A New York state law that sought to prohibit the direct sale of cigarettes through the Internet, as well as by mail order and via telephones, was declared unconstitutional by a federal judge in Manhattan.
In a 79-page ruling, U.S. District Court Judge Loretta Preska wrote that the law violates the commerce clause of the U.S. Constitution, which limits the powers of states to restrict interstate trade. While the state''s interest in protecting the health of residents is "indeed commendable," Preska said, that can''t be done in violation of constitutional guarantees to companies.
The law, signed last August by New York Gov. George Pataki, banned direct sales of cigarettes over the Internet and the two other mediums in an attempt to prevent minors from making illegal purchases. The measure also sought to halt untaxed sales of cigarettes in the state via mail order and other means. But Louisville, Ky.-based cigarette maker Brown & Williamson Tobacco filed a lawsuit challenging the direct-sales ban last October, arguing that it unfairly limited the ways companies could do business in New York. A month later, Preska issued a temporary restraining order against the law just before it was due to take effect.
Brown & Williamson spokesman Mark Smith on Friday called the ruling "a caution to the states" in how they try to legislate online sales and business. Preska "made clear that states have many tools at their disposal to protect their interests without banning direct sales," Smith said, adding that state officials "ought not use a meat ax when a scalpel will do."
Marc Violette, a spokesman for the New York state attorney general''s office, which defended the law, said that it''s disappointed by Preska''s ruling and is considering options for an appeal. "We view the issue of Internet sales of tobacco as being an important health issue in New York, particularly when it allows [minors] access when using the Internet," Violette said. Brown & Williamson, the third-largest cigarette maker in the U.S., set up a new division called BWT Direct last year to sell some of its harder-to-find cigarette brands directly to smokers. The direct-marketing strategy is aimed at making the brands more visible at a time when retailers have finite amounts of shelf space for products such as cigarettes.
The hard-to-find brands currently account for about 3.5 percent of the company''s annual sales. Brown & Williamson has said BWT Direct will collect all taxes on direct sales of the cigarettes and forward the money to the federal government and to state revenue departments, as required by existing laws.