Having received a ruling from the Illinois Supreme Court on certain questions in the case, the 7th Circuit Court of Appeals this week dismissed the city of Chicago’s amusement tax collection lawsuit against StubHub.
A lower court had dismissed the case last year, at which point the city appealed to the 7th Circuit Court. The circuit court then asked the state Supreme Court to interpret certain questions surrounding Illinois’ legislative laws, and the Supreme Court handed down their ruling last month.
Under the state Supreme Court’s decision, the legislature gave marketplaces like StubHub “the choice of collecting and remitting all federal, state, and local taxes, or notifying resellers of their own liabilities for any applicable local amusement taxes.”
Armed with the Supreme Court’s ruling, the 7th Circuit Court issued its decision on Wednesday, November 23, upholding the lower court’s dismissal.
In its questions to the Supreme Court, the 7th Circuit Court wrote that the Supreme Court had not addressed some matters that were under dispute between the city and StubHub. The questions included whether a 2005 state legislative amendment to the tax law “prevents Chicago from defining Internet auction sites as resellers’ agents”; and whether the amusement tax is a tax on “tangible personal property.”
The City of Chicago believed StubHub should collect an amusement tax, which the city requires local ticket brokers do. StubHub argued in part that, as an online marketplace, the company was protected from not collecting the tax under a portion of the Communications Decency Act (CDA).
StubHub notified resellers of Chicago event tickets about the tax. Among its arguments, StubHub claimed that it was protected under the CDA from legal challenges based on the activity of others.
A subsection of the CDA that StubHub used in its defense states: “No provider or user of an interactive computer service shall be treated as the publisher or speaker of any information provided by another information content provider.”
The city’s legal department is reviewing the dismissal, and city has not released a statement. A spokesperson for StubHub did not immediately respond to a request for comment.