On Novembe r 1, 2006, Robert E. Cooper , J r., was sworn in as the Attorney Gene ral for

the 1 State of Tenne ssee.

NO T R EC OM M EN DE D F OR F UL L- TEX T P UB LIC AT ION F ile Nam e: 07a0283n.06 F iled: April 19, 2007 No. 06-5148 UN ITED STA TES C OU RT OF AP P EA LS F OR THE SI XT H C IR CU IT
S&M B RANDS, I

NC., and I

NTE R NATI ONAL TOB ACCO PARTNERS , L TD., Pla int if fs -A pp e lla nts , v. P AUL G. SUMMERS, i n his official c apac ity as Attorney Gene ral of the State of Tenne ssee, Def endant- Appellee
. ) ) ) ) ) ) ) ) ) ) ) ON AP PE A L FROM THE UN I TE D ST AT ES D I STR I CT C O U R T F O R

T H E M ID D LE DI STRI CT OF TEN

NESSEE O P I N I O N

BEF ORE: KEN NE DY , M OORE, a nd M c KEA G UE , C ir c uitJudg e s. McK EAGU E, Circuit Judge. S&M B rands, Inc. and I nternational Tobacc o Partners, Ltd. (“I TP”) sued Paul G. Summers in his officia l ca p ac i t y as the Attorney Gene ral of the State of Te nn e sse e . Th e y

c la im that the State of Te nn e sse e ha s vio late d fe de ra l anti tr us t law and the U. S. 1 Constit ution in it s implementation and application o f t h e Master Settlement Ag ree ment (“MSA”) betwee n various states a

nd major tobac co manuf

actur ers. The district court di smissed all but oneNo. 06-5148

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um me rs

On the Ap pe lla

nts ’ r e ma ini ng c la im— Te nn e sse e ’s e nf or c e me nt of a re c e nt a

me ndme nt t o 2 its tob acc o leg islation had an impermissible retroa ctive ef fec t—the district court g rante d partial summary judgme nt to both parties. S& M B ra nd s, In c . v . S um me rs , 420 F. Supp. 2d 840 (M.D. Te nn. 20 06 ); S& M Bra nd s, In c . v . S um me rs , No. 05-171, 2005 WL 3160869 (M.D. Te nn. Nov. 28, 2005). They have soug ht r eview of the rulingin a sepa rate set of appe als. S&

M B ra nd s v . S um me rs , N os . 06 -5 82 8/5 82 9. Ac c or din g ly , the Ap pe lla nts ’ re tr oa c tiv ity c la im i s n ot b e fo re us tod ay in t his a pp e a l. - 2 - of their c laims under F eder al Rule of C ivil Procedur e 12(b)(6). As explained below, we aff irm the 2 dis tr ic t c ourt ’s dis mis sa l in fa vo r o f t he Attor ne y Ge ne ra l.

I The Appellants’ c laims arose in c onnection with the MSA executed in Nove mber 1998 by
and amon g fo rt

y -s ix state s (i nclu din g Te nn e sse e ) a nd six te rr ito ri e s a s w e ll a s th e fo ur larg e st domestic c ig a

r e tt e ma n u f a c tu r e r s ( Ph il ip M o r

r is U SA , Inc., R.J . Rey

nolds Tobacc o Company , Br own & Williamson To b acc o Company , and L orillard Toba cco Company ). S&M B rands is a toba cco product manufactur er and I TP is an im porter of tobacc o products. Ne ither compa ny has joined the MSA. I n their complaint, the Appe lla n t s challeng e the va lidity of ce rtain statutes ena cted by Te n n e s s e e p u r s u an tt o t h e t e r m s o f t h e M S A , i n c l u d i n g th e T e n n e s s e e T o b a c c o M anu f a c tur e rs ’ EscrowFund Ac t of 1999, Tenn. Code A nn. § 47-31-101 et seq . (“Esc row Ac t”) (a s amende d), and the t ax laws passed to aid i n the enforce ment of the Esc row Ac t, Tenn. Code Ann. § 67- 4-2601 et seq . (collec tively , the “Toba cco Statutes” ). Specific ally , the Appellants c laim that the enac tm e nt and enfor ceme nt of the Tobac co Statutes have ha d the ef fec t of implementing a

n illega l combination or “output car

tel” cr eate d by

the settling state s and the participating manuf actur ers in the MSA, and thatNo. 06-5148

