UPS Found Liable for New York Cigarette Shipments

Federal judge says the United Parcel Service is liable for illegally shipping hundreds of thousands of cartons of untaxed cigarettes in New York.

March 28, 2017

NEW YORK – Last week, a federal judge held the United Parcel Service (UPS) liable for illegally shipping hundreds of thousands of cartons of untaxed cigarettes in New York, “depriving the state and New York City of millions of dollars of taxes,” reports Reuters.

U.S. District Judge Katherine Forrest said the state and city are entitled to compensatory damages and fines. "UPS largely relied on its size and weak internal procedures to excuse blatantly culpable conduct," she wrote. "But there were many, many people within UPS who consciously avoided the truth, for years."

Reuters reports that the state and city had sought more than $872 million, and Forrest could determine the award as soon as next month.

UPS was accused of shipping more than 683,000 cartons of untaxed contraband cigarettes since 2010 to unlicensed wholesalers, retailers and residences, often from smoke shops on Indian reservations. Plaintiffs alleged that UPS had violated an October 2005 agreement with the state not to ship cigarettes to unlicensed dealers and individual consumers.

Reuters notes that UPS was also accused of violating federal laws against racketeering and cigarette trafficking, as well as New York's public health law.

New York state and New York City are pursuing a similar lawsuit against FedEx Corp.

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