the state's brief is loaded with hyperbole and exaggeration about cigarette trafficking terrorist organizations and the ills of smoking and this case is nothing to do about any of that hyperbole aside my client is in india you know one hundred percent indian located located almost three thousand miles away from where we sit today that employs fifty approximately fifty indians respect to the geography of new york it only so sold to indian own businesses or to indians and we're not saying that the tax scheme is unconstitutional we're not saying anything has to be struck down we're just saying that the two federal statutes taking their plain language does not apply to king mountain selfs and so starting with the pact that the sales for the o reservation which is situated within the geography of washington state and king mountains customers which were on reservations sitting within new york were not interstate commerce under the if you like me to just focus on no not at all and it's interesting i was thinking about this question i take it that they're shipped by truck from one reservation to the reservation reservations  flying from one american city to another americans but i'm going to be flying it through canadian airspace interesting question seems not to be i'm going when the americans leave another but suppos but it wouldn't be interstate commerce under the pact that because it defines the delivery where the cigarettes are delivered as the endpoint of the commerce so it doesn't account for the i would just say one more thing about the pact act what i think makes it all make sense because the state says none of it makes sense is that two things number one it defines state and indian country separately and so it would make no sense for state to include in the country if that were the case and the country doesn't appear in the definition of state and second the pact act is focused on remote sales that's why it was an act then and that's a cell where the buyer and seller are not together and the concern expressed was for example an internet cell and losing control over the regulation and when you think about that purpose there's nothing missed in the regulatory scheme by king mountain sells from its reservation to a new york reservation because it's the next leg of the transaction it's to sell to the consumer that is still captured by the pac that and i think that's why one of the examples of interstate commerce was from a reservation in new york to a place in new york outside the reservation you want to part on the theory that that the that you were not in possession of the cigarettes because they were on board a common carrier but didn't you have constructive possession afterward you could have called  carrier and said no no no no no i know we said to send it to point send it to point b you could have x and then you know well i think the record made clear that once it left king mountains warehouse  nation it no longer had possession of it as a legal matter the state never try to prove otherwise that's not an issue imo unaware of it being an issue there was no discovery or examination about whether there was constructive possession delivery free on board for on delivery none of that was in the case i think it was accepted that once it left it was no longer and came out its possession your client concedes that it did not sell the cigarettes to a licensed stamping agent that's correct and you lost on that we did sounds like that's right correct well we take issue with one of the court's precedents that held that the only point of entry in new york is through a new york stamping agent if you look at the regulation that's cited for that proposition it actually doesn't say that and i think the precedent has developed that there are so many regulations surrounding the use of a stamping agent that necessarily that must be the only way for a point of entry into new york but that that regulation in section seventy four of title twenty of the new york regulations actually does nation and that's the end it is the whole ball game now when we started there were some other challenges but you're absolutely right and i say a couple of things about that first i think under the principles of race  a there were only two transactions that were included in this claim december third two thousand and twelve seizure and a november sixth two thousand and twelve purchase and as i'm sure the court's aware there was a parallel in ministry of tax case brought by new york with respect to the seizure was eventually dismissed with prejudice in king mountains favor zero taxes owed and i think  wasn't it wasn't a settlement it was a voluntary dismissal with prejudice and it was not adjudicated the state presented a stipulation of dismissal with prejudice taxes zero there was no hearing there was no evidence and the court the district court took the view that transaction a month before was not part of the same series of transactions such that it would be subject to claim i'm not sure that's exactly what held and it's not part of the same series of transactions obviously it was part of the same transactions it was just a different transaction and really doesn't mean that you don't have to pay taxes if taxes are owed on that transaction correct and i think on taxes we won on both transactions my point is that for the injunction to only sell to staffing agents that derives from that same claim the third claim to watch from it but the the the administrative body didn't have the power to impose an injunction they could not impose the full measure of relief that the state is seeking now that's true that's true the state also didn't seek anything other than the collection of taxes in its complaint and its amended complaint on that claim so we were in a sense surprised to see that at the very end of the litigation when we got to the remedy stage they were as you may have seen at the very end of the complain because seeking well i guess all complaints equal that extent it may have said to occur to you that appropriate relief might include an injunction they had only been speaking to a collection of taxes owed from us by reason of our possession and in many ways that was the federal statutes were