State of Oregon v. Maybee

The state of Oregon sought to enjoin the owner of a retail business operated on Seneca Nation tribal lands in New York state from selling certain types of cigarettes to consumers in Oregon via internet websites.  The state argued that the owner had failed to comply with an Oregon law prohibiting the in-state sale of certain cigarette brands.  Upon appeal, the Court affirmed the trial court's order of summary judgment for the state.  The Court held that the state court possessed subject matter jurisdiction, finding that the nature of the owner's business dealings with consumers in Oregon stretched beyond the borders of the Seneca tribal territory and into the state.  The Court further held that the statute applied to the defendant's activities and that the statute did not violate the federal constitution's commerce clause.

State of Oregon, et al. v. Maybee, 232 P.3d 970, Court of Appeals of the State of Oregon (2010).

  • United States
  • May 12, 2010
  • Court of Appeals of the State of Oregon
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Parties

Plaintiff

  • Hardy Myers, Attorney General for the State of Oregon
  • State of Oregon

Defendant Scott Maybee, dba buycheapcigarettes.com, dba smartsmoker.com, dba ordersmokesdirect.com

Legislation Cited

Oregon State Complementary Act, ORS 180.400 to 180.455

Oregon State Qualifying Escrow Act, ORS 323.800 to 323.806

Related Documents

Type of Litigation

Tobacco Control Topics

Substantive Issues

Type of Tobacco Product

None

"By invoking the Commerce Clause, defendant argues that the Complementary Act unduly interferes with Congress's constitutional authority to regulate commerce among the several states, even though Congress has not enacted any law with which the state statute conflicts. In other words, defendant advances a so-called "dormant Commerce Clause" argument. See, e.g., CTS Corp. v. Dynamics Corp. of America, 481 US 69, 107 S Ct 1637, 95 L Ed 2d 67 (1987). Dormant Commerce Clause jurisprudence is enormously complex and controversial. In essence, state laws may not overtly discriminate against out-of-state interests; they may not operate so as to protect in-state economic interests from out-of-state competition; and, even if they are facially neutral and neutral in operation, they must not impose a burden on interstate commerce that is "clearly excessive in relation to the putative local benefits." Pike v. Bruce Church, Inc., 397 US 137, 142, 90 S Ct 844, 25 L Ed 2d 174 (1970). The Complementary Act is nondiscriminatory; it applies with equal force to in-state and out-of-state persons who sell, offer for sale, or possess for sale in this state, unlisted cigarettes. It is not protectionist; no Oregon sellers or manufacturers receive an economic benefit from its operation. And the state interest at stake, public health, is weighty, while the burden on interstate commerce is minimal, in light of the fact that 46 other states have similar statutes. Further, defendant's perfunctory argument under the dormant Commerce Clause relies entirely on one case, S.K.I. Beer Corp. v. Baltika Brewery, 443 F Supp 2d 313, 319-20 (EDNY 2006), which stands for the unremarkable proposition that a state may not regulate economic transactions that occur entirely out-of-state. That is not what occurs under the Complementary Act."
"Finally, even if we were to agree with defendant that his sales of cigarettes do not occur "in this state," we would nonetheless conclude that his activities violate ORS 180.440(1)(b). That statute makes it unlawful for a person to sell or "offer for sale" an unlisted brand in this state. While defendant can make a plausible (albeit ultimately unconvincing) argument that the sale occurs when he receives the payment and ships the product in New York, the same cannot be said for his argument that the offer occurs in New York. If defendant's offer did not extend beyond the boundaries of New York, nobody in Oregon could accept it and Oregon would have nothing to regulate."
"That conclusion brings us to defendant's second argument: Even if ORS 180.440(1)(b) penalizes the sale of unstamped cigarettes in this state, the statute nonetheless does not apply to him because the sales do not take place "in this state" as that phrase is used in ORS 180.440(1)(b).(2) We have already rejected the argument that, with respect to subject matter jurisdiction, defendant's activities took place entirely on the Seneca reservation and did not reach into Oregon. The same reasoning applies to defendant's argument that the statutory term "in this state" does not capture his sales activities. His offer reaches into this state, the offer is accepted here, and the final act of the transaction, receipt of the product, occurs here. The context within which ORS 180.440(1)(b) occurs supplies additional reasons to reject defendant's statutory interpretation argument."