Three lawyers from a Lewiston firm will argue a landmark e-commerce case in the U.S. Supreme Court on Tuesday, the firm’s second time in front of the court in five years.

Brann and Isaacson partners George Isaacson, Martin Eisenstein and Matthew Schaefer will represent online retailers in a case about whether those companies have to collect state sales tax.

The firm, which has 19 attorneys, has developed a niche practice catering to internet companies with legal issues like state taxation and patent trolls. The firm’s unique legal focus started with representing L.L. Bean in mail-order taxation cases three decades ago and has grown since, Schaefer said in a phone interview Monday.

“The specialty grew out of some success we had representing LL Bean in come cases out of the 1980s,” Schaefer said. “It has been our good fortune to live and work in Maine and nevertheless develop the opportunity to represent companies that do business across the country like this.” The firm is L.L. Bean’s general counsel and has represented the company since the 1960s.

Brann and Isaacson now represents dozens of internet retailers, including home goods company Wayfair, retailer Overstock, and electronics store Newegg, three companies challenging a South Dakota law forcing them to collect state sales tax from customers, the case now in front of the Supreme Court.

It is uncommon for local law firms to argue a case in front of the court, partially because many cases that make it to that level are brought by a small number of Washington D.C.-area lawyers, Schaefer said.

“The number of firms appearing in the Supreme Court has shrunk around a core group, which makes it less common for firms like ours to have this opportunity,” he said.

“We are fortunate in that regard to have developed this particular specialty and to have the trust and faith of our clients to represent them well through the courts.”

Tuesday’s case, South Dakota v. Wayfair Inc. et al, stems from a law South Dakota passed in 2016 that required online retailers to collect sales tax if their sales reached $100,000 or 200 separate transactions. Maine passed an identical law in 2017. But both laws conflict with a 1992 Supreme Court ruling that retailers had to have a physical presence in the state to collect local sales tax.

Whereas giant companies like Amazon and Wal-Mart collect sales tax in most states, smaller retailers still don’t have the resources to navigate some 12,000 local and state tax jurisdictions, Schaefer said.

Overruling the court’s 1992 ruling would benefit those large retailers at the expense of small and medium-size companies, he added.

“It will further solidify the dominance of the big players.”

The U.S. retail industry and state authorities don’t buy those arguments. Trade groups such as the National Retail Federation have filed briefs in the case to support overruling the physical-presence rule to make an even playing ground for online and brick-and-mortar stores. Colorado, along with 40 other states, including Maine, also support collecting sales tax, complaining they are losing tens of millions of dollars a year in uncollected tax.

Curtis Picard, president and CEO of the Retail Association of Maine, said the argument that sales tax regimes are too complex for companies to decipher doesn’t hold water. Maine loses an estimated $40 million a year to e-commerce outlets that don’t collect sales tax and it disadvantages in-state stores, Picard said.

“Brick-and-mortar retailers will tell you they can match the price, what they can’t do is tell you that you don’t have to pay the sales tax,” he said.

Considering the sea-change of e-commerce in the last 25 years, it is likely Supreme Court justices will be responsive to arguments in favor of changing the 1992 ruling, he added.

“Part of the reason for the court case going forward is the recognition by the Supreme Court that it was time to take a fresh look at it,” he said.

The court’s interest in reexamining the physical-presence rule comes from a case Brann and Isaacson litigated in front of the court in 2014-2015 for the Direct Marketing Association. The case centered around whether federal courts had jurisdiction to hear an appeal of a Colorado law that compelled retailers such as Amazon and L.L. Bean to report customer’s purchasing activity so the state revenue authority could collect sales tax directly from customers.

The court ruled 9-0 in the marketing association’s favor, but Justice Anthony Kennedy also wrote an opinion that it should revisit its 1992 ruling, setting the stage for the current case, Schaefer said.

“It is an issue that is going to affect all consumers in the U.S. and quite literally millions of businesses as well,” he added.

Peter McGuire can be reached at 791-6325 or at:

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Twitter: @PeteL_McGuire

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