important but that was the big exposure for the clients right up until the end because you do the math on their excise taxes and the invoices we gave them it was quite a lot of taxes  so you're right that the department of tax and finance could not impose an injunction even if it was a litigator proceeding but it was brought up as a tax claim under article twenty it was charged in the complaint as a session of tax article twenty and certainly the november purchase was part of the same transaction in the way claim preclusion is examined that it should have been subject to relying on the phrase indian nation it's not an indian nation it's not asking for tribal sovereign immunity they've the state has thrown that out quite a bit especially in the district court and every time it's been raised we've said that's not our issue we're not contesting where subject to sovereign immunity but what judge cyber did relying on the hobby lobby look to the dictionary act where a person is deemed to include a corporation and since in the end was undefined why wouldn't and why shouldn't indian also included in the incorporation and not particularly makes sense in this statute because contraband cigarettes as defined under the statute is ten thousand or more cigarettes statute which has both criminal and civil aspects to it was focusing on cigarette traffickers and bootleggers and so the formulation the state proposes is that only an individual who has more than ten asking because i'm not aware of any i'm not aware of any either there's a d c circuit case that dealt with the record keeping requirements of the pact act that cited judge savage decision but essentially distinguish why a new york city case we cited wolfpack tobacco which was the city of new york pursuing bootleggers and traffickers of stamp cigarettes throughout the city it charged i believe six or seven companies these restrictions did not apply to federal enforcement it's a carve out for civil enforcement only by states and localities like new york city and so i think it further makes sense that the federal for the state of new york america serve two minutes of rebuttal on the cross appeal thank you i'm going to just touch very briefly three points on the new york state claims and then move to the cross appeal on the federal claims first  under the new york claims the regulation at issue does state expressly that dealers cannot are prohibited from selling on stamps cigarettes in new york and the statutes for seventy one and four seventy one dash say the same thing express sales which were indeed ongoing that's there's the november twentieth twelve which was booked before december twenty twelve and then there were many other undisputed sales that were proven in through discovery  win on your tax claim for your twenty's hasn't twenty seventeen income taxes you could use that to preclude claims about your twenty six sixteen taxes or your twenty nine thousand taxes that just doesn't make any sense and finally the last thing i'll say unless the court has questions on the state claims is that the tax money is about public health new york's high taxes are designed to depress the the sale and use of cigarettes which is a major public health problem and the tax money itself actually goes to public health and in cigarettes as well only in terms of the injunction was based on the irreparable harm which included the immense public health harm to the state from the massive massive commerce includes cigarettes that go from outside a place in a state into the state and that's exactly what happened here it went from outside new york the reservation in washington into new york and that first prong by  plain terms is classic interstate commerce it doesn't say anything about indian three it doesn't matter for that first prong whether the whether the shipment started or ended or both in indian country what matters is that it crosses a state line and that is clear from the plain terms of the definition it's also clear from the other definitions of state and indian country the reason why the congress to find those two terms separately is because of the second and third prongs of the statu which expand the meaning of interstate commerce into nontraditional intrust state movements that involve indian country and in order to make sense of those nontraditional meanings you have to know what indian country that's true but it doesn't mean that it's not within the state in which it is located which remains the case both under the plain terms of the statute when congress defined state it simply said states are the fifty states of the us and other large geographical areas like d c and puerto rico when you say fifty states you include what's in the fifty states you include new york city is in new york a reservation that's in new york as in new york a lake that's in new york is still in new york congress doesn't list out everything that's in a intrastate commerce and if you look at that sec the second and third prong they contemplate that they enter indian reza nation is located in the state that is your graphically located and it says that expressly but you you need to define indian country in order to make sense of these nontraditional interstate commerce definitions and it really doesn't make sense to say that in expanding interstate commerce to these nontraditional areas congress would have meant to also detract from the classic plain vanilla meaning of interstate co and another another to look at the definition the tax return would return commerce between points in the same state through any place outside of the state or through indian country you're talking about points if that point is in indian country then the point it's not in the state it's indian it's in the country and it's going to have a point and that point is also in indian country so it looks like some vision there is talking about point to point rather than the transit route which is what you're told well i agree that it's talking about points but i don't agree that that means that something cannot be both indian country and with the new york at the same time the definitions don't remotely suggest that and if you look at the reporting requirement the reporting requirement specifically