Iwan Ries & Co. v. City of Chicago

          JUSTICE KILBRIDE delivered the judgment of the court, with opinion. Justices Thomas, Garman, Karmeier, and Neville concurred in the judgment and opinion. Justice Theis dissented, with opinion.

          OPINION

          KILBRIDE JUSTICE

         ¶ 1 In 2016, defendant the City of Chicago enacted an ordinance that imposed a municipal tax on units of noncigarette "other tobacco products" (OTP) purchased in the City. See Chicago Municipal Code § 3-49 et seq. (added Mar. 16, 2016). Thereafter, plaintiffs, various entities with interests in the tobacco-products industry, filed a complaint seeking declaratory and injunctive relief. Plaintiffs argued that the City's ordinance was preempted by section 8-11-6a of the Illinois Municipal Code (65 ILCS 5/8-11-6a (West 2016)), addressing the authority of home rule units to impose certain taxes, including cigarette and other tobacco product taxes.

         ¶ 2 After considering the parties' cross-motions for summary judgment, the Cook County circuit court agreed with the plaintiffs on the preemption issue and granted their motion. The appellate court reversed. 2018 IL App (1st) 170875, ¶ 32.

         ¶ 3 For the following reasons, we reverse the judgment of the appellate court and affirm the judgment of the circuit court.

         ¶ 4 I. BACKGROUND

         ¶ 5 Since 1971, defendant the City of Chicago, has imposed a municipal tax on the purchase of cigarettes in the city. See, e.g., Chicago Municipal Code § 3-42-20 (amended Dec. 14, 2016). More recently, on March 16, 2016, the City enacted an ordinance that imposed a municipal tax on purchases of noncigarette "other tobacco products" for the first time. See Chicago Municipal Code § 3-49 et seq. (added Mar. 16, 2016). The new ordinance imposes a $1.80 per ounce tax on smoking and smokeless tobacco, a $0.60 per ounce tax on pipe tobacco, and a $0.20 tax per cigar. Chicago Municipal Code, § 3-49-30 (added Mar. 16, 2016). This new "other tobacco products" tax is the subject of the instant appeal and referred to by the parties as "the OTP tax."^[1]

         ¶ 6 On May 26, 2016, several plaintiffs with interests or involvement in the tobacco-products industry filed a verified complaint for declaratory judgment and injunctive relief. Plaintiffs asked the circuit court to invalidate the OTP tax and enj oin its enforcement.

         ¶ 7 On June 17, 2016, plaintiffs filed an amended complaint. In that complaint, plaintiffs sought declaratory and injunctive relief in three counts: (1) count I sought a declaratory judgment that the OTP tax violated the applicable home rule provisions of the Illinois Constitution (Ill. Const. 1970, art. VII, § 6(g)) and section 8-11-6a of the Illinois Municipal Code (65 ILCS 5/8-11-6a (West 2016)), (2) count II sought preliminary and permanent injunctive relief, and (3) count III sought relief from an alleged "improper litigation penalty" in the ordinance.

         ¶ 8 After the City answered plaintiffs' complaint, plaintiffs filed a motion for partial summary judgment. Plaintiffs argued they were entitled to partial summary judgment in their favor on counts I and II of their amended complaint, seeking declaratory and injunctive relief, respectively. Plaintiffs contended there were no genuine issues of material fact and they were entitled to judgment as a matter of law.

         ¶ 9 In relevant part, plaintiffs asserted that the City's OTP tax was preempted by the plain language of section 8-11-6a of the Illinois Municipal Code (65 ILCS 5/8-11-6a (West 2016)). Plaintiffs maintained that the legislature enacted that statute to enable home rule municipalities to impose taxes on cigarettes or other tobacco products in only limited circumstances. Specifically, plaintiffs argued that under the statute the City was not permitted to impose a municipal tax on other tobacco products unless "such a tax" existed prior to July 1, 1993. Because the City did not tax other tobacco products prior to July 1, 1993, and instead only taxed cigarettes prior to July 1, 1993, the OTP tax the City enacted in 2016 was invalid.

         ¶ 10 Plaintiffs further asserted that, even if the statutory language was ambiguous, the City's OTP tax was preempted by the legislative intent underlying section 8-11-6a. Specifically, the legislative debates on the provision demonstrated that the legislature intended to prohibit new local taxes on cigarette or tobacco products to protect state tax revenues on tobacco products and limit local taxes on those same products. The legislature sought to ameliorate the effects of state tax increases on cigarettes and noncigarette tobacco products that occurred in 1993 and preserve jobs in the Illinois tobacco industry by restricting taxes on tobacco products at the state and local level.

