Chamber of Commerce of the United States v. Brooke Lierman
Court
Fourth Circuit Court of Appeals
Decided
August 15, 2025
Jurisdiction
F
Importance
47%
Practice Areas
Case Summary
USCA4 Appeal: 24-1727 Doc: 48 Filed: 08/15/2025 Pg: 1 of 23 PUBLISHED UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT No. 24-1727 CHAMBER OF COMMERCE OF THE UNITED STATES OF AMERICA; NETCHOICE; COMPUTER & COMMUNICATIONS INDUSTRY ASSOCIATION, Plaintiffs - Appellants, v. BROOKE E. LIERMAN, Defendant - Appellee. NATIONAL TAXPAYERS UNION FOUNDATION, Amicus Supporting Appellant. Appeal from the United States District Court for the District of Maryland, at Greenbelt. Lydia Kay Griggsby, District Judge. (1:21-cv-00410-LKG) Argued: May 6, 2025 Decided: August 15, 2025 Before RICHARDSON and HEYTENS, Circuit Judges, and FLOYD, Senior Circuit Judge. Reversed and remanded by published opinion. Judge Richardson wrote the opinion, in which Judge Heytens and Judge Floyd joined. USCA4 Appeal: 24-1727 Doc: 48 Filed: 08/15/2025 Pg: 2 of 23 ARGUED: Scott Allen Keller, LEHOTSKY KELLER COHN LLP, Washington, D.C., for Appellants. Ryan Robert Dietrich, OFFICE OF THE ATTORNEY GENERAL OF MARYLAND, Baltimore, Maryland, for Appellee. ON BRIEF: Tara S. Morrissey, Jennifer B. Dickey, UNITED STATES CHAMBER LITIGATION CENTER, Washington, D.C., for Appellant Chamber of Commerce of the United States of America. Michael B. Kimberly, Charles Seidell, MCDERMOTT WILL & EMERY LLP, Washington, D.C., for Appellants. Anthony G. Brown, Attorney General, OFFICE OF THE ATTORNEY GENERAL OF MARYLAND, Baltimore, Maryland, for Appellee. Tyler Martinez, NATIONAL TAXPAYERS UNION FOUNDATION, Washington, D.C., for Amicus Curiae. 2 USCA4 Appeal: 24-1727 Doc: 48 Filed: 08/15/2025 Pg: 3 of 23 RICHARDSON, Circuit Judge: In 1765, the British Parliament imposed a novel tax on the fledgling colonies in North America. The Stamp Act was reviled because it taxed most everything written on paper, from playing cards to newspapers. This not only cost people money but jeopardized their ability to speak on matters of public concern. John Adams roused Massachusetts against the tax, calling it an “enormous Engine . . . for battering down all the Rights and Liberties of America.” 1 The Adams Papers 263 (L.H. Butterfield ed., 1961). Thousands of citizens protested when the dreaded stamps arrived in Charleston harbor, besieging the stamp officers in Fort Johnson for nine days. D.D. Wallace, Constitutional History of South Carolina From 1725 To 1775 at 32–33 (1899). And across the colonies, outrage about the tax prompted the colonists to begin developing the arguments that would later form the Declaration of Independence. See generally Daniel Dulany, Considerations on the Propriety of Imposing Taxes in the British Colonies (1765). In more ways than one, the Stamp Act and other taxes like it ignited revolution. Two and a half centuries later, the State of Maryland imposed another tax—not on those who print pamphlets but their internet-age successors. This tax applies to the money made by advertising on the internet. But as some things have changed, others have remained the same. It is no less true today than centuries ago that “the power to tax involves the power to destroy.” M‘Culloch v. Maryland, 17 U.S. (4 Wheat) 316, 431 (1819). And complaining about taxes remains a grand American political tradition. Perhaps fearing such complaints, Maryland paired its tax with another rule. Companies that make money advertising on the internet must not only pay the tax but avoid 3 USCA4 Appeal: 24-1727 Doc: 48 Filed: 08/15/2025 Pg: 4 of 23 telling their customers how it affects pricing: No line items, no surcharges, no fees. If companies pass on the cost of the tax, they must do so in silence—keeping customers in the dark about why prices have gone up and thereby insulating Maryland from political responsibility. That provision is the subject of this appeal. Plaintiffs, a group of trade associations, challenge Maryland’s rule on grounds that it abridges their freedom to speak. They say Maryland has no reason, other than insulating themselves from criticism and political accountability, to forbid them to explai
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Status
Decided
Date Decided
August 15, 2025
Jurisdiction
F
Court Type
appellate
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Case Summary
AI-generated comprehensive summary with legal analysis
Case Overview
In the case of Chamber of Commerce of the United States v. Brooke Lierman, the Fourth Circuit Court of Appeals addressed the constitutionality of Maryland's digital advertising tax. The court particularly focused on a provision that restricts companies from disclosing the tax to their customers, emphasizing the importance of free speech in political discourse. This ruling has significant implications for the intersection of taxation and First Amendment rights.
