IN THE SUPREME COURT OF FLORIDA

TOP RANK, INC., AMERICA ) PRESENTS, LTD., and ) SHOWTIME NETWORKS INC., ) ) Petitioners, ) vs. ) Case No. SC03-494 ) FLORIDA STATE BOXING ) COMMISSION, et al., ) ) Respondents. )

______

RESPONDENTS' ANSWER BRIEF ON JURISDICTION ______

CHARLES J. CRIST, JR. ATTORNEY GENERAL

ERIC J. TAYLOR SENIOR ASSISTANT ATTORNEY GENERAL Fla. Bar No. 337609

LYNN C. HEARN DEPUTY SOLICITOR GENERAL Fla. Bar No. 0123633

Office of the Attorney General PL-01 The Capitol-Tax Section Tallahassee, FL 32399-1050 (850) 414-3300 (850) 488-5865 (FAX) TABLE OF CONTENTS

TABLE OF AUTHORITIES ...... ii

INTRODUCTORY STATEMENT ...... 1

STATEMENT OF THE CASE AND FACTS ...... 1

SUMMARY OF THE ARGUMENT ...... 3

ARGUMENT ...... 4

ISSUE I

THE COURT SHOULD NOT EXERCISE ITS DISCRETIONARY JURISDICTION TO REVIEW THE DECISION OF THE DISTRICT COURT BECAUSE THE GROSS RECEIPTS TAX AT ISSUE DOES NOT IMPLICATE THE FIRST AMENDMENT ...... 4

ISSUE II

THE FIRST DISTRICT PROPERLY AFFIRMED SHOWTIME'S DISMISSAL DUE TO LACK OF STANDING ...... 7

CONCLUSION ...... 9

CERTIFICATE OF SERVICE ...... 10

CERTIFICATE OF COMPLIANCE ...... 10

i TABLE OF AUTHORITIES

CASES

Campus Communications v. Department of Revenue, 473 So. 2d 1290 (Fla. 1985) ...... 8

Department of Revenue v. Young American Builders, 358 So. 2d 1096 (Fla. 1st DCA 1978) ...... 8

Pioneer Oil Co., Inc. v. State Department of Revenue, 401 So. 2d 1319 (Fla. 1981) ...... 8

Sarnoff v. Department of Highway Safety and Motor Vehicles, 825 So. 2d 351 (Fla. 2002) ...... 8

Top Rank, Inc. v. Florida State Boxing Commission, 837 So. 2d 496 (Fla. 1st DCA 2003) ...... 1,4,7

FLORIDA STATUTES

Section 548.06 ...... passim

Section 548.002 ...... 1,2

RULES

Florida Administrative Code R. 61K1-1.042 ...... 8

Florida Rule of Appellate Procedure 9.030 ...... 3

ii INTRODUCTORY STATEMENT

The Respondent, Florida State Boxing Commission (“Commission”), respectfully states that this Court should decline to exercise its discretionary jurisdiction in this case because the First District Court of Appeal correctly decided the case below. See Top Rank, Inc. v. Florida State Boxing Commission, 837 So.

2d 496 (Fla. 1st DCA 2003).

STATEMENT OF THE CASE AND FACTS

Section 548.06(1), Fla. Stat. (2000), imposes a gross receipts tax upon

“promoters” of boxing matches.1/ The tax is imposed upon various receipts by the promoters, including the receipts received by the promoters on the sale or lease of the promoters’ rights to broadcast fights to a third party. Only those persons defined as

“promoters” in Section 548.002(15), Fla. Stat. (2000), are subject to the tax imposed by Section 548.06(1).

1/ The Petitioners’ statement that the Commission imposes and collects a gross receipts tax “on the pay-per-view fees collected from viewers in Florida” for the pay- per-view broadcasts (Petitioners’ Brief at 1) is flatly incorrect. If Petitioners’ statement were correct, the amount of tax collected would increase substantially, because the tax would be collected not only upon fees received by promoters for the sale or lease of broadcasting rights to broadcasters, but also upon fees received by broadcasters for the actual broadcast to cable television viewers. However, the statute does not impose a tax upon the money received from viewers.

1 Petitioner Top Rank, Inc. (“Top Rank”) and America Presents, Ltd. (“America

Presents”) are licensed boxing promoters, as defined by Section 548.002(15).

Petitioners sell or lease the broadcast rights for their respective professional boxing matches to television and cable companies, such as Petitioner Showtime Networks,

Inc. (“Showtime”), and Home Box Office (“HBO”) for monetary consideration.

Petitioner Showtime is a broadcaster. Showtime televises boxing matches to the public over its Showtime network. In order to televise such boxing matches,

Showtime purchases or leases the right to broadcast the matches from promoters such as Top Rank and America Presents. After it purchases these broadcast rights,

Showtime decides if and when it may televise or distribute the actual television feed to the general public. Usually, the telecast is sold on a pay-per-view basis for each boxing match.

