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Monday, January 30, 2017

Ind. Decisions - 7th Circuit decides one Indiana case today, reversing e-cigarette dismissal [Updated]

In Legato Vapors, LLC v. David Cook (SD Ind., Barker), a 22-page opinion, Judge Hamilton writes:

In 2015 the State of Indiana enacted the Vapor Pens and E-Liquid Act to regulate the manufacture and distribution of vapor pens and the liquids used in so-called e-cigarettes. 2015 Ind. Acts 1870, Ind. Code §§ 7.1-7- 1-1 et seq. The Act is written so as to have extraterritorial reach that is unprecedented, imposing detailed requirements of Indiana law on out-of-state manufacturing operations. The Act regulates the design and operation of out-of-state production facilities, including requirements for sinks, cleaning products, and even the details of contracts with outside security firms and the qualifications of those firms’ personnel. Imposing these Indiana laws on out-of-state manufacturers violates the dormant Commerce Clause of the United States Constitution.

The federal Constitution leaves Indiana ample authority to regulate in-state commerce in vapor pens, e-liquids, and ecigarettes to protect the health and safety of its residents. For example, the Act’s prohibitions on sales to minors, its requirements for child-proof packaging, ingredient labeling, and purity, and requirements for in-state production facilities pose no inherent constitutional problems. Indiana may not, however, try to achieve those health and safety goals by directly regulating out-of-state factories and commercial transactions. As applied to out-of-state manufacturers, the challenged provisions of the Act violate the dormant Commerce Clause prohibition against extraterritorial legislation.

We reverse the judgment of the district court dismissing this case and remand with instructions to enjoin enforcement of the challenged provisions against the plaintiffs and to declare the challenged provisions unenforceable against out-ofstate manufacturers. To explain our reasons, we first review the statutory provisions and procedural history of the case. Then we apply the Commerce Clause analysis to three categories of challenged provisions: security terms, clean room specifications, and audit requirements. * * *

The Indiana Act directly regulates the production facilities and processes of out-of-state manufacturers and thus wholly out-of-state commercial transactions. It poses the clear risk of multiple and inconsistent regulations that would unduly burden interstate commerce. As applied to out-of-state manufacturers, the challenged extraterritorial laws violate the Commerce Clause. * * *

For these reasons, we REVERSE the district court’s grant of summary judgment to the defendant state officials and REMAND to the district court to declare the challenged provisions unenforceable against out-of-state manufacturers and 22 No. 16-3071 to enjoin their enforcement against the plaintiffs. These instructions apply to the following provisions: Indiana Code §§ 7.1-7-4-1(d)(1)–(3), (6), (8)–(10); 7.1-7-4-6(b)(8), (10)–(16), and (19).

Here is the June 30, 2016 SD Ind. opinion.

[Updated at 2:00 pm] Here is preliminary Indianapolis Star coverage, by Tim Evans , Tony Cook and Mark Alesia.

Posted by Marcia Oddi on January 30, 2017 01:01 PM
Posted to Ind Fed D.Ct. Decisions | Ind. (7th Cir.) Decisions