No. 2015-01
I
N
T
HE
F
RED
G
WYNNE
,
Petitioner , v.
I NERTIA B OARD OF R EVENUE AND M OMENTUM R EVENUE
A GENCY ,
Respondents .
On Writ of Certiorari to the
Court of Appeals for the
Fourteenth Circuit
BRIEF FOR PETITIONER
T
EAM
#13
Counsel for Petitioner

i
TABLE OF CONTENTS
Page
TABLE OF AUTHORITIES .......................................................................................... iii
STATEMENT OF THE CASE ........................................................................................ 1
SUMMARY OF THE ARGUMENT ............................................................................... 4
ARGUMENT .................................................................................................................. 6
I.
THE STATE TAX VIOLATES THE DORMANT COMMERCE
CLAUSE ............................................................................................................. 6
A.
The U.S. Constitution Places Constraints on State Taxation ........................... 7
1.
This Court Has Jurisdiction to Invalidate State Tax Laws
Which Violate the Constitution of the United States ................................. 8
2.
The Commerce Clause Contains a “Dormant” Power Which
Restricts State Encumbrance of Interstate Commerce ............................... 9
B.
The Tax Facially Discriminates Against Interstate Commerce and thus Implicates the Dormant Commerce Clause ........................................... 10
C.
The Fourteenth Circuit Erred by Failing to Implicate the Dormant
Commerce Clause ........................................................................................ 12
1.
General Motors & Tamagni Support Gwynne’s Argument ..................... 12
2.
The Tax Places More Than an Incidental Burden Upon
Interstate Commerce .............................................................................. 15
3.
Revisiting Goldberg v. Sweet .................................................................. 16
II.
THE TAX INJUNCTION ACT DOES NOT PRECLUDE FEDERAL
JURISDICTION ................................................................................................ 18
A.
Hibbs v. Winn and the Purpose of the TIA .................................................... 18
B.
A Note on Stare Decisis ............................................................................... 20
III.
MOMENTUM’S NOTICE AND REPORTING OBLIGATIONS
VIOLATE THE COMMERCE CLAUSE .......................................................... 21

ii
A.
The Notice and Reporting Obligations are Facially Discriminatory and Discriminate in Their Effect .................................................................. 21
B.
The Notice and Reporting Obligations Create an Undue Burden on
Interstate Commerce .................................................................................... 24
CONCLUSION ............................................................................................................. 27

iii
TABLE OF AUTHORITIES
Page
C
ASES
Am. Trucking Ass’ns., Inc. v. Scheiner ,
483 U.S. 266 (1987) ............................................................................................. 16
Burnet v. Coronado Oil & Gas Co.
,
285 U.S. 393, 405 (1932) ................................................................................ 20, 21
Camps Newfound/Owatonna, Inc. v. Town of Harrison ,
520 U.S. 564 (1997) ...................................................................... 10, 11, 17, 21, 23
Chemical Waste Mgmt. Inc. v. Hunt ,
504 U.S. 334 (1992) ............................................................................................. 22
Complete Auto Transit, Inc. v. Brady ,
430 U.S. 274 (1977) ................................................................................6, 7, 24, 25
Direct Marketing Ass’n v. Brohl
,
735 F.3d 904 (2013) ................................................................................. 18, 19, 20
Fulton Corp. v. Faulkner ,
516 U.S. 325 (1996) ............................................................................................. 12
General Motors Corp. v. Tracy ,
519 U.S. 278 (1997) ............................................................................................. 13
Goldberg v. Sweet ,
488 U.S. 252 (1989) ....................................................................................... 16, 17
Gwynne v. Inertia Bd. of Revenue ,
233 I.3d 100 (2012) ................................................................................................ 3
Gwynne v. Mom. Revenue Agency ,
344 M.3d 200 (2013) .............................................................................................. 4
Harper v. Virginia State Bd. of Elections ,
383 U.S. 663 (1966) ............................................................................................... 9
Hibbs v. Winn ,
542 U.S. 88 (2004) ................................................................................ 5, 18, 19, 20

iv
Hughes v. Oklahoma ,
441 U.S. 322 (1979) ................................................................................... 9, 21, 22
Hunt v. Wash. Apple Adver. Comm’n
,
432 U.S. 333 (1977) ............................................................................................. 22
Ill. Brick Co. v. Illinois ,
431 U.S. 720 (1977) ............................................................................................. 21
In re Tamagni ,
695 N.E.2d 1125 (N.Y. 1998) ......................................................................... 13, 14
Inertia Bd. of Revenue v. Gwynne ,
742 F.3d 1 (2014) .......................................................................................... passim
Katzenbach v. McClung ,
379 U.S. 294 (1964) ............................................................................................. 11
Lawrence v. Texas ,
539 U.S. 558 (2003) ............................................................................................. 20
M’Culloch v. Maryland
,
17 U.S. 316 (1819) ............................................................................................. 7, 8
Minneapolis Star and Tribune Co. v. Minn. Comm’r of Revenue
,
460 U.S. 575 (1983) ............................................................................................... 8
Nat’l Bellas Hess, Inc. v. Dep’t of Revenue of Ill.
,
386 U.S. 753 (1967) ............................................................................................. 25
New Energy Co. v. Limbach ,
486 U.S. 269 (1988) ....................................................................................... 21, 22
Or. Waste Sys., Inc. v. Dep’t of Envtl. Quality ,
511 U.S. 93, (1994) ..................................................................... 5, 7, 15, 21, 22, 23
Pennsylvania v. West Virginia ,
262 U.S. 553 (1923) ............................................................................................. 17
Quill Corp. v. North Dakota ,
504 U.S. 298 (1992) ...................................................................................... passim
United States v. Lopez ,
514 U.S. 549 (1995) ....................................................................................... 15, 16

