New York Ban on Net Cigarette Sales Halted

A federal judge in New York has halted the state's enactment of a new law that would ban direct cigarette sales over the Internet to prevent minors from obtaining them.

U.S. District Judge Loretta Preska issued a temporary restraining order Monday in the case that pits Brown & Williamson Tobacco Corp. (BWT) against the state of New York. Joining BWT in seeking the halt was the Sante Fe Natural Tobacco Co.

In her ruling, Preska wrote that the tobacco companies had presented compelling arguments that there could be other ways besides the online sales ban for the state to protect minors from obtaining cigarettes. Preska also ruled that the plaintiffs presented ample arguments to show that the new law imposes a burden on interstate commerce that is "clearly excessive in relation to the putative local benefits."

Last month, BWT and its online division, BWT Direct LLC, filed a lawsuit in federal court charging that the law is unconstitutional because it unfairly infringes on the company's right to do business (see story). The law was signed by New York Gov. George Pataki in August and was to go into effect on Tuesday.

Mark Smith, a spokesman for the Louisville, Ky.-based cigarette maker, which is the third-largest tobacco company in the nation, today said the company is fighting to keep the new law from ever being enacted.

"It restricts interstate trade," Smith said.

David Remes, a BWT attorney, refused to comment about the case.

Juanita Scarlett, a spokeswoman for the New York attorney general's office, said the state believes the law is necessary to protect minors from easy accessibility to cigarettes.

"We intend to vigorously argue that point," she said. "We will now go to court and argue it on its merits."

Preska's order was for a 10-day restraining order. Yesterday, Preska extended the order through March 16, to allow time for both sides to prepare legal arguments, according to an official close to the case. A hearing has been set for Feb. 6, to allow the judge to hear arguments from both sides.

The New York law would also ban cigarette sales by mail or by telephone ordering.

BWT Direct said it had set up its new Internet business to try to boost the sales of some of its harder-to-find brands, including Tareyton, Carlton, Barclay, Misty and Capri cigarettes. The company said that a lack of shelf space by many retailers means that slower selling brands are left out of stores, leaving cigarette makers to find new ways to market them.

BWT also said it would collect taxes on the cigarettes sold over the Internet.

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