Opinion ID: 2215594
Heading Depth: 2
Heading Rank: 1

Heading: Uniformity and Equal Protection

Text: Plaintiffs first contend that the trial court erred in denying their summary judgment motion and granting the Authority's motion on those counts alleging that the airport departure tax violates the equal protection clause of the United States Constitution (U.S. Const., amend. XIV) and the uniformity clause of the Illinois Constitution (Ill. Const. 1970, art. IX, § 2). The uniformity clause provides: In any law classifying the subjects or objects of non-property taxes or fees, the classes shall be reasonable and the subjects and objects within each class shall be taxed uniformly. Exemptions, deductions, credits, refunds and other allowances shall be reasonable. Ill. Const. 1970, art. IX, § 2. The uniformity clause imposes more stringent limitations than the equal protection clause on the legislature's authority to classify the subjects and objects of taxation. Geja's Cafe v. Metropolitan Pier & Exposition Authority, 153 Ill.2d 239, 247, 180 Ill. Dec. 135, 606 N.E.2d 1212 (1992); Searle Pharmaceuticals, Inc. v. Department of Revenue, 117 Ill.2d 454, 467-68, 111 Ill.Dec. 603, 512 N.E.2d 1240 (1987). If a tax is constitutional under the uniformity clause, it inherently fulfills the requirements of the equal protection clause. Geja's Cafe, 153 Ill.2d at 247, 180 Ill.Dec. 135, 606 N.E.2d 1212. Accordingly, we need only consider the validity of the airport departure tax under the uniformity clause. See Geja's Cafe, 153 Ill.2d at 247, 180 Ill.Dec. 135, 606 N.E.2d 1212.
To survive scrutiny under the uniformity clause, a nonproperty tax classification must be based on a real and substantial difference between the people taxed and those not taxed, and the classification must bear some reasonable relationship to the object of the legislation or to public policy. Searle Pharmaceuticals, Inc. v. Department of Revenue, 117 Ill.2d 454, 468, 111 Ill.Dec. 603, 512 N.E.2d 1240 (1987); see also Northern Illinois Home Builders Ass'n v. County of Du Page, 165 Ill.2d 25, 44-45, 208 Ill.Dec. 328, 649 N.E.2d 384 (1995); Geja's Cafe v. Metropolitan Pier & Exposition Authority, 153 Ill.2d 239, 247, 180 Ill.Dec. 135, 606 N.E.2d 1212 (1992); Federated Distributors, Inc. v. Johnson, 125 Ill.2d 1, 15, 125 Ill.Dec. 343, 530 N.E.2d 501 (1988). The uniformity requirement, as traditionally understood, may be violated by classifications which are either underinclusive or overinclusive. See G. Braden & R. Cohn, The Illinois Constitution: An Annotated and Comparative Analysis 416 (1969) (where the legislature defines and levies    [a nonproperty tax] upon a class,    the class as defined must include only those properly within it and not exclude those reasonably a part of it). Although the uniformity clause imposes a more stringent standard than the equal protection clause, the scope of a court's inquiry under the uniformity clause remains relatively narrow. Geja's Cafe, 153 Ill.2d at 248, 180 Ill. Dec. 135, 606 N.E.2d 1212. Statutes bear a presumption of constitutionality, and broad latitude is afforded to legislative classifications for taxing purposes. Geja's Cafe, 153 Ill.2d at 248, 180 Ill.Dec. 135, 606 N.E.2d 1212. One challenging a nonproperty tax classification has the burden of showing that it is arbitrary or unreasonable, and if a state of facts can reasonably be conceived that would sustain the classification, it must be upheld. Geja's Cafe, 153 Ill.2d at 248, 180 Ill.Dec. 135, 606 N.E.2d 1212. In the case at bar, the common characteristic linking the vehicle operators in the plaintiff classesand forming the basis of plaintiffs' uniformity clause challengeis that although they provide ground transportation service departing from the airports, they do not transport airport passengers for hire into the City of Chicago. Some of the class members are prohibited by Chicago's ground transportation licensing ordinance from transporting passengers from the airports to destinations in Chicago. Under the ordinance, a Chicago vehicle license is required to provide transportation service wholly within the city. See Chicago Municipal Code §§ 9-112-020, 9-112-030 (1990). [2] Other class members provide scheduled airport service along routes which do not include destinations in the City of Chicago. Plaintiffs maintain that in terms of the economic impact of the McCormick Place expansion project, there is a real and substantial difference between the vehicle operators in the plaintiff classes and their city-licensed counterparts, because only the operators of city-licensed vehicles enjoy the opportunity to transport passengers from the airports to McCormick Place or nearby downtown hotels. Plaintiffs contend that any positive economic impact from the expansion project for class members is too indirect to support taxing them in the same manner as those operators providing airport transportation to destinations in Chicago, who enjoy a direct benefit by virtue of an increased demand for transportation to McCormick Place and nearby hotels. Plaintiffs rely on Geja's Cafe, where, as previously noted, this court upheld the food and beverage tax imposed by the Authority in connection with the McCormick Place expansion