v
C ONSTITUTIONAL P ROVISIONS
U.S. Const. art. VI, cl. 2................................................................................................ 8
S
TATUTES
28 U.S.C. § 1341 .......................................................................................................... 1
Inertia Tax Code § 49-686(a) ........................................................................................ 2
Inertia Tax Code § 49-686(a)(1) ................................................................................... 2
Inertia Tax Code § 49-686(a)(2) ................................................................................... 2
Inertia Tax Code § 49-686(a)(3) ................................................................................... 2
Inertia Tax Code § 49-686(c) ...................................................................................... 10
Momentum Tax Code § 14-051(c) .......................................................................... 2, 22
Momentum Tax Code § 14-051(d)(1) ............................................................... 2, 22, 23
Momentum Tax Code § 14-051(d)(2) ............................................................2, 3, 22, 23
Momentum Tax Code § 14-051(e) .......................................................................... 3, 22
O THER A UTHORITIES
Momentum Senate Record TK-421, 1st Sess. (Mom. 2009). ....................................... 22
E. Levi, An Introduction to Legal Reasoning , 15 U.
C
HI
.
L.
R
EV
. 501 (1948) .............. 21
Goldman Sachs , OpenSecrets.org, available at https://www.opensecrets.org/ orgs/summary.php?id=D000000085 ..................................................................... 18

I
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T
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No. 2015-01
F RED G WYNNE ,
Petitioner , v.
I NERTIA B OARD OF R EVENUE AND M OMENTUM R EVENUE
A
GENCY
,
Respondents .
On Writ of Certiorari to the
Court of Appeals for the
Fourteenth Circuit
BRIEF FOR PETITIONER
STATEMENT OF THE CASE
In the decision from which this case is appealed, the Fourteenth Circuit Court of
Appeals held that:
1) a state’s restriction of an income tax credit to only certain parts of the state’s total income tax did not implicate the Commerce Clause,
2) a state’s requirement for out-of-state retailers to adhere to notice and reporting requirements concerning the use tax violated the Commerce Clause, and
3) the Tax Injunction Act (“TIA”), 28 U.S.C. § 1341, did not remove the consideration of the constitutionality of the notice and reporting requirements from the federal court’s jurisdiction.
While correct in its decisions concerning the TIA and a state’s ability to impose notice and reporting requirements on out-of-state retailers, the lower court erred in

2 holding that a state is permitted to limit a credit for taxes paid to other states to only certain tranches of the income tax.
1.
Inertia’s Income Tax Credit.
ITC § 49-686(a) splits the Inertia state income tax into three components. First, the income tax for the benefit of the state is determined by multiplying taxable income by nine percent (the “State Component”). ITC § 49-
686(a)(1). Second, the income tax for the benefit of the county in which the taxpayer resides is determined by multiplying taxable income by one percent (the “County
Component”).
Id. at (a)(2). Finally, nonresidents subject to the State Component but not the County Component pay a similar one percent tax on their taxable income in lieu of the County Component (the “Nonresident Component”).
Id. at (a)(3). Inertia allows taxpayers to take a credit for income taxes paid to other states, but restricts the application of the credit to only the State Component of the income tax.
2.
Momentum’s Notice and Reporting Requirements.
In 2009, Momentum enacted three notice and reporting requirements for all out-of-state retailers making sales to Momentum residents (collectively, the “Notice and Reporting Obligations”). The first obligation requires retailers not collecting the Momentum sales tax to notify the purchaser of their requirement to self-report the purchase to the Momentum Revenue
Agency (“MRA”) and pay the use tax (the “Transactional Notice”). MTC § 14-051(c).
Second, the non-collecting retailer must provide Momentum residents who make more than $200 worth of purchases with a schedule of their purchases for the year, along with a reiteration of the Transactional Notice (the “Annual Purchase Summary”).
Id. at (d)(1).
Finally, the Notice and Reporting Obligations oblige non-collecting retailers to report the names, addresses, and total purchases of all Momentum customers to the MRA. Id. at

3
(d)(2). MTC § 14-051(e) exempts in-state retailers from the Notice and Reporting
Obligations. A penalty of $50 is imposed on the retailer for each sale where the Notice and Reporting Obligations were not followed.
3.
Petitioner’s Complaint. Fred Gwynne (“Gwynne”) is an Inertia resident.
From 2007 to 2009, Gwynne was the sole member of Muenster, LLC (“Muenster”), a retailer of artisan cheeses registered in Inertia. Muenster operated three brick-and-mortar stores, all located within Inertia. Approximately seventy percent of Muenster’s sales were generated through mail order and online sales to out-of-state purchasers.
Concerning the Inertia state income tax, for the 2007, 2008, and 2009 tax years,
Gwynne applied the credit for taxes paid to other states to both the State Component and the County Component. The Inertia Board of Revenue (“IBR”) disallowed the credit against the County Component. Gwynne appealed the resulting deficiency and assessment first to the IBR, where the assessment was upheld, and then to the Inertia Tax
Court, where it was similarly upheld. Gwynne sought judicial review in the District
Court for the Western District of Inertia, where the decision of the Inertia Tax Court was reversed and remanded for a determination of the appropriate assessment. Gwynne v.
Inertia Bd. of Revenue , 233 I.3d 100, 104 (2012). The IBR appealed the District Court’s decision to the Fourteenth Circuit Court of Appeals. In the opinion from which this appeal was born, the Fourteenth Circuit held that disallowing the credit against the
County Component did not implicate the Commerce Clause, and as such was a valid state law. Inertia Bd. of Revenue v. Gwynne, 742 F.3d 1, 9–15 (2014) (hereinafter “ Gwynne
”).
Momentum’s Notice and Reporting Obligations were challenged by Gwynne immediately after the MRA enacted Notice and Reporting regulations in 2010. The

