Red Earth LLC v. United States, et al., No. 10-3165 (2d Cir. 2011)
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The government appealed from an order of the district court granting a preliminary injunction to stay enforcement of provisions of the Prevent All Cigarette Trafficking Act (PACT Act), Pub. L. No. 111-154, section 2(a), 124 Stat. 1087, 1088, requiring mail-order cigarette sellers to pay state excise taxes. The government argued that the district court erred in concluding that plaintiffs were likely to succeed on the merits of their claim that the PACT Act's provision requiring out-of-state tobacco sellers to pay state excise taxes, regardless of their contact with that state, violated the Due Process Clause. The court held that because the district court's entry of the preliminary injunction was not an abuse of discretion, the court affirmed the judgment.
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10-3165-cv(L) Red Earth LLC v. USA 1 2 UNITED STATES COURT OF APPEALS 3 FOR THE SECOND CIRCUIT 4 5 August Term 2010 6 (Argued: November 1, 2010 7 Docket Nos. 10-3165-cv(L), 10-3191-cv(XAP), 10-3213-cv(XAP) 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 Decided: September 20, 2011) -----------------------------------------------------x RED EARTH LLC, D/B/A SENECA SMOKESHOP, AARON J. PIERCE, SENECA FREE TRADE ASSOCIATION, Plaintiffs - Appellees - Cross-Appellants, -- v. -UNITED STATES OF AMERICA, ERIC H. HOLDER, JR., IN HIS OFFICIAL CAPACITY AS ATTORNEY GENERAL OF THE UNITED STATES, UNITED STATES DEPARTMENT OF JUSTICE, JOHN E. POTTER, IN HIS OFFICIAL CAPACITY AS POSTMASTER GENERAL AND CHIEF EXECUTIVE OFFICER OF THE UNITED STATES POSTAL SERVICE, UNITED STATES POSTAL SERVICE, Defendants - Appellants - Cross-Appellees. -----------------------------------------------------x B e f o r e : JACOBS, WALKER, and CABRANES, Circuit Judges. Appeal from an order of the Western District of New York 30 (Richard J. Arcara, Judge) granting a preliminary injunction to 31 stay enforcement of provisions of the Prevent All Cigarette 32 Trafficking Act ( PACT Act ) that require mail-order cigarette 33 sellers to pay state excise taxes. 1 The government argues that 1 the district court erred in concluding that plaintiffs were 2 likely to succeed on their claim that the PACT Act s provision 3 requiring out-of-state tobacco sellers to pay state excise taxes 4 regardless of their contact with that state violates due process. 5 We affirm the district court s order granting the preliminary 6 injunction. 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 AFFIRMED. MICHAEL P. ABATE, Attorney, Appellate Staff, Department of Justice Civil Division, Washington, D.C. (Tony West, Assistant Attorney General, William J. Hochul, Jr., United States Attorney for the Western District of New York, Mark B. Stern, Alisa B. Klein, Attorneys, Appellate Staff, Department of Justice Civil Division, on the brief), for Defendants-Appellants-CrossAppellees. LISA A. COPPOLA, Rupp, Baase, Pfalzgraf, Cunningham & Coppola LLC, Buffalo, NY for PlaintiffsAppellees-Cross-Appellants Red Earth LLC, d/b/a Seneca Smokeshop and Aaron J. Pierce. HOWARD M. RADZELY, Morgan, Lewis & Bockius LLP, Washington, D.C. (R. Edward Cruz, Russell R. Bruch, Leni D. Battaglia, Morgan, Lewis & Bockius LLP, Washington, D.C., Daniel B. Moar, Goldberg Segalla LLP, Buffalo, NY, on the brief), for Plaintiff-Appellee-CrossAppellant Seneca Free Trade Association. Richard T. Sullivan, Harris Beach PLLC, Buffalo, NY, for Amici Curiae 2 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 National Association of Convenience Stores and New York Association of Convenience Stores. Allison M. Zieve (Gregory A. Beck, on the brief), Public Citizen Litigation Group, Washington, DC, for Amici Curiae American Cancer Society, American Cancer Society Cancer Action Network, American Heart Association, American Legacy Foundation, American Lung Association and Campaign for Tobacco-Free Kids. Michael A. Cardozo, Corporation Counsel of the City of New York (Eric Proshansky, Victoria Scalzo, Aaron M. Bloom, William H. Miller, Assistant Corporation Counsel, on the brief), New York, NY, for Amicus Curiae City of New York. Carol E. Heckman, Harter Secrest & Emery LLP, Buffalo, NY (Riyaz A. Kanji, Kanji & Katzen, PLLC, Ann Arbor, Michigan, on the brief), for Amicus Curiae Seneca Nation of Indians. Andrew M. Cuomo, Attorney General of the State of New York (Barbara D. Underwood, Solicitor