U.S. SC sides with Cordray in federal courts issue

By Nick Rees | Jun 1, 2010

COLUMBUS, Ohio (Legal Newsline) - Ohio Attorney General Richard Cordray is touting a victory regarding the principles of federalism from the U.S. Supreme Court.

The court said Tuesday in a unanimous ruling that federal courts must defer to state courts on challenges to state tax law.

The ruling stems from Levin v. Commerce Energy, Inc., an Ohio case that revisited the balance between state and federal power, Cordray said.

"We're pleased that the court recognized the critical importance of ensuring state courts the right to review their own tax and revenue laws," Cordray said.

"The court's opinion restores the balance between state and federal power in an area of law that is vital to the fiscal stability of every state."

In Levin, natural gas suppliers sued the Ohio Tax Commissioner in federal court. The suppliers argued that Ohio's method of taxing different types of natural gas suppliers was a violation of the U.S. Constitution.

The tax commissioner countered that the case belonged in Ohio courts. The United States Court of Appeals for the Sixth Circuit in Cincinnati disagreed with the tax commissioner's stance, allowing the case to instead proceed in federal court.

A review was granted by the U.S. Supreme Court on Nov. 2, with oral arguments heard on March 22.

The U.S. Supreme Court, in issuing its opinion on Tuesday, agreed with the arguments made by Cordray's office.

The court also said that, in this instance, a state court review is appropriate because the plaintiffs, in an effort to improve their competitive position, are seeking "review of commercial matters over which Ohio enjoys wide regulatory latitude" and because "the Ohio courts are better positioned than their federal counterparts to correct any violation."

As a result of the Supreme Court's decision, the federal suit will be dismissed.

This is the third Ohio case heard by the U.S. Supreme Court since Cordray took office. All three cases have been won unanimously by the state.

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