OPINION

DAVID PURYEAR, Justice.

After the legislature enacted subchapter V of the Texas Health & Safety Code, entitled, "Fee on Cigarettes and Cigarette Tobacco Products Manufactured by Certain Companies," appellees Texas Small Tobacco Coalition and Global Tobacco, Inc. (Small Tobacco) filed a suit for declaratory and injunctive relief, alleging that the tax imposed by subchapter V is unconstitutional.1 Appellants Susan Combs, in her official capacity as Texas Comptroller, and Greg Abbott, in his official capacity as Texas Attorney General, (the State) filed a plea to the jurisdiction and a motion for summary judgment, and Small Tobacco filed its own motion for summary judgment. The trial court denied the State's plea to the jurisdiction and motion for summary judgment, granted Small Tobacco's motion for summary judgment, found that the tax is unconstitutional, and enjoined the State from assessing or collecting the tax. We affirm the trial court's order.

Factual Background

In 1996, the State sued four major tobacco companies (Big Tobacco)2 for antitrust violations, deceptive advertising, and marketing campaigns aimed at children. In 1997 and 1998, Big Tobacco settled with the State, agreeing to change the way they advertised and marketed their products and to pay billions of dollars to the State in exchange for a settlement of the State's claims and a release from any future claims the State might have against Big Tobacco.3

The 1998 Comprehensive Settlement Agreement and Release (the 1998 Settlement) provided a schedule of payments to be made to various entities and stated that the payments were intended as "reimbursement for public health expenditures of the State" and to satisfy the State's claims "for damages incurred by the State in the year of payment or earlier years," including Medicaid expenditures and punitive damages. The 1998 Settlement stated that payments made in 1998 "constitute reimbursement for public health expenditures" and that "[a]ll other payments ... are in satisfaction of all of the State of Texas's claims for damages incurred by the State in the year of payment or earlier years, including those for reimbursement of Medicaid expenditures and punitive damages." The agreement then listed seven specific payments, such as $351 million to be paid to the State's general revenue fund for funding the Children's Health Insurance Program and various anti-smoking programs, and stated that "[a]ll remaining amounts, including any amounts due to be paid by Settling Defendants after December 31, 1998, are to be allocated to the general revenue fund of the State of Texas to be used for such purposes as the State of Texas may determine." Big Tobacco agreed to make large yearly payments based on the companies' various market shares, and those payments were to increase or decrease "in accordance with decreases or increases in volume of domestic tobacco product volume sales."

In 2013, the legislature passed House Bill 3536 and enacted subchapter V of chapter 161 of the health and safety code. See Act of May 23, 2013, 83d Leg., R.S., ch. 1305, § 1, 2013 Tex. Gen. Laws 3331, 3331-36 (codified at Tex. Health & Safety Code §§ 161.601-.614 (effective September 1, 2013)). Subchapter V, entitled, "Fee on Cigarettes and Cigarette Tobacco Products Manufactured by Certain Companies," applies only to tobacco companies that did not sign the 1997 and 1998 settlement agreements ("non-settling manufacturers") and is intended to:

Tex. Health & Safety Code § 161.601.

Under subchapter V, a 2.75 cent "fee" is imposed on each cigarette or 0.09 ounce of tobacco product made by a non-settling manufacturer, for a total of 55 cents added to the price of each 20-cigarette pack, with the fee to increase each year. Id. §§ 161.603, .604.4 Subchapter V does not release non-settling manufacturers from liability, although it does provide that all fees paid by a manufacturer "shall apply on a dollar for dollar basis to reduce any judgment or settlement on a released claim brought against the manufacturer that made the payment." Id. § 161.612.