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These c laims are se parate from the r etroa ctivity claim. Se e su

pra note 2. 3 - 3 - this implementation constitutes a per se restra int of trade in violation of Section 1 of the Sherma n Ac t, 1 5 U.S. C. § 1. Th e y fu rt he r co nte nd that the e nf

or c e me nt of the To ba c c o St a tut e s v iol a te s th e ir ri g hts un der th e Eq ual Pr ote c tio n Cl a us e of the F ourt e e nth

Am e ndme nt a s w e ll a s th e ir F ir st Amendment rig hts of fre edom of speec h and freedom to petition. Finally , in their response to the Attor ne y Ge ne ra l’ s mot ion to dis mis s, the Ap pe lla nts a sse rt that th e To ba c c o St a tut e s v iol a te the ir ri g hts to s ub sta

nti ve and pr oc e dura l du e pr oc e ss u nd e r t he F ourt e e nth

Am e ndme nt. 3 On the Attorne y

Gene ral’s motion, the district court dismissed the claims. The district cour t held t hat Tennessee’ s Tobac co S tatutes wer e not preempted by the Sherman A ct. S&

M Brands, Inc.
v . S um me rs , 393 F. Supp. 2d 604, 629-30 (M.D . Tenn. 2005). O n the constitutio n al cl ai m s , the district court conc luded that the Appe llants failed to state a ny valid claim for r elief. Id. at 630-38. The Appe llants tim ely

appea led.

II A. Stand ard of Review We review de novo a dismissal for fa ilure to state a c laim under Rule 12(b) (6). Se . Te x . I nn s, Inc. v . Prime Hospitality Corp. , 46 2 F .3 d 66 6, 67 1 (6 th Cir
. 20 06 ). To surv ive a mot ion to d ism iss , the Appellants’ c omplaint must alleg e fa cts which, if pr oved, would entitle them to re lief. Id
. We construe the complaint in the light most favora ble to the Appellants, a cce pt their fac tual alleg ationsNo. 06-5148

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- 4 - a s tr ue , a nd de te rm ine wh e the r t

he y c an p ro ve no se t of fa c ts in s up po rt of the ir c la ims that w ou ld entitle them to relief. Id.

B . An ti tr u s t C l a i ms Section 1 of t he S herma

n Act provides in part: “Every contra ct, combination in the form of tr us t or oth e rw ise , o r c on sp ir a c y , in re str a int of tr a de or c omm e rc e amon g the se ve ra l State s, or wi th fore ign nations, is declare d to be illeg al.” 15 U.S.C . § 1. State statutes that authorize or compe l pr ivate pa rt ie s to a c t anti c omp e tit ive ly c an vio late Se c tio n 1 of the She rm an Ac t; h ow e ve r, no t a ll state statutes that re strain competition violate t he Act. To bring a valid claim, a plaintiff m ust show, amongother thing s, that the Sherman Ac t pree mpts the state statute in question. Rice v . Norman W illiams Co. , 4 58 U. S. 6 54 , 6 59 (1 98 2) ; Mc Ne ilu s Truc k & Mf

g. Co. v . O hio , 22 6 F .3 d 4 29 , 4 40 (6 th Cir. 2000). Af te r t he pa rt ie s f ile d th e ir br ie fs , a no the r p ane l of thi s c ourt

iss ue d a pu bli sh e d d e c isi on

in
a ca se similar to the prese nt one. In Trit ent International Corp. v. Kentucky , 467 F.3d 547 ( 6th Cir. 20 06 ), the c ourt

c on sid e re d w he the r t

he Sta te of Ke ntu c ky

vio late d th e fe de ra l anti tr us t la ws in
co n n ec t i o n with its i mplementation and application of the MSA. The cour t held that Kentucky ’s tobacc o leg islation was not pree mpted b y t h e S herma n Act bec ause the leg islation did not

“ mand a te [] o r a

uth or ize [] c on du c t that ne c e ssa ri ly c on sti tut e s a vio latio n of the anti tr us t la ws in a ll
c a se s, or . . . p la c e [] irr e sis tib le pr e ssu re on a pri vat e pa

rt y to v iol a te the anti tr

us t la ws in o rd e r t o comply with the statute.” Id. at 5 5 4 (q u o t i n g Rice , 458 U. S. at 6 61 ). Th e manu fa c tur e rs ’ f a ilure toNo. 06-5148

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- 5 - e sta bli shthat th e She rm an A c t pr e e mpt e d Ke ntu c ky ’s tob a c c o le g isl a tio n wa s fata l to t he ir anti tr us t claims. Id. at 558-59. Be cause Tenne ssee’ s Tobacc o Statutes a re identical in a ll mate rial re spects to the Ke ntucky leg islation at issue in Trit ent , we a sk ed the pa rties to submit suppl emental br iefs on the impac t of that decision on the pre sent ap peal. The Appellants conc ede in their supplemental brief

that “the
anti tr us t iss ue s ra ise d on that a pp e a l [ Trit ent ] . . . are the sa me a s th os e inv olv e d h e re .” Pla int if fs

