As reported in the Buffalo News:
http://www.buffalonews.com/editorial/20060505/1030089.asp

New York State sued for obstruction of legal cigarettes sales
5/5/2006

ALBANY -

A new lawsuit has been filed against the state of New York claiming that it is illegally restricting the sale of cigarettes purchased over the Internet or by telephone. The suit was brought in State Supreme Court in New York's Erie County.

But that hasn't stopped NY Attorney General Eliot Spitzer from using the 2000 law to convince companies - including private delivery firms and credit card companies - not to do business with the Indian retailers who charge no taxes on their cigarettes. Such pressure, lawyers for the plaintiffs allege, illegally restricts interstate commerce of a legal product: cigarettes.

"It's a protectionist policy that seeks to pick winners and losers in a national economy. It's hurting competition and hurting consumers," said David J. McNamara, a partner at Philips Lytle, who is representing a fledgling group called the Association of Responsible Cigarette Sellers. The group has two members: Seneca merchant Scott Maybee and Kentucky's Best, a small cigarette manufacturer in Kentucky.

McNamara said the law is "saying the New York market is restricted to face-to-face transactions in brick-and-mortar outlets and that unconstitutionally restricts alternative distribution methods."

The lawsuit was filed against the state, against Spitzer, and against three of Spitzer's aides who McNamara said have been involved in enforcing the 2000 law. Marc Violette, a Spitzer spokesman, said the attorney general has not been served the papers yet.

A hearing on the case is scheduled for June 8 before State Supreme Court Justice Rose H. Sconiers.