contemplates and this is a fifteen you a c three seventy six specifically contemplates that when  cigarettes land on a reservation in new york they go to both the reservation and new york and reports under the pac tacked have to be filed in both the state and the tribal government if that tribal government also imposes its own taxes and in fact the reporting requirement is structured so that it says only when a state gets the packed report then you also have to give the reports to a relevant local government or indian  it's the same idea if cigarettes land in new york city they land in both new york city and the state of new york and packed up reporting as required both to the city which has its own tax and the state it's the same concept for indian country and it wouldn't make sense to have a ports to both indian country was outside of the state and again the reason why indian country and state are they are separately defined but it's to operationalize those nontraditional prongs of interstate commerce and if they do not affect the first prong of interstate commerce which doesn't even mention indian country at all unless the court has other questions on the interstate commerce i'm happy to turn to the a the indian in indian country language is not meant to be so broad it is meant to preserve the preexisting protections that existed not just for tribal sovereign immunity which is which is one part of the statute but also other tribal sovereignty tribal immunity also extended and creates protections for individual tribal members on their own land that is a background a longstanding background principle of federal law and that's what congress was trying to preserve with this phrase it was not trying to expand and create new protections for corporations that are not members of a tribe by the rules of the a combination and that leave that reservation across the country and come into another state that's an area where states have traditionally had power to tax and impose other regulations and this comes not just from the background principles but from the language itself of the statute when you congress uses the term well the word person in some statutes or if it's undefined in the dictionary act does have that broad meeting but that's because congress has given it that drug meaning in the dictionary act of one individual has to go well that actually does happen in this case the individual that was moving should gretz for king mountain had more than ten thousand cigarettes in the truck but so what congress wanted to do here was to make sure that when it acted it was not monkeying with the pre existing rules and the preexisting rules do give indian nations much more authority over individual indians acting in their own tribal land that is an area where indian sovereignty and authority is that it's  highest point and and state authorities that slows point and that's a longstanding principle that has existed in the case law for a long time but when a company that's not indian leaves a reservation across the country and is trafficking illegal in cigarettes in another state that's an area where traditionally states have had a very high authority the individual person who could possess the ten thousand or twenty thousand cigarettes would be the truck driver yes yes and you think that's what this statute is aimed that's one of the things that it's aimed at i think it's aimed more broadly at preserving the background protections and balance that existed at the time the truck driver was acting for the mean that's quite an addiction well i don't think the idea is that the individuals consuming in the us are consuming all of the cigarettes but it is the case that individuals move the cigarettes for companies or the companies that are moving the cigarettes but i think the broader principle here is that congress wanted to preserve the preexisting balance between indian and state sovereignty and that balance has traditionally been on individual indians who are in india their own indians land that is an area that is reserved more for indian authority rather than state but only unless congress says otherwise that's why it was important for congress to put in this language because by acting through a statute congress can change the background principles and could authorize state to come in and bring in foresman actions against an individual in his own indian country but that that would be upsetting the preexisting rules and that's what congress wanted to make sure it was not seen as doing but there's nothing  in the in the c t s history or language to suggest that it wanted to give a massive exemption to corporations that leave the reservation trap and traffic in illegal cigarettes in another state  loophole in a statute that was intended to close loopholes and to strengthen reporting requirements but that doesn't involve the safety of human life or the british may be protection property maybe that doesn't apply i'm sorry please speaks to indian territory within the state your honor referred to the separate definition of indian country but that definition itself refers to indian country within the state of alaska so again numerous provisions of the pact show that congress was meaning to adhere to the common sense understanding as the state of new york stated that indian country is part of the state in which it is located just as new york city is part of new york and a sale from an indian reservation in one state across the country to a different indian reservation in a different state is plainly interstate commerce both under a common sense understanding of that term and as is used in the pact act i'd also just like to back up and say that the congress was an act of the pact act under the background understanding numerous supreme court cases that recognized that indian jurisdiction is located within the state for purposes of cigarettes if that were so when you assume that the statute would not have it's own pocket definition of interstate commerce and w just assume that when you say interstate commerce it means what everybody else means by that we're i think maybe that's a fair reading of the first prong but as the state of new york stated congress went further in the second