4
District Court for Momentum granted a preliminary injunction stopping the enforcement of the Notice and Reporting Obligations, and later granted summary judgment to Gwynne after finding that the Notice and Reporting Obligations (1) were facially discriminatory without advancing a legitimate state interest and (2) could not be applied to a retailer without a physical presence in the state. Gwynne v. Mom. Revenue Agency , 344 M.3d
200, 206, 212 (2013). On appeal, the Fourteenth Circuit Court of Appeals unanimously upheld the decision of the district court. Gwynne at 18–22. It was determined that the
Notice and Reporting Requirements discriminated against and placed an undue burden on interstate commerce, and the TIA did not remove the case from federal jurisdiction. The
Fourteenth Circuit was unanimous in all their decisions.
SUMMARY OF THE ARGUMENT
I.
The Supremacy Clause holds that no state may impose a tax on its citizens if the tax runs afoul of any single provision of the federal constitution. This includes even the negative implications of those provisions, such as the dormant aspect of the Commerce
Clause. Quill Corp. v. North Dakota , 504 U.S. 298 (1992). If a state enacts a tax that treats citizens engaged in intrastate commerce differently from those engaged in interstate commerce, the state has exposed its law to dormant Commerce Clause scrutiny. Inertia’s argument that Gwynne, who owned a multistate business that files income taxes in multiple states, is not engaged in interstate commerce is based on misinterpretations of precedent case law and is without merit.
Inertia’s income tax law facially discriminates against interstate commerce and can be struck down as thus. Additionally, the lower court found as a matter of fact that

5 the law fails the benchmark Complete Auto test. Gwynne v. Inertia Bd. of Revenue , 233
I.3d 100, 109 (2012). Such a law cannot stand under the dormant Commerce Clause and thus must be struck down.
II.
The TIA necessitates a narrow reading identical to the laid out in Hibbs v. Winn ,
542 U.S. 88 (2004). Rather than a broad ban on federal courts hearing state tax cases, the
TIA is intended to discourage taxpayers from filing federal suits that would prevent the state from enforcing a tax when a state refund suit would be more appropriate. The
“plain, speedy and efficient remedy” factor of the TIA indicates a refund remedy, and reveals the type of case Congress was attempting to consign to the state courts.
Here Gwynne owes nothing to Momentum. The Notice and Reporting
Obligations were declared unconstitutional almost immediately after their enactment, and have not been enforced. While the TIA would not bar the case from federal courts if a refund was owed, the fact that there is only a constitutional question at stake firmly removes the TIA from the consideration of the court.
III.
The Notice and Reporting Obligations are unconstitutional as violations of the
Commerce Clause. First, the Notice and Reporting Obligations facially discriminate against interstate commerce by imposing an indirect tax on out-of-state retailers while explicitly exempting in-state retailers from the law. See Or. Waste Sys., Inc. v. Dep’t of
Envtl. Quality , 511 U.S. 93, (1994). No legitimate interest of the Momentum government is strong enough to justify this type of discrimination, and as such the Notice and
Reporting Obligations are per se invalid.
Second, the Notice and Reporting Obligations unduly burden interstate commerce by imposing an indirect tax on a company with no physical presence in the state.

6
Industries without a physical presence in a taxing state are diminished in their ability to accommodate a state tax when compared to their in-state competitors, and the bright-line requirement for a physical presence protects interstate companies from being unduly burdened. See Quill Corp. v. North Dakota , 504 U.S. 298 (1992). Companies with an instate presence will always collect the sales tax, and as the Notice and Reporting
Obligations apply only to those retailers without a physical presence that do not collect the sales tax, the Notice and Reporting Obligations are not enforceable against Gwynne or any out-of-state retailer.
ARGUMENT
I.
THE STATE TAX VIOLATES THE DORMANT COMMERCE CLAUSE
The facts show, and the Fourteenth Circuit Court of Appeals’ recitation of the lower court’s findings reveal, that the County Component of Inertia’s income tax law fails the second and third prongs of the Complete Auto test. The test’s respective prongs posit a state tax on a multistate business’ income must be fairly apportioned and must not discriminate against interstate or foreign commerce.
1
The Fourteenth Circuit held that
Gwynne failed his burden of implicating the dormant Commerce Clause, and thus
Complete Auto and its related cases don’t apply. That legal conclusion is incorrect. The lower court erred in holding that the Inertia tax did not implicate the dormant Commerce
1
Complete Auto Transit, Inc. v. Brady, 430 U.S. 274 (1977).
Complete Auto’s
holding initially stood for the narrow concept that interstate commerce was not immune from state taxation. It’s progeny has since magnified its relevance in this field exponentially, including the internal and external consistency tests developed in Container Corp. of America v. Franchise Tax Bd.
, 463 U.S. 159, at 169, which are cited by the Fourteenth Circuit.

7
Clause, and an application of dormant Commerce Clause scrutiny proves that the law should be struck down as unconstitutional.
In the alternative, we also argue that it is not necessary for this Court to implicate
Complete Auto and its progeny in order to strike down the tax under the dormant
Commerce Clause. “[D]iscrimination simply means differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter. If a restriction on commerce is discriminatory, it is virtually per se invalid.” Or. Waste Sys.,
Inc. v. Dep't of Envtl. Quality , 511 U.S. 93, 99 (1994) (internal quotation marks omitted).
The County Component of Inertia’s state income tax discriminates against interstate commerce by its own statutory construction. By administering a cap on credits for similar taxes paid to foreign entities, the law facially discriminates against interstate business in favor of similar income generated purely intrastate. Thus, it is “per se invalid.”
Id.
A.
The U.S. Constitution Places Constraints on State Taxation
It is surprising that the Fourteenth Circuit would cite Chief Justice John
Marshall’s great triumph of federalism to support its finding that Gwynne’s only avenue of relief from double taxation is through Inertia’s state legislature.
Gwynne at 11–12
(“‘That the power of taxation is one of vital importance; that it is retained by the states; that it is not abridged by the grant of a similar power to the government of the Union . . .
.’”) (quoting M’Culloch v. Maryland,
17 U.S. 316, 425–28 (1819)). Gwynne has not brought his case before the Supreme Court of the United States because of his specific situation — he seeks to invalidate Inertia’s tax scheme as unconstitutional on its face. In raising the issue that the state income tax discriminates against interstate commerce,

