Judge rules against UPS in N.Y. cigarette case

U.S. District Court Judge Katherine Forrest found the parcel giant and third-party logistics provider violated state law by transporting hundreds of thousands of cartons of untaxed cigarettes into New York City from lower-tax areas.    A federal judge in New York City has ruled against parcel giant and third-party logistics provider UPS Inc. in a case over alleged illegal cigarette shipments, according to a statement from New York Attorney General Eric T. Schneiderman.
   Judge Katherine Forrest of the U.S. District Court for the Southern District of New York found UPS violated state law by transporting hundreds of thousands of cartons of untaxed cigarettes into New York City, primarily from American Indian reservations.
   The lawsuit, brought in February 2015 by Schneiderman and New York City, is part of the state’s ongoing efforts to combat smuggling of cigarettes from lower-tax areas.
   Lilia Toson, a lawyer for the city, said at the time it was filed that UPS repeatedly ignored signs that shipments from American Indian reservations in New York contained cartons of cigarettes that were not subject to state and city taxes.
   The suit alleges UPS transported roughly 78,500 illegal cigarette shipments from state Indian Reservations, costing the state and city more than $35 million in tax revenue.
   Forrest has yet to determine damages to be paid by UPS, but media reports last September estimated the lawsuit could cost the company as much as $872 million in fines and penalties.
   UPS said in a statement it is “still evaluating the Court’s lengthy decision,” according to a report from the New York Daily News.
   “The court has not yet issued a final ruling, and will do so only after the parties make further submissions,” the company said.
   “Today’s decision is a win for New York and a win for public health,” Schneiderman said of the ruling. “We’re very pleased that the Court agreed with us on all claims, finding that UPS has repeatedly violated numerous state and federal contraband cigarette trafficking laws – as well as its own agreement with the State – by shipping hundreds of thousands of cartons of cigarettes to consumers in New York.”
   The case is State of New York, et al v. United Parcel Service, U.S. District Court, Southern District of New York, No. 15-01136.