AUSUPERIOR COURT OF THE STATE OF WASHINGTON FOR KING COUNTY PHILIP WATSON, an individual; RAY CARTER, an individual; FARWEST SPORTS, INC., dba OUTDOOR EMPORIUM, a Washington corporation; PRECISE SHOOTER LLC, a Washington limited liability company; THE SECOND AMENDMENT FOUNDATION, INC., a Washington nonpro?t corporation; NATIONAL RIFLE ASSOCIATION OF AMERICA, INC., a New York non-pro?t association; AND NATIONAL SHOOTING SPORTS FOUNDATION, a Connecticut nonpro?t association, Plaintiffs, v. CITY OF SEATTLE, a municipality; ED MURRAY, Mayor of the City of Seattle, in his of?cial capacity; SEATTLE DEPARTMENT OF FINANCE AND ADMINISTRATIVE SERVICES, a department of the City of Seattle; and GLEN LEE, Director of Finance and Administrative Services, in his of?cial capacity, Defendants. NO. 15-2-20613-3 SEA MEMORANDUM OPINION On August 21, 2015, Seattle Mayor Ed Murray signed Ordinance 124833 into law. Section 1 of that ordinance provides: The City ?nds and declares that gun violence directly affects the city and its residents. Therefore, the City intends to exercise its taxing authority, as MEMORANDUM OPINION - - 1 THE HONORABLE PALMER ROBINSON KING COUNTY SUPERIOR COURT 516 THIRD AVENUE SEATTLE, WASHINGTON 98104 granted by the Washington State Constitution and as authorized by the Washington State Legislature, to raise general revenue for the City and to use that revenue to provide broad?based public bene?ts for residents of Seattle related to gun violence by funding programs that promote public safely, prevent gun violence and address in part the cost of gun violence in the City. The ordinance created a new Firearms and Ammunition Tax Fund: to provide broad-based public bene?ts for residents of Seattle related to gun violence by funding programs that promote public safety, prevent gun violence and address in part the cost of gun violence in the City. Such public bene?ts may include, but are not limited to, basic research, prevention and youth education and employment programs. Plaintiffs, sellers and purchasers of ?rearms and ammunition in the City of Seattle, and the National Ri?e Association, Second Amendment Foundation, Inc. and National Shooting Sports Foundation, sued the City, Mayor Murray, Seattle Department of Finance and Administrative Services and Glenn Lee, Director. Plaintiffs seek a declaratory judgment declaring that the ordinance violates Washington statutory and constitutional law, and an injunction prohibiting the City from collecting the tax or enforcing the ordinance. They argue the ordinance is an impermissible regulation of ?rearms in violation of RCW 9.41.290 and that, if a tax, it is an impermissible tax. At oral argument the City argued that, even if the ordinance is a regulation it does not run afoul of RCW 9.41.290 because it does not impose any criminal penalty in the event of a violation. However, the ordinance provides that violation is a gross misdemeanor, punishable in accordance with Section 12A.02.070. Section 12A.02.070 is entitled Punishment of Crime and provides that every crime designated as a misdemeanor may be punished by a ?ne not to exceed one thousand dollars or by imprisonment for a term not to exceed ninety days or both. The City?s argument fails on this point. MEMORANDUM OPINION - - 2 THE HONORABLE PALMER ROBINSON KING COUNTY SUPERIOR COURT 516 THIRD AVENUE SEATTLE, WASHINGTON 98104 The parties agree that the question whether the ordinance is a regulation or a tax is to be answered with reference to the three-part test set forth in Covell v. City of Seattle 127 Wash.2d 874 (1995) and Okeson v. City of Seattle [50 Wash. 2d 540 (2003). The ?rst issue is whether the primary purpose of the city is to raise revenue for general governmental purposes or to regulate. Here, the ordinance states its purpose is to provide broad- based public bene?ts. It does not place any burden or restriction on the plaintiffs in terms of their conduct other than to require payment of fees and it does not prescribe any activity other than the non-payment of the sums set forth in SMC The second issue is whether the fees are allocated to a regulatory purpose. If so, the conclusion that the ordinance imposes a regulation is buttressed. On the other hand, if the costs do not regulate an activity, the fee is more likely a tax. Okeson at 553. In this case, the money generated goes to public education and research. That is not a regulatory purpose. The third issue is whether there is a direct relationship between the fee and the service received or burden produced. Neither party articulated a direct relationship