RYO MacHine, LLC v. United States Department of Treasury
2012 U.S. App. LEXIS 19630
6th Cir.2012Background
- The Bureau’s 2010-4 ruling treats retailers offering roll-your-own machines as tobacco product manufacturers for tax/permit purposes.
- RYO and Tobacco Outlet challenge the Ruling in district court, seeking declaratory and injunctive relief and a TRO.
- Congress amended § 5702(d) in July 2012 to include retailers making roll-your-own machines available, effectively mirroring the Ruling for post-amendment conduct.
- The Highway Act amendment moots the dispute for roll-your-own sales after July 6, 2012, and the court must consider mootness and jurisdiction.
- The district court granted a preliminary injunction; the district court’s jurisdiction was analyzed under the Anti-Injunction Act (AIA).
- The panel vacates the injunction and remands for dismissal for lack of jurisdiction due to the AIA, and addresses mootness prospectively.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does the Highway Act moot the dispute? | RYO argues amendment removes live controversy post-enactment. | The Government contends mootness applies to post-amendment conduct only; pre-amendment issues remain. | Mooted with respect to post-amendment removal; remand for dismissal of pre-amendment claims. |
| Does the Anti-Injunction Act bar jurisdiction over the suit? | Companies contend the AIA does not bar their challenge to the Ruling. | The Bureau asserts the Ruling relates to tax assessment/collection, falling within AIA restrictions. | AIA bars jurisdiction; district court must dismiss. |
| Does the South Carolina v. Regan exception apply? | Exception should allow suit to proceed despite AIA due to lack of alternative remedies. | Exception is narrow and does not apply here because retailers can obtain relief through other avenues and interests are intertwined with taxpayers. | Exception does not apply. |
| Does the Enochs v. Williams Packing exception apply? | Equity and irreparable harm justify equitable relief notwithstanding AIA. | Ruling is plausible on the face; Williams Packing test not satisfied. | Exception does not apply. |
| Do standing concerns affect the result? | Companies may lack standing because injury stems from retailers’ discretion, not the Bureau’s action. | Injury relates to tax assessment/collection and standing is questionable but unnecessary to resolve due to AIA dismissal. | Standing not decided due to lack of jurisdiction; require dismissal anyway. |
Key Cases Cited
- Bob Jones Univ. v. Simon, 416 U.S. 725 (U.S. 1974) (AIA applies to preemption of tax collection suits; broad interpretation)
- Bob Jones Univ. v. Simon, 416 U.S. 736 (U.S. 1974) (premier case illustrating exceptions; not outcome-specific here)
- Americans United for Separation of Church and State v. Bowdoin, 416 U.S. 761 (U.S. 1974) (illustrates AIA exception context; donor-tax rationale)
- South Carolina v. Regan, 465 U.S. 367 (U.S. 1984) (narrow AIA exception for lack of alternative remedies)
- Enochs v. Williams Packing & Nav. Co., 370 U.S. 1 (U.S. 1962) (exemption requires clear government non-victory and equity jurisdiction)
- Thorpe v. Housing Auth. of Durham, 393 U.S. 268 (U.S. 1969) (statutory interpretation timing governs appellate law analysis)
- United States v. Schooner Peggy, 5 U.S. (1 Cranch) 103 (U.S. 1801) (early interpretation guiding mootness principles)