UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
September 14, 2011
NATIONAL TOBACCO COMPANY, L.P., PLAINTIFF,
DISTRICT OF COLUMBIA, DEFENDANT.
The opinion of the court was delivered by: Robert L. Wilkins United States District Judge
Before the Court are Plaintiff National Tobacco Company, L.P.'s ("NTC") Motion for a Preliminary Injunction (Docket No. 3) and Defendant District of Columbia's ("District") Motion to Dismiss NTC's Complaint (Docket No. 11). For the reasons set forth below, NTC's Motion for a Preliminary Injunction is denied and the District's Motion to Dismiss is granted in part and denied in part.
National Tobacco Company
NTC, a corporation based in Kentucky, manufactures tobacco products, including cigar wrappers. Compl. ¶ 3. NTC created the Zig-Zag brand of roll-your-own tobacco products, and is now the fourth largest producer of such products in the United States. Id. NTC began selling its Zig-Zag cigar wrappers in 2009, and claims that those products "account for a substantial portion" of NTC's national business. Id. ¶ 8.
The District's Ban on Cigar Wrapper Sales
NTC has sued the District, seeking judgment declaring D.C. Code § 48-1103(e)(1)(D) unconstitutional under the Commerce Clause, Supremacy Clause, Due Process Clause, and Equal Protection Clause. That statute is the ban on the sale of cigar wrappers that went into effect on July 23, 2010 as part of the Prohibition Against Selling Tobacco Products to Minors Amendment Act of 2010 ("the Act"). The Act amended provisions of the D.C. Code defining and creating punishments for possessing and selling drug paraphernalia, and specifically regulated the sale of cigar wrappers.
Section 48-1101, the definitions section of the Code, defines drug paraphernalia, in part, as "[c]igarette rolling paper or cigar wrappers sold at a commercial retail or wholesale establishment, which does not derive at least 25% of its total annual revenue from the sale of tobacco products and which does not sell loose tobacco intended to be rolled into cigarettes and cigars." Section 48-1101(3)(L)(xv).*fn1 Put another way, cigar wrappers are not considered drug paraphernalia when they are sold at a specialty shop defined in Section 48-1101.
The prohibited acts section of the Code, however, bans of the sale of cigar wrappers completely: "it is unlawful to sell . . . [c]igar wrappers, including blunt wraps" in the District. See Section 48-1103(e)(1)(D). Although Section 48-1103 allows for the sale of cigarette rolling papers at specialty shops (thus acknowledging the exception in Section 48-1101(3)(L)(xv)), there is no corresponding exception for cigar wrappers. The statutory scheme results in a scenario where, although cigar wrappers are not considered drug paraphernalia if they are sold at specialty shops, the sale of all cigar wrappers is nevertheless banned outright.
Prior to the passage of the Act, Peter J. Nickles, Esq., then-Attorney General of the District of Columbia pointed this "definitional inconsistency" out to the D.C. Council, which decided not to amend the Act. On account of the fact that "under a literal reading," the Act results in a "loss of an existing exception that allows tobacco specialty shops to sell cigar wrappers," Nickles informed then-Mayor Adrian M. Fenty that he would not be enforcing the ban against "tobacco specialty shops that sell cigar wrappers." Exh. 3. to Pl.'s Mem. at 3.
Other than this letter from the former Attorney General to the former Mayor, the District concedes that there has been no official writing, such as a directive to local law enforcement or regulatory agencies, from the District stating that it will not enforce the ban. Although the District asks the Court to accept its representation that the District does not intend to enforce the ban, the District concedes there is nothing to prevent the D.C. government from changing its position at any time in the future. The District's representation is undermined further by its concession that the United States Attorney for the District of Columbia, not the Attorney General for the District of Columbia, is the prosecuting authority for violations of the cigar wrapper ban. See D.C. Code § 23-101 (2001). There is nothing, moreover, in this record reflecting whether the U.S. Attorney's Office shares the position of the D.C. Attorney General regarding non-enforcement of the ban.
