A tobacco shop at Kimball Junction has sued Summit County since the county has denied it a permit to sell flavored e-cigarette products. The business was unsuccessful at a recent Third District Court hearing in getting a temporary restraining order against the county.
The lawsuit was filed by BSM Enterprises, which is operating as Park City Vapor Company, in a location south and west of Smith’s Grocery.
The business owner, Beau Maxon, filed the litigation against the county Health Department and its director,r Rich Bullough, which denied the business a Specialty Tobacco Retail Permit. An appeal was denied in late June by the Board of Health, which is also named in the suit.
The suit says the shop has had a retail business license going back to 2017; it was permitted as a tobacco retailer in late 2018 and it claims that under state legislation this year defining e-tobacco sales, the business is grandfathered and is allowed to sell electronic flavored cigarettes.
In a hearing on July 15, the plaintiff’s attorney, Phillip Dyer, contended they should be granted a temporary restraining order against the county because they will suffer “irreparable damage” from the county’s denial.
He said the shop faces a loss of 31% of its revenue, in addition to a general loss of customers and goodwill. The attorney also said his client has $500,000 of e-cigarette products that can’t be sold.
“The county comes to the table with the argument that 31%t of a business’—a small business, if you will—of its revenue, is not irreparable harm,” Dyer said “And I would respectfully submit that’s not true, particularly as we’re in a pandemic, a (once in a) 100-year-event. And the courts have noted, under the Hunsaker case that both parties have cited to, as well as the System Concepts vs. Dixon case, that you can have irreparable harm on more than one point. It’s not just lost sales, it’s loss of goodwill, it’s also customer relationships. And that is what is going to happen if the court does not issue a temporary restraining order.”
He also said there would be no harm to public health and safety, in particular any sales of their products to minors, if the business got a TRO. He noted that legislation this year provides the products can only be sold to customers 21 years or older.
“There have been three undercover operations by law enforcement in Summit County,” Dyer said. “And Mr. Maxon’s business has passed all of those with flying colors. Additionally, Mr. Maxon has tried to work with the county, to provide tobacco-prevention seminars to high schools, to say why they don’t want minors purchasing tobacco products. Lastly, they’ve confiscated fake I.D.s, and inquired of Park City Health Department, ‘How do we go about making sure what our obligations are under the law to make sure we don’t get taken by fake I.D.s and cause problems.’”
However, Third District Court Judge Teresa Welch noted that four legal standards have to be met to grant a temporary restraining order.
The failure of any one of them, she noted, is sufficient to deny a TRO. In this case, she said, the plaintiff had not shown he would suffer “irreparable damage.”
Deputy County Attorney Jamie Brackin argued that there can be financial compensation for any of the damages sustained by the Vapor Company.
“Loss of sales certainly can be compensasted by monetary damages,” Brackin said. “Loss of customers can be compensated by monetary damages, as can the loss of the product, the $500,000 in product they allege. Goodwill is valued all the time, as a monetary amount. If a business is going to be sold, they value the goodwill of that company as part of the price of the company. The goodwill is valued in terms of tax valuation and some other things. But we have specialized appraisers that do in fact value goodwill.”
She said that under county code, one crucial factor in denying the permit is that the Vapor Company site is within 1000 feet of the Kimball Junction Library and also in proximity to a licensed childcare facility.
“Do they qualify now under the new definitions as a retail tobacco specialty business? Yes,” Brackin said. “They fit that definition now, which triggers the requirement that they get the permit from the Health Department, the specialized license from the State Tax Commission and the specialized business license from Summit County in order to continue the sales of those products. In the current location, that’s not going to be possible because they cannot meet the proximity requirements.”
Summit County’s formal response to the overall lawsuit will be filed later in the summer, and a scheduling conference is set for Aug. 17.