project. The tax applied to certain types of food and beverage sales within a geographic subdistrict in Chicago. One of the arguments raised by its opponents was that pursuant to the uniformity requirement, the tax should have been imposed on food and beverage sales throughout Cook County. This court rejected the argument, finding that [t]he General Assembly could reasonably conclude that the direct beneficiaries [of the expansion project's economic impact] would be those within the taxing subdistrict, and plaintiffs have not produced anything to suggest that narrowing the taxed area in this fashion was unreasonable. Geja's Cafe, 153 Ill.2d at 250-51, 180 Ill.Dec. 135, 606 N.E.2d 1212. Plaintiffs contend that, like the food and beverage tax in Geja's Cafe, the Authority's airport departure tax should also be limited to the subclass of vehicle operators who benefit most directly from the expansion project. In response, the Authority notes that in Geja's Cafe this court merely held that it was permissible to limit the tax to the geographic subdistrict; the court did not hold or suggest that a more broadly applicable tax would necessarily be unconstitutional. The Authority's observation underscores a basic flaw in plaintiffs' analysis. Plaintiffs' argument rests largely on their understanding that a real and substantial difference between the vehicle operators in the plaintiff classes and those who transport passengers from the airports into Chicago would necessarily be fatal to a tax scheme imposing the same taxes on both groups of operators. While Geja's Cafe and other decisions under the uniformity clause hold that there must be a real and substantial difference between the people taxed and those not taxed, we are aware of no authority for a converse rule that there may be no real and substantial difference among those taxed. As this court observed in Geja's Cafe, [t]he uniformity clause was not designed as a straitjacket for the General Assembly. Rather, the uniformity clause was designed to enforce minimum standards of reasonableness and fairness as between groups of taxpayers. (Emphasis added.) Geja's Cafe, 153 Ill.2d at 252, 180 Ill.Dec. 135, 606 N.E.2d 1212. Accordingly, the real and substantial difference standard merely represents the minimum level at which the differences among groups are of a sufficient magnitude to justify taxing the groups differently. However, just because the differences between groups reach this minimum level, it does not follow that identical tax treatment would necessarily be unreasonable. To apply the real and substantial difference test in the manner plaintiffs propose would transform the uniformity requirement from a minimum standard of reasonableness and fairness to a precise formula for drawing tax lines. Under the analysis that plaintiffs advocate, the relative tax treatment of any two groups of potential taxpayers would be preordained by the existence or nonexistence of a real and substantial difference between the groups. Under such an analysis, the taxing body would be deprived of any range of options in the formulation of tax classifications. We reject such a rigid rule. Instead, we adhere to the view that the existence of a real and substantial difference between groups of taxpayers only establishes that differential taxation may be permissible, not that it is constitutionally essential. Plaintiffs cite Northwestern University v. City of Evanston, 221 Ill.App.3d 893, 164 Ill.Dec. 307, 582 N.E.2d 1251 (1991), in support of their understanding of the real and substantial difference requirement. Plaintiffs' reliance on that decision is misplaced. In Northwestern, the appellate court held that pursuant to the uniformity clause, a local hotel-motel tax could not constitutionally be applied to an educational facility simply because the facility included several floors of sleeping rooms primarily for use by students. As we read Northwestern, the ratio decidendi was that [a] taxing body is    prohibited under the uniformity provisions of the Illinois Constitution from defining statutory terms contrary to their common meaning. Northwestern, 221 Ill.App.3d at 897, 164 Ill. Dec. 307, 582 N.E.2d 1251, citing Central Television Service, Inc. v. Isaacs, 27 Ill.2d 420, 428, 189 N.E.2d 333 (1963). We express no opinion on the quality of this reasoning. Suffice it to say that the decision has no application here. We agree with plaintiffs that at some point the differences among taxpayers may be so profound that taxing them as a single class would violate the uniformity requirement. In our view, however, this limitation is embraced within the uniformity clause test's second and more general requirement that tax classifications must bear some reasonable relationship to the object of the legislation or to public policy. See Searle, 117 Ill.2d at 468, 111 Ill.Dec. 603, 512 N.E.2d 1240. In other words, the relevant question here is not whether the differences among vehicle operators serving the airports are real and substantial, but whether the differences are so great that the General Assembly's decision to tax all such operators as a single class bears no reasonable relationship to the object of the tax. We turn to that question below.