The Commission sought to collect the 5% gross receipts tax from Top Rank and America Presents pursuant to Section 548.06(1). The promoters refused to pay the tax, and filed suit asserting that the tax violates the First Amendment. Showtime also joined the suit, claiming that it could be assessed the tax by virtue of being deemed a “promoter” under an administrative rule promulgated by the Commission.

The trial court entered summary judgment in favor of the Commission, finding that Section 548.06 did not violate the First Amendment. The trial court also

2 dismissed Showtime because it had not been assessed the challenged tax. The First

District Court of appeal affirmed, and Petitioners now seek to invoke the discretionary jurisdiction of this Court pursuant to Rule 9.030(a)(2)(i) of the Florida Rules of

Appellate Procedure.

SUMMARY OF THE ARGUMENT

This Court should not accept jurisdiction of this case because the First District's decision is not a departure from any decision of this Court or of the United States

Supreme Court. The First Amendment does not prohibit taxation on the monetary receipts received by a presenter or promoter for presenting a professional sporting event.

Petitioners mischaracterize the intent and effect of Section 548.06 in an attempt to create a First Amendment “content” issue where none exists. The tax is not on the broadcast - - in fact, no broadcast is necessary. All that is necessary under Section

548.06 is that a boxing match occur and that the promoter of the match sell or lease his broadcast rights.

The First District correctly found that sporting events, in and of themselves, are not “speech” entitled to protection of the First Amendment. Because Section 548.06 imposes the tax upon the various receipts received by the promoter, and not upon any broadcast, the Florida tax does not implicate the First Amendment.

3 The First District also was correct in dismissing Showtime for lack of standing.

Showtime claimed standing based upon an administrative rule promulgated by the

Commission. Where an issue raised by a party is dependent upon an administrative rule, rather than a statute, the party must first exhaust its administrative remedies with the agency that promulgated the rule before proceeding to court.

ARGUMENT

The tax created by the Legislature in Section 548.06 does not tax speech protected by the First Amendment. As the First District held, this tax merely applies to the receipts of a sales transaction, and does not affect pure or symbolic speech.

See Top Rank, 837 So. 2d at 502.

I. THE COURT SHOULD NOT EXERCISE ITS DISCRETIONARY JURISDICTION TO REVIEW THE DECISION OF THE DISTRICT COURT BECAUSE THE GROSS RECEIPTS TAX AT ISSUE DOES NOT IMPLICATE THE FIRST AMENDMENT.

Petitioners’ First Amendment argument fails because Section 548.06 does not tax the broadcast of a boxing match. Without a tax on the broadcast, there can be no improper taxation based upon content. All the cases cited by the Petitioners on this issue are, in fact, cases where the state attempted to place a tax upon a broadcast or on other speech subject to First Amendment protection. See Petitioners’ Jurisdictional

Brief at 6-8.

4 Section 548.06, Fla. Stat. (2000), provides:

(1) A promoter holding a match shall, within 72 hours after the match, file with the commission a written report which includes the number of tickets sold, the amount of gross receipts, and any other facts the commission may require. For the purposes of this chapter, total gross receipts include:

(a) The gross price charged for the sale or lease of broadcasting, television, and motion picture rights without any deductions for commissions, brokerage fees, distribution fees, advertising, or other expenses or charges;

(b) The portion of the receipts from the sale of souvenirs, programs, and other concessions received by the promoter; and

(c) The face value of all tickets sold and complimentary tickets issued.

(2) The written report shall be accompanied by a tax payment in the amount of 5 percent of the total gross receipts exclusive of any federal taxes, except that the tax payment derived from the gross price charged for the sale or lease of broadcasting, television, and motion picture rights shall not exceed $40,000 for any single event.

(Emphasis supplied).

In spite of the express language of Section 548.06 imposing the tax on

“promoter[s],” Petitioners insist that this section imposes a tax upon television and pay-per-view broadcasts. In making this argument, Petitioners mischaracterize the very nature of Section 548.06 in order to attempt to create a First Amendment issue.

5 Section 548.06(1)(a) is a “gross receipts” tax. A gross receipts tax is a tax on the one-time sale of an intangible right. In this case, the intangible right is the right to sell or lease the right to broadcast or televise a boxing event. This right starts, and ends, with the fight promoter. The promoter may sell or lease his rights to broadcast or televise, or he may not. The choice is solely up to the fight promoter. Only if the fight promoter decides to sell or lease his right to broadcast or televise a match is a tax imposed under this subsection; and then only if the boxing match takes place. In short

- no fight, no tax.

Pursuant to Section 548.06(1)(a), the tax is measured by the promoter’s gross receipts and is imposed on the promoter. The manner in which Showtime, or any other purchaser of the rights to broadcast or televise, goes about selling its acquired rights is irrelevant to the imposition of the tax under Section 548.06(1)(a).

The Petitioners’ misunderstanding of the workings of Section 548.06 is reflected in their statement that:

If the tax is truly on the promotion of the underlying boxing match rather than the broadcast of the match, then . . . it becomes irrelevant whether or not a match is broadcast--yet, the statute requires a broadcast before any tax can be imposed . . . .

