Sometimes an appellant merely seeks reversal of a trial court’s decision. However, appellants should also remember that an appellate court will, on occasion, reverse a lower court and decide the case on its merits. The Supreme Court of North Carolina released an opinion last week that highlights the importance of this possibility.
IMT, Inc. v. City of Lumberton was a consolidation of four cases that all challenged the constitutionality of a change in Lumberton’s privilege license tax. The change raised taxes on sweepstakes operators from a flat $12.50 to $7,500 or more. On appeal, the Supreme Court found that the Just and Equitable Tax Clause, set forth in article 5, section 2 of the North Carolina Constitution, imposes a substantive limitation on a legislature’s power and provides a private cause of action to challenge the constitutionality of a tax.
The court could have remanded the case to the trial court to analyze the cases in light of that decision. Instead, the court decided the case on the merits and found that the city’s “59,900% minimum tax increase is wholly detached from the moorings of anything reasonably resembling a just and equitable tax.” Because the sole issue was “merely a question of law,” the court stated that it could resolve the matter “as capably as a trial court.”
Thus, appellants should remember that they should not only argue against the trial court’s decision but also in favor of their own position. They may just get their cake and eat it, too.