Cook County’s Outrageous Attempt To Charge Plaintiffs $17 Million In Beverage Tax Case – WP Original

By: Mark Glennon*

The legal defense of Cook County’s new beverage tax took an astonishing turn this week — a dangerous one.

First, the background. On June 30 a Cook County judge issued a temporary restraining order against enforcement of Cook County’s new beverage tax. The plaintiffs — the Illinois Retail Merchants Association and some grocers — argued that the tax is unconstitutional. An appellate court upheld that order on July 10, and the lower court extended its order for an additional week on July 21. But on July 28 the court determined on the merits that the tax was constitutional, denying a request for a permanent injunction and letting the tax go into effect.

Well, now Cook County has gone back to court and demanded plaintiffs pay it $17 million as compensation for taxes that weren’t collected while the tax was on hold.

The danger inherent in penalizing — or even trying to penalize — those who bring plausible constitutional claims in good faith should be obvious. If Cook County sets a precedent, claimants will be frightened by the prospect of being liable for damages even though though the damages result from legal due process. Just the cost of litigating the damage claim would chill the assertion of constitutional rights for those with limited means.

Cook County’s claim is apparently unprecedented. As reported by Crain’s yesterday, the judge is allowing Cook County to brief its case for the $17 million but said, “I’m willing to do that only because everyone is entitled to that. But let me just make sure that everybody understands my perspective. I could find no such case of a governmental body suing a taxpayer who had challenged a tax.”

It’s not like the original lawsuit was unfounded or frivolous. The initial temporary restraining order required a showing of likelihood of prevailing on the merits, and that order was upheld on appeal. That the judge ultimately ruled against the plaintiffs on the merits doesn’t matter.

Is there anything deterring other governments in Illinois from doing what Cook County is doing?  One possibility is sanctions against lawyers. In other words, the question shouldn’t be whether the retailers should be penalized, it’s whether the county’s lawyers should be.

Lawyers can be sanctioned for making frivolous or bad faith claims. In Illinois, that’s embodied in Supreme Court Rule 137. Their positions must be “warranted by existing law or a good-faith argument for the extension, modification, or reversal of existing law.” Their claims cannot be “interposed for any improper purpose, such as to harass or to cause unnecessary delay or needless increase in the cost of litigation.”

It sure looks like Cook County’s claim for the $17 million is intended at least partially to deter assertion of challenges to taxes it assesses. And if the judge is right that the county’s claim has no precedent, the county’s lawyers should be expected to come up with something else supporting their position or, I would hope, face sanctioning.

Maybe they can; I don’t know. The judge was right to let them brief their case.

There’s also a question whether Cook County’s claim violates Illinois’ “anti-SLAPP law” — “strategic lawsuit against public participation.” The question was raised in an INN article yesterday. That law provides for dismissal of any claim that is “based on, relates to, or is in response to any act or acts of the moving party in furtherance of the moving party’s rights of petition, speech, association, or to otherwise participate in government.”

Illinois courts have interpreted that law narrowly, however, and there’s apparently no remedy available beyond dismissal of the claim.

The best we can hope for is that the judge who rules on Cook County’s claim slams the door hard against it — unequivocally. That’s the precedent that needs to be set so lawyers for other taxing authorities know they’ll have no good faith basis for trying to copy Cook County. The politicians might well want to continue abusing power by threatening claims with little merit, but at least their lawyers would then face sanctions.

It won’t do if the judge disposes of Cook County’s claim on some tangential matter. For example, there’s a question whether Cook Count’s damages are too speculative to be legally recoverable. If the decision is based on something like that the door will be left open.

The judge seems to understand what’s at issue. That’s Cook County Circuit Court Judge Daniel Kubasiak. In the hearing this past week he said, according to Crain’s, “I can tell you that I am troubled by this, the chilling effect of the government saying that you best not challenge us because if you are proven wrong, we will come and get damages from you.”

Let’s hope he’s troubled enough that he pounds a stake through the heart of Cook County’s claim.

*Mark Glennon is founder of Wirepoints. Opinions expressed are his own.

UPDATE 8/8/17: Cook County has now abandoned its effort to collect the money.