case 1 :12-cv-04838-jmf document 43 filed 12/01/12 page 1 of … · 2013-05-23 · case...

Case 1 :12-cv-04838-JMF Document 43 Filed 12/01/12 of 29

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF NEW YORK

THE CITY OF NEW YORK,

-against-

Plaintiff,

ROBERT GORDON, d/b/a ALL OF OUR BUTTS; MARCIA GORDON; JOHN DOES 1-5, being persons who own, are employed by or are associated with ALL OF OUR BUTTS; REGIONAL INTEGRA TED LOGISTICS, INC., d/b/a REGIONAL PARCEL SERVICES; and JOHN DOES 6-10, being persons who own, are employed by or are associated with Regional Integrated Logistics, Inc. d/b/a Regional Parcel Services,

Defendants.

------------------------·--------------------------------------------------)(

Civil Action No. 12 cv 4838

MEMORANDUM OF LAW IN SUPPORT OF MOTION OF DEFENDANTS ROBERT GORDON d/b/a ALL OF OUR BUTTS AND MARCIA GORDON

TO DISMISS THE AMENDED COMPLAINT AND IN OPPOSITION TO PLAINTIFF'S MOTION FOR A PRELIMINARY INJUNCTION

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Case 1:12-cv-04838-JMF Document 46 Filed 12/03/12 Page 1 of 29


TABLE OF CONTENTS

PRELIMINARY STATEMENT ..................................................................................................... !

APPLICABLE STANDARD OF REVIEW FOR MOTION TO DISMISS .................................. .4

ARGUMENT FOR MOTION TO DISMISS .................................................................................. 4

I. THE COMPLAINT DOES NOT STATE A CLAIM FOR VIOLATION OF THE

A. The CCTA Does Not Authorize an Action by the City Against Indians in Indian Country ......................................................................................................... 5

B. The Complaint Fails to Allege Any Transaction Involving "Contraband Cigarettes" Under the CCT A ................................................................................... 8

II. THE COMPLAINT DOES NOT STATE A CLAIM FOR VIOLATION OF RICO ......... '"'"'"··~········~·······,.···,····················································._ .......................................... 11 A. The City Has Not Properly Alleged a RICO Enterprise or a "Pattern" of

Racketeering Activity ............................................................................................ 12

B. RICO's "Injury to Business or Property" Limitation Precludes Recovery for Injury to a Sovereign Tax Collection Interest .................................................. 13

C. The RICO Claims Against the Gordon Defendants' Do Not Sufficiently Allege the Causation Element of a RICO Claim ................................................... 15

D. The City Has Not Adequately Plead a Claim for Conspiracy to Violate RICO ., ....... ~···~··.,··········~--··~·············~~-· .. ······················~~-~~-~··· .. ·······~··············~················t••l5

III. THE COMPLAINT DOES NOT STATE A CLAIM FOR VIOLATION OF THE CIGARETTE MARKETING STANDARDS ACT .......................................................... 16

APPLICABLE STANDARD OF REVIEW FOR PRELIMINARY INJUNCTION .................... 16

ARGUMENT OPPOSING PRELIMINARY INJUNCTION ....................................................... 17

I. THE PRELIMINARY INJUNCTION SHOULD BE DENIED BECAUSE THE BALANCE OF THE EQUITIES FAVORS THE GORDON DEFENDANTS ................ 17

II. THE INSTANT MATTER INVOL YES COMPLEX ISSUES OF LAW REGARDING NATIVE AMERICAN SOVERIEGNTY, NOT SUITED TO RESOLUTION THROUGH A PRELIMINARY INJUNCTION ..................................... 18

III. THE PUBLIC INTEREST WEIGHS AGAINST GRANTING A PRELIMINARY INJUNCTION ....................................................................................... 21

CONCLUSION .............................................................................................................................. 23

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TABLE OF AUTHORITIES

Page(s) CASES

Allen v. New World Coffee. Inc., No. 00 Civ. 2610 (AGS), 2002 WL 432685 (S.D.N.Y. Mar. 19, 2002) .................................. 15

Batista v. City ofNew York, No. 05-CV-8444 (KMK), 2007 WL 2822211 (S.D.N.Y. Sept. 25, 2007) ................................ 6

Blackhawk Industries Products Group Unlimited, LLC v. U.S. General Services Administration, 348 F.Supp.2d 649 (E.D. Va. 2004) ........................................................................................ 16

Ca itol avin fD.C. Inc. v. District of Columbia, 496 F.Supp.2d 54 (D.D.C. 2007) ............................................................................................. 17

City ofiSew York v. Golden Feather Smoke Shop. Inc., 597 F.3d 115 (2d Cir. 20 I 0) ..................................................................................................... 16

Edmonds v. Seavey, No. 08 Civ. 5646 (HB), 2009 WL 2949757 (S.D.N.Y. Sept. 15, 2009) .................................. 15

Elk v. Wilkins, 112 vs 94 [ 1884] ..................................................................................................................... 19

I

First Cat}ital Asset Mgmt. Inc. v. Satinwood, 385 F .3d 159 (2d Cir. 2004) ..................................................................................................... 12

First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763 (2d Cir. 1994) ......................................................................................................... 4

Ford v. Reynolds, 316 F.3d 351 (2d Cir. 2003) ....................................................................................................... 6

Gianni Cereda Fabrics, Inc. v. Bazaar Fabrics1 Inc., 335 F.Supp. 278 (S.D.N.Y. 1971) ........................................................................................... 17

Gordon v. Holder, 826 F.Supp.2d 279 (D.D.C. 2011) ........................................................................................... 17

Gordon v. Holder, No. I 0-1092 .... 4,,..t ..... ~ .... ~ , ••• ~··· .. ~···· ........... ~~···,····~·······~···"''········· .. ········,····················~··~··-·········passim

Hawaii v. Standard Oil, 405 u.s. 251 (1972) ................................................................................................................. 13

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Case 1: 12-cv-04838-JM F Document 43 Filed 12/01/12 of 29

TABLE OF AUTHORITIES (continued)

Hemi Group. LLC v. City ofNew York,

Page(s)

130 S. Ct. 983 (U.S. 2010) ....................................................................................................... 15

Hemi Group. LLC v. City ofNew York, No. 08-969 at 27:15- 31 :21 (annexed to the Rader Declaration as Exhibit F) ...................... 14

Leeds v. Meltz, 85 F.3d 51 (2d Cir. 1996) ............................................................................................................ 4

Medinol Ltd. v. Boston Scientific Corp., 346 F.Supp.2d 575 (S.D.N.Y. 2004) ........................................................................................ 15

Merrion v. Jicarilla Apache Tribe, 455 u.s. 130 (1982) ................................................................................................................. 19

Metropolitan Taxicab Bd. Of Trade v. City ofNew York, 615 F.3d 152 (2d Cir. 2010) ..................................................................................................... 16

Montana v. Blackfeet Tribe oflndians, 4 71 U.S. 759 ( 1985) ................................................................................................................. 20

