Vermont Society of Ass'n Executives v. Milne

779 A.2d 20, 172 Vt. 375, 2001 Vt. LEXIS 179
CourtSupreme Court of Vermont
DecidedJune 8, 2001
Docket00-032
StatusPublished
Cited by5 cases

This text of 779 A.2d 20 (Vermont Society of Ass'n Executives v. Milne) is published on Counsel Stack Legal Research, covering Supreme Court of Vermont primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Vermont Society of Ass'n Executives v. Milne, 779 A.2d 20, 172 Vt. 375, 2001 Vt. LEXIS 179 (Vt. 2001).

Opinions

Skoglund, J.

In this appeal, the Secretary of State challenges the superior court’s ruling that Vermont’s tax on lobbying expenditures is unconstitutional. We conclude that, in singling out and burdening interests protected by the First Amendment, the lobby tax violates the United States Constitution under the heightened scrutiny required. Accordingly, we affirm the superior court’s judgment.

Effective January 1, 1998, the Legislature imposed a five-percent tax “on the expenditures of lobbyists and employers of lobbyists. . . . in excess of $2,500.00.” 2 V.S.A §264a(a).1 The tax is expressly restricted to expenditures connected with communications or activities aimed at influencing legislation or administrative action. See 2 V.S.A. § 261(5), (9) (defining terms “Expenditure” and “lobbying”). The lobby tax was enacted as part of a campaign finance reform statute that established a fund to provide public grants to candidates running for [377]*377the offices of governor and lieutenant governor, 1997, No. 64, § 2. The tax was earmarked as one of the primary sources to fund these grants. § 264a(d) (all revenues collected from lobby tax “shall be submitted to the state treasurer for deposit in the Vermont campaign fund established under section 2856 of Title 17”).

Plaintiffs, a group of nonprofit organizations employing lobbyists, initially filed a declaratory judgment action in the superior court alleging that the lobby tax unconstitutionally singled out and burdened protected First Amendment activities and violated equal protection guarantees. Plaintiffs requested that the court declare § 264a unconstitutional and enjoin the Commissioner of Taxes from enforcing the tax. The Secretary of State (hereinafter “the State”) moved to dismiss the suit on the ground that plaintiffs had failed to exhaust administrative remedies established by statute for challenging the imposition of a tax. See 32 V.S.A. § 9777(a) (taxpayer may request hearing before commissioner to challenge assessment of unpaid taxes); 32 V.S.A § 9781(a) (taxpayer may request tax refund from commissioner). The superior court denied the motion. Later, pursuant to the parties’ agreement, one of the plaintiffs, Home Builders Association, requested a refund of taxes it had paid under § 264a. The commissioner denied the request, and that denial was appealed to the superior court, where it was consolidated with the declaratory judgment action. The parties then filed opposing motions for summary judgment.

The superior court granted summary judgment in favor of plaintiffs. Applying strict scrutiny, the court ruled that the lobby tax violates the First Amendment under the analysis set forth in Leathers v. Medlock, 499 U.S. 439 (1991). The court also concluded that the tax violates the equal protection provision of the Fourteenth Amendment and results in an unconstitutional double taxation of lobbyist expenditures. The court made no separate analysis under the Vermont Constitution, but determined that the tax violated the Vermont counterparts to the relevant federal constitutional provisions. The parties have not addressed on appeal whether the Vermont Constitution provides an alternative basis to strike down § 264a.2

The State argues on appeal that the superior court erred in (1) subjecting § 264a to heightened scrutiny under the First Amendment, (2) holding the statute unconstitutional under the First and [378]*378Fourteenth Amendments to the United States Constitution, (3) reaching unbriefed claims under the Vermont Constitution, and (4) asserting jurisdiction over plaintiffs’ claims without requiring them to first exhaust their administrative remedies. There are no facts in dispute. We apply de novo review to resolve the legal issue raised by the parties. See O’Donnell v. Bank of Vermont, 166 Vt. 221, 224, 692 A.2d 1212, 1214 (1997) (motion for summary judgment is reviewed under same standard as that applied by trial court).

The parties’ characterizations of the lobby tax are in marked contrast to one another. In the State’s view, § 264a is merely a generally applicable sales tax on the expenditures of a commercial service — lobbying — without regard to the content of the message provided by the service. To plaintiffs, however, § 264a is a special tax that unconstitutionally singles out and burdens core political speech protected by the First Amendment’s right to petition the government. Under United States Supreme Court case law, if the State’s characterization of § 264a as a generally applicable, content-neutral extension of the sales tax is correct, the statute is reviewed under a deferential rational-basis standard. On the other hand, if plaintiffs are correct that § 264a is a special tax burdening First Amendment interests, we apply a heightened standard of review, under which the State has conceded it cannot prevail. For the reasons set forth below, we agree with plaintiffs that the lobby tax is a special tax singling out First Amendment interests and thereby requiring heightened scrutiny.

I.

A.

Because the State questions the general notion of applying heightened scrutiny to a tax directed at lobbyists, as opposed to the press, we first consider the status of lobbying as a protected First Amendment interest. In relevant part, the First Amendment of the United States Constitution, which was made applicable to the states with the ratification of the Fourteenth Amendment, forbids laws “abridging the freedom of speech, or of the press; or the right of the people ... to petition the Government for a redress of grievances.” The United States Supreme Court has never defined the scope of the right to lobby in any in-depth analysis, but lobbying unquestionably concerns core political speech that “implicates First Amendment guarantees of petition, expression, and assembly.” Kimbell v. Hooper, 164 Vt. 80, 83, 665 A.2d 44, 46 (1995); see United States v. Harriss, 347 U.S. 612, 625 (1954).

[379]*379The venerable right to petition one’s government to redress grievances extends back to the Magna Carta, where the Crown first formally recognized its duty to be accessible to all citizens. A. Thomas, Easing the Pressure on Pressure Groups: Toward a Constitutional Right to Lobby, 16 Harv. J.L. & Pub. Pol’y 149, 181-82 (1993). In America, the history of influencing legislative action began with the New Englander’s personal appearance in the town meeting to make a complaint or request some sort of action. 1 N. Singer, Statutes and Statutory Construction § 13.02, at 657 (5th ed. 1994). At times, a neighbor might speak for a fellow citizen unable to attend the meeting. “That neighbor was the first American lobbyist.” Id.

That innocent beginning was soon to fall upon “evil ways” as aggressive new industries sought to obtain concessions from local, state, and federal legislators. Singer, supra, at 657. Recognizing the potential danger to our democratic system posed by abuses in lobbying, Congress and state governments passed reform statutes that required lobbyists to disclose who they were representing and how much they were spending on their clients’ behalf. See id. § 13.04, at 663.

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Bluebook (online)
779 A.2d 20, 172 Vt. 375, 2001 Vt. LEXIS 179, Counsel Stack Legal Research, https://law.counselstack.com/opinion/vermont-society-of-assn-executives-v-milne-vt-2001.