Czajkowski v. State of Ill.

Decision Date15 December 1977
Docket NumberNo. 76 C 4729.,76 C 4729.
Citation460 F. Supp. 1265
PartiesDonald CZAJKOWSKI, Individually and as representative of a Class of Persons similarly situated, Plaintiff, v. STATE OF ILLINOIS, Daniel Walker, Governor of the State of Illinois, Robert Allphin, Individually, as Director of the Illinois Department of Revenue and as Agent of the Illinois Retail Candy and Tobacco Distributors Association, Richard Dunn, Thomas Howard, George Rummell, Donald Yearly, Philip Mitchell, Michael Berry, Robert Motta, Jane Conray, Reg Anstrom, Illinois Association of Tobacco & Candy Distributors, and Unknown Defendants, Defendants.
CourtU.S. District Court — Northern District of Illinois

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Ditkowsky & Contorer, Chicago, Ill., for plaintiff.

William L. Perlman, Asst. Atty. Gen., State of Illinois, Chicago, Ill., for defendant State of Illinois.

Anton R. Valukas, Terry Rose Saunders, Jenner & Block, Chicago, Ill., for defendant Daniel Walker.

Robert A. Sternberg, Cohon, Raizes & Regal, Chicago, Ill., for defendant Illinois Association of Tobacco & Candy Distributors.

Paul J. Petit, Samuel J. Betar, Schippers, Betar, Lamendella & O'Brien, Chicago, Ill., for all other defendants.

MEMORANDUM OPINION

MARSHALL, District Judge.

Plaintiff, Donald Czajkowski, a retailer of cigarettes in Hammond, Indiana, has brought this action against the State of Illinois, former Governor Walker, the Director of the Illinois Department of Revenue, several employees of that department, and the Illinois Association of Tobacco and Candy Distributors, alleging violations of various federal constitutional and statutory provisions. Plaintiff claims that two sections of the Illinois Cigarette Tax Act, Ill. Rev.Stat. ch. 120, §§ 453.9c and 453.18, are unconstitutional and that defendants' enforcement of those sections violates plaintiff's civil rights, the United States Constitution, and Sections 1 and 2 of the Sherman Act, 15 U.S.C. §§ 1, 2. Plaintiff sues both individually and as representative of a class of Indiana businessmen who retail cigarettes in their stores along the northeastern border of Illinois and Indiana. Czajkowski has also joined Thomas O'Leary as a plaintiff representing a class of persons who purchase cigarettes from these retailers and who are threatened with enforcement of the Illinois statutes.1

The challenged statutory provisions are part of a comprehensive State regulatory scheme taxing the distribution, sale and use of cigarettes in Illinois. Ill.Rev.Stat., ch. 120, §§ 453.1-453.67. This statutory scheme is divided into two interrelated parts, with one part imposing a tax on persons engaged in the business of selling cigarettes at retail (§§ 453.1-453.30), and the other imposing a tax on the privilege of using cigarettes in Illinois (§§ 453.31-453.67). See O'Leary v. Allphin, 65 Ill.2d 268, 2 Ill.Dec. 324, 328, 357 N.E.2d 491, 495 (1976). Each part contains enforcement provisions which are intended to insure that the taxes are properly collected and remitted to the State, and each part also authorizes civil and criminal penalties against persons who violate the statutes. Both of the sections challenged here fall under the first part of the statutory scheme. Section 453.9c, the "transporter" provision, prohibits any person from transporting more than 2,000 untaxed cigarettes (10 cartons) into Illinois without a permit issued by the Illinois Department of Revenue. Violators of this section are subject to criminal prosecution and the offending goods may be confiscated and forfeited to the State. Section 453.18 complements the function of § 453.9c by providing that authorized employees of the Department of Revenue may arrest without a warrant any person who violates the Act "in their presence," and may seize any offending packages possessed by that person without a warrant.