Penalties for the Sale of Cigar Wrappers
NTC has argued that Section 48-1103's failure to set forth a penalty for the sale of cigar wrappers runs afoul of the due process clause. The District failed to rebut or address this allegation in any of its briefs. For the first time at oral argument, however, the District argued that such a penalty provision did exist. The District pointed out, in the version of Section 48-1103 published by Michie's Legal Resources that counsel for NTC had handed to the Court, the following penalty provision at subsection (e)(5):
A person who violates this subsection shall be imprisoned for not more than 180 days or fined not more than $1,000, or both, unless the violation occurs after the person has been convicted in the District of Columbia of a violation of this subchapter, in which case the person shall be imprisoned for not more than 2 years, or fined not more than $5,000, or both.
Because this subsection did not exist in the Court's West version, the Court undertook to determine why one version of the statute contained a penalty provision while another version did not. The Court's research revealed even more sloppy drafting than the "definitional inconsistency" discussed above.
Section 48-1103 as it existed prior to the 2010 amendments contained a penalty provision at subsection (e)(4) with the same language outlined above in the current Michie's version of the Code. As part of the Act, which became effective July 23, 2010, the D.C. Council amended 48-1103 subsections (e)(1)(D), (e)(2), and (e)(3), but did not amend or strike the penalty provision at subsection (e)(4). See 57 D.C. Reg. 3019 (Apr. 9, 2010); 57 D.C. Reg. 6905 (Aug. 6, 2010). Subsection (e)(4) was ostensibly still part of the statute after those amendments. As part of the Legalization of Marijuana for Medical Treatment Amendment Act of 2010, which became effective on July 27, 2010, the D.C. Council again amended Section 48-1103. In that Act, subsection (e) was amended in that:
[a] new paragraph (4) is added to read as follows: "(4) A cultivation center or dispensary may sell cigarette rolling papers in accordance with the Legalization of Marijuana for Medical Treatment Initiative of 1999, effective February 25, 2010 (D.C. Law 13-315; 57 DCR 3360).
See 57 D.C. Reg. 4798 (June 4, 2010); 57 D.C. Reg. 7549 (Aug. 20, 2010).
It appears that Michie's Legal Resources interpreted the amendment in the Marijuana Act to mean that the existing penalty provision at (e)(4) would merely be moved down to (e)(5) and the new provision would be inserted as the new subsection (e)(4). The West publishers, however, appear to have interpreted the amendment to mean that the penalty provision at (e)(4) would be removed and replaced with the new subsection (e)(4) set forth in the Marijuana Act.
As of this writing, the Michie's version of the Code still contains the penalty provision at 48-1103(e)(5), whereas the updated West version does not. Although the District contends that the Michie's version is correct and that the exclusion of the penalty provision from the West version is merely an inadvertent "non-substantive, paragraph numbering error," the "District of Columbia Official Code" on the D.C. Council's web site and the D.C. Government's web site, apparently published by West, still do not contain any such penalty provision.*fn2
A.Standard of Review
a.Motion to Dismiss
The District has moved to dismiss for lack of subject matter jurisdiction under Rule 12(b)(1) on the basis that NTC lacks standing, and for failure to state a claim under Rule 12(b)(6). "To survive a motion to dismiss under Rule 12(b)(6), a complaint must contain sufficient factual matter, acceptable as true, to state a claim to relief that is plausible on its face." Anderson v. Holder, 691 F.Supp.2d 57, 61 (D.D.C. 2010) (brackets omitted) (quoting Ashcroft v. Iqbal, --- U.S. ----, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (citing Bell Atl. Corp. v. Twombly, 550 U.S. 544, 556, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007)) (internal quotes omitted).
A court considering a Rule 12(b)(6) motion must construe the complaint in the light most favorable to plaintiff and must accept as true all reasonable factual inferences drawn from well-pleaded factual allegations. In re United Mine Workers of Am. Employee Benefit Plans Litig., 854 F.Supp. 914, 915 (D.D.C. 1994). Where the well-pleaded facts do not permit a court, drawing on its judicial experience and common sense, to infer more than the "mere possibility of misconduct," the complaint has not shown that the pleader is entitled to relief. Iqbal, 129 S. Ct. at 1950. In evaluating a Rule 12(b)(6) motion to dismiss, a court "'may consider only the facts alleged in the complaint, any documents either attached to or incorporated in the complaint and matters of which [a court] may take judicial notice.'" Trudeau v. Federal Trade Comm'n, 456 F.3d 178, 183 (D.C. Cir. 2006) (quoting EEOC v. St. Francis Xavier Parochial Sch., 117 F.3d 621, 624-25 (D.C. Cir. 1997)).