General, Alison J. Nathan, Special Counsel to the Solicitor General, Benjamin N. Gutman, Deputy Solicitor General, on the brief), New York, NY, for Amici Curiae States of New York, Alaska, Arizona, Arkansas, California, Connecticut, Delaware, District of Columbia, Florida, Georgia, Hawaii, Idaho, Illinois, Indiana, Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nebraska, Nevada, New Hampshire, New Mexico, North Carolina, North Dakota, Ohio, 3 1 2 3 4 5 6 7 8 9 Oklahoma, Pennsylvania, Rhode Island, South Carolina, South Dakota, Tennessee, Utah, Vermont, Washington, West Virginia, and Wyoming. PER CURIAM: The government appeals from a July 30, 2010 order of the 10 District Court for the Western District of New York (Richard J. 11 Arcara, Judge) granting a preliminary injunction to stay 12 enforcement of provisions of the Prevent All Cigarette 13 Trafficking Act ( PACT Act ) requiring mail-order cigarette 14 sellers to pay state excise taxes. 15 the district court erred in concluding that plaintiffs were 16 likely to succeed on the merits of their claim that the PACT 17 Act s provision requiring out-of-state tobacco sellers to pay 18 state excise taxes, regardless of their contact with that state, 19 violates the Constitution s Due Process Clause. 20 the district court s entry of the preliminary injunction was not 21 an abuse of discretion, we affirm. The government argues that Because we find 22 BACKGROUND 23 The PACT Act, signed into law on March 31, 2010, imposes 24 strict restrictions on the delivery sale of cigarettes and 25 smokeless tobacco. 26 1088 (2010). 27 are not in each other s physical presence at the time the buyer 28 requests or receives the cigarettes, as when cigarettes are Pub. L. No. 111-154, § 2(a), 124 Stat. 1087, A delivery sale occurs when the buyer and seller 4 1 ordered over the Internet and delivered by mail. 2 § 375(5). 3 the collection of all tobacco taxes, the statute demands that 4 delivery sellers comply with the same laws that apply to 5 law-abiding tobacco retailers. 6 end, the PACT Act requires delivery sellers to pay excise taxes, 7 obey licensing and tax-stamping requirements, and otherwise 8 comply with state and local tobacco laws as if the delivery 9 sales occurred entirely within the specific State and place 10 11 15 U.S.C. In order to prevent tobacco smuggling and ensure 124 Stat. at 1087-88. where the tobacco product is delivered. To that 15 U.S.C. § 376a(a)(3). Red Earth, LLC ( Red Earth ) is a tobacco retail business 12 and delivery seller under the PACT Act that is located on the 13 Cattaraugus Indian Reservation in the territory of the Seneca 14 Nation of Indians in New York State. 15 Aaron J. Pierce, an enrolled member of the Seneca Nation. 16 Earth is a member of the Seneca Free Trade Association ( SFTA ), 17 a non-profit organization that represents hundreds of businesses 18 licensed by the Seneca Nation. 19 least 140 tobacco retailers that sell and ship cigarettes to 20 customers across the United States. The business is owned by Red The SFTA s membership includes at 21 Red Earth and other SFTA members, as Native American 22 retailers operating in Indian country, can purchase cigarettes 23 and other tobacco products free of state and local excise taxes. 24 See Dep t of Taxation & Fin. v. Milhelm Attea & Bros., Inc., 512 5 1 U.S. 61, 64 (1994). Prior to the PACT Act, those tax savings 2 were passed along to their customers: SFTA retailers sold tax- 3 free cigarettes to customers via phone, fax, and the Internet, 4 and shipped them by mail. 5 and local governments could collect excise taxes only directly 6 from the customers, using sales reports that out-of-state tobacco 7 sellers have to file with state tobacco tax administrators under 8 the Jenkins Act of 1949.1 9 York, 130 S. Ct. 983, 987 (2010). For these out-of-state sales, state See Hemi Group, LLC v. City of New Red Earth s business model, 10 according to Pierce, is predicated upon selling cigarettes 11 free of New York State sales taxes by utilizing the Internet, 12 telephone, and mail. 13 The PACT Act does away with this business model by imposing 14 on delivery sellers the burden of collecting taxes. 15 products cannot be sold or delivered until any state or local 16 excise tax has been paid, with required stamps or other 17 indicia that the excise tax has been paid . . . properly affixed 18 or applied to the product. 