Philip Morris Inc. v. Reilly

267 F.3d 45 (1st Cir. 2001)

 

RULE:

The United States Court of Appeals for the First Circuit notes that the prohibitions imposed upon state regulation by the Dormant Commerce Clause fall into three general categories. First, a state statute which has an extraterritorial reach, whether intended or not, is a per se violation of the clause. Thus, when a state statute regulates commerce occurring wholly outside the state's borders or when it has a practical effect of requiring out-of-state conduct to be carried on according to in-state terms, it will be invalid. Second, if a statute discriminates against out-of-state commerce, or when its effect is to favor in-state economic interests over out-of-state interests, it will be held invalid unless the state can show that it advances a legitimate local purpose that cannot be adequately served by reasonable nondiscriminatory alternatives. Lastly, the court applies a lower level of scrutiny when the state statute does not discriminate but has incidental effects on interstate commerce. Where the statute regulates evenhandedly to effectuate a legitimate local public interest, and its effects on interstate commerce are only incidental, it will be upheld unless the burden imposed on such commerce is clearly excessive in relation to the putative local benefits.

FACTS:

Tobacco companies sued state officials in the United States District Court for the District of Massachusetts, claiming that the Massachusetts Tobacco Ingredients and Nicotine Yield Act violated the Takings Clause, the Commerce Clause, and the Due Process Clause because it required the tobacco companies to annually report the ingredient list and nicotine yield rating of tobacco products sold in Massachusetts. The lower court granted the tobacco companies motion for summary judgment. The state officials appealed to the United States Court of Appeals for the First Circuit.

ISSUE:

Did the Massachusetts Tobacco Ingredients and Nicotine Yield Act violate the Takings Clause, the Commerce Clause, and the Due Process Clause?

ANSWER:

No

CONCLUSION:

The Court held that the lower court had erred in finding an unconstitutional taking because the requirement to provide information was not a per se taking. Moreover, there was no regulatory taking because requiring the information was a valid exercise of police power and the Commonwealth had not provided explicit guarantees of confidentiality. The state law also did not violate the Dormant Commerce Clause because the potential impact on the tobacco companies' profits did not mean that the statute was regulating the profits. In addition, the burden imposed was not excessive given the law's even-handedness and the expected public benefit of disclosing potentially harmful ingredients.

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