A federal judge has ruled the city of Chicago can continue its lawsuit against companies it accused of violating an ordinance that bans marketing tobacco products to minors.
The lawsuit targets Equte LLC, Vapes.com and Juishy LLC, as well as individual defendant Jeffrey Evenmo, who allegedly runs all three businesses. The city’s allegations — levied following an investigation from the Department of Business Affairs and Consumer Protection — concern the portion of the city code that prohibits the advertising and sale of tobacco products to people younger than 21, as well as bans the sale of all flavored liquid tobacco products.
The defendants moved to dismiss the complaint, a request U.S. District Judge Sara Ellis denied in an opinion filed June 14.
U.S. District Judge Sara Ellis
Ellis noted the ordinance stipulates violations are subject to fines from $500 to $10,000 per offense, applicable each day a violation continues, but the defendants argued the city can’t pursue those fines in federal court because they can only come from the consumer protection commissioner. Outside those penalties, they argued, the ordinance limits the city to pursuing an injunction.
Although the relevant ordinance does detail an enforcement mechanism, Ellis wrote, it doesn’t limit the city’s authority to other forms of relief. She said “the code ‘expressly permits the (commissioner) to turn over the prosecution of consumer fraud to the (city),’ which includes pursuing fines authorized by the code.”
Ellis said the code has no language limiting the city to administrative action, but grants the commissioner the power to cede violation enforcement to the city, state’s attorney, attorney general or other relevant government agency. That’s exactly what happened here, she continued, as the commissioner asked the city to take the companies to court.
The companies also argued federal court isn’t the appropriate venue because although they are incorporated in multiple states, the amount in controversy doesn’t exceed $75,000. Ellis rejected that argument, pointing out the companies “admit to at least 600 underage sales and 100 sales of flavored liquid tobacco products between March 23, 2017, and Jan. 31, 2021,” so the total possible fines exceed $300,000.
Evenmo, of the Minnesota-based Equte, argued he lacks sufficient contacts in Illinois to establish jurisdiction in federal court for the city’s claims. The city countered by contending Evenmo waived the right to challenge on those grounds when he participated in discovery for three months. The city also argued Evenmo can be held liable becausehe allegedly treated all three corporate defendants “as one business enterprise and completely controlled their conduct.”
The city specifically alleged there were no other corporate representatives of the three businesses and also alleged Equte at one point used Evenmo’s residence as its registered corporate address. While discovery might prove differently, Ellis wrote, she wouldn’t dismiss Evenmo from the complaint on those grounds.
The companies also challenged the city’s ability to sue under statutory limitations, but Ellis said the city has immunity from restraints on when it can pursue enforcement actions like the ones alleged in this complaint.
“The public is incapable of acting on its own behalf,” Ellis wrote. “The city has sufficiently alleged it is enforcing a public right; therefore, the statute of limitations does not bar” the challenged portion of the city’s complaint.
Evenmo and the Equte defendants are represented by attorney Jeffrey C. Brown, of Minneapolis.