Mullin v. P&R Educ. Servs .. Inc., 942 F.Supp. 110 (E.D.N.Y. 1992) ............................................................................................. 6

Regents ofthe Univ. of Cal. v. Doe, 519 u.s. 425 (1 997) ................................................................................................................... 6

Santa Clara Pueblo v. Martinez, 436 u.s. 49 (1978) ................................................................................................................... 19

Solis v. Matheson, 563 F.3d 425 [9th Cir. 2009] ................................................................................................... 21

Spool v. World Child Int'l Adoption Agency. 520 F.3d 178 (2d Cir. 2008) ...................... .,. ............................................................................. 13

State of Mich. Dep't of Treasury v. Fawaz, 653F.Supp. 141 (E.D.Mich.l986),affd,848F.2d 194, 1988WL44736(6thCir. 1988) t•t:ttt••••••• ~t;tlll-l>*lt tl ~- tt•~'ftt' Jo tt11 t•t~ f>t tttt .. ~ t•t t•t~tt ··~··• ~tf ..... ••~ '""" iiH<tt tto t tttt"ttt t• tt!i~ t t•»tttt•~ .... '"' tt>Ott•t~ttt• ......... 14

State ofW. Va. v. Moore, 895 F. Supp. 864 (S.D.W.Va. 1995) ........................................................................................ 14

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U.S. y. Fiander,


Page(s)

547 F.3d 1036 (9th Cir. 2008) ..................................................................................... 12, 19,21

U.S. y. Morrison, 596 F. Supp.2d 661 (E.D.N.Y. 2009) ........................................................................................ 9

U.S. y. Morrison, 685 F. Supp.2d 339 (E.D.N.Y. 2010), reversed ......................................................................... 9

U.S. y. Wilbur, 674 F.3d 1160 (9th Cir. 2012) ................................................................................................... 8

Westlands Water Dist. v. U.S. Dep't of Interior. Bureau of Reclamation, 805 F. Supp. 1503 (E.D. Cal. 1992), affd, 10 F.3d 667 (9th Cir. 1993) ................................... 4

Worcester v. Georgia, 31 u.s. 515 (1832) ................................................................................................................... 19

STATUTES

18 U.S.C. § 1961 etseq ............................................................................................................ 12, 16

18 U.S.C. § 1962 (c) ...................................................................................................................... 12

18 U.S.C. § 2341(2) .............................................................................................................. 8, 12, 16

18 U .S.C. § 2341 et seq .................................................................................................................... 8

18 U.S.C. § 2342(a) ......................................................................................................................... 8

18 u.s.c. § 2342(b) ......................................................................................................................... 9

18 u.s.c. § 2343 ............................................................................................................................ 10

18 u.s.c. § 2346 .............................................................................................................................. 4

18 U.S.C. §2346(b) ..................................................................................................................... .3, 5

18 u.s.c. § 2346(b)(1) .......................................................................................................... 4, 7, 12

18 u.s.c. § 3282 .............................................................................................................................. 8

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Page(s}

Federal Indian Law ........................................................................................................................ 19

Racketeer Influenced and Corrupt Organizations Act ("RICO") .................................................... !

RICO ...................................................................................................................................... passim

OTHER AUTHORITIES

27 CFR § 646.141 .......................................................................................................................... 10

27 CFR § 646.143 .......................................................................................................................... 10

27 CFR § 646.146 .......................................................................................................................... 10

I 51 Cong. Rec. H6273-04 ........................................................................................................... 6, 7

Brief Of Amicus Curiae ......................................................................................................... 2, 3, 13

Eleventh Amendment. ...................................................................................................................... 6

Rule 12 (b) (6) of the Federal Rules of Civil Procedure .................................................................. 4

Trial Transcript, U.S. v. Morrison, No. 04-CR-699, at 12844-47 (S.D.N.Y. Mar. 31, 2008) ........................................................................................................................... 3

Transcript of Oral Argument before the Supreme Court, Hemi Group, LLC v. City ofNew York, No. 08-969 at 27:15-31:21 (N.Y. Sup. Ct. Nov. 3, 2009) ........................ 18

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Case 1: 12-cv-04838-JMF Document 43 Filed 12/01/12 of 29

Defendants, Robert Gordon, d/b/a All Of Our Butts and Marcia Gordon (collectively the

"Gordon Defendants"), through their attorneys, Anderson Kill & Ofick, P.C., respectfully submit

this Memorandum Of Law In Support Oftheir Motion To Dismiss The Amended Complaint and

In Opposition To The Motion For Preliminary Injunction in the above-referenced action.

PRELIMINARY STATEMENT

Plaintiff, the City ofNew York (the "City"), has asserted several claims against the

Gordon Defendants, including but not limited to alleging a violation of the Cigarette Contraband

Trafficking Act ("CCTA") against Marcia Gordon. The City does not, and cannot, allege any

CCTA violation against Robert Gordon. Nevertheless, the City has wrongly filed a claim against

Robert Gordon for a substantive violation of the Racketeer Influenced and Corrupt Organizations

Act ("RICO"). The grounds for dismissal of this claim are clear and absolute. The City should '

be precluded from bringing a claim for a substantive violation of RICO against Mr. Gordon

because the alleged predicate offense for the substantive RICO claim is a violation ofthe CCTA.

The City's RICO claim cannot stand because the CCTA provides that as an "Indian in Indian

country," Mr. Gordon is exempt from any CCTA claim by the City. Thus, no such CCTA claim

can f9rm the basis for a substantive RICO claim against Mr. Gordon. Likewise, the City's

CCTA claim and its substantive RICO claim against Marcia Gordon both infringe on the

sovereignty that the proscription against CCTA claims against Native Americans was designed

to protect. With no jurisdictional basis to claim a CCTA violation against a Native American

such as Mr. Gordon, the City should not be permitted to bypass that constraint by proceeding

against Ms. Gordon, his alleged employee.' The sovereignty issues at stake here are even more

1 Further, the City's CCT A claims fail because the City does not adequately allege any single sale into New York City by any of the Gordon Defendants that involves in excess of 10,000 cigarettes. Because the City cannot successfully allege a CCT A violation, its RICO conspiracy claim against Robert Gordon similarly fails and must be dismissed.

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Case 1:12-cv-04838-JMF Document 43 Filed 12/01/12 of 29

substantial in view of the fact that the alleged RICO "enterprise," All Of Our Butts, is a sole

proprietorship owned by Mr. Gordon, and operating on Indian territory pursuant to a business

license issued by the Seneca Nation.

Just as the City is attempting to subvert the sovereignty concerns which led to the

limitation forbidding it from bringing a CCTA claim against Mr. Gordon, it is also attempting to

thwart Mr. Gordon's efforts to assert his constitutional rights within the context of the United

States legal system. Mr. Gordon is the Plaintiff in an action filed in the D.C. District Court

which is captioned: Gordon v. Holder, No. I 0-1 092, D.D.C. In that action, Mr. Gordon has

successfully enjoined the provision of the Prevent All Cigarette Trafficking Act (the "PACT

Act") that requires delivery sellers of tobacco to comply with the tax laws of each state and

locality in which they sell cigarettes. An appeal and cross-appeal are now pending in which the

U.S. Government is appealing the injunction of the tax provisions of the PACT Act and Mr.

