San Francisco’s Legal Fight Against Big Tobacco’s Youth-Targeted Sales Tactics

On September 4th, 2024, San Francisco’s city attorney, David Chiu, filed a civil complaint against four major tobacco companies for their unlawful sale and advertisement of flavored tobacco products to consumers within the city [1]. The complaint centers around alleged online retail sales of “ZYNs,” flavored nicotine pouches placed between the consumer’s mouth and lip. ZYNs have become more popular among youth in recent years due to their faster-acting effects, sweet flavors, and low prices compared to vapes or cigarettes. Because of this newfound popularity, "nicotine pouches are the second most common form of tobacco use among California 8th graders” [2]. If vendors of these ZYNs were located within city bounds, San Francisco would take simpler actions than a civil lawsuit to enforce their codes, such as suspending licenses. However, due to San Francisco’s limited authority to directly enforce penalties on companies outside of city limits for their violation of city codes, David Chiu’s civil complaint seeks monetary damages to incentivize tobacco companies to stop the flow of tobacco to youth in San Francisco. These monetary damages, if the suit is successful, involve payment by tobacco companies of $2,500 for each violation of Business and Professions Code section 17200 [3]. Because this suit involves many instances of violation, the damages could be significant, raising the stakes for rich tobacco companies that would be unaffected by a smaller fine. In the complaint, San Francisco claims that defendants Rogue Holdings LLC, Swisher International, Inc., Northerner Scandinavia, Inc., and Lucy Goods, Inc. (along with 50 unnamed individuals) continue to violate San Francisco health codes prohibiting the sale of flavored tobacco products [4]. It goes on to state that companies also violate California state legislation regulating how tobacco companies are allowed to sell and deliver their products to prevent youth consumption of nicotine.

California legislators have long been concerned about the advertisement and sale of tobacco products to youth. First, to address the general risk of youth nicotine addiction, San Francisco stipulates in their health code: “No Person shall Sell or Distribute any Flavored Tobacco Product to a Person in San Francisco” [5]. Under David Chiu’s civil complaint, multiple incidents of flavored tobacco being sold and shipped to San Francisco residents were alleged to have occurred. If the companies selling these products were local vendors, San Francisco enforcement agencies would take much less complex and dramatic action by revoking tobacco licenses for the violators. Unfortunately for the city government, these vendors are based outside of the city’s jurisdiction to revoke licenses, instead shipping their addictive products into San Francisco in brash disregard for explicit prohibition. Because of this, San Francisco seeks civil damages against these major companies to enforce its codes, as well as to enforce larger California regulations on flavored tobacco products. California has taken less extreme steps to curtail the distribution of flavored tobacco products to minors with the Stop Tobacco Access to Kids Enforcement Act (STAKE Act). Among the stipulations regulating flavored tobacco sales these major companies have been alleged to violate are requirements to call the purchaser prior to 5 p.m. to confirm shipping, only deliver to the verified billing address, and deliver the product in a container specifically stating that a signature of a person 21 years or older is required for delivery [6]. While these clauses are not as authoritative as San Francisco’s ban on all flavored tobacco products, they are aimed at preventing youth from getting access to nicotine. Although this lawsuit may appear to be a simple case about straightforward violations of clear statutes, its implications are vast.

The online aspect of these illegal sales is most frustrating for the enforcement of San Francisco’s local codes prohibiting them. San Francisco has no power to revoke licenses or fine big online retailers because their offices are not based within the city, making enforcement of clear city laws on online retailers difficult. New York State has a similar enforcement issue to San Francisco, as “flavored e-cigarettes have been illegal to sell in New York State since 2020, but enforcement of these policies has been slow to commence” [7]. This also applies to New York City, despite it being “unlawful for any person to sell or offer for sale, or to possess with intent to sell or offer for sale, any flavored electronic cigarette or flavored e-liquid” [8]. The limited resources and authority of individual cities make fighting large, well-funded, and remote tobacco companies an uphill battle. If San Francisco is successful in its civil suit against tobacco companies, the precedent would encourage other cities and states to enforce their policies through civil lawsuits on a large scale despite the jurisdiction detachment online retailers use to dodge local enforcement. Online sale of flavored nicotine products is a relatively recent issue for America’s slow-moving legal system, making San Francisco’s case a pioneer exemplar for other cities and local areas in their pursuit of rule of law over online retailers circumventing or simply ignoring clear regulation.

In addition to being a pioneer case in its application of local ordinances to online retailers based outside of city limits, San Francisco’s suit has important implications for holding wealthy companies accountable in a substantiative way. Upon proving tobacco companies’ fault, there would assumably be thousands of instances of violations against local and state codes, each with thousands of dollars of damages attached [9]. However, as large companies, violators would find damages associated with this singular lawsuit insignificant compared to the money they gain from these youth-targeted sales tactics. Those named in the lawsuit have a significant portion of the around 8 billion dollars the industry sale of nicotine patches alone generated in 2023 [10]. This suit has the potential to result millions of dollars in damages, a small part of the huge yield the tobacco industry gains from the sale of ZYNs and comparable products targeted at youth. Because of this, more significant than the monetary outcome of this one specific case is the precedent it has the potential to set. Other cities such as New York City, for example, will be empowered to take legal action to enforce their civil codes if they knew it was successful elsewhere. Tobacco companies will be deterred from ignoring local laws if they assume lawsuits will follow, as the sheer number of damages collected from a multitude of lawsuits would hurt their business in a substantial way. San Francisco’s lawsuit has the potential to set a precedent resulting in significant financial consequences and restrictions for powerful tobacco companies across jurisdictions throughout America, raising the stakes beyond simply enforcing one set of local laws.

San Francisco’s landmark case against big tobacco will determine whether local jurisdictions are able to exercise rule of law over wealthy and detached companies. As this case pends litigation, big tobacco and local governments across America anticipate the result.

Sources:

1. David Chiu, City Attorney sues online tobacco retailers for violating local flavored tobacco ban, (September 4, 2024), https://www.sfcityattorney.org/2024/09/04/city-attorney-sues-online-tobacco-retailers-for-violating-local-flavored-tobacco-ban/.
2. Id.
3. People of the State of California and People of the City and County of San Francisco v. Rogue Holdings LLC., et al.
4. S.F. Health. Code. § 19.Q.3 (2018)
5. Id.
6. STAKE Act. Business and Professions. Code. § 22963 (2016)
7. Public Health Law Center, NEW YORK STATE  & FLAVORED TOBACCO, (November 2023), https://www.publichealthlawcenter.org/sites/default/files/resources/NYS-Flavored-Tobacco-Brief.pdf.
8. N.Y.C. Admin. Code. § 17-715.
9. Id at 1.
10. Id at 3.