19 bars the delivery of cigarettes or smokeless tobacco through the 20 U.S. Postal Service, 18 U.S.C. § 1716E(a)(1), and imposes strict 21 shipping, packaging, age-verification, and record-keeping 22 requirements, 15 U.S.C. § 376a(b), (c). 1 2 15 U.S.C. § 376a(d)(1). 1 The statute Violators are subject to The PACT Act amends the Jenkins Act. 1090, 1091, 1100, 1101. 6 Cigarette See 124 Stat. at 1088, 1 civil and criminal penalties, including, for the first violation, 2 up to three years imprisonment and fines up to the greater of 3 $5,000 or two percent of the delivery seller s gross sales of 4 tobacco products during the one-year period ending on the date of 5 the violation. 6 See 15 U.S.C. § 377(a)(1), (b)(1). On June 25, 2010, four days before the PACT Act was to go 7 into effect, Pierce and Red Earth challenged the statute s 8 constitutionality in a complaint filed in the Western District of 9 New York. The district court temporarily stayed enforcement of 10 the statute as to Pierce and Red Earth. 11 complaint was filed by the SFTA, the district court consolidated 12 the actions and expanded the stay to protect the SFTA s full 13 membership. 14 After a similar On July 30, 2010, the district court, finding that Red 15 Earth, Pierce, and the SFTA (collectively plaintiffs ) were 16 likely to succeed on the merits of their due process claim, 17 entered a preliminary injunction that stayed enforcement of the 18 PACT Act provisions requiring delivery sellers to prepay excise 19 taxes and comply with all laws as if the delivery sales occurred 20 entirely in the place of delivery. 21 (4), (d). 22 out-of-state seller to maintain minimum contacts with a state 23 before the state can subject it to taxation, see Quill Corp. v. 24 North Dakota, 504 U.S. 298, 306-08 (1992), the district court See 15 U.S.C. § 376a(a)(3)- Adopting as its premise that due process requires an 7 1 found that the PACT Act s mandate that delivery sellers pay state 2 taxes without regard to their contact with that state effectively 3 legislate[d] the due process requirement out of the equation. 4 Red Earth LLC v. United States, 728 F. Supp. 2d 238, 252 5 (W.D.N.Y. 2010). 6 remainder of the PACT Act, including its non-mailability and age- 7 verification provisions. 8 that plaintiffs failed to show a likelihood of success as to 9 their equal protection claims, and that they lacked standing to The district court left undisturbed the The district court further concluded 10 bring a Tenth Amendment claim. 11 plaintiffs cross-appeal, from that order. 12 13 The government appeals, and DISCUSSION We review a district court s entry of preliminary injunction 14 for abuse of discretion. Green Party v. N.Y. State Bd. of 15 Elections, 389 F.3d 411, 418 (2d Cir. 2004). 16 abuses its discretion when its decision is arbitrary or is based 17 on an error of law or a clearly erroneous finding of fact. 18 Almontaser v. N.Y. City Dep t of Educ., 519 F.3d 505, 508 (2d 19 Cir. 2008) (per curiam). 20 moving party must demonstrate (1) irreparable harm absent 21 injunctive relief; (2) either a likelihood of success on the 22 merits, or a serious question going to the merits to make them a 23 fair ground for trial, with a balance of hardships tipping 24 decidedly in the plaintiff's favor; and (3) that the public s A district court To obtain a preliminary injunction, the 8 1 interest weighs in favor of granting an injunction. 2 Taxicab Bd. of Trade v. City of New York, 615 F.3d 152, 156 (2d 3 Cir. 2010) (internal quotation marks and citations omitted). 4 When, as here, the preliminary injunction will affect government 5 action taken in the public interest pursuant to a statutory or 6 regulatory scheme, it should be granted only if the moving 7 party meets the more rigorous likelihood-of-success standard. 8 Id. (quoting County of Nassau v. Leavitt, 524 F.3d 408, 414 (2d 9 Cir. 2008)). 10 Metro. On appeal, the government argues that the district court 11 abused its discretion in entering the preliminary injunction 12 because plaintiffs failed to establish a likelihood of success on 13 the merits of their due process claim. 14 appeals, challenge the district court s assessment of their equal 15 protection and Tenth Amendment claims. 16 turn. 17 I. We address each appeal in The Government s Appeal 18 19 Plaintiffs, in cross- A. The Due Process Clause of the Fourteenth Amendment places 20 limits on a state s ability to tax out-of-state vendors. 