Gordon is appealing the denial of an injunction of certain other provisions of the PACT Act. The

City clearly is interested in the Gordon v. Holder litigation, having filed an Amicus Brief in

support of the Government's Appeal on June 11, 2012 Gust nine days before the filing of the

instant Complaint).

In its Amicus submission to the D.C. Circuit Court, the City asserted that prior to the

enactment of the PACT Act it did not have any legal remedy to prevent delivery sales such as

those alleged in the instant action. See Brief Of Amicus Curiae City ofNew York filed in

Gordon v. Holder Appeal at p.3, annexed to the Declaration of Adam J. Rader (hereinafter

"Rader Declaration") as Exhibit A. In addition, the City's Amicus Brief cited the identical

alleged sale by All of Our Butts that forms the basis of this action (compare Compl. at,, 43, 45,

48 with Declaration of Eric Proshansky dated June 11, 2012 at 11 2-3 (hereinafter "Proshansky

2

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Declaration"))2, and asserted that that sale was "protected" as a result ofthe District Court's

injunction- which the City requests be overturned (see Brief Of Amicus Curiae City of New

York filed in Gordon v. Holder Appeal at pp.3, 6-7).

Contrary to the position expressed in Gordon v. Holder, here the City seeks to rely on

statutes that were in force prior to the enactment of the PACT Act to assert claims against the

Gordon Defendants for alleged sales made prior to the enactment of the PACT Act- a time

I

during which the City simultaneously claims that it had no legal remedy against delivery sellers

-and for the exact, post-PACT Act, sale which it claims was "licensed" by the existing

injunction of the PACT Act's tax provisions. The City's directly conflicting arguments make

clear that this action is nothing more than a retaliatory effort to deter Mr. Gordon from exercising

his Cqnstitutional right to challenge the PACT Act- a challenge which has been successful to

date- by attempting to divert Mr. Gordon's attention and resources from the PACT challenge.

Although the City is attempting to prosecute the Gordon Defendants based on an

allegation consisting of a mere two concrete sales after the enactment of the PACT Act, (see

Compl. at,, 43, 45, 48, 52, 55, 58), it has opted not to prosecute other delivery sellers who,

according to the City's Amicus submission in Gordon v. Holder, have sold thousands of cartons

ofunstamped cigarettes during that same time-frame. See Proshansky Declaration at, 6. In its

desperate attempt to deter Mr. Gordon from exercising his constitutional rights in Gordon v.

Holder, the City has asserted claims that violate the sovereignty concerns protected by 18 U.S.C.

§2346(b), and which are based on conclusory, contradictory and unclear allegations.

Accordingly, as further demonstrated below, these claims should be dismissed.

2 The Proshansky Declaration is annexed to the Rader Declaration as Exhibit B.

3

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APPLICABLE STANDARD OF REVIEW FOR MOTION TO DISMISS

On a motion to dismiss for failure to state a claim made pursuant to Rule 12 (b) (6) of the

Federal Rules of Civil Procedure, the Court must accept as true the factual allegations set forth in

the complaint, and draw all reasonable inferences in favor ofthe plaintiff. However, bald

assertions and conclusions of law will not enable complaint to survive a motion to dismiss for

failure to state a claim. Leeds v. Meltz, 85 F.3d 51 (2d Cir. 1996). In deciding a motion to

dismiss for failure to state a claim, a court need not accept conclusory allegations, unreasonable

inferences or unwarranted deductions of fact. Westlands Water Dist. v. U.S. Dep't of Interior,

Bure§:u of Reclamation, 805 F. Supp. 1503 (E.D. Cal. 1992), afrd, 10 F.3d 667 (9th Cir. 1993).

Moreover, in a RICO case, a Court is not required to accept as true "conclusions of law or

unwarranted deductions." First Nationwide Bank v. Gelt Funding Corn., 27 F.3d 763, 771 (2d

Cir. 1994).

As set forth below, the Complaint in the instant action fails to meet even the most

minimal pleading requirements as it relies on conclusory allegations based almost entirely on

bald assertions and conclusions of law. Consequently, the Gordon Defendants' Motion to

Dismiss the Complaint should be granted.

ARGUMENT FOR MOTION TO DISMISS

I. THE COMPLAINT DOES NOT STATE A CLAIM FOR VIOLATION OF THECCTA

Pursuant to 18 U.S.C. § 2346(b )(I), the Plaintiff is not empowered to assert a CCTA

claim !against Mr. Gordon because he is "an Indian in Indian country." The City has violated

both tbe letter and the spirit of 18 U.S .C. § 2346 by bringing a CCTA action against Mr.

Gordon's agents, and by bringing a substantive RICO action against Mr. Gordon when it has no

standing to sue him - and has not sued him - for the alleged predicate offense upon which the

4

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RICO claim is based. Even assuming, arguendo, that the City was entitled to bring a CCTA

claim against Mr. Gordon's agents, it has failed to adequately plead such a claim. Consequently,

the City's CCTA claim should be dismissed.3

A. The CCTA Does Not Authorize an Action by the City Against Indians in Indian Country

The CCTA claim against Marcia Gordon amounts to an indirect attack on Indian

commerce that is barred by the statutory prohibition on claims affecting Indian sovereignty, and

should 9e dismissed as a matter of law. Specifically, no civil action pursuant to the CCTA may

be com+enced by a local government or state against an Indian tribe or an Indian vendor in

Indian country. 18 U.S.C. §2346(b). The CCTA further provides that nothing in the CCTA shall

be deemed to abrogate or constitute a waiver of any sovereign immunity of an Indian tribe

against any unconsented lawsuit or to modify any sovereign immunity of an Indian tribe.4

Though the City's CCTA claim arises from harm allegedly attributable to cigarette sales

by Marcia Gordon, those sales occurred in her capacity as an employee of All of Our Butts.

Com pl. ,~ 9, 141. All of Our Butts is located on the Allegany Reservation and is owned and

operated by Robert Gordon, a member of the Seneca Nation of Indians. Compl. ~ 8. It is a

business licensed by, and operating in accordance with the laws of, the Seneca Nation. See All

Of Our Butts Business License (annexed to the Rader Declaration as Exhibit C). Accordingly,

3 Similarly, because the City has not adequately plead a CCTA claim against Mr. Gordon's agents, its RICO claims against him and them also must be dismissed, as must be its RICO conspiracy claim against Mr. Gordon.

4 For additional discussion regarding the Native American sovereignty issues implicated by this case,~ Argument Opposing Preliminary Injunction, Section II, infra.

