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Tribal cigarette supplier not protected

Fri., Aug. 16, 2013

High court rejects N.Y. company’s claim

BOISE – Tribal sovereignty doesn’t protect a corporation located on a New York Indian reservation that ships illegal cigarettes to a retailer on the Coeur d’Alene Indian Reservation, the Idaho Supreme Court ruled Thursday.

Native Wholesale Supply is a corporation, not a tribe or a tribal member, the Idaho justices held in a nine-page ruling. Therefore, it can’t sell cigarettes that are illegal in Idaho and aren’t a part of the nationwide tobacco settlement with states.

The company, a supplier on New York’s Seneca Reservation, argued that Idaho had no business interfering with shipments of more than 100 million Canadian cigarettes since 2004 to Warpath Inc., a Coeur d’Alene reservation business owned by a tribal member. Neither the Coeur d’Alene Tribe nor Warpath was a party to the Native Wholesale Supply case.

Native Wholesale Supply prevailed on a separate issue: The Supreme Court ruled that it doesn’t need a state wholesaler’s permit, overturning a lower court ruling. “Any cigarette sales made to a business owned by a tribal member are exempt from tax, and thus exempt from the requirement to obtain a wholesaler permit,” Justice Joel Horton wrote in the court’s unanimous opinion.

States are forbidden by federal law from meddling in activities of a tribal member or a member’s business operating within Indian Country, Native Wholesale Supply argued. But Idaho justices concluded such sovereignty claims weren’t applicable in this case involving illegal cigarettes.

The justices said the nature of Native Wholesale’s transaction with Warpath involving two countries, multiple tribes and at least three states was sufficient to transform the cigarette shipments into an off-reservation activity that Idaho had every business regulating.

Brett DeLange, chief of the Idaho attorney general’s Consumer Protection Division who argued the case for the state, said Native Wholesale Supply must pay a $214,200 fine originally levied by a 4th District Court judge in Boise for shipping cigarettes to Idaho that aren’t on a list approved by the state.

DeLange said Thursday’s decision underscores a previous Idaho Supreme Court ruling that affirmed the state’s authority in regulating Internet cigarette sales to retailers on Idaho Indian reservations.

“We respect Indian sovereignty and feel like we have a good working relationship with the tribes,” he said. “But the court’s decision here makes clear that under the facts of this case, those principles don’t pre-empt state law. … If you wholesale cigarettes, or ship cigarettes into Idaho, you need to comply with Idaho law.”

Samuel Diddle, the Boise attorney who represented Native Wholesale Supply, wasn’t immediately available for comment.

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