21 Principally, due process requires some definite link, some 22 minimum connection, between a state and the person, property or 23 transaction it seeks to tax. 24 U.S. 340, 344-45 (1954). Miller Bros. Co. v. Maryland, 347 For purposes of a delivery seller s 9 1 obligation to comply with state tax laws, the PACT Act creates 2 the fiction that every delivery sale occurs entirely within the 3 specific State and place where the tobacco product is delivered. 4 15 U.S.C. § 376a(a)(3). 5 whether Congress can, consistent with constitutional due process, 6 require a vendor to submit to the taxing jurisdiction of any 7 state into which it makes at least one sale, without regard to 8 the extent of that vendor s contact with the state. 9 This action raises the question of The district court, relying on Quill Corp. v. North Dakota, 10 504 U.S. 298 (1992), and applying the preliminary injunction 11 standard, concluded that Congress most likely cannot do so. 12 Quill, the Supreme Court overruled its previous due process 13 holdings to the extent they indicated that the Due Process 14 Clause requires physical presence in a State for the imposition 15 of duty to collect a use tax. 16 earlier, the Supreme Court had refused to obliterate the sharp 17 distinction . . . between mail order sellers with retail outlets, 18 solicitors, or property within a State, who could be subject to 19 state taxes, and those who do no more than communicate with 20 customers in the State by mail or common carrier as part of a 21 general interstate business, who could not. 22 Inc. v. Dep t of Revenue, 386 U.S. 753, 758 (1967). 23 24 Id. at 308. That distinction gave way in Quill. Twenty-five years Nat l Bellas Hess, Recognizing that its due process jurisprudence had evolved substantially since 10 In 1 Bellas Hess, particularly in the area of judicial jurisdiction, 2 the Court, in the area of taxation, analogized its due process 3 analysis to its jurisdictional holdings. 4 08. 5 abandoned more formalistic tests that focused on a defendant s 6 presence within a State in favor of a more flexible inquiry 7 into whether a defendant s contacts with the forum made it 8 reasonable, in the context of our federal system of Government, 9 to require it to defend the suit in that State. Quill, 504 U.S. at 307- With regard to personal jurisdiction, the Supreme Court had Id. at 307. 10 The relevant inquiry asked whether a defendant had minimum 11 contacts with the jurisdiction such that the maintenance of the 12 suit does not offend traditional notions of fair play and 13 substantial justice. 14 Washington, 326 U.S. 310, 316 (1945)). 15 a state was not, therefore, a prerequisite to that state s 16 exercise of personal jurisdiction over a foreign corporation, 17 provided that the corporation had purposefully avail[ed] itself 18 of the benefits of an economic market in the forum State. 19 at 307-08. 20 Id. at 308 (quoting Int l Shoe Co. v. Physical presence within Id. The Supreme Court in Quill relied on [c]omparable 21 reasoning to answer the question before it: whether North Dakota 22 could require an out-of-state mail-order house engaged in 23 continuous and widespread solicitation of business within the 24 state to collect from its customers, and remit to the state, a 11 1 use tax. 2 with due process, the Court concluded, because it was beyond 3 dispute that the seller had purposefully directed its activities 4 at North Dakota residents, that the magnitude of those contacts 5 [was] more than sufficient for due process purposes, and that the 6 use tax [was] related to the benefits [the seller] receive[d] 7 from access to the State. 8 9 Id. at 301, 308. Taxation in that context comported Id. at 308. In the case before us, the district court observed that the PACT Act automatically subjects delivery sellers to the laws of 10 the forum state notwithstanding the presence or absence of any 11 other contacts with that forum. 12 251. 13 jurisdictional reach of each state and locality without regard to 14 the constraints imposed by the Due Process Clause, which the 15 district court concluded it cannot do. 16 basis, the district court found that plaintiffs had shown a 17 likelihood of success on the merits of their due process claim. 18 The government, on appeal, contests this conclusion. 19 Red Earth, 728 F. Supp. 2d at Congress, in other words, was broadening the Id. at 252. On that Under the deferential abuse of discretion standard, as long 20 as the district court did not act arbitrarily, we will overturn 21 the preliminary injunction only if the district court made an 22 error of law or a clearly erroneous finding of fact. 23 neither. 