Today at Indiana Governor Eric J. Holcomb’s request,  Attorney General Curtis Hill filed a lawsuit on behalf of Indiana’s Department of Revenue asking a court to find House Enrolled Act 1129 (Ind. Code § 6-2.5-2-1) constitutional. The new law, which became effective July 1, 2017, seeks to level the playing field between Hoosier-based businesses and those outside our state that do business here through online sales. HEA 1129 requires these out-of-state businesses to collect and remit the same sales/use taxes as Hoosier-based businesses.

The Indiana General Assembly enacted HEA 1129, and Gov. Holcomb signed it into law, with full awareness that the United States Supreme Court ruled in 1992 that out-of-state retailers need not collect and remit sales/use taxes.

“In light of the rapid evolution and capabilities of software and technology, the incredible growth of online sales in recent years and other factors, it’s time for the Supreme Court to revisit and overturn this ruling,” Gov. Holcomb said. “Hoosier-based businesses need the ability to compete on a level playing field as soon as possible.”

The legislature included, and the state’s lawsuit relies upon, a provision in HEA 1129 that allows Indiana to put into motion a legal process to challenge the 1992 Supreme Court ruling.  HEA 1129 also calls for the court(s) to act “expeditiously.”

The full lawsuit is attached.

INDIANAPOLIS – Below find Indiana Governor Eric J. Holcomb’s public schedule for August 29, 2017.

80/90 PUSH Project Ribbon Cutting

WHO:  Secretary of Transportation Elaine Chao

Gov. Holcomb

ITR Concession Company LLC

Various state and local officials

WHAT:  80/90 PUSH Project Ribbon Cutting Ceremony & Photo Opportunity

WHEN:  11 a.m. ET 

WHERE: Indiana Toll Road Mishawaka Commuter Lot (Near milepost 83)

Granger, IN 46530

Media parking:

Beacon Health

3221 Beacon Parkway

Granger, IN 46530

*Note: Arrive early, as media and guests will be transported from the parking lot to the ceremony site.

South Shore Line Roundtable Discussion

WHO:  Secretary of Transportation Elaine Chao

Gov. Holcomb

U.S. Sen. Todd Young

U.S. Rep. Pete Visclosky

U.S. Rep. Jackie Walorski

INDOT Commissioner Joe McGuinness

Various state and local officials

WHAT:  South Shore Line Roundtable Discussion

              *Note: The roundtable discussion is closed to the press.

WHEN:  2:15 p.m. ET set up for brief media availability to begin at 2:20 p.m.

WHERE: South Bend International Airport

4477 Progress Dr.

South Bend, IN 46628

IL for www.theindianalawyer.com

In an unusual legal move, Simon Property Group Inc. has sued Starbucks Corp. over the coffee giant’s plan to close 78 Teavana stores in its malls across the country.

Indianapolis-based Simon, the country’s largest shopping mall operator, says in the lawsuit that Starbucks is breaching its leases by closing the Teavana stores and “shirking its contractual obligations at the expense of Simon’s shopping centers and the dozens of communities they serve and support.”

In the suit, filed Aug. 21 in Marion Superior Court, Simon said it is seeking temporary and permanent injunctions preventing Starbucks from closing the stores.

Seattle-based Starbucks announced July 27 that it planned to close all 379 of its Teavana stores in the next year, with most closures taking place in the spring of 2018.

Simon, though, said Starbucks recently indicated that it intends to close the stores no later than Dec. 31. The mall landlord said only two of its Teavana leases expire prior to the spring and the other 76 extend as far as January 2027.

“In order to successfully operate its shopping centers, Simon depends upon each tenant fulfilling the covenants in their respective leases,” the company said in its suit. “Crucially, each of Simon’s tenants promises that it will open and operate continuously for the entire term of its lease.”

In the Indianapolis area, Teavana operates at Circle Centre mall, the Fashion Mall at Keystone, Castleton Square Mall and Greenwood Park Mall.

In January 2013, Starbucks—then led by Howard Schultz—bought the Atlanta-based tea retailer for $620 million. At the time, Teavana had about 300 stores. Schultz predicted the business would swell in size and that his company “would do for tea what we did for coffee.”

In April, the same month Kevin Johnson took the helm as CEO, Starbucks said it was disappointed in the performance of the Teavana stores and was reviewing its options. Three months later, Johnson cited declining foot traffic in malls as a reason for closing the stores. With “that headwind and with all of the work we have done to reinvent the store, it just couldn’t overcome that,” Johnson said.

That comment didn’t sit well with Simon, which said in the lawsuit that it was intended “to deflect blame from itself and avoid adverse investor reaction.” Simon noted that just a year ago Starbucks had boasted that its tea business was growing rapidly.

In the lawsuit, Simon said it has seen a long line of retailers close mall stores in recent years because of “financial distress,” including Sears, Sports Authority, Gap, Ralph Lauren, Finish Line, Macy’s, Nine West, Rue 21, Jones New York, American Eagle and others.

“Those retailers, at least, claimed closure was necessary to avoid bankruptcy, and that staying open and fulfilling their leases would cause them financial ruin,” Simon said in the suit. “That obviously is not the case with Starbucks, which is one of the largest and most recognized companies in the world.”

Teavana isn’t losing money, Simon said in the suit—it just isn’t growing fast enough to fit into Starbucks’ business strategy.

Starbucks is a “thriving company” with a market capitalization of more than $80 billion that is coming off a record quarter in which it opened 575 net new stores, Simon said.

“Starbucks’ decision to close its Teavana stores is simply an effort to further increase its economic gains at the expense of others,” Simon said. “Starbucks does not contend that Simon breached any lease or that Starbucks cannot remain viable if it continues to honor its promises in its leases for stores in Simon’s shopping centers. Instead, Starbucks simply believes it can make more money if it violates the leases than if it honored its contractual promises and obligations.”