New York court fines UPS $247mn for smuggling contraband cigarettes

The world’s largest package delivery company United Parcel Service (UPS) has been ordered to pay $247 million in damages and penalties over the illegal shipping of large amounts of untaxed cigarettes in the state of New York and New York City.
UPS says it is going to appeal the decision.

“The court’s monetary award is excessive and far out of the bounds of constitutional limits, particularly given that the shipments at issue generated around $1 million in revenue,” the company said in an emailed statement sent to Reuters.

The value of the fine was chosen because the court was convinced “modest penalties” would not make a “sufficient corporate impact” on the delivery giant, according to Manhattan District Judge Katherine Forrest, who delivered the ruling.

The court analyzed information it had previously received from the parties and said UPS’ submissions had spotted a “lack of cooperation” and “odd abrasiveness.”

According to the ruling, the court was “troubled” by the company’s “consistent unwillingness to acknowledge its errors.”

Earlier this year, UPS was charged with the illegal shipping of hundreds of thousands of cartons of untaxed cigarettes to New York. Reportedly this deprived the state and the city of millions of dollars in taxes.

Since 2010, the company has been accused of shipping over 683,000 cartons of cigarettes to unlicensed wholesalers, retailers, and residences.

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Taking into consideration the courier’s “high degree of culpability,” the “significant penalties” were appropriate, according to Judge Forrest.

New York State has reportedly been awarded $165.8 million while New York City, $81.2 million. Initially, the plaintiffs had sought more than $872 million.

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We are pleased that the award of nearly $247 million to the city and state reflects the serious nature of the offenses at issue. Cigarette smoking is a leading cause of preventable death, and the city and the state will continue in their efforts to protect the public health,” said New York City Corporation Counsel Zachary Carter, as cited by Reuters.