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September 21, 2005
        Codey Plans Stricter Limits on Smoking
        By Damien Cave

NEWARK - With its smoky casinos where cigarettes are more common than jackpots, New Jersey has found tobacco a difficult habit to kick. Efforts to outlaw smoking indoors have stalled in the State Legislature for years, even as New York and other states have made such bans commonplace.

But Acting Gov. Richard J. Codey has taken aim at the tobacco industry, and if he gets his way during the last few months of his term, New Jersey might become much less friendly to those looking to light up.

On Tuesday, Mr. Codey said he would introduce legislation to raise the state's legal age for buying tobacco products to 19 from 18, a move that comes weeks after he signed into law a statewide ban on smoking in college dormitories - the first of its kind in the nation.

The governor also promised to win passage of a comprehensive ban on smoking indoors by the end of his term in January.

Mr. Codey's plan to raise the minimum age for buying tobacco products, announced at a news conference at Newark Beth Israel Medical Center, would make New Jersey the fourth state in the country to prohibit sales of cigarettes to 18-year-olds, joining Alabama, Alaska and Utah.

Mr. Codey said the proposed law, which he plans to introduce in the State Senate on Monday, was aimed at preventing teenagers from starting to smoke. He cited statistics from the American Cancer Society indicating that 90 percent of all smokers pick up the habit before age 18, and said that he had "a moral responsibility to stop the tobacco addiction death march."

Mr. Codey said that schools in particular would benefit from an increase in the legal purchasing age, while vendors would have an easier time identifying those who are underage.

"By raising the age limit just one year, it will become illegal for virtually all high school students to buy cigarettes," Mr. Codey said. "More importantly, fewer will be able to share them with their classmates."

Mr. Codey, a long-time coach of high school athletics, said fines for selling tobacco products to people younger than 19 could go as high as $1,000.

Peter Slocum, a vice president of advocacy for the American Cancer Society of New York and New Jersey, said that the other states that passed laws pushing the limit to 19 "have not shown a particularly significant decrease in smoking."

But, he added, the policy could be effective if coupled with a comprehensive ban on smoking indoors, a measure Mr. Codey said he would seek to move out of committee during the lame duck session that will follow the Nov. 8 election. "I think it will pass, and I'll sign it into law," the governor said.

Mr. Codey's push for limits on tobacco appears to be part of a larger drive to create a legacy tied to public health, political scientists say.

Unlike some of his other successful proposals, to limit diesel emissions, for example, antismoking plans might face stiff opposition. Assemblyman John F. McKeon, a longtime antismoking advocate who introduced a bill this year to ban smoking while driving, said that the prohibition might not include casinos and private clubs. Concerns about the impact of such a ban on those businesses, he said, might force a compromise that would allow for smoking in specified areas.

On the street on Tuesday, reaction was mixed. Keer Jones, 34, a medical assistant at Newark Beth Israel, said she would welcome limits on sales of tobacco, and on locations where she could smoke. "There's a lot of babies out here smoking who shouldn't be," she said, cigarette in hand.

Abel Flores, 45, the owner of Florez Tobacconist in Summit, seemed more skeptical. He said that trying to limit smoking would only increase its allure, without having much of an impact on access to the product.

Several students across the street from Columbia High School in Maplewood said that they doubted they would have a hard time finding cigarettes, even if the legal age for buying them is raised.

"I'd just keep doing what I do now," said Lucian Lai, 16. "I'd find a 19-year-old or a place that didn't card."

June 9, 2005
        Award Limit in Tobacco Case Sets Off a Strenuous Protest
        By Michael Janofsky and David Johnston

WASHINGTON, June 8 - A Justice Department decision to seek $10 billion for a stop-smoking program in its suit against the country's leading tobacco companies, instead of the $130 billion suggested by one of its expert witnesses, set off a firestorm on Wednesday.

Several Democratic lawmakers with a longtime interest in smoking and health issues attacked the department for what they said was a politically motivated decision, as did public health groups.

Judge Gladys Kessler of Federal District Court, who is presiding in the trial here against the companies, took note of the sudden change, telling the court on Wednesday, "Perhaps it suggests that additional influences have been brought to bear on what the government's case is."

The move infuriated lawmakers who have long been critics of the tobacco industry. "It reeks of an administration whose heart isn't really in this case," said Senator Frank R. Lautenberg of New Jersey, at a news conference with other Democrats who suggested that Justice Department officials with ties to the tobacco industry might have grown uncomfortable with a large financial demand as part of the government's case against the companies.

The payments are intended to finance a stop-smoking program that a government witness said would cost $130 billion over 25 years. In court on Tuesday, a government lawyer, Stephen D. Brody, said the government would ask for a program costing only $10 billion to be paid out over five years.

In a statement issued Wednesday evening, the Justice Department said, "The government's suggested smoking cessation program is only an initial requirement, based on the compelling evidence that the defendants will continue to commit fraudulent acts in the future."

A department official said that $10 billion figure represented an effort to ask for an amount that would comply with adverse rulings by a court of appeals. "This is not politics," said the official. "This is exactly the contrary. This is trying to stay within the law and trying to stay within a decision with which we disagreed."

Despite the lower figure, if the judge, who is hearing the case without a jury, rules against the companies, she can impose financial penalties of any size, no matter what the government has requested.

The appeals decision cited by the administration official occurred five months into the trial. The ruling held that under civil racketeering laws, the tobacco companies could not be forced to relinquish past profits. Instead, the court said, the government could only seek sanctions that involved payments for new programs ordered by the judge.

Tobacco company lawyers expressed surprised delight at the change, saying they believed the government lawyers realized that Judge Kessler would not grant them as much as $130 billion.

The original figure was based on testimony from Dr. Michael C. Fiore, an expert on tobacco addiction, who said an effective nationwide program that included a telephone help-line, access to medical treatment and counseling and a budget for advertising and promotion would cost $5.2 billion a year for 25 years.

"Why, in the middle of a lawsuit, would you give up, which is exactly what this administration has done?" said Senator Richard J. Durbin, Democrat of Illinois. "Was it because of the power of the tobacco lobby? Was it their close connection with people within the administration? Was it the fact that they'd never had the stomach to tackle this special interest group in Washington?" He added, "I think it's all of the above."

Representative Henry A. Waxman, Democrat of California, made public a letter he had written to the inspector general of the Justice Department asking for an investigation into whether improper political interference had led to the change in request and what role might have been played by Associate Attorney General Robert D. McCallum Jr., a former classmate of President Bush at Yale and partner in an Atlanta law firm that represented one of the defendants in the case, R. J. Reynolds.

Mr. McCallum, who attended court on Tuesday and Wednesday, declined to discuss the issue, saying he would answer questions after closing arguments concluded Thursday. Department officials would not discuss whether ethics officials in the department had reviewed his involvement in the case.

But they said no one who had represented any party in tobacco litigation was participating in the lawsuit.

William V. Corr, director of the Campaign for Tobacco-Free Kids, a health group that has fought the tobacco industry for years, said he and leaders of other antismoking groups, could only deduce from the retreat that the Bush administration did not want to inflict undue harm on the tobacco companies.

"Here we are, at the last minute of the case, with senior political officials interfering with the trial team's materials and decisions," Mr. Corr said. Referring to antismoking groups, he added, "We've had a widespread sense since 2001 that the Bush administration was trying to kill the lawsuit."

The tobacco case, which was filed by President Bill Clinton's Justice Department in 1999, has been bathed in political intrigue since President Bush took office in 2001, setting off widespread speculation that the new administration had no real interest in pursuing a case against a big American industry.

Early in Mr. Bush's first term, his attorney general, John Ashcroft, revealed his discomfort with the lawsuit, moving to reduce financial support for the legal team in the case and pushing for a settlement because he viewed the case as weak.

Nonetheless, trial preparations continued for four years under a career prosecutor, Frank Marine, who guided a team of 35 department lawyers. By the start of the trial last September, the department said it had spent $135 million on the case.

Five months into the trial, the government suffered a major blow, when the United States Court of Appeals for the District of Columbia Circuit ruled that under civil racketeering laws, it was only entitled to seek sanctions, known as remedies, that were forward-looking, intended to prevent and restrain any future misconduct by the companies. As a result, the court said the $280 billion the government was seeking as profits from illegal activities was backward-looking and thus, unavailable.

On Wednesday, lawyers for all the tobacco companies took their turns in closing arguments, as, one by one, they tried to convince Judge Kessler that their clients did nothing over the years that could be construed as a racketeering violation.

David Bernick, a lawyer for Brown & Williamson, which merged last year with Reynolds, said at the outset, "The government's case is fatally flawed." He proceeded to argue that the government had failed to prove any of its claims against any of the defendant companies: Philip Morris; its parent, Altria; Brown & Williamson; Reynolds; Lorillard; Liggett; and Batco, a British company that no longer does business here.

May 29, 2005
        Post Office Sidesteps Fray on Illicit Sales of Cigarettes
        By Michael Cooper

ALBANY, May 26 - As they move to thwart the illegal trade of cigarettes over the Internet, state officials have joined colleagues from around the nation in persuading the major credit card companies to stop processing payments for online cigarette sales. Additionally, the state has enacted a law prohibiting the shipment of cigarettes to its residents and banned private carriers, like FedEx, from shipping cigarettes.

But as state officials fight illegal online cigarette sales, one operation is not falling into line - the United States Postal Service, which officials say delivers the bulk of illegally purchased cigarettes to New Yorkers.

The Postal Service, citing concerns about the privacy of the mail and wary of putting postal clerks in the position of deciding which packages to accept and which to reject, is resisting the growing calls that it stop shipping cigarettes.

Its stance is exasperating law enforcement officials. "It is outrageous that the federal government - through the United States Postal Service - is knowingly acting as the delivery arm for these criminal enterprises," New York's attorney general, Eliot Spitzer, said in a statement.

The role of the post office in shipping illegally sold cigarettes is also attracting attention across the nation. Last month the National Association of Attorneys General asked the Postal Service to "adopt a firm policy prohibiting transportation of packages that the carrier knows or reasonably should know contains cigarettes sold illegally on the Internet." In Oregon, an online cigarette seller was charged in January with unlawful distribution of cigarettes and racketeering; the post office was not charged but was named in the indictment as part of the racketeering enterprise. Congress has considered legislation that would ban the mailing of cigarettes.

Postal officials say that they are committed to fighting illegal activities conducted through the mail, but complain that their hands are tied. They note that Priority Mail, which officials say is most frequently used to ship cigarettes, cannot be inspected without a search warrant or the consent of either the sender or the recipient.

The post office's investigative arm, the Postal Inspection Service, has worked to stop illegal cigarette shipments in a number of cases, but has only about 1,970 inspectors in the whole country, charged with investigating everything from the anthrax mailings to all suspicious packages to the distribution of child pornography. And postal officials say that postal clerks cannot be expected to figure out what people are shipping, and whether cigarette retailers are complying with obscure laws like the Jenkins Act, which requires cigarette sellers to keep lists of customers for tax collection purposes.

"Tobacco is a legal, mailable product," Mary Anne Gibbons, the Postal Service's general counsel, wrote last month in a response to the association of attorneys general. "It would be impracticable for postal acceptance clerks to make determinations on any given mailer's compliance with state excise or tax law or Jenkins Act filings."

But state officials reject this argument, pointing out that at least in New York State, public health laws prohibit direct sales of cigarettes by mail. They acknowledge that the state cannot bar the post office, a federal entity, from shipping cigarettes in New York, but say that since online merchants often violate tax laws, shipping their cigarettes violates federal mail fraud statutes and therefore should be stopped.

