The U.S. Supreme Court last week ruled in favor of Ohio Attorney General Richard Cordray last week when it said in a unanimous ruling that federal courts must defer to state courts on challenges to state law.
The court sided with Cordray by dismissing a federal lawsuit that challenged Ohio’s tax standards for natural gas suppliers. The ruling stems from Levin v. Commerce Energy Inc., in which the natural gas supplier sued the Ohio Tax Commissioner in federal court, saying the state violated the U.S. Constitution by applying different tax standards to different gas suppliers. Commerce Energy Inc. argued it was discriminated against by having to pay taxes while local suppliers are given tax exemptions.
A federal judge dismissed the case, but on appeal the Sixth Circuit court reversed the dismissal. The U.S. Supreme Court heard oral arguments in March and ruled on the case June 1, reversing the circuit court’s ruling and dismissing the case.
The Sixth Circuit ruled that Ohio courts are “better positioned than their federal counterparts to correct any violation.”
“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 in a statement. “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.”