         ¶ 11 The City also filed a motion for summary judgment, arguing that "the sole issue" was whether section 8-11-6a preempted the City's home rule authority to impose the OTP tax. According to the City, the key language of that provision was that "a home rule municipality that has not imposed a tax based on the number of units of cigarettes or tobacco products before July 1, 1993, shall not impose such a tax after that date." 65 ILCS 5/8-11-6a (West 2016). The City contended that the plain statutory language "grandfathers" the City's OTP tax because the City imposed a tax based on the number of units of cigarettes before July 1, 1993. Therefore, the City was not a municipality that failed to impose a tax on cigarettes or other tobacco products before July 1, 1993.

         ¶ 12 Contrary to the plaintiffs' position, the City asserted that "the distinction drawn by [the statute] was between municipalities that were grandfathered and those that were not-not between tobacco taxes that were grandfathered and those that were not." (Emphasis in original.) The City alleged that both the plain language of the provision and its legislative history authorized the City to impose a home rule tax on any and all tobacco products.

         ¶ 13 On January 20, 2017, after considering full briefing and arguments on the parties' cross-motions for summary judgment, the circuit court entered a nine-page opinion and order. Ultimately, the court found that, as a matter of law, the plain language of section 8-11-6a of the Illinois Municipal Code preempted the City's authority to enact the OTP tax. Accordingly, the court granted plaintiffs' motion for partial summary judgment and denied the City's motion for summary judgment. The court later amended its order to include language pursuant to Illinois Supreme Court Rule 304(a) (eff. Mar. 8, 2016) to allow an appeal.

         ¶ 14 On appeal, the appellate court reversed the judgment of the circuit court. After construing the plain language and legislative history of the statute, the court concluded that, when "[r]eading section 8-11-6a in its entirety, it follows that the legislature intended for a home rule municipality to be able to tax cigarettes or tobacco products so long as the home rule municipality had 'a tax' in place on either 'cigarettes or tobacco products' prior to July 1, 1993. (Emphasis added.) 65 ILCS 5/8-11-6a (West 2016)." (Emphasis in original.) 2018 IL App (1st) 170875, ¶ 31. Thus, the court concluded that "because the City had enacted a tax on cigarettes prior to July 1, 1993, it fulfilled the condition of the statute that 'a tax' exist on either the number of units of cigarettes or tobacco products" and its OTP tax was not preempted. (Emphases in original.) 2018 IL App (1st) 170875, ¶ 32.

         ¶ 15 Plaintiffs filed a petition for leave to appeal. Ill. S.Ct. R. 315(a) (eff. July 1, 2018). We allowed that petition.

         ¶ 16 II. ANALYSIS

         ¶ 17 This case requires us to consider whether section 8-11-6a of the Illinois Municipal Code (65 ILCS 5/8-11-6a (West 2016)) preempts the City's home rule authority to enact a municipal ordinance imposing the OTP tax (Chicago Municipal Code § 3-49 et seq. (added Mar. 16, 2016)). Specifically, we must construe section 8-11-6a of the Illinois Municipal Code to determine whether it precludes the City from exercising its home rule power to enact the OTP tax for the first time in 2016.

         ¶ 18 This question originates in the circuit court's ruling on cross-motions for summary judgment. Summary judgment may be granted when the pleadings, depositions, admissions, and affidavits, viewed in the light most favorable to the nonmovant, fail to establish that a genuine issue of fact exists, thereby entitling the moving party to judgment as a matter of law. 735 ILCS 5/2-1005(c) (West 2016); Village of Bartonville v. Lopez, 2017 IL 120643, ¶ 34. When, as here, parties file cross-motions for summary judgment, they mutually agree that there are no genuine issues of material fact and that the case may be resolved as a matter of law. Jones v. Municipal Employees' Annuity & Benefit Fund, 2016 IL 119618, ¶ 26. Because this case involves the circuit court's ruling on cross-motions for summary judgment and requires statutory construction, our review is de novo. Oswald v. Hamer, 2018 IL 122203, ¶ 9.

         ¶ 19 When construing a statute, the goal of this court is to ascertain and give effect to the intent of the legislature. The most reliable indicator of the legislature's intent is the plain and ordinary meaning of the statutory language. Cassidy v. China Vitamins, LLC, 2018 IL 122873, ¶ 17. This court reviews the statute as a whole, construing words and phrases in the context of the entire statute and not in isolation. Oswald, 2018 IL 122203, ¶ 10. We also remain mindful of the subject ...