"Instead of complying with federal law, the Postal Service is taking a head-in-the-sand approach, by claiming that they have no idea what is in the packages being delivered - even if they are being mailed by Internet operators that sell nothing but cigarettes," Mr. Spitzer said in a statement. "That is an absurd argument that we would never accept from a private defendant."

And several law enforcement officials said that in small upstate communities like Salamanca, N.Y., which are dotted with smoke shops advertising the tax-free cigarettes sold from Indian reservations, the post office willingly accepts delivery of truckloads of cartons of cigarettes for delivery.

But Anthony Alverno, the post office's chief counsel for customer protection and privacy, said in an interview that the post office's research indicated that the smoke shops doing business in New York sold other items beside cigarettes, including "novelty items," so some packages they ship might not be cigarettes. "We would need to get a search warrant to make the determination," he said.

The Postal Inspection Service joined other federal and local law enforcement agencies to seize 300,000 cartons of illegal cigarettes last November at Kennedy International Airport. Mr. Alverno said that blocking overseas shipments was easier, because they must pass through customs. He added that the Postal Service would continue to discuss civil or criminal actions that could be taken with law enforcement agencies.

Not just government officials, but also antismoking advocates are trying to stop the mailing of cigarettes. And some see signs of progress.

John F. Banzhaf III, the executive director of Action on Smoking and Health, an antismoking organization that has warned the Postal Service that it could face legal liability for shipping illegally purchased cigarettes, said that the service was finding itself increasingly isolated, especially since credit card companies stopped processing the payments for such sales earlier this year.

"It may be more trouble - both from a legal and public relations point of view - than the benefits of the revenue that comes in," he said.

Several online cigarette sellers shut down after the credit card companies stopped processing their transactions; others are struggling. One Web site, tobaccobymail.com, which says it is run from western New York, complains on its site that it is "perpetually targeted by the state of New York," and says that it is not bound by state or federal laws because it is owned and operated by the Seneca Nation of Indians.

The Web site says that it ships cigarettes by Priority Mail, that they are tax-free, and that the company will not share its customer lists with the government. But state officials say the company is flagrantly violating tax laws.

Mr. Spitzer said that the Postal Service should stop carrying illegally sold cigarettes. "The entire law enforcement community - attorneys general, the federal Bureau of Alcohol, Tobacco and Firearms, police officers, state tax officials, and even the Postal Inspection Service - is united in trying to stop these illegal sales," he said. "The postmaster general should be instructing the 'delivery side' of his office to join us in this effort, rather than facilitating illegal conduct."

May 17, 2005
        In One Long Island County, Tobacco-Buying Age Is 19
        By Vivian S. Toy

Suffolk County, which was the first county in the state to approve a smoking ban in restaurants two years ago, made history again yesterday when a new law took effect making it the first county in the state to raise the legal age for buying cigarettes and other tobacco products to 19 from 18.

The new law, which was passed in an 18-to-0 vote by county legislators last December and signed by Steve Levy, the county executive, on Jan. 31, took effect with little fanfare. The county's Department of Health Services had mistakenly notified about 2,200 storeowners that enforcement would begin on May 1, leading many stores to start limiting sales of the products two weeks before the actual start date. But officials nonetheless heralded yesterday as a milestone.

Brian X. Foley, a Democratic county legislator from Blue Point and the prime sponsor of the bill, said that while Suffolk County has produced significant tobacco control proposals in the past, the new law was unprecedented because it was the first to receive unanimous support in the county legislature. He talked of the "persuasive and powerful testimony" given at public hearings by high school students, explaining how their 18-year-old classmates would often buy cigarettes and bring them into schools for underclassmen.

"Nobody's under the illusion that this will eliminate the problem," Mr. Foley said. "But it should have some impact on the situation in the future."

Under the new law, any store caught selling tobacco to someone younger than 19 would be subject to a $300 fine for a first violation and up to $1,500 in fines for subsequent violations.

Several other counties in the metropolitan area are also considering raising the legal age for buying tobacco products, including Nassau, Westchester and Rockland. Charles J. Fuschillo, a Republican state senator whose district straddles Nassau and Suffolk Counties, has also proposed state legislation that would raise the legal purchasing age throughout the state. Only three other states - Alaska, Utah and Alabama - have laws setting the minimum age for buying tobacco at 19.

Paul J. Tonna, a Republican Suffolk County legislator from West Hills and a co-sponsor of the new law, said he hoped the state would eventually enact similar legislation.

"That's been generally the pattern: Suffolk County does it and then the state picks it up," he said.

Mr. Tonna was referring to the county's smoking ban in workplaces, including restaurants and bars, and its ban on handheld cellphone use while driving, which were both eventually enacted statewide. "We have a tradition of enacting progressive and proactive legislation," he added.

Surendra Sherma, the manager at Melville Cards and Smoke, said he posted the "Stop You Must Be 19" decals provided by the county and started limiting sales on May 1. "We are very careful and we refuse to sell if they come in between 18 and 19 years old," he said.

At the 7-Eleven in Farmingdale, just a few blocks west of the Nassau-Suffolk border, Moe Shahid, a clerk, said they expected sales might go up slightly since Nassau County still adheres to a minimum age of 18. "But Nassau County is thinking about it and it's probably just a matter of time before it becomes a state law," he said. "So it won't be different for long."

William I. Stoner, the regional advocacy director for the American Cancer Society on Long Island, said in a statement, "We hope Albany will follow Suffolk's lead in taking this proactive step to protect the state's children from the scourge of tobacco."

But James Calvin, president of the New York Association of Convenience Stores, a trade group in Albany that represents more than 1,500 stores, said his group opposed the Suffolk law and would fight against a state law.

"The reality is that this will not bring any meaningful progress in the ongoing effort to restrict young people's access to tobacco," he said.

May 7, 2005
        Tobacco Industry Is Given Victory by a Panel of U.S. Judges
        By Anthony Ramirez

A panel of federal appeals court judges in Manhattan handed the tobacco industry a victory yesterday by striking down a proposal by a judge in Brooklyn to organize a single high-stakes trial that might have subjected the industry to billions of dollars in damages.

Three judges of the United States Court of Appeals for the Second Circuit ruled unanimously against the proposal of Judge Jack B. Weinstein of Federal District Court in Brooklyn, saying his plan was flawed for technical reasons. The proposal was returned to Judge Weinstein's court.

"The appeals court decision is the correct and proper one," said William S. Ohlemeyer, a top lawyer for Philip Morris USA, a defendant in the case and maker of Marlboro cigarettes, in a prepared statement yesterday.

A public relations representative for Altria, the parent company of Philip Morris, said Altria would not go beyond the prepared statement and that lawyers representing Philip Morris in the case had gone home for the weekend.

"Judge Weinstein has been a thorn in the side of the tobacco industry for some time, but we see this decision as further reducing his ability to be a nuisance to the industry going forward," said Robert Campagnino, a tobacco analyst for Prudential Financial, in a note to investors yesterday.

Whether the high-stakes trial ever reached a courtroom turned on technical legal issues like who had the right to sue and enter what is known as a class action and whether the proceeding was fundamentally fair by placing a limit on potential damages.

In September 2002, Judge Weinstein proposed presiding over a national trial that would not assess individual claims for compensation, but would decide only whether the cigarette companies should be assessed punitive damages because of the harm done to smokers and their survivors.

A single industry fund to pay potential punitive damages would be established.

The class for the trial, with some exceptions, would be all current and former smokers of the defendant companies' cigarettes since April 1993.

The proposal became known as the Simon II plan because it stemmed from a 1999 class-action lawsuit by a group of smokers titled Simon v. Philip Morris Inc.

In its 37-page ruling released yesterday, three appeals court judges - James L. Oakes, Rosemary S. Pooler and Richard C. Wesley - found flaws in Judge Weinstein's proposal, especially in the membership of the class and the size of potential damages.

"We hold that the order certifying this punitive damages class must be vacated," the judges wrote, "because there is no evidence by which the district court could ascertain the limits of either the fund or the aggregate value of punitive claims against it, such that the postulated fund could be deemed inadequate to pay all legitimate claims."

The ruling is subject to appeal to all 23 appeals court judges of the Second Circuit and the United States Supreme Court.

April 4, 2005
        Trouble for Online Vendors of Cigarettes
        By Bob Tedeschi

NOT since the dot-com bust have so many sites gone south so quickly.

Two weeks after credit card companies announced they would no longer accept payment for tobacco products bought online, scores of Internet cigarette merchants have effectively lost the means to do business profitably, and are either limping along or have shut down their operations altogether.

Visa International, MasterCard International, American Express, eBay's PayPal service and others cut off the online tobacconists last month after being told by a coalition of states and representatives of the federal Bureau of Alcohol, Tobacco and Firearms that virtually all such sales were illegal. Government officials said that merchants had not done enough to comply with age verification practices or to register sales with governments to insure the collection of state taxes.

Now, most merchants are reduced to accepting electronic or paper checks, and fewer customers may be willing to wait for those checks to clear before their orders are shipped. Meanwhile, some online merchants say they have been wrongfully singled out by authorities.

Maxine Jimerson, owner Ron's Smoke Shop in Allegany, N.Y., recently shut down the online part of her business and laid off 120 of her 160 employees. As a member of the Seneca Nation Indian tribe, she is entitled to sell cigarettes free of state tax.

"Most everybody else around here is going out of business too," said Ms. Jimerson, who will keep her retail shop open but has sold her Web address to another merchant who operates on Seneca territory. "We're talking about probably 30 businesses, and between 1,500 and 2,000 employees being laid off."

Ms. Jimerson said her company had gone to great lengths to verify customers' ages, contracting with a special vendor and requiring buyers to send in a copy of a government-issued picture ID, with age and signature, before a purchase could be made. Customer signatures at the time of delivery had to match the signatures on file.

But federal and state authorities said that online cigarette merchants did not do enough to insure the collection of taxes. In particular, they did not comply with the Jenkins Act, a federal law that requires sellers to register purchases in states where customers live. Like many other online sellers operating on Indian territory, Ron's Smoke Shop did not comply with such strictures because it argued that the law did not apply to it.

If there were online companies that complied with all state and federal regulations, "it's news to us," said Marc Violette, a spokesman for the office of Eliot Spitzer, the attorney general of New York, where all online cigarette sales are considered illegal.

"It's good public relations to say you're bending over backwards to comply with the law, but the fact is, they're engaged in an illegal industry, and on their face, these transactions are illegal," Mr. Violette said.

State officials had for years tried unsuccessfully to collect cigarette tax revenues from online merchants, and had redoubled such efforts as budget deficits skyrocketed in recent years. By using the credit card companies as leverage, though, they appear to have made progress in the fight.

The credit card company embargo "will significantly curtail cigarette sales over the Internet, to the advantage of the major cigarette manufacturers as well as state governments," wrote Robert T. Campagnino, an analyst with Prudential Equity Group, an investment firm, in a report late last month.

Mr. Campagnino estimated in his report that in 2004, $1 billion worth of cigarettes were sold online, or about 3.1 percent of the industry's total volume. Many of those sales were made to customers in states with particularly high cigarette taxes like New York, where offline merchants must charge $15 or more in taxes for each carton. New York bars direct shipment of tobacco products to its citizens, but many online merchants ignored that law.

Some established tobacco sellers, like Nat Sherman, a cigar and cigarette manufacturer based in New Jersey that also sells its products online, strenuously object to the government actions.

