Lorillard Tobacco Co. has waged an expensive legal battle with Isaac Engida, an Ethiopian immigrant who runs a ramshackle liquor store in northeast Denver and drives a taxicab to make ends meet.
Usually, the nation’s third-largest tobacco company can smoke through a small- business owner’s resources in court. But this time, Lorillard has met its match.
Last week, for the second time, a federal appeals court in Denver denied Lorillard’s petitions. The Greensboro, N.C.- based company and its Denver-based legal counsel declined to comment. Should Lorillard continue its claims, its next venue could be the U.S. Supreme Court.
“They must have spent hundreds of thousands on this, so far,” said Denver attorney Stephen Peters, who represents Engida. “I haven’t seen their bills, but I know how hard we worked.”
All of this costly legal wrangling is over two packs of cigarettes.
On Jan. 31 of last year, two Lorillard employees went into Engida’s I&G Liquors and purchased two packs of Newport cigarettes they claim were counterfeit.
A few days later, Lorillard, maker of genuine Newport cigarettes, filed a federal lawsuit against Engida alleging trademark infringement and counterfeiting.
Lorillard then won an order allowing federal marshals to raid Engida’s store, which they did Feb. 14. The raid turned up no counterfeit cigarettes.
Perhaps U.S. District Court Judge Lewis Babcock was disappointed that he signed off on a federal raid of a private business that turned up zilch-o. Nobody wants to feel like Big Tobacco’s tool.
Babcock immediately lifted a temporary restraining order against Engida and told Lorillard to reconsider its case. “You went fishing, and you came back empty- handed,” he said. “Perhaps you ought to find a better small fish.”
Babcock then found two lawyers – Peters and John Chanin of Lindquist & Vennum – who agreed to represent Engida for free. Court-appointed lawyers are extremely rare in civil cases.
A smart legal team might read this as a sign. But leave it to a tobacco company to not know when to quit.
Lorillard appealed Babcock’s decision to lift the restraining order. When it lost the appeal, it filed a “petition for rehearing,” which the appeals court denied last week.
When I first wrote about this case last year, Lorillard’s associate general counsel, Hanna Hasl-Kelchner, said her company takes a “zero- tolerance” approach to counterfeiters. This time, she did not respond to my requests for an interview, but her position is understandable.
Illegal cigarette trafficking is a multibillion-dollar-a- year business. The more our government taxes real cigarettes, the more attractive fake cigarettes become. And it’s a boom for rogue nations such as North Korea, which produces billions of counterfeit cigarettes every year.
Lorillard has filed hundreds of trademark lawsuits over the past few years, some resulting in multimillion-dollar settlements. Other tobacco companies, including Philip Morris, have done the same. But many of these lawsuits are against small-business owners who aren’t really the source of the problem and can’t afford to fight back.
Small businesses “are by far the most common retail outlets of these counterfeit goods,” Lorillard’s attorneys argued in their appeal. “These same ‘small businesses’ are also the most likely to present the plausible claim of ignorance in an attempt to reframe a strict liability offense as (a) … ‘David vs. Goliath’ struggle.”‘
The issue in Engida’s case, however, isn’t just David vs. Goliath. The issue is evidence. And Lorillard’s evidence is as thin as the paper it uses to roll cigarettes. It’s mainly on testimony from its own employees and hasn’t been tested in court.
Engida’s story – that he has no idea about those fake smokes – hasn’t been cross-examined either.
So who knows? Maybe Engida is at the center of an international counterfeiting cartel. Or maybe he was just the hapless recipient of two packs of fake Newports.
All I know is that Lorillard keeps making a federal case out of two packs of smokes. I think the company should move on to a better case, or adopt the tired, old slogan of a rival cigarette maker: “I’d rather fight than switch.”
Al Lewis’ column appears Sundays, Tuesdays and Fridays. Respond to him at denverpostbloghouse.com/lewis, 303-954-1967 or alewis@denverpost.com.
