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July 12, 1996


Appeal from the Circuit Court of Cook County. No. 95 CH 11919. The Honorable Alexander P. White, Judge Presiding.

Released for Publication August 29, 1996.

The Honorable Justice Hourihane delivered the opinion of the court: Gordon and Cousins, J.j., concur.

The opinion of the court was delivered by: Hourihane

The Honorable Justice HOURIHANE delivered the opinion of the court:

The plaintiffs, Communications & Cable of Chicago, LaSalle Telecommunications, South Chicago Cable, collectively doing business as Chicago Cable TV, and the Cable Television and Communications Association of Illinois, sought declaratory and injunctive relief against the defendants, the Chicago Department of Revenue and its acting director, Ernest R. Wish, challenging the constitutionality of the November 15, 1995, amendment to the Chicago Amusement Tax Ordinance (Chicago Municipal Code section 4-156-010 et seq. (1995)). The trial court denied the plaintiffs' motion and expressly found that there was no just reason to delay the appeal of his ruling. Plaintiffs now appeal (134 Ill. 2d R.307(a)), contending the trial court abused its discretion in denying their motion for injunctive relief because (1) the amended tax is an unauthorized occupation tax in violation of Article VII, Section 6(e) of the Illinois Constitution, (2) the amended tax constitutes a franchise fee which violates the Cable Act (47 U.S.C. section 542), (3) the amended tax is a non-uniform tax prohibited by Article IX, Section 2 of the Illinois Constitution, and (4) plaintiffs established the risk of irreparable harm and the inadequacy of legal remedy necessary to support the grant of a preliminary injunction. We affirm.


Plaintiffs are in the business of providing cable television services to over 200,000 residents of the city of Chicago. Plaintiffs' programming includes news, religious, informational, shopping, weather, public access, educational and governmental affairs channels as well as more traditional entertainment and movie channels. Plaintiffs were, because of their status as a business operating a "community antenna television system" as defined by section 5/11-42-11 of the Illinois Municipal Code (65 ILCS 5/11-42-11(b) (West 1994)), subject to a franchise fee. Section 5/11-42-11 of the Illinois Municipal Code provides, inter alia, that the corporate authorities of each municipality may license, franchise and tax the business of operating a community television system. The defendants, therefore, as a franchising authority, collect a 5% franchise fee on the gross revenues collected by the plaintiffs.

On November 15, 1995, the Chicago City Counsel passed an amendment to the Chicago Amusement Tax Ordinance (Chicago Municipal Code section 4-156-010 et seq. (1995)) which was formally adopted on December 13, 1995. This amendment, effective on January 1, 1996, provided for additional taxation of the services provided by the plaintiffs. Section 4-156-020 of the Chicago Municipal Code provides in pertinent part:

"An amusement tax is imposed upon the patrons of any amusement within the city in an amount equal to seven percent of the admission fees or other charges paid for the privilege to enter, to witness, to view or to participate in such amusement ***." Chicago Municipal Code § 4--156--020 (A) (November 19, 1994).

Section 4-156-010, as amended, includes the following definition of "amusement":

"(3) any paid television programming, whether transmitted by wire, cable, fiber optics, laser, microwave, radio, satellite or similar means. "Chicago Municipal Code § 4--156--010 (December 13, 1995).

On December 13, 1995, plaintiffs filed a complaint for declaratory judgment and injunctive relief challenging the constitutionality of the City's amended amusement tax. The complaint alleged that prior to its amendment, the amusement tax specifically excluded all "amusements" of any kind utilized or viewed in the home. *fn1 Under the amended tax, plaintiffs must collect the 7% tax from its subscribers for remittance to the city or face penalties. The tax would apply to all programming services provided by plaintiffs but would not apply to revenues from equipment rental and installation. According to the complaint, many of the programs available from plaintiff are also available from video rental stores, computer on-line services and other methods of delivery which are not subject to the amusement tax.

In their complaint, plaintiffs argued that the amusement tax, as applied to them is invalid for several reasons. First, plaintiffs argued that, as amended, the amusement tax constitutes an unauthorized occupation tax in violation of Article VII, Section 6(e) of the Illinois Constitution. Second, plaintiffs argued that the tax is a non-uniform tax which violates the prohibition of Article IX, Section 2 of the Illinois Constitution. Third, plaintiffs asserted that the tax applies selectively to cable operations and thus violates the equal protection clauses of the United States and the Illinois Constitutions as well as the First Amendment rights of the plaintiffs and their customers. Fourth, plaintiffs alleged that the amended tax exceeds the 5% limit allowed under the Federal Cable Act and thus renders the amended tax void under the Supremacy Clause of the United States Constitution.

In moving for preliminary injunctive relief, plaintiffs argued that the court had to enjoin the defendants from enforcing the amended tax because requiring the plaintiffs to collect the tax from their subscribers would result in an irreparable loss of good will, there was not enough time for the plaintiffs to modify their billing procedures to include the tax, the tax would put the plaintiffs at a significant disadvantage with other competitors, and if plaintiffs' challenge to the constitutionality of the tax was ultimately successful, it would be impossible to credit the plaintiffs for the taxes collected.

At the conclusion of the hearing on plaintiffs' motion, the trial court entered an order finding that plaintiffs had failed to prove any of the elements necessary to establish the right to a preliminary injunction and denied their motion.


I. Motions Taken With The Case

On February 21, 1996, plaintiffs filed a motion to bring new information before the court. Defendants filed an objection and the motion was taken with the case. Plaintiffs seek to introduce evidence and additional argument relating to the recently enacted Telecommunications Act of 1996, Pub. L. N. 104-104. Plaintiffs argue that this federal statute, which expressly preempts the local taxation of direct-to-home satellite services, would support an argument by plaintiffs that their equal protection rights were violated. As defendants note in their objection to this motion, plaintiffs have not presented this court with an equal protection argument on appeal. Moreover, while such an argument was made in the trial court, that court was not presented with the information the plaintiffs now ask us to consider in evaluating the propriety of the trial court's ruling. For these reasons, the plaintiffs' motion is denied. See Johnson v. Johnson, 244 Ill. App. 3d 518, 185 Ill. Dec. 214, 614 N.E.2d 348 (1993); Clark v. Han, 272 Ill. App. 3d 981, 209 Ill. Dec. 371, 651 N.E.2d 549 (1995).

II. Preliminary Injunction

A preliminary injunction is a provisional remedy granted to preserve the status quo pending a hearing on the merits of the case. Office Mates 5, North Shore, Inc. v. Hazen, 234 Ill. App. 3d 557, 175 Ill. Dec. 58, 599 N.E.2d 1072 (1992). A preliminary injunction is an extraordinary remedy which is used only where an extreme emergency exists and where in the absence of an injunction serious harm would result. Label Printers v. Pflug, 206 Ill. App. 3d 483, 151 Ill. Dec. 720, 564 N.E.2d 1382 (1991). In order to establish a right to a preliminary injunction, a plaintiff must demonstrate that (1) he had a protectible right; (2) he would suffer irreparable injury if injunctive relief was not granted; (3) his recovery at law was inadequate; and (4) there was a likelihood that he would succeed on the merits. Buzz Barton & Associates, Inc. v. Giannone, 108 Ill. 2d 373, 91 Ill. Dec. 636, 483 N.E.2d 1271 (1985); Heerey v. Berke, 179 Ill. App. 3d 927, 128 ...

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