Ap pe lla nts Sup p. B r. a t 1. Our ow n r e vie w c on fi rm s th a t Trit ent is d ir e c tly

on -p oint to the anti tr

us t
c la ims in t

his a pp e a l. “A pa nel of this Court cannot over rule the de cis i o n of anothe r pane l. The prior de cision
rema ins con t ro l l i n g authority unless an inconsistent dec ision of the United States Supreme Court
re qu i re s m o d i fi ca t i o no f t h e d ec i s i o no r t h i s C o urt s i t t i n g en banc over ru l es t h e p rior dec ision.” Salmi v. Sec ’y of He alth & Human Serv s . , 7 7 4 F
. 2 d 6 8 5 , 6 8 9 (6 thC i r. 1 9 8 5 ) ( ci t i n g Timmreck v. Un i t ed States , 577 F.2d 372, 376 n.15 ( 6th Cir. 1978), rev’d on other grounds , 441 U.S. 780, on remand , 6 00 F .2 d 1 22 8 ( 6th Cir . 1 97 9) ); see also 6th Cir. R. 206(c) (“Repor ted panel opinions are binding on subseque nt p anels. Thus, no subseque nt panel over rules a published opinion of a previous panel.”). Under the r easoningof Trit ent , we hold that the Sherman Act does not pree mpt Te nn e sse e ’s To ba c c o St a tut e s; the re fo re , we a ff ir m the dis mis sa l of

the Ap pe lla

nts ’ a nti tr us t c la ims
.

C. Constitutional Clai m s Raised Before the Distr ict Court The Ap p e ll an ts h av e n o t r a is e d an y is s u e s in th is a p p e a l i n v o lv in g th e ir

E qu a l P r o te ction, Due Proc ess, or Fi rs t Amendment cla ims. “I ssues which we re r aised in the district cour t, y et notNo. 06-5148

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- 6 - raised on a

ppeal, a re c onsidered a

bandoned a

nd not r eviewa

ble on appe al.” Renk

el v. United States , 4 5 6 F. 3 d 6 4 0 , 6 4 2 n . 1 (6 t hC i r. 2 0 0 6 ) ( qu o t i n g Robinson v. Jone s , 142 F.3d 905, 906 ( 6th Cir. 19 98 )) . A c c or din g ly , w e wi ll n ot a dd re ss t ho se c la ims on

a pp e a l.

D. Do r m antCo m m e r c e Cl aus e Finally , in their supplemental brie f, the Appe llants ar gu e t h at a cla im under the dorma nt Com me rc e Cla

us e surv ive s Trit ent . T he y are c or re c t th a t Trit ent

did not involve a claim broug ht under the dormant C ommerce Clause. U.S
. Const. art. I , § 8, cl. 3. Yet, the Appe llants did not assert
a do rm ant C omm e rc e Cla us e c la im i n th e ir

c omp la int . N or

do e s it app ear th a t th e y oth e rw ise broug ht suc h a claim to the attention of the district cour t. See, e .g. , Plaintiffs-Appellants F inal Br
. a t 56 n.21 (“ I n the e ve nt of a re ve rs a l [ of the dis tr ic t court ], pl a int if fs wi ll ame nd

the ir c omp la int

to plead this dormant Commerce Clause violation.”). “I t is well-settled that this court will not consider arguments raised for the first time on appea l unless o u r failure to consider the issue will result in a plain miscarr iag e of justice.” Ove rstreet v. Lexington-Faye tte Urban County Gov’ t , 3 0 5 F. 3 d 5 6 6 , 5 7 8 (6 thC i r. 2 0 0 2 ) ( qu o t i n g Bailey v . Floyd County Bd. of Educ ., 10 6 F .3 d 1 35 , 1 43 (6 th C ir . 1 99 7) ); see also Re nkel , 456 F.3d at 642 n.1 (s ame ). As the Ap pe lla

nts have no t sh ow n that fa ilure to c on sid e r the ir do rm ant C omm e rc e Cla

us e arg u me n t w il l r e s u lt in a p la in mi s c ar r ia g e o f ju s ti c e , w e w il l n o t c o n s id e r it f o r th e first time on
a pp e a l.

IIINo. 06-5148

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- 7 - Ac c or din g ly , w e AF F I RM.