In a wide-ranging opinion yesterday, Judge Forrest passed judgment on a slew of defenses asserted by UPS in a breach of contract action brought by the City and State of New York. The action seeks to enforce the terms of an Assurance of Discontinuance (“AOD”) whereby UPS agreed to comply with City and State laws regarding taxes for cigarettes shipped by the company.
Among other defenses, Judge Forrest considered UPS’s defense that the City and State’s claims were barred based on their failure to enforce the relevant laws regarding cigarette taxes against third parties. Judge Forrest rejected this defense, noting the broad discretion given to government actors when making policy enforcement decisions:
It is well-established, and both parties on this motion agree, that government actors have broad executive discretion in law enforcement decisions. Executive discretion relates both to the decision not to take action, as well as the decision to take action . . . As the Supreme Court has explained, an executive agency is far better equipped than the courts to deal with the many variables involved in the proper ordering of enforcement priorities. This is no less true with respect to the executive’s decision whether to prosecute one party or another.
Judge Forrest did not categorically rule out any defense based on the City and State’s enforcement actions. She found that certain defenses – including laches and equitable estoppel – may still be available to UPS with regards to the City and State’s enforcement of the AOD itself. According to Judge Forrest, the City and State’s claims based on the AOD were more akin to a private plaintiff in a breach of contract action (where these defenses would be viable) than a government actor making an enforcement decision (where they would probably not be).