"They're throwing the baby out with the bathwater," said Joel Sherman, the company's chief executive. "We have over 70 licenses to sell directly to customers around the country - every state, and many municipalities. And we have a whole series of proofs in place for age verification."

Mr. Sherman said that credit card companies "have not gotten around to shutting us off yet," so his site still accepts plastic. But he said that since his customers can find Nat Sherman products at retailers throughout the country - at lower prices, since customers do not pay for shipping - his business will not be as deeply affected by a credit card embargo as others.

In theory, at least, law-abiding online tobacco sellers could avoid the credit card embargo. Joshua Peirez, a senior vice president at MasterCard, said that banks that issue his company's brand of credit cards may provide MasterCard with documentation if they believe one of their merchant customers is selling tobacco online legally.

"But if there's any doubt, banks have the obligation not to contract," said Mr. Peirez, who estimated that his company has so far cut off about 100 of the biggest online tobacco sellers.

Some online cigarette sellers, who spoke on condition of anonymity, said they were exploring ways to create their own credit cards, perhaps in association with other online tobacco sellers. They would then battle government regulators in court to determine the legality of their practices.

Still other online sellers are engaged in more creative practices.

Richard Johnson Jr., who until late last year sold foreign, duty-free cigarettes through www.internet-distributors.com, said he was in the process of reviving that site so he could sell domestic cigarettes to United States consumers. Mr. Johnson said he planned to establish credit card accounts with foreign banks, which he said were not bound by United States laws.

Because some Internet cigarette sellers continue to accept credit cards, this practice is possibly already being adopted. Mr. Peirez, of MasterCard, said the company's policy applied to any bank whose merchants sell to United States customers. "So no, we wouldn't allow them to process those transactions," he said.

Meanwhile, Ms. Jimerson of Ron's Smoke Shop said she hoped to use her company's former warehouse for a new party supplies and candle business, FirstAmericanCandle.com, which she began developing months ago.

"I could retire," she said. "But I don't like to be forced into anything."

April 2, 2005
        Remedies Emerging as Issue in Federal Tobacco Case
        By Michael Janofsky

WASHINGTON - Already one of the most costly civil cases ever prosecuted by the Justice Department, the racketeering trial against the tobacco industry, now in its seventh month, is being heard in two courts and could reach a third, raising questions about what the government might gain with a victory.

Testimony continues in the Federal District Court here in a nonjury trial to determine whether the companies hid the adverse health effects of cigarettes for 50 years, as the government contends. Meanwhile, an appeal is already under way to determine the extent of liability if the trial judge rules against the companies.

Barring a settlement, the efforts - along with appeals almost certain to reach the Supreme Court - are expected to drag out for months, driving up litigation costs to hundreds of millions of dollars for each side.

"This is a very expensive, very time-consuming process," said William S. Ohlemeyer, vice president and associate general counsel for Altria, the parent of Philip Morris, one of the five defendant companies. "It's particularly difficult with such a large number of people working for such a long period of time."

Looming over the daily parade of witnesses who have come before Judge Gladys Kessler is how the tobacco companies might be held accountable if she decides for the government.

Early in the case, Judge Kessler ruled that the government could seek $280 billion from the companies as a remedy for any past fraudulent acts. To speed things along, she encouraged the companies to appeal that decision while testimony proceeded. Last month, a three-judge panel of the United States Court of Appeals for the District of Columbia Circuit overruled her, asserting that financial remedies would be contrary to civil racketeering law, which requires remedies to prevent and restrain future illegal acts.

The panel's ruling prompted the government to ask the full appellate court to rehear the arguments. It also prompted Judge Kessler to reorganize the trial, ordering both sides to call witnesses to address remedies after the liability phase of the case. In effect, she made the remedy phase a trial within a trial, to help her assess how to hold the companies accountable if financial remedies remain unavailable.

The appellate decision, meanwhile, has cast doubt on other remedies the government might seek and whether they would accomplish the lawsuit's goals any better than, say, the latest tobacco bill in Congress, which seeks to confer regulatory authority over tobacco products to the Food and Drug Administration.

Government lawyers say that even without a financial remedy, Judge Kessler has at her disposal a broad pallet of methods that could discourage future illegal acts.

One proposal is creating a nationwide stop-smoking program the companies would sponsor at a cost of $5.2 billion a year for 25 years, a total commitment of $130 billion. Another is a campaign to reduce youth smoking that would set estimates of the population of young smokers, then penalize the companies $2,400 for every young smoker exceeding an annual target number. Judge Kessler could also impose restrictions on cigarette marketing, like limiting print advertisements to black-and-white pictures.

The companies contend that most of the remedies Judge Kessler could order were addressed in 1998 with the Master Settlement Agreement between states and the tobacco industry, which ended an enormous lawsuit concerning the states' health-care costs incurred from smoking-related illnesses.

"There are a lot of things the court can do that the F.D.A. bill cannot do," said William V. Corr, executive director of the Campaign for Tobacco-Free Kids, a nonprofit group that supports tighter controls on the industry.

But Mr. Corr acknowledged that current legislation could achieve many goals that a court decision could not, like forcing the companies to list all the ingredients in their products.

The legislation would also cover all tobacco companies, not just the lawsuit's defendants; increase the size of warning labels; prohibit flavored cigarettes; and end the use of terms like "light," "low" and "mild" that suggest some cigarettes pose lower health risks than others.

Lawmakers have tried since 1997 to pass measures giving the F.D.A. authority over tobacco. Recent efforts have fared better in the Senate than in the House, and that may be the case again, with measures introduced two weeks ago that revise efforts of last year.

The current Senate bill, sponsored by Senator Mike DeWine, Republican of Ohio, and Senator Edward M. Kennedy, Democrat of Massachusetts, has nine other Republican supporters and full backing among Democrats, giving it a reasonable chance to pass. Prospects for a parallel bill in the House are less certain.

Philip Morris, the nation's largest tobacco company, with about half the domestic market, supports the legislation as a way to standardize the industry and reduce corporate liability in tobacco lawsuits. But the other defendants oppose legislation, arguing that more regulation would make it harder for smaller companies to build market share at Philip Morris's expense.

"We believe the F.D.A. legislation is anticompetitive because it locks in market share," said John Singleton, a spokesman for Reynolds American, the company formed last year from R.J. Reynolds Tobacco's acquisition of the Brown & Williamson division of British American Tobacco. Reynolds is the second-largest company, with about a third of the domestic market. "If you're Philip Morris, with half the market, that's not a bad place to be," Mr. Singleton said.

Legislative success might ultimately depend on the White House, which has at least tacitly supported the lawsuit but has expressed no opinion on F.D.A. regulation of tobacco. At his Senate confirmation hearing last month, President Bush's nominee to become the new commissioner of food and drugs, Lester M. Crawford, said nothing about tobacco products.

While Mr. Bush "talks constantly" about the need for Americans to quit smoking, said Trent Duffy, a White House spokesman, "it's rare that the administration takes a position on legislation until it reaches the floor of the House or Senate."

"If it does," Mr. Duffy added, "the administration will obviously look at it."

March 1, 2005
        Ban on Lighters in Air Travel

WASHINGTON - Airplane passengers are going to have to leave their cigarette lighters home, under a policy announced on Monday by the Transportation Security Administration.

The ban, which takes effect April 14, will also prohibit lighters inside checked baggage for safety reasons. Passengers will still be allowed to carry matches, at least for now.

"The ban is not an attack on smokers," said Yolanda Clark, a spokeswoman for the agency. "This is a serious security measure that is intended to reduce security vulnerabilities."

The ban is required under a provision of the intelligence overhaul bill that Congress passed late last year. It was motivated by the case of the so-called shoe bomber, Richard C. Reid, who tried to light an improvised explosive device while on a plane to the United States from Paris in December 2001.

The Federal Bureau of Investigation is said to have concluded that if Mr. Reid had had a lighter, instead of matches, the bomb probably would have been set off.

February 25, 2005
        Panel Backs Case Directed at Tobacco
        By Michael Janofsky

WASHINGTON, Feb. 24 - A group of former high-ranking public health officials who served presidents of both major parties stepped into the government's racketeering case against the tobacco industry on Thursday, asking the judge to reinstate an education program that cigarette companies once financed.

The request came through a "friend of the court" brief from the Citizens' Commission to Protect the Truth, a group of 21 former surgeons general, secretaries of health and human services and directors of the Centers for Disease Control and Prevention dating to the Johnson administration. The group was formed last year to protect antismoking educational programs that had been required under a 1998 settlement that ended litigation between the companies and 46 states over health-care costs from smoking.

Joseph A. Califano Jr., the commission chairman, who served as heath secretary under President Jimmy Carter, said in an interview that the commission's request satisfied a recent appeals court decision in the racketeering case.

The appeals court ruled against the government in its effort to seek $280 billion in illegal profits, calling it a "backward looking" remedy that was not permitted under civil statutes of the 1970 Racketeer Influenced and Corrupt Organizations Act, known as RICO.

The ruling said that if the government did prevail in the case, any other remedy should "prevent and restrain" future illegal acts, not punish the companies for acts in the past.

"If you want to focus on future conduct," Mr. Califano said, "this is one thing the industry can do."

Under the 1998 settlement, the four leading American tobacco companies - Philip Morris, Lorillard, R. J. Reynolds and Brown & Williamson - were required to pay for education programs for five years. After that, they have to continue the payments except in years when their combined market share falls below 99.05 percent, as it did in 2004.

By then, most of the $1.5 billion from the companies had been used to finance a television advertising campaign known as the Truth Campaign, which tried to discourage smoking by teenagers. It was sponsored by the American Legacy Foundation, a group created after the settlement agreement to raise awareness of the adverse health effects of smoking.

The companies also embarked on their own campaigns, warning young people of the hazards of smoking.

By some estimates, the Truth Campaign produced impressive results. A study by The American Journal of Public Health, published this week, found that it led to "roughly 300,000 fewer youth smokers" - those 18 and younger - from 2000 to 2002, with some areas reporting declines of as much as 50 percent.

The disease-control agency has estimated that a third of all smokers die prematurely and that every adult smoker accounts for $3,400 in annual health care costs, about $1 billion a year.

Over all, the report said the campaign accounted for a national drop of 1.5 percent in youth smoking. Citing that finding, the commission used its brief to tell the presiding judge, Gladys Kessler of the United States District Court for the District of Columbia, that the Truth Campaign was precisely the kind of remedy that would make companies alter their approach to selling cigarettes.

The trial, which began in September, continued Thursday with each side offering a summation of the progress. Judge Kessler said she would decide over the weekend whether the case would resume next week with government witnesses on remedies or with the start of the companies' defense.

February 12, 2005
        New York Hits Online Sellers of Cigarettes
        By Ian Urbina

Concerned about the booming trade in online cigarette sales, New York state officials have begun using a variety of techniques to clamp down on the trade, saying New York City alone is losing more than $75 million a year in uncollected tax revenues because of the sales.

In recent weeks, Attorney General Eliot Spitzer has been pushing local postal officials and private carriers to stop delivering cigarettes bought online. His office has also recently begun negotiations with credit card companies to block transactions of online cigarettes.

These efforts were given added push recently as local officials from the federal Bureau of Alcohol, Tobacco, Firearms and Explosives met with credit card executives to alert them to the various ways in which these transactions are illegal.

"The tone was very cordial and unthreatening," said a city official who participated in the presentation three weeks ago at the bureau's office in Brooklyn. "But in the end they made it crystal clear that now that the credit card companies understood the law, they would be held accountable for processing these transactions."

