People v. Shami

• Decision Date: 26 April 2018
• Docket Number: No. 155273,155273
• Citation: 912 N.W.2d 526,501 Mich. 243
• Parties: PEOPLE of the State of Michigan, Plaintiff–Appellee, v. Samer A. SHAMI, Defendant–Appellant.
• Court: Michigan Supreme Court

501 Mich. 243

912 N.W.2d 526

PEOPLE of the State of Michigan, Plaintiff–Appellee,

v.Samer A. SHAMI, Defendant–Appellant.

No. 155273

Supreme Court of Michigan.

Argued on application for leave to appeal January 11, 2018

Decided April 26, 2018

Bill Schuette, Attorney General, Aaron D. Lindstrom, Solicitor General, Laura Moody, Chief Legal Counsel, and Daniel C. Grano and Daniel J. Magee, Assistant Attorneys General, for the people.

Varnum LLP (by Thomas J. Kenny ) and Hammoud, Dakhlallah & Associates (by Ali K. Hammoud) for defendant.

BEFORE THE ENTIRE BENCH (except Wilder, J.)

Zahra, J.

The Tobacco Products Tax Act (TPTA)¹ requires a manufacturer of a tobacco product to be licensed with the Michigan Department of Treasury before purchasing, possessing, acquiring for resale, or selling that product in Michigan.² Criminal liability may arise from the failure to comply with the licensing requirement.³ The issue presented in this case is whether an individual who combines two different tobacco products to create a new blended product or repackages bulk tobacco into smaller containers with a new label is considered to be a manufacturer of a tobacco product and must have the requisite license.

The Court of Appeals held that, in either instance, such a person is a manufacturer. According to that Court, manufacturing simply requires a change from the original state of an object or material into a state that makes it more suitable for its intended use, and a person who changes either the form or delivery method of tobacco constitutes a manufacturer for purposes of the TPTA.

Although we agree with the Court of Appeals' conclusion that an individual combining two different tobacco products to create a blended product, relabeling that new mixture, and making it available for sale to the public is a manufacturer of a tobacco product, we disagree with the Court of Appeals that merely repackaging bulk tobacco into smaller containers renders an individual a manufacturer under the TPTA. Therefore, we affirm in part and reverse in part the judgment of the Court of Appeals. This case is remanded to the Wayne Circuit Court for further proceedings consistent with this opinion.

I. FACTS AND PROCEEDINGS

Defendant Samer A. Shami managed the day-to-day operations of Sam Molasses, a hookah-tobacco retail store located in Dearborn, Michigan, which was owned by Sam Molasses, LLC. Although Sam Molasses, LLC, was licensed with the Michigan Department of Treasury as a secondary wholesaler⁴ and an unclassified acquirer⁵ of other tobacco products, it is undisputed that neither Sam Molasses, LLC, nor Shami was licensed as a manufacturer of tobacco products during the relevant time.

With the assistance of the Michigan State Police, treasury officials conducted an administrative tobacco tax inspection of Sam Molasses on May 1, 2013, during which Shami produced several invoices from various tobacco distributors. When Alisha Nordman, an employee of the treasury's Tobacco Tax Enforcement Unit, discovered that the labels on several plastics tubs of hookah tobacco in the store's inventory did not match those listed on the invoices, Shami informed Nordman that he had mixed two or more flavors of hookah tobacco to create a new "special blend," which was then placed in the plastic tubs and affixed with new labels to reflect the blended product. Michigan State Police Sergeant Stephanie Cleland also observed that labels on plastic tubs describing the flavor of hookah tobacco found inside did not correspond to invoices from the distributors.

Sergeant Cleland further questioned Shami about tobacco in the store's inventory that did not match the labels on certain containers. In response, Shami told her that he repackaged bulk hookah tobacco from a particular distributor by taking the clear packets of tobacco out of the boxes, inserting them into silver metal tins, and placing a "360" label on the tins. These tobacco-filled tins were then sold at the store.

