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To be argued by HOwARD C. ANTRON (fA1TYt IIf ApppEtl-4 STATE OF NEW YORK LONG ISLAND TOB':'-0 CO., INC., MAURICE BRON9TEIN djb%a ALLIED CIGARcTTE SALES, and ROBERT BOG.ITS d/b/a B & B VESDING CO., Plainti, ff s-rl p p ellarats, -aaftlIlst- JoaN V. LIxDSAx, as Mayor of the City of New York and RICaARD LEwlsoaN, as Finance Administrator of the City of New York, Def endan.ts-Responden.ts. BRIEF FOR PLAINTIFFS-APPELLANTS POLLAK, SWARTZ, STARS iC .<1xn.oN 1lttornegs for Plaintiffs-Appelln,nts 1133 Avenue of the Americas New York, N. Y. 10036 OX 7-3988 MERVIN C. POLLAE- HOWARD C. AbIRON ~'yILLIAM R. POLLA$ of Counsel n 0 L Fa A

2 differential for all cigarettes sold at retail in the City of New York. That differential was three or four cents a pack, depending upon tar and nicotine content. There was no exception or special treatment in the original Regulation for cigarettes sold through vending machines as distinguished from c:garettes sold over the counter. The original Regulation adopted on July 1, 1971, was never enforced in connection with cigarette sales through vending machines. (R. 41) This action was commenced in February, 1973 and sought a determination that the New York City Administrative Code and the Regulations promulgated thereunder were illegal insofar as they required a differential pricing sys- tem for cigarettes sold in the City of New York. Appel- lants also sought to enjoin respondents permanently and pendente lite from enforcing the price differential require- ment with respect to cigarettes sold through vending machines. A motion was made before Honorable Justice Samuel J. Silverman seeking a preliminary injunction. Respondents cross-moved to dismiss the complaint. Appellants' motion was denied, Respondents' cross-motion to dismiss the com- plaint was granted. The judg7nent inter alia declared that the pertinent provisions of the Administrative Code and the Cigarette Tas Law Regulations were in all respects legal, valid and constitutional. Appellants duly appealed to the Appellate Division, First Department, which, by Order dated October 4, 1973 affirmed Justice Silverman's order and judgment below, a stay pre- viously granted by the Appellate Division for a further period of ten days. (R. 77) Appellants, within that ten day period, duly served and filed a notice of appeal to this Court dated October 9, 1973. (R. 75)

TABLE OF CONTENTS PAGE Jurisdiction _--------------------------------------------- ---------------------------- 3 Statement ................................. ...------- ------------------------ --.......... 3 New York State Enabling Statute ..... ....................... 3 New York City Local Law .......................................... 3 Basic Price Differential Regulation ........................ 4 Questions Involved......................°-----------------.....--------°----- 6 Summary of Argument ........ -----....... ----------------------------------- 7 POrNT I- There Is No Reasonable Relationship Between a Differential In the Price of Cigarettes Based on Tar and Nicotine Content and the Cigarette Brand Preferences and Selection By Smokers In the City of New York -------------------------------------------------------- 9 POINT II- The Price Differential Requirement Is Not Author- ized By the State Enabling Act --------.--_....._............ 12 POINT III- The Price Differential Requirement Is Cncon- stitutionall,c Broad ------------- .............. .-------------- ------------- 17 POINT IV- The Price Differential Provision Is Barred By the Federal Public Health Smol:ing Act ........................ 20 .~ a rv ~ v1 t-~ V~

Tnixrt nf Appettts STATE OF tiTE-W YORK LONG IsLAIiD TOBACCO Co., INC., MLIIRIGE BRONSTEIN d/b/a ALLIED CIGARETTE SALES, and ROBERT BOGATS d/b/a B & B VENDING CiO., Plaintiffs-2ppellants, -against- JOHN V, LINDSAY, as Mayor of the City of New York and Rlca-sRn LEwisoax, as Finance Administrator of the City of New York, Defendands-Respondents. BRIEF FOR PLAIiNTIFFS-APPELLANTS This appeal involves the validity of an amendment to Article 2-A(c) of the Cigarette Tax Law Regulations for The New York City Administrative Code promulgated by the Finance Administrator of the Ciiy of New York. The amendment was promulgated on December iS, 1972 to be effective on January 27, 1973. The amendment in questionrequired cigarettes sold in vending machines in the City of New York to be sold at five cents differential between "low tar" cigarettes and all other cigarettes regardless of whether the latter were subject to a three or four cents additional tax. Prior to this amendment of the section of the Adminis- trative Code that Regulation originally required a price i I IR,

