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Red Earth LLC v. United States (2d Cir.)

Topic(s): Tobacco
Date Of Involvement: 08/10/2010

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In Red Earth, LLC v. United States (2d Cir.) and Gordon v. Holder (D.C. Cir.), Public Citizen represents public health and tobacco-control groups such as the American Cancer Society, the American Legacy Foundation, the American Lung Association and the Campaign for Tobacco-Free Kids as amici curiae. The cases were brought by sellers of tobacco-products over the internet to challenge the Prevent All Cigarette Trafficking Act (PACT Act), which was enacted because many sellers of cigarettes and smokeless tobacco over the Internet and through mail order do not pay applicable excise taxes and do not have sufficient safeguards to prevent sales to children. The impact of these Internet and mail-order sales on public health has been extraordinarily harmful. By making tobacco products more readily available at lower prices, such sales increase tobacco use and, therefore, tobacco-caused death and disease, and undermine efforts to curtail tobacco use by our nation’s children. To combat these harms, the PACT Act seeks to ensure the collection of federal, state, and local tobacco taxes on cigarettes and smokeless tobacco sold via the Internet and other mail-order sales, and to stop Internet cigarette sales to minors.

In Red Earth, the district court granted a preliminary injunction against enforcement of the tax provisions of the Act. In Gordon, the district court denied the preliminary injunction. As amici in both appeals, our briefs highlight two related points important to two considerations underlying the decision whether to grant a preliminary injunction: the balance of harms and the public interest. First, tobacco use is this nation’s number one preventable cause of premature death and disease. Second, Internet and mail-order sellers who do not pay applicable tobacco taxes and do not follow rules prohibiting sales to minors significantly interfere with and undermine efforts to reduce tobacco use, especially by children.

The sellers prevailed in both appeals. In Gordon, the district court then enjoined the enforcement of the tax provisions on due process grounds, but otherwise dismissed Gordon’s claims. That order was then affirmed by the D.C. Circuit Court of Appeals.