24 Congress may authorize state actions that burden interstate We find The Supreme Court observed in Quill that, while 12 1 commerce, it does not similarly have the power to authorize 2 violations of the Due Process Clause. Quill, 504 U.S. at 305. 3 The PACT Act requires a seller to collect state and local taxes 4 based on its making of one delivery, but the federal courts have 5 for decades steered away from the question of whether a single 6 sale is enough to satisfy the requirements of due process. 7 Supreme Court has never found that a single isolated sale . . . 8 is sufficient. 9 2780, 2792 (2011) (Breyer, J., concurring in the judgment). The J. McIntyre Mach., Ltd. v. Nicastro, 131 S. Ct. Nor 10 has it held that a single sale into a state is insufficient for 11 due process purposes, although its previous holdings suggest as 12 much. 13 close, a court reviewing the issuance of a preliminary 14 injunction should uphold the injunction and remand for trial on 15 the merits. 16 Because the district court reached a reasonable conclusion on a 17 close question of law, there is no need for us to decide the 18 merits at this preliminary stage. 19 court acted within its discretion in entering the injunction 20 here. Id. 21 22 Where the underlying constitutional question is Ashcroft v. ACLU, 542 U.S. 656, 664-65 (2004). We find that the district B. The government also contends that the district court abused 23 its discretion by entering an injunction that is too broad in 24 scope. The injunction applies only to three provisions of the 13 1 PACT Act: (1) 15 U.S.C. § 376a(a)(3), which requires delivery 2 sellers to comply with all state and local laws, including those 3 imposing excise taxes, as if the delivery sales occurred entirely 4 within that state; (2) § 376a(d), which requires delivery sellers 5 to pay state and local tobacco taxes before delivering their 6 products; and (3) § 376a(a)(4), which mandates compliance with 7 § 376a(d). 8 provisions present a due process problem, the district court also 9 enjoined the mandate that delivery sellers comply with laws Although only the PACT Act s tax-collecting 10 imposing . . . restrictions on sales to minors and other . . . 11 legal requirements relating to the sale, distribution, or 12 delivery of cigarettes or smokeless tobacco as if the sales 13 occurred entirely within that state. 14 15 U.S.C. § 376a(3)(C)-(D). As the district court noted in denying the government s 15 motion for a stay pending appeal, the injunction was crafted to 16 preserve the age verification procedures that appear elsewhere in 17 the PACT Act. 18 or delivering tobacco products to anyone under the minimum age 19 set by applicable law at the place of delivery, mandate that the 20 purchaser or another adult sign for the product upon delivery, 21 and require delivery sellers to verify the purchaser s age using 22 a database. 23 injunction s application to one provision governing sales to 24 minors is effectively nullified by its preservation of separate Those provisions bar delivery sellers from selling 15 U.S.C. § 376a(b)(4). 14 Any defect in the 1 2 restrictions to the same effect. The Supreme Court has instructed courts to refrain from 3 invalidating more of the statute than is necessary. Alaska 4 Airlines, Inc. v. Brock, 480 U.S. 678, 684 (1987) (quoting Regan 5 v. Time, Inc., 468 U.S. 641, 652 (1984) (plurality opinion)). 6 Whenever an act of Congress contains unobjectionable provisions 7 separable from those found to be unconstitutional, it is the duty 8 of this court to so declare, and to maintain the act in so far as 9 it is valid. Id. (quoting Regan, 468 U.S. at 652) (alterations 10 omitted). 11 its injunction to three provisions of the PACT Act, all of which 12 impose on delivery sellers the obligation to collect state and 13 local taxes without regard to due process. 14 court arguably could have wielded its scalpel even more finely 15 for example, by excluding § 376a(a)(3)(C), regarding laws 16 imposing restrictions on sales to minors - its failure to do so 17 was not an abuse of discretion and is of no practical 18 consequence. 19 20 The district court heeded that guidance by limiting Although the district C. The government assails the district court s calculus as to 21 the balance of equities and the public interest. 