Despite the favorable inferences a plaintiff generally receives on a motion to dismiss, under Rule 12(b)(1), "it is to be presumed that a cause lies outside the federal court's limited jurisdiction unless the plaintiff establishes by a preponderance of the evidence that the Court possesses jurisdiction." Ramer v. United States, 620 F.Supp.2d 90, 95-6 (D.D.C. 2009) (internal citations and quotation marks omitted). Moreover, "[w]hile the complaint is to be construed liberally, the Court need not accept factual inferences drawn by plaintiffs if those inferences are not supported by facts alleged in the complaint, nor must the Court accept plaintiffs' legal conclusions." See Speelman v. United States, 461 F.Supp.2d 71, 73 (D.D.C. 2006). "Plaintiffs' factual allegations in the complaint . . . will bear closer scrutiny in resolving a 12(b)(1) motion than in resolving a 12(b)(6) motion for failure to state a claim." Wightman-Cervantes v. Mueller, 750 F.Supp.2d 76, 78 (D.D.C. 2010) (internal quotation marks and citations omitted).
A preliminary injunction is an "extraordinary remedy." Winter v. Natural Res. Def. Council, Inc., 555 U.S. 7, 24 (2008). To obtain a preliminary injunction, a plaintiff must establish that he is:
1) likely to succeed on the merits; 2) that he is likely to suffer irreparable harm in the absence of an injunction; 3) that the balance of equities tips in his favor, and 4) that an injunction is in the public interest. Id. at 20. As the Supreme Court has held, "'a preliminary injunction is an extraordinary and drastic remedy, one that should not be granted unless the movant, by a clear showing, carries the burden of persuasion.'" Mazurek v. Armstrong, 520 U.S. 968, 972 (1997) (quoting 11A C. Wright,
A. Miller & M. Kane, FEDERAL PRACTICE AND PROCEDURE § 2948, pp. 129-30 (2d ed. 1995)).
In its Motion to Dismiss, the District argues that NTC lacks standing to challenge Section 48-1103(e)(1)(D) because NTC, as a manufacturer, would never face enforcement under the statute. See Section 48-1103(e)(1)(D). The District argues that NTC is merely seeking to shield its customers-the retail establishments selling NTC's cigar wrappers-from criminal enforcement. NTC argues, however, that it has standing given the fact that NTC has suffered direct, concrete injury which would be redressed by an order invalidating the ban.
Lack of standing is a defect in subject matter jurisdiction, and a plaintiff's standing under Article III must be first determined "in order to establish the jurisdiction of the Court to hear the case and reach the merits." George v. Napolitano, 693 F.Supp.2d 125, 128-29 (D.D.C. 2010) (internal citations omitted). Standing focuses on the party before the court and not on the issues the party seeks to adjudicate. Nat'l Fed'n of Fed. Emp. v. Cheney, 883 F.2d 1038, 1041 (D.C. Cir. 1989).
It is well-settled that the "irreducible constitutional minimum of standing" requires three elements: 1) Plaintiff must have suffered an injury in fact-an invasion of a legally protected interest-which is a) concrete and particularized; and b) actual or imminent, not conjectural or hypothetical; 2) there must be a causal connection between the injury and the conduct complained of; which injury has to be fairly traceable to the challenged action and not the result of the independent action of some third party not before the court; and 3) it must be likely (as opposed to merely speculative) that the injury will be redressed by a favorable decision. See Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992) (internal citations and quotation marks omitted).