between the number of guns or rounds of ammunition sold by a retailer and the impact on public health or safety. The guns and ammunition may never be used, may be used only at a range, or may be used exclusively for safe and legal purposes. Accordingly, the fee imposed is a tax rather than a regulation. However, that is not the end of the inquiry. The City must have authority to impose a tax before it can impose and collect it. Plaintiffs argue that, absent express statutory authority, the City may only impose sales taxes, property taxes, and business and occupation taxes. Further, they argue that any tax (any tax which is not a sales tax or tax on real property) can only be THE HONORABLE PALMER ROBINSON KING COUNTY SUPERIOR COURT 516 THIRD AVENUE SEATTLE, WASHINGTON 98104 MEMORANDUM OPINION - - 3 levied at a single uniform rate imposed on gross receipts or gross income from sales and that the amount of such taxes is limited. RCW 35.21.710 Plaintiffs? reading of the Chapter 31 RCW is too narrow. The Tax Reference Manual authored by the Washington State Department of Revenue states that there are three general types of taxes: property, income and excise taxes. (emphasis added) Tax Reference Manual, Washington Department of Revenue, January, 2010 at 3.) taxes are a type of excise tax, but not all excise taxes are levied under RCW 35.21 .710: ?Other excise taxes include the selective sales taxes on speci?c products (cigarettes, gasoline, etc.) and the various taxes which are levied in lieu of property tax g. harvested timber, leaseholds, etc.)? Tax Reference Mm, Washington Department of Revenue, January, 2010 at 3. SMC 5.45.050 provides that the City Business License tax is a tax on the gross proceeds of such sales of the business. The tax provided for in the ordinance and codi?ed at SMC 5.50 is not a tax on gross proceeds and is not limited by the multiplier in SMC 5.45.050(c) any more than sales tax is limited to a multiplier of .00215. RCW 35.22.280 grants ?rst class cities the power to ?grant licenses for any lawful purpose, and to ?x by ordinance the amount to be paid therefor.? That statute has been interpreted to include the ability to raise revenues by imposing a tax. ?The tax is an excise. It is levied upon the right to do business, not upon the right to exist; nor upon the property.? Paci?c Tel. Tel. Co. v. City of Seattle, 172 Wash 649, 654 (1933). It may include a tax on gross receipts, but is not limited such a tax. In Pacific Tel Tel C0. the Supreme Court ruled that the City of Seattle had authority, by Virtue of Rem. Comp. Stat Sections 8966 and 8981 (comparable THE HONORABLE PALMER ROBINSON KING COUNTY SUPERIOR COURT 516 THIRD AVENUE SEATTLE, WASHINGTON 98104 MEMORANDUM OPINION - - 4 M-PUJN RCW 35.22280) to grant licenses for any lawful purpose and to charge for those licenses for the purpose of generating revenue. In Alderwood Idaho, LLC Kennewick, 151 Wash2d 359, 367 (2004) the Supreme Court considered whether the city of Kennewick?s ordinance imposing a ambulance service charge on every household, business and industry, but which was billed to the holders of utility accounts, was within the City?s authority under RCW 3522.280: Our cases establish that an assessment is a valid excise tax if (1) the obligation to pay an excise tax is based upon the voluntary action of the person taxed in performing the act, enjoying the privilege, or engaging in the occupation which is the subject of the excise tax, and (2) the element of absolute and unavoidable demand is lacking. Because the tax was imposed on its utility customers, rather than those who used ambulance services, the court held the charges exceeded the authority granted the city in the statue and was thus unenforceable. The ordinance at issue was enacted as an amendment to SMC Title 5, ?Revenue, Finance and Taxation.? Subtitle 11 Title 5 imposes a number of excise taxes in addition to the tax. Ordinance 124833 is a tax imposed under authority granted to the City by RCW 352228002). Plaintiffs? requests for declaratory relief and an injunction are denied. Defendants? Motion for summary Judgment is granted. A separate order is attached. Dated this 22nd day of December, 2015. AMV j/ onorable. Palmer Robinson Superior Court Judge THE HONORABLE PALMER ROBINSON KING COUNTY SUPERIOR COURT 516 THIRD AVENUE SEATTLE, WASHINGTON 98104 MEMORANDUM OPINION - - 5 SUPERIOR COURT OF THE STATE OF WASHINGTON FOR KING COUNTY PHILIP WATSON, an individual; RAY CARTER, an individual; FARWEST SPORTS, INC, dba OUTDOOR EMPORIUM, a Washington corporation; PRECISE SHOOTER LLC, a