Small Tobacco sued for declaratory and injunctive relief, arguing that the fee imposed by subchapter V was in fact a tax that violated the Equal and Uniform Clause of the Texas Constitution and the Equal Protection Clause and the Due Process Clause of the United States Constitution. The State filed a plea to the jurisdiction asserting that the Texas Small Tobacco Coalition5 lacked standing to bring a taxpayer suit under chapter 112 of the tax code, that section 112.108 of the tax code barred a suit under the Uniform Declaratory Judgments Act,6 and that Small Tobacco had not pled a viable constitutional claim so as to overcome the State's sovereign immunity. Both Small Tobacco and the State filed motions for summary judgment. After a hearing, the trial court signed an order denying the State's plea to the jurisdiction and motion for summary judgment and granting Small Tobacco's motion for summary judgment. The trial court found that subchapter V is unconstitutional "in its entirety" and permanently enjoined the State from assessing, collecting, or enforcing the tax. The State appealed.

Scope Of Our Review

Initially, we note that in its statement of its arguments, the State contends only that the trial court erred in denying the State's plea to the jurisdiction, asserting (1) that Small Tobacco failed to plead valid claims that subchapter V violates the Equal and Uniform Clause of the Texas Constitution or the Equal Protection and Due Process Clauses of the federal constitution and (2) that the Texas Small Tobacco Coalition lacks standing to bring the suit. In its prayer, the State asks us to reverse the trial court's judgment and "render judgment dismissing plaintiffs' claims for lack of subject-matter jurisdiction." Although the State's statements of argument and prayer present a very limited question, the parties present detailed argument about the overall merits of Small Tobacco's underlying claims and the trial court's ruling of unconstitutionality. Because the parties' actual arguments concern the propriety of the trial court's finding that the statutes are unconstitutional, we will not limit our discussion to the trial court's denial of the State's plea to the jurisdiction. See Majeed v. Hussain, No. 03-08-00679-CV, 2010 WL 4137472, at *7-9 (Tex.App.-Austin Oct. 22, 2010, no pet.) (mem. op.) (omission of prayer for remand in brief did not waive appellant's entitlement to or court's power to award remand).

Standing

In its third issue, the State asserts that the Texas Small Tobacco Coalition lacks associational standing to bring the underlying suit on behalf of its members. We disagree.

An association has standing to sue on behalf of its members if: the members themselves have standing to sue in their own right7; the interests the association is seeking to protect are germane to its purpose; and participation of the individual members in the lawsuit is not necessary, meaning the pleadings and record show that neither the claim asserted nor the relief sought require the individual members to participate in the suit. Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 447-48 (Tex.1993) (quoting Hunt v. Washington State Apple Adver. Comm'n, 432 U.S. 333, 343, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977)). When, as here, an association seeks injunctive or declaratory relief, as opposed to damages requiring a showing of individualized lost profits, the relief will inure to the benefit of the association's members and does not require the participation of each individual member. Id. at 448 (quoting Hunt, 432 U.S. at 343, 97 S.Ct. 2434).

The State contends that only an individual taxpayer has standing to sue under section 112.108 of the tax code and asserts that "lawsuits by associations of taxpayers ... are forbidden."8 However, we have held that section 112.108 is unconstitutional, and that holding has not been overruled by the Texas Supreme Court. See Richmont Aviation, Inc. v. Combs, No. 03-11-00486-CV, 2013 WL 5272834, at *5-6 (Tex.App.-Austin Sept. 12, 2013, pet. filed) (mem. op.); Rylander v. Bandag Licensing Corp., 18 S.W.3d 296, 304-05 (Tex. App.-Austin 2000, pet. denied).9 Further, none of the statutes cited by the State forbids an association from bringing a lawsuit on behalf of its members to argue that a tax statute is unconstitutional, and we recently reaffirmed that a suit for declaratory relief challenging a tax statute's constitutionality can be brought by a trade association. Texas Entm't Ass'n, Inc. v. Combs, 431 S.W.3d 790, 795 & n. 3 (Tex. App.-Austin 2014, pet. filed). We overrule the State's third issue.

Equal and Uniform Clause

Although phrased in terms of whether Small Tobacco pled a valid constitutional claim, the State argues in its first issue that subchapter V's fee does not violate Texas's Equal and Uniform Clause because the legislature's decision to assess a fee against non-settling manufacturers and not against settling manufacturers was based on a reasonable distinction.