Plaintiffs' complaint is based on a single alleged factual pattern arising out of the enforcement of the cigarette taxing statutes. Armed employees of the Illinois Department of Revenue drive unmarked official cars to the vicinity of plaintiffs' Indiana businesses, where they observe plaintiffs' customers purchasing large quantities of cigarettes. Because Indiana has a lower cigarette tax than that imposed by Illinois, Indiana retailers can sell their cigarettes for less and can draw substantial numbers of Illinois bargain-hunters to their stores. After making their bulk purchases, the buyers attempt to transport their bounty across the Illinois state line by automobile. However, Illinois Revenue agents follow some purchasers from the stores to the border. As soon as the border is penetrated, the agents stop the purchaser's automobile, carry out a warrantless search of their person and possessions for the offending articles, perform a warrantless arrest of the violators, confiscate the unlawful cigarettes as well as the purchaser's automobile, and bring a criminal complaint and/or a civil action against the violator. Apparently, although some of the buyers have attempted to procure a permit from the Department to buy large quantities of cigarettes, they have generally been unsuccessful in securing this potential defense to their prosecution.

Plaintiffs' complaint attempts to transform this alleged misconduct into a number of federal constitutional and statutory violations. Jurisdiction is invoked under 28 U.S.C. §§ 1331, 1343,2 2281,3 2201 and 2202.4 Although the complaint is inartfully and confusingly drawn, we liberally interpret it to present the following theories of recovery.

First, Sections 453.9c and 453.18 of the Act are unconstitutional both on their face and as applied, in that they violate the Commerce Clause and the Fourth, Fifth and Fourteenth Amendments to the Constitution. The statutes violate the Commerce Clause by stopping interstate commerce in Indiana-taxed cigarettes at the Illinois state line, and by interfering with the Indiana retailers' right to sell to all persons in the two-state market area, whether they are travelling interstate or intrastate. The statutes violate the Fourth Amendment by authorizing the warrantless search and seizure of the cigarettes, automobiles and other personal property of the buyers. Furthermore, state revenue agents in practice have breached the command of this amendment by searching the premises of the retailers' businesses through binoculars and physical trespass, without first procuring a warrant. The Fourth Amendment theory also encompasses the intimidation and warrantless arrest of suspected violators of the statutes. The due process clauses of the Fifth and Fourteenth Amendments are transgressed by the summary confiscation of the customer's property, and by the related but more indirect confiscation of the retailer's economic expectations by the defendants' unwarranted attack on their customers. It is also a violation of due process for Illinois to apply its taxing statutes extra-territorially to destroy Indiana businesses, by stationing armed revenue agents at surveillance points outside those businesses to apprehend suspected violators. Finally, plaintiffs' equal protection theory is that the statutes and enforcement procedures discriminate against interstate as opposed to intrastate travelers, and also discriminate against customers and retailers on the Indiana side of the border since the statute is not similarly enforced against similar persons on the Illinois-Kentucky border or in the middle of Indiana.

Second, the complaint alleges that defendants' enforcement of the Illinois Cigarette Tax Act has violated plaintiffs' civil rights under 42 U.S.C. § 1983 by depriving them of rights under the First Amendment, the Commerce Clause, and the due process and equal protection clauses of the Fourteenth Amendment (Complaint, ¶ I(a) and p. 14). The due process and equal protection theories are the same as those described above. Plaintiffs claim that the First Amendment guarantee of free association creates a right to attract and sell to Illinois residents in their effective market area, which includes parts of both Indiana and Illinois. The enforcement of the Act interferes with this right by limiting access by Illinois residents to their businesses. Under the Commerce Clause, plaintiff-retailers claim that their constitutional right to trade freely in interstate commerce and their customer's right to purchase freely in interstate commerce have been infringed.

Third and finally, plaintiffs assert that defendants have enforced the challenged statutory provisions as part of a conspiracy to force them out of business in violation of Sections 1 and 2 of the Sherman Act. According to this theory, former Governor Walker, the Illinois Department of Revenue, and the Illinois Association of Tobacco and Candy Distributors (the Association) conspired to create a monopoly for Illinois merchants who compete with Indiana sellers in the market for retail cigarettes bought by interstate travelers. Thus the Department supposedly instituted its statutory enforcement procedures "at the urging" of the Association, which had made monetary contributions to Walker's political campaign. Employees of the department then misused their official positions by harassing and intimidating westbound customers through arrests and confiscations of property. The Department also issued press releases which threatened bulk purchasers with arrest and confiscation. This action was calculated to frighten customers and to induce them not to patronize the Indiana retailers. Furthermore, the Department imposed an arduous and inaccessible procedure for acquiring permits to lawfully transport large numbers of cigarettes. Since the Department required applications for permits to be submitted two weeks in advance of the date of transporting the cigarettes, these delays have quashed impulse buying by casual purchasers. Therefore, in promulgating these enforcement procedures, defendants have attempted to...

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