The 1st Circuit has added another twist to the long running battle between Coors and Puerto Rico. Rather than reach the dormant commerce clause argument, the 1st Circuit upheld the dismissal of the case on the ground of privity. In the opinion , Chief Judge Lynch stated “The question presented in this case is whether the Supreme Court’s decision in Levin v. Commerce Energy, Inc., 130 S. Ct. 2323 (2010), requires the federal courts to refrain from exercising jurisdiction over this case, a dormant Commerce Clause attack on Puerto Rico’s differential taxation of categories of brewers. We answer that question affirmatively and affirm the district court’s dismissal on comity grounds.
He later noted: We do not address the merits of Coors’s challenge to the beer tax regime and make no ruling as to the validity of that regime under the dormant Commerce Clause. Should Coors choose to pursue its case in the Puerto Rico courts, it may press its federal constitutional claims there and, should it receive an unfavorable disposition, it may seek further review of any substantial federal claims in the U.S. Supreme Court.
I guess we will wait and see if Coors appeals to the US Supreme Court or seeks to start litigation to challenge the small brewer tax rate in the Puerto Rico Courts.
(Earlier Post) 1st Circuit Holds Oral Argument on Coors Challenge to Small Brewer Tax Rate in Puerto Rico
Earlier this month, the 1st Circuit held oral arguments on the long-standing effort by Coors to challenge the Puerto Rico excise tax system. The vast majority of this argument discussed recent Supreme Court decisions and whether comity should preclude these sorts of tax challenges. A link for your listening pleasure is here.
(Earlier Post) Coors Seeks Appeal in 1st Circuit in Puerto Rico Tax Case
Well here we go. The 1st Circuit will get another chance to address alcohol litigation. Coors has filed a notice of appeal to the 1st Circuit on their attempt to strike down the small brewer tax rate in Puerto Rico. Their notice of appeal is here.
District Judge Rules Against Coors
District Judge Daniel Dominguez has ruled against Coors in a comprehensive opinion. Applying a recent Supreme Court decision that overturned the 2009 1st Circuit case in this litigation, the court approved the magistrate’s decision. The opinion can be found here.
Coors Files Objections to the Magistrate Judge’s Report and Recommendation
Coors has filed objections to the Magistrate Judge’s report and recommendations. Most of the objections concentrate on the position of Coors that the Magistrate Judge got the dorman Commerce Clause language wrong. The long-standing procedural history of this case is also addressed. A copy of Coors filing can be found here.
(Earlier Post) Magistrate Rules for Puerto Rico and Against Coors
Chief United States Magistrate Judge Justo Arenas has sided with Puerto Rico and is seeking to dismiss the action brought by Coors against the Puerto Rico tax rate for small brewers. This vein of litigation actually goes back over 30 years but the present matter started in 2006. In a wide-ranging opinion covering many subjects the Magistrate sided with the arguments of Puerto Rico. He dismissed the claims of Coors that the case violated the dormant commerce clause finding that there was no facial or intentional discrimination. His opinion can be found here. Coors has until the 17th to file objections with the Magistrate.
(Earlier Post) Puerto Rico Seeks to Dismiss Coors Lawsuit Challenging Small Brewer Tax Rate
In a new filing, the government of Puerto Rico has sought to dismiss the Coors lawsuit against Puerto Rico. In its lawsuit Coors Brewing seeks to eliminate the lower tax rate on small brewers. Coors claims that it does not seek to lower the taxes Coors pays, just eliminate the tax break small brewers have under Puerto Rico law. However, a recent decision by the United States Supreme Court in Levin v. Commerce Energy has made it clearer that deference to state courts on state taxation matters is important even where someone (like Coors) claims they are not trying to lower their own taxes. The Levin decision can be found here. The filing by Puerto Rico notes that the 1st Circuit returned this case to Puerto Rico district court by relying on a line of reasoning now discredited by the Levin decision. As such, Puerto Rico’s brief argues that this matter should be dismissed in its entirety.
This case is being closely watched to see how state alcohol tax rates are impacted in the future. Will there be more challenges to small brewer tax rates? (FYI- A federal bill changing the tax rates of small brewers is also being considered by Congress.)
Interesting Puerto Rico Beer Tax Case Sent Back to District Court By First Circuit
Part of the 30 year long dispute over the taxation of beer in Puerto Rico has been a lawsuit filed by Coors Brewing Company against Puerto Rico for its tax treatment for small brewers. It its lawsuit Coors is seeking to eliminate the tax exemption for small brewers in Puerto Rico.
Coors had lost at the district court level. The First Circuit last week reversed and decided to send the case back to the district court for further instructions. Complicating this case is the long history of small brewer tax rates and related litigation in Puerto Rico. The 1st Circuit remanded the case to determine if Coors was barred by previous litigation related to a lawsuit filed by its importer for Puerto Rico or another older litigation filed by the United States Brewers Association in which Coors was a member.
It is worth a read just to learn about fun law school topics such as res judicata, collateral estoppel, the Butler Act, the Federal Relations Act and the litigious history of challenges to Puerto Rico’s treatment of small and large brewers. Alas there is no substantive discussion of the underlying dormant commerce clause, 21st Amendment or Tax Injunction Act issues in last week’s opinion. It is a case to monitor for future discussion of the dormant commerce clause.
Here is the complaint in Coors lawsuit against Puerto Rico. Read it here.