Up In Smoke: Federal Court Supports Local Authority to Restrict Smokeless Tobacco Sales More Strictly than Under Existing Federal Law

By Peter M. Jaensch –

On March 23, 2010, Judge McMahon of the U.S. District Court for the Eastern District of New York issued a memorandum decision in U.S. Smokeless Tobacco Manufacturing Company, LLC, and U.S. Smokeless Tobacco Brands, Inc. v. City of New York denying plaintiffs’ motion for a preliminary injunction blocking New York City’s recently enacted law (codified at N.Y. Admin. Code §§ 17-713-718) restricting the sale of flavored tobacco.

The New York City ordinance makes it “unlawful for any person to sell or offer to sell any flavored tobacco product, except in a tobacco bar.” The ordinance covers “any substance which contains tobacco, including, but not limited to, cigars and chewing tobacco; provided, however, that such term shall not include cigarettes.” A “tobacco bar” under the ordinance is an appropriately-registered bar “that, in the calendar year ending December 31, 2001, generated ten percent or more of its total annual gross income from the on-site sale of tobacco products and the rental of on-site humidors, not including any sales from vending machines.” Plaintiffs asserted that there are fewer than ten such establishments in New York City.

The Plaintiffs, manufacturers and distributors of smokeless tobacco, argued that the city ordinance was preempted by the federal Family Smoking Prevention and Tobacco Control Act (“FSPTCA”), and that they would suffer irreparable harm because enforcement of the ordinance would cause them to lose revenue, brand equity, adult tobacco consumers and market share.

In a lengthy analysis of federal preemption doctrine, the Court rejected Plaintiffs’ argument. The Court found no grounds in the language of the statute to suggest a Congressional intent to preempt local legislation, and in the absence of an actual conflict, there was no basis for implicit preemption. Absent a basis for preemption, Plaintiffs could not show a likelihood of success on the ultimate merits of their case, a necessary showing to obtain a preliminary injunction.

Rather, the Court held that the FSPTCA explicitly preserves the ability of local governments to enact laws with respect to tobacco products that are “in addition to, or more stringent than, [the federal] requirements,” and further that the FSPTCA’s preemption clause “does not apply to [state or local] requirements relating to the sale [or] distribution…of tobacco products.” In finding no conflict between local and federal law, the Court held that “at most, the City Ordinance applies sales restrictions on flavored tobacco products…over and above those imposed by the federal law.”

The decision by the Court seems likely to forecast what we may expect to see before long in a dispositive motion by the Defendant.