Mr. Spitzer emphasized that the effort has as much to do with health as money. "These sales present a significant threat to public health because they provide easy access to cheap cigarettes, which increases smoking rates, particularly among children," he said. "These illegal sales also evade state tax requirements."

Whatever their motivation, city and state officials are broadening their efforts to eradicate the business.

Two weeks ago, a judge ruled in one of the city's four lawsuits against online sellers that the city can file a revised racketeering lawsuit against Internet cigarette sellers. The ruling was the first time a federal judge has indicated that Internet sellers can be charged under federal racketeering law, said Eric Proshansky, the city's chief lawyer on the case.

After gleaning the names and the addresses from a Virginia lawsuit against one online cigarette company, the city began sending letters last month to more than 2,600 New Yorkers who officials say bought tax-free cigarettes. The letters, sent to those who bought cigarettes online from July 2002 to April 2004, give the alleged violators 30 days to pay or face interest and penalties of up to $200 a carton.

In November, local law enforcement seized 300,000 cartons of illegal cigarettes at Kennedy International Airport. Joseph G. Green, a spokesman for the A.T.F., said that the seizure was the culmination of a yearlong investigation jointly conducted by the Queens district attorney's office; federal Bureau of Alcohol, Tobacco, Firearms and Explosives; postal inspectors; and city and state tax and finance officials.

Sam Miller, a spokesman for the city's Department of Finance, said that the city loses more than $75 million a year as people duck local taxes by purchasing online. But the crackdown has drawn some criticism.

"New York is simply trying to engage in economic protectionism by limiting cigarette sales to brick-and-mortar sellers," said James L. Bikoff, a lawyer who represents several Internet tobacco sellers. "Most of the folks who are in the online cigarette business are small outfits and they typically advise the consumer to check with their own city and state's laws regarding tax rules."

New York City smokers pay the highest cigarette taxes in the country, as the state charges a $1.50 tax per pack and the city adds an additional $1.50 tax per pack. A carton of cigarettes in the city costs about $70, including $33.30 in excise and sales taxes. Online, cigarettes cost as little as $15 a carton.

Thus far, the city and the state have met with mixed results in their efforts to control the online traffic in cigarettes.

Some banks that process MasterCard transactions have begun blocking sales from certain Internet tobacco sites to customers, said Joshua Peirez, a senior vice president at MasterCard. But other banks do not. American Express currently has no policy that blocks Internet cigarette sales, said Christine Elliott, a spokeswoman for the company.

After sending a letter to credit card executives in August, Mr. Spitzer joined several other state attorneys general to send another letter pressing credit card companies to stop the transactions.

Both letters cited several reasons for the failure of Internet tobacco sellers to comply with applicable laws, including that they make no effort to verify the age of their customers and fail to report shipment of cigarettes to the tobacco tax administrator of the state into which shipments are made.

While the United Parcel Service and other private carriers have been more open to the idea of blocking the delivery of these packages, postal officials have balked at pressure from Mr. Spitzer's office, claiming that they do not have the legal authority to stop the shipments, according to city officials who have been part of the discussions. But Mr. Spitzer's office contends that the postal service indeed has the authority under federal laws that prohibit mail fraud schemes, according to a letter sent by the office.

New York State passed a law that took effect in 2003 prohibiting online and mail-order sales of cigarettes to its residents. The law was largely intended to curb tax evasion and under-age smoking, since many online cigarette sites do virtually nothing to verify the age of customers.

Efforts to stop online sales are complicated, since Internet sites are sometimes based abroad and are therefore difficult to prosecute. City officials estimate that about 80 percent of the online cigarette sales come from sites that claim Indian affiliation, which for sovereignty reasons claim immunity from laws like the Jenkins Act.

February 6, 2005
        In Barrooms, Smoking Ban Is Less Reviled
        By Jim Rutenberg and Lily Koppel

Back in 2002, when the City Council was weighing Mayor Michael R. Bloomberg's proposal to eliminate smoking from all indoor public places, few opponents were more fiercely outspoken than James McBratney, president of the Staten Island Restaurant and Tavern Association.

He frequently ripped Mr. Bloomberg as a billionaire dictator with a prohibitionist streak that would undo small businesses like his bar and his restaurant. Visions of customers streaming to the legally smoke-filled pubs of New Jersey kept him awake at night.

Asked last week what he thought of the now two-year-old ban, Mr. McBratney sounded changed. "I have to admit," he said sheepishly, "I've seen no falloff in business in either establishment." He went on to describe what he once considered unimaginable: Customers actually seem to like it, and so does he.

By many predictions, the smoking ban, which went into effect on March 30, 2003, was to be the beginning of the end of the city's reputation as the capital of grit. Its famed nightlife would wither, critics warned, bar and restaurant businesses would sink, tourists would go elsewhere, and the mayor who wrought it all would pay a hefty price in the polls. And then there were those who said that city smokers, a rebellious class if ever there was one, simply would not abide.

But a review of city statistics, as well as interviews last week with dozens of bar patrons, workers and owners, found that the ban has not had the crushing effect on New York's economic, cultural and political landscapes predicted by many of its opponents.

Employment in restaurants and bars, one indicator of the city's service economy, has risen slightly since the ban went into effect, as has the number of restaurant permits requested and held, according to city records, although those increases could be attributed in part to several factors, including a general improvement in the city's economy.

City health inspectors report that 98 percent of bars and restaurants are in compliance with the rules, though some critics question those statistics. Wrath at Mr. Bloomberg, at least pertaining to the smoking ban, seems to be abating.

There are still those cursing the ban as an affront to their civil liberties, and some bar and restaurant owners say that it has undoubtedly caused a decline in business. City officials say they doubt that contention, pointing to data from the first year of the ban showing that restaurant and bar tax receipts were up 8.7 percent over the previous year's. They said they were still waiting for more detailed and current data from the state.

But a vast majority of bar and restaurant patrons interviewed last week, including self-described hard-core smokers, said they were surprised to find themselves pleased with cleaner air, cheaper dry-cleaning bills and a new social order created by the ban.

All of this comes as great relief to Dr. Thomas R. Frieden, commissioner of the city's Department of Health and Mental Hygiene, who took his job on a promise from the mayor that the smoking ban would be given priority. "It was not a pleasant time," he said of the initial uproar over the ban. "There was a myth that this was very unpopular."

Dr. Frieden credits the apparent success of the new smoking rules here with encouraging other seemingly unlikely places to follow suit, or at least to consider doing so. Among them are Boston, Virginia, Australia, Ireland and Italy. Last week, the City Council in Philadelphia began reviewing a newly proposed bill to make bars and restaurants smoke-free.

The councilman who introduced the bill in Philadelphia, Michael A. Nutter, cited New York as an inspiration. "This is kind of the epitome of the song: 'If you can make it there,' " he said in an interview. "What people are saying is, 'If New York can deal with clean-air legislation, why can't we?' "

Mr. Nutter said he was not worried about the political ramifications.

Mr. Bloomberg's Republican critics have indicated they will raise the smoking rules during the Republican primary campaign as an example of what they call his Democratic tendency toward regulation. But many of the mayor's staunchest opponents said they thought the ban would have no effect on his re-election bid. One of his Democratic challengers, Gifford Miller, the City Council speaker, helped secure the ban's passage. And a leading contender for the Democratic mayoral nomination, Fernando Ferrer, has said he would not seek to overturn it.

"I thought he would lose 50,000 votes simply based on the smoking ban," said Robert Bookman, a lawyer for the New York Nightlife Association, a trade group that aggressively fought the ban. "I'm not so sure anymore."

That is no small thing for Mr. Bloomberg, who once faced hecklers in the streets because of the smoking ban, and whose drop in popularity after it was put in effect was illustrated by The New York Post in a front-page bar graph with cigarette butts.

Mr. Bookman did not dispute most of the good-news numbers the city presented in relation to the smoking ban, though he disagrees with the conclusion that the ban has not had an adverse impact on restaurants and bars.

"Clearly employment is up in New York City going into 2005 or the end of 2004 compared with the year before the smoking ban went into effect," he said. "The year before was 2002; 2002 was almost a depression in New York City. It was the recession plus the 9/11 economic impact. Everybody's doing better in New York compared with 2002."

Mr. Bookman said that the nightlife industries would be doing better still without the ban. But he conceded during an interview that his group had all but given up any lingering hope of overturning the city's provision. It is instead focusing in part on what he said were unfair enforcement issues, like ticketing bar owners for the misbehavior of smoking patrons or for an increase in noise complaints drawn by customers smoking outside. City officials say noise complaints have risen because the city's 311 complaint line has made it easier to file them, not because of outdoor smoking.

The turncoats of Mr. Bookman's once vocal movement can be found on the sidewalk on any given night. Huddled in a tent at the Bohemian Hall and Beer Garden in the Astoria section of Queens on Wednesday and chain-smoking by two heat lamps, Kate Bly, who teaches English to foreign exchange students, said she was surprised by her own positive reaction to the measure, which she had expected would be terrible.

"I was really against the smoking ban," she said. "I thought, bars are for sinful things, smoking, drinking. Now my reaction has changed. I used to feel clammy, stinky, disgusting. Now there's a nice breakup to the evening and a new crowd."

Jason Sitek, 31, said he had similarly begun to enjoy the ban, even if smoke-free bars subtract from what he used to think a New York City bar should be. "The whole nature of New York City and the bar is you can go into a smoky atmosphere," he said. "It's like Disney World now."

Still, he said, smoke-free bars have their advantages. "You realize you stop stinking, you don't smell like an ashtray," he said on Tuesday night as he smoked outside Spike Hill, a bar in the Williamsburg section of Brooklyn.

The temperature was hovering near 30 degrees, but down the street, in front of Rosemary's Greenpoint Tavern, Brian Rennie, 23, said he did not mind that he was forced outdoors to smoke. "I like going outside," he said. "I like to get fresh air."

Several smokers cited other advantages.

"I'm all for it. My dry-cleaning bill's gone way down," said John Payne, 36, who was smoking on Tuesday night outside Toad Hall, in SoHo. "And I'm smoking less."

A friend, Bill Cauclanis, 29, said, "There's a secondary scene now outside of bars - a smoker's scene."

He added: "You can meet a girl out here. Strike up a conversation."

What is good for singles like Mr. Cauclanis is bad for bartenders, who cannot so easily go outside and who find themselves increasingly cut out of the social scene in which they centrally stood. Now, they are often placed in the role of hall monitors, chiding those who disobediently light up, said Barry Crooks, who was tending bar at Toad Hall. Mr. Crooks, an owner of Toad Hall, said he was far more worried about a falloff in business of at least 10 percent, which he said was a result of the new smoking ordinance. "It hurt the volume of business," Mr. Crooks said.

While such complaints were once more common, and perhaps more heated, there are still plenty of them. "It hurts," said John Mulvey, owner of Bridget's Public House on Staten Island.

Public acceptance of the ban has "come around a little bit," Mr. Mulvey said. Business was off 25 percent right after the ban took effect, he said, but now that decline has stabilized at about 5 percent. And while Mr. Mulvey is no longer furious over the anti-smoking ordinance, he says it bothers him that he is not free to run his business as he sees fit - without government intervention.

Mr. Mulvey still has a champion in Audrey Silk, founder of NYC Clash, or Citizens Lobby Against Smoker Harassment. In an interview, Ms. Silk vowed to continue fighting the ban. "We're not giving up," she said.