22 court concluded that the public interest favors injunctive relief 23 due to the PACT Act s threatened economic impact on the delivery 24 sellers, many of whom claim they do not have the financial 15 The district 1 wherewithal to comply with the PACT Act s requirements and would 2 go out of business if the statute were enforced. 3 court would therefore confront delivery sellers with the 4 Hobson s choice of ceasing what they believe to be lawful 5 business activities, or continuing to engage in those activities 6 while facing the threat of criminal prosecution if they are 7 wrong. 8 contends that these threats are overstated, as compliance with 9 the PACT Act demands, for the vast majority of states, simple Red Earth, 728 F. Supp. 2d at 259. Inaction by the The government 10 reliance on state-licensed stamping agents to apply tax stamps to 11 the product. 12 interest by supporting tobacco control efforts and discouraging 13 youth demand for cigarettes, goals that, in the government s 14 view, outweigh unsubstantiated claims of economic harm. 15 Furthermore, the PACT Act serves the public We agree with the district court that the equities tip in 16 the plaintiffs favor because of the adverse economic effects 17 that will result from enforcement of the statute in violation of 18 the due process rights they may have. 19 therefore did not abuse its discretion in concluding that the 20 potential for economic harm to plaintiffs tipped the scales of 21 public interest in favor of enjoining the problematic provisions. 22 23 24 16 The district court 1 II. Plaintiffs Cross Appeals 2 A. 3 Plaintiffs allege that the PACT Act violates the Fifth 4 Amendment s equal protection guarantees because it intentionally 5 targets Native Americans, and because it exempts only residents 6 of Alaska and Hawaii from the statute s exclusion on the use of 7 the mails. 8 protection claims were unlikely to succeed on the merits. 9 Earth and Pierce argue that the district court erred as to the 10 intentional discrimination claim, and the SFTA asserts that the 11 district court erred as to the non-mailability claim. 12 The district court concluded that plaintiffs equal Red Red Earth and Pierce allege that the PACT Act, although a 13 facially neutral statute, was motivated by discriminatory animus 14 towards Native Americans and that its application results in a 15 discriminatory effect. 16 Metro. Hous. Dev. Corp., 429 U.S. 252, 264-65 (1977) (requiring 17 proof of racially discriminatory intent in addition to 18 racially disproportionate impact to find that official action 19 violates equal protection). 20 the decisionmaker . . . selected or reaffirmed a particular 21 course of action at least in part because of, not merely in 22 spite of, its adverse effects upon an identifiable group. 23 Personnel Adm r v. Feeney, 442 U.S. 256, 279 (1979). 24 See Village of Arlington Heights v. Discriminatory intent implies that The district court recognized that the PACT Act would have a 17 1 disproportionate effect on Native Americans, who comprise at 2 least 80 percent of delivery sellers. 3 acknowledged plaintiffs identification of evidence in the 4 legislative history that they characterized as evincing animus 5 towards Native Americans, such as laughter by some present when a 6 letter from the Seneca Nation was introduced into the 7 congressional record. 8 Congress s intent in passing the PACT Act was to curtail what it 9 believed to be improper assertions of Native American The district court also However, the district court found that 10 sovereignty, not to purposefully discriminate against Native 11 Americans as a group. 12 this finding was clearly erroneous, the district court did not 13 abuse its discretion in deeming plaintiffs intentional 14 discrimination claim unlikely to succeed on the merits. 15 As plaintiffs have failed to show that The SFTA s equal protection challenge is based on an 16 exception to the PACT Act's classification of all cigarettes and 17 smokeless tobacco as nonmailable. 18 Although the statute prohibits the U.S. Postal Service from 19 accepting cigarettes and smokeless tobacco for delivery, 20 mailings within the State of Alaska or within the State of 21 Hawaii are excepted from that restriction. 22 Plaintiffs argued that this provision irrationally favors 23 residents of Alaska or Hawaii over similarly situated residents 24 of other states. 18 U.S.C. § 1716E(a)(1). Id. § 1716E(b)(2). The district court rejected this challenge, 18 1 finding the exception was rationally designed to ensure that 2 residents of remote areas of Alaska and Hawaii could obtain 3 cigarettes. 