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USA Brief in Red Earth Case: 10-3165 Document: 227 Page: 1 09/28/2010 114238 74 10-3165-cv 10-3191-cv 10-3213-cv IN THE UNITED STATES COURT OF APPEALS FOR THE SECOND CIRCUIT RED EARTH LLC, d/b/a SENECA SMOKESHOP, AARON J. PIERCE, SENECA FREE TRADE ASSOCIATION, Plaintiffs-Appellees/Cross-Appellants, v. UNITED STATES OF AMERICA, ERIC H. HOLDER, in his official capacity as Attorney General of the United States, UNITED STATES DEPARTMENT OF JUSTICE, JOHN E. POTTER, in his official capacity as Postmaster General and Chief Executive Officer of the United States Postal Service, UNITED STATES POSTAL SERVICE, Defendants-Appellants/Cross-Appellees. ON APPEAL FROM THE UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF NEW YORK OPENING BRIEF FOR APPELLANTS/CROSS-APPELLEES [Counsel Listed On Following Page] Case: 10-3165 Document: 227 Page: 2 09/28/2010 114238 74 COUNSEL FOR DEFENDANTS-APPELLANTS/CROSS-APPELLEES TONY WEST Assistant Attorney General WILLIAM J. HOCHUL, Jr. United States Attorney MARK B. STERN ALISA B. KLEIN MICHAEL P. ABATE (202) 616-8209 Attorneys, Appellate Staff Civil Division, Room 7318 Department of Justice 950 Pennsylvania Ave., N.W. Washington, D.C. 20530-0001 Case: 10-3165 Document: 227 Page: 3 09/28/2010 114238 74 TABLE OF CONTENTS Page STATEMENT OF JURISDICTION. ....................................................................... 1 STATEMENT OF THE ISSUES. ............................................................................ 1 STATEMENT OF THE CASE................................................................................. 2 STATEMENT OF FACTS. ...................................................................................... 5 I. Statutory Background........................................................................... 5 A. State and local excise taxes curb tobacco use, particularly underage use.. ......................................................... 5 B. The PACT Act addresses the problems presented by remote sales of cigarettes and smokeless tobacco................. 7 II. Factual Background............................................................................ 12 III. District Court Proceedings. ................................................................ 14 SUMMARY OF ARGUMENT. ............................................................................. 16 STANDARD OF REVIEW. ................................................................................... 18 ARGUMENT.......................................................................................................... 18 I. Plaintiffs Have No Likelihood Of Success On The Merits. ............. 19 A. The PACT Act's Requirement That State And Local Taxes Be Paid In Advance Of Delivery Does Not Violate Due Process................................................. 19 B. The District Court Offered No Basis for Enjoining The PACT Act Provisions That Require Compliance With Laws That Govern The Sale and Distribution Of Cigarettes.. ................... 35 Case: 10-3165 Document: 227 Page: 4 09/28/2010 114238 74 II. The Balance Of Equities And The Public Interest Require That The Preliminary Injunction Be Vacated.. ...... ............. 39 CONCLUSION....................................................................................................... 43 CERTIFICATE OF COMPLIANCE WITH RULE 32(a)(7)(c) OF THE FEDERAL RULES OF APPELLATE PROCEDURE CERTIFICATE OF SE VICE -ii- Case: 10-3165 Document: 227 Page: 5 09/28/2010 114238 74 TABLE OF AUTHORITIES Cases: Page Almontaser v. N.Y. City Dep’t of Educ., 519 F.3d 505 (2d Cir. 2008). ............................................................................. 18 Brown & Williamson v. Pataki, 320 F.3d 200 (2d Cir. 2003). ................................................................... 6, 36, 39 Busch v. Buchman, Buchman & O’Brien, Law Firm, 11 F.3d 1255 (5th Cir. 1994). ............................................................................ 27 Chloe v. Queen Bee of Beverly Hills, LLC, 571 F. Supp. 2d 518 (S.D.N.Y. 2010). .............................................................. 32 Chloe v Queen Bee of Beverly Hills, LLC, __ F.3d __, 2010 WL 3035495 (2d Cir. 2010). ........................................... 17, 32 Consumer Mail Order Ass’n of America v. McGrath, 94 F. Supp. 705 (D.D.C. 1950), aff'd, 340 U.S. 925 (1951). ............................. 26 Department of Tax. & Fin. of New York v. Milhelm Attea & Bros., Inc., 512 U.S. 61 (1994)........................................................................... 11, 39, 40, 41 FDA v. Brown & Williamson Tobacco Corp., 529 U.S. 120 (2000)......................................................................................... 5, 6 Gordon v. Holder, No. 10-1092-HHK (D.D.C.), appeal pending, No. 10-5227 (D.C. Cir.)..... 13, 31 Gordon v. Holder, No. 10-5227 (D.C. Cir.)