court action related to any phase
of taxation might be said to “hold back” “collection.” Such
a broad construction would thus render “assessment [and]
levy”—not to mention “enjoin [and] suspend”—mere sur-
plusage, a result we try to avoid. See Hibbs, supra, at 101
(interpreting the terms of the TIA to avoid superfluity).
Assigning the word “restrain” its meaning in equity is
also consistent with our recognition that the TIA “has its
roots in equity practice.” Tully v. Griffin, Inc., 429 U.S.
68, 73 (1976). Under the comity doctrine that the TIA
partially codifies, Levin v. Commerce Energy, Inc., 560
U.S. 413, 431–432 (2010), courts of equity exercised their
“sound discretion” to withhold certain forms of extraordi-
nary relief, Great Lakes Dredge & Dock Co. v. Huffman,
319 U.S. 293, 297 (1943); see also Dows v. Chicago, 11
Wall. 108, 110 (1871). Even while refusing to grant cer-
tain forms of equitable relief, those courts did not refuse to
hear every suit that would have a negative impact on
States’ revenues. See, e.g., Henrietta Mills v. Rutherford
County, 281 U.S. 121, 127 (1930); see also 5 R. Paul & J.
Mertens, Law of Federal Income Taxation §42.139 (1934)
(discussing the word “restraining” in the AIA in its equi-
table sense). The Court of Appeals’ definition of “restrain,”
12 DIRECT MARKETING ASSN. v. BROHL
Opinion of the Court
however, leads the TIA to bar every suit with such a nega-
tive impact. This history thus further supports the con-
clusion that Congress used “restrain” in its narrower,
equitable sense, rather than in the broad sense chosen by
the Court of Appeals.
Finally, adopting a narrower definition is consistent
with the rule that “[j]urisdictional rules should be clear.”
Grable & Sons Metal Products, Inc. v. Darue Engineering
& Mfg., 545 U.S. 308, 321 (2005) (THOMAS, J., concur-
ring); see also Hertz Corp., supra, at 94. The question—at
least for negative injunctions—is whether the relief to
some degree stops “assessment, levy or collection,” not
whether it merely inhibits them. The Court of Appeals’
definition of “restrain,” by contrast, produces a “ ‘vague
and obscure’ ” boundary that would result in both needless
litigation and uncalled-for dismissal, Sisson v. Ruby, 497
U.S. 358, 375 (1990) (SCALIA, J., concurring in judgment),
all in the name of a jurisdictional statute meant to protect
state resources.
Applying the correct definition, a suit cannot be under-
stood to “restrain” the “assessment, levy or collection” of a
state tax if it merely inhibits those activities.2
——————
2 Because the text of the TIA resolves this case, we decline the par-
ties’ invitation to derive various per se rules from our decision in Hibbs
v. Winn, 542 U.S. 88 (2004). In Hibbs, the Court held that the TIA did
not bar an Establishment Clause challenge to a state tax credit for
charitable donations to organizations that provided scholarships for
children to attend parochial schools. Id., at 94–96. Direct Marketing
Association argues that Hibbs stands for the proposition that the TIA
has no application to third-party suits by nontaxpayers who do not
challenge their own liability. Brief for Petitioner 18–21. The Executive
Director acknowledges that Hibbs created an exception to the TIA, but
argues that the exception does not apply to suits that restrain activities
that have a collection-propelling function. Brief for Respondent 25–33.
In Levin v. Commerce Energy, Inc., 560 U.S. 413 (2010), we empha-
sized the narrow reach of Hibbs, explaining that it was not “a run-of-
the-mine tax case,” 560 U.S., at 430. As we explained, Hibbs held only
“that the TIA did not preclude a federal challenge by a third party who
Cite as: 575 U. S. ____ (2015) 13
Opinion of the Court
III
We take no position on whether a suit such as this one
might nevertheless be barred under the “comity doctrine,”
which “counsels lower federal courts to resist engagement
in certain cases falling within their jurisdiction.” Levin,
supra, at 421. Under this doctrine, federal courts refrain
from “interfer[ing] . . . with the fiscal operations of the
state governments . . . in all cases where the Federal
rights of the persons could otherwise be preserved unim-
paired. ” Id., at 422 (internal quotation marks omitted).
Unlike the TIA, the comity doctrine is nonjurisdictional.
And here, Colorado did not seek comity from either of the
courts below. Moreover, we do not understand the Court
of Appeals’ footnote concerning comity to be a holding that
comity compels dismissal. See 735 F.3d, at 920, n. 11
(“Although we remand to dismiss [petitioner’s] claims
pursuant to the TIA, we note that the doctrine of comity
also militates in favor of dismissal”). Accordingly, we
leave it to the Tenth Circuit to decide on remand whether
the comity argument remains available to Colorado.
