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Justice News

Department of Justice
U.S. Attorney’s Office
Western District of New York

FOR IMMEDIATE RELEASE
Wednesday, June 12, 2013

PACT Act now fully enforceable

BUFFALO, N.Y. - U.S. Attorney William J. Hochul, Jr. and Alcohol, Tobacco, Firearms and Explosives New York Field Division Special Agent in Charge Joseph A. Anarumo announced today that after nearly three years of litigation, the lawsuit seeking to stop the federal law aimed at restricting the internet sales of cigarettes and sales to children has ended with the dismissal of several Native American cigarette retailers’ claims. 

            In June of 2010, Red Earth, LLC., d/b/a Seneca Smokeshop, and the Seneca Free Trade Association (“SFTA”), which represent over 140 Seneca owned smoke shops, sued the federal government to stop the enforcement of the new federal law, referred to as the PACT Act (Prevent All Cigarette Trafficking), just days before it was to go into effect. In July 2010, U.S. District Judge Richard J. Arcara issued a preliminary injunction preventing the United States from enforcing certain sections of the PACT Act relating to the collection of state taxes on cigarette sales and other state regulations. Judge Arcara upheld other portions of the PACT Act, including a ban on retailers using the United States Postal Service to mail cigarettes. 

The Government and plaintiffs both appealed to the Second Circuit Court of Appeals which upheld Judge Arcara’s preliminary injunction and referred the case back to the district court for trial and the district court litigation continued. However, in April of this year, the SFTA discontinued its claims and asked that its lawsuit be dismissed. In addition, on June 7, 2013, Judge Arcara dismissed the remaining Red Earth claims pursuant to an agreement between the U.S. Attorney’s Office and Red Earth. The dismissal also vacated the earlier preliminary injunction which essentially means that the full scope of the PACT Act can now be enforced nationwide by the federal government.
 
"With the end of this litigation, the federal government can now begin to enforce the full breadth and scope of the PACT Act and help insure that our nation’s children are protected from the sales of cigarettes to minors,” said U.S. Attorney Hochul. “The PACT Act will also allow for the proper tax revenues to be collected on the sales of cigarettes by each state, revenues which will be used to finance additional health programs to combat the devastating health effects felt by Americans due to the availability of cheap cigarettes.”

“The PACT Act was passed to combat interstate trafficking in untaxed tobacco which has been found to deprive governments of billions of tax dollars and to fund organized criminal activity,” said Alcohol, Tobacco, Firearms and Explosives  Special Agent in Charge Joseph A. Anarumo. “We are pleased that the Government will finally be able to use this important legislative tool.”   

The PACT Act litigation was handled by Assistant U.S. Attorney and Civil Division Chief Mary E. Fleming, Assistant U.S. Attorney Richard D. Kaufman, Special Assistant U.S. Attorneys Jeffrey A. Cohen and Matthew Myerson of the ATF Office of Chief Counsel and the Department of Justice’s Consumer Litigation Attorney Gerald Kell.