Coors Lawsuit Thrown Out for Lack of Jurisdiction

By Tanya Roth, Esq. on May 03, 2012 | Last updated on March 21, 2019

One mega beer company is alleging that it isn't getting fair treatment under tax laws, and the First Circuit Court of Appeals isn't cutting the company any slack.

Coors Brewing Company sued the Commonwealth of Puerto Rico, asking for federal jurisdiction as it related to taxes.

The problem for Coors was that it was taxed at a higher rate in Puerto Rico, due to the fact that they were considered as a "large brewer" under the tax schedule.

The lawsuit asserted a claim under the Dormant Commerce Clause. Coors argued that it was getting differential treatment.

Puerto Rico, while not a state of the U.S., is within the jurisdiction of the First Circuit Court of Appeals. The general rule for taxation in Puerto Rico, as the court noted, is that the U.S. may not enjoin the collection of state taxes. Under this rule, the appellate court held that the U.S. couldn't intervene in enjoining Puerto Rico from taxing Coors.

But that wasn't Coors' argument. Coors was asking that Puerto Rico erase the disparity altogether by taxing its competitor at the same rates, ergo raising the tax.

Nevertheless, the First Circuit Court of Appeals denied jurisdiction in this case. As a result, it couldn't rule on the issue as to whether or not the tax should be raised in Puerto Rico.

The case has yet to be decided on the merits. At this stage, it's been all about procedure and jurisdiction. As far as the First Circuit is concerned, there is no jurisdiction at the federal appellate level for taxes imposed on the states.

That's not to say that the U.S. Supreme Court can't take on this case. But writs of certiorari aren't granted easily and who's to say that the Nine will ever take a second glance at this case?

As for now, Coors hasn't indicated whether it plans to take the case back to Puerto Rico.

Related Resources:

Copied to clipboard