February 5, 2005
        Appellate Court Backs Companies in Tobacco Case
        By Michael Janofsky

WASHINGTON - A federal appeals court delivered a major victory to the nation's leading tobacco companies on Friday, ruling that the government cannot force them to turn over $280 billion in profits if a trial court finds that the companies engaged in a conspiracy of fraud and deceit to promote smoking.

The 2-to-1 decision by the United States Court of Appeals for the District of Columbia strikes at the heart of the government's biggest legal effort ever to punish cigarette makers.

It reverses a ruling by Judge Gladys Kessler of Federal District Court, who agreed with the government that the giving up of profits, or disgorgement, was a suitable remedy under federal civil racketeering law. Testimony in the trial continued while an appeal of that ruling was heard.

In writing the majority opinion for the appeals court, Judge David B. Sentelle found that the 1970 Racketeer Influenced and Corrupt Organizations Act, or RICO, the law under which the Justice Department sued, does not allow the government to recover illegal profits as a way to prevent and restrain future violations.

The law, Judge Sentelle wrote, only provides remedies intended to prevent future violations, like an injunction that blocks certain behavior or the dissolution of a corporation. Forcing the tobacco industry to give up profits, he continued, "is a quintessentially backward-looking remedy focused on remedying the effects of past conduct to restore the status quo."

The requirement that companies give up profits might be acceptable under the criminal section of the RICO act, which has far higher burdens for proving culpability, Judge Sentelle wrote, but not under the civil section, which the government used in the lawsuit.

He was joined by Judge Stephen F. Williams; both judges were appointed by President Ronald Reagan.

In a dissenting opinion, Judge David S. Tatel, who was appointed by President Bill Clinton, said Judge Kessler had properly ruled the companies could be forced to give up their profits. He said that evidence in the case had shown that forcing the companies to relinquish profits would, in fact, "prevent and restrain" them from committing future violations because they would know to expect severe penalties for repeating such conduct.

The majority decision has no immediate effect on the trial, which is expected to last well into spring. Should Judge Kessler, who is deciding the case without a jury, ultimately rule for the government on the merits, she could still hold the companies accountable by requiring them to finance stop-smoking and education programs or to change advertising and marketing strategies, rulings that could still cost the companies many millions of dollars.

But the appeals court ruling, for now, eliminates the government's biggest potential financial threat to the tobacco industry from the case. That is the government's calculation of $280 billion in profits it estimates that the industry garnered from cigarettes smoked from 1971 to 2000. Lawyers for the tobacco companies had contended that being forced to disgorge so great a sum could have driven some companies into bankruptcy.

The stocks of tobacco companies surged after the ruling. Shares in the Altria Group, the parent company of Philip Morris USA, jumped $3.26, or 5.1 percent, to $67. Shares in Reynolds American rose $3.69, or 4.5 percent, to $85.60, while British American Tobacco added 75 cents, or 2.1 percent, to $36.15.

It is unclear what the government intends to do next. It can request a review of the decision by the entire appeals court or an appeal to the Supreme Court. Justice Department officials said that any decision would be made by the new attorney general, Alberto R. Gonzales, who was confirmed by the Senate on Thursday.

Kimberly Smith, a spokeswoman for the Justice Department, said government lawyers were reviewing the ruling and would have no immediate comment.

Lawyers for Philip Morris USA, the biggest company in the case, declined to comment beyond acknowledging the court decision.

David M. Bernick, a lawyer for Brown & Williamson, now part of Reynolds, the second-largest tobacco company, said : "Obviously, we're pleased with the decision. What's happened is that an enormous piece of noise that never should have been there has been eliminated, and the case can now properly focus on whether or not we are doing something we shouldn't be doing."

"The threat of a Draconian monetary award was something we could not ignore," Mr. Bernick added. "But it was an improper threat."

The sum the government sought from the tobacco companies made this the biggest lawsuit they had ever faced, surpassing even the series of actions filed by the states' attorneys general that led to a combined settlement of $246 billion in 1998. Those were essentially product-liability cases in which states were seeking to recoup medical costs from treating patients who suffered from the adverse effects of smoking.

The conspiracy case was a novel approach for the government, which had first sued to recover federal health-care costs. When that approach was rejected, the government turned to racketeering laws, trying to prove that the companies worked in partnership for more than 50 years to sell their products by denying the health consequences of smoking, manipulating the level of nicotine to maintain addiction and marketing products to children.

Government lawyers have tried to show that the companies are still acting in bad faith despite their assertions that they have altered their behavior by measures like admitting that smoking causes health problems and eliminating marketing efforts to children.

The case was filed in 1999 during the Clinton administration, and it was pursued through President Bush's first term, at a cost of $135 million before opening arguments last September. Since then, scores of witnesses have testified, and the government still has, perhaps, another month of witnesses before the companies begin their defense.

Through the weeks of trial testimony, the issue of disgorgement hung over the proceedings. Now that it has been removed - for the time being, anyway - government lawyers may have to shift their focus to convince Judge Kessler that there are other ways to punish the companies if she rules for the government.

William V. Corr, executive director of the Campaign for Tobacco-Free Kids, a nonprofit group that has fought cigarette companies for years, expressed disappointment over the appellate ruling but said in a statement that the options open to Judge Kessler still "hold the greatest potential for reducing the death and disease caused by tobacco use."

Mr. Corr also urged the Justice Department to resist any request by the companies to settle the case, a possibility that company lawyers said they would consider if disgorgement was no longer a factor in the case.

"Today's ruling," Mr. Corr said, "should not be an excuse to let the tobacco industry off the hook for the wrongful practices that are the basis of the lawsuit."

Dean Richard A. Daynard of the Northeastern University Law School in Boston, a longtime industry critic, said tobacco opponents were initially skeptical of the Bush administration's commitment to the suit. But Dean Daynard said he believed that the administration would appeal the ruling and continue to press the case.

January 15, 2005
        Mayor Backs City's Right to Tax Purchases Made on the Internet
        By Winnie Hu

Mayor Michael R. Bloomberg said yesterday that he favored regulations allowing states and cities to tax purchases made on the Internet.

The mayor, speaking on his weekly radio program on WABC-AM, said that governments should have the right to impose a sales tax on such purchases as a way to raise money for their schools and police and fire departments.

"It's not fair when - just because you order it one way versus another - you can avoid the tax the other person pays," Mr. Bloomberg said.

"At the beginning you could maybe make a case that the Internet needed a little bit of help and therefore a tax break for a while was in the country's interest, but we've long gone beyond that. The Internet is an accepted way to do business, they do enormous volume, and why shouldn't you have to pay your taxes?"

In New York, the state government collects the sales tax and remits a portion to local governments. For Internet purchases, a resident is charged a sales tax when the retailer has a physical presence in the state. But when that is not the case, residents are supposed to pay an equivalent amount on their state income tax form, though many do not do so.

The debate over taxing Internet purchases resurfaced this week in New York City after Bloomberg administration officials announced that they were aiming at smokers who had bought their cigarettes online and avoided paying local taxes. Compiling names of customers from an online cigarette retailer, the city has so far sent letters to 3,700 smokers seeking more than a million dollars in unpaid excise taxes that amount to $1.50 a pack, which the city can collect directly.

"The law says you've got to pay your taxes," Mr. Bloomberg said about the city's efforts to collect from smokers. "You pay your taxes; I pay mine. Most people do, and the handful of people that don't are just stealing from the rest of us."

January 9, 2005
        Bingo Players Flee, Dab-O-Ink and Cigarettes in Hand
        By Jeff Vandam

In Richmond Hill, Queens, the marquee of the old RKO Keith's theater still speaks loudly with big type and yellow trim, as it did when vaudevillians ad-libbed on its stage and crowds swarmed its entrance. But no movies are shown there anymore, and the bright bulbs inside the bold red letters of the theater's name are gone.

One attraction, however, does get top billing. "Richmond Hill Bingo Hall," the marquee on Hillside Avenue now reads. "Cash Prizes." In place of the seats on the theater's main floor are a sea of plain brown tables. Bingo video monitors abound.

The game has ruled here since the late 60's, when the theater reopened as a bingo palace, with proceeds going to various charity groups. But in the last decade, the hall's managers say, the city's bingo industry took a series of hits, as O.T.B. parlors became more prevalent and Atlantic City regained its popularity. And no blow has been as damaging as the 2003 smoking ban.

"Business was decreasing before, but it was livable," said Bob Wooldridge, the hall's manager. "But the no-smoking law came in and really whammed it."

Since then, at least half of the customers, from all corners of the city, have decided to find entertainment elsewhere. Nightly games under the theater's dusty chandeliers used to attract 300 or 400 guests, but now the average is closer to 125. Some players tried ducking outside after every few games to light up, but it didn't last.

"If they want to spend their money, they want to be comfortable," said Susan Shkoditch, the volunteer who runs the bingo games for the charities. "They're mostly angry that their rights are being violated."

Competition among bingo halls in Queens for the remaining players has become so fierce that some establishments have resorted to sabotage, Mr. Wooldridge says. He believes that competitors have called the city's 311 phone line to report smoking at his hall, even though there isn't any. If a customer does manage to sneak an unauthorized smoke and an inspector arrives, an $800 fine and a day in court can result.

But the game is not dead yet. Dedicated players pass through the grand old lobby, showing up hours early with their Dab-O-Ink markers and satchels marked "My Lucky Bingo Bag." Posters covered in dollar signs advertise "Dottie's New Game," where players are promised big jackpots and are asked, politely but urgently, to "bring a friend."
 
 
 
 
 

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December 6, 2005
        THEY'D RATHER FIDO THAN QUIT
        By Neil Graves

Smokers were fuming yesterday over Mayor Bloomberg's suggestion that they quit puffing at home — for the sake of their pets' health.

"That's crazy, ludicrous," Yvonne Lee, a Manhattan mail clerk and owner of Annamae, a Jack Russell terrier, said while smoking with friends outside a Midtown office building. "I mean, it's my house."

Walter Henry Kaiser III agreed while playing at a Riverside Park dog run with his Shih Tzu, Lea.

"Let people do what they want to do," said Kaiser, 62, a stage manager. "I adore my critter, but I also smoke at home."

After two studies indicated health risks to dogs and cats from secondhand smoke, the city Health Department issued an advisory to pet owners — but it can't impose a law.

December 5, 2005
        SEE SPOT COUGH
        By Carl Campanile

He has already snuffed out your right to smoke in bars — and now Mayor Bloomberg is trying to shame you from lighting up in your own home, by dragging cats and dogs into the debate.
City Hall has issued a warning that secondhand smoke endangers the health of puffers' pets.

That's right. Even if you don't have a spouse or kids to worry about, that next smoke could push Fido, Sylvester or Tweetie one step closer to the pet cemetery, the city Health Department declares in its new advisory.

"Even cats and dogs whose owners smoke have higher rates of cancer," the Health Department reports.

The push for a "smoke-free home" is an extension of Bloomberg's campaign against secondhand smoke, including a ban on lighting up in most public places.

Hizzoner can't impose a law barring smoking in private abodes, as he did in bars and restaurants, but he is working on smokers' consciences to do the right thing for their families and pets.

City health officials said smokers should kick the habit at home because "moving to another room, opening a window, or using an air filter does not protect nonsmokers. 'No smoking' means even when no one else is around," the advisory reads.

Several studies and other research by pet experts have concluded that secondhand smoke does, in fact, harm cats, dogs and birds.

The Journal of Epidemiology published a report claiming that dogs in smoking households have a 60 percent greater risk of lung cancer. Another study said long-nosed dogs — such as collies and greyhounds — were twice as likely to develop nasal cancer living with smokers.

