Gordon v. Holder
| Decision Date | 28 June 2013 |
| Docket Number | 12–5051.,Nos. 12–5031,s. 12–5031 |
| Citation | 721 F.3d 638 |
| Parties | Robert GORDON, Appellee v. Eric H. HOLDER, Jr., In His Official Capacity as Attorney General of the United States, et al., Appellants. |
| Court | U.S. Court of Appeals — District of Columbia Circuit |
OPINION TEXT STARTS HERE
Appeals from the United States District Court for the District of Columbia, (No. 1:10–cv–01092).
Michael P. Abate, Attorney, U.S. Department of Justice, argued the cause for appellants/cross-appellees. With him on the briefs were Stuart F. Delery, Acting Assistant Attorney General, Ronald C. Machen Jr., U.S. Attorney, and Alisa B. Klein and Mark B. Stern, Attorneys. Gerald C. Kell, Special Trial Counsel, U.S. Department of Justice, entered an appearance.
Eric T. Schneiderman, Attorney General, Office of the Attorney General for the
State of New York, Barbara D. Underwood, Solicitor General, Steven Wu, Special Counsel to the Solicitor General, Irvin B. Nathan, Attorney General, Office of the Attorney General for District of Columbia, Samuel S. Olens, Attorney General, Office of the Attorney General for the State of Georgia, David M. Louie, Attorney General, Office of the Attorney General for the State of Hawai'i, Lawrence G. Wasden, Attorney General, Office of the Attorney General for the State of Idaho, Lisa Madigan, Attorney General, Office of the Attorney General for the State of Illinois, Gregory F. Zoeller, Attorney General, Office of the Attorney General for the State of Indiana, Michael C. Geraghty, Attorney General, Office of the Attorney General for the State of Alaska, Tom Horne, Attorney General, Office of the Attorney General for the State of Arizona, Dustin McDaniel, Attorney General, Office of the Attorney General for the State of Arkansas, Kamala D. Harris, Attorney General, Office of the Attorney General for the State of California, John W. Suthers, Attorney General, Office of the Attorney General for the State of Colorado, George Jepsen, Attorney General, Office of the Attorney General for the State of Connecticut, Joseph R. Biden III, Attorney General, Office of the Attorney General for the State of Delaware, Lori Swanson, Attorney General, Office of the Attorney for the State of Minnesota, Jim Hood, Attorney General, Office of the Attorney General for the State of Mississippi, Jon Bruning, Attorney General, Office of the Attorney General for the State of Nebraska, Catherine Cortez Masto, Attorney General, Office of the Attorney General for the State of Nevada, Michael A. Delaney, Attorney General, Office of the Attorney General for the State of New Hampshire, Gary K. King, Attorney General, Office of the Attorney General for the State of New Mexico, Roy Cooper, Attorney General, Office of the Attorney General for the State of North Carolina, Tom Miller, Attorney General, Office of the Attorney General for the State of Iowa, Derek Schmidt, Attorney General, Office of the Attorney General for the State of Kansas, Jack Conway, Attorney General, Office of the Attorney General for the Commonwealth of Kentucky, William J. Schneider, Attorney General, Office of the Attorney General for the State of Maine, Douglas F. Gansler, Attorney General, Office of the Attorney General for the State of Maryland, Martha Coakley, Attorney General, Office of the Attorney General for the Commonwealth of Massachusetts, Bill Schuette, Attorney General, Office of the Attorney General for the State of Michigan, Robert E. Cooper, Attorney General, Office of the Attorney General for the State of Tennessee, Mark L. Shurtleff, Attorney General, Office of the Attorney General for the State of Utah, William H. Sorrell, Attorney General, Office for the Attorney General for the State of Vermont, Robert M. McKenna, Attorney General, Office for the Attorney General for the State of Washington, Darrell V. McGraw, Jr., Attorney General, Office of the Attorney General for the State of West Virginia, Gregory A. Phillips, Attorney General, Office of the Attorney General for the State of Wyoming, Wayne Stenehjem, Attorney General, Office of the Attorney General for the State of North Dakota, Michael DeWine, Attorney General, Office of the Attorney General for the State of Ohio, E. Scott Pruitt, Attorney General, Office of the Attorney General for the State of Oklahoma, Linda L. Kelly, Attorney General, Office of the Attorney General for the Commonwealth of Pennsylvania, Peter F. Kilmartin, Attorney General, Office of the Attorney General for the State of Rhode Island, Alan Wilson, Attorney General, Office of the Attorney General for the State of South Carolina, and Marty J. Jackley, Attorney General, Office of the Attorney General for the State of South Dakota, were on the brief for amici curiae States of New York, et al. in support of appellants/cross-appellees.
