United States

In various actions before US District Courts, the Seneca Nation of Indians and others sued the Governor of New York and others on the basis that amendments to New York's tax law, which were designed to tax on-reservation cigarette sales to nonmember purchasers, are invalid.  Plaintiffs argued that the amended tax law interfered with their tribal sovereignty and failed to ensure their access to tax-free cigarettes for personal use.  Certain District Courts denied plaintiffs’ motions for a preliminary injunction while another Court granted a preliminary injunction motion. 

The Second Circuit ruled that plaintiffs failed to demonstrate a likelihood of success on the merits of their claims noting that (1) the pre-collection scheme impermissibly imposes a direct tax on tribal retailers, or alternatively, imposes an undue and unnecessary economic burden on tribal retailers; and (2) the coupon and prior approval systems interfere with their rights of self-government and rights to purchase cigarettes free from state taxation.  The Court vacated the District Court’s order granting the preliminary injunction and affirmed other Courts’ denial of a preliminary injunction.  The Court remanded all the cases for further proceedings.