State v. NORTH OF THE BORDER TOBACCO, LLC
162 N.H. 206
| N.H. | 2011Background
- The 1998 Master Settlement Agreement allocated annual payments into a state escrow to fund public health measures; non-participating manufacturers (NPMs) may trigger adjustments if they lose market share.
- New Hampshire enacted RSA 541-C (NPM Act) in 1999, requiring tobacco manufacturers to participate or deposit funds into an escrow by April 15 after the year in question.
- RSA 541-D (2003; 2007) requires NPMs selling cigarettes in NH to certify compliance and disclose brand families; the attorney general maintains a directory of compliant entities.
- Tobacco Haven operated a Brookline shop with on-site cigarette-making machines, selling loose tobacco labeled pipe tobacco and cigarette tubes, and renting the machines to customers.
- The State alleged Tobacco Haven was manufacturing cigarettes under RSA 541-C/D by using the machines with pipe tobacco to produce cigarettes on-site, circumventing escrow and tax requirements.
- The trial court granted summary judgment against Tobacco Haven, enjoining sale of machines with pipe tobacco unless escrow payments were made; the court later granted motions affecting RYO, a related entity, which the State sought to bind similarly.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Does pipe tobacco labeled tobacco constitute roll-your-own cigarettes under 541-C:2, IV(b)? | State argues the tobacco is rolled cigaretÂte material and thus RO cigarettes under the statute. | Tobacco Haven argues the tobacco is pipe tobacco not likely to be offered as RO cigarettes. | No; labeling alone does not prove RO cigarettes; likelihood and retailer conduct must show RO status. |
| Did Tobacco Haven manufacture rolled cigarettes under RSA 541-C:2, IV(a) by operating on-site machines with customers? | State contends Tobacco Haven directly manufactures rolled cigarettes and sells them to consumers. | Tobacco Haven contends retailers selling machines for home use are not manufacturers. | Tobacco Haven is a tobacco product manufacturer selling rolled cigarettes under the NPM Act. |
| Was the extension of the summary judgment to RYO proper without factual findings for RYO and without addressing counterclaims? | State sought to bind RYO to the same injunction based on joint enterprise. | RYO disputed the factual basis and alleged differences in business plan; argued lack of opportunity to litigate. | The extension to RYO was error; vacate and remand to address RYO-specific facts and defenses. |
| Should RYO's constitutional defenses and counterclaims be reviewed on appeal or remanded for proceedings in the trial court? | State urges swift appellate resolution of the theory. | RYO raised constitutional claims requiring development in the trial court. | Remand for trial court consideration of RYO's constitutional issues. |
Key Cases Cited
- N. Sec. Ins. Co. v. Connors, 161 N.H. 645 (2011) (summary judgment review; de novo; evidentiary standard)
- Hill-Grant Living Trust v. Kearsarge Lighting Precinct, 159 N.H. 529 (2009) (summary judgment standards; defeating movant's burden)
- Appeal of Union Tel. Co., 160 N.H. 309 (2010) (statutory interpretation; context and purpose)
- Berliner v. Clukay, 150 N.H. 80 (2003) (preservation of issues for appellate review)
- Miami Subs Corp. v. Murray Family Trust and Kenneth Dash Partnership, 142 N.H. 501 (1997) (summary judgment must be based on admissible evidence)