Judge Stays Enforcement of NYC Regulations
Coupon, promotional price, and minimum pack restrictions on hold until lawsuit is resolved
As a result of a federal district court hearing on Friday, March 14, 2014, a federal judge ordered New York City not to enforce Section 6 of the recently enacted New York City tobacco ordinance until the later of May 23, 2014, or the adoption of final regulations implementing the ordinance provisions. Section 6 of the New York City ordinance (1) prohibits the honoring or redeeming of coupons and other price reduction instruments on cigarettes and tobacco products, (2) outlaws the offering for sale or selling cigarette and tobacco products through any multi-package discount or for less than the listed price in exchange for purchasing other cigarettes or tobacco products, (3) prohibits offering tobacco products for sale at less than the listed price, and (4) mandates a minimum price of $10.50 for cigarettes and little cigars sold in packages of 20 or more.
In January of 2014, NATO, the New York Association of Convenience Stores, the Bodega Association of the United States, along with Lorillard Tobacco Co., R.J. Reynolds Tobacco Co., Inc., American Snuff Co., Philip Morris USA Inc., U.S. Smokeless Tobacco Brands Inc., and John Middleton Co. filed a lawsuit in the U.S. Federal District Court for the Southern District of New York seeking preliminary and permanent injunctions against the enforcement of several provisions of the New York City ordinance which was scheduled to go into effect on March 19, 2014.
While the lawsuit seeks to overturn only those provisions in Section 6 of the New York City ordinance that prohibit certain coupon redemption and discount price practices, the federal judge prohibited enforcement of all provisions of Section 6, including the minimum $10.50 per pack price for cigarettes and little cigars sold in packs of 20 or more. In addition, the Court’s order states that New York City shall not use or reference in any administrative or legal proceeding against a retailer the fact that, during this stay period, the retailer engaged in conduct that would otherwise be prohibited under Section 6.
This means that until May 23, 2014, or the date on which New York City issues final regulations implementing the ordinance, whichever is later, New York City retailers may: (1) continue to accept and redeem cigarette and tobacco product coupons, (2) continue to sell cigarettes and tobacco products in either multi-packs with discounted prices or for less than the listed price when purchased with other cigarettes or tobacco products, (3) continue to offer discounts off the posted price of tobacco products, and (4) continue to sell cigarettes and little cigars in packs of 20 for less than the ordinance’s minimum price of $10.50. [Note that retailers must continue to abide by the New York State minimum cigarette price mark up law].
Finally, the federal judge’s order allows both the plaintiffs and the defendants in this litigation to file motions for summary judgment along with NATO and the other plaintiffs’ original motion seeking a temporary and permanent injunction against particular provisions of Section 6 of the New York City ordinance. The court will hear oral arguments on all of the motions on May 6th and said it will decide those motions before its order against enforce of the New York City ordinance expires.