March 23, 2009 - Judge Carol Bagley Amon of Federal District Court for the Eastern District in Brooklyn ruled today, March 17, 2009 that the stores were not protected from the City’s lawsuit by sovereign immunity, which can bar lawsuits against certain Indian tribes and tribal businesses. The lawsuit filed in federal court back in September 2008 accuses the small cluster of shops on the Poospatuck Indian Reservation of breaking state and federal law by selling massive quantities of cigarettes to bootleggers, who then smuggle the cartons off the reservation and resell them throughout the New York City metropolitan area.
The court found that the cigarette sellers located on the Poospatuck Reservation in Mastic, Long Island, did not meet the factors that are necessary to show that the cigarette businesses were operating as part of the tribe’s own economic activity, in part because the store owners, not the tribe itself, profited from the businesses.
The tax losses from the sales by the eight businesses named in the lawsuit alone amount to $195 million for the City and an additional $525 million for the Stat
The cigarettes are sold in the City, not only giving rise to the tax losses described above but injuring legitimate businesses and undercutting smoking prevention programs.
The ruling was announced by New York City Mayor Michael R. Bloomberg, Finance Commissioner Martha Stark and Corporation Counsel Michael A. Cardozo Monday in the City’s case against cigarette dealers located on a Long Island Indian reservation that serves as a major source of bootlegged cigarettes into New York City.
Reference: Judge: NYC can move forward with reservation cigarette lawsuit; rejects 'sovereignty' defense by Michael A. Harris - NY Government Examiner, examiner.com, 3/17/2009.