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Old 05-04-2006, 07:03 PM   #1
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Group Sues State To Overturn Law Banning Internet Tobacco Sales

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FROM: THE ALBANY TIMES-UNION NEWSPAPER - BREAKING NEWS AP NEW YORK STATE
NEWSWIRE

_http://timesunion.com/AspStories/story.asp?storyID=478028&BCCode=BNNEWYORKSTA
TE&newsdate=5/3/2006_
(http://timesunion.com/AspStories/sto...sdate=5/3/2006)

Group Sues State To Overturn Law Banning Internet Tobacco Sales
By MARK JOHNSON, Associated Press
Last updated: 5:37 p.m., Wednesday, May 3, 2006
ALBANY -- A group of cigarette distributors and sellers filed a lawsuit
against the state Wednesday seeking to overturn a law banning Internet, telephone
and mail order tobacco sales.
The suit by the Association of Responsible Cigarette Sellers, filed in Erie
County Supreme Court, contends the 2000 state law violates the Commerce
Clause of the U.S. Constitution.
David McNamara, the group's lawyer, said his case was bolstered by last
year's U.S. Supreme Court ruling striking down laws in New York and Michigan that
banned wine shipments from out-of-state producers. The Constitution
prohibits states from passing laws that discriminate against out-of-state businesses.

The group, based in Salamanca near where the Seneca tribe is based, claims
the law also violates the Indian Commerce Clause, which gives the federal
government the sole right to regulate commerce with Indian tribes. Many Internet
sellers are located on tribal reservations in western New York.
In January, Attorney General Eliot Spitzer said Philip Morris USA, the
nation's biggest tobacco company, agreed to end shipments of any of its products
to customers, Indian tribes and enterprises that states deem illegal, as part
of an agreement with attorneys general for 37 states and territories.
The action was the third prong of the states' efforts to curb the sale of
cigarettes to minors over the Internet and by mail order. In March 2005, major
credit card companies agreed to stop processing payments from Internet
retailers. Shippers DHL and UPS Inc. agreed to stop shipping packages from the
vendors.
Authorities consider Internet cigarette sales to be illegal because they
violate state and federal laws aimed at collecting sales taxes and stopping
sales to underage smokers.
The lawsuit seeks to keep Spitzer from enforcing the agreements with the
shippers and credit card companies.
Attorney general spokesman Marc Violette said his office had not yet seen
the lawsuit and declined to comment.
The 2nd U.S. Circuit Court of Appeals ruled in 2003 against such a challenge
to the law, saying the statute treats in-state and out-of-state businesses
equally.
Margaret Murphy, a lawyer representing the cigarette vendors, said that
decision has "been brought into question" by last year's Supreme Court decision
and that her clients are challenging the law on different grounds.
On Tuesday, convenience store operators sued Gov. George Pataki to compel
him to enforce a new state law requiring tax collection on tobacco products and
gasoline sold to Indian businesses.
The New York Association of Convenience Stores says Pataki's failure to
collect taxes on the goods before they reach the reservations, as required under
a law that took effect March 1, costs taxpayers $450 million a year and costs
businesses $1 billion a year.
Businesses located near reservations say they suffer a competitive
disadvantage because they must charge substantially higher prices. A carton of
cigarettes bought from a tribe can retail at $15 less than at off-reservation
retailers.
------------
On the Net:
_http://www.responsiblesellers.org_ (http://www.responsiblesellers.org/)
Copyright 2006 Associated Press. All rights reserved. This material may not
be published, broadcast, rewritten, or redistributed.
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