Opinion ID: 8407619
Heading Depth: 4
Heading Rank: 2

Heading: Delivery Exception

Text: The district court also found that the delivery exception has a discriminatory effect. Santa Fe, 2001 WL 636441, at . We disagree with this conclusion as well-. The State reiterates on appeal its argument that the exception only permits individual consumers, rather than brick-and-mortar retailers, to transport up to four cartons of cigarettes. We reject this restrictive interpretation and agree with the district court that the delivery exception applies to all transporters of cigarettes, except common or contract carriers. In reaching this conclusion, we adopt the district court’s observation that there “is nothing in the language of the statute that limits [the. exemption] to consumers. If the Legislature had wanted to restrict the exemption [only] to individual consumers ..., it could easily have defined the exemption accordingly.” Santa Fe, 2001 WL 636441, at . Subdivision two prohibits the “transport” of cigarettes by common or contract carriers to anyone in New York other than licensed cigarette tax agents, licensed dealers, export warehouse proprietors, customs bonded warehouses, or state and federal officials acting in furtherance of their duties. This subdivision also prohibits the “transport” of cigarettes by “any other person” to anyone other than persons in the permitted categories set out in the previous sentence. However, with respect to “any other person,” subdivision two creates an exception for the “transporting” of “not more than eight hundred cigarettes at any one time to any person in this state.” Subdivision one prohibits “any person engaged, in the business of selling cigarettes” from “shipfping] or caus[ing] to be shipped” any quantity of cigarettes to “any person” in New York who is not included in one of the permitted categories. Judge Cabranes posits that subdivision one, which prohibits shipping, somehow limits the reach of subdivision two’s “transporting” exception to individual'purchasers of cigarettes. ■ He does so despite the apparently bro'ad applicability of subdivision two to any person other than a common or contract carrier by distorting the commonly accepted meaning of “ship,” so that it means the same thing as “transport.” The first two definitions of “ship” listed in a commonly accepted dictionary are “to place or receive on board of a ship for transportation by water ...” and “to cause to be transported.” Webster’s Third New International Dictionary 2096 (1993). Both definitions connote one actor causing another to transport something. The action of a retailer who drives her delivery van to a long-term customer’s house does not fall comfortably within either definition. We would not say of this retailer, “she shipped 800 cigarettes to Mr. Jones in her delivery van.” Instead we would say that the retailer transported or carried the cigarettes to her customer. See id. at 2430 (listing “carry” as a synonym for “transport”). Because Section 1399-ll is a penal statute, one should not read “ship” in such a distorted fashion. Judge Cabranes’ reading would subject to criminal liability, see N.Y. Pub. Health L. § 1399-B(5), small retailers who, in rebanee on the common sense meaning of “ship” as it is used in subdivision one and in subdivision two’s exception, carry small quantities of cigarettes to customers in their own delivery vans. The district court found, and we agree, that the organization representing grocery stores in New York supported Section 1399-11 based, in part, on its understanding that a de minimis exception existed for the transportation of small quantities of cigarettes by cigarette sellers. See Santa Fe, 2001 WL 636441, at  & n. 25 (citing letter dated July 18, 2000, from Michael Rosen, Vice President and General Counsel of the Food Industry Alliance, to James M. McGuire, Counsel to the Governor, Pl.Ex. 211, Tab 32). Thus, it is probable that individual grocers would adopt our understanding of the statute and, under Judge Cabranes’ interpretation, be subject to prosecution. Finding no basis for the State’s interpretation of the subdivision two exception, we reject that interpretation. Although we agree with the district court’s interpretation of the delivery exception, for the reasons discussed below, we find that the exception does not in effect discriminate against interstate commerce. The district court credited the testimony of Robin Sommers, the President and Chief Executive Officer of Santa Fe, who, according to the district • court, testified “that it is not economically feasible for interstate companies to make deliveries to New York customers using then-own trucks.” Id. The