DMA Files Brief in Supreme Court Case vs. Colorado


The Direct Marketing Association (DMA) this week filed a brief with the Supreme Court in a case it brought to challenge Colorado’s right to impose regulations on non-taxpaying entities located outside the state. DMA had originally brought suit in U.S. District Court in Colorado and won a preliminary injunction, but the Tenth Circuit Court of Appeals vacated that decision, holding that the federal court lacked the jurisdiction to have made it.

In July the U.S. Supreme Court decided to hear the association’s appeal in DMA v. Brohl in its fall session. DMA’s brief takes issue with the Circuit Court’s contention that, under the Tax Injunction Act (TIA), DMA should be required to re-file its case in Colorado state court.

“If that happens, marketers and retailers doing business with residents of a state would be forced to eat that state’s home cooking,” says Chris Oswald, DMA’s VP of State Affairs. “We in America have a dual court system comprised of federal and state courts. Having access to the federal courts gives you a neutral body to consult.”

DMA’s brief contends that TIA does not prohibit challenges brought by non-taxpayers that are not contesting state tax liability on the part of businesses, such as the association. It further holds that the Tenth Circuit mistakenly identified Colarado’s reporting requirements as collection methods, when in fact they were reporting requirements. Finally, DMA makes the philosophical case that access to federal courts by companies and individuals from out-of-state is a binding tenet of the U.S. judicial system.

DMA’s members fear that the spread of such cases in other states could compromise their privacy commitments to their customers. The original case brought by DMA against Colorado complained that out-of-state merchants were required to turn over personally identifiable information on their customers, while in-state merchants were not.

“Marketers should care about this case because, if DMA loses, remote sellers that have never been physically present within a state could be forced to venture to that state to challenge state laws and lose the option of using federal courts,” Oswald warns.

The Colorado Department of Revenue must file its brief by mid-October and oral arguments in the Supreme Court are scheduled for December 8. The Court’s decision on the case is expected next spring.

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