By Martin I. EisensteinDavid Swetnam-Burland, & Nathaniel A. BesseyBrann & Isaacson

The ACMA has won a hard-earned victory in its litigation against the California Franchise Tax Board (FTB). Siding with the ACMA, the California Superior Court ruled that the FTB went too far in dressing up substantive regulations as mere “guidance.”

On December 13th, San Francisco Superior Court Judge Ethan Schulman issued a carefully reasoned order granting the ACMA’s motion for summary adjudication, concluding that two guidance documents published by the FTB in 2022, Technical Advice Memorandum 2022–01 and FTB Publication 1050, are void as invalid “underground regulations.”

FTB Exceeded Its Regulatory Authority
These FTB documents purported to instruct out-of-state retailers what online activities were and were not protected by federal law (Public Law 86–272),

In simply publishing the publications on the FTB’s website, the court concluded that the FTB exceeded its regulatory authority by not complying with the California statute governing how agencies must issue regulations.

The court also made short work of the FTB’s recycled arguments that the ACMA should not have been allowed to bring its lawsuit in the first place, reaffirming that California law allows the ACMA to vindicate its members’ rights.

Court Rejects Numerous CA FTB Arguments
“Like a broken record,” the court wrote, “the FTB repeats the same objections …[that] are meritless.” The judge also chided the FTB for failing to acknowledge legal authority identified in an earlier ruling, and dismissed another FTB procedural argument “specious.”

Because this ruling resolves the case, the court will shortly enter a judgment in favor of the ACMA, after which the ball will be in the FTB’s court to withdraw the publications or take an appeal.

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The authors’ bios are linked above. For more information, contact Marty Eisenstein at


Legal Disclaimer:
This column is for educational purposes only, to provide information as of the date of the blog about various legal issues we believe may be of interest to members of the ACMA and other catalog marketers. Reading this column does not create an attorney-client relationship between you and any of the column’s authors or their law firm Brann & Isaacson.  Although the authors of this column are attorneys, the information provided here is not provided in the course of an attorney-client relationship and is not intended to constitute legal advice. This column is not intended to be legal advertising or to solicit any specific representation. The views expressed are those of the authors, and are not intended to reflect or express the views of the ACMA or any of its members.
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