In Texas, taxation must be equal and uniform. Tex. Const. art. VIII, §§ 1, 2. Although the legislature may "pursue policy goals through tax legislation," those goals must be "related to the taxation." In re Nestle USA, Inc., 387 S.W.3d 610, 622 (Tex.2012) (orig. proceeding). The legislature has the discretion to make classifications in levying sales and occupation taxes, and there is a strong presumption in favor of a tax statute's constitutionality. Id. at 623 (quoting Vinson v. Burgess, 773 S.W.2d 263, 266 (Tex. 1989), and citing 2 Wade Newhouse, Constitutional Uniformity and Equality in State Taxation 1723 (2d ed. 1984)). Exact equality and uniformity in taxation is unattainable, and the uniformity that is required is "uniformity within classes." Id. at 620 (quoting Enron Corp. v. Spring Indep. Sch. Dist., 922 S.W.2d 931, 935 (Tex.1996)). In reviewing tax classifications, we will uphold a tax statute that "treat[s] differently those engaged in the same business so long as a reasonable basis justifies the disparate treatment." American Home Assurance v. Texas Dep't of Ins., 907 S.W.2d 90, 97 (Tex.App.-Austin 1995, writ denied). We look to the nature of the business in evaluating a classification's reasonableness, and a "slight difference in the subject matter taxed justifies a separate classification." Id. at 97-98.10 Thus, our focus must be on the subject of the tax, not the entity being taxed. See id.; Prudential Health Care Plan, Inc. v. Commissioner of Ins., 626 S.W.2d 822, 830 (Tex.App.-Austin 1981, writ ref'd n.r.e.) (legislature may classify people, corporations, and organizations and may treat classes differently "merely because they are engaged in different businesses").

Small Tobacco's members make cigarettes and other tobacco products, as do the Big Tobacco companies. There is no indication in this record that the taxed subject matter, cigarettes or "cigarette tobacco products,"11 see Tex. Health & Safety Code §§ 161.603, .604, differs even slightly when manufactured by Small Tobacco versus Big Tobacco. The only justification proffered by the legislature for making a distinction between the products is that Big Tobacco and, to a lesser degree, subsequent participating manufacturers, entered into the 1997 and 1998 settlement agreements. See id. § 161.601. Subchapter V was in part enacted to protect the settlement agreements and funding for the various programs that receive money from Big Tobacco and also is an apparent attempt to protect Big Tobacco from losing market share to Small Tobacco. See id. § 161.601(3) (subchapter V is intended to "protect the tobacco settlement agreement and funding, which has been reduced because of the growth of sales of non-settling manufacturer cigarettes and cigarette tobacco products"). Protecting one company's market share over another's does not justify the unequal treatment of identical products. Nor do the other, more laudable purposes of subchapter V. Few would take issue with goals of reducing underage smoking or recovering costs of medical care related to smoking. However, imposing a tax on only one class of identical products is not equal and uniform under Texas law and cannot be upheld. See American Home Assurance, 907 S.W.2d at 97-98; Prudential Health Care Plan, 626 S.W.2d at 830.

Further, Big Tobacco, in entering into the settlement agreements, obtained a release of past and future claims, including claims of serious misconduct, claims that have not been leveled by the State at Small Tobacco.12 Small Tobacco obtains no similar release in exchange for the taxes paid, although a non-participating manufacturer is to receive a dollar-for-dollar credit in the event it is found liable for claims brought against the manufacturer. And, unlike in states with escrow laws, an alternative to taxation discussed in more detail below, here, non-settling manufacturers like Small Tobacco's members do not earn interest and have no opportunity to regain any of the funds that are not used to satisfy claims leveled against the companies by the State. Instead, the tax money goes into the State's general revenue coffers for use in whatever way the State sees fit. Id. § 161.601(5) (tax intended to "provide funding for any purpose the legislature determines").