(Petitioners’ Brief at 7). In fact, Section 548.06 does not require a broadcast; the tax can be imposed even if no broadcast ever is televised. The express terms of the

6 statute make this clear:

(1) A promoter holding a match shall . . . file with the commission a written report which includes . . . gross receipts . . . . [G]ross receipts include:

(a) The gross price charged for the sale or lease of broadcasting, television, and motion picture rights . . . .

Note the key triggering words that cause the tax to be imposed. First, it is the

“promoter” who is affected by this law. Second, a boxing “match” must occur. If no match takes place, nothing in Section 548.06 is triggered. Third, the promoter must

“[sell] or lease” the right to broadcast the match. When these events occur, the tax is triggered. It is irrelevant whether the broadcaster actually broadcasts the match; indeed, the promoter is liable for the tax even if the match is not ultimately broadcast to viewers.

Therefore, the cases cited by the Petitioners in which taxes were imposed on the broadcast of a boxing match (Petitioners’ Brief at 8) are simply inapposite to this case, where the tax is imposed upon the sale or lease of the right to broadcast a match.

II. THE FIRST DISTRICT PROPERLY AFFIRMED SHOWTIME’S DISMISSAL DUE TO LACK OF STANDING.

The trial court dismissed Showtime for lack of standing because Showtime was not a “promoter” within the terms of the statute. The First District properly affirmed that ruling. See Top Rank, 837 So. 2d at 502.

7 Showtime claimed standing based upon an administrative rule promulgated by the Commission. See Fla. Admin. Code R. 61K1-1.042. Showtime interprets this rule to make it a “promoter” subject to the tax imposed by Section 548.06. It is axiomatic that administrative rules do not impose taxes; only statutes impose taxes. See, e.g,

Campus Communications v. Department of Revenue, 473 So. 2d 1290 (Fla. 1985);

Pioneer Oil Co., Inc. v. State Department of Revenue, 401 So. 2d 1319 (Fla. 1981);

Department of Revenue v. Young American Builders, 358 So. 2d 1096 (Fla. 1st DCA

1978), aff'd, 376 So. 2d 849 (Fla. 1979).

Furthermore, Showtime never applied to the Commission for an interpretation of this rule or challenged the rule administratively. As this Court has recently ruled, where an issue raised by a party is dependent upon an agency rule rather than a statute, the party must exhaust its administrative remedies with the agency before proceeding to court. Sarnoff v. Department of Highway Safety and Motor Vehicles, 825 So. 2d

351 (Fla. 2002).

Like the petitioners in Sarnoff, Showtime has the right and ability to request an administrative interpretation of the Commission’s rule to see if Showtime is considered to be a “promoter” subject to the tax under the terms of the rule. Showtime has not requested such an interpretation. This Court should not exercise its discretionary jurisdiction because Showtime clearly does not have standing in this case.

8 CONCLUSION

This Court should decline to exercise its discretionary jurisdiction in this case.

The decision of the First District is not a departure from any decision of this Court, or of the United States Supreme Court, and the tax imposed in Section 548.06(1) does not implicate the First Amendment. Furthermore, Showtime lacks standing in this case.

Respectfully submitted,

CHARLES J. CRIST, JR. ATTORNEY GENERAL

______ERIC J. TAYLOR SENIOR ASSISTANT ATTORNEY GENERAL Fla. Bar No. 337609

LYNN C. HEARN DEPUTY SOLICITOR GENERAL Fla. Bar No. 0123633

Office of the Attorney General PL-01 The Capitol-Tax Section Tallahassee, FL 32399-1050 (850) 414-3300 (850) 488-5865 (FAX)

Counsel for the Respondents the Florida State Boxing Commission its Members in their Official Capacity; Florida Department of Business and Professional Regulation; Chris Meffert, Executive Director of the Florida State

9 Boxing Commission, Department of Business and Professional Regulation; and, Robert F. Milligan, formerly the Comptroller Of the State of Florida

CERTIFICATE OF SERVICE

I HEREBY CERTIFY that a true and correct copy of the foregoing has been forwarded by U.S. Mail this ______day of April, 2003, to: Bernard Nash, David

Englehardt, and Keisha Gary, Esqs., Dickstein, Shapiro, Morin & Oshinsky LLP,

2101 L Street, NW, Washington D.C. 20037-1526; Michael Heitner, Esq., Herrick,

Feinstein LLP, 2 Park Avenue, New York, NY 10016-9301; and, Stephen H. Grimes and Susan L. Kelsey, Esqs., Holland & Knight LLP, P.O. Drawer 810, Tallahassee,

Florida 32312.

______Eric J. Taylor Senior Assistant Attorney General

CERTIFICATE OF COMPLIANCE

I hereby certify that the Respondents’ Jurisdictional Brief complies with the font requirements of Rule 9.210(a)(2), Fla. R. App. P., in that this Brief uses Times New Roman 14-point font.

______ERIC TAYLOR Senior Assistant Attorney General

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