The parties agree that in enacting the scheme of taxation to finance the McCormick Place expansion project, the General Assembly sought to impose the tax burden on certain industries that could be expected to realize significant economic benefits from the large number of visitors the project is expected to bring to the Chicago area. The Authority contends that while not all ground transportation providers who serve the airports will necessarily benefit in precisely the same way or to the same extent, it was still reasonable for the General Assembly to treat all providers as a single class for tax purposes based on anticipated benefits flowing to the class as a whole. The Authority maintains that by focusing exclusively on a limited sector of the market for ground transportation servicesthe market for transportation from the airports to downtown Chicago plaintiffs have ignored the broader positive economic impact for the industry in general resulting from the expansion project. Plaintiffs respond that the specific benefits the Authority claims the vehicle operators in the plaintiff classes will enjoy are either nonexistent or drastically attenuated and do not support industrywide taxation. As a prelude to consideration of these arguments, we digress briefly to address certain procedural matters. First, we note that in Geja's Cafe, this court clarified the burdens borne by the parties in litigation involving a uniformity clause challenge. While a classification will be upheld if a state of facts can reasonably be conceived to sustain it, the opponent of a tax is not required to come forward with any and all conceivable explanations for the tax and then prove each one to be unreasonable. Geja's Cafe, 153 Ill.2d at 248, 180 Ill.Dec. 135, 606 N.E.2d 1212. Rather, upon a good-faith uniformity challenge, the taxing body bears the initial burden of producing a justification for the classifications. Geja's Cafe, 153 Ill.2d at 248, 180 Ill.Dec. 135, 606 N.E.2d 1212. Once the taxing body has provided a sufficient justification, the opponent has the burden of persuading the court that the justification is unsupported by the facts. Geja's Cafe, 153 Ill.2d at 248-49, 180 Ill.Dec. 135, 606 N.E.2d 1212. We also take note of the procedural posture of this case, which is before us on the trial court's ruling in favor of the Authority on the parties' cross-motions for summary judgment. Summary judgment is appropriate where the pleadings, depositions, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 1994); Gilbert v. Sycamore Municipal Hospital, 156 Ill.2d 511, 517-18, 190 Ill.Dec. 758, 622 N.E.2d 788 (1993). The purpose of summary judgment is not to try a question of fact, but to determine whether one exists. Gilbert, 156 Ill.2d at 517, 190 Ill.Dec. 758, 622 N.E.2d 788. Plaintiffs are not required to prove their case at the summary judgment stage. However, to survive a motion for summary judgment, the nonmoving party must present a factual basis which would arguably entitle him to a judgment. E.g., Gauthier v. Westfall, 266 Ill.App.3d 213, 219, 203 Ill.Dec. 435, 639 N.E.2d 994 (1994). Accordingly, in the present case, to the extent the Authority has produced a legally sufficient justification for its tax classification, plaintiffs would then be required to present a factual basis negating the asserted justification to survive defendant's motion for summary judgment. Conversely, if the Authority has failed to produce a legally sufficient justification for the classification, plaintiffs would be entitled to a judgment as a matter of law. Applying these principles, we conclude that the Authority has submitted a legally sufficient justification for imposing the airport departure tax on the members of the plaintiff classes who operate taxicab or limousine services from the airports to destinations outside the City of Chicago (Classes A and C). First, the Authority notes that while suburban and out-of-state operators are precluded from making trips into Chicago, Chicago-licensed operators are permitted to operate outside the city. Hence, both categories of operators compete for the business in taking travellers from the airports to suburban and out-of-state destinations. The Authority maintains that the generally increased demand for transportation from the airports into the city owing to the McCormick Place expansion project will take many city-licensed operators out of competition for the suburban/out-of-state market, thereby increasing the share of this market served by suburban and out-of-state taxicab and limousine operators. In other words, the increased demand for the city market will allow operators without Chicago licenses to take up the slack in the market for airport transportation to destinations outside the city. Second, the Authority contends that the demand for downtown hotel rooms during major McCormick Place events is likely to divert other visitors to hotels in the suburbs, thereby increasing the demand for transportation from the airports to those hotels. The Authority notes the findings of a marketing study conducted by the firm of KPMG Peat Marwick in conjunction with the McCormick Place expansion project: A poorly documented but real effect is the ripple effect. When a large event comes to Chicago, demand currently accommodated in an area may be displaced into outlying areas. A convention oriented hotel which has a strong commercial base may displace regular corporate demand to outlying hotels. Meeting events in Chicago regularly have room in the O'Hare, Oakbrook and Rosemont areas. As delegates