8 irrespective of the issue of double taxation, we would likewise cite the same landmark decision:
The states have no power, by taxation or otherwise , to retard, impede, burden, or in any manner control the operations of the constitutional laws enacted by congress to carry into effect the powers vested in the national government.
M’Culloch at 317 (emphasis added).
M’Culloch
struck down a state tax on federal banks.
As this quote makes clear, this Court does not agree that a state’s right to tax its citizens is immune from Constitutional constraints. States may be “sovereigns” in many respects, but they are axiomatically States of the Union, and thus their tax laws are subject to the
“supreme law of the land.” U.S. Const. art. VI, cl. 2.
1.
This Court Has Jurisdiction to Invalidate State Tax Laws Which Violate the Constitution of the United States
Preventing discrimination against interstate commerce under the dormant
Commerce Clause is hardly the only federal interest this Court has championed in striking down state tax laws. Scrutiny under the Constitution of the United States is implicit each time this Court agrees to review a state law or regulation, whether it pertains to individuals invoking their rights as citizens of the United States or as proxies for defending overarching federal interests.
In Minneapolis Star and Tribune Co. v. Minn. Comm’r of Revenue , 460 U.S. 575
(1983), this Court struck down a state tax on the use of paper and ink purchased out of state by Minnesota periodicals. The Court noted that while Minnesota’s interest of raising revenue is “critical to any government,” the tax still violated the First Amendment

9 because the state had a less constitutionally restrictive means of achieving that goal: they could have raised taxes on all businesses. Id.
at 587.
Similarly, in Harper v. Virginia State Bd. of Elections , 383 U.S. 663 (1966), a state’s effort to charge a poll tax during state elections was struck down by this Court as a violation of the Equal Protection Clause of the Fourteenth Amendment. The Court found that restricting voters based on their ability to pay was arbitrarily discriminatory because the requirement bore no relation to voter qualifications. Id.
at 667. Such discrimination relating to a fundamental right was per se unconstitutional.
These two cases each represent entire bodies of the Supreme Court of the United
States’ precedent related to their respective constitutional considerations. Plaintiffs prevail in these types of cases because of their participation in arenas protected by the
United States Constitution. Their wider circumstances trump their individual statuses as the subjects of the respective states’ tax codes. Thus, the Due Process clause does not, as it never has, provide the States with immunity from constitutional constraints.
2.
The Commerce Clause Contains a “Dormant” Power Which Restricts
State Encumbrance of Interstate Commerce
Forever-cloaked by the Founding Fathers’ concern “to avoid the tendencies toward economic Balkanization that had plagued relations among the Colonies and later among the States under the Articles of Confederation,” taxpayers engaged in interstate commerce are likewise protected by the dormant Commerce Clause. Hughes v.
Oklahoma , 441 U.S. 322, 325 (1979) (“The Commerce Clause has accordingly been interpreted by this Court . . . even in the absence of a conflicting federal statute, as a restriction on permissible state regulation.”).
Quill Corp. v. North Dakota , 504 U.S. 298

10
(1992), provides a sterling example of a case in which this Court struck down a state tax that, although valid under the Due Process Clause, discriminated against interstate commerce and thus violated the dormant Commerce Clause. Id.
at 313 n.7. The
Fourteenth Circuit acknowledged this fact in their opinion, yet went on to dismiss
Gwynne’s claim on narrower grounds.
Gwynne at 10. They held Gwynne’s claim, that the income tax law discriminated against interstate commerce, somehow failed to implicate the dormant Commerce Clause.
B.
The Tax Facially Discriminates Against Interstate Commerce and thus
Implicates the Dormant Commerce Clause
The concept of a “credit for similar taxes paid” assumes, at the very least, one taxpayer, two states, and income allocable to both. Gwynne at 5 (citing ITC § 49
-
686(c)).
It is impossible to use a credit otherwise. Gwynne presents an additional, but not uncommon, component — the multistate business. Ipso facto , these four factors should require a finding of interstate commerce. Inertia’s formulae for apportionment and credit limitations assume, and only become relevant in, the presence of the same interstate commerce they are now denying. The Fourteenth Circuit’s holding, which divorces the right to a credit for similar taxes paid from interstate commerce itself, is not only contrary to this Court’s precedent analysis of the dormant commerce clause, but it is inherently illogical.
Consider this Court’s decision in
Camps Newfound/Owatonna, Inc. v. Town of
Harrison , 520 U.S. 564 (1997):
It is not necessary to look beyond the text of this statute to determine that it discriminates against interstate commerce.
The [state’s] law expressly distinguishes between entities that serve a principally interstate clientele and those that

11 primarily serve an intrastate market, singling out [entities] that serve mostly in-staters for beneficial tax treatment, and penalizing those [entities] that do a principally interstate business.
Id.
at 575–76. We are of the opinion that the facts of Gwynne’s case allow the above text to be quoted in this Court’s majority opinion today.
Newfound also rejected the town’s claim that the dormant Commerce Clause was inapplicable because of the type of tax being challenged while simultaneously setting a low bar for engagement in commerce.
Id.
at 564–65 (finding “[t]he camp is unquestionably engaged in commerce . . . as a purchaser [of interstate goods]”) (citing Katzenbach v. McClung , 379 U.S. 294, 300–01
(1964)). While the record does not affirmatively state whether Muenster purchased business inputs outside the state of Inertia, it is not unreasonable to assume that they might have; nor is it unreasonable to infer that the court in Newfound would have found
Muenster’s multistate cheese export operation to fall under “commerce” as easily as it categorized the camp in that case.
Should the Fourteenth Circuit have followed Newfound , it would have found
Inertia’s tax to be discriminatory on its face and never reached the question of whether
Gwynne had standing to implicate the dormant Commerce Clause. If Inertia wanted to implement a tax on residents free from dormant Commerce Clause scrutiny, it should have instead enacted a property tax or a pervasive retail sales tax. Having chosen an income tax which may be imposed on taxpayers conducting multistate businesses, they have exposed themselves to a prima facie challenge, which in this case must be decided in favor of the taxpayer.
Failing to follow Newfound , the Fourteenth Circuit found the dormant Commerce
Clause did not apply to Inertia’s county tax scheme because “Gwynne failed to prove that

