Commonwealth Brands, Inc. v. Morgan

Appellants raised a constitutional challenge to a fee legislated on cigarettes distributed through Mississippi for sale outside the state, claiming separate violations of the Commerce and Due-Process Clauses. In 2009, the Mississippi Legislature passed a law imposing a fee on the sale, purchase, and distribution in Mississippi of cigarettes manufactured by companies that did not enter into settlement agreements with the State as a result of a 1997 lawsuit (the "nonsettling manufacturer" or "NSM" law), "including cigarettes sold, purchased or otherwise distributed in this state for sale outside of this state." In October 2009, the chancery court entered a temporary restraining order enjoining the Commissioner of Revenue from assessing and collecting the challenged fee, and later ruled that the legislative amendment did not apply retroactively, denied Appellants' motion for reconsideration, and granted the Commissioner's motion for final judgment. However, the chancery court did not enter final judgment at that time. In 2011, the chancellor entered final judgment, which incorporated an August 2010 order (denying Appellants’ request for a permanent injunction and declaratory relief) and a May 2011 order (denying motion for rehearing and granting motion for final judgment). Appellants raised several issues on appeal; the Supreme Court found that the provision of the NSM law imposing a fee on NSM cigarettes distributed through Mississippi for sale outside the state was not internally consistent in violation of the Commerce Clause. The Court declined to address Appellants' due process argument. Furthermore, the Court found that the chancery court erred in granting claims for attorney fees asserted under 42 U.S.C. 1988 for Appellants' section 1983 challenge to the constitutionality of the NSM law. The Court found that all Appellants had an adequate remedy at state law (declaratory relief under Mississippi Rule of Civil Procedure 57), and as such, the chancery court should have "refrain[ed] from considering Section 1983 claims in tax cases, mooting Section 1988 claims for fees. That being said, no basis exist[ed] for a claim by Appellants for attorney fees." View "Commonwealth Brands, Inc. v. Morgan" on Justia Law