Four Palo Alto tobacco-shop owners, including Neil Khoury of the longstanding Mac's Smoke Shop, are suing the city, claiming its new ban on vape and flavored tobacco products violates the retailers' rights to conduct lawful business.
The lawsuit, filed July 28, seeks more than $5.2 million for four business owners — David Zoumut of Hookah Nights Lounge on University Avenue, Mohammad Hammad of Raw Smoke Shop on California Avenue, Khoury of Mac's Smoke Shop and Jaswinder Singh, who owns Smokes & More on El Camino Real and Smokes & Vapes, a block away — as a result of the citywide ban.
"We were forced to seek legal counsel," Khoury said. "It's not something we want."
The lawsuit is the culmination of a monthslong battle between the city and sellers of flavored tobacco — mainly Khoury, who, along with his wife and shop co-owner, Lori Khoury, has urged the council on many occasions to reconsider the city's ban on vaping devices and flavored tobacco.
The ban was prompted by concerns over high school students' increasing use of vaping products, including flavored nicotine cartridges. Though the restriction aimed to curb youth smoking, a slew of health advocates and parents requested the City Council not make any exceptions for adult-only stores or any flavored tobacco.
In May, the council voted 4-3 for the ban on both products without including exemptions for either adult-only stores such as Mac's Smoke Shop or flavored tobacco products that aren't necessarily used with vaping devices and electronic cigarettes such as cigars, chewing tobacco, paper cigarettes, etc. The ban was reaffirmed in June and approved in a second reading this week.
As a result, the ban directly impacts retailers like Mac's but not tobacco stores such as Hemingway Cigars and Tobacco on University Avenue, which does not sell flavored tobacco.
Khoury has said before that he is willing to comply with the ban on vaping devices but pleaded to the council not to ban all flavored tobacco products. Doing so would put Mac's out of business, he said, since flavored tobacco makes up around 70% of the store's sales. (In addition to flavored cigars and chewing tobacco, Mac's sells its own blend of flavored pipe tobacco.)
With the ban, Khoury said he was given until the end of August to clear out his store of vaping and flavored tobacco items.
"We feel that we've been targeted," Khoury said. "Being called a smoke shop, I guess we don't fit the new Palo Alto look. I guarantee you Mac's has been there longer than anybody (on the council) who voted on it in Palo Alto."
Part of the lawsuit claims the city violated the Takings Clause of the Fifth Amendment, which essentially states that owners of private property are entitled to "just compensation" whenever a government body, like a city council, confiscates that property. The lawsuit equates the city's new ban to the taking of property without proper compensation.
The lawsuit also states the city's ordinance causes financial hardship and "irreparable harm" to the retail owners' constitutional rights as U.S. and state citizens to conduct lawful businesses.
"Mohammad Hammad, who operates Raw Smoke Shop, will have his income significantly reduced to the point where he will have to close his business, but he will still owe over $264,000 in rent pursuant to his lease agreement," the lawsuit claims. "The city's new ordinance will permanently shut down the plaintiffs' businesses and cause extreme financial hardship as the plaintiffs' must still pay rent, utilities, wages, insurance, etc."
The lawsuit requests that a judge declare the city's ordinance void and restrain the city from enforcing the ban until the court "decides the merits of this lawsuit."
City Attorney Molly Stump said the city does not comment on pending litigation.
David Finkelstein, the attorney representing the four business owners, did not return requests for comment in time before the story was published.
While Palo Alto's ordinance follows the footsteps of many city- and county-wide restrictions such as San Francisco, Santa Clara and San Mateo County, so does the civil suit that promptly followed the bans on flavored tobacco.
Last year, in Arden Hills — a small city north of St. Paul, Minnesota — tobacco shop owner Ibrahim Aquel sued the city council for banning flavored tobacco without providing any exemptions for adult-only stores, according to St. Paul Pioneer Press. The attorney similarly accused the council for targeting Aquel's store.
More recently, three tobacco companies filed a lawsuit in June against Los Angeles County, the county's Board of Supervisors and individual members of the board for their flavored tobacco ordinance that was passed in September 2019, calling it "one of the most draconian bans on tobacco products of any county in the nation."