Appeals Court Upholds Ruling Against United Parcel Service for Shipping Illegal Untaxed Cigarettes

November 7, 2019

New York City and New York State have prevailed in a suit against United Parcel Service (UPS) for knowingly violating State and Federal laws prohibiting the shipment of contraband cigarettes. UPS had appealed a $246M judgment. In a 2-1 decision an appeals court affirmed the liability findings while adjusting the penalty but doubling a damages award. The bottom line is a judgment against UPS for $98 million, of which New York City will receive about $39 million. The court confirmed that UPS could be held liable for the violations of federal and state law proved at trial, and it held that the State and City had adequately proved those violations. The City and State have previously settled with another carrier, FedEx, on the eve of trial for $35 million for illegally shipping untaxed cigarettes to people’s homes, in violation of federal and state law.

Statement by Corporation Counsel James E. Johnson:

“This ruling is a big win for New Yorkers and our public health laws. In upholding millions of dollars in civil fines and doubling the damages award, the court has sent a powerful message to companies:  Do not illegally transport untaxed cigarettes; it will cost you. This case continues the string of successful joint efforts by the NYC Law Department and the NYS Attorney General.  We will continue to hold companies accountable for their misconduct that harms public health.”