and third prongs and included transactions between a state an indian red indian country in that state which should we be looking at for this case for this case your honor it's the first prong between a state and a place outside the state again that kind of captures the common sense understanding of interstate commerce which here we have a transaction between an indian reservation and washington across the country to a different state an indian reservation in new york and to the extent that congress went further why would the indian nation be a place outside the state if it separately separately defined as something o the state well again you are the definition of indian country itself recognizes that it can be within a state and we have been of out of vs six understanding that that's the ordinary meaning is indian country is in a state congress can also define two term separately but those terms can nonetheless have overlapping meaning again as the state of new york alluded to the definition of state also doesn't specify that localities are included but new york city is included in new york and a sail from seattle to new york c he would be interstate you're here for something other than collecting tax damps in your state we are if someone violates the pact act that they don't follow a serial ports the federal government can put them on the non compliant list and that has significant consequences and one of the major tools for enforcing this statute it can prevent common carriers from carrying the tobacco products and so if a reservation to reservation sale like this is not within the meaning of the pact act then a company can ship truckloads of stamps on reported cigarettes into eight reservation in a state and not file the necessary reports that the state can't track what's coming in the indian reservation for that matter can't track what's coming in and the federal government wouldn't be allowed to put this substantial loophole in the act these sales could become commonplace or you would have to do would sail to a reservation to another reservation and that opens the door for further downstream sales and those are going to be without the necessary reports being filed again the state's going to be hampered in its ability to truckloads of cigarettes are coming into new york for example new york can apply its own taxes to those laws and certainly new york can tax certain sales on indian reservations again that's the colleville case just reaffirms again that indian territory is in the jurisdiction of the state for these purposes the state has an interest in tracking the cigarettes that are coming into its territory and if the sale is not included that deprives the state of that benefit and again the federal government wouldn't go to put noncompliance sellers on the non compliant list which is a primary tool that a t f uses to enforce th and if one is on the non compliant list what happens to one again common carriers wouldn't be able to transport the product is my understanding your i gretz or anything cigarettes i believe so it's a primary tool because otherwise you know states might have to bring piecemeal legislation to enforce the statute whereas the non compliant list again is it's a way that you put a seller on there and it has a host of consequences that are meaningful the a t f and this in a separate matter your honor putting mountain  federal enforcement of the pact act and again congress annex the pac tech to strengthen existing reporting requirements and to close loopholes in congress was particularly concerned with indian reservation sales because some sales on those indian reservations  tax exempt so it would make little sense for congress to open a loophole precisely where they were concerned with legislating and closing loopholes thank you thank you thank you in rebuttal first i wanted to correct what i'm sure was an inversion mistake about the record when the state was arguing this december third two thousand and twelve truck stop the truck driver question  that was a truck and driver employed by a company named e r w and in the known company in new york and one of king mountains customers so the truck contained king mountain cigarettes but they were certainly no longer in the possession of  showing he was transporting the cigarettes from the night a reservation to the gunny ank reservation and so it was it was more than ten thousand cigarettes they were cigarettes the fellow was the driver they weren't king mountain cigarettes they weren't being delivered for king mt on the issue of race judicata the complaints if you look at paragraph eighty seven really only speaks to the past  tense as the cause of action is for what had occurred and those were november and december and there is no request for an injunction in the wherefore clause or no language there that i see that would cover  injunction requiring that the only point of sale be to a stamping agent no question that there were subsequent transactions in fact i think it evidences what i said at the start i mean king mountain did not try to hide anything it produced its records it produced all evidence of its sales and with respect to something else i said at the start i would encourage the court to look at the record the court do that well i think one who surely would be by an injunction write their claim for for seventy one which is what the injunction emanates from was solely to collect taxes for king mountains possession so if they succeeded on that claim there would have been a hearing the formula would have been applied and a judgment would have been entered to collect the taxes so that the continuing violation would not necessarily be continuing not to pay the taxes it's own it would be continuing to ship cigarettes in a way that permits a sale within the state of new york when they are not stamped if that's what they alleged and that's what they were seeking that would be an appropriate  injunction but that's not the way they approach the case what i think the truckstop also evidences and we didn't touch on the dorm or commerce clause this morning but i mentioned how king mountain has in effect been singled out if you look at page seven seventy of the record this is a typical still