State's Transfer Of Money From Casinos To Horse Tracks Is A "Tax"
EMPRESS CASINO JOLIET CORP. v. BALMORAL RACING CLUB (July 8, 2011)
Several years ago, the State of Illinois passed laws which required the state's four largest casinos to turn over 3% of their annual revenue to the State. The laws required the State to hold the funds in a segregated account and turn them over to certain Illinois racetracks within days. The casinos brought suit against the racetracks and the Governor, alleging that the racetracks "bought" the legislation in violation of RICO. They sought a constructive trust. Judge Kennelly (N.D. Ill.) ruled that the Tax Injunction Act did not allow such a remedy. On appeal, the Seventh Circuit reversed (opinion here and intheiropinion here). Some of the defendants sought rehearing en banc. The Court granted the petition and vacated that portion of its opinion that addressed the Tax Injunction Act.
In their opinion, Chief Judge Easterbrook and Judges Bauer (dissenting), Posner, Kanne (dissenting), Wood, Sykes (dissenting), Tinder, and Hamilton affirmed. In relevant part, the TIA does not allow a federal district court to enjoin or restrain the collection of a state tax. Although the case before it does not technically seek to enjoin the collection of a tax, the Court stated that the imposition of the constructive trust would amount to the same thing. The Court was critical of some TIA jurisprudence that used "open-ended, multifactor tests" to decide if the Act applied. Instead, the Court noted a strong preference for a simple and clear rule that would distinguish between a tax and other collections of money by a state. The Court concluded that the only material distinction is that a tax generates revenue while a fine punishes and a fee pays for goods or services. The money at issue in this case must, therefore, be a tax because it is not meant to punish or pay for goods or services. The only aim of the statute only aim is to raise revenue. The fact that most taxes go to the state’s general funds and that these taxes passed through a segregated fund directly to the racetracks is irrelevant. The Court noted that lawmakers on the federal and state level frequently use their powers to redistribute wealth from one group to another.
Judge Sykes (joined by Judges Bauer and Kanne) dissented. The dissent noted that a) the suit was a civil RICO case, not a challenge to a State tax, b) not one cent of State money is at issue, c) the State is not even a party to the litigation, d) the State is simply acting as a trustee for the transfer of funds, e) the case poses no threat to Illinois' revenue. The TIA does not, therefore, prevent the case from proceeding.
The Blochs have owned and occupied several units in the Shoreline Towers condominium building in Chicago for years. The Blochs are Jewish – each of them has, for years, displayed a 
Korrin Stewart was diagnosed as HIV-positive when she was just fourteen years old. Shortly thereafter, she learned that it had actually developed into AIDS. At the age of eighteen, she applied for a wait-staff position at Lee’s Log Cabin (“Lee’s”). Lee’s found out that Stewart was HIV+. In fact, the manager wrote the notation “HIV+” on her application. The EEOC filed suit when Lee’s did not hire Stewart. Shortly before trial, the EEOC presented affidavits from Stewart and her doctors describing how AIDS affected her daily activities. The district court rejected the affidavits because the EEOC had never pleaded the presence of AIDS and, the court found, AIDS and HIV-positive were not synonymous. The court granted summary judgment for Lee’s. The panel of the Seventh Circuit affirmed. The Court thought that the EEOC “complicated the inquiry” by attempting to refashion its claim as AIDS claim late in the case. The Court called it a “major alteration” of the EEOC’s case. Relying on significant symptomatic differences at different stages of the disease, the Court thought it was highly relevant whether Stewart was HIV-positive or had AIDS. The EEOC sought rehearing and rehearing en banc.