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the CCT A claim against Marcia Gordon is, in fact, an impermissible claim against Robert

Gordon, an Indian in Indian Territory. 5

The legislative history of the CCTA reveals a strong desire to ensure that the CCTA does

not encroach on Indian sovereignty m: restrict the Indian tobacco trade. 151 Cong. Rec. H6273-

04, 2005 WL 1703380 (July 21, 2005). Indeed, the proposed bill amending the CCTA in 2006

was modified to "make sure that there is no impact on tribal sovereignty." 14:. at *33. Thus,

[a]s initially drafted, the amendment by Mr. Coble could have had the unintended effect of targeting tribal governments who are legitimately involved in the retailing of tobacco products. With the help of Mr. Cole, and other members, Mr. Coble has modified his

5Since Robert Gordon, as the owner of All of Our Butts, is the actual target ofthe Complaint, his immunity from suit protects his agents from the City's attempt to recover under the CCTA. By way of comparison, in the context of sovereign immunity under the Eleventh Amendment:

[A]ctions against one of the United States encompasses not only actions in which a State is actually named as the defendant, but also certain actions against state agents and state instrumentalities. Thus, when the action is in essence one for recovery of money from the state, the state is the real, substantial party in interest and is entitled to invoke its sovereign immunity from suit even though individual officials are nominal defendants.

Ford y. Reynolds, 316 F.3d 351,354 (2d Cir. 2003) (citing Regents ofthe Univ. ofCal. v. Doe, 519 U.S. 425, 429 ( 1997) (internal citations and some quotation marks omitted)). In determining whether to extend immunity to those acting on behalf of a protected party, the Eleventh Amendment analysis emphasizes where the actual liability lies. Regents of the Univ. of Cal. '1· Doe, 519 U.S. 425,429 nt. 6 (1997); Batista v. City ofNew York, No. 05-CV-8444 (KMIK), 2007 WL 2822211, *10 (S.D.N.Y. Sept. 25, 2007) ("In most cases, ifthe suit names a state instrumentality, but seeks money damages, which, if awarded, would be paid by the state, that instrumentality may invoke sovereign immunity."); Mullin v. P&R Educ. Servs .. Inc., 942 F.Supp. 110 (E.D.N.Y. 1992) ("[B]ecause the suit against P&R does not appear to effect 'the state's purse,' the Court will not dismiss the complaint as against defendant P&R on the grounds of sovereign immunity."). Because Robert Gordon, and his business All ofOur Butts, will be liable for all the damages alleged against the company and its agents, the actual target of the Complaint is Robert Gordon. The City cannot circumvent the bar to its CCTA claim against Robert Gordon merely by naming a non-Indian employee of All of Our Butts as the target ofthe claim.

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amendment and has incorporated language that will go a long way to protecting tribal governments and tribal sovereignty. Specifically, a provision stipulating that enforcement against tribes or in Indian country, as defined in Title 18, Section 1151, will not be authorized by the pending bill that has been incorporated.

Support for tribal sovereignty is a bi-partisan issue and collectively the Congress will continue to defend that fundamental principle of law.

Id. at *34; ~also Statement of Chairman James Sensenbrenner, id. at *33 ("as a result of the

modification that the gentleman from North Carolina has proposed, there is no longer a question

of tribal sovereignty. That has been taken care of in the modification.").

This action is unprecedented and appears to be case of first impression. Never before has

the City ofNew York attempted to assert a claim for violating the CCTA against the agent(s) of

an Indian on Indian territory. By asserting a CCTA claim against Marcia Gordon, alleged to be

an "owner, employee and/or manager" of All Of Our Butts (Compl. at~ 9), the City is subverting

the legislative purpose and policy behind 18 U.S.C. § 2346(b)(l). In fact, All Of Our Butts is not

a distinct corporate entity at all. It is the name under which Mr. Gordon does business in his

individual capacity. The City has acknowledged this by suing Mr. Gordon as "Robert Gordon,

d/b/a All Of Our Butts," and by alleging that "Robert Gordon does business as 'All Of Our

Butts'." See Complaint at~ 8. Accordingly, the City's CCTA claim against "All Of Our Butts"

and its alleged employees is really just a claim against Robert Gordon which the City has no

jurisdiction to assert. See 18 U.S.C. § 2346(b )(I).

The intent of Congress was clear. The CCTA amendments were deliberately crafted to

exclude commerce in Indian country from the purview of the CCTA and, therefore, cannot be

used by the City to bring the instant lawsuit.

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B. The Complaint Fails to Allege Any Transaction Involving "Contraband Cigarettes" Under the CCT A

Recognizing that it is not empowered to proceed against Mr. Gordon, the City instead

asserts a claim for violation of the CCTA against his alleged employee, Marcia Gordon.

However, the CCT A allegations against Ms. Gordon are insufficient to state a claim and should

be dismissed.

The CCTA, 18 U .S.C. § 2341 et seq., provides that "[i]t shall be unlawful for any person

knowingly to ship, transport, receive, possess, sell, distribute, or purchase contraband cigarettes

or contraband smokeless tobacco." 18 U.S.C. § 2342(a). The CCTA further defines the term

"contraband cigarettes" as "a quantity in excess of 10,000 cigarettes, which bear no evidence of I

the payment of applicable State or local cigarette taxes in the State or locality where such

cigarettes are found, if the State or local government requires a stamp, impression, or other

indication to be placed on packages or other containers of cigarettes to evidence payment of

ciga~ette taxes, and which are in the possession of any person other than [certain exempt

people]." 18 U.S.C. § 2341(2).

As an initial matter, the City is barred from pursuing any alleged CCT A violations that

occurred prior to June 20, 2007 (i.e., five years before the date the instant Complaint was filed)

because the CCTA has a five-year statute of limitations. See 18 U.S.C. § 3282; ~also U.S. v.

Wilbur, 674 F.3d 1160, 1171 (9th Cir. 2012). Any transactions alleged to have occurred before

June 20, 2007 fall outside the limitations period.6

6 Should the Court disagree with the above, the Gordon Defendants note that prior to 2006 (when the CCTA was amended), "contraband" cigarettes were defined as an amount in excess of 60,000 cigarettes per transaction. To the extent that the City is alleging CCT A violations for a period of time prior to the amendment taking effect (i.e. the years 2002- 2006), it must prove that Marcia Go,on was involved in transactions that were i: excess of 60,000 cigarettes per transaction.

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For an act to be a violation ofthe CCTA, it must involve a quantity in excess of 10,000

cigarettes per transaction. See U.S. v. Morrison, 596 F. Supp.2d 661, 686 n.27 (E.D.N.Y.

2009). 7 Such an interpretation is also supported by the language of both the CCT A and the

Federal Regulations applicable to the CCTA.

Section 2342 of the CCTA describes the "unlawful acts" prohibited by the statute. See

18 U.S.C. 2342. In addition to§ 2342(a)'s prohibition on the shipping, transport, receipt, sale,

distribution, or purchase or contraband cigarettes referenced above, § 2342(b) provides that "[i]t

shall b¢ unlawful for any person knowingly to make any false statement or representation with

respect to the information required by this chapter to be kept in the records of any person who

ships, sells, or distributes any quantity of cigarettes in excess of 10,000 in a single transaction."

