U.S. Supreme Court knocks down state’s regs on carriers

The Associated Press

2/20/2008

WASHINGTON — The Supreme Court sided with business Wednesday in a case that invalidates Maine's regulations of package delivery companies.

The favorable outcome relied on federal law that the court said pre-empts state action.

Meir Feder, a New York appeals court specialist, says the decision is part of a trend that generally has limited the ability of individuals to sue businesses.

"There is a lot of skepticism by the court about the benefit of allowing private civil lawsuits against companies and a lot of concern about the downsides of litigation — deterring investment and raising costs," Feder said.

The package delivery case could provide the impetus for the transportation industry to get out from under state laws regulating cigarette deliveries in the Internet age.

The court unanimously invalidated parts of a Maine law that bars Internet tobacco sales to minors.

The justices said the state cannot impose a regulatory scheme on transportation companies delivering tobacco products directly to consumers. The justices said federal transportation law prevents state-by-state regulation.

"Despite the importance of the public health objective, we cannot agree" with Maine's approach, Justice Stephen Breyer wrote. He said federal law "says nothing about a public health exception" enabling state regulation.

Federal law bars states from regulating prices, routes or services of shipping companies.

Thirty-one states besides Maine have cigarette delivery laws targeting the problem of underage smokers.

Maine's law requires delivery companies to intercept packages from unlicensed tobacco sellers and to verify the age of buyers. This requirement hits delivery companies with huge additional costs, the industry said.

Wednesday's ruling could enable the industry to argue that similar laws in other states are invalid. The decision could clear the way for companies to challenge an aggressive campaign by New York that led the industry's biggest players to stop shipping cigarettes directly to consumers from illegal Internet sellers.

The case is Rowe v. New Hampshire Motor Transport Association, 06-457.