Finally, we address the State's assertion that, should we agree that subchapter V is unconstitutional, we "must also declare unreasonable the judgment of fifty[-]four other legislatures" and the "reasoning of every court of appeals in the nation to consider the question." We disagree. Only two other states, Minnesota and Mississippi, have assessed a per-cigarette tax on non-settling manufacturers. The other states established "escrow statutes" that require tobacco manufacturers other than Big Tobacco to either join the master settlement agreement as a subsequent participating manufacturer or remain a non-participating manufacturer. See, e.g., Grand River Enter. Six Nations, Ltd. v. Pryor, 481 F.3d 60, 63 (2nd Cir.2007). In escrow-statute states, non-participating manufacturers must make annual deposits into escrow accounts, creating "a pool of funds from which settling states may secure damage awards from [non-participating manufacturers] for any successful cigarette-related claims." Id. After twenty-five years, funds remaining in the escrow accounts, along with any earned interest, are returned to the non-participating manufacturers. Id.; Commonwealth ex rel. Fisher v. Jash Int'l, Inc., 847 A.2d 125, 128 (Pa.Commw.Ct.2004); see Tenn.Code § 47-31-103(a)(2)(D) ("[a] tobacco product manufacturer that places funds into escrow... shall receive the interest or other appreciation on such funds as earned"; escrow funds will be released to pay "judgment or settlement on any released claim brought against such tobacco product manufacturer by the state or any releasing party located or residing in the state," if manufacturer can show it overpaid, or after twenty-five years). Such deposits have been upheld against constitutional challenges. See, e.g., Star Scientific Inc. v. Beales, 278 F.3d 339, 361-62 (4th Cir. 2002), cert. denied, 537 U.S. 818, 123 S.Ct. 93, 154 L.Ed.2d 24 (2002). Due to the differences between the tax in question here and the escrow system established by the majority of the states, a finding that subchapter V is unconstitutional casts no shadow on the "judgment of fifty[-]four other legislatures" or the reasoning of every other "court of appeals in the nation."

As for Mississippi and Minnesota, the constitutionality of Mississippi's tax statute has apparently not been challenged, and Minnesota applies a "rational basis" test to its tax statutes. See Council of Indep. Tobacco Mfrs. of Am. v. Minnesota, 713 N.W.2d 300, 308-11 (Minn.2006), cert. denied, 549 U.S. 1052, 127 S.Ct. 666, 166 L.Ed.2d 514 (2006) (quoting Miller Brewing Co. v. Minnesota, 284 N.W.2d 353, 356 (Minn.1979)) (reviewing state "Uniformity Clause challenge under the rational basis standard," stating that "any legitimate purpose can support the classifications created by the statute," and asking whether "the differences between the taxpayers distinguished by the statute provide a `natural and reasonable basis' for separate classifications"). Texas's constitutional standard is more stringent. See Tex. Const. art. VIII, §§ 1, 2 (taxation must be equal and uniform). As the supreme court has stated, "tax classifications must not only be rational but must attempt to group similar things and differentiate dissimilar things." In re Nestle USA, 387 S.W.3d at 622. Thus, the Texas Constitution requires more than that a tax classification be merely rational, and Minnesota's rational-basis analysis is not applicable here.

We hold that the trial court did not err in determining that subchapter V's tax violates Texas's Equal and Uniform Clause. We overrule the State's first issue.

Conclusion

Having determined that subchapter V violates the Texas Constitution, we need not examine whether it also violates the federal constitution. We affirm the trial court's judgment.

As for Small Tobacco's motion and supplemental motion for sanctions, the State provided this Court with packs of grape-flavored "cigars" while representing them to be "cigarettes," and certain of its assertions and allegations in its briefing were unsupported by factual references. However, we do not believe those actions rose to a level that would justify our imposing sanctions in the form of requiring the State to pay Small Tobacco's appellate attorney's fees.13 We therefore deny Small Tobacco's motions for sanctions.