New York seeks $872 million from UPS in cigarette shipments trial
By Nate Raymond
NEW YORK (Reuters) - New York state and city authorities took United Parcel Service Inc (UPS.N: Quote) to trial on Monday, urging a federal judge to make the company pay more than $872 million for making illegal deliveries of more than 683,000 cartons of untaxed cigarettes.
The non-jury trial before a federal judge in Manhattan came in a lawsuit by New York Attorney General Eric Schneiderman and New York City as part of the state's ongoing efforts to combat smuggling of cigarettes from lower-tax areas.
Lilia Toson, a lawyer for the city, told U.S. District Judge Katherine Forrest in her opening statement that UPS repeatedly ignored red flags that many of its shipments from American Indian reservations contained untaxed cartons of cigarettes.
"The evidence will show a sufficiently large number of contraband shipments to suggest that UPS is turning a blind eye," Toson said.
She urged the judge to appoint a monitor to ensure UPS's compliance with the law, and argued the world's largest package delivery company should be forced to pay over $872 million in penalties and damages.
The size of the potential penalties appeared to catch UPS's lawyers off-guard. Carrie Cohen, an attorney for UPS, complained the state had given it no notice that was the potential figure, having only previously said damages could be $180 million.
Cohen urged Forrest to reject the state and city's "misleading" allegations, as the evidence would should it complied with the law and that authorities had mistaken cartons of legally shippable "little cigars" as cigarettes.
"The plaintiffs' case is devoid of evidence that UPS knew it was delivering cigarettes," she said. Continued...