Gordon v. Holder
2011 U.S. Dist. LEXIS 139201
D.D.C.2011Background
- Gordon, a Seneca delivery seller, challenges two PACT Act provisions: a mail ban on shipping cigarettes and a prepayment tax requirement for remote sales.
- PACT Act aims to curb underage smoking, cigarette trafficking, and tax evasion; it expands registration, shipping, record-keeping, and age-verification requirements.
- Gordon formerly sold by mail; after enactment, he ships only locally and via a small carrier; he maintains an online presence referencing tax immunity as a sovereign nation.
- Gordon filed suit June 2010; the district court denied a TRO; on remand the D.C. Circuit instructed separate consideration of each constitutional claim and standing.
- The court held only Gordon’s due-process challenge to the tax provisions has likelihood of success; mail ban and Tenth Amendment claims fail; injunction granted for the tax provisions.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the mail ban violate due process or equal protection? | Gordon contends irrational policies burden lawful commerce and favor in-state retailers. | Congress has postal authority; rational-basis review sustains the mail ban to further legit aims. | Mail ban survives rational-basis review; no due process/equal protection violation. |
| Do the tax provisions violate due process by imposing taxes without sufficient minimum contacts? | Each sale creates a minimum contact; due process requires connection to the taxing state. | Federal law permits requiring compliance with state taxes; minimum contacts need not be per-state for a federal regime. | Tax provisions may violate due process; not sufficiently linked to states from single sales at this stage. |
| Does the PACT Act commandeer states under the Tenth Amendment by forcing tax collection? | Act coerces states to enact/enforce a federal tax scheme. | Act merely requires delivery sellers to comply with existing state/local tax laws; states retain autonomy. | No commandeering of states; Tenth Amendment challenge fails. |
Key Cases Cited
- Quill Corp. v. North Dakota, 504 U.S. 298 (1992) (due process limits on taxing out-of-state sellers; minimum contacts principle)
- International Shoe Co. v. Washington, 326 U.S. 310 (1945) (minimum contacts standard for in-person jurisdiction)
- World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286 (1980) (foreseeability and substantial connection required for due process)
- Burger King Corp. v. Rudzewicz, 471 U.S. 462 (1985) (purposeful availment and forum connection for jurisdiction)
- New York v. United States, 505 U.S. 144 (1992) (federalism limits on congressional commandeering of state regimes)
- Printz v. United States, 521 U.S. 898 (1997) (cannot command state officers to enforce federal programs)
- James Clark Distilling Co. v. Western Maryland Ry. Co., 242 U.S. 311 (1917) (commerce laws and federal reach over interstate activities)
- Kentucky Whip & Collar Co. v. Illinois Central Ry. Co., 299 U.S. 334 (1937) (state compliance with commerce acts does not vest state power over federal regulation)
- Heller v. Doe, 509 U.S. 312 (1993) (rational-basis scrutiny and permissible governmental objectives)
- MeadWestvaco Corp. v. Illinois Dept. of Revenue, 553 U.S. 16 (2008) (fiscal relation between taxing power and protection/benefits from the state)