Legal Issues
The court examined several critical legal questions:
- Does Maryland's pass-through provision of the digital advertising tax violate the First Amendment by restricting political speech?
- Does the provision restrict how companies can communicate tax costs to consumers?
- Does the pass-through provision regulate speech or conduct?
- Does the provision withstand heightened scrutiny under the First Amendment?
- Is the pass-through provision facially unconstitutional?
Factual Background
- Maryland enacted a digital advertising tax applicable to companies with over $100 million in global gross revenues.
- The pass-through provision prohibits companies from disclosing the tax to customers, which plaintiffs argue limits their ability to criticize the government.
- The law allows companies to calculate and include tax costs in pricing but restricts how they can communicate this to customers.
Court's Analysis
The court's reasoning included the following points:
- The pass-through provision constitutes a content-based restriction on speech, which is impermissible under the First Amendment. The court found that it primarily regulates speech rather than conduct.
- The provision does not prevent companies from raising prices but restricts how they can express this to customers, thus requiring strict scrutiny for justification.
- Maryland's law failed to meet even intermediate scrutiny as it did not directly advance a substantial government interest and was deemed underinclusive.
Holdings and Decision
The court made several key rulings:
- The court reversed the district court's dismissal of the First Amendment claims, ruling that the pass-through provision is unconstitutional.
- The pass-through provision does not violate First Amendment rights as it only restricts specific means of communication regarding tax costs.
- Ultimately, the court held that the pass-through provision is facially unconstitutional, applying broadly to all instances of its enforcement.
Legal Precedents
The court cited several important cases:
- M‘Culloch v. Maryland, 17 U.S. (4 Wheat) 316 (1819) - Cited to illustrate the principle that the power to tax involves the power to destroy.
- W. Va. State Bd. of Educ. v. Barnette, 319 U.S. 624 (1943) - Reinforced the idea that the First Amendment protects the right to criticize the government.
- Central Hudson Gas & Electric Corp. v. Public Service Commission, 447 U.S. 557 (1980) - Established the intermediate scrutiny standard for commercial speech.
- Reed v. Town of Gilbert, 576 U.S. 155 (2015) - Set the standard for content-based regulations of speech.
Practical Implications
This ruling has significant implications for legal practice and future cases:
- It underscores the importance of First Amendment protections in the context of taxation, particularly regarding how companies communicate about government-imposed costs.
- The decision may influence how states structure tax laws to avoid infringing on constitutional rights, particularly in the realm of commercial speech and political accountability.
- Legal practitioners must consider the implications of this ruling when advising clients on compliance with tax regulations and the potential for First Amendment challenges.
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Case Details
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Status
Decided
Date Decided
August 15, 2025
Jurisdiction
F
Court Type
appellate
Legal Significance
Case importance metrics
Metadata
Additional information
Quick Actions
Case management tools