When, as in this case, the plaintiff is not the subject of the regulation it is challenging, standing is not precluded, but is ordinarily "substantially more difficult to establish." Id. at 562. In these types of cases: causation and redressibility ordinarily hinge on the response of the regulated (or regulable) third party to the government action or inaction-and perhaps on the response of others as well. The existence of one or more of the essential elements of standing depends on the unfettered choices made by independent actors not before the courts and whose exercise of broad and legitimate discretion the courts cannot presume either to control or to predict; and it becomes the burden of the plaintiff to adduce facts showing that those choices have been or will be made in such manner as to produce causation and permit redressibility of injury.
Id. (internal quotation marks and citations omitted) (emphasis added). Although Lujan makes clear that the plaintiff's burden to adduce facts to establish standing is much higher when the plaintiff is not the subject of the regulation, that burden need not necessarily be met at the pleading stage:
At the pleading stage, general factual allegations of injury resulting from the defendant's conduct may suffice, for on a motion to dismiss we presume that general allegations embrace those specific facts that are necessary to support the claim. In response to a summary judgment motion, however, the plaintiff can no longer rest on such mere allegations, but must set forth by affidavit or other evidence specific facts, which for purposes of the summary judgment motion will be taken to be true. And at the final stage, those facts (if controverted) must be supported adequately by the evidence adduced at trial.
Id. (internal citations and quotation marks omitted).
In this case, the District has not asked-and NTC has not consented-to have its motion to dismiss converted into a motion for summary judgment. At this pleading stage, during which the Court is required to view the facts and reasonable inferences in favor of NTC, the Court is satisfied that NTC has met the elements of standing. NTC alleges that it has suffered direct injury in the form of lost income, loss of market share and reputational harm from the enactment of Section 48-1103(e)(1)(D). The facts alleged also satisfy the elements of causation and redressibility. Although NTC fails to offer any testimony or evidence from its customers, NTC does allege that, after the enactment of the statute, many of its customers stopped selling NTC's product. Those allegations raise the reasonable inference that, were the statute held to be unenforceable, NTC's customers would restock and sell NTC's product once again.
The District's Motion with respect to NTC's alleged lack of standing, therefore, is denied. The Court notes, however, that these allegations will likely be insufficient to satisfy NTC's higher burden at summary judgment, and ultimately, trial to establish the elements of causation and redressibility. The Court now turns to analysis of the merits of NTC's Motion for a Preliminary Injunction and the District's Motion to Dismiss.
C.Motion for Preliminary Injunction
NTC argues that it stands to suffer two types of irreparable harm. First, it claims that its economic harm is of such a nature that it cannot be compensable at a later date. According to NTC, this includes losses in market share, revenue, and business contracts. Second, NTC argues that it stands to suffer irreparable harm in the form of "reputational stigma" from its products being deemed drug paraphernalia.
"[P]roving irreparable injury is a considerable burden, requiring proof that the movant's injury is certain, great and actual-not theoretical-and imminent, creating a clear and present need for extraordinary equitable relief to prevent harm." Power Mobility Coal. v. Leavitt, 404 F.Supp.2d 190, 204 (D.D.C. 2005) (internal citations and quotation marks omitted). For economic injury to be irreparable, a plaintiff must show that it will suffer harm that is "'more than simply irretrievable; it must also be serious in terms of its effect on the plaintiff.'" Toxco, Inc. v. Chu, 724 F.Supp.2d 16, 30 (D.D.C. 2010) (quoting Hi-Tech Pharmacal Co., Inc. v. U.S. Food & Drug Admin., 587 F.Supp.2d 1, 11 (D.D.C. 2008)). "Purely economic harm is not considered sufficiently grave under this standard unless it will cause extreme hardship to the business, or even threaten destruction of the business." Id. (quoting Gulf Oil Corp. v. Dep't of Energy, 514 F.Supp. 1019, 1026 (D.D.C. 1981)).
