Tobacco Industry: Tobacco Shipments Through the Mail

Supreme Court Strikes Down State’s Law to Diminish Internet Tobacco Sales to Teens
By Robert Barnes, Washington Post Staff Writer
February 21, 2008
The Supreme Court yesterday shut down state efforts to curb Internet sales of tobacco to teenagers, saying that the efforts were well-intentioned but violated federal restrictions against states regulating shipping.
The court ruled unanimously that federal restrictions against state laws that relate to a “price, route or service of any motor carrier” bar Maine’s attempt to require those delivering tobacco to make sure that the person receiving it is of legal age, among other things.
Other states have employed similar laws to try to cut down on the delivery of cigarettes bought over the Internet, and 31 states joined Maine in asking the court to uphold the law.
But Justice Stephen G. Breyer said the restrictions were a clear violation of federal law and could lead to a “patchwork of state service-determining laws, rules and regulations” that Congress meant to forbid.
Maine said its law, which among other things would require the deliverer to make sure the person receiving the shipment shows a valid photo ID, should receive an exemption because its efforts were to protect citizens’ health, not regulate the shipping industry.
“Despite the importance of the public health objective, we cannot agree with Maine that the federal law creates an exception on that basis,” Breyer wrote.
Justice Ruth Bader Ginsburg agreed with the decision but wrote separately to urge federal lawmakers to come up with a solution. She said she doubts those who wrote the federal law “anticipated the measure’s facilitation of minors’ access to tobacco. Now alerted to the problem, Congress has the capacity to act with care and dispatch to provide an effective solution.”
The Maine decision — Rowe v. New Hampshire Motor Transport Association– was among five decisions the court rendered yesterday involving business and criminal procedure.
In Danforth v. Minnesota, the court ruled 7 to 2 that states may give prisoners the retroactive benefit of Supreme Court decisions that expand criminal procedure rights. That is the case, Justice John Paul Stevens wrote, even if the court does not extend the same benefit in federal habeas corpus cases.
In this case, a Minnesota prisoner wanted to take advantage of a Supreme Court decision that in some cases barred the admission of out-of-court or pretrial testimony. Stephen Danforth had been convicted of the sexual abuse of a 6-year-old boy, based partly on a taped interview with the boy.
The Minnesota Supreme Court said Danforth was barred from benefiting from the decision because of a separate Supreme Court ruling that said such criminal procedure decisions would not be applied retroactively in federal cases.
But Stevens said that this restriction does not bind state courts, and the justices sent the case back to Minnesota. Chief Justice John G. Roberts Jr. and Justice Anthony M. Kennedy dissented.
And in Preston v. Ferrer, justices ruled 9 to 1 against Alex Ferrer, a former Florida trial court judge who appears as “Judge Alex” on a Fox television program. The case involved a fee dispute with attorney Arnold Preston, who said he had a claim on some of Ferrer’s earnings.
Even though the two had signed a contract that said disputes would be handled by arbitration, Ferrer had gone to court. Ginsburg wrote that the Federal Arbitration Act supersedes state laws. Justice Clarence Thomas dissented.

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State laws preempted in three areas
Posted By Lyle Denniston On February 20, 2008 @ 10:03 am In Uncategorized | No Comments
The Supreme Court, in the first of several decisions Wednesday, ruled that federal law bars states from controlling the commercial delivery of tobacco or other products harmful to children.? There were no dissents as the Court decided Rowe? v. New Hampshire Motor Transport Association (06-457).? Justice Stephen G. Breyer wrote the main opinion.
?In a second decision on federal preemption, in Preston v. Ferrer (06-1463), the Court ruled 8-1 that federal law prevents the referral of a dispute that the parties agreed to arbitrate to an initial review by an administrative agency under state law.? Just as state laws that divert an arbitral dispute to an initial court review are preempted by the Federal Arbitration Act, so are laws that set up an administrative review first, the Court said in an opinion written by Justice Ruth Bader Ginsburg.? Only Justice Clarence Thomas dissented.
?Continuing with preemption rulings, the Court’s third decision of the day declared that the Food and Drug Administration’s pre-market approval of the safety and effectiveness of a medical device bars all state court damage lawsuits by those injured from such a device.? Again, the vote was 8-1, with Justice Ginsburg dissenting alone.? Justice Antonin Scalia wrote the Court’s opinion in Riegel v. Medtronic (07-179).
In LaRue v. DeWolff, Boberg (06-856), the Court ruled that an individual taking part in a retirement plan covered by ERISA has a right to recover money losses in his or her pension account because of the fault of plan managers or administrators.? Justice John Paul Stevens wrote the main opinion; there were no dissents.

