On February 26, 2013, the United States Court of Appeals for the Second Circuit affirmed the Southern District of New York’s ruling upholding a New York City local ordinance that prohibits the sale of flavored tobacco products, including smokeless tobacco, anywhere in the city other than at existing “tobacco bars.”  As we reported in a December 15, 2011 blog post, Plaintiffs U.S. Smokeless Tobacco Manufacturing Company, LLC and U.S. Smokeless Tobacco Brands Inc. sued the City of New York, challenging a city ordinance on grounds that the ordinance is preempted by the federal Family Smoking Prevention and Tobacco Control Act (“Tobacco Control Act”).  The District Court awarded summary judgment in favor of the City and dismissed the lawsuit.

The City ordinance prohibits the sale of “any flavored tobacco product except in a tobacco bar.”  On appeal to the Second Circuit, the Plaintiffs represented and the City did not contest that there are only eight tobacco bars in New York City – none of which sell flavored smokeless tobacco products.  Consequently, in reviewing the District Court’s ruling, the Second Circuit assumed that flavored tobacco products would not be available for purchase in New York City if the ordinance remained in effect.

The Second Circuit noted that the Tobacco Control Act “reserves regulation at the manufacturing stage exclusively to the federal government, but allows states and localities to continue to regulate sales and other consumer-related aspects of the industry in the absence of conflicting federal regulation.”  The Plaintiffs again argued on appeal that the Tobacco Control Act preempts the City’s ordinance.  Specifically, the Plaintiffs argued that while the ordinance regulated sales, it actually constituted a regulation of the manufacturing process in violation of the Tobacco Control Act’s preemption provision.

The Second Circuit agreed that a purported sales ban that in effect dictates how a tobacco product is manufactured would not escape preemption because the ordinance is characterized as a sales regulation.  Although the Second Circuit noted that sales regulations could impact manufacturing decisions, the Court concluded that such a broad reading of the preemption clause was inappropriate.  Ultimately, the Second Circuit concluded that the City ordinance does not govern the ingredients in tobacco products but is based on whether the product has “a distinguishable taste or aroma.”  In affirming the District Court’s award of summary judgment in favor of the City, the Second Circuit held that the ordinance is a valid regulation of the sale of flavored tobacco products and not an attempt to regulate manufacturing.