Attorney David Ruskin says retailers expect preliminary injunction to be entered on July 12.

Circuit Court Judge Daniel J. Kubasiak granted a temporary restraining order against the collection of Cook County’s penny per ounce beverage tax. The block will last until at least July 12, when a preliminary injunction hearing is scheduled. County attorneys had no comment on the order Friday afternoon, but testified the setback is a $17 million blow per month to the county’s ledger. Kubasiak said his decision was informed by taxpayers’ constitutional rights, a “significant issue that deserves significant amount of consideration.” The TRO gives retailers a sigh of relief ahead of one of the year’s biggest sales weekends, the July 4 holiday.

President Toni Preckwinkle issued a statement later in the afternoon saying the county would appeal, and she would direct her Finance Department “to look at all options to compensate for the revenue that would have been generated by the tax.”

Judge Kubasiak’s Opinion and Order Granting a TRO

Like a surgeon, Kubasiak told attorneys, “the first rule of the court is to do no harm.” In his order, he said while “the Court is fully aware of the importance of the tax to Defendant’s budget… [it] believes it is necessary to maintain the status quo in order to protect the interests of all consumers, all taxpayers, and the effected [sic] merchants.”

Per Kubasiak, attorneys for retailers demonstrated:

  1. A right to relief, because they are required to implement new systems and displays to reflect the tax.
  2. No adequate remedy at law, because the county did not give a satisfactory answer about how customers might get a refund if retailers are successful in blocking the law. County attorneys said Thursday that customers could just bring back receipts to retailers.
  3. Irreparable harm or damage, because if the tax goes into effect and is later found unlawful, retailers “will suffer from greatly increased administrative and overhead costs which could not be recouped.”
  4. Likelihood of success on the merits, because retailers raised a fair question about whether the sweetened beverage tax is constitutional.

The judge refused two requests from Assistant State’s Attorney Sisavanh Baker: for bond on the $17 million the county says it’s missing out on without the tax, and for the county to present witnesses at the preliminary injunction hearing on July 12. “You did not file a verified answer, so you won’t be allowed to produce witnesses on that date, but you will be able to question theirs,” the judge said.

Attorney David Ruskin says those witnesses will be Illinois Retail Merchants Association General Counsel and Vice President Tanya Triche-Dawood, and a 7-11 employee responsible for point of sale systems. Ruskin expects the preliminary injunction hearing to be similar to the one for the TRO, and that the injunction will be granted. Attorneys said the number of changes the county has proposed since June 1 made it nearly impossible for businesses to collect the tax in time for the July 1 collection date.

“We appreciate the court’s decision to hit the pause button on this matter. To implement this tax correctly by the July 1 deadline is inconceivable with rules and regulations that are so poorly defined, vague and continually changing. Without this delay, Cook County retailers would be unfairly exposed to lawsuits for failure to comply and that’s a situation we’re not willing to accept for our members. We are now asking for the court to rule on a preliminary injunction that will continue the status quo until we have a final decision on the legality of the ordinance,” said Rob Karr, president and CEO of IRMA in a statement Friday.

“Because we are now more than halfway into our fiscal year, we must immediately look at holdbacks, efficiencies and – because 87 percent of General Fund expenditures are personnel-related — a substantial number of position reductions each month that collection of the tax is delayed,” President Preckwinkle said, vowing to defend the tax “aggressively.”

Public health advocates like the Illinois Public Health Institute and the Illinois Alliance to Prevent Obesity are backing up the county. “While we are disappointed about this temporary setback, we are confident that the sweetened beverage tax will soon be implemented and our communities will experience the health benefits that come from drinking less sugar. This optional tax will benefit Cook County’s fiscal health and our communities’ physical health,” the group said in a statement.