A federal judge granted a temporary restraining order Monday allowing a Seneca Nation mail-order cigarette retailer to supply tobacco products across the country without having to meet the requirements of a new federal law that took effect at midnight.
District Judge Richard J. Arcara granted the motion as part of the retailer's lawsuit against the U.S. government. The retailer, Red Earth, which does business as Seneca Smokeshop, has asked the court to declare the Prevent All Cigarette Trafficking Act unconstitutional.
Seneca Smokeshop, a 10-year-old business, employs 17 people and sells cigarettes in 46 states. It is owned by Aaron J. Pierce, a member of the Seneca Nation of Indians.
Without the restraining order, the law would have immediately crippled the business, said Lisa A. Coppola, the retailer's lawyer.
"It's no small thing for him to lose his business entirely," Coppola told Arcara during a hearing Monday afternoon in federal court.
The so-called PACT Act, signed into law in March, bans the U.S. Postal Service from shipping cigarettes and affects the mail-order cigarette business in other ways.
It requires those selling cigarettes on the Internet to pay all federal, state, local or tribal tobacco taxes, and to affix tax stamps before delivering any tobacco products to any customer.
Retailers also have to register with the state where they are based and make periodic reports to state tax collection officials. Sellers also must check the age and identities of customers when tobacco products are purchased and when they are delivered.
The restraining order will remain in effect for 14 days, unless the court rules earlier on the retailer's motion to keep the federal government from enforcing the new law throughout duration of the lawsuit. The judge ordered both sides to return to court July 7 for a hearing on that request.
In seeking the restraining order, lawyers for SenecaSmokeshop did not address the Postal Service ban, but focused on how the retailer would have to contend with thousands of state and local taxing jurisdictions while selling cigarettes across the country.
"We're not talking about only 46 states or a couple of taxing jurisdictions," Coppola told Arcara.
"There are extraordinarily serious problems with the act that have nothing to do with the Postal Service," Coppola said after learning of Arcara's ruling.
Arcara found the smoke shop demonstrated it would have suffered irreparable injury without the restraining order. The judge also found the retailer demonstrated a likelihood of success on the merits of its claim that the PACT Act violates various provisions of the Constitution, including the commerce clause, the 10th amendment, the due-process clause and the equal protection clause.
In his written order, Arcara said he acted "in the public interest because the public favors restraining enforcement of statutes that appear to violate provisions of the Constitution."
Arcara noted the U.S. Attorney's Office had failed to file a timely response to the retailer's motion for a restraining order.
The retailer's lawyer filed court papers Friday afternoon, both in Buffalo and Washington, D.C.
Assistant U.S. Attorneys Richard D. Kaufman and Mary Fleming asked Arcara to hold off on ruling for at least a couple of days so they could better prepare a response.
"He'd only lose a couple of days of business," Kaufman said about how such a delay would affect the retailer.
"How would you like to lose a couple days of pay, Mr. Kaufman?" Arcara replied.
Coppola, meanwhile, stressed the immediate danger the smoke shop faced as the effective date for the new law approached.
"If this law goes in effect at midnight, it essentially closes down our client," Coppola said. "This product my client is selling is a legal product, and that should count for something."
Arcara's order is limited in scope, restraining the federal government from enforcing the federal law against specifically the Seneca Smokeshop and Pierce -- but not mentioning other cigarette mail-order retailers.
During Monday's hearing, Coppola said the smoke shop has been working to arrange delivery of cigarettes by a private carrier, at least in this state, Pennsylvania and New Jersey, where most of its customers live.
Coppola said she had not spoken with Pierce about the ruling, so she did not know if the smoke shop will resume mailing the cigarettes while the restraining order is in effect or proceed with another form of delivery.
By signing the law, President Obama angered business people from the Senecas and other tribes that sell tobacco products.
But other organizations, including the Campaign for Tobacco-Free Kids, rejoiced, calling the law a landmark step in preventing youngsters from obtaining cigarettes and in averting billions of dollars in tax evasion.
Along with the constitutional arguments, Pierce's lawyers also claimed that the new law violates four different treaties, all signed between 1784 and 1842, granting sovereignity to the Senecas and other tribes.
"The act is overbroad, unduly burdensome and impermissibly vague," Coppola said in court papers. "Among other things, it requires out-of-state retailers (even those without a physical presence in the state) to collect the sales and use taxes of states and localities in which they have no presence."
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