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February 20, 2008
Court Invalidates Maine Tobacco Law, By THE ASSOCIATED PRESS
WASHINGTON (AP) — The Supreme Court on Wednesday invalidated parts of Maine’s law barring Internet tobacco sales to minors.
In a unanimous decision, the court said Maine cannot impose a regulatory scheme on transportation companies delivering tobacco products directly to consumers. The justices said federal transportation law blocks the states from doing so.
The ruling could provide the impetus for the transportation industry to get out from under state laws regulating cigarette deliveries in the Internet age.
”Despite the importance of the public health objective, we cannot agree” with Maine’s approach, Justice Stephen Breyer wrote.
Breyer wrote that federal law ”says nothing about a public health exception” enabling state regulation.
Federal law bars states from regulating prices, routes or services of shipping companies.
Because of Maine’s regulation, companies will have to offer tobacco delivery services ”that differ significantly” from what the market might dictate, Breyer wrote.
Thirty-one states besides Maine have cigarette delivery laws targeting the problem of underage smokers.
Maine’s law requires delivery companies to intercept packages from unlicensed tobacco sellers and to verify the age of buyers, hitting delivery companies with huge additional costs, the industry says.
Maine passed the law to ensure state tax collections and to keep cigarettes out of the hands of youths under the age of 18.
The state of Maine argued that federal law does not pre-empt state regulation for public health and safety. The 1st U.S. Circuit Court of Appeals in Boston disagreed, rejecting Maine’s argument that the federal law trumps state law only when it comes to traditional economic regulation of carriers.
The Bush administration sided with the delivery companies, declaring that when Congress deregulated the transportation industry, it determined that states should not step in to fill the void.
Congress deregulated truckers to put them on the same competitive footing with the deregulated airline industry.
The delivery companies are fighting Maine’s law at the same time the industry’s biggest players have stopped shipping cigarettes directly to consumers from illegal Internet sellers. The largest companies agreed to do so in the face of an aggressive campaign by the state of New York.
The ruling against Maine’s law could enable the industry to argue that similar laws in other states are invalid. The decision could clear the way for companies to challenge the New York law and the agreements.
The case is Rowe v. New Hampshire Motor Transport Association, 06-457.
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On the Net:
Supreme Court: http://www.supremecourtus.gov

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Internet tobacco law struck down
The Supreme Court’s ruling on Maine legislation could affect efforts nationwide to stem sales to minors.

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Court to review Maine tobacco sales law

November 27, 2007

(AP) – The U.S. Supreme Court will hear a challenge Wednesday from motor transport associations in three New England states to a 2003 Maine law that seeks tighter regulation of online sales of tobacco products.

Maine Attorney General G. Steven Rowe said the state is defending significant portions of the law, which was intended to keep minors from avoiding over-the-counter age verification by using the Internet or the phone to order cigarettes.

Motor transport associations in Massachusetts, New Hampshire and Vermont challenged the law, claiming it is pre-empted by the Federal Aviation Administration Authorization Act of 1994. The three trade associations’ members include such companies as UPS (NYSE:UPS) , Federal Express and DHL freight carriers.

At issue is a section of Maine’s law requiring that persons to whom tobacco products are addressed be at least 18 years old and that they sign for the package. If the buyer is under 27, a government-issued identification must be shown at the time of delivery.