4 On appeal, the SFTA reiterates that the exception for Alaska 5 and Hawaii is over-inclusive, in that it applies to residents of 6 cities like Anchorage and Honolulu, and under-inclusive, as it 7 excludes similarly situated residents of remote regions in other 8 states. 9 act incrementally and to pass laws that are over (and under) However, rational basis review allows legislatures to 10 inclusive without violating equal protection. 11 Paterson, 594 F.3d 150, 171 (2d Cir. 2010). 12 neither involving fundamental rights nor proceeding along 13 suspect lines is accorded a strong presumption of validity. 14 Heller v. Doe, 509 U.S. 312, 319 (1993). 15 long as there is any reasonably conceivable state of facts that 16 could provide a rational basis for the classification. 17 320 (quoting FCC v. Beach Commc ns, Inc., 508 U.S. 307, 313 18 (1993)). 19 exception falls well within the bounds of rationality. 20 21 Hayden v. A classification It will be upheld as Id. at The district court properly concluded that this B. The Tenth Amendment provides that [t]he powers not 22 delegated to the United States by the Constitution, nor 23 prohibited by it to the States, are reserved to the States 24 respectively, or to the people. 19 U.S. Const. amend. X. 1 Plaintiffs claim that, by attempting to levy state and local 2 taxes, Congress is acting outside its enumerated powers in 3 violation of the Tenth Amendment. 4 Brooklyn Legal Services Corporation B v. Legal Services 5 Corporation, 462 F.3d 219, 234-36 (2d Cir. 2006), 6 concluded that plaintiffs lack standing to assert a Tenth 7 Amendment claim. The district court, relying on 8 In Brooklyn Legal Services, after deciding that the question 9 of standing under the Tenth Amendment was controlled by Tennessee 10 Electric Power Co. v. Tennessee Valley Authority, 306 U.S. 118, 11 144 (1939), we found that plaintiffs lacked standing because no 12 plaintiff . . . represent[ed] a state or its instrumentality. 13 See Brooklyn Legal Services, 462 F.3d at 234-35. 14 States v. Bond, the Third Circuit, while recognizing a circuit 15 split as to the issue of standing under the Tenth Amendment, 16 similarly relied on Tennessee Electric in concluding that the 17 individual plaintiff lacked standing to assert a Tenth Amendment 18 claim. 19 S. Ct. 455 (2010). 20 185 F.3d 693, 703-04 (7th Cir. 1999) (allowing private parties to 21 bring Tenth Amendment challenges), cert. denied, 528 U.S. 1116 22 (2000). 23 24 In United 581 F.3d 128, 136-38 (3d Cir. 2009), cert. granted, 131 But see Gillespie v. City of Indianapolis, During the pendency of this appeal, the Supreme Court reversed the Third Circuit, resolving this circuit split. 20 In 1 Bond v. United States, 131 S. Ct. 2355 (2011), the Court held 2 that an individual can have standing to pursue a Tenth Amendment 3 claim. 4 justiciable case or controversy, she is not forbidden to object 5 that her injury results from disregard of the federal structure 6 of our Government. 7 letters filed with the court pursuant to Federal Rule of 8 Appellate Procedure 28(j), both state that Bond provides an 9 additional basis for upholding the preliminary injunction issued [W]here the litigant is a party to an otherwise Id. at 2366-67. 10 by the district court. 11 Red Earth and the SFTA, in plaintiffs letters. 12 The government has not responded to Bond effectively overrules Brooklyn Legal Services, and thus 13 abrogates the basis for the district court s resolution of the 14 Tenth Amendment question. 15 that plaintiffs were unlikely to succeed on their Tenth Amendment 16 claim based on their apparent lack of standing, it did not 17 otherwise address the claim s viability on the merits. 18 affirm the preliminary injunction on other grounds, and 19 plaintiffs do not contend that Bond warrants any expansion of 20 that injunction, the outcome of this appeal is unaffected by the 21 Supreme Court s resolution of Bond. 22 plaintiffs have standing to raise the Tenth Amendment claim, we 23 have no need to address the likelihood that plaintiffs will 24 succeed as to their Tenth Amendment claim and decline to do so. Because the district court concluded 21 As we While it now appears that 1 2 CONCLUSION For the foregoing reasons, the district court s order 3 entering the preliminary injunction is AFFIRMED. 4 government s request to lift the injunction is DENIED, and 5 plaintiffs request to expand the injunction is also DENIED. 22 The
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