NYC Tobacco Regulation Bid Shot Down by Supreme Court

New York City cannot use federal racketeering laws to force Internet tobacco sellers to hand over lists of buyers in the city who could be dodging local cigarette taxes, the U.S. Supreme Court has ruled.

The Wall Street Journal reported Jan. 25 that the city had accused tobacco retailer Hemi Group of New Mexico of mail and wire fraud — both racketeering offenses — because the company refused to report the names of cigarette buyers to city officials. Hemi Group does not collect New York City tobacco taxes from buyers.

However, the Supreme Court ruled 5-3 that the direct offense was the failure of buyers to pay taxes, not Hemi’s refusal to report on them, and rejected the city’s RICO claim.