court also credited the testimony of an expert for the Plaintiffs who explained that doing the delivery themselves just means that they are becoming a common carrier [and] economically they have to have the same [cost]-strueture as a common carrier in order to compete in-state. If for some reason or another they can’t dehver in the state at a cost that is similar to the common carrier, if they have to have a courier come from the retailer who is employed by the retailer, then make a face-to-face transaction at the house, that is the same as a ban because that’s going to be cost-prohibitive. That’s going to be, you can always get the same effect as a ban by making something so costly that nobody is going to do it. Id. The court then stated, quoting Hunt, 432 U.S. at 350-51, 97 S.Ct. 2434, that “the statute’s consequence of raising the costs of doing business in the New York market for interstate sellers, while leaving those of their New York counterparts unaffected, ... has the practical effect of not only burdening interstate sales ... but discriminating against them.” Santa Fe, 2001 WL 636441, at  (alterations omitted). The district court’s conclusion is erroneous. First, the exercise of the delivery exception does not leave “unaffected” the Plaintiffs’ New York counterparts. The Plaintiffs’ in-state counterparts are not New York brick-and-mortar retail outlets that sell cigarettes; rather, they are non-brick- and-mortar sellers who ship cigarettes directly to New York consumers following purchases made by Internet, telephone, or mail order. See Ford Motor Co. v. Texas Dep’t of Transp., 264 F.3d 493, 500 (5th Cir.2001) (“The [Supreme] Court’s jurisprudence finds discrimination only when a State discriminates among similarly situated in-state and out-of-state interests.”). Second, in order to show a discriminatory effect on interstate commérce, the Plaintiffs must demonstrate that the Statute confers on their in-state counterparts a competitive advantage.' The Plaintiffs cannot satisfy this burden merely by showing the difficulties they themselves would face in their efforts to continue selling cigarettes directly to New York consumers under the terms of the delivery exception. In other words, it may also not be economically viable for in-state direct shippers to “make deliveries to New York customers using their own trucks.” Id. at . A similarly situated in-state direct shipper who, for instance, currently receives cigarette orders on his' website and then ships cigarettes directly to the buyer’s residence, would also be required under the exception to maintain his own fleet of delivery trucks, employ drivers, and undertake any other necessary investment just as would the out-of-state direct shipper. The Plaintiffs have not demonstrated how or in what manner such an undertaking would be less onerous for their in-state counterparts. Even if the Plaintiffs’ instate counterparts include brick-and-mortar retail outlets, the delivery exception would only benefit those that already have a delivery system in place. The Plaintiffs have not introduced evidence indicating what portion of brick-and-mortar retail cigarette sellers currently offer delivery services. Thus, we are unable to conduct a comparative analysis of the advantages and disadvantages of the delivery exception to in-state as opposed to out-of-state sellers even were we to consider in-state brick-and-mortar outlets to be counterparts to the Plaintiffs. One can surely imagine, however, that of all in-state retail cigarette sellers, only a small percentage offer delivery service to their customers. In any event, to the extent that, for instance, a grocery store that currently delivers goods to its customers is permitted to include in a delivery up to four cartons of cigarettes, we find that de min-imis advantage to in-state brick-and-mortar retail sellers insufficient to establish a discriminatory effect. See Hunt, 432 U.S. at 349, 97 S.Ct. 2434 (“[N]ot every exercise of state authority imposing some burden on the free flow of commerce is invalid.”). Where a state restriction áffecting commerce applies evenhandedly to both instate and out-of-state businesses and does not impede the flow of goods in interstate commerce, the restriction neither discriminates against out-of-state entities nor unjustifiably burdens interstate commerce. For the reasons stated above, we conclude that the Statute is not discriminatory either on its face or in effect but instead has only incidental effects on interstate commerce. We therefore analyze its constitutionality under the'test established in Pike v. Bruce Church, Inc., 397 U.S. 137, 90 S.Ct. 844, 25 L.Ed.2d 174 (1970).