18 U.S.C. § 2342(b) (emphasis added). Further, the CCTA imposes certain recordkeeping

requirements on "any person who ships, sells, or distributes any quantity of cigarettes in excess

7 The Morrison court reiterated several times that any alleged CCT A violation must be evaluated on a "per transaction" basis, including: (i) during the trial as a supplemental instruction in response to a note from the jury (~March 31, 2008 Trial Tr. at 12844-4 7)("As I previously instructed you at page 114 of the jury charge, the term contraband cigarettes means a quantity in excess of 60,000 cigarettes in a single transaction which bears no evidence of the payment of applicable state cigarette taxes in the state where the cigarettes are found, if such state requires a stamp, impression or other indication to be placed on packages or other containers of cigarettes to eviqence payment of cigarette taxes. The key phrase in that is in a single transaction. So you'r~ talking about for a particular transaction to be violative of the CCTA. You would have to have a transfer ofunstamped cigarettes to a given individual in a given transaction which exceeds 60,000 cigarettes. If a person bought cigarettes on day one, three and five, ang each was 2l.OOQ. you wouldn't total it. You tak,e a single transaction. single individual. And if it exceeds 60.00Q cigarettes. that satisfies that element of the CCTA definition of what constitutes contraband cigarettes.")(emphasis added)(annexed to the Rader Declaration as Exhibit D)); and (ii) aspartofits calculation ofrestitution (see U.S. v. Morrison, 685 F. Supp.2d 339,348 (E.D.N.Y. 201 0), reversed and remanded on other grounds, 686 F.3d 94 (2nd Cir. 2012) ("alth~mgh the government supports the State's application [for restitution under the MYRA], it does sp only to the extent that the State's calculation of tax loss is tethered to actual CCTA violations, viz. sales of contraband cigarettes in quantities in excess of 60,000 per transaction. The Court agrees.")(emphasis added)).

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I

of lO,OOO ... in a single transaction ... " See 18 U.S.C. § 2343 (emphasis added). The purpose of

these recordkeeping requirements is to assist the enforcement of the CCTA. Consequently,

§ 2341 should be read as barring transactions involving in excess of 10,000 cigarettes in a single

transaction where the other statutory elements are met.

Similarly, the federal regulations applicable to the CCT A that were promulgated by the

Bureau of Alcohol, Tobacco, Firearms, and Explosives ("A TF") demonstrate that conduct under

the CCTA should be viewed through the lens of a "single transaction" requirement. Specifically,

27 CFR § 646.141, which sets forth the scope of those regulations, states that "[t]he regulations

in thh; subpart relate to the distribution of cigarettes in excess of 60,000 in a single transaction."

27 CFR § 646.141 (emphasis added). 8 Further, the regulations define the term "distribute" as

meaning "[t]o sell, ship, issue, give, transfer, or otherwise dispose of' while defining a

"distributor" as "[a]ny person who distributes more than 60,000 cigarettes in a single

transi):ction." 27 CFR § 646.143 (emphasis added). The recordkeeping portions ofthe

regulations buttress this interpretation. The "General Requirements" provide that "[e]ach

distributor of cigarettes shall keep copies of invoices, bills of lading, or other suitable

commercial records relating to each disposition of more than 60.000 cigarettes." 27 CFR §

646.146 (emphasis added). Thus, the regulations counsel for a logical interpretation ofthe

definition of"contraband cigarettes" as those which are shipped, transported, received,

poss¢sses, sold, distributed, or purchased in a single transaction because only such an

8 The regulations have not been updated following the 2006 amendment to the CCTA that changed the relevant number of cigarettes from 60,000 to 10,000. Nevertheless, these regulations are equally applicable to CCT A in its current form, with references to the specific numper 60,000 being understood to apply similarly to the I 0,000 figure.

10

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interpretation properly reflects the intended coordination of the prohibition on transactions

involving "contraband cigarettes" and the recordkeeping requirements for distributors.

The Complaint does not sufficiently allege that All of Our Butts - or, by extension,

Marcia Gordon - engaged in any single transaction of 1 0,000 or more cigarettes with a New

York City resident. Indeed, All of Our Butts is no longer selling cigarettes at all into New York

City. See Gordon Defendants' Amended Response to Plaintiffs First Set of Requests for

Admission, dated November 29, 2012, at Response No. I (annexed to the Rader Declaration as

Exhibit E). Furthermore, in response to the City's Requests for Admission, the Gordon

Defendants provided a sworn statement that they did not engage in any single sale of more than

I 0,000 cigarettes to a New York City resident during the time period relevant to the Requests.

See id. The only transaction by the Gordon Defendants that could directly impact the City is a

sale to a New York City resident. However, the City has provided no specific or concrete

exampl~s of any sale into New York City of over I 0,000 cigarettes to a single buyer in a single

I

transaction. Nor does the Complaint allege facts sufficient to reasonably infer transactions of

that size. Rather, the only information provided as to a specific transaction by All of Our Butts

relates to two separate sales of only 400 cigarettes apiece, which similarly is insufficient to meet

the jurisdictional threshold of the CCT A. See Com pl. at 11 43, 48, 52, 58; see also Proshansky

Declar~tion at 11 2-3.

For the foregoing reasons, the CCTA claim against Marcia Gordon should be dismissed.

II. THE COMPLAINT DOES NOT STATE A CLAIM FOR VIOLATION OF RICO

The City alleges that the Gordon Defendants violated RICO, with the alleged CCTA

violations by Marcia Gordon forming the basis for the RICO predicate acts. See Compl. at 11

I 02-04~ However, because the City has failed to properly plead a violation of the CCTA as

11

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discussed above, the RICO claims should be dismissed. See CCTA, 18 U.S.C. § 2341(2); ~

also 18 U.S.C. § 1961 et seq.; U.S. v. Fiander, 547 F.3d 1036 (9th Cir. 2008). Moreover, the

City cannot state a RICO claim against Robert Gordon when it: (i) has no statutory authority to

accuse him of violating the CCTA, the alleged predicate act for the alleged violation of RICO;

and (ii) has not asserted a CCTA claim against Mr. Gordon. See I 8 U.S.C. § 2346 (b)(l). Nor

should the City be permitted to assert a CCTA claim against Mr. Gordon's alleged employees,

such as Marcia Gordon, when it has no jurisdiction to proceed against Mr. Gordon himself. See

Section I(A), supra.

A. The City Has Not Properly Alleged a RICO Enterprise or a "Pattern" of Racketeering Activity

The RICO claim also improperly identifies All Of Our Butts as the RICO "enterprise,"

even though it alleges that All Of Our Butts is actually Robert Gordon d/b/a All Of Our Butts.

As Mr. Gordon is identified in the Complaint as a RICO "person" he cannot also be the RICO

"enterprise." This confusing and inadequate pleading is insufficient to state a claim. 18 U.S.C.

§ 1962 (c) requires that the alleged "enterprise" be separate and apart from those persons who are

alleged to be conducting the activities thereof. First Capital Asset Mgmt. Inc. v. Satinwood, 385

F.3d 159 (2d Cir. 2004). In the instant case, there is no distinction between the alleged

"enterprise" and those who are alleged to be conducting its activities. Therefore, the RICO

c !aims fai I to state a cause of action.