12 requiring him to pay a county tax without a credit either expressly discriminates against interstate commerce or places more than an incidental burden upon interstate commerce
.”
Gwynne at 15 (emphasis added). The Fourteenth Circuit disagreed with
Gwynne’s contention that Inertia taxpayers who restrict their business to in-state activities are similarly situated to Inertia taxpayers who conduct interstate business, stating “[t]hose who engage in out-of-state business enjoy the protections and markets provided by the states where they do business. Taxpayers [that] restrict their business to
Inertia only receive the protections and services provided by a single state.”
Id.
This finding in direct contrast to the holding of Fulton Corp. v. Faulkner , 516 U.S. 325
(1996), where this Court found dormant Commerce Clause analysis appropriate in a case comparing South Carolina residents who only held corporate stock of intrastate businesses to South Carolina residents who held corporate stock of interstate businesses.
C.
The Fourteenth Circuit Erred by Failing to Implicate the Dormant
Commerce Clause
The Fourteenth Circuit cites four cases to support their wayward conclusion that it lacked jurisdiction to apply the dormant Commerce Clause; three from the Supreme
Court of the United States and one from the Court of Appeals of New York. All of the cases are materially distinguishable from the current case on the merits. Yet, upon careful analysis, the respective reasoning of each court actually bolsters Gwynne’s position. We posit that Gwynne has met the burden applied by the Fourteenth Circuit
Court of Appeals in Gwynne and thus the dormant Commerce Clause is implicated.
1.
General Motors & Tamagni
Support Gwynne’s Argument

13
Two of the cases relied upon by the Fourteenth Circuit are General Motors Corp. v. Tracy , 519 U.S. 278 (1997) and In re Tamagni , 695 N.E.2d 1125 (N.Y. 1998). While both cases uphold a state tax against dormant Commerce Clause scrutiny, the lower court stopped reading these cases too soon. Neither holding could be construed as an indictment of Gwynne’s argument that he, a resident of Inertia with multistate income, and another resident of Inertia with no extra-state income “constitute similarly situated parties in one market.” On the contrary, we find them instructive for analyzing the framework in which a court would be persuaded to decide in Gwynne’s favor.
In General Motors , this Court upheld a gas sales and use tax, which intrastate gas companies were exempt from. The Court considered the intrastate gas company more like a public utility with access to a “captive” market that the interstate gas company did not compete in. Though both companies competed in the better-financed and more-informed “non-captive” market, since there was a market where they didn’t compete, the court had to decide which market superseded the other to determine whether interstate commerce was implicated. The court decided the captive market was controlling; and thus, interstate commerce was not at issue.
General Motors’
extremely narrow application of the dormant Commerce Clause in the area of public utilities is understandable. The state’s tax in
General Motors was specific to the gas industry. Through narrow application, this Court was able to parse out different markets in where the competing companies vied. Yet this approach is simply untenable within the case at bar. Inertia’s tax scheme applies to the entire tax base, regardless of industry. We argue that this virtually eliminates the court’s task of finding whether taxpayers are “similarly situated.” Considering the scope of the income-tax law,

14 the market affected by Inertia’s law can only be described as all consumers since the income tax implicates all businesses. This would make any two Inertia residents with businesses similarly situated taxpayers. As soon as there is discrimination based on whether a taxpayer decides to expand his or her business out of state at the risk of being subject to double taxation, the dormant Commerce Clause should apply.
Tamagni involved a taxpayer who earned income only in New York, but claimed residency in New Jersey. New York’s residency statute found him to be a statutory resident of New York, thus subjecting his worldwide income to the state’s income tax.
The Court of Appeals of New York found no dormant Commerce Clause protection for the taxpayer because the clause does not protect interstate residency, which in this case was the only reason there was double taxation.
Inertia’s state income tax law discriminates not against any single interstate industry or interstate residency, but against interstate business itself. The court in
Tamagni aptly points out that the New York state income tax allows a credit for foreign taxes paid in order to “[protect] residents actually engaged in interstate commerce from double taxation by ensuring that they are taxed only once upon income derived from interstate activities.”
Tamagni at 1128–29. The taxpayer this case wasn’t eligible for the credit because all of his income was sourced in New York.
Gwynne, however, would receive the credit under the New York law in question.
Citing two cases decided by the Supreme Court of the United States, the Court of
Appeals of New York goes on to define “discrimination” under the dormant Commerce
Clause as “differential treatment of in-state and out-of-state economic interests that benefits the former and burdens the latter.”
Id.
at 1131 (internal quotations omitted). We

15 use the same language, quoted from Oregon Waste Systems at 99, in our analysis. Supra
Part I. The taxpayer’s failed complaint in Tamagni bears no material resemblance to
Gwynne’s, and the Court of Appeals of New York would likely disagree with the
Fourteenth Circuit’s application of their case. The County Component of Inertia’s state income tax law subjects its residents with out-of-state business income to a threat of double taxation — a threat that is unconstitutionally absent from those residents with only in-state business income.
2.
The Tax Places More Than an Incidental Burden Upon Interstate
Commerce
The Fourteenth Circuit also cites United States v. Lopez , 514 U.S. 549 (1995), for the proposition that to apply judicial scrutiny under the dormant Commerce Clause, the impact resulting from discrimination or undue burden on interstate commerce must be
“more than incidental.” Gwynne at 15. The Fourteenth Circuit declines to elaborate on this concept other than “the fact the income tax may have some incidental effect on interstate commerce is not sufficient to prove a violation of the dormant commerce clause.” Id . We, however, disagree that the holding in Lopez impedes Gwynne’s ability to implicate the dormant Commerce Clause in the current case.
The term “incidental” is nowhere to be found in Lopez . This is troubling because it is the only concept the Fourteenth Circuit attributes to the case. Gwynne at 15 (“This impact must be more than incidental. United States v. Lopez.
514 U.S. 549, 559.”). Nor did Lopez have anything to do with the dormant Commerce Clause. Lopez was a case limiting Congress’ ability to legislate affirmatively under the positive Commerce Clause.
After tracing the history of this Court’s application of the positive Commerce Clause, this