..................................................................................... 37 Grand River Enterprise Six Nations, Ltd. v. Pryor, 481 F.3d 60 (2d Cir. 2007). ............................................................................... 37 -iii- Case: 10-3165 Document: 227 Page: 6 09/28/2010 114238 74 Hemi Group, LLC v. City of New York, 130 S. Ct. 983 (2010)..................................................................................... 8, 19 Illinois v. Hemi Group LLC, __ F.3d __, 2010 WL 3547647 (7th Cir. Sept. 14, 2010). ............... 17, 32, 33, 36 International Shoe Co. v. Washington, 326 U.S. 310 (1945)..................................................................................... 27, 28 James Clark Distilling Co. v. Western Maryland R. Co., 242 U.S. 311 (1917)........................................................................................... 25 Kentucky Whip & Collar Co. v. Illinois Cent. R. Co., 299 U.S. 334 (1937)........................................................................................... 25 Lorillard Tobacco Corp. v. Reilly, 533 U.S. 525 (2001)........................................................................................... 36 In re Magnetic Audiotape Antitrust Litigation, 334 F.3d 204 (2d Cir. 2003). ............................................................................. 27 Meadwestvaco Corp. v. Illinois Dep’t of Revenue, 553 U.S. 16 (2008)....................................................................................... 22, 29 Moe v. Salish & Kootenai Tribes, 425 U.S. 463 (1976)............................................................................... 11, 39, 40 New York v. Smoke-Spirits.com, Inc., 541 F.3d 425 (2d Cir. 2008), overruled on other grounds by Hemi Group LLC v. City of New York, 130 S.Ct. 983 (2010)................................................... 9 Oklahoma Tax Comm'n v. Citizen Band of Potawatomi Tribe of Okla., 498 U.S. 505 (1991)........................................................................................... 40 Porina v. Marward Shipping Co., Ltd., 521 F.3d 122 (2d Cir. 2008). ............................................................................. 27 -iv- Case: 10-3165 Document: 227 Page: 7 09/28/2010 114238 74 Quill Corp. v. North Dakota, 504 U.S. 298 (1992)............................................................. 22, 27, 28, 29, 30, 31 Red Earth LLC et al. v. United States et al., __ F. Supp. 2d __, 2010 WL 3061103 (W.D.N.Y. July 30, 2010)...................... 2 SEC v. Bilzerian, 378 F.3d 1100 (D.C. Cir. 2004)......................................................................... 27 State v. Maybee, 224 P.3d 1109 (Idaho 2010). ............................................................................. 36 United States v. Brewer, 528 F.2d 492 (4th Cir. 1975). .............................................................................. 9 United States v. DeFiore, 720 F.2d 757 (2d Cir. 1983). ............................................................................... 9 United States v. Melvin, 544 F.2d 767 (5th Cir. 1977). .............................................................................. 9 Wash. State Grange v. Wash. State Repub. Party, 552 U.S. 442 (2008)........................................................................................... 34 Washington v. Confederated Tribes of Colville Indian Reservation, 447 U.S. 134 (1980)......................................................................... 30, 39, 40, 41 Winter v. Natural Resources Defense Council, Inc., 129 S. Ct. 365 (2008)......................................................................................... 18 Zippo Mfg. Co. v. Zippo Dot Com, Inc., 952 F. Supp. 1119 (W.D. Pa. 1997)................................................................... 33 Statutes: 7 U.S.C. § 1571....................................................................................................... 24 7 U.S.C. § 1573....................................................................................................... 24 -v- Case: 10-3165 Document: 227 Page: 8 09/28/2010 114238 74 15 U.S.C. § 375 Note. ................................................... 3, 8, 9, 10, 11, 19, 22, 38, 39 15 U.S.C. § 376a(1). ........................................................................................... 4, 10 15 U.S.C. § 376a(a)(3)...................................................................................... 10, 35 15 U.S.C. § 376a(a)(3)-(4)................................................................ 4, 10, 15, 19, 22 15 U.S.C. § 376a(b). ........................................................................................... 4, 10 15 U.S.C. § 376a(b)(4)...........................................................................................
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