N.Y. AG sues FedEx for $70M over shipment of cigarettes

NEW YORK (Legal Newsline) - New York Attorney General Eric Schneiderman announced a $70 million lawsuit on Monday against Federal Express Corporation for allegedly shipping close to 80 million contraband cigarettes illegally to consumers throughout the state.

The lawsuit joins and expands upon a suit filed in December by New York City and adds allegations of FedEx's unlawful shipments throughout the state. The joint lawsuit alleges FedEx made nearly 33,000 illegal shipments of cigarettes to consumers in the state between 2006 and 2012. The alleged shipments totaled more than 400,000 cartons of untaxed cigarettes at a direct tax loss of more than $10 million to the state.

Schneiderman alleges the shipments violated an agreement FedEx entered into with his office in 2006. FedEx agreed to halt all unlawful cigarette deliveries to consumers in New York and throughout the country.

The suit also alleges FedEx engaged in a pattern of racketeering activity with cigarette retailers to traffic contraband cigarettes in violation of the federal anti-racketeering statute.

"FedEx's blatant disregard for its long-standing agreement with New York, as well as federal and state law, enabled tens of millions of cheap, untaxed cigarettes to be shipped to New Yorkers," Schneiderman said.

"Not only has FedEx cheated the state out of millions in tax dollars -- but many of these cigarettes may have ended up in the hands of teenagers, who are particularly vulnerable to low-priced cigarettes. Illness and death caused by cigarette smoking is the number one preventable public health epidemic of our day.

"If we can make cheap cigarettes less widely available, we can discourage young people from smoking and limit this public health disaster."

The suit seeks approximately $35 million in penalties for alleged violations of the federal Racketeer Influence and Corrupt Organizations Act and approximately $34 million for alleged violations of the 2006 assurance of compliance.