NTC's purported injury does not constitute the type of irreparable economic loss that courts have previously found sufficient to support a grant of a preliminary injunction. NTC fails to offer any specific, non-speculative reason why its lost revenues are irreparable or why it cannot simply reinitiate any lost business contracts if this Court were to hold the ban unconstitutional. NTC offers no evidentiary support for its claims other than an affidavit from Ronald Tully, NTC's Vice President of New Projects and Initiatives. That affidavit, however, is woefully inadequate in terms of establishing the irreparable harm that NTC is purportedly facing. The Tully affidavit fails to set forth which of NTC's customers chose to discontinue selling its products, and whether (and which of) those customers would have fallen under the exception for specialty tobacco shops. Most importantly, beyond making conclusory allegations of economic loss, there is nothing in the Tully Affidavit that establishes the specific harm that NTC suffers in the D.C. market from the ban. There is no evidence of the volume of lost income from the D.C. ban, NTC's market share before and after the ban, or the effect of the losses in D.C. on the company's overall financial health.
Unlike the plaintiffs in Bracco Diagnostics, Inc. v. Shalala, a case upon which NTC relies, there is no indication in the record that NTC is suffering "significant and irreparable losses" relative to its revenue. 963 F.Supp. 20, 28-29 (D.D.C. 2007). NTC does not allege that the ban is causing extreme hardship to the company or that it threatens destruction to the business. As stated above, although NTC generally states how much revenue its cigar wrapper business generates, it does not specify how much of that revenue is generated within the District and, consequently, how much revenue it has lost as a result of the ban.
NTC's argument that it has lost its market share is similarly unavailing. Unlike the cases upon which NTC relies, this is not a case in which NTC is losing market share to another competitor who is being allowed to sell cigar wrappers in the District. Section 48-1103 is an across-the-board ban and there is no market share for the product in this jurisdiction. See Grand River Enterprise Six Nations, Ltd. v. Pryor, 481 F.3d 60, 67-68 (2d Cir. 2007) (discussing whether Plaintiff's inability to compete with other competitors constituted irreparable harm); Novartis Consumer Health, Inc. v. Johnson & Johnson-Merck Consumer Pharmaceuticals Co., 290 F.3d 578, 595-97 (3d Cir. 2002) (finding plaintiff established irreparable harm, where its market share of a product corresponded to increased sales of a similar product sold by a competitor); Freedom Holdings, Inc. v. Spitzer, 408 F.3d 112, 114-15 (2d Cir. 2005) (holding that plaintiff failed to establish loss of market share in relation to competitor).
NTC has also failed to meet its burden to show that it has suffered irreparable reputational injury. Although NTC claims that it "faces the significant irreparable damage to its reputation with both retailers and consumers" (Tully Aff. ¶ 10), NTC fails to offer any evidence to support this claim. NTC acknowledges that "the showing of reputational harm must be concrete and corroborated, not merely speculative." Toxco, 724 F. Supp. 2d at 30 (quoting Trudeau v. Fed. Trade Comm'n, 384 F.Supp. 2d 281, 297 (D.D.C. 2005)). Just as in Toxco, the principal case upon which NTC relies, however, NTC's claims of "reputational harm are based solely on the uncorroborated and speculative assertions made in an affidavit of . . . one of the plaintiff's vice-presidents." Toxco, 724 F. Supp. 2d at 30. NTC has failed to point to a "single concrete manifestation of the reputational injury it is purportedly suffering." Id. at 30-31. Although this Court recognizes NTC's contention that having its product defined as drug paraphernalia can be stigmatizing, on the whole, NTC's claim of reputation injury is far too vague and speculative to support an injunction.
Finally, NTC has failed to show how a preliminary injunction would reverse or prevent any further injury. At the time NTC filed its motion for preliminary injunction, it had already purportedly lost 26 customers in the District and suffered alleged financial and reputational injury.