Shami was subsequently charged with violating the TPTA by possessing, acquiring, transporting, or offering for sale tobacco products with an aggregate wholesale price of $250.00 or more as a manufacturer without a license in violation of MCL 205.423(1) and MCL 205.428(3).⁶

Following a preliminary examination, the 19th District Court bound Shami over to the Wayne Circuit Court for trial, ruling that there was probable cause to believe that Shami was a manufacturer of a tobacco product insofar as he transformed "certain articles by blending those articles together to create a distinctive product or new character."⁷ Shami thereafter filed a motion to quash, which the circuit court granted. According to the circuit court, "blending two types of hookah tobacco does not constitute manufacturing ...."⁸ The Court of Appeals reversed, concluding that Shami was a manufacturer of tobacco products because he manufactured or produced tobacco for purposes of the TPTA when he mixed different flavors of tobacco and repackaged tobacco in tins with his own "360" label before offering it for sale.⁹

Shami applied for leave to appeal in this Court. This Court directed the Clerk to schedule oral argument on whether to grant the application or take other action.¹⁰

II. STANDARD OF REVIEW

To bind a criminal defendant over for trial in the circuit court, the district court must find probable cause to believe that the defendant committed a felony,¹¹ which requires sufficient evidence of each element of the crime charged, or from which the elements may be inferred,¹² to " ‘cause a person of ordinary prudence and caution to conscientiously entertain a reasonable belief’ " of the defendant's guilt.¹³ This Court generally reviews a district court's bindover decision for an abuse of discretion.¹⁴ A district court abuses its discretion if its decision " ‘falls outside the range of principled outcomes.’ "¹⁵ Insofar as the district court based its ruling on questions of law, however, its ruling is reviewed de novo.¹⁶ Questions of statutory interpretation are similarly reviewed de novo.¹⁷

III. ANALYSIS

The Legislature enacted the TPTA in 1993 to, among other things, regulate and license manufacturers of tobacco products, as well as provide penalties for violations of the act.¹⁸ Relevant to the instant matter is MCL 205.423(1), which provides, in part, that "a person shall not purchase, possess, acquire for resale, or sell a tobacco product as a manufacturer ... in this state unless licensed to do so." And under MCL 205.428(3), a person is guilty of a felony if he or she "possesses, acquires, transports, or offers for sale contrary to this act ... tobacco products other than cigarettes with an aggregate wholesale price of $250.00 or more ...."¹⁹ Taken together, these two statutory provisions subject a manufacturer of a tobacco product to criminal liability for possessing, acquiring, transporting, or selling a certain wholesale value of a tobacco product in this state without a license. This, in turn, raises the principal question in this case: who is considered a manufacturer of a tobacco product?

The TPTA defines a "manufacturer" as a person who "manufactures or produces a tobacco product."²⁰ Although the Legislature defines "tobacco product" as "cigarettes, cigars, noncigarette smoking tobacco, or smokeless tobacco,"²¹ it did not provide a definition for either "manufactures" or "produces."

When interpreting a statute, this Court's primary goal is to " ‘ascertain the legislative intent that may reasonably be inferred from the words in [the] statute.’ "²² Because the language of a statute provides the most reliable manifestation of the Legislature's intent, this Court begins its interpretation by reviewing the words and phrases of the statute itself.²³ If a statutory word or phrase is not defined in the statute, it must be accorded its plain and ordinary meaning, unless the undefined word or phrase is a legal term of art.²⁴ This Court has consistently consulted dictionary definitions to give words and phrases their plain and ordinary meaning.²⁵

A person can become a "manufacturer" under the TPTA by either "manufactur[ing]" or "produc[ing]" a tobacco product.²⁶ Merriam–Webster's Collegiate Dictionary provides several definitions for the verb form of "manufacture," including "to make into a product suitable for use" and "to make from raw materials by hand or by machinery."²⁷ We agree with Shami that these definitions do not describe the conduct charged here regarding Shami's blending of the tobacco products.²⁸ The unblended tobacco products were not raw materials, and they were already suitable for use.

But a person who "produces" a tobacco product is also a "manufacturer" under MCL 205.422(m)(i ). Merriam–Webster's Collegiate Dictionary defines the verb form of "produce" in several different ways. Our selection of the proper definition must be guided by the statutory context in which the term appears.²⁹ Here, the term "produce" defines the statutory term "manufacturer," and thus the relevant definition is one that corresponds to "manufacturer." Only one definition reflects this context: "to give being, form, or shape to[.]"³⁰ Because a person cannot give "being, form, or shape" to something that already existed in the same "form or shape," the product produced must take a different form or shape than any of its constituent parts. Thus, an individual "produces" a tobacco product when he or she combines two or more different tobaccos "to give being, form, or shape to" a single, custom tobacco blend that differs from the ingredient tobaccos. Consequently, that individual is a "manufacturer" of a tobacco product under MCL 205.422(m)(i ), and he or she must have a license before purchasing, possessing, acquiring for resale, or selling a tobacco product under MCL 205.423(1).

In this case, there is sufficient evidence for a person of ordinary prudence and caution to conscientiously entertain a reasonable belief that Shami was a manufacturer under MCL 205.422(m)(i ...