16
Court “conclude[d], consistent with the great weight of our case law, that the proper test
[for Commerce Clause scrutiny] requires an analysis of whether the regulated activity
‘substantially affects’ interstate commerce.”
Lopez at 559. The majority opinion has no bearing on past or future concerns related to the dormant Commerce Clause, nor does it opine on what may or may not amount to an “incidental” impact on interstate commerce.
Justice Kennedy, in his concurring opinion, aptly notes that this Court’s analysis of positive Commerce Clause cases is necessarily different than dormant Commerce
Clause cases because, unlike in the latter, Congress can effectively overrule the Court in the former. Id.
at 580 (Kennedy, J., concurring). A logical implication of that reasoning would be a lower bar for access to judicial scrutiny in dormant Commerce Clause cases.
The Fourteenth Circuit’s application of Lopez is misguided. As a factual matter, we would argue that an income tax on out-of-state income, which was found to be discriminatory, would place more than an “incidental” burden on interstate commerce.
See supra Part II.B.
3.
Revisiting Goldberg v. Sweet
In addition, the Fourteenth Circuit’s implication that dormant Commerce Clause protection is unavailable to Gwynne on the basis that Gwynne is a resident of the state from which his claims arise is improper. Gwynne at 12 (citing Goldberg v. Sweet , 488
U.S. 252, 266 (1989)). This Court in Goldberg was grappling with a state tax on incoming and outgoing telephone activity that for all practical purposes could “neither be traced nor recorded” by the taxing state.
Goldberg at 266. As such, this Court found it to be distinguishable from Am. Trucking Ass’ns., Inc. v. Scheiner , 483 U.S. 266 (1987), a case in which this Court found a violation of the dormant Commerce Clause. This Court

17 also found the cases to be materially different in that the tax in Scheiner adversely affected an out-of-state business, while the economic incidence of the tax in Goldberg fell on in-state consumers. Goldberg at 266. This mattered because the former “would have difficulty effecting legislative change” while the latter was an “insider who presumably [was] able to complain about and change the tax through the [taxing state’s] political process.”
Id.
Thus the Fourteenth Circuit’s conclusion that “[i]t is not a purpose of the Commerce Clause to protect state residents from their own state taxes.” Gwynne at
15 (quoting Goldberg at 266). This line of reasoning assumes two things: one about the economic foundation of the dormant Commerce Clause, and one about the political process. We argue that neither is compelling as fact.
First, we disagree that the dormant Commerce Clause concerns itself with economic incidences at all. We argue, and case precedent reveals, that the relevant inquiry is instead whether there is an undue burden upon interstate commerce. “States are not free to levy such taxes in a manner that discriminates against interstate commerce.”
Newfound at 565 (quoting Pennsylvania v. West Virginia, 262 U.S. 553, 596
(1923)). The fact that in-state residents would pay more for phone services, or that clients of Gwynne outside of the state of Inertia would face higher prices, may infer nothing about the neutrality of a law as it relates to interstate commerce.
Second, we vehemently disagree that a multistate business is without a voice within the various legislatures that govern the states where they earn income. In fact, we would argue a well-financed business has much more influence with state policymakers than individual residents. Politicians, forever in search for campaign financing and job creation, often enact business-friendly policy in order to attract such employers.

18
Goldman Sachs, for example, contributed over $4.3 million dollars to the 2014 election cycle, over $2 million dollars of which went directly to candidates including $99,225 to
Senator Mitch McConnell (R-KY). Goldman Sachs , OpenSecrets.org (last visited Feb.
10, 2015). Surely that garners more influence than the average voter can muster.
The reality of today’s interstate economy in conjunction with the holding in
Fulton Corp.
compels the rejection of
Goldberg’s
claim that the dormant Commerce
Clause does not apply to residents of Inertia challenging Inertia state law. The inquiry must be focused on the law in question. In this case there is no compelling justification to deny the application of the internal consistency test elucidated in Container , an application of which yields, as a factual matter, that the County Component of the tax fails constitutional scrutiny under the dormant Commerce Clause.
II. THE TAX INJUNCTION ACT DOES NOT PRECLUDE FEDERAL
JURISDICTION
The Fourteenth Circuit correctly held that the TIA does not preclude federal court jurisdiction over a suit brought by an out-of-state retailer to enjoin a state’s notice and reporting requirements in an attempt to collect use tax from purchasers in its state. A holding to the contrary would enlarge the TIA’s ambit beyond that of Congress’ intent and conflict with unambiguous, recently-established Supreme Court precedent.
A.
Hibbs v. Winn and the Purpose of the TIA
The Tenth Circuit’s finding that “[a]lthough [the Supreme Court] states that the
TIA applies to ‘cases in which state taxpayers seek federal-court orders enabling them to avoid paying state taxes,’ we have not interpreted it as holding that the TIA applies only to taxpayer suits,” not only lacks precedential value here in the Supreme Court, but it is

19 also a direct violation of stare decisis.
Direct Marketing Ass’n v. Brohl
, 735 F.3d 904,
911 (2013) (quoting Hibbs v. Winn , 542 U.S. 88, 107 (2004)). Interestingly, Direct
Marketing quotes Hibbs heavily. The Tenth Circuit leans on inferences and negative implications to assert that the Supreme Court somehow managed to enlarge the scope of the TIA beyond that of the plain language Justice Ginsburg uses to circumscribe the law.
By doing so, the Tenth Circuit does the case and this Court a conceited injustice.
Hibbs’ insistence on elucidating how and why the TIA is limited to taxpayer suits is illustrative. Hibbs is a request to enjoin a tax credit. Justice Ginsburg’s decision hinged on this fact, and this Court distinguished the case from this Court’s history of invoking the TIA in cases “involv[ing] plaintiffs who mounted federal litigation to avoid paying state taxes (or to gain a refund of such taxes).” Id. at 105. These are the plaintiffs
“Congress wrote the Act to address” and who “seek federal-court orders enabling them to avoid paying state taxes.”
Id.
at 107. Regarding Congress’ intent: “[n]owhere does the
[legislative history of the TIA] announce a sweeping congressional direction to prevent federal-court interference with all aspects of state tax administration.” Id.
at 90. Instead,
“[i]n both [the Anti-Injunction Act] and [the TIA], Congress directed taxpayers to pursue refund suits instead of attempting to restrain collections.”
Id.
Refund suits-as-remedies offered nothing to the taxpayers in Hibbs just as it is empty rhetoric to the Direct Marketing Association and Muenster. Hibbs ’ reasoning implies that the “plain, speedy and efficient remedy” contemplated by the TIA relates to means for a refund of tax. A refund necessarily implies taxes were paid. Muenster owes no tax to Momentum. Gwynne at 4. It follows, as the Fourteenth Circuit correctly held, that the TIA is inapplicable to the current case.