3 Jurisdiction This Court has jurisdiction of this appeal by reason of New York Constitution, Art. 6 Sec.. 3(b). All questions presented by this appeal are questions of law and this Court has jurisdiction j determine them pursuant to New York Constitution, Art. 6 Sec. 3(a). Statement New York State Enabling Statute Since 1952, the New York State enabling statute, L.1952, c.235, as amended, has authorized New York City to impose "taxes on cigarettes . . . such as the legislature has or would have power and authority to impose". Section 1(1). On June 9, 1971, the enabling statute was amended by L.1971, c.394 effective July 1, 1971, to authorize the City of New York to impose an additional tax of 3¢ per pack of cigarettes containing either more than 17 milligrams ("mg.") of "tar" or more than 1.1 mg. of nicotine, and an additional tax of 40 per package of cigarettes containing both more than 1.1 mg. of nicotine. Section 1(1)(a). No other changes were made in the enabling statute at that time. It is noted that neither prior or subsequent to the 1971 amendment, has the state enabling statute ever .con- tained any reference to any requirement for a differential in the retail price of cigarettes on the basis of tar and nicotine content or on any other basis. New York City Local Law Local Law No. 34 of 1971, 49 City Record 3260 (July 15, 1971), enacted June 22, 1971 effective July 1, 1971 amended the cigarette tax law provisions of the New York City Ad- ministrative Code by authorizing the imposition of the ad- F

6 ing machines were involved and that the cost of altering these machines to conform to the requirements of the amended price differential regulation would be approxi- mately $25.00 per machine, or some $315,000. (R. 42) Aside from the heavy cost involved there are other prob- lems involved in compliance with the amerided regulation. Approximately 15% of the cigarette vending machines in New York City cannot be converted to a two-tier price system, and will have to be replaced. There is a shortage of skilled mechanics and parts necessary to make such con- versions where they can be made. The tar and nicotine content of the cigarette brands subject to the amended regulation is determined, periodically issued by Federal Trade Commission reports, the lastt of which was issued some time in February, 1973, and the next is shortly to be issued. Each time there is a reported change in the tar and nicotine content of any cigarette brands operators of vend- ing machines will be forced to make additional correspond- ing adjustments in the prices at which those brands will be sold through their machines. This, in turn, involves sub- stantial repeated conversion costs. This appeal parallels Cook, now pending before this Court. With the exception of the arguments contained in Point I this brief, the arguments herein embrace sur-!an- tailly some of the same issues raised in Cook. As to these is€ues, these arguments are for the most part identical with the arguments of Appellant's brief in Cook. Questions Involved 1. Did the defendants, by requiring a price differential, exceed the scope of the authority granted them by the State Enabling Statute L. 1971 C 394? The courts below held that it did not. A

7 2. Did the defendants violate due process by adopting a broad price differential requirement in order to advise cigarette purchasers of a differing tar and nicotine tax when a simple sign would sufflce g The courts below held that due process was not violated. 3. Is the defe ~tant's adoption of the price differential requirement barred by Section 5(b) of the Federal Public Health Cigarette Smoking Act of 1969? The courts below held that it was not. 4. W ere defendants acting within their local police power rights F The courts below held that they were. Summary of Argument 1. There is no authority granted to Respondents to legislate non-revenue health measures by requiring vari- ations in the retail purchase price of cigarettes based upon tar and nicotine content, 2. It is settled that a delegation of taxing power by the Legislature to a municipality must be express and can- not be inferred. The State enabling statute does not ex- pressly authorize the City to impose a cigarette price differential requirement. Such a requirement is not a procedural detail which may be authorized by implication; it is a literally unprecedented attempt to use the taxing power to fix prices for a non-tas purpose. 3. Constitutional due process of law requires that the State not resort to a sweeping or burdensome regulation

