US Supreme Court to review NC sales tax, DWI disputes on June 15

May 30, 2023

Supreme Court of the United States

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  • The U.S. Supreme Court has set June 15 as the date to review two cases with N.C. ties. One involves a dispute over state sales tax assessments. The other covers procedures for prosecuting drunk-driving cases.
  • If the nation's highest court takes either case, arguments would take place no earlier than October.
  • The Supreme Court still must decide what to do about North Carolina's high-profile Moore v. Harper redistricting dispute. Justices will also decide a case dealing with race as a factor in admissions at the University of North Carolina's flagship campus.

The U.S. Supreme Court will review two cases next month with N.C. ties. Either case could return the Tar Heel State to national headlines when the nation’s highest court starts its next term in the fall.

Justices have set June 15 as the date to consider whether to take up Quad Graphics v. N.C. Department of Revenue and Diaz-Tomas v. North Carolina. If the Supreme Court accepts either case, arguments would take place no earlier than October.

In Quad Graphics, the plaintiff is a company based in Wisconsin. It argues that its business transactions take place outside North Carolina. That means this state’s Revenue Department has no authority to assess sales tax.

The department disagrees. Looking into transactions with North Carolina-based customers from 2009 to 2011, revenue staff assessed Quad Graphics $3 million in sales tax and penalties in 2018.

The N.C. Supreme Court upheld that decision last December in a 6-1 ruling. The lone dissenter, Republican Justice Phil Berger Jr., argued that his colleagues should have deferred to a 1944 U.S. Supreme Court precedent in a case called Dilworth.

“[T]his Court is not permitted to disregard the Supreme Court’s interpretation of the Commerce Clause and the federal Constitution,” Berger wrote.

Quad Graphics makes the same argument in its appeal to the U.S. Supreme Court. It has support from the N.C. Chamber Legal Institute, American College of Tax Counsel, National Association of Manufacturers, National Federation of Independent Business, and the Council on State Taxation.

State lawyers have asked the high court to reject the case. But the latest court filing Monday from Quad Graphics rebuts the state’s arguments.

“Rarely does a respondent concede so many factors warranting this Court’s review,” the company’s lawyers wrote. “The North Carolina Department of Revenue agrees that the decision below conflicts directly with [Dilworth]. The Department agrees that under Dilworth, Quad Graphics should not have been assessed a multimillion-dollar tax —including nearly a million dollars in penalties — for its remote sales. The Department agrees ‘that the scope of state authority to tax remote sales is vitally important.’ The Department does not dispute that ‘[t]his case presents an ideal vehicle to take up the issue of Dilworth’s continued vitality.’ And the Department agrees that state high courts
have split 4-2 on that issue.”

“The Department instead stakes its opposition on a single argument about the merits —that whether this Court realized it or not, Dilworth has already been overruled” by a 2018 case called Wayfair. “But as this Court recently reminded litigants, ‘[s]peculating about what this Court might have thought about arguments it never addressed needlessly introduces confusion.’”

 “Even if the Department were right about an anti-Dilworth holding lurking in Wayfair, that would only cinch the case for plenary review,” Quad Graphics’ lawyers argued. “If the Wayfair Court was ‘simply unaware’ that it was inadvertently overthrowing a 75-year-old precedent, then this case presents a perfect opportunity for deciding Dilworth’s fate deliberately and with full briefing.”

The Diaz-Tomas case involves prosecution of drunk-driving offenses. If a defendant misses a court date, state law allows prosecutors to proceed with a “dismissal with leave.” The case disappears from the court’s docket, but the criminal charge remains.

Only the district attorney can restore the case to the court’s calendar. Two DWI defendants claim prosecutors have abused that power. Prosecutors coerce defendants into pleading guilty and giving up their right to appeal, according to a petition to the nation’s highest court. Without a plea, the cases remain in legal limbo.

The state Supreme Court ruled unanimously last November against plaintiffs Rogelio Diaz-Tomas and Edgardo Nunez. The two men hope the nation’s highest court will reverse that decision.

Their lawyers accuse N.C. district attorneys of “blatantly flouting” U.S. Supreme Court precedent by reviving a practice declared unconstitutional in 1967.

“In Klopfer v. North Carolina, … the Court held unconstitutional a practice unique to North Carolina, under which the state indefinitely postponed certain prosecutions over the objection of the accused,” according to the U.S. Supreme Court petition. “The Court determined that this practice violated the Speedy Trial Clause. Justice Harlan, concurring in the result, took the view that this practice violated the Due Process Clause.”

“District attorneys in North Carolina have now revived this practice,” the petition continued. “In DWI cases, where the defendant fails to appear for a scheduled court date, the state indefinitely postpones the defendant’s prosecution.”

“Defendants are left in perpetual limbo, with no way to contest the charges against them,” plaintiffs’ lawyers argued. “Their only exit from this predicament is to relinquish their right to a trial.”

Whether the nation’s highest court takes either the Diaz-Tomas or Quad Graphics case for its 2023-24 term, North Carolina will generate national legal headlines in the weeks ahead.

The U.S. Supreme Court will decide soon what to do about Moore v. Harper. That redistricting dispute has generated national interest because of its link to a legal theory identified by left-of-center critics as the Independent State Legislature Doctrine.

The high court heard oral arguments in the case last December. But recent action at the N.C. Supreme Court has convinced soma parties that the nation’s highest court should drop the case.

Justices in Washington, D.C., also will decide within the next month or so whether the University of North Carolina at Chapel Hill can continue to use race as a factor in admissions decisions. The Supreme Court heard oral arguments last October in a case brought by the group Students for Fair Admissions.