Retailer Can Pursue Lanham Act Suit Over "Tax Free" Cigarette Ads

This posting was written by William Zale, Editor of CCH Advertising Law Guide.

A retailer could pursue Lanham Act claims that tribal smoke shops in New York were falsely advertising cigarettes as "tax free," despite defense contentions that the claims were time-barred, that the advertising contained no quantity term, and that New York tax law did not require payment of excise tax for purchases of less than 400 cigarettes, the federal district court in Brooklyn has ruled.

The complaint stated that the advertising at issue induced non-tribe members to purchase "large quantities of cigarettes," which might include purchases involving more than 400 cigarettes (two cartons). The fact that the advertising did not include a quantity term did not support the conclusion that it was necessarily true, the court reasoned.

Statute of Limitations

Even assuming that the retailer was aware in 2000 that tribal smoke shops in New York were falsely advertising cigarettes as "tax free," the retailer's Lanham Act claim filed in March 2006 could not be rejected as time-barred at the stage of a motion to dismiss, the court held.

The Lanham Act provided no statute of limitations for false advertising claims. The most analogous state limitation was New York's six-year period for fraud claims, the court held.

Contrary to the tribal stores' contention, the retailer's claims for damages and injunctive relief did not have to be analyzed as separate causes of action for limitations purposes. The motion to dismiss could not be granted until it was determined whether the retailer became aware of its alleged injury more than six years before filing suit.

The August 8 decision is Gristede's Foods, Inc. v. Unkechauge Nation, CCH Advertising Law Guide ¶63,093.