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| NAAGAZETTE Volume 6, Number 1 | January 24, 2012|
Jump to full article: National Association of Attorneys General (NAAG), 2012-01-24
Author: Patricia Molteni, Tobacco Project Counsel
The Supreme Court of Oklahoma, in Edmondson v. Native Wholesale Supply, 2010 OK 58, 237 P.3d 199 (2010), recently issued a ruling affirming the authority of the state of Oklahoma to regulate the sale of cigarettes in Oklahoma even though the cigarettes as issued were manufactured by an Indian tribe, distributed through a business owned by a tribal member, and sold to a tribal wholesaler located on an Oklahoma reservation. Similar litigation has arisen against Native Wholesale Supply (NWS) in New Mexico, California, and Idaho, as each of these states seeks to enforce their tobacco laws to prevent the alleged unlawful sale of cigarettes into their states.
The Edmondson decision made important findings about tribal immunity and the application of the Indian Commerce Clause in the context of tobacco regulation by the state. With respect to sovereign immunity, it held that only an entity owned and managed by the tribe for the benefit of the tribe enjoys immunity from suit. An entity owned by a Native American but operated for his or her personal benefit is not eligible for such protection. And with respect to the Indian Commerce Clause, states may clearly enforce their tobacco laws against entities owned by a Native American if their cigarette sales involve sales to non-tribal members, sales between different tribes, or sales off a reservation.k . . .
Specifically, the Court found that the Seneca cigarettes sold by NWS into Oklahoma were manufactured in Canada, shipped to the United States, and stored in a Free Trade Zone in Nevada. Id. The Muscogee Creek Nation Wholesale placed orders for the cigarettes from its reservation located within Oklahoma to NWS at NWS' business in New York on the Seneca reservation. Id. NWS delivered the cigarettes to Muscogee Creek Nation Wholesale by shipping them from the Nevada Free Trade Zone to the Muscogee Creek reservation in Oklahoma where they were then sold to other retailers who offer them for sale to the general public in Oklahoma. Id. at 208 and 216.
Because NWS' cigarette sales involved no less than three tribes (the Seneca tribe, the Sac and Fox tribe, and the Muscogee Creek) and transportation of cigarettes off the reservation (Canada to the Nevada Free Trade Zone) and sale to the general public (not just tribal members), this conduct was subject to all states laws so long as they did not discriminate against tribes and were not expressly preempted by federal law. As a final matter, the Court found that the Complementary Act was not discriminatory and that Congress had not preempted state regulation of the distribution and sale of tobacco product in the Oklahoma market. Id. at 216. Therefore, the Indian Commerce Clause did not preclude Oklahoma from enforcing its Complementary Act against NWS.
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