shot of one of the videotapes that were taken at one of these undercover buy where the state investigator went into the reservation and bought two packs of cigarettes and the counter is filled with new york manufactured cigarettes by and then tribes and nothing seized nothing's investigated there's one instance where a truck a van is actually being unloaded it one of these shops with new york manufactured travel cigarettes and you see in the two investigators just chitchatting while these people are around loading the truck well i mean that's the fact that consequences of interpretating interstate commerce here i mean this this is indeed a massive loophole as as the us said that and it's the exact kind of loophole that congress was trying to stop it's true that the state has some other state law or other mechanisms to try and force its tax laws but the state has been trying to enforce its tax laws in many different ways and it doesn't always work and that's why the state tax law was amended to be the way it is now and that is why we have federal statutes like the pact act and the c t a that are meant to provide further mechanisms for the state to be able to enforce its tax laws and do more precisely because the prior systems weren't working fully and this kind of so called nation to nation sale and can mount is not a nation residence and reservations reservation sale was precisely the type of shipments that congress was trying to make sure did not invade state tax laws and other state other state public health laws as well through the pact act and it went so far as to do as to make interstate commerce not just crossing state lines and going reservations reservation but also shipments that go within new york but are moving from reservation to new york to be precisely because the the tax evasion problem at issue was was often emanating from reservation sales which makes sense because it's the very narrow tax exemption for individuals on buying for their own use that creates the operate that can create the opportunity for this massive tax evasion of the point of view what difference does it make in terms of applies there are many packed act reporting obligations that would apply to king mountain and that the district court could issue an injunction requiring king mountain to comply with and those reports are designed to provide a way for the state to track precisely these types of shipments to know what is coming in and out of reservations on on its land in order to know whether the taxes that need to be paid by all those consumers who don't have any tax exemption are being paid or not  and it also the non compliant list as the us mentioned is a huge tool that both the states and the federal government can use but the states can only put somebody on the request put somebody on the non compliant list if they are violating the pact act so if all of these millions and millions of cigarettes are coming in on stamps suddenly comply with the pact act new york can't use those as a basis to put king mountain on the non compliant list and being on the non compliant list is a big deal it means that shippers like fed ex and u p s and other shippers are not allowed to ship to ship cigarettes for those companies and there are also separate penalty provisions that the pact act has that the state would be able to pursue if those claims came back into the case those were out of the case by the time we got to the relief stage understand how the scheme works what if it is inviolate of of new york law for cigarettes  manufactured within and on an indian reservation and sold on an indian reservation to a non indian who comes in and buys a few few packs and then leaves them yes i mean a non indian or a non member of the tribe has absolutely no title meant to any exemption from state tax and so if they are buying cigarettes they have to pay the tax it doesn't matter if the rect correct but it that's correct but it the way that the new york recollect system works is that all cigarettes that are sold need to have the stamps even though the tax eventually the incidence of the tax is supposed to fall on the consumer it was the case that trying to enforce the law only against every individual consumer who might go on some reservation was impossible for the consumer who is an indian living on the reservation oh sorry i thought you  non india and that's ok that's correct but then if you from if a non indian goes to the reservation and bones a carton of cigarettes that person then is required to remit the sum of money to the state in theory yes i mean that that person is supposed to be pay up and that person is supposed to be paying the tax i mean the price of their cigarettes is supposed to include the price of the tax but that would usually be collected the same correct their correct i mean have to be there no it does have to be there i mean well let me just back up i mean her shop that's selling cigarettes and ninety nine percent of the people who come in are indians they don't have stamps on the force them into an all cigarettes sold on a reservation to anyone indian or non indian do need to have a stamp they all need to have stamps but the state has different mechanisms to make sure that indians on their own land who are buying for their own use that the incidence of the tax doesn't actually fall on them and that's the coupon system and the pre approval system so the cigarettes that they buy the cigarettes that an indian member buys for their own use do need to have stamps but they don't have to pay the tax because they come with let's say they have the coupon system in their nation they come with a coupon they hand that to the seller and the seller doesn't include the tax in the price instead the seller gives a piece of the coupon back to  but then the price of the cigarettes as it goes down the line the stamping agent a license stamping agent the license stamping agent is supposed to prepay the tax or gets the money and then that the price of the tax is included all down the line of the distribution chain until somebody walks into a store and buys one pack of cigarettes and the price includes the tax so now they have paid it and the person that the the money has gone back into the