Cooper’s Hawk tax dispute between Rolling Meadows and Arlington Heights to be decided by Illinois Supreme Court

The Illinois Supreme Court has agreed to hear Rolling Meadows’ appeal of a ruling that would have the city pay Arlington Heights more than $1 million in misallocated sales taxes from Cooper’s Hawk Winery & Restaurant.

And Rolling Meadows has retained a high-powered law firm to beef up its legal team and present oral arguments.

The city council this week approved the engagement of Jenner & Block in the city’s appeal of the First District Appellate Court’s 2-1 decision from Jan. 12. The city will pay the law firm a $100,000 flat fee in four installments on June 17, July 17, Aug. 17 and Sept. 17.

The hiring comes after the state Supreme Court late last month allowed Rolling Meadows’ petition for leave to appeal.

“The city feels very strongly that the Appellate Court’s decision was erroneous,” City Manager Rob Sabo wrote in an email to the Daily Herald Thursday. “Because of the significance of the issue presented, the city has retained well-respected appellate attorneys to present its case. The city is pleased that the Illinois Supreme Court granted our petition and we look forward to presenting our case to the court.”

Rolling Meadows City Manager Rob Sabo

Jenner & Block will present oral arguments and review and edit the opening and reply briefs for the appeal, which will be drafted by the city’s primary law firm, Storino, Ramello & Durkin, according to the engagement letter.

The letter was written by John R. Storino, a partner at Jenner & Block and the son of Donald J. Storino, the founding partner of Rosemont-based Storino, Ramello & Durkin.

The case stems from the opening of Cooper’s Hawk at 798 W. Algonquin Road in June 2011, when the Illinois Department of Revenue mistakenly coded the restaurant as a Rolling Meadows business, even though it is in Arlington Heights.

For the next eight years, the state collected sales taxes from the restaurant, and sent the local 1% share to Rolling Meadows — until Arlington Heights discovered the error at the onset of the pandemic.

The state reimbursed Arlington Heights $109,000 covering six months of revenue for the last half of 2019, which is the maximum allowable under state law.

Arlington Heights sued Rolling Meadows in 2022, when the latter municipality refused to return the rest — more than $1 million — plus interest. A Cook County circuit court judge initially dismissed the village’s suit seeking more than eight years’ worth of back taxes, before the appeals court ruled in the village’s favor.

“There is no dispute over the money coming from Cooper’s Hawk,” said Arlington Heights Village Manager Randy Recklaus. “It was always in Arlington Heights. We know to the penny how much it was. Rolling Meadows received it mistakenly. And for us, it’s a straightforward case of they received it mistakenly and we ought to get it back. For us it’s that simple.”

Arlington Heights Village Manager Randy Recklaus

According to court documents, the two sides disagree about whether Rolling Meadows officials knew of the error.

Should the seven-member panel determine the city owes the village, Sabo wouldn’t say where the money would come from.

Recklaus said village staff hasn’t yet discussed where the money would be allocated, if they receive it.

He said he is “comfortable” with the village’s law firm Elrod Friedman and there are no plans to retain outside counsel.

Arlington Heights Village Attorney Hart Passman said he expects written briefs to be filed over the course of the summer and early fall. Justices then will decide whether and when to hear oral arguments before issuing a written decision.

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