A Tufts University study found that cats whose owners smoked were three times as likely to develop lymphoma.

The studies also note that pets don't just inhale smoke. Tobacco particles are trapped in their fur and ingested when they groom themselves.

"Cats seem more sensitive to secondhand smoke than dogs. They can get asthma and bronchitis," said Manhattan veterinarian Jennifer Chaitman.

The American Society for the Prevention of Cruelty to Animals lists tobacco smoke as a poison for birds.

"Secondhand smoke is especially hazardous to birds because they have a very sensitive respiratory tract. It could cause fluid accumulation and lead to pneumonia, which is life-threatening," said ASPCA spokeswoman Dana Farbman.

The health advisory said that maintaining a smoke-free home makes kicking the tobacco addiction easier.

NYC C.L.A.S.H. Note:  Click here for a debunking of this pet health alert

November 18, 2005
        GOOD, BAD & UGLY OF BLOOMIN' SMOKE LAW
        By Steve Dunleavy

YESTERDAY'S "Great American Smokeout," which urges people to quit the weed or never start, is good.
I smoke, that's bad.

I support Mayor Michael Bloomberg, the Democrat in Republican pinstripes, in many ways, and that's good.

But his sucker punch — which deprived me of the right of partaking in a legal activity in a privately owned establishment — is virtually unconstitutional, and was never put to a public vote. That is bad.

Being concerned about the bartenders' health is good.

Running a taxpaying bar owner out of business or slashing a bartender's tips by up to 30 percent, because so many New Yorkers just don't go to the pubs anymore, is bad.

Bloomberg's concern about my health, which he has personally imparted to me, is good.

Me, standing like a frozen stork outside a bar smoking in the snow risking pneumonia, that's bad.

Bloomberg won his first mayoral race with big bucks and booming brains in his campaign — well, that's good.

But he didn't utter a word in his campaign about his Draconian intention to ban smoking in bars. That's bad.

People still smoke pot (an illegal substance), and that's bad. But if cops catch you smoking a joint in a bar, you will get fined $100. That's good.

But if you get caught smoking cigarettes, a legal substance, the bar owner gets fined $1,000 and eventually could lose a license, that's bad. Very bad.

November 5, 2005
        CIG BAN INSIDE & OUT
        By Kenneth Lovett

ALBANY — New Yorkers are fed up with having to pass through clouds of smoke created by clustered cigarette puffers congregating outside buildings, a poll shows.

A new study on smoking commissioned by the state Health Department found a whopping 75.5 percent of adult New Yorkers favor a ban on smoking in front of public buildings and workplace entrances.

Even a majority of adult smokers — 54 percent — favor such a ban, according to the study of 1,949 adult New Yorkers done earlier this year by North Carolina-based RTI International.

Meanwhile, 51.6 percent of adults would ban smoking at public parks and beaches.

"Clearly, people do not like walking through that cloud of smoke around doorways, and I think we're going to have to address it sooner or later," said Russell Sciandra, director of the Center for a Tobacco Free New York.

"It's a sign how rapidly public attitude is changing about smoking as the number of smokers continues to decline and people come to appreciate smoke-free environments."

Assemblyman Alexander "Pete" Grannis, the Manhattan Democrat who sponsored the statewide indoor-smoking ban for most public places, said he believed landlords and localities would soon begin addressing the problem as complaints grow.

He said it could be tricky for the state to outlaw smoking on public streets, though he wouldn't rule it out.

"Obviously, with those kinds of numbers, you can't help but think this is something that will happen one way or another," Grannis said of a push to end smoking in front of building entranceways.

Sciandra said a law could be drafted to ban people from standing still and smoking in front of a building, forcing them to walk up and down the street while puffing.

But state Conservative Party Chairman Michael Long, a former smoker, questioned how much more you can do to punish smokers for engaging in a legal activity.

"While I don't think people should smoke, we shouldn't treat those who do like lepers," he said. "That's what we're doing.

". . . What's next? Banning heavy people from walking on narrow sidewalks?"

October 30, 2005
        SPITZER'S CIG SHOWDOWN
        Editorial

Attorney General Eliot Spitzer has bullied another private company into doing his bidding.

Last week, UPS announced that it will no longer deliver cigarettes to individuals, under an agreement reached with the aspiring — indeed, all-but-presumptive — governor.

What did he threaten to do to the company if it didn't knuckle under? Maybe some press conferences denouncing it?

Maybe a lawsuit, despite the fact that UPS has violated no law?

No matter.

Whatever the AG wants, the AG gets. No questions asked.

Ostensibly, this agreement is supposed to make it harder for people — particularly New Yorkers, but UPS' new policy applies nationwide — to buy tax-free cigarettes online.

For consumers in New York City, facing an extra $3 a pack in taxes (the state and the city each impose a $1.50 levy), buying from Indian-reservation outlets, which don't charge taxes, is quite a bargain.

Whether Indian vendors who sell to non-Indians have to collect taxes is in dispute, but that's something for New York state and the tribes to work out — not for Spitzer to dictate.

Spitzer and his ilk say they want to stem the tide of lost revenue.

The price, however, is likely to be lost lives.

The principle here is fairly simple.

Any time you ban a product that people want — or make it prohibitively expensive, as is the case here — you inevitably create a black market.

Alcohol prohibition begat bootleggers, who eventually evolved into organized criminal enterprises that plague the United States to this day.

Similarly, "buttlegging" has become a problem in New York, with all kinds of unsavory characters getting in on the action — Russian thugs, Chinatown gangs and even rings of smugglers with ties to Hezbollah.

Cutting off one avenue for cheap cigarettes is only going to push more traffic to another: the streets.

New York has already seen a rash of murders as buttleggers fight over turf throughout the five boroughs.

The problem here, of course, ultimately stems from this state's politicians and their addiction to spending.

The politicians had to get their money-fix somewhere, and hitting smokers with a ridiculously heavy tax burden was the easy score.

The question at this point shouldn't be how to push the gray market for cigarettes on the Internet into blacker and blacker territory.

It should be whether the costs of Bloomberg-Pataki neo-Prohibitionism are really worth it.

And just how bad things might get during a Spitzer administration.

June 28, 2005
        TICKET A KICK IN THE ASH
        By Patrick Gallahue

Talk about a nicotine fit.

A Staten Island man was apoplectic yesterday after a ticket-happy New Jersey state trooper slapped him with a $240 fine for flicking cigarette ash — not a butt, ash — out of his car window.

"It's ridiculous," said John Nestor, 40, of New Springville. "Do people get summonses for walking down the street with a cigarette? Where do they flick their ashes? Are they going to put ashtrays on every street corner?"

Cops made an ash of Nestor on Sunday afternoon on Route 80, where he said New Jersey State Trooper Nestor Pla began trailing him as he drove home from the Poconos with his wife and twin 12-year-old sons.

"He was on my butt," the self-professed Marlboro Man said, punning obliviously.

After about 10 minutes the trooper flashed his lights and pulled Nestor over just outside Allamuchy.

"He said, 'You were littering,' " recalled Nestor, a telecommunications operations manager for CBS. "I looked at the kids and thought maybe they threw something out the window. Then he said, 'Your cigarette ash.' "

"But I didn't throw a cigarette out the window," Nestor argued, claiming he puts his butts in an empty Snapple bottle. "The trooper said, 'No, the ash off your cigarette.' "

The trooper then hit him with a stiff summons for "Littering from M.V. [motor vehicle.]." The ticket even says "ashes" in the space reserved for a description of the offense.

"If they actually went after him for flicking his ash out the window it's absolutely a form of harassment," said smokers-rights advocate Audrey Silk.

Even the State Police seemed perplexed.

"That would be littering — but I find it hard to believe it's just the ashes," said Sgt. Gerald Lewis, a spokesman for the New Jersey State Police, of the reported offense.

"More than likely it was an entire cigarette, which is a fire hazard," Lewis added. "If the gentleman is going to contest it, then all the specifics are going to come out in the trooper's testimony. But I don't believe this gentleman is telling you the whole story."

Nestor, a smoker for 15 years, said he plans to fight the charge in court — and that his version of events is the truth, the whole truth and nothing butt the truth.

Asked if his troopers target New Yorkers, Lewis scoffed. "Absolutely not," he said.

June 14, 2005
        GOV BLOWS OUT APT.-CIG BAN
        By Kenneth Lovett

 ALBANY — Gov. Pataki yesterday snuffed out the idea of banning smoking in people's apartments.

Pataki wouldn't comment on the specific bill being introduced by Assemblyman Felix Ortiz to outlaw smoking in public housing — reported in The Post yesterday — but said he is not comfortable with the state telling people what they can do legally behind closed doors.

The Post reported that Ortiz (D-Brooklyn) is crafting legislation that would immediately require public housing projects to make 50 percent of their apartments smoke-free.

June 13, 2005
        NICO-FIEND TENANTS FUMING OVER PROPOSAL
        By John Doyle

No butts about it — the proposed no-smoking law targeting the city's housing projects shouldn't pass, say those who live and smoke in them.

"If I'm paying rent, I should be allowed to smoke in my own home," fumed Maritza Schelmetty, a 33-year-old resident of Brooklyn's Red Hook Houses.

The huge housing complex is situated in the district represented by Assemblyman Felix Ortiz, who is sponsoring the anti-smoking measure. Residents told The Post that the proposal should get snuffed out. "It's a silly law that won't get passed," said Schelmetty, who admits to smoking since age 8.

Her advice: "If you don't want people to smoke, then make cigarette sales against the law."

James Aston, 68, thinks the law is going to go down in smoke.

"It's a good thing, smoking can kill you," he noted. "But you can't tell a person what to do in their own home.

"People aren't going to quit. It won't stop me. It's not fair," said Aston, a smoker for more than 30 years and a resident of Red Hook Houses.

Julia Perry, a smoker for 60 of her 73 years, thinks the proposed law is "ridiculous. I don't think they'll be able to enforce it."

Another project resident, who refused to give her name, laughed when she heard about law.

"Stop the drugs out here before you stop the smoking," she suggested.

June 13, 2005
        ASH FRAY IN CITY'S PROJECTS
        By Kenneth Lovett

ALBANY — Thousands of New Yorkers living in public housing could soon be banned from smoking in their apartments.

Brooklyn Democratic Assemblyman Felix Ortiz said his legislation would immediately require public housing complexes to make 50 percent of their apartments smoke-free.

By 2010, smoking in the projects would be outlawed completely, Ortiz said.

Ortiz — best known for his successful push to ban the use of hand-held cellphones while driving — said he's concerned about the effects of secondhand smoke that seeps though the walls and ceilings into neighboring apartments.

"People have the right to smoke, and I'm not trying to stop people from making choices," he said. "I'm trying to have a cleaner and healthier environment for our children."

Ortiz said he has received complaints about smoking from a number of the 9,000 constituents in his district who live in public housing.

"Hotels have smoking and nonsmoking rooms, and housing complexes are not so much different than hotels," Ortiz said.

Supporters say the bill is designed to protect the health of nonsmokers.

But opponents charge lawmakers are seriously overstepping their bounds by trying to legislate what people can do in the privacy of their own homes — something they say they warned about when the city and state banned smoking in most public places two years ago.

"It's an outrageous move that seeks to take away the personal freedoms of our citizens," said state Conservative Party Chairman Michael Long.

"Once again, legislators are starting to take on the role of telling people what lifestyles they should lead, what they should be doing, what weight they should be and what social habits they should be participating in," he said.

