US Supreme Court Overturns Quill

In South Dakota v. Wayfair, Inc., No. 17-494, 2018 WL 3058015 (June 21, 2018), the United States Supreme Court upheld a law allowing the State of South Dakota to collect sales and use tax from out-of-state sellers, even if those sellers do not maintain a physical presence in South Dakota.  In its decision, the Supreme Court overturned its prior decisions in Quill Corp. v. North Dakota, 504 U.S. 298 (May 26, 1992), and National Bellas Hess, Inc. v. Dept. of Revenue of State of Illinois, 386 U.S. 753 (May 8, 1967), which had required the out-of-state seller’s physical presence (such as an office or retail store) in the state in order for the state to collect a sales and use tax. The decision has now made it possible for states to impose sales and use tax on online purchases from out-of-state sellers (such as online retailers).

In Sky Cable LLC v. DIRECTTV Inc., 886 F.3d 375 (4^th Circuit, March 28, 2018), the 4^th Circuit Court of Appeals affirmed a district court decision ruling that Delaware law permits a court to reverse pierce the corporate veil in order to hold an entity liable for the debts of its alter ego member.  The district court entered judgment for DirectTV for $2.3 million against an individual who fraudulently provided DirectTV services to over 2,300 rental units without a license. When the individual was unable to satisfy the judgment out of his personal assets, DirectTV sought to hold the individual’s limited liability company liable, of which the individual was the sole member. Basing its decision on existing Delaware law and the abundance of evidence that the limited liability company was merely the alter ego of the individual, the 4^th Circuit affirmed the district court decision holding that the limited liability company was the alter ego of the individual, and therefore liable for the individual’s debts. This case serves as a good reminder of the importance of observing the corporate formalities.

In Burkhart v. Grigsby, 886 F.3d 434 (4^th Circuit, March 29, 2018), the 4^th Circuit Court of Appeals held that an unsecured claim can be stripped from a debtor’s principal residence in a Chapter 13 bankruptcy case, regardless of whether the claimant filed a proof of claim.

In Total Tech Solutions, LLC v. ActioNet, Inc., CL-2017-10745 (Fairfax Cir. Ct., March 29, 2018), the Fairfax Circuit Court held that a subcontractor failed to sufficiently plead a cause of action for quantum meruit or unjust enrichment when the disputed matters were clearly contemplated in and addressed by the parties’ written agreement.