PITTSBURGH – After more than a year of inactivity, a state court judge’s ruling has breathed new life into a lawsuit filed by a trio of professional athletes and the players’ associations of Major League Baseball, the National Football League and the National Hockey League - all of whom allege that the City of Pittsburgh’s “jock tax” that is applied to both resident and non-resident athletes is unconstitutional.
The plaintiffs feel that the City’s argument that because it financed the construction of its major sports stadiums through taxpayer funds, it has the right to tax the individuals using the facilities in order to get its money back, is faulty.
The unions – along with former Pittsburgh Penguins forward Scott Wilson, New Jersey Devils forward Kyle Palmieri and veteran former baseball player Jeff Francoeur – initially filed suit in the Allegheny County Court of Common Pleas on Nov. 5, 2019 against the City.
The “jock tax” is a three percent income tax on visiting professional athletes and those who live outside Pittsburgh as a “non-resident facility usage fee” for major sports venues that are publicly funded in the City: PNC Park (Pittsburgh Pirates), Heinz Field (Pittsburgh Steelers) and PPG Paints Arena (Pittsburgh Penguins).
However, residents of Pittsburgh who access and use the facilities only pay a one percent income tax.
This is the major objection of the lawsuit, as it labels the taxes “unconstitutional.”
The plaintiffs cite the Pennsylvania Constitution’s provision that all taxes be “uniform,” arguing the City can’t levy different taxes on residents and non-residents, and furthermore, cite the U.S. Constitution’s text which “prohibits states and municipalities from establishing conditions on professional work that are more burdensome for non-residents than they are for residents.”
Wilson, currently working under a two-year deal with the Buffalo Sabres worth $2.1 million, paid a $6,000 tax to Pittsburgh in 2016.
Palmieri, in the middle of a five-year, $23 million contract with the Devils, paid $1,900 to the City in 2016.
Finally, Francoeur, who made $1 million playing for the Atlanta Braves in 2016, paid $800 of that sum to Pittsburgh that same year.
Lawyers for the players have successfully overturned similar taxes in other states, such as Ohio and Tennessee.
“The City of Pittsburgh, through its taxpayers, financed large portions of the facilities utilized by the plaintiff. Accordingly, it is reasonable for the City to seek remuneration for those expenditures, from the individuals who utilize the facilities,” according to a Jan. 21, 2020 answer in the litigation from the City Solicitor Yvonne S. Hilton and Associate City Solicitor, Michael E. Kennedy.
Hilton and Kennedy referred to the City’s tax structure as “appropriate and legal” under state and federal law and added the non-individual plaintiffs lack standing to pursue their claims.
Additionally, the City officials believe the objecting plaintiffs did not pursue the matter in a timely fashion.
“To the extent that discovery reveals that any of the plaintiffs have failed to act in a timely basis, defendant asserts the appropriate statute of limitations as a defense,” Hilton and Kennedy said.
Pittsburgh Mayor Bill Peduto explained the rationale behind the tax created in 2005, during a time when the City was enduring difficult financial straits.
“The stadiums themselves have been paid for by taxpayers. They use them as their place of work. There was a way we felt that some of that money could be recouped for the public and we will let the judge decide,” Peduto stated.
State court judge gets “jock tax” case going again after more than a year
Allegheny County Court of Common Pleas Judge Christine A. Ward ruled on June 28 that the parties will collaborate on agreeing upon stipulations of fact and engage in settlement discussions, ahead of preparation of cross motions for summary judgment later this year.
“The parties will work together to reach joint stipulations of fact on or before Aug. 13, 2021. Should they fail to reach an agreement on joint stipulations of fact, the parties will notify the Court on or before that date to seek a status conference concerning a period of limited discovery followed by either dispositive motions or a hearing on the merits. The parties have agreed to and will engage in structured settlement discussions, through a mutually agreed-upon mediator, for a period of not more than 60 days following agreement on the joint stipulations of fact. If the parties reach an agreement on joint stipulations of fact, but do not resolve these actions through settlement discussions, plaintiffs will file a motion for summary judgment and supporting memorandum on or before Nov. 1, 2021,” Ward stated.
“The City of Pittsburgh will file a cross-motion for summary judgment and its opposition to plaintiffs’ motion on or before Dec. 1, 2021. The parties may file a single consolidated response/reply brief to the cross-motions for summary judgment on or before Dec. 20, 2021. The Court will set a hearing for argument on the cross-motions for summary judgment as soon as practicable thereafter.”
Ward’s ruling revived the case after more than a year of inactivity in the action.
Jay K. Reisinger, a partner at Pittsburgh-based Farrell Reisinger & Comber who manages the firm’s sports law practice and has extensive experience representing professional athletes, previously told the Pennsylvania Record that the tax is unconstitutional.
“In my opinion, it’s long overdue. Professional athletes, not just in Pittsburgh but in other jurisdictions, have been singled out for a so-called use tax or a licensing fee, etc., so that local municipalities that have stadiums and professional teams can charge those players,” Reisinger said.
“Everybody knows where the Steelers are playing, but you don’t know what lawyers from New York are coming into Pittsburgh to work there and earn money, that aren’t paying the same tax. So, what’s the difference? The difference is you can actually figure out where these [athletes] are, where they play and where they earn money.”
The plaintiffs are represented by Scott R. Leah of Tucker Arensberg in Pittsburgh, plus Stephen W. Kidder, Ryan P. McManus and Michael P. Moore Jr. of Hemenway & Barnes, in Boston.
The defendants are represented by City Solicitor Yvonne S. Hilton and Associate City Solicitor Michael E. Kennedy, also in Pittsburgh.
Allegheny County Court of Common Pleas case GD-19-015542
From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at nick.malfitano@therecordinc.com