Michael Bloomberg's Tobacco Row

Billionaire New York City Mayor Michael Bloomberg, like many reformed smokers, has a bee in his bonnet about his former vice. He's donated millions of dollars to anti-smoking campaigns and pushed for higher tobacco taxes. Now the mayor is suing a Washington state cigarette company, in part for failing to insure that New York City and state taxes were paid. In doing so, he's got a fight over Native American sovereignty on his hands.

Jeremy Eaton

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More About

• Michael Bloomberg
• Tobacco Product Manufacturing
• Tobacco Manufacturing
• Native American Issues
• Smoking and Tobacco Use

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The company in question is King Mountain Tobacco Company, which lies on the Yakama Indian Reservation. According to the suit announced last week by Bloomberg, King Mountain sold thousands of cartons of cigarettes over a nine-month period to smoke shops on the Poospatuck Indian Reservation in New York.

A recently passed federal law, the Prevent All Cigarette Trafficking Act, requires King Mountain to ensure that taxes are paid before shipping tobacco to New York. The suit contends that not only has the company failed to do so, it refused to stop supplying the cigs after being told by Bloomberg's law office that it was breaking the law.

The civil action, which also accuses King Mountain and two co-owners of racketeering, seeks unspecified financial damages and an injunction to stop King Mountain from sending more cigarettes to Bloomberg territory. The mayor said yesterday that the case is "extending the fight" against tobacco-tax evaders to out-of-state companies.

But King Mountain is arguing that Native American sovereignty gives the company a pass on state taxes for wholesale cigarettes. "The state has no jurisdiction," Kamiakin Wheeler, King Mountain CEO and son of co-owner Delbert Wheeler, told the Yakima Herald-Republic.

"It's just wrong," counters Eric Proshanky, the lead attorney on the New York suit. He tells Seattle Weekly that federal law allows Native Americans to sell cigarettes to fellow tribal members without collecting tax. But that's the only tax exemption. He also says that King Mountain broke more than just tax laws—for example, a regulation that prohibits companies from shipping more than 10 pounds of cigarettes across state lines.

King Mountain plays up its Native American roots on its website, which calls tobacco an "intensely sacred and spiritual plant" used by Native Americans to ward off "negative spirits."