Meanwhile, college students are also facing a crackdown as a bill already quietly making its way through the Legislature would ban smoking in all public and private college dormitories.

That bill overwhelmingly passed the Democrat-controlled Assembly last week, and has majority sponsorship in the Republican-controlled Senate.

Twenty-seven percent of colleges nationwide, including the universities of Vermont and Rhode Island as well as Harvard, have banned smoking in dormitories, according to a memo by Assembly-bill sponsor Amy Paulin (D-Westchester).

In New York State, Syracuse University, Hofstra, SUNY Buffalo and SUNY at Old Westbury have as well, she said.

May 29, 2005
        CIG-SELLER FEUD ENDS IN DEATH
        By Mark Bulliet and Chris Michaud

A dispute between two cigarette sellers led to a slap and a Macing, then escalated to a stabbing that left one of the vendors, a father of a newborn, dead.

Cops charged a Bronx man, Njasang Nji, 26, early yesterday with the murder of Luis Padilla, 20, also of The Bronx.

Padilla's family said both men sold bootleg cigarettes at 125th Street and St. Nicholas Avenue in Harlem, but on Friday their competition led to Nji smacking Padilla's common-law wife, with whom Padilla has a month-old son.

Padilla went after Nji but ended up getting sprayed with Mace and had to be treated at a hospital early in the evening, his brother, Andrew Martinez, told The Post.

Later, Padilla went to confront Nji again.

"I wanted to go together," Martinez said, "but he went and did it his way."

Padilla's wife, Mary Smith, 19, said she had warned him: "Be careful, just be careful. And call me when you get back."

But he never did.

Witnesses said Padilla was waiting on the street outside the Aristy Food Market on Kingsbridge Avenue in The Bronx when Nji, who lives on nearby West Kingsbridge Road, got out of a cab.

"I heard them cursing at each other," said a man who goes by the name Chino and was watching from his apartment window. "They were really going at it," cursing at each other, then Padilla "ran down the hill and the other dude chased him . . . he just started stabbing him."

Cops said Padilla, who had 14 arrests, was stabbed twice in the left arm and chest and was pronounced dead on arrival at St. Barnabas Hospital.

May 26, 2005
        JUDGE SNUFFS CLUB'S 'LET US SMOKE' LAWSUIT
        By Clemente Lisi

A federal judge yesterday tossed a lawsuit brought by a posh private Manhattan club that sought to overturn the city's smoking ban so it could continue to honor its members in "pipe ceremonies."

The Players Club is not entitled to any special privileges with health inspectors who enforce the ban and members "have no fundamental constitutional right to smoke tobacco," said Manhattan federal Judge Victor Marrero.

The judge also rejected the club's argument that the smoking ban infringed on the club's right to continue a tradition in which members are honored in a ceremony that involves smoking.

"While individuals' freedom of association, freedom of assembly and freedom of speech merit constitutional protection, there is no basis for concluding that the smoking bans infringe those rights," Marrero wrote.

The club, with nearly 700 members, including Academy Award-winner Morgan Freeman and legendary newsman Walter Cronkite, filed the suit in December 2003 after city health inspectors ticketed it for failing to remove ashtrays from its offices.

The city ban went into effect in March 2003, banning smoking from all restaurants, bars, offices and private clubs. A similar state law went into effect in July 2003.

The Players Club was founded in 1888 by Edwin Booth, the brother of Abraham Lincoln's assassin, John Wilkes Booth.

May 25, 2005
        MIKE GOP FOE SMOKING MAD
        By Stephanie Gaskell

Butt out!

That was the message to Mayor Bloomberg yesterday from Republican rival Tom Ognibene, who said that if he's elected mayor, he would lobby Albany to repeal the smoking ban.

"What he did is, he singled out a certain industry and then applied a draconian system that does more harm than good," Ognibene at Langan's bar and restaurant near Times Square.

"We had a law that was working," he went on, referring to Rudy Giuliani's 1995 smoking ban, which prohibited smoking in restaurants but allowed it in bars.

A Bloomberg spokesman said the ban is working well.

May 11, 2005
        City Still Has Free Nicotine Patches
        By David Seifman

Nicotine patches to help smokers quit are still available for free from the city's Health Department.

Health Commissioner Thomas Frieden said smokers who got the free patches have a 1 in 3 chance of quitting, compared to 1 in 20 for those who try to go cold turkey.

Pfizer donated 45,000 patches, which retail for $150.  They can be requested by calling 311.

May 9, 2005
        N.Y. BIDS TO RAISE AGE FOR SMOKING
        By Kenneth Lovett

ALBANY — First, they raised the taxes on cigarettes, and now legislators are considering raising the smoking age, The Post has learned.

A bill quietly making its way through the Legislature would raise the purchasing age for smoking products from 18 to 19.

The Senate Health Committee is expected tomorrow to consider the bill, which is sponsored by the same senator, Charles Fuschillo (R-Long Island), who sponsored the statewide ban on smoking in most indoor public places.

The Assembly Health Committee has already "reported out" the bill last month. It now sits in the Assembly Codes Committee.

Three states — Alabama, Utah and Alaska — have raised the tobacco-purchasing age to 19. In New York, the smoking age is already set to increase to 19 in Suffolk County on May 16.

Fuschillo said the goal of his bill is to make it more difficult for high-school kids to get their hands on cigarettes.

Many younger teens, he said, use 18-year-old school friends to buy cigarettes for them. Raising the age by a year will greatly diminish that option, he said.

The state legislation has drawn joint opposition from the usually disparate state Conservative Party and the more liberal New York Public Interest Research Group.

Despite being "ferociously anti-smoking," NYPIRG's Blair Horner said his group opposes the legislation because it discriminates against 18-year-old adults, "with no proof raising the smoking age will do anything to reduce smoking rates among teens."

Conservative Party Chairman Michael Long, who quit smoking eight years ago, branded the bill as nothing more than "feel-good, politically correct legislation that really won't do anything."

"It's absolutely ludicrous when you think that an 18-year-old serving in the military who might be a smoker might come home on leave and not be able to buy a pack," he said.

Fuschillo, who said he has heard no objections to the legislation in his house, plans to speak with Senate Majority Leader Joseph Bruno this week to determine the chances of the bill making it to the floor this year.

Assembly Health Committee Chairman Richard Gottfried (D-Manhattan) said the legislation has "fairly broad support" in his house.

While a spokesman for Gov. Pataki said the governor "has been a strong supporter of anti-smoking efforts, especially those aimed at teenage smoking," it's unclear whether he will back raising the tobacco purchasing age to 19.

"If the measure passes both houses and is sent to us, we'll take a look at it," said the spokesman, Andrew Rush.

Representatives for the Altria Group's Philip Morris division, the leading cigarette manufacturer in the country, said the company does not oppose increasing the smoking age.

May 2, 2005
        NIGHT LIFE RISES FROM ASHES OF SMOKING BAN
        By Kenneth Lovett and Perry Chiaramonte

The Big Apple's night life is still thriving, despite predictions it would go up in smoke because of the ban on butts, a new state study shows.

The first-time study by the state Department of Taxation and Finance — a copy of which was obtained by The Post — shows that while tavern business in the city dipped the first six months after the smoking ban went into effect in March 2003, it has been rebounding steadily since.

The study, which for the first time separated out the sales at bars from restaurants, also showed the smoking ban had even less of an initial impact on restaurants, where business has grown at a faster rate than at watering holes.

"Certainly there was a short-term impact in the middle of 2003, but clearly since then business hasn't suffered," said state Tax and Finance spokesman Thomas Bergin. "As a matter of fact, business has improved."

Many bar workers and patrons are not surprised.

"We have smokers who come here that are still upset that they have to go outside, but people find a way to deal with it," said Lucie, a bartender at Milady's on Prince Street.

Samir Hadjarab, manager of Red Bench Bar on Sullivan Street, added, "It was quiet for a while, but now a majority of my customers are nonsmokers."

According to the state study, sales-tax revenue collected from bars dropped 5.9 percent and 7.8 percent during the first two quarters following the implementation of the city ban — the largest declines experienced since business dropped 17 percent right after the Sept. 11 terrorist attacks in 2001.

But since September 2003, bar business has begun climbing again, whereas statewide, it has dropped or remained relatively flat since the state smoking ban went into effect July 2003.

For the quarter beginning last June and ending in August, city bars and taverns reported $73.2 million in sales taxes, a healthy 3.8 percent increase over the same period in 2003.

Business even increased slightly during the winter months of late 2003 and early 2004, when smokers had to get used to going outside and lighting up, despite the cold and snow.

State tax officials contend that the numbers are evidence that, despite dire predictions by bar owners and pro-smoking forces, the ban has not decimated the city's bustling night-life industry.

But Scott Wexler, executive director of the Empire State Restaurant and Tavern Association, said the increase in state sales taxes that were collected from bars can likely be pinned to a quarter-percent increase in the sales tax enacted by the state, as well as to establishments being forced to increase drink prices to make up for lost business.

Still, many customers told The Post they are happy with the smoke-free environment.

"It's more enjoyable," said Howard Glassman, 34, a nonsmoking patron at the Bleecker Street Bar. "People are pretty adaptive, and over time, they have gotten over it."

Yvonne, a bartender at Tom and Jerry's on Elizabeth Street, said: "I still see a lot of smokers coming out. They go outside, and it's become a very social thing."

April 25, 2005
        BUTT BAN BITES BACK
        Editorial

Talk about a dubious policy coming back to bite you.

Raymond "Spanish Ray" Marquez, once the city's most famous numbers runner, has won judicial leave to pursue a $15 million lawsuit against the city, claiming he came down with bladder cancer while breathing second-hand smoke in the city's jails.

Manhattan Supreme Court Justice Michael Stallman will allow the lawsuit to go forward — and has given the city less than three weeks to produce all records of cigarette sales to prisoners at Rikers Island, where Marquez was held from 1998 through January 2001 before his acquittal on gambling charges.

Now, given Mayor Mike's notorious zealotry on the question of smoking by any New Yorkers — even those behind bars — you might think the City Law Department would just throw in the towel and write Marquez a hefty check.

After all, as the plaintiff's son and lawyer (that's right) notes: "How does the city even have the audacity to argue against this case when, after I filed suit, they banned smoking at Rikers?"

Good question.

Fortunately, the mayor's fanaticism on smoking doesn't go quite that far.

Restaurant and bar owners who've had to pay a price for imposing a smoking ban might wonder why City Hall doesn't feel the need to be held liable for its smoking sins.

But foolish consistency, as Emerson noted, is the hobgoblin of small minds.

April 22, 2005
        APPLE'S 'INHALE' OF A FIX
        By Dareh Gregorian

A former Rikers inmate can sue the city for not placing him in a no-smoking section while he was in jail, a Manhattan judge has ruled.

Legendary numbers kingpin Raymond Marquez — better known as "Spanish Raymond" — says in a $15 million lawsuit that "he developed bladder cancer and injury to the urethra as a result of secondhand smoke he inhaled" while held without bail at the Manhattan Detention Center and Rikers Island between Jan. 1, 1998 and Jan. 30, 2001.

"Every time he complained about it, he was told, 'This is jail. What do you expect?' " said Marquez's son and lawyer, David Marquez.

Marquez, 75, was later acquitted of the charges he was being held on.

In a ruling made public yesterday, State Supreme Court Justice Michael Stallman snuffed out the city's bid to toss the suit, finding that the questions of whether the jails were "reasonably safe" because of the smoke condition and if the city's alleged negligence caused Marquez's injuries should be answered by a jury.

