California Increases Efforts To Regulate Tobacco Sales

Earlier this week, the California Attorney General’s Office filed a lawsuit against Huber Enterprise Smoke Shop, a tribal buy cigarette online shop located on the Wiyot Table Bluff Reservation, and its owner, Ardith Huber, claiming the cheap cigarette online shop’s sales of untaxed, non-fire-safe-certified, off-directory cheap cigarettes to non-Native Americans beyond the reservation’s boundaries violates California law, including California’s Unfair Competition Law. Huber’s attorney claims the state lacks jurisdiction over the tribal tobacco shop because Huber is a Native American operating her shop on her own reservation. The court will hear argument on the jurisdictional issue on November 10th.

Less than four months ago, the California Fourth District Court of Appeal ruled against a tribal tobacco shop in a similar case. In Harris v. Black Hawk Tobacco, Inc., 197 Cal. App. 4th 1561 (2011), the court upheld a preliminary injunction barring Black Hawk, a tobacco products retailer operating stores on the trust lands of Agua Caliente Indian Reservation, from selling off-directory, non-fire-safe certified, untaxed cigarettes online to non-Native Americans. Similar to the Huber case, the state claimed in Harris that such sales violated California’s tobacco directory statute and Cigarette Fire Safety and Firefighter Protection Act, as well as the federal Contraband Cigarette Trafficking Act. Black Hawk claimed it was entitled to make the sales because it was a Sac and Fox Nation corporation owned by an enrolled Sac and Fox Indian and operating on the Agua Caliente Indian Reservation. The Fourth District, however, disagreed. The court concluded that the state has the authority to tax and regulate cigarette sales to non-Native Americans. According to the court, “[n]o federal or tribal interest outweights the state’s interest in collecting cigarette tax revenue or in enforcing the California tobacco directory and fire-safety laws.” The court also found that defendants would not suffer any harm from the issuance of the preliminary injunction because Black Hawk could continue to operate by selling other brands of fire-safe-certified, tax-stamped cigarettes for sale listed on the California directory. It is important to note that, unlike Huber, Black Hawk and its owner are not members of the tribe on whose land they operate, a fact noted by the Black Hawk trial court in ruling that tribal sovereignty did not apply to Black Hawk and its owner.

Will the Huber court follow the lead of the Black Hawk court? Stay tuned. The Troutman Sanders Tobacco Team will monitor developments in these cases.