Convinced that the city’s position is correct, Chicago officials are appealing the ruling earlier this year that secondary ticketing giant StubHub does not have to collect the city’s 8 percent amusement tax from its broker clients and resellers on the resale of tickets.
Attorney’s for the city recently filed a Notice of Appeal in U.S. District Court for the Northern District of Illinois against the ruling from U.S. District Court Judge Wayne R. Andersen, in which he supported StubHub’s assertion that collecting the tax would have been logistically difficult and that the company was already doing enough to inform brokers of the tax.
In recent years, the city has staunchly defended the tax and has taken other brokers to court over it. StubHub did not dispute the legality of the tax but stressed that as an exchange it was not liable for its collection. Local brokers, while not enamored of the tax, have found themselves on the city’s side because they believe they are at a competitive disadvantage because they have to collect the tax, while brokers outside of the city using StubHub do not collect it. Therefore, tickets resold by Chicago brokers are sometimes more expensive.
“By this appeal, the City will ask the court of appeals to reverse the orders and judgment of the district court, remand the case to the district court for further proceedings, and grant such other relief as the City may be entitled to on this appeal,” the appeal document states.
Because secondary ticket exchanges have become so prevalent over the past decade, where thousands of brokers and fans resell hundreds of thousands of tickets annually, how the case ends up could have far-reaching ramifications on the secondary ticket market.
“It will be interesting to see what the Seventh Circuit does,” Chicago attorney John Moore told TickeNews. Moore has represented ticket brokers at various times over the past 15 years, and stressed that the court primarily stuck to a single issue, that of state law not applying to ticket brokers but only to “internet auction listing services.”
“Judge Anderson made his decision on only one of the grounds that StubHub raised in its motion to dismiss. However, the appellate court can affirm the lower court’s decision on any basis supported by the record. So even if the appellate court believes the basis of Judge Anderson’s decision is wrong, it can still affirm the decision on the basis of one of StubHub’s other arguments such as Section 230 of the Communication Decency Act,” Moore added.
Section 230 of the Communications Decency Act essentially protects internet service providers and users from legal action against them based on the activity of others.
Ed Walsh, spokesperson the city’s Department of Revenue, declined to comment and referred question to the Chicago Department of Law. Jennifer Hoyle of the legal department did not return messages seeking comment. The city could lobby the state legislature to create a law that would require StubHub and other exchanges to collect the tax.
“We think the U.S. District Court got it right in dismissing the case, and we have confidence that the Seventh Circuit will affirm the dismissal,” Joellen Ferrer, spokesperson for StubHub, told TicketNews.
