A Cook County judge has decided to bottle up, for now, Cook County’s plan to begin collecting a penny-per-ounce tax on soda and other sweetened beverages.

On June 30, Cook County Circuit Judge Daniel Kubasiak granted the request by the Illinois Retail Merchants Association and a group of local grocers, slapping a temporary restraining order on the so-called soda tax.

The tax had been scheduled to take effect July 1.

“We appreciate the court’s decision to hit the pause button on this matter,” said IRMA President and CEO Rob Karr, in a statement Friday afternoon. “To implement this tax correctly by the July 1 deadline is inconceivable with rules and regulations that are so poorly defined, vague and continually changing.

“Without this delay, Cook County retailers would be unfairly exposed to lawsuits for failure to comply, and that’s a situation we’re not willing to accept for our members.”

The stay will mean prices for beverages sold by the grocers and other beverage purveyors in Chicago and suburban Cook County will remain unchanged, at least until the court can rule on whether IRMA and the grocers should have the right to an injunction, barring the county from collecting the tax.

Ultimately, IRMA and the grocers have asked the judge to further declare the ordinance illegal and unconstitutional.

In his order Friday afternoon, Judge Kubasiak the potential harm facing Cook County retailers and consumers was significantly greater than any harm the county government may face from not collecting the tax immediately on July 1.

He centered his ruling on concerns raised by the retailers concerning potential lawsuits, fines and other expensive legal problems they could face should they either not be able to properly collect the tax or not be able to refund the tax to consumers.

The county’s “proposal for the refund of taxes in the event Plaintiffs should prevail does not provide a reasonable procedure to return the collected money to the taxpayers,” the judge said.

“Plaintiffs will be irreparably harmed if the tax goes into effect and is subsequently found unlawful.

And on that count, the judge said the retailers’ argument against the tax had a good chance of not falling flat.

“Here, Plaintiffs have persuaded the Court that a fair question exists as to the constitutionality of the Sweetened Beverage Tax,” the judge said.

The parties will return to court next month on the retailers’ request for a preliminary injunction.

IRMA and the grocer plaintiffs, including include the operators of Berkot’s Super Foods, with locations in Chicago’s southwest suburbs; Fairplay Foods, with locations in Chicago and several southwest suburbs; Food Market La Chiquita, with locations in Chicago and several western suburbs; Tony’s Fresh Market, in Chicago and elsewhere in the Chicago area; and Walt’s Food Centers in Chicago’s southwest suburbs, had filed suit July 27 against the county tax.

The tax had been enacted through an ordinance passed at the behest of Cook County Board President Toni Preckwinkle last year.

Supporters of the tax said they believed the ordinance would raise more than $200 million per year in new tax revenue for the county, and would help reduce consumption of soda and other sweetened beverages, improving public health.

However, retailers and beverage distributors have launched a campaign to block or rescind the tax, saying the tax, which would sharply spike the prices of beverages, would flush beverage sales in Cook County – and suburban Cook, particularly – while burdening retailers with confusing new rules and regulations, and an increased threat of lawsuits.

Retailers noted, for instance, that federal rules don’t allow them to collect tax on sales of anything purchased through the Supplemental Nutrition Assistance Program (SNAP), also commonly known as food stamps. Obligations under the soda tax ordinance, however, would leave them at risk of federal action for violating federal rules, resulting in removal from SNAP eligibility.

And retailers said the county had not provided any realistic guidance on how to collect the tax on the sales of fountain beverages and other drinks in “non-pre-determined size containers,” which customers can often refill themselves, and which may contain ice.

With no ability to quickly and efficiently track the tax collections in real time and either collect more from customers or refund any overcharges, the retailers said the ordinance would likely lead to class action lawsuits.

IRMA and the grocers are represented in the action by attorneys with the firm of Horwood Marcus & Berk, of Chicago.

 

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Cook County
118 N Clark St
Chicago, IL - 60602

Cook County Circuit Court
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Chicago, IL - 60602

Horwood Marcus & Berk, Chartered
500 W Madison St
Chicago, IL - 60661

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