The Complaint largely fails to set forth the date, time, or location of the alleged conduct

comprising RICO. The entire complaint is stated "on information and belief as to the actions of

others." See Complaint Introduction at p. 1. The City asserts in conclusory fashion that the

allegations "constitute a pattern of racketeering activity ... in that they consist of two or more acts

of racketeering activity within a ten-year period." See Compl. at~ 115. However, there are no

12

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specific allegations as to when such alleged activities took place. In fact, only~ alleged

violation ofthe CCTA is set forth with any specificity whatsoever. This alleged sale, standing

alone, is insufficient to satisfy the requirement of a "pattern" of RICO activity.9

The Second Circuit has~ sustained as a "pattern," predicate activities which are

alleged to have occurred during a period of less than two years. Spool v. World Child Int'l

Adoption Agency, 520 F.3d 178 (2d Cir. 2008). In the instant case, the City does not plead any

specifi~ allegations to establish that the alleged predicate acts were performed during a period of

more than two years. To the contrary, the effective date of the PACT Act was less than two

years prior to the filing of the Complaint. As the City has already acknowledged in another

context that the claims alleged herein were not enforceable prior to the effective date of the

PACT Act (see Brief Of Amicus Curiae City ofNew York filed in Gordon v. Holder Appeal at

p.3), it has failed to allege a "pattern" occurring over more than two years, and cannot allege

such a pattern.

B. RICO's "Injury to Business or Property" Limitation Precludes Recovery for Injury to a Sovereign Tax Collection Interest

The power of taxation is an incident of sovereignty and not a property right. Case of the

State Freight Tax, 82 U.S. 232, 278 (1873) ("A tax is a demand of sovereignty; a toll is a demand

of proprietorship ... [A state] may tax by virtue of her sovereignty, and measure the tax by

income, but the income itself is beyond her reach."). By contrast, the phrase "business or

property" refers "to commercial interest or enterprises," and does not include damage to

sovereign interests. Hawaii v. Standard Oil, 405 U.S. 251,264 (1972). As a result, the lost tax

9 Nor does it satisfy the elements of the CCT A, which requires a sale of in excess of 1 0,000 cigarettes in a single transaction before the cigarettes in question will be considered "contraband." See Section l(B), supra.

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revenue alleged by the City is insufficient to establish an injury to business or property under

RICO.

Several decisions confirm that RICO cannot be used to collect lost tax revenue. State of

W. a. v. Moore, 895 F. Supp. 864,872 (S.D. W.Va. 1995) ("[T]he Court is not convinced that

civil ICO is an appropriate method for the State to use in recouping that [tax] loss."); State of

Mich. Dep't ofTreasury v. Fawaz, 653 F. Supp. 141 (E.D.Mich. 1986), afrd, 848 F.2d 194,

1988 WL 44736 (6th Cir. 1988) (holding that the Revenue Division of the Michigan State

Treasury Department was not a person having standing to bring a civil RICO action against a

state tax violator).

Allowing claims for lost tax revenue to proceed under civil RICO would have unintended

consequences. "Federal courts would be barraged with state agencies' vindictive civil RICO

actions against tax cheaters. The understandability of this becomes even stronger in view of the

fact that their own comprehensive state remedies and forums are available to sovereign bodies in

the Pfrsuit of state sales tax matters." State of Mich., Dept. of Treasury. Revenue Div., 653 F.

SupJ. at 143; see also Nov. 3, 2009 Transcript of Oral Argument before the Supreme Court in

Hemi Group, LLC v. City of New York, No. 08-969 at 27:15-31:21 ("[I]f in fact the failure of a

State to collect a tax is property, then why isn't every corporation that files an income tax return

and makes two false statements automatically liable for RICO? ... That would mean the States

have'a new method ... of collecting treble taxes from anyone who makes two false statements ...

and it would seem to me that would have vast repercussions .... So that's what's bothering me ...

what is the stopping place? ... ifCongress intended RICO to be used for tax purposes, why didn't

they include failure to pay one's income tax or state tax as a predicate act under RICO?")

(ann~xed to the Rader Declaration as Exhibit F).

I nydocs 1-999899 .I

14



C. The RICO Claims Against the Gordon Defendants' Do Not Sufficiently Allege the Causation Element of a RICO Claim

The City fails to establish that the Gordon Defendants' alleged activity was the proximate

cause of its injury. See Hemi Group. LLC y. City ofNew York, 130 S. Ct. 983 (U.S. 2010).

There are independent factors, such as the wholesaler's failure to stamp the alleged cigarettes

and the taxpayer's alleged failure to pay the tax, which account for the City's alleged injury of

lost tax revenue. Accordingly, the City has not stated a valid claim for Civil RICO. !2:. at 991-

94.

D. The City Has Not Adequately Plead a Claim for Conspiracy to Violate RICO

The City premises its claim against Robert Gordon for conspiracy to violate RICO on an

alleged !intent to "conduct the affairs of the All Of Our Butts Enterprise consist[ing] of acts of

contraband cigarette trafficking into New York City." See Compl. at~ 122. However, because

the City has failed to properly plead a violation ofthe CCTA by Robert Gordon himself, or by

any of his employees or agents, as discussed above, it cannot sustain a RICO conspiracy claim

against Mr. Gordon. Similarly, because the substantive RICO claim against both Mr. Gordon

and his employees and agents- including Ms. Gordon- fails, the City's RICO conspiracy claim

correspondingly cannot survive. See Medinol Ltd. v. Boston Scientific Corp., 346 F.Supp.2d

575, 616 (S.D.N.Y. 2004) ("If a substantive RICO claim fails, then the RICO conspiracy claim

must fail as well."); Edmonds v. Seavey, No. 08 Civ. 5646 (HB), 2009 WL 2949757, at *7

(S.D.N -r. Sept. 15, 2009) ("Where a plaintiff fails to establish a claim for a substantive RICO I

violatioh ... any claim for conspiracy to commit that violation must necessarily fail as well.");

Allen v .. New World Coffee. Inc., No. 00 Civ. 2610 (AGS), 2002 WL 432685, at *6 (S.D.N.Y.

Mar. 19, 2002) ("The dismissal of all of plaintiff's RICO claims leaves the conspiracy cause of

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action without a leg to stand on."). Accordingly, the RICO conspiracy claim should be

dismissed. See CCTA, 18 U.S.C. § 2341(2); ~also 18 U.S.C. § 1961 et seq.

III. THE COMPLAINT DOES NOT STATE A CLAIM FOR VIOLATION OF THE CIGARETTE MARKETING STANDARDS ACT

The Complaint's vagueness and its failure to allege substantial transactions by the

Gordon Defendants, also compel dismissal of the Cigarette Marketing Standards Act ("CMSA")

claim. Moreover, as the CMSA claim is grounded in State law, the dismissal of the federal

claims would deprive this Court of jurisdiction over the CMSA claim, and it, too, would have to

be dismissed.