stay in these hotels, regular business may be displaced to further outlying areas. In this way the outlying areas are getting demand associated with McCormick Place, but it is not from visitors attending McCormick Place events directly. Plaintiffs contend that their own informal survey shows that, at present, visitors attending McCormick Place events rarely stay in suburban hotels. However, plaintiffs have offered no evidence contradicting the assertion that McCormick Place events displace other visitors to outlying areas. Nor have plaintiffs offered any evidence to refute the Authority's theory that suburban and out-of-state taxicab and limousine operators will benefit from decreased competition in the market they serve. In essence, plaintiffs simply protest that these benefits are too indirect in comparison with the benefits to city-licensed operators. Be that as it may, the benefits identified are nonetheless tangible and would appear to represent reasonable conclusions about the dynamics of related market forces in the local economy. In this regard, we agree with the observation of our appellate court in Forsberg v. City of Chicago, 151 Ill.App.3d 354, 365, 104 Ill.Dec. 20, 502 N.E.2d 283 (1986), cited by the Authority, that not all persons burdened by a tax must be benefited in the same way. We cannot say as a matter of law that the inclusion of these vehicle operators bears no reasonable relationship to the object of the tax. The Authority also points out several potential benefits to the members of the plaintiff classes operating bus or van services (Classes E and F). First, bus and van operators are permitted to transport passengers into Chicago from points outside the city, and do in fact operate both scheduled and charter services with stops in Chicago. The Authority notes deposition testimony that an estimated 30% of the charter business conducted by Sam Van Galder, Inc. (Van Galder)a Wisconsin-based bus company which is the parent company of plaintiff Alco Bus Corporation (Alco)consists of trips to museums, baseball games and civic events in Chicago. Thus, the Authority maintains that the expansion project will create new opportunities for bus operators to transport passengers who reside in the suburbs and neighboring states to events at McCormick Place. Moreover, the expansion project includes plans to reroute the northbound lanes of Lake Shore Drive in a manner designed to enhance access to the Field Museum, the Shedd Aquarium and the Adler planetarium, thereby increasing the market for charter services to these already popular attractions. The Authority further notes that bus companies throughout the area enjoy a substantial volume of business as subcontractors in connection with the market for shuttle service between hotels and conventions held at McCormick Place. Business records of one of the major prime contractors for convention shuttle service show subcontracts to suburban and out-of-state companies for over 1,400 buses during a 17-month period. Plaintiffs' principal objection to the Authority's reasoning is that the particular examples of charter service that the Authority cites involve separately incorporated affiliates of certain plaintiffs rather than the plaintiffs themselves. For instance, plaintiffs dispute the relevance of the charter business conducted by Van Galder, the parent company of plaintiff Alco. Plaintiffs note that Van Galder's charter business is entirely separate from Alco's airport transportation operation and potential benefits to Van Galder cannot justify imposition of the airport departure tax on Alco. This argument is unpersuasive. The General Assembly cannot be charged with knowledge of the corporate structure of every firm in the ground transportation industry. In formulating tax classifications, the General Assembly is entitled to make reasonable assumptions about the characteristics of the industries subjected to taxation. In this regard, we think it was reasonable for the General Assembly to consider bus companies as integrated enterprises for purposes of appraising the economic impact of McCormick Place and the expansion project. Plaintiffs also dispute the Authority's contention that suburban and out-of-state bus companies benefit from subcontracting opportunities related to convention shuttle service. Plaintiffs insist that under recent amendments to applicable Chicago ordinances (Chicago Municipal Code §§ 9-112-010, 9-112-360 (1990)), city-licensed charter operators are prohibited from affiliating with unlicensed operators. The provisions that plaintiffs have identified do not resemble the propositions for which they have been cited. We further note that Chicago has provided by ordinance that temporary permits may be issued to operators of licensed charter/sightseeing vehicles for the operation of additional vehicles as charter/sightseeing vehicles. Chicago Municipal Code § 9-112-120 (1990). Thus, there is no reason to believe subcontracting opportunities have ceased to exist or will in the future. Plaintiffs' argument is without merit. As with the taxicab and limousine operators, we conclude that the Authority has submitted a legally sufficient justification for imposition of the bus and van operators in the plaintiff classes. Plaintiffs have not introduced evidence showing that the asserted justifications for taxing the members of the four plaintiff classes are factually erroneous. Accordingly, the trial court properly granted the Authority's motion for summary judgment on the counts brought under the uniformity and equal protection clauses.