20
Direct Marketing offers no controlling Supreme Court precedent as an alternative to Hibbs ’ plain-language holding that the TIA is limited to taxpayer suits. We offer the reason for this dearth of research is that there is no such authority available. Instead, the
Tenth Circuit cites more of its own interpretation of Hibbs as well as a few other lower court holdings in support of their position. In light of stare decisis and related considerations of judicial equity, there is no compelling justification to ignore the
Supreme Court’s clear guidance in Hibbs . As such, Muenster, a non-taxpaying third party, cannot be barred by the TIA from suing the State of Momentum in federal court for an injunction enjoining the state’s notice and reporting requirements.
B.
A Note on Stare Decisis
“Stare decisis is not, like the rule of res judicata, a universal inexorable command.” Burnet v. Coronado Oil & Gas Co.
, 285 U.S. 393, 405 (1932) (Brandeis, J., dissenting). This is imperative as we progress as a nation with ever-evolving beliefs since “the judgment of the court in [an] earlier decision may have been influenced by prevailing views as to economic or social policy which have since been abandoned.” Id.
at 412. Justice Brandeis’ dissent has been quoted with approval by majority opinions of the Supreme Court several times since 1986, perhaps most recently in Lawrence v. Texas ,
539 U.S. 558, 577 (2003).
Yet this line of reasoning has been ascribed primarily to matters involving the federal Constitution and not statutes like the TIA.
Stare decisis is usually the wise policy . . . . This is commonly true even where the error is a matter of serious concern, provided correction can be had by legislation. But in cases involving the Federal Constitution, where correction through legislative action is practically

21 impossible, this court has often overruled its earlier decisions.
Burnet at 406–07 (internal citations omitted). In cases of statutory interpretation, this
Court has noted that “[the Supreme Court] should follow the normal presumption of stare decisis.”
Ill. Brick Co. v. Illinois , 431 U.S. 720, 736 (1977). See also E. Levi, An
Introduction to Legal Reasoning, 15 U.
C
HI
.
L.
R
EV
. 501, 540 (1948) (“More than any other doctrine in the field of precedent, [stare decisis in statutory interpretation] has served to limit the freedom of the court. It marks an essential difference between statutory interpretation on the one hand and case law and constitutional interpretation on the other
.”) (emphasis added).
As such, there is no compelling reason to ignore the precedent in Hibbs and hold that the TIA restricts federal jurisdiction in the case at bar.
III. MOMENTUM’S NOTICE AND REPORTING OBLIGATIONS VIOLATE
THE COMMERCE CLAUSE
A.
The Notice and Reporting Obligations are Facially Discriminatory and
Discriminate in Their Effect
The dormant Commerce Clause provides a state may not “unjustifiably . . . discriminate against or burden the interstate flow of articles of commerce.” Or. Waste
Sys., Inc. v. Dep’t of Envtl. Quality , 511 U.S. 93, 98 (1994). See also New Energy Co. v.
Limbach , 486 U.S. 269, 273 (1988); Hughes v. Oklahoma , 441 U.S. 322, 326 (1979). A state tax that discriminates against interstate commerce on its face is “virtually per se invalid” as a violation of the Commerce Clause.
Oregon Waste Systems , 511 U.S. at 100.
“It is not necessary to look beyond the text of [a] statute to determine [if] it discriminates against interstate commerce.” Camps Newfound/Owatonna, Inc. v. Town of Harrison ,

22
520 U.S. 564, 575–76 (1997). Statutes that explicitly treat interstate commerce differently may be categorized as facially discriminatory, and are “typically struck down without further inquiry.” Chemical Waste Mgmt. Inc. v. Hunt , 504 U.S. 334, 342 (1992).
Consider, then, the language of Momentum’s Notice and Reporting Obligations.
MTR §§ 14-051(c) & (d) (2012) provide that only those retailers not obligated to collect the Momentum sales tax are burdened by the Notice and Reporting Obligations. Since only sales made within the state by in-state retailers are required to collect the sales tax, it follows that all out-of-state retailers are targeted by the Notice and Reporting
Obligations. Indeed, MTR § 14-051(e) (2012) explicitly absolves in-state retailers of any duty under the Notice and Reporting Obligations, and Momentum’s legislative history identifies the law as being intended to apply “solely to retailers who are protected from the imposition of sales and use tax collection obligations under . . . Quill .” S. TK-421,
1st Sess., at 9 (Mom. 2009). Momentum’s Notice and Reporting Obligations, so completely and brazenly directed at interstate commerce, can only be described as discriminatory on its face.
A facially discriminatory tax can only survive the “virtually per se rule of invalidity” if the state can prove that the tax “‘advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives.’” Oregon
Waste Systems , 511 U.S. at 101 (quoting New Energy Co.
, 486 U.S. at 278). As a virtually per se invalid statute, the burden of proving a legitimate purpose falls on the state, and is subject to a review of the strictest scrutiny. Hughes , 441 U.S. at 336–37
(quoting
Hunt v. Wash. Apple Adver. Comm’n
, 432 U.S. 333, 353 (1977)). Whether the state’s purpose reaches the point of legitimacy depends on (1) whether the tax can be

23 shown to “approximate — but not exceed — the amount of the tax on intrastate commerce” and (2) whether “the events on which the interstate and intrastate taxes are imposed [are]
‘substantially equivalent’.” Oregon Waste Systems , 511 U.S. at 103.
As it pertains to the approximation of taxes on intrastate commerce, the Notice and Reporting Obligations indirectly impose significantly greater requirements on the out-of-state retailer:

An out-of-state retailer making more than $200 of sales per year to a
Momentum resident is required to provide them with an Annual Purchase
Summary. MTC § 14-051(d)(1). These Annual Purchase Summaries must be mailed to the purchaser, and as such necessitate postage and increased administrative costs. Mom. Regs. § 14-051(d)(1)(ii). These expenses will have to be either absorbed by the business or, much more likely, be built into the out-of-state retailer’s sales price. In-state retailers are not required to produce Annual Purchase Summaries.

