Tobacco.org

• New York City's Use of Consumer Fraud, Public Nuisance Statutes to Recoup Cigarette Taxes Is Rejected  

New York City cannot use the state's consumer fraud statute or a common law public nuisance claim to sue cigarette vendors to recover revenues lost when untaxed cigarettes are shipped into the city, the New York Court of Appeals determined Tuesday.

The legislative intent behind the consumer fraud law, General Business Law §349(h), and the public nuisance statute, Public Health Law §1399-11, does not provide for their employment in the city's longstanding attempts to sue cigarette vendors and distributors to recover sales tax revenues, a unanimous court ruled in City of New York v. Smokes-Spirits.com Inc., 92.

The 2nd U.S. Circuit Court of Appeals had asked for answers on two certified questions about the applicability of New York laws in association with the city's legal fight in federal court against the shipment of untaxed cigarettes into the city.

A circuit panel has upheld the city's attempts to use the Racketeer Influenced and Corrupt Organizations Act (RICO) against tobacco vendors for their failure to report sales as required by the federal Jenkins Act.

But the state Court of Appeals concluded that the consumer fraud claim fails because the city does not fall under the definition of a consumer who can avail itself of the statute.

Jump to full article »