The law also requires retailers who ship tobacco products to clearly indicate on the package that it contains tobacco products. Carriers must check packages to determine whether they bear such markings.

In addition to preventing underage purchases of tobacco products, the law was designed to assist the state in collecting taxes that would otherwise be unpaid.

In May 2005, U.S. District Judge D. Brock Hornby ruled in favor of the trade associations, saying that federal law pre-empts the state law. Maine appealed to the 1st U.S. Circuit Court of Appeals, which affirmed Hornby’s ruling a year later.

Rowe asked the U.S. Supreme Court to review the case.

Rowe said after the District Court ruling that states have well-established powers to adopt laws to keep youth from smoking. Hornby ruled that while Congress has written into the law some exemptions, the Maine Tobacco Delivery law fits none of them.

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Sen. Collins Introduces Legislation To Stop Tobacco Shipments Through the Mail

August 7th, 2006
Melissa Campanelli

Senator Susan Collins introduced legislation on Aug. 3 to help crack down on illegal sales of tobacco to children by banning the shipment of cigarettes and other tobacco products through the U.S. mail.

Specifically, the bill would add cigarettes and smokeless tobacco to the U.S. Postal Service’s list of restricted, non-mailable products. A first violation of mailing such a product would be liable for a civil penalty of up to $5,000 or 10 times the estimated retail value of the tobacco products, including all federal, state, and local taxes, whichever is highest. Civil penalties of up to $100,000 would be imposed for each subsequent violation.

The Senate went into recess on August 4.

This is not the first action taken against Internet sellers of cigarettes.

In January Philip Morris USA reached an agreement with a coalition of 37 Attorneys General aimed at combating the sale of the company’s cigarettes over the Internet and through the mails. In addition, in March 2005, the Attorneys Generals also announced that the major credit card companies had all agreed to stop processing credit card payments for the Internet retailers. And, later in the year, both DHL and UPS agreed to stop shipping packages for the vendors engaged in these illegal sales.

The USPS has continued to ship cigarettes because under postal law packages are sealed against inspection unless there is probable cause, according to USPS spokesman Gerry McKiernan

In September 2005, the agency adopted a formal policy recognizing that it cannot knowingly permit mail to be used to further activities deemed unlawful by state and federal authorities. As a result, the agency currently makes it illegal to mail alcoholic beverages and guns.

However, the USPS policy authorizes postal employees to accept packages suspected of containing untaxed or under-taxed cigarettes because, there could be souvenirs in the package. However, “its pretty obvious if it’s a gun, don’t you think,” asked Mr. McKiernan.

If enacted, McKiernan, “we will comply, but we hope guidance will be offered on how we can effectively enforce this legislation.”

Sen. Collins said Internet sales of tobacco are growing, but effective safeguards against illegal sales to young people are virtually non- existent on the more than 400 websites selling tobacco, making it easier and cheaper for kids to buy cigarettes.

She added that the delivery of cigarettes and other tobacco products through the mail creates opportunities for tax evasion.

Collins said that 20 percent of cigarette-selling Websites do not say anything about sales to minors being prohibited and more than half require only that the buyer say they are of legal age. Another 15 percent require that the buyer type in their date of birth and only 7 percent require any drivers license information.

Collins said Internet “stings” conducted by Attorneys General in at least 15 states found that children as young as 9-years-old are able to purchase cigarettes easily. Moreover, since Internet cigarette vendors typically require a two-carton minimum purchase, many high school and middle school buyers of Internet tobacco also end up serving as suppliers of cigarettes to other kids.

In March, Senator Charles E. Schumer, D-NY, and New York State Attorney General Eliot Spitzer announced that they had teamed up to support legislation to stop the shipment of cigarettes and smokeless tobacco through the U.S. Mail.

Schumer said his bill would prohibit mailing cigarettes through the USPS, impose fines of at least $1,000 per offense and jail time for repeat offenders, and give state Attorneys General the ability to pursue those who ship tobacco in violation of the law.

The bill has not yet been introduced.