According to published reports, a federal court in New York ruled on Friday that a state law prohibiting mail-order, Internet and telephone sales of cigarettes is unconstitutional because it places an undue burden on interstate commerce.
The permanent order to halt enforcement of the law came after a five-day trial that concluded April 30th. According to AP reports, the court had stopped the law’s enforcement temporarily in November following review of materials submitted by the plaintiff, tobacco giant Brown & Williamson.
“While the statute is a reasonable, indeed commendable, solution by a concerned governor and a responsive legislature to certain pressing problems facing New Yorkers, that is not the test imposed by the Constitution,” the court opinion said, according to media sources. “Even a wise statute, beneficial to most New Yorkers, must be judged by the Constitutional mandate.”
U.S. District Court Judge Loretta Preska, the Reuters report said, ruled that the effect of the law would be to discriminate against interstate commerce by eliminating all interstate merchants from the competition in the market for retail cigarette sales in New York state.
New York Ban
The New York state law, which went into effect last year, makes it a crime to ship or transport cigarettes sold by mail, phone or via the Internet to consumers in the state.
Brown & Williamson acted quickly to challenge the law, filing suit against the state in October over whether the law met federal constitutional standards.
The suit alleged that the law is an “unconstitutional interference with commerce.” The statute, signed in August by Governor George Pataki, is the first of its kind in the United States.
Threat to Web Commerce
“The Constitution prohibits any one state from regulating avenues of national commerce such as the Internet, the U.S. mails, and interstate shipping,” said David Remes, an attorney representing the Louisville, Kentucky-based maker of Kool and Lucky Strike brand cigarettes, at the time the suit was filed.
Remes added, “The future of e-commerce will be jeopardized if all 50 states can set their own rules for what can be sold over the Internet, or if they can ban out-of-state sales to protect state tax revenues or local merchants.”
Now that the New York ban has been lifted by the district court, New York state officials have the option of bringing the case to a higher court. According to Reuters, state officials did not say whether the state would file an appeal because they are still reviewing the decision.
Under the Commerce Clause of the U.S. Constitution, states cannot make laws that unduely burden interstate transactions.
According to published reports, the court opinion said that there is “every reason to suspect that the gainers will be New York retail businesses and that the losers will be out-of-state retailers.”