15 Civ. 01136

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Judge Forrest awarded over $165 million to plaintiff New York State and over $81 million to plaintiff New York City for their claims that UPS failed to prevent the shipment of untaxed cigarettes using its parcel service (see our previous coverage here).  Judge Forrest awarded damages under both a previous Assurance of Discontinuance agreed to by UPS and New York State, as well as under Prevent All Cigarette Trafficking (PACT) Act and Contraband Cigarette Trafficking Act (CCTA).

Judge Forrest noted that the facts of the case made “significant penalties” appropriate:
Continue Reading Judge Forrest Awards Almost $250 Million to New York State and City in UPS Cigarette Tax Case

On Friday, Judge Forrest held UPS liable to the City and State of New York for shipping millions of dollars worth of untaxed cigarettes from Native American reservations to locations elsewhere in the state (see our previous coverage of the case here).  The order comes after a bench trial held last September, where UPS asserted that packages it delivered containing untaxed cigarettes did not violate a previous Assurance of Discontinuance (AOD) signed with the State of New York in 2005.

Judge Forrest found that UPS had improperly shipped untaxed cigarettes, and should have known that the packages contained untaxed cigarettes based on numerous red flags.  As a result, significant penalties were appropriate (though the court highlighted UPS’ now-improved internal procedures):
Continue Reading Judge Forrest: UPS Liable for Shipping Untaxed Cigarettes in New York State

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:Continue Reading Judge Forrest Partially Rejects “Lack of Enforcement” Defense in UPS Cigarette Tax Action

The SDNY Blog is relaunching as a publication of Steptoe & Johnson LLP.  We expect to post several times a week on decisions and other developments in the Southern District of New York.  You can find us right here at www.sdnyblog.com, or follow us on Twitter or Facebook.

Here’s a quick summary of what’s been happening in the Southern District while we were away:

  • Judge Berman vacated the NFL’s four-game suspension of New England Patriots quarterback Tom Brady for his alleged role in deflating footballs used during the 2015 AFC Championship Game.  Judge Berman concluded that “Brady had no notice that he could receive a four-game suspension for general awareness of ball deflation by others or participation in any scheme to deflate footballs, and non-cooperation with the ensuing Investigation.”

Continue Reading SDNY Blog Returns as Steptoe Blog