Tully Aff. ¶¶ 8-11. NTC has not shown how, if this Court issued an injunction, NTC's business customers would put its product back on their shelves pending a final determination on the merits. There is simply no showing from any of NTC's vendors declaring that if an injunction issued, they would start selling NTC's cigar wrappers again. Accordingly, given all these factors, NTC has failed to meet its burden to establish irreparable harm.
b.Likelihood of Success on the Merits/Motion to Dismiss
It is well-settled in this Circuit that the "failure to demonstrate irreparable harm is 'grounds for refusing to issue a preliminary injunction, even if the other three factors entering the [preliminary injunction] calculus merit such relief.'" National Mining Ass'n v. Jackson 2011 WL 124194 at *10 (D.D.C. Jan. 14, 2011) (quoting Chaplaincy of Full Gospel Churches v. England, 454 F.3d 290, 297 (D.C. Cir. 2006)). Because the court of appeals may be called upon to review this case, however, the Court will briefly set forth its reasoning on all the injunction factors. See Gordon v. Holder, 632 F.3d 722, 725 (D.C. Cir. 2011). The substantive grounds on the likelihood of success on the merits will also set forth the grounds for the Court's ruling on the District's Motion to Dismiss.
i.Count I-Supremacy Clause
NTC alleges that the D.C. ban is invalid because it violates the Constitution's Supremacy Clause. Although NTC does not expressly state in its own motion papers which theory of preemption it is advancing, NTC alleges in its Opposition to the District's Motion to Dismiss that it is advancing a claim of implied, as opposed to express, preemption based on the theory that the D.C. ban conflicts with federal law. Pl.'s Opp. to Def. Mot. to Dismiss at 8-9.
A state law will be invalidated under the theory of conflict preemption when "'compliance with both the state law and the federal law is a physical impossibility,' or when 'the state law stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.'" Bourbeau v. Jonathan Woodner Co., 549 F.Supp.2d 78, 88 (D.D.C. 2008) (quoting California Fed. Savings and Loan Assoc. v. Guerra, 479 U.S. 272, 281 (1987)). A state law that imposes additional requirements over and above those imposed by a federal law, however, does not necessarily conflict with federal law in either manner. Bourbeau, 549 F.Supp.2d at 88. Moreover, a presumption exists against finding federal preemption of state law in areas traditionally regulated by states and matters of local concern. California v. ARC America Corporation, 490 U.S. 93, 101 (1989); Medtronic v. Lohr, 518 U.S. 470, 485 (1996). As the Supreme Court has recently reiterated, a "high threshold must be met if a state law is to be preempted for conflicting with the purposes of a federal Act." Chamber of Commerce of the United States v. Whiting, 131 S.Ct. 1968, 1985 (2011) (internal citations and quotation marks omitted).
NTC does not allege-nor could it-that compliance with both D.C. and federal law is a "physical impossibility." Bourbeau, 549 F.Supp.2d at 88. Rather, NTC points to a number of disparate federal tax, licensing, and patent regulations treating cigar wrappers as a tobacco product. According to NTC, "[t]his complex federal statutory, regulatory and taxation scheme evinces a clear Congressional intent that cigar wrappers be classified and treated as tobacco products, a vital component of the national economy, and specifically not as drug paraphernalia." Mem. at 19. None of the provisions upon which NTC relies, however, reflect that the D.C. ban stands as an "obstacle" to the full purposes and objectives of Congress. Simply because cigar wrappers are taxed by the IRS, licensed by the TTB, and afforded U.S. patents does not reflect that D.C.'s ban stands as an obstacle to a Congressional purpose. There is no indication, for example, that Congress requires that cigar wrappers be sold in every jurisdiction, and NTC offers no other allegation or evidence of an actual or potential conflict between the D.C. ban and federal law. NTC has, therefore, both failed to state a claim under the Supremacy Clause and failed to show a likelihood of success on the merits.
ii. Count II-Commerce Clause
NTC also fails to make an adequate showing on its Commerce Clause claim. NTC's essential complaint appears to be that, because cigar wrappers are sold in interstate commerce, the District's complete ban on those wrappers per se violates the Commerce Clause. NTC does not allege that the ban exhibits economic protectionism or that it is discriminatory. Nor does NTC allege that the ban fails to serve a legitimate local public interest. Rather, NTC argues that the ban's burden on interstate commerce is outweighed by the local benefits and that, under the balancing test set forth in Pike v. Bruce Church, Inc., 397 U.S. 137, 142 (1970), the ban violates the Commerce Clause.