* * *
Because the TIA does not bar petitioner’s suit, we re-
verse the judgment of the Court of Appeals. Like the
Court of Appeals, we express no view on the merits of
those claims and remand the case for further proceedings
consistent with this opinion.
It is so ordered.
——————
objected to a tax credit received by others, but in no way objected to her
own liability under any revenue-raising tax provision.” 560 U.S., at
430; accord, id., at 434 (THOMAS, J., concurring in judgment). Because
we have already concluded that the TIA does not preclude this chal-
lenge, it is unnecessary to consider whether and how the narrow rule
announced in Hibbs would apply to suits like this one.
Cite as: 575 U. S. ____ (2015) 1
KENNEDY, J., concurring
SUPREME COURT OF THE UNITED STATES
_________________
No. 13–1032
_________________
DIRECT MARKETING ASSOCIATION, PETITIONER v.
BARBARA BROHL, EXECUTIVE DIRECTOR,
COLORADO DEPARTMENT OF REVENUE
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE TENTH CIRCUIT
[March 3, 2015]
JUSTICE KENNEDY, concurring.
The opinion of the Court has my unqualified join and
assent, for in my view it is complete and correct. It does
seem appropriate, and indeed necessary, to add this sepa-
rate statement concerning what may well be a serious,
continuing injustice faced by Colorado and many other
States.
Almost half a century ago, this Court determined that,
under its Commerce Clause jurisprudence, States cannot
require a business to collect use taxes—which are the
equivalent of sales taxes for out-of-state purchases—if the
business does not have a physical presence in the State.
National Bellas Hess, Inc. v. Department of Revenue of Ill.,
386 U.S. 753 (1967). Use taxes are still due, but under
Bellas Hess they must be collected from and paid by the
customer, not the out-of-state seller. Id., at 758.
Twenty-five years later, the Court relied on stare decisis
to reaffirm the physical presence requirement and to
reject attempts to require a mail-order business to collect
and pay use taxes. Quill Corp. v. North Dakota, 504 U.S.
298, 311 (1992). This was despite the fact that under the
more recent and refined test elaborated in Complete Auto
Transit, Inc. v. Brady, 430 U.S. 274 (1977), “contemporary
Commerce Clause jurisprudence might not dictate the
2 DIRECT MARKETING ASSN. v. BROHL
KENNEDY, J., concurring
same result” as the Court had reached in Bellas Hess.
Quill Corp., 504 U.S., at 311. In other words, the Quill
majority acknowledged the prospect that its conclusion
was wrong when the case was decided. Still, the Court
determined vendors who had no physical presence in a
State did not have the “substantial nexus with the taxing
state” necessary to impose tax-collection duties under the
Commerce Clause. Id., at 311–313. Three Justices con-
curred in the judgment, stating their votes to uphold the
rule of Bellas Hess were based on stare decisis alone. Id.,
at 319 (SCALIA, J., joined by KENNEDY, J., and THOMAS, J.,
concurring in part and concurring in judgment). This
further underscores the tenuous nature of that holding—a
holding now inflicting extreme harm and unfairness on
the States.
In Quill, the Court should have taken the opportunity to
reevaluate Bellas Hess not only in light of Complete Auto
but also in view of the dramatic technological and social
changes that had taken place in our increasingly intercon-
nected economy. There is a powerful case to be made that
a retailer doing extensive business within a State has a
sufficiently “substantial nexus” to justify imposing some
minor tax-collection duty, even if that business is done
through mail or the Internet. After all, “interstate com-
merce may be required to pay its fair share of state taxes.”
D. H. Holmes Co. v. McNamara, 486 U.S. 24, 31 (1988).
This argument has grown stronger, and the cause more
urgent, with time. When the Court decided Quill, mail-
order sales in the United States totaled $180 billion. 504
U.S., at 329 (White, J., concurring in part and dissenting
in part). But in 1992, the Internet was in its infancy. By
2008, e-commerce sales alone totaled $3.16 trillion per
year in the United States. App. 28.
Because of Quill and Bellas Hess, States have been
unable to collect many of the taxes due on these purchases.
California, for example, has estimated that it is able to
Cite as: 575 U. S. ____ (2015) 3
KENNEDY, J., concurring
collect only about 4% of the use taxes due on sales from
out-of-state vendors. See California State Board of Equal-
ization, Revenue Estimate: Electronic Commerce and Mail
Order Sales, Rev. 8/13, p. 7 (2013) (Table 3). The result
has been a startling revenue shortfall in many States,
with concomitant unfairness to local retailers and their
customers who do pay taxes at the register. The facts of
this case exemplify that trend: Colorado’s losses in 2012
are estimated to be around $170 million. See D. Bruce,
W. Fox, & L. Luna, State and Local Government Sales Tax
Revenue Losses from Electronic Commerce 11 (2009)
(Table 5). States’ education systems, healthcare services,
and infrastructure are weakened as a result.