AfPLICABLE STANDARD OF REVIEW FOR PRELIMINARY INJUNCTION

Generally, before being entitled to "the extraordinary relief of a preliminary injunction,''

a party is required to establish "'(I) irreparable harm and (2) either (a) a likelihood of success on

the merits, or (b) sufficiently serious questions going to the merits of its claims to make them fair

ground for litigation, plus a balance of the hardships tipping decidedly in favor of the moving

party.'" City ofNew York v. Golden Feather Smoke Shop. Inc., 597 F.3d 115, 120 (2d Cir.

2010) (guoting Plaza Health Labs .. Inc. v. Perales, 878 F.2d 577,580 (2d Cir. 1989)). In any

court's ~nalysis, "[t]he most important consideration is balancing the harm to the plaintiff against

the harm to the defendant. Consequently, a court must first address this balancing of the equities

and then weigh the remaining factors accordingly." Blackhawk Industries Products Group

Unlimited. LLC v. U.S. Qeneral Services Administration, 348 F.Supp.2d 649,655 (E.D. Va.

2004). Further, courts must also evaluate whether "the public's interest weighs in favor of I

grantin~ an injunction." Metropolitan Taxicab Bd. OfTrade v. City ofNew York, 615 F.3d 152,

156 (2d Cir. 20 I 0).

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As discussed in detail below, the City cannot prove its entitlement to a preliminary

injunction. First, the balance of the equities tips decidedly in favor of the Gordon Defendants.

Second, the City's Complaint raises complex issues of law surrounding Native American

sover~ignty, which should not be resolved through the mechanism of a preliminary injunction.

Finally, the public interest also weighs in favor of denying the City's application.

ARGUMENT OPPOSING PRELIMINARY INJUNCTION

I. THE PRELIMINARY INJUNCTION SHOULD BE DENIED BECAUSE THE BALANCE OF THE EQUITIES FAVORS THE GORDON DEFENDANTS

In a case addressing issues surrounding the delivery sale of tobacco products by All of

Our Butts, the United States District Court for the District of Columbia already has determined

that the balance of the equities tips in favor of Defendant Robert Gordon. Gordon v. Holder, 826

F.Supp.2d 279, 296-97 (D.D.C. 2011). Mr. Gordon's challenge ofthe PACT Act in the Gordon

v. Hojder matter presented nearly identical considerations for the court- namely, the need to

weig~ the government's alleged harm resulting from All of Our Butts' internet tobacco sales

against the threatened harm to Mr. Gordon's business and livelihood.

Likewise, here, should the City's preliminary injunction motion be granted, it would

devas~ate Mr. Gordon's business. By contrast, the City's damages can be measured easily in

monetary terms should the City ultimately prevail on its claims. As such, the preliminary

injunction should be denied. See Gianni Cereda Fabrics. Inc. v. Bazaar Fabrics. Inc., 335

F.Supp. 278 (S.D.N.Y. 1971); Capitol Paving of D.C .. Inc. v. District of Columbia, 496

F.Supp.2d 54 (D.D.C. 2007).

Furthermore, courts have found that "the equities lie against [a] plaintiff because of the

delay in instituting [a] suit and bringing on [a] motion [for preliminary injunction]. Delays in

seeking preliminary injunctions have been held grounds for barring that relief." Gianni Cereda 17

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Fabric' Inc., 335 F.Supp. at 280. Here, it appears that the City knew of the Gordon Defendants'

internet tobacco sales as early as 2002, and yet never brought a claim against the Gordon

Defendants until ten years later in June 2012. Such a delay demonstrates that the preliminary

injunction sought by the City is not that urgent. Moreover, as the Gordon Defendants are no

longer selling cigarettes into New York City(~ Gordon Defendants' Amended Response to

Plainti!frs First Set of Requests for Admission, dated November 29, 2012, at Response No. 1

[annexed to the Rader Declaration as Exhibit E]), any need the City may have had for a

preliminary injunction has been mooted.

Because the balance of the equities favors the Gordon Defendants, the City's application

for a preliminary injunction should be denied.

II. THE INSTANT MATTER INVOLVES COMPLEX ISSUES OF LAW REGARDING NATIVE AMERICAN SOVERIEGNTY, NOT SUITED TO :RESOLUTION THROUGH A PRELIMINARY INJUNCTION

This case presents several novel and complex questions of law surrounding Native

Ameriqan sovereignty. Foremost amongst these is the appropriateness of the City intervening in

matters bearing on long-standing disputes between the federal government and Indian tribes,

particularly where relations with Indian tribes traditionally falls within the purview of the U.S.

government. The instant matter raises issues surrounding the taxability of tobacco products that

were manufactured and sold by Native Americans on Indian territory, and were taxed by a

sovereign Native American Nation. See Gordon Defendants' Amended Response to Plaintifrs

First S¢t of Requests for Admission, dated November 29, 2012, at Response No. I (annexed to

the Rader Declaration as Exhibit E).

As the Supreme Court has long recognized, "Indian Tribes retain their original natural

rights, ~Nhich vested in them as sovereign entities long before the genesis of the United States."

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Worcester v. Georgia, 31 U.S. 515,519 (1832). As the leading scholar on Indian law has stated

it, rules of statutory construction require "a broad construction when the issue is whether Indian

rights are reserved or established, and for a narrow construction when the Indian Rights are to be

abrogated or limited." See Felix S. Cohen, Handbook of Federal Indian Law, at p. 225.

Moreover:

Indian tribes are "distinct, independent political communities, retaining their original natural rights" in matters of local selfgovernment. Although no longer "possessed of the full attributes of sovereignty," they remain a "separate people, with the power of regulating their internal and social relations." They have power to make their own substantive law in internal matters.

As separate sovereigns pre-existing the Constitution, tribes have historically been regarded as unconstrained by those constitutional provisions framed specifically as limitations on federal or state authority.

* * * As the Court in Talton recognized, however, Congress has plenary authority to limit, modify or eliminate the powers of local selfgovernment which the tribes otherwise possess.

Santa Clara Pueblo v. Martinez, 436 U.S. 49, 55-57 (1978) (extensive citations omitted). 10 So

whil~ Congress may very well have the ultimate word, that word must be clear and unequivocal.

Encroachment on rights set forth in Indian treaties prevents enforcement with respect to

Native Americans. U.S. v. Fiander, 547 F.3d 1036 (9th Cir. 2008). Statutes are to be interpreted

10 ~ lli.§Q id. at 71 ("we have also recognized that the tribes remain quasi-sovereign nations which, by government structure, culture, and source of sovereignty are in many ways foreign to the constitutional institUtions of the Federal and State Governments.~ Elk v. Wilkins. 112 US 94 [1884]"); Merrion v. Jicartlla Apache Tribe, 455 U.S. 130, 148, n 14 ( 1982) (in upholding a Tribe's sovereign authority to impose of a severance tax on natural resources removed by nonmembers from tribal land; the court noted that "[b]ecause the Tribe retains all inherent attributes of sovereignty that have not been divested by the Federal Government, the proper inference from silence [in the Tribe's constitution] on this point is that the sovereign power to tax remains intact").

