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SANTA FE NATURAL TOBACCO CO. v. JUDGE

January 16, 1997

SANTA FE NATURAL TOBACCO COMPANY, INC., and ROBIN L. SOMMERS, an individual d/b/a ROBIN SOMMERS MARKETING, Plaintiffs
v.
ROBERT A. JUDGE, SR., Secretary of the Department of Revenue of the Commonwealth of Pennsylvania, Defendant



The opinion of the court was delivered by: CALDWELL

 Plaintiffs, Santa Fe Natural Tobacco Co., Inc. ("Santa Fe"), and Robin L. Sommers, filed this action against Defendant, Robert A. Judge, Sr., Secretary of the Pennsylvania Department of Revenue, seeking a declaration that a particular provision of Pennsylvania's Cigarette Sales and Licensing Law, 72 Pa. Stat. § 204-A(a)(2) (1995), violates the United States and Pennsylvania Constitutions, and requesting a permanent injunction against its enforcement. Before us are Plaintiffs' motion for summary judgment and Defendant's motion for judgment on the pleadings.

 I. Background

 Santa Fe is a New Mexico corporation engaged in the manufacture and sale of specialty cigarettes; Sommers is Santa Fe's President and a principal owner of the corporation. Unlike the major cigarette companies, Santa Fe does not use established cigarette wholesalers or distributors. Instead, it distributes its products directly to retailers, or through Robin Sommers Marketing, a sole proprietorship owned by Sommers which distributes cigarettes exclusively for Santa Fe.

 In order to distribute Santa Fe's products to retailers in Pennsylvania, Sommers obtained a Pennsylvania Cigarette Dealer's License, authorizing him to act as a cigarette stamping agent. *fn1" Sommers maintained this license and renewed it annually from 1991 through 1995. During that period, Sommers acted as Santa Fe's licensed distribution agent in Pennsylvania.

 On January 24, 1996, Sommers applied for renewal of his license. Santa Fe had also applied for a license on December 4, 1995 (the company intended to take over its own distribution in Pennsylvania). Both applications were denied.

 Defendant, through the Miscellaneous Tax Division of the Bureau of Business Trust Fund Taxes, explained to Plaintiffs that their applications had been denied pursuant to a 1993 amendment to the Cigarette Sales and Licensing Law. This amendment changed 72 Pa. Stat. § 204-A(a)(2) to include the requirement that an applicant for a license have "received commitments from at least two cigarette manufacturers whose aggregate share is at least forty per centum of the Commonwealth's cigarette market" (the "Commitment Requirement"). *fn2" 1993 Pa. Legis. Serv. 46 (West 1993). Because Sommers acts as distributor exclusively for Santa Fe (and because Santa Fe intended to act solely as its own distributor), Plaintiffs had not obtained such commitments, and allege that they are unable to do so.

 Plaintiffs filed this action on June 28, 1996, alleging that the Commitment Requirement violates the United States and the Pennsylvania Constitutions. On that date we issued a temporary restraining order, extending the effectiveness of Sommers' Cigarette Dealer's License. On July 2, 1996, we issued a preliminary injunction, extending the license until all proceedings in this Court are completed. The material facts are not in dispute, and the parties now seek final resolution of the dispute, Plaintiffs through a motion for summary judgment under Rule 56, Defendant through a motion for judgment on the pleadings under Rule 12(c). Because Defendant has responded to Plaintiffs' motion for summary judgment, and therefore has had an opportunity to submit any pertinent material as required under Rule 12(c), and because the material facts do not appear to be in dispute, we will treat the motions as cross motions for summary judgment.

 II. Standard of Review

 Summary judgment is appropriate "if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56; Celotex Corp. v. Catrett, 477 U.S. 317, 106 S. Ct. 2548, 91 L. Ed. 2d 265 (1986). In reviewing the evidence, facts and inferences must be viewed in the light most favorable to the nonmoving party. Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S. Ct. 1348, 1356, 89 L. Ed. 2d 538, 553 (1986). Summary judgment must be entered in favor of the moving party "where the record taken as a whole could not lead a rational trier of fact to find for the nonmoving party. . . ." Id., 475 U.S. at 586-87, 106 S. Ct. at 1356, 89 L. Ed. 2d at 552 (citations omitted).

 III. Discussion

 Plaintiffs assert that Pennsylvania's Commitment Requirement is unconstitutional on two grounds: first, that it constitutes an impermissible delegation of legislative authority to cigarette manufacturers, in violation of the Due Process Clause of the Fourteenth Amendment to the United States Constitution, and in violation of Article II, § 1 of the Pennsylvania Constitution; and second, that it creates a classification between similarly situated entities without any rational basis, and thus violates the Equal Protection Clause of the Fourteenth Amendment. *fn3"

 A. Delegation of Legislative Authority

 A delegation of legislative authority to private parties violates the Due Process Clause of the Fourteenth Amendment. Washington ex. rel. Seattle Title Trust Co. v. Roberge, 278 U.S. 116, 49 S. Ct. 50, 73 L. Ed. 210 (1928); Carter v. Carter Coal Co., 298 U.S. 238, 56 S. Ct. 855, 80 L. Ed. 1160 (1936); General Elec. Co. v. New York State Dep't of Labor, 936 F.2d 1448, 1455 (2d Cir. 1991). Similarly, a delegation of legislative power violates the Pennsylvania Constitution's requirement that "the Legislative power of this Commonwealth shall be vested in a ...


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