The Internet has caused far-reaching systemic and
structural changes in the economy, and, indeed, in many
other societal dimensions. Although online businesses
may not have a physical presence in some States, the Web
has, in many ways, brought the average American closer
to most major retailers. A connection to a shopper’s favor-
ite store is a click away—regardless of how close or far the
nearest storefront. See PricewaterhouseCoopers, Under-
standing How U. S. Online Shoppers Are Reshaping the
Retail Experience 3 (Mar. 2012) (nearly 70% of American
consumers shopped online in 2011). Today buyers have
almost instant access to most retailers via cell phones,
tablets, and laptops. As a result, a business may be pre-
sent in a State in a meaningful way without that presence
being physical in the traditional sense of the term.
Given these changes in technology and consumer so-
phistication, it is unwise to delay any longer a reconsider-
ation of the Court’s holding in Quill. A case questionable
even when decided, Quill now harms States to a degree far
greater than could have been anticipated earlier. See
Pearson v. Callahan, 555 U.S. 223, 233 (2009) (stare
decisis weakened where “experience has pointed up the
precedent’s shortcomings”). It should be left in place only
4 DIRECT MARKETING ASSN. v. BROHL
KENNEDY, J., concurring
if a powerful showing can be made that its rationale is still
correct.
The instant case does not raise this issue in a manner
appropriate for the Court to address it. It does provide,
however, the means to note the importance of reconsider-
ing doubtful authority. The legal system should find an
appropriate case for this Court to reexamine Quill and
Bellas Hess.
Cite as: 575 U. S. ____ (2015) 1
GINSBURG, J., concurring
SUPREME COURT OF THE UNITED STATES
_________________
No. 13–1032
_________________
DIRECT MARKETING ASSOCIATION, PETITIONER v.
BARBARA BROHL, EXECUTIVE DIRECTOR,
COLORADO DEPARTMENT OF REVENUE
ON WRIT OF CERTIORARI TO THE UNITED STATES COURT OF
APPEALS FOR THE TENTH CIRCUIT
[March 3, 2015]
JUSTICE GINSBURG, with whom JUSTICE BREYER joins,
concurring.*
I write separately to make two observations.
First, as the Court has observed, Congress designed the
Tax Injunction Act not “to prevent federal-court interfer-
ence with all aspects of state tax administration,” Hibbs v.
Winn, 542 U.S. 88, 105 (2004) (internal quotation marks
omitted), but more modestly to stop litigants from using
federal courts to circumvent States’ “pay without delay,
then sue for a refund” regimes. See id., at 104–105 (“[I]n
enacting the [Tax Injunction Act], Congress trained its
attention on taxpayers who sought to avoid paying their
tax bill by pursuing a challenge route other than the one
specified by the taxing authority.”). This suit does not
implicate that congressional objective. The Direct Market-
ing Association is not challenging its own or anyone else’s
tax liability or tax collection responsibilities. And the
claim is not one likely to be pursued in a state refund
action. A different question would be posed, however, by a
suit to enjoin reporting obligations imposed on a taxpayer
or tax collector, e.g., an employer or an in-state retailer,
——————
* JUSTICE SOTOMAYOR joins this opinion with respect to the first ob-
servation.
2 DIRECT MARKETING ASSN. v. BROHL
GINSBURG, J., concurring
litigation in lieu of a direct challenge to an “assessment,”
“levy,” or “collection.” The Court does not reach today the
question whether the claims in such a suit, i.e., claims
suitable for a refund action, are barred by the Tax In-
junction Act. On that understanding, I join the Court’s
opinion.
Second, the Court’s decision in this case, I emphasize, is
entirely consistent with our decision in Hibbs. The plain-
tiffs in Hibbs sought to enjoin certain state tax credits.
That suit, like the action here, did not directly challenge
“acts of assessment, levy, and collection themselves,” ante,
at 9. See Hibbs, 542 U.S., at 96, 99–102. Moreover, far
from threatening to deplete the State’s coffers, “the relief
requested [in Hibbs] would [have] result[ed] in the state’s
receiving more funds that could be used for the public
benefit.” Id., at 96 (internal quotation marks omitted;
emphasis added). Even a suit that somewhat “inhibits”
“assessment, levy, or collection,” the Court holds today,
falls outside the scope of the Tax Injunction Act. Ante, at
12. That holding casts no shadow on Hibbs’ conclusion
that a suit further removed from the Act’s “state-revenue-
protective moorings,” 542 U.S., at 106, remains outside
the Act’s scope.