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liberally in favor of the Indians, with ambiguous provisions interpreted for their benefit. Montana

v. Blackfeet Tribe oflndians, 471 U.S. 759,766 (1985).

New York City's efforts to usurp the Seneca Nation tax scheme and impose taxes on

Native American manufactured product, all of which have Seneca Nation Tax stamps, is a

violation of the 1794 Treaty of Canandaigua, which was executed by the federal government and

the Six Nations of the Iroquois Confederacy. The relevant text of the treaty states:

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The President of the United States having detennined to hold a conference with the Six Nations of Indians for the purpose of removing from their minds all causes of complaint, and establishing a finn and permanent friendship with them ...

ARTICLE 2. The United States acknowledge the lands reserved to the Oneida, Onondaga, and Cayuga Nations in their respective treaties with the State of New York, and called their reservations, to be their property; and the United States will never claim the same, nor disturb them, or either of the Six Nations, nor their Indian friends, residing thereon, and united with them in the free use and enjoyment thereof; but the said reservations shall remain theirs, until they choose to sell the same to the people of the United States, who have the right to purchase.

ARTICLE 3. [Geographic boundaries of the treaty are described here] ... Now, the United States acknowledge all the land within the aforementioned boundaries, to be the property of the Seneca Nation; and the United States will never claim the same, nor disturb the Seneca Nation, nor any of the Six Nations, or of their Indian friends residing thereon, and united with them, in the free use and enjoyment thereof; but it shall remain theirs, until they choose to sell the same, to the people of the United States, who have the

ARTICLE 4. The United States have thus described and acknowledged what lands belong to the Oneidas, Onondagas, Cayugas and Senecas, and engaged never to claim the same, not disturb them, or any of the Six Nations, or their Indian friends residing thereon, and united with them, in the free use and enjoyment thereof; now, the Six Nations, and each of them, hereby engage that they will never claim any other lands, within the boundaries of the United States, nor ever disturb the people of the United States in the free use and enjoyment thereof.

20



Further, Article IX of the Treaty of May 20, I 842 (otherwise known as the "Buffalo

Creek Treaty") between the Seneca People and the United States requires the United States to

protect the Territories of the SNI and the Seneca People from taxes. Indian treaties are deemed

the legal equivalent of federal statutes (Solis v. Matheson, 563 F.3d 425, 430 [9th Cir. 2009]),

and if silent as to their applicability to Indian tribes, federal statutes will not be interpreted to

violate rights guaranteed by Indian treaties. U.S. v. Fiander, 547 F.3d 1036, 1039 (9th Cir.

2008). The CCTA and the PACT Act, as applied by the City of New York in the instant case,

violate the Treaty of Canandaigua and the Buffalo Creek Treaty. Accordingly, these statutes are

inapplicable with respect to Native manufactured cigarettes sold by All Of Our Butts, a Native

American company, licensed by the Seneca Nation of Indians and subject to all rules, regulations

and taxes imposed by the Seneca Nation of Indians, a federally recognized Indian Tribe.

For the aforementioned reasons, the City's preliminary injunction motion should

be denied.

III. : THE PUBLIC INTEREST WEIGHS AGAINST GRANTING A I

! PRELIMINARY INJUNCTION

The City is being disingenuous regarding the legal grounds for the instant action against

the Gordon Defendants, having asserted directly opposing claims as part of an Amicus

submission in the Gordon v. Holder matter. Further, the City is using this lawsuit as a means of

thwarting Mr. Gordon's constitutional claims that have been thus far successful in Gordon v.

Holqer. As a result, the public interest weighs against granting the preliminary injunction sought

by the City.

This action contradicts the City's position- asserted in the Gordon v. Holder appeal--

that the City has no remedy against the Gordon Defendants under existing law. Significantly, the

City has filed Amicus Briefs in Gordon v. Holder in both the District Court proceeding and the

21

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current Appeal and Cross-Appeal pending before the D.C. Circuit Court of Appeals. In its most

recent Amicus Brief, filed with the D.C. Circuit Court of Appeals, the City asserted that the

injunction staying the PACT Act will interfere with enforcement of New York State and City tax

regulations concerning remote sales of tobacco by "delivery sellers." Indeed, the City's Amicus

Brief stated: " ... the injunction imposed by the court below impairs those benefits [provided by

the PACT Act] and restores to delivery sellers like Gordon the ability to divert state and local tax

revenue ... " Brief of Amicus Curiae City of New York filed in Gordon v. Holder Appeal at p.3

(emphasis supplied). In its Amicus submission, the City makes specific reference to the alleged

sale that forms the basis for this Complaint (May 3, 2012 delivery of order for two 200 count

bags of"Rollies Menthol King"). Compare Compl. at~ 48 with Proshansky Declaration at~~ 2-

3.

The City has taken diametrically opposed positions in this case and in the Amicus Briefs

it filed in Gordon v. Holder. Specifically, in the D.C. Circuit, the City argues that without the

PACT Act it is powerless to prevent delivery sellers from selling unstamped cigarettes. See Brief

of Amicus Curiae City ofNew York filed in Gordon v. Holder Appeal at p. 3. However, the

Complaint in this action seeks to do just that, despite the fact that key provisions of the PACT

Act requiring delivery sellers to comply with state and local tax schemes have been stayed. The

City's Amicus Brief also asserts that prior to enactment of the PACT Act, "delivery sellers

escaped the remedies of then-existing law." See id. However, the instant Complaint attempts to

utilize pre-PACT Act statutes- such as the CCT A- to enjoin delivery sales of allegedly

unstamped cigarettes.

These inherently contradictory allegations add to the confusion and uncertainty as to the

City's true position. This action is nothing more than a retaliatory effort to deter Robert Gordon

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from exercising his Constitutional right to challenge the PACT Act- a challenge which has been

successful to date, and which the City has opposed- by attempting to divert Mr. Gordon's

attention and resources from the PACT challenge. Accordingly, because it is overwhelmingly in

the pUblic interest to permit individuals to make Constitutional challenges, and to promote

transparency and consistency in government actions, the public interest weighs in favor of

denying the requested preliminary injunction.

CONCLUSION

For the reasons detailed above, the Gordon Defendants respectfully request the Court to

dismiss the City's Amended Complaint with prejudice. Further, the Gordon Defendants

respectfully request that the City's application for a preliminary injunction be denied.

Dated: New York, New York November 30, 2012

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ANDERSON KILL & OLICK, P.C. 1251 A venue of the Americas New York, New York 10020 (212) 278-1000

By: Is/ Adam J. Rader

23

Michael A. Lacher. (ML 8229) Adam J. Rader (AR 3530) Attorneys for Defendants Robert Gordon, d/b/a All Of Our Butts and Marcia Gordon


case 1 :12-cv-04838-jmf document 43 filed 12/01/12 page 1 of … · 2013-05-23 · case...

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