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Freedom Holdings, Inc. v. Cuomo, No. 09-0547

By FindLaw Staff on October 18, 2010 5:05 PM

In Freedom Holdings, Inc. v. Cuomo, No. 09-0547, Sherman Act and Commerce Clause challenges to New York's Escrow and Contraband Statutes, enacted in furtherance of a 1998 Master Settlement Agreement between cigarette manufacturers and all but four states, the court affirmed judgment for defendants where plaintiffs failed to point to record evidence that precluded the district court from finding, as it did, that the challenged statutes were unilateral state actions that did not mandate or authorize private parties to restrain trade or, in any event, that the statutes were not subject to Sherman Act preemption by virtue of the state action immunity doctrine.

As the court wrote:  "Plaintiffs Freedom Holdings, Inc., and International Tobacco Partners, Ltd., are cigarette importers. They filed this putative class action in the United States District Court for the Southern District of New York (Alvin K. Hellerstein, Judge) to enjoin the enforcement of New York statutes enacted in furtherance of a 1998 Master Settlement Agreement ("MSA") between a number of tobacco companies and various government entities, including New York State. Plaintiffs contend that the laws at issue, N.Y. Pub. Health Law §§ 1399-nn-1399-pp (the "Escrow Statute"), and N.Y. Tax Law §§ 480-b, 481, and 1846 (collectively, the "Contraband Statute"), impermissibly (1) restrain trade in violation of section 1 of the Sherman Act, 15 U.S.C. § 1; and (2) regulate out-of-state commerce in violation of the Commerce Clause, U.S. Const. art. I, § 8, cl. 3."

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