City lawyer Jennifer Plotkin said "we're disappointed with the judge's ruling," but "look forward to presenting our case in court."

A source close to the case said the city plans to bring up that Marquez was a longtime smoker — something his son said he plans to bring up, as well.

"He smoked for 20 years 20 years ago," which made Marquez "predisposed" to cancer, his son said — a predisposition that manifested itself during his time in the city's smoky cells.

The smoke "was so heavy it was palpable," and was the "proximate cause" for Marquez's injuries, the lawyer said. "It was a condition he did not have before he was incarcerated."

He said his father was first treated for cancer while awaiting trial on numbers-running charges in September 2000 — and was then sent right back to jail. "The tumors in his bladder grew back after they put him back in the smoky environment."

Plotkin said the city's jails "have been entirely smoke-free since March 2003."

"Spanish Raymond" was widely recognized as the king of the Harlem's number racket for decades, and pleaded guilty to attempted enterprise corruption back in 1996. He's now appealing that conviction. He beat other gambling related charges at his 2001 trial, and has since emerged victorious on charges he cheated the state out of taxes.

March 14, 2005
        SECOND-RATE SCIENCE
        By Elizabeth M. Whelan
        Dr. Elizabeth M. Whelan is president, American Council on Science and Health.

ENVIRONMENTAL activists this week brought the credibility of the noble science of epidemiology (the study of the cause of human disease) to another low.

The Air Resources Board of the California EPA declared that exposure to second-hand smoke upped a woman's risk of breast cancer. Nevermind that the "study" was preliminary and was neither peer reviewed nor published.

The national media picked up its scary conclusions in a generally uncritical manner, most scientists remained silent on the travesty and the California regulatory exorcists who are committed to removing all "toxins" from the air, pondered even more legislation to "protect" women from breast cancer by eliminating exposure to second-hand smoke.

But there is no persuasive evidence that smoking, no less second-hand exposures, cause breast cancer. In fact, there is some evidence that women who smoke may have a reduced risk of breast cancer given that smoking reduces the body's natural estrogen levels. Commonsense suggests that if a woman smoking a pack a day is not at increased risk of breast cancer, then a nonsmoking woman transiently exposed to second-hand smoke would not be either.

Indeed, why do anti-smoking advocates need to exaggerate their claims when there is already overwhelming scientific evidence of the dangers of smoking? Because the anti-smoking movement is driven by a zeal to regulate cigarette smoking out of existence and the ends justify the means.

They seem unaware that their baseless health claims threaten the acceptance and credibility of legitimate public health initiatives as facts and hype get tangled.

Let's not give the tobacco industry fertile grounds for claiming all smoking and health claims are based on junk science.

March 8, 2005
        'NET CIGS MASTER-BARRED
        By Kenneth Lovett

ALBANY — MasterCard yesterday became the first major credit-card company to warn financial institutions against processing payments to tax-free Internet cigarette companies.

MasterCard said such transactions should be approved only if there is documented evidence that Internet companies are complying with all federal, state and local laws, including the collection and payment of sales taxes.

"We put out the bulletin to remind our global membership that MasterCard does not tolerate illegal activities of any kind," said MasterCard Senior Vice President Joshua Peirez.

State Attorney General Eliot Spitzer applauded the decision and urged other credit-card companies to follow suit.

The Post reported in January that Spitzer warned credit-card companies and their processors to block orders from tax-free online tobacco companies because many of them skirt state tax laws and do not check the age of customers.

At least two Web-based tobacco companies, Cigs4free.com and 00taxfree.com, have already begun restricting shipments to customers in New York.

February 23, 2005
        ALBANY'S SMOKING OUT PUFFERS FOR ONLINE TAXES
        By Stephanie Gaskell

Smokers who got socked with tax bills from the city for buying cigarettes online are now hearing from another party with its hands out — the state.

State officials have just sent out 2,200 letters to customers who bought smokes on the Internet but failed to pay the state tax on them.

"Because the vendor did not collect and remit the appropriate taxes to New York State, you are responsible for the unpaid taxes," the letter says.

Tax-collectors took addresses from a lawsuit against an online cigarette sales company in Virginia.

"The addresses are wide and varied, not just New York City," said Tom Bergin, spokesman for the State Department of Taxation and Finance.

City officials used the same list recently to send out 3,100 letters to city residents who tried to dodge the city tax.

"The message we would like to get across to people who buy cigarettes on the Internet is that there is no such thing as a tax-free cigarette," Bergin said.

The state hopes to collect about $1 million in unpaid cigarette taxes.

February 14, 2005
        354G IN ASH CASH
        By David Seifman

More than 1,000 smokers caught buying cigarettes on the Internet have coughed up $354,000 to settle tax claims by the city, The Post has learned.

And more checks are in the mail.

"We're still getting about 100 letters a day," Finance Department spokesman Sam Miller said last week.

Armed with lists of buyers obtained under court order, the Finance Department last month sent out 3,100 letters demanding payments totaling $1.2 million from residents who ducked the city's $1.50-a-pack tax since July 2002.

Those who didn't pay within 30 days — the deadline was yesterday — were threatened with a draconian penalty of $200 a carton.

The largest single check was $3,075, representing the taxes owed on 205 cartons. Some smokers entered into installment plans.

Miller said no one was offered a discount, although double-billing errors were corrected.

"There are no deals," he declared.

Andrew Hoffer, a Queens utility worker among the first to get slapped with the tax shocker, decided after contacting a lawyer to reluctantly write the city a check for $1,005.

"I wasn't gonna pay," he said. "But if I didn't, the penalty was $13,500. The lawyer asked me, 'Do you want to risk that?' I wanted to get it out of the way."

Hoffer also said he's cut down on his smoking and has stopped using the Internet to buy cigarettes.

"I'm not going to make that mistake again," he said.

But other smokers might.

Numerous online tobacco retailers continue to advertise that their products are "tax-free."

Indian Smokes Online was offering a carton of Marlboros for $25.75 yesterday. That's about half the price charged by shops in the city.

January 28, 2005
        CIG CYBER-SELLERS WIN A ROUND VS. BLOOMBERG
        By Carl Campanile

A Manhattan federal judge ruled yesterday that the city hasn't shown that online brokers hawking "tax-free" cigarettes are engaged in racketeering -- striking a blow to Mayor Bloomberg's campaign to stop smokers from avoiding city taxes by using the Internet.

Judge Deborah Batts tossed out city claims that a half-dozen firms acted as a racketeering enterprise by falsely advertising that cigarettes are tax-free if bought out-of-state on the Internet.

But Bloomberg's case is not in ashes yet, because Batts also ruled city lawyers can amend the suit and plead its case again within 30 days.

The judge ruled that the lawyers had improperly described the racketeering enterprise, a defect that could be corrected.

She even said that the city is "defrauded" of taxes when out-of-state Internet firms fail to report cigarette sales to New York authorities.

City lawyers insisted the judge provided a "road map" to move ahead with its case.

"This ruling bolsters the city's efforts to prevent Internet cigarette vendors from misleading the public into illegal transactions," said Corporation Counsel Michael Cardozo.

The city has filed four lawsuits against 55 Internet companies and individuals it says are selling "tax-free' smokes illegally.

Batts also sided with the city by ruling that her court did have jurisdiction in the case.

January 17, 2005
        MIKE'S CONTINUING OBSESSION
        Editorial

The Bloomberg administration's to bacco obsession seems to know no bounds — on both the smoking and anti-smoking sides.

Many New Yorkers are finding letters in their mailboxes from the city Finance Department demanding back taxes — sometimes hundreds of dollars — from cigarettes purchased online.

Now, the law governing out-of-state purchases is clear. New York state taxes are supposed to be collected at the point of purchase. If not, they remain the responsibility of the purchaser.

Thus the city probably is within its rights in dunning cigarette consumers who buy over the Internet.

Regardless, the mayor seemed a little too happy Thursday in reminding cigarette-purchasers that Caesar's tobacco-tax tribute must be honored.

Of course, this is the same administration that — enforcing the smoking ban — has fined business for having empty ashtrays . . . in out of the way back rooms!

In other words, an ashtray just on the premises was itself evidence of having broken the smoking ban.

Now, having jacked up the city per-pack tobacco tax to $1.50 (never mind the state and federal bite), it shouldn't come as a surprise that otherwise law-abiding people will try to find a bargain.

Are these people "avoiding" taxes?

Yes, but like any consumer when faced with a price hike in their preferred product, they are also trying to shop around.

By enforcing laws foolishly on the one hand and passing onerous tax hikes on the other, a government will ultimately encourage disrespect for the law.

Indeed, Internet sales of tobacco pales in comparison to the business "butt-leggers" are doing all over the city.

Meanwhile, before certain politicians get too gleeful over "getting" consumers with avoided taxes, remember that those consumers are also voters.

A close election could turn on how many voters might take letters from the Finance Department with them as they head to the voting booth.

January 14, 2005
        BLOOMY PIPES UP ON CIG-TAX 'NET CHEATS
        By David Seifman

Mayor Bloomberg yesterday vigorously defended his tax collectors for going after New Yorkers who didn't pay taxes on cigarettes they buy over the Internet.

"It's not fair to every other taxpayer in this city if some people avoid it," Bloomberg said. "I'd also like to point out these aren't people buying cigarettes to smoke for themselves. It's buying a lot of cigarettes for resale to avoid the taxes."

The Finance Department said 2,300 letters demanding payment went out Monday to a list of city smokers obtained from Web sites sued by the federal government in Virginia.

Another 1,800 letters went out yesterday to anyone who bought tobacco from another Internet company sued by the city.

The city has lawsuits pending against 30 other Web retailers, meaning that thousands more unwary smokers are going to get slapped with outstanding tax bills.

There's one smoker who's certainly burning up today — she's been hit with a $9,960 bill for buying 664 cartons of untaxed cigarettes. Officials wouldn't identify the culprit other than to say she lives in Brooklyn.

Several Web sites promise that their transactions are confidential. But the Finance Department said there's no legitimate way to buy tax-free cigarettes over the Web.

While smokers were squawking, grocery store owners were cheering.

"I think this is something fair for everybody," said Jose Fernandez, president of the 7,000-member Bodega Association.

January 13, 2005
        CITY SMOKES OUT 'NET TAX
        By David Seifman

Big Brother Bloomberg is watching.

Smokers who've been buying cigarettes from Internet sites to beat the city's $1.50-a-pack tax are in for a shock: tax collectors know who you are and are now sending out thousands of bills going back more than two years, The Post has learned.

Andrew Hoffer, a utility worker who lives in Queens, told The Post he was flabbergasted to get a threatening letter from the Finance Department demanding $1,005 for the taxes due on purchases he made back to July 2002.

"I had a feeling of violation," said Hoffer, 37. "Internet purchases are traditionally considered private and secure. This just doesn't seem right to me at all."

In fact, residents have to pay full city taxes on whatever they buy, even outside the five boroughs.

By law, New Yorkers who order untaxed merchandise over the Web are required to forward the applicable tax to state and city authorities. Few do.

Authorities rarely prosecute, except in cases where they catch high-end jewelers and art dealers deliberately ducking taxes by sending expensive purchases to fake out-of-state addresses.

With the price of a pack here reaching $7 or more, the Bloomberg administration last year filed lawsuits to prevent Internet tobacco sites from shipping to New Yorkers.

Tax-evading smokers are apparently next in the administration's sights.

Sources say the blitz will be widespread with possibly more than 2000 letters likely to be sent out.

In a