In Pike, the Supreme Court stated that where "a statute regulates even-handedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits." Id. (emphasis added). NTC urges this Court to conduct the Pike balancing test and find that the factors weigh in its favor. NTC, however, fails to offer anycompetent evidence allowing this Court to engage in that examination. NTC relies on a statement by Congress that tobacco products are part of interstate commerce, but that general statement is not helpful to this Court to determine what burdens, if any, D.C.'s ban has on interstate commerce. NTC also makes broad statements, such as that the District's interest in enacting the ban is "not being met by the Code's complete ban of a tobacco product" and that the ban "poses am [sic] enormous burden on interstate commerce by prohibiting the sale of an integral component of interstate commerce." Reply at 7. NTC offers nothing, however, to support its claims and there is no record for this Court to reach such conclusions. For example, although NTC's affiant Ronald Tully states that NTC's cigar wrapper business generated $31 million dollars in the first nine months of 2010, NTC fails to inform the Court what percentage of that business was generated in the District and how much revenue it has lost as a result of the D.C. ban on the sale of cigar wrappers. There is no way for this Court to know what the burdens on interstate commerce are on this record, let alone be able to conduct the Pike balancing test.
NTC, moreover, fails to respond to the District's argument that Electrolert Corp. v. Barry, 737 F.2d 110 (D.C. Cir. 1984), controls this Court's analysis under the Commerce Clause. In that case, the Circuit held that a D.C. ordinance banning the possession of radar detectors did not violate the dormant commerce clause. The Circuit asked two questions in analyzing the ordinance: 1) did the ordinance exhibit protectionist measures in that it bore disproportionately on out-of-state businesses or residents?; and 2) was the ordinance based on nonillusory safety benefits to the locality? Answering both questions in the negative, the Circuit held that its inquiry under the Commerce Clause was at an end. As in Electrolert, NTC has not alleged that the cigar wrapper ban is overtly protectionist or that it is based on an illusory or a nonexistent safety rationale. This Court need go no further to conduct any balancing test or probe the ban further to determine whether it runs afoul of the Commerce Clause. On this record, it does not. NTC has failed to state a claim and, thus, also fails to make a substantial showing that it would succeed on its Commerce Clause claim.
iii.Count III-Due Process
NTC alleges two theories of due process violations. First, it claims that the ban on the sale of cigar wrappers is unconstitutionally vague because it fails to give any notice of what conduct is prohibited, and because it fails to set forth any penalties or sanctions for selling cigar wrappers.
On a claim such as this, the Court "must assess whether [the statute] 'either forbids or requires the doing of an act in terms so vague that men of common intelligence must necessarily guess at its meaning and differ as to its application.'" United States v. Barnes, 295 F.3d 1354, 1366 (D.C. Cir. 2002) (quoting United States v. Lanier, 520 U.S. 259, 266 (1997)). In order to succeed on this claim, NTC bears the burden of showing that the ban "is impermissibly vague in all of its applications." Decatur Liquors, Inc. v. District of Columbia, 478 F.3d 360, 364 (D.C. Cir. 2007) (en banc) (internal citations and quotation marks omitted); see also Navegar, Inc. v. United States, 103 F.3d 994, 1001 (D.C. Cir. 1997) ("We can hold a statute to be impermissibly vague on its face only if we conclude that it is capable of no valid application."). As this Circuit has held, "the Constitution does not require unattainable feats of statutory clarity." Barnes, 295 F.3d at 1366 (internal citations and quotation marks omitted).
Although this Court is not convinced that the statute fails to clearly describe the prohibited conduct, there is considerable confusion as to whether the statute sets forth a penalty for that conduct. As set forth above, although the Michie's version of the Code contains a penalty provision, the West version and the D.C. Official Code on the web sites of the D.C. Council and D.C. government do not contain any such provision. A person of ordinary intelligence, therefore, has no clear guidance as to the penalty for the prohibited conduct. This Court is not moved by the District's argument that, according to general counsel for the D.C. Council and its legislative drafting guidelines, the removal of the penalty provision was an inadvertent technical error. The Court must instead be guided by the D.C. Council's legislation as drafted and, correspondingly, the official versions of the Code.
