Spitzer just got his face slapped!!!
Posted on 03/19/2006 6:00:54 AM PST by SheLion
New York City's attempt to sue Internet cigarette sellers for lost tax revenue under a racketeering theory has been dismissed by a federal judge for the second time.
Southern District Judge Deborah Batts dismissed the amended complaint filed in City of New York v. Nexicon, 03 CV 383, finding that the city had once again failed to meet the standard for pleading a racketeering enterprise.
The case is one of five that the corporation counsel has brought against Internet cigarette sellers it claimed have been avoiding taxes and failing to file tax reports on the number of sales they make to New York residents. It is considered a template for the other four cases -- an important part of the city's effort to recoup as much as $100 million in lost state and city tax revenues each year.
Eric Proshansky, deputy chief of the law department's affirmative division, said Thursday the city will appeal to the 2nd U.S. Circuit Court of Appeals.
The city sued under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §1961 et seq., seeking compensatory damages as well as injunctive relief. It wanted to recover three times the amount of tax revenue lost under the alleged tax-avoidance scheme.
The city tried to break new ground by alleging that the failure to file so-called Jenkins Act reports with New York state on the volume of cigarette sales in New York constitutes the predicate acts of mail and wire fraud needed to make a case under RICO.
But in her decision on motions to dismiss in January 2005, Batts was skeptical about the city's "novel theory."
The Jenkins Act, she said, was a criminal act to be used by the federal government against tobacco companies to prevent state tax avoidance going forward through injunctions and, retrospectively, through criminal penalties.
Batts said it was doubtful the Jenkins Act even applied in civil cases and it was "extremely unlikely" that any party other than the federal government may sue under the act.
She also undercut the case by ruling the city failed to meet the standard for "distinctiveness" under RICO, in that it had not shown there was any difference between the employees of the Internet sales companies named in the suit and the companies themselves.
Nonetheless, she gave the city leave to replead.
But in this week's decision, Batts said the city again failed on a key element of the statute -- that "the enterprise as alleged must be distinct from the person conducting the affairs of the enterprise."
Under 2nd Circuit case law, she said, "a plaintiff may not allege 'a RICO enterprise that consists merely of a corporate defendant associated with its own employees or agents carrying on the regular affairs of the defendant.' Riverwood Chappaqua Corp. v. Marine Midland Bank, N.A., 30 F.3d 339 (2d Cir. 1994)."
The city claimed that it had met the standard for distinctiveness.
Judge Batts disagreed. The language of the Jenkins Act, she said, forbids "persons" from transporting cigarettes for profit in interstate commerce," and a person includes "corporations, companies, associations, firms ... as well as individuals."
Batts said "it is clear that companies are the primary entities responsible for filing Jenkins Act reports."
"The catch-all phrase 'as well as individuals' suggests a separate class of people who may be liable under the Jenkins Act, but does not by any means connote officers or directors of the business entities listed before the phrase," she said. "Accordingly, as only the defendant companies are responsible for filing the reports, and only they can be accused of fraudulently concealing such reports by not filing them, only the defendant companies may be considered as having committed predicate acts."
Proshansky was joined by Assistant Corporation Counsels Toby Butterfield and James Altman in representing the city.
James L. Bikoff of Silverberg Goldman & Bikoff, in Washington, D.C., was lead counsel for the cigarette sellers.
Ping!
This has nothing to do with Spitzer, unfortunately. But on the bright side it is the Bloominidiot that got his face slapped. This was a City of NY not State case.
States acted like children in a candy store with unlimited funds. Always spending more than they have. Each party trying to impress the voters to vote for them. None of them ever think beyond the moment of when the bottomless pool of the American taxpayer pocket developes a hole and dries up.
PING!!!!!
The 20-30 Minutes Fiasco: Why Anti-Smoking Groups Providing Inaccurate Health Information is Unethical
http://www.freerepublic.com/focus/f-news/1599156/posts
What is this?
Maybe I should have put that the link is a good example of how we got to smokers being taxed and states going after the revenue because it is politically correct? Sorry.
Oh ok! I kept going back and forth thinking I must have goofed or something. hehe!
The utter"Hypocrisy"is DAZZLING!On the one hand,they have outlawed smoking practically everywhere(including PRIVATE PROPERTY....restaurants,bars,etc.etc.) because it's so injurious to our health.On the other hand,they are crying bloody murder because of their lost revenues!!Pardon me while I visit the toilet!!!
"Go get your shinebox, Spitzer."
This is wonderful news!
The utter"Hypocrisy"is DAZZLING!On the one hand,they have outlawed smoking practically everywhere(including PRIVATE PROPERTY....restaurants,bars,etc.etc.) because it's so injurious to our health.On the other hand,they are crying bloody murder because of their lost revenues!!Pardon me while I visit the toilet!!!
Oh...they will come up with a solution you can count on it!As long as lawmakers(snakes)have the priviledge to confiscate money from the Taxpayer and put it in their pockets they will find a way.They have dreams at night and plenty of time during the day to come up with ways to seine the money from the fishes in the sea of America.They'll even cut the throuts of their own children and grandchildren of the future to do so.
oops! throats...(correction)
Good news!
Yes,they will(and do)!They "cloak"their collective DEPREDATIONS with phrases like:"In The Interests Of The Public Good"!!!!!!!!!!!!!!!!
Oh, no! Our revenues are drying up! We need to sue on ANY grounds possible to make-up for it!!!!!!!!!!!!!!!
BWAHAHAHAHAHAHAHAHAH!
I sure am glad this judge has a brain. It doesn't seem like the anti's have had a good week. They got their butts paddled in Ohio, too.
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