Washington limited liability company; NO. 15-2-20613-3 SEA THE SECOND AMENDMENT ORDER DENYING FOUNDATION, INC, a Washington nonpro?t MOTION FOR SUMMARY corporation; NATIONAL RIFLE JUDGMENT AND GRANTING ASSOCIATION OF AMERICA, INC., a New CROSS-MOTION York non-pro?t association; AND NATIONAL FOR PARTIAL SUMMARY SHOOTING SPORTS FOUNDATION, a JUDGMENT Connecticut nonpro?t association, Plaintiffs, V. CITY OF SEATTLE, a municipality; ED MURRAY, Mayor of the City of Seattle, in his of?cial capacity; SEATTLE DEPARTMENT OF FINANCE AND ADMINISTRATIVE SERVICES, a department of the City of Seattle; and GLEN LEE, Director of Finance and Administrative Services, in his of?cial capacity, Defendants. THIS MATTER having come for hearing before the undersigned Judge on Plaintiffs? Motion for Summary Judgment and Defendants? Cross-Motion for Partial Summary Judgment, ORDER DENYING PLAIN MOTION FOR GORDON TILDEN THOMAS CORDELL SUMMARY JUDGMENT AND GRANTING LLP DEF ENDAN CROSS-MOTION FOR PARTIAL 1001 Fourth Avenue, Suite 4000 SUMMARY JUDGMENT - 1 Seattle, WA 98154 Phone (206) 467-6477 Fax (206) 467?6292 LUJN and the Court having considered the record, oral argument, and all materials ?led on this issue, including: 1. Plaintiffs? Motion for Summary Judgment; 2. Declaration of Steven W. Fogg in Support of Plaintiffs? Motion for Summary Judgment, and the exhibits attached thereto; 3. Defendants? Opposition to Plaintiffs? Motion for Summary Judgment and Cross- Motion for Partial Summary Judgment; 4. Declaration of Laurie Edelstein in support of Defendants? Opposition to Plaintiffs? Motion for Summary Judgment and Cross-Motion for Partial Summary Judgment, and the exhibits attached thereto; 5. Declaration of Seattle City Council President Tim Burgess in support of Defendants? Opposition to Plaintiffs? Motion for Summary Judgment and Cross-Motion for Partial Summary Judgment; 6. Declaration of Samantha Vu in support of Defendants? Opposition to Plaintiffs? Motion for Summary Judgment and Cross-Motion for Partial Summary Judgment; 7. Defendants? Request for Judicial Notice in support of their Opposition to Plaintiffs? Motion for Summary Judgment and Cross-Motion for Partial Summary Judgment; 8. Plaintiffs? Opposition and Reply on Summary Judgment; 9. Declaration of Seven W. Fogg in Support of Plaintiffs? Opposition and Reply on Summary Judgment; 10. Defendants? Reply in support of their Cross-Motion for Summary Judgment; and ORDER DENYING PLAIN MOTION FOR GORDON TILDEN THOMAS CORDELL SUMMARY JUDGMENT AND GRANTING LLP DEF ENDAN CROSS-MOTION FOR PARTIAL 1001 Fourth Avenue, Suite 4000 SUMMARY JUDGMENT - 2 Seattle, WA 98154 Phone (206)467-6477 Fax (206) 467-6292 The Court hereby ?nds that plaintiffs are not entitled to judgment as a matter of law. The Court further ?nds that there is no genuine issue of material fact and that defendants are entitled pm to Wsummary judgment as a matter of law. NOW, THEREFORE, IT IS HEREBY ORDERED: 1. Plaintiffs? Motion for Summary Judgment is 2. Defendants? Cross-Motion for Summary Judgment is 3. Ordinance 124833 (the ?Ordinance?) imposes a tax, not a regulation; 4. The tax imposed by the Ordinance under the City?s constitutional and legislative authority to impose taxes, which is separate from its regulatory authority under its police power, is not preempted by RCW 9.41.290; and 5. Ordinance 124833 is a lawful exercise of Seattle?s taxing authority. 6. Plaintiffs? Complaint is dismissed with prejudice. Defendants are awarded their taxable costs and statutory attorneys? fees. Dated this Eday of 20 Dow an. Palmer Robinson Superior Court Judge Presented by: PETER S. HOLMES Seattle City Attorney Attorneys for Defendants City of Seattle By: Kent C. Mever Kent C. Meyer, WSBA #17245 Carlton W.M. Seu, WSBA #26830 ORDER DENYING PLAIN MOTION FOR GORDON TILDEN THOMAS CORDELL SUMMARY JUDGMENT AND GRANTING LLP DEFENDAN CROSS-MOTION FOR PARTIAL 1001 Fourth Avenue, Suite 4000 SUMMARY JUDGMENT - 3 Seattle, WA 98154 Phone (206) 467-6477 Fax (206) 467-6292 STEPTOE JOHNSON LLP Attorneys for Defendants City of Seattle By: 5/ William F. Abrams William F. Abrams* Laurie Edelstein* Sarah K. Jackel* David H. Kwasniewski* *Admitted Pro Hac Vice GORDON TILDEN THOMAS CORDELL LLP Attorneys for Defendants City of Seattle By: 5/ Franklin D. Cordell Jeffrey I. Tilden, WSBA #12219 Franklin D. Cordell, WSBA #26392 ORDER DENYING MOTION FOR GORDON TILDEN THOMAS CORDELL SUMMARY JUDGMENT AND GRANTING LLP DEFENDAN CROSS-MOTION FOR PARTIAL 1001 Fourth Avenue, Suite 4000 SUMMARY JUDGMENT - 4 Seattle, WA 98154 Phone (206) 467-6477 Fax (206) 467-6292