10 production of revenue, although these taxes, too, have been fixed for_many years at rates which vary according to alcohol content of the subject beverages [Tax Lew §424(a)- (f)]. To cite but one example of this comparable, non- ecological variance, liquors containing not more than 24% of alcohol by volume are taxed at fifty cents per gallon [Tax Law 6424(e)] while all liquors with a higher alcoholic content are taxed at one dollar and fifty cents per gallon [Tax Law §424(f)]. Similarly, authority cited below by Respondents for the proposition that smoke from cigarettes with a high tar and nicotine content is more harmful in its effect on human health is also an insufficient basis for inferring that the State Legislature must have intended to authorize, for health and not for revenue reasons, taxation of such ciga- rettes at higher rates in a limited geographic area. If this had been the legislative concern and purpose the graduated cigarette tax increase should have been imposed on the sale of cigarettes throughout the State and not confined to cigarettes sold only in the City of New York. In addition, Respondents have not shown, because they cannot show, legislative recognition and e3pActation that the ingrained brand preference of habitual cigarette smokers will or can be changed by the imposition of price differentials between brands. Respondents have ^ot established in this action, or anywhere else, that an enforced price differential of up to four cents a pack would, in fact, discourage or diminish appreciablp,in the City of New York, the use of cigarettes with higher tar and nicotine content. Respondents suggest the contrary when they cite statistics to show that despite the long national campaign to discourage cigarette smok- ing by public programs, health warning requirements on cigarette packs and the prohibition against all broadcast advertising of cigarettes, the sale of cigarettes in this 0 ... . . . . . . r

S when a narrower regulation would achieve its purpose. In this case the City's purpose-to inform customers of the additional tar and nicotine tax they are paying-could be accomplished by a simple sign-posting requirement. 4. The price differential requirement is barred by Sec- tion 5(b) of the Federal Public Health Cigarette Smoking Act of 1969, 15 U.S.C. Sec. 1334(b), which preempts any State or local regulation "based on smoking and health ... with respect to the advertising or promotion of any cigarettes" bearing the warning required by the Act. 5. The price differential i?gulation and its amendment are not within the local police power of the City of Vew York. That power cannot be used to prohibit conduct which is permitted by State law. The State permits flex- ibility in pricing cigarettes without regard to tar and nicotine content, and that statewide permissible flexibility cannot be curtailed by a purported exercise of local police power. .~ •.- a h3 ~Ll -0 ~.) O

lll PAGE Papachristoia v. City of Jacksonville, 405 U.S. 156 (1972) 17 ----................................................... --------••----- ------ .. Rice v. Santa Fe Elevator Corp., 331 U.S. 218 (1947) .... 21 Robin v. Incorporated Pillage o] Hempstead, 30 N.Y. 2d 347, 285 N.E.2d 285, 334 N.Y.S.2d 129 (1972) ........ 26 S. H. Kress d^ Co. v. Department of Health, 283 N.Y. 55, 27 N.E.2d 431 (1940) --°---- ...................................... 24 Society of the Plastics Inda,stry, Inc. v. City of New York, 68 Misc. 2d 366, 326 \T.Y.S.2d 788 (Sup. Ct. N.Y. County 1971) ---------------------- -------- ---------------------- 12 Trio Distrib. Corp. v. City of Albamy, 2 N.Y.2d 690, 143 N.E.2d 329, 163 N.Y.S.2d 585 (195T) .................... 17 .T'inited States Steel Corp. v. Gerosa, 7 N.Y.2d 454, 166 N.E.2d 459, 199 N.Y.S2d 475 (1960) ............................ 12 Western Elec. Co. v. Taylor, 276 N.Y. 309, 12 N.E.2d 309 (1938) -------------------------- .---------------- -------------- ----------- .-...- 13 _ Statutes and Rules: Federal Public Health Cigarette Smoking Act of 1969, Section 5(b), 15 U.S.C. § 1334(b) ........................ 7, 8, 20, 21 N.Y. Const., Art. 6, § 3.............. ...----------------- .------------------ ... 3 N.Y. Const., Art, 16, § 1-------------------------- ...------------------- .... 12 N.Y. Tas Law §§ 470-82 ------- ................. ------------------------ -...... 25 N.Y. Tax Law § 471(3) --------------- ------------------------------ -11,15, 25n L. 1952, c. 235 ------------------------------------------------------------------------- 11 L. 1971, e. 394 -- ---- ........................ ----------------------- --------- 3, 6, 9,11 N.Y. City Admin. Code § D46-2.0 ........ ......................... ..... 4,15