All out-of-state retailers making sales to Momentum residents must provide an annual Customer Information Report to the MRA, incurring administrative costs similar to the cost necessary to create Annual
Purchase Summaries. MTC § 14-051(d)(2). In-state retailers are not required to produce Customer Information Reports.
Newfound featured similarly discriminatory burdens imposed indirectly on interstate commerce. 520 U.S. at 580 (“[W]e recognize that here the discriminatory burden is imposed on the out-of-state customer indirectly by means of a tax on the entity transacting business with the [out-of-state] customer.”). The distinction between a direct

24 and indirect tax “makes no analytic difference” in the evaluation of a discriminatory tax.
Id. Here, it is enough to highlight the fact that retailers fortunate enough to be residents of Momentum are only required to collect and remit the state sales tax. The indirect consequence of the Notice and Reporting Obligations will cause Momentum residents to look almost exclusively to in-state retailers, who benefit from being spared the expense of producing and sending individualized separate reports to their customers and the MRA.
Under a review a strict scrutiny, the existence of these requirements is sufficient to demonstrate that the Notice and Reporting Obligations create a duty that exceeds
Momentum’s tax on intrastate commerce.
In its practical effect, the Notice and Reporting Obligations discriminate against interstate commerce without advancing a legitimate purpose. As facially discriminatory, the Notice and Reporting Obligations must be held unconstitutional as a violation of the
Commerce Clause.
B.
The Notice and Reporting Obligations Create an Undue Burden on
Interstate Commerce
The dormant Commerce Clause prohibits a state from imposing taxes that
“unduly burden interstate commerce.”
Quill Corp. v. North Dakota , 504 U.S. 298, 313
(1992). A state’s tax law does not burden interstate commerce, and is therefore valid under the Commerce Clause, if it meets the four-part test laid out in Complete Auto and made iconic in Quill
. A state tax is valid if it (1) targets an activity with a “substantial nexus” with the state, (2) is fairly apportioned, (3) does not discriminate against interstate commerce, and (4) is fairly related to services provided by the state. Complete Auto , 430
U.S. at 279.

25
The state advocates for an extremely narrow reading of the Complete Auto test, and argues that Momentum’s Notice and Reporting Obligations are precluded from
Complete Auto’s evaluation on the basis that they obligations are not, in a nominal sense, an imposition of a sales or use tax. The idea that a state law is only unconstitutional when it directly targets interstate commerce with a tax perished long ago. “ Complete
Auto rejected . . . formal distinction[s] between ‘direct’ and ‘indirect’ taxes on interstate commerce because that formalism allowed the validity of statutes to hinge on ‘legal terminology, draftsmanship and phraseology.’ Quill , 504 U.S. at 310 (quoting Complete
Auto , 430 U.S. at 281). The Notice and Reporting Obligations have the practical effect of imposing an indirect tax on interstate commerce by increasing the administrative costs of out-of-state retailers by an amount proportional to their interstate sales through the
Annual Purchase Summary and Customer Information Report requirements. The Notice and Reporting Obligations have the practical effect of creating an indirect burden on interstate commerce, and therefore the state’s distinction must fail.
The Complete Auto test must be applied to determine the constitutionality of
Momentum’s Notice and Reporting obligations. Most significantly, the state tax must target an activity with substantial nexus with the state—a requirement that has not been met. Substantial nexus, as used in the context of the Complete Auto test, includes a bright-line physical presence requirement. Quill , 504 U.S. at 314–18 (upholding the physical presence requirement laid out in
Nat’l Bellas Hess, Inc. v. Dep’t of Revenue of
Ill.
, 386 U.S. 753 (1967) as part of the Complete Auto test). The necessity of an out-ofstate activity having a physical presence within the taxing state “firmly establishes the boundaries of legitimate state authority to impose a duty to collect sales and use taxes and

26 reduces litigation concerning those taxes.”
Quill , 504 U.S. at 315. A state may not tax an out-of-state activity that has no physical presence within the state. Muenster’s brick-andmortar establishment, sales force, and operations are all within Inertia. Muenster’s sole connection with Momentum consists of communications and deliveries sent to
Momentum residents. Muenster has no physical presence within Momentum, and as such, Momentum lacks the substantial nexus needed with Muenster to impose its Notice and Reporting Obligations.
The state finally posits that the physical presence requirement has become obsolete with the advent of remote commerce — a similar argument to the one made in
Quill . The physical presence requirement is still good law, and is crucial as an approachable legal concept that can be embraced by all states, as a guard against the tidal wave of controversies dissecting the ebbs and flows of an activity’s constantly evolving
“substantial nexus” within a patchwork of states, and as a tool for the economic development of the still developing mail-order and internet market. Moreover, as held by this Court, the continued application of the physical presence bright-line rule is a decision
“that Congress may be better qualified to resolve, [and] also one that Congress has the ultimate power to resolve.”
Quill , 504 U.S. at 318.
The practical effect of the Notice and Reporting Obligations is to create a tax based on the number of sales made by out-of-state retailers to Momentum residents.
Retailers without a physical presence within the state are unduly burdened by state taxes on interstate commerce. As Muenster has no physical presence within Momentum, the
Notice and Reporting Obligations create an undue burden prohibited by the Commerce
Clause.

27
CONCLUSION
The judgment of the Fourteenth Circuit Court of Appeals should be reversed as it pertains to Inertia’s income tax credit scheme. The judgment of the Fourteenth Circuit
Court of Appeals should be affirmed as it pertains to Momentum’s Notice and Reporting
Obligations and the TIA.