Allison M. Zieve and Greg A. Beck were on the brief for amici curiae Campaign for Tobacco–Free Kids, et al. in support of appellants/cross-appellees.
Linda Singer was on the brief for amicus curiae City of New York in support of appellants/cross-appellees.
Scott A. Sinder was on the brief for amicus curiae National Association of Convenience Stores, et al. in support of appellants/cross-appellees.
Aaron M. Streett argued the cause for appellee/cross-appellant. With him on the briefs were R. Stan Mortenson and Sara E. Kropf. Richard P. Sobiecki entered an appearance.
Before: GRIFFITH and KAVANAUGH, Circuit Judges, and SENTELLE, Senior Circuit Judge.
Opinion for the court filed by Circuit Judge GRIFFITH.
Robert Gordon owns a business that sold tobacco products across state lines. In the district court, Gordon sought a preliminary injunction against the enforcement of provisions of the Prevent All Cigarette Trafficking Act (PACT Act) that require him to pay state and local taxes and ban him from sending his products through the U.S. mail. Gordon argues that the tax provisions violate the Due Process Clause and the Tenth Amendment and that the mail ban runs afoul of the Due Process and Equal Protection Clauses.
The district court enjoined the enforcement of the tax provisions on due process grounds, but otherwise dismissed Gordon's claims. The government appeals the preliminary injunction, and Gordon cross-appeals the district court's dismissal of, and refusal to grant a preliminary injunction for, his remaining claims. For the reasons set forth below, we affirm the district court's decision in its entirety.
In most states, the liability for sales and use taxes falls primarily on the buyer. U.S. Government Accountability Office, GAO–03–714T, Internet Cigarette Sales: Limited Compliance and Enforcement of the Jenkins Act Result in Loss of State Tax Revenue 3 (2003) (hereinafter GAO Report); Walter Hellerstein, State Taxation ¶ 12.01 (3d ed.2012). States require retailers to collect applicable taxes from resident buyers and remit the receipts to the state. Steven Maguire, Congressional Research Serv., State Taxation of Internet Transactions 1 (2013). A state may not, however, impose such an obligation on a retailer with whom the state lacks minimum contacts. See Quill Corp. v. North Dakota, 504 U.S. 298, 112 S.Ct. 1904, 119 L.Ed.2d 91 (1992).1 This means that most out-of-state retailers operate beyond the state's regulatory reach. When they cannot rely on retailers to collect taxes, states find it both expensive and difficult to track the smaller out-of-state purchases of their residents and to collect the applicable taxes directly from them. This creates an opportunity for tax evasion that is especially costly when it comes to goods like tobacco products that are taxed at high rates. GAO Report, supra, at 7. In an effort to eliminate this opportunity for tobacco buyers, Congress passed the Jenkins Act, which obligates retailers to report each interstate sale of tobacco products to the tax authority of the consumer's state. Pub.L. No. 81–363, 63 Stat. 884 (1949).
More than a half century has elapsed since the passage of the Jenkins Act, and as the Internet has made it easier for consumers to order tobacco products from out-of-state sellers, it has become more difficult for states and localities to collect taxes on these transactions. H.R.Rep. No. 111–117, at 18–19 (2009); see also GAO Report, supra, at 8, 12–13. Remote purchasing also makes it easier for parties to evade age restrictions and otherwise traffic in cigarettes illegally. 15 U.S.C. § 375 note; see alsoH.R.Rep. No. 111–117, at 18. Finding the Jenkins Act inadequate, H.R.Rep. No. 111–117, at 18, Congress has sent the PACT Act into the breach.
The PACT Act is “aimed primarily at combating three evils: tobacco sales to minors, [illicit] cigarette trafficking, and circumvention of state taxation requirements.” Gordon v. Holder (Gordon I), 632 F.3d 722, 723 (D.C.Cir.2011). It does so by restricting “delivery sales” of cigarettes and smokeless tobacco products. A delivery sale is any sale in which either the purchase or the delivery does not occur face-to-face. 15 U.S.C. § 375(5). Two sections of the Act are at issue here. Section 2a prohibits delivery sales unless all applicable state and local taxes are paid “in advance of the sale, delivery, or tender.” 15 U.S.C. § 376a(a)(3)-(4), (d). Delivery sellers must comply with “all State, local, tribal, and other laws generally applicable to sales of cigarettes or smokeless tobacco as if the delivery sales occurred entirely within the specific State,” meaning that they must collect any taxes that state or local laws require in-state retailers to collect. 15 U.S.C. § 376a(a)(3). They are subject to federal criminal and civil penalties if the applicable taxes have not been paid in advance. 15 U.S.C. § 376a(d)(1) (prohibition); 15 U.S.C. § 377 (penalties). Section 3 prohibits...
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