Given the lack of a clear penalty provision, NTC has stated a claim sufficient to survive the District's motion to dismiss as to whether the statute is impermissibly and unconstitutionally vague. See United States v. Batchelder, 442 U.S. 114, 123 (1979) ("vague sentencing provisions may post constitutional questions if they do not state with sufficient clarify the consequences of violating a given criminal statute.").*fn3 NTC's second theory under the due process clause is that the D.C. ban deprived NTC of its property interests in the form of monetary and reputational harm. It appears that NTC has now abandoned that claim, as it failed to defend the claim in its opposition to the District's Motion to Dismiss, respond in any way to the District's arguments in its Reply in support of its Motion for Preliminary Injunction, and dispute the District's claim at oral argument that NTC has abandoned this claim.
iv.Count IV-Equal Protection
Finally, NTC alleges that the ban violates the Equal Protection Clause because it treats sellers of cigarette rolling papers different from sellers of cigar wrappers. NTC does not allege that this case implicates any fundamental rights or suspect classifications under the Equal Protection analysis. As such, the legislative action is presumed to be valid and will be upheld as long as the ban bears a rational relationship to a legitimate government interest. City of Cleburne v. Cleburne Living Center, 473 U.S. 432, 439-40 (1985). As this Circuit has noted, the rational basis test is "highly deferential." Calloway v. District of Columbia, 216 F.3d 1, 9 (D.C. Cir. 2000).
Against the level of deference this Court is required to afford the legislative action, NTC fails to state a claim on its Equal Protection claim. NTC argues that, because cigar wrappers and cigarette rolling papers are treated similarly under the definitions of drug paraphernalia in 48-1101, they must also be treated equally in other parts of the Act. The D.C. Council, however, made specific findings about cigar wrappers, which the Council found were being used to create "blunt wraps" of marijuana. As the District correctly points out, the D.C. Council expressly stated that the goal of the legislation was to "keep the cheap blunt wrappers, that serve no legitimate purpose but to assist in the consumption of illicit drugs, out of the hands of adolescents." Exh. D to Pl.'s Motion for Preliminary Injunction, at 6. Accordingly, given the highly deferential standard this Court must apply, NTC offers no compelling reason why these findings do not serve as a rational basis for the ban or why the findings do not serve as a legitimate reason to treat cigar wrappers and cigarette rolling papers differently in Section 48-1103.
NTC's allegations in its Complaint and its arguments in support of its motion for preliminary injunction wholly fail to substantiate its claim that the D.C. ban violates the Equal Protection clause, and the District's motion with respect to this claim is granted.
NTC argues that the public interest "overwhelmingly" favors granting an injunction because, without it, "neither citizens nor enforcement personnel have any guidelines for enforcement" of the ban against the sale of cigar wrappers. Mem. at 32 (internal quotations omitted); Reply at 11. Although the District argues that there are no plans to enforce the statute, the District offers no evidence of that position from the office with authority to prosecute such crimes-the U.S. Attorney's Office. Nonetheless, it is hard for this Court to conclude that the public interest is served by upholding a statute so poorly drafted that the District has no interest in enforcing it. On balance, therefore, the public interest favors granting an injunction.
d.Balance of Equities
The Court finds that the balance of equities tips slightly in favor of NTC, who has suffered financial losses. There has been no showing that the District would be harmed in any way were an injunction to issue, given that the Distrist has no interest in enforcing the staute and there is no evidence that any such violations of the statute have been or are being enforced.
Nevertheless, the Court's finding in NTC's favor on the public interest and balance of equities prongs is not sufficient to outweigh NTC's weak showing on irreparable harm. Nor is NTC's having stated a claim and shown a likelihood of success on one of its four counts sufficient to outweigh the weak showing on irreparable harm. Accordingly, the Court denies NTC's request for the extraordinary remedy of a preliminary injunction. Although the factors today weigh against a preliminary injunction, this does not foreclose the possibility of NTC obtaining a permanent injunction against the enforcement of the statute in the future.
For the foregoing reasons, NTC's Motion for a Preliminary Injunction is denied and the District's Motion to Dismiss is granted in part and denied in part. An Order accompanies this Memorandum.