Texas law imposed a higher tax on the tobacco products of manufacturers who were not members of any settlement agreements ("Small Tobacco"), compared to the tax rate for manufacturers who had entered into settlement agreements. The settlement agreements required annual payments and restricted advertising and lobbying activities in exchange for releasing claims against manufacturers. Some manufacturers who were members of the settlement agreements did not make any annual payments to the State of Texas, although their products were taxed at a lower rate pursuant to the law. Small Tobacco argued that the difference in the tax between their products and products produced by those manufacturers who were not making annual payments to Texas violated the constitutional guarantees of due process and equal protection. The Court rejected Small Tobacco's arguments and held that the law was constitutional.
Hegar v. Tex. Small Tobacco Coal., No. 03-13-00753-CV, Texas Court of Appeals, Third District (2017).
Tobacco companies or front groups may challenge any legislative or regulatory measure that affects their business interests. Unlike public interest litigation, these cases seek to weaken health measures. These cases frequently involve the industry proceeding against the government. For example, a group of restaurant owners challenging a smoke free law as unconstitutional.
A violation of the right to equal protection under the law, or another form of discrimination. The industry may claim that regulations discriminate against tobacco companies or tobacco products. Smokers may claim that addiction is a health condition, so regulations discriminate against them based on their health condition. Facilities subject to smoke free laws may claim that smoke free (SF) exceptions (e.g., hotel rooms, mental hospitals, etc.) unfairly discriminate against SF businesses because the law should apply to all locations equally.
A violation of the right to procedural fairness. For example, a party may claim that a government agency did not consult with public or stakeholders when issuing regulations.
Type of Tobacco Product
None
Limitations regarding the use of quotes The quotes provided here reflect statements from a specific decision. Accordingly, the International Legal Consortium (ILC) cannot guarantee that an appellate court has not reversed a lower court decision which may influence the applicability or influence of a given quote. All quotes have been selected based on the subjective evaluations undertaken by the ILC meaning that quotes provided here may not accurately or comprehensively represent a given court’s opinion or conclusion, as such quotes may have originally appeared alongside other negative opinions or accompanying facts. Further, some quotes are derived from unofficial English translations, which may alter their original meaning. We emphasize the need to review the original decision and related decisions before authoritatively relying on quotes. Using quotes provided here should not be construed as legal advice and is not intended to be a substitute for legal counsel on any subject matter in any jurisdiction. Please see the full limitations at https://www.tobaccocontrollaws.org/about.
"Regardless of whether a non-settling manufacturer is a Texas company, it is only required to pay the tax on products it sells in Texas, thus satisfying any minimal-connection requirement. The supreme court held that the legislature “articulated legitimate purposes for the tax,” including recovery of future healthcare costs related to Texas residents’ use of Small Tobacco’s products and reducing underage smoking, and that those goals are reasonably related to the tax. Hegar, 496 S.W.3d at 788-89. Small Tobacco has not shown that the tax is fiscally unrelated to the benefit of being allowed to sell tobacco products in Texas, see MeadWestvaco Corp., 553 U.S. at 24, nor has it demonstrated that the tax “was adopted as a mere disguise, under which there was exercised, in reality, another and different power denied by the Federal Constitution to the state,”
see A. Magnano, 292 U.S. at 44-45; see also Hegar, 496 S.W.3d at 788-89 (legislature articulated legitimate purposes for tax; tax classifications are reasonably related to goals of recovering healthcare costs and reducing underage smoking). We overrule Small Tobacco’s due-process claims."
Limitations regarding the use of quotes The quotes provided here reflect statements from a specific decision. Accordingly, the International Legal Consortium (ILC) cannot guarantee that an appellate court has not reversed a lower court decision which may influence the applicability or influence of a given quote. All quotes have been selected based on the subjective evaluations undertaken by the ILC meaning that quotes provided here may not accurately or comprehensively represent a given court’s opinion or conclusion, as such quotes may have originally appeared alongside other negative opinions or accompanying facts. Further, some quotes are derived from unofficial English translations, which may alter their original meaning. We emphasize the need to review the original decision and related decisions before authoritatively relying on quotes. Using quotes provided here should not be construed as legal advice and is not intended to be a substitute for legal counsel on any subject matter in any jurisdiction. Please see the full limitations at https://www.tobaccocontrollaws.org/about.
Texas law imposed a higher tax on the tobacco products of manufacturers who were not members of any settlement agreements ("Small Tobacco"), compared to the tax rate for manufacturers who had entered into settlement agreements. The settlement agreements required annual payments and restricted advertising and lobbying activities in exchange for releasing claims against manufacturers. Some manufacturers who were members of the settlement agreements did not make any annual payments to the State of Texas, although their products were taxed at a lower rate pursuant to the law. Small Tobacco argued that the difference in the tax between their products and products produced by those manufacturers who were not making annual payments to Texas violated the constitutional guarantees of due process and equal protection. The Court rejected Small Tobacco's arguments and held that the law was constitutional.