UPS Fined $247 Million Over Illegal Shipments of Cigarettes

A judge in federal court has ruled that United Parcel Service must pay close to $247 million in penalties and damages for the illegal shipping of large quantities of cigarettes that were untaxed in New York, showed a court filing on Thursday.

UPS announced that it was disappointed with the ruling of the court and would be appealing its decision. In an emailed prepared statement, UPS said the monetary award by the court had been excessive and out of its constitutional limits, in particular given the shipments involved generated only $1 million in revenue.

The ruling by Manhattan Judge Katherine Forrest justified the amount by saying the court had been convince that any modest penalties would not make sufficient corporate impact on the shipping company.

In total, the state of New York was rewarded $165.7 million and New York City the plaintiff $81.2 million.

The parties were required to file information to the court prior to April 7 and the court submissions by UPS showed odd abrasiveness and a lack of cooperation read the court ruling.

The ruling also said the court had been troubled by the consistent unwillingness of UPS to acknowledge errors it made.

In March, the judge ruled UPS was liable for having illegally made shipments of hundreds of thousands of cigarette cartons that were untaxed in New York, depriving New York City of millions in tax dollars.

The city and state were seeking over $872 million in the case.

An attorney representing New York City said the city was pleased with the award of close to $247 million that reflects the serious nature of the offenses related to the case.

Cigarette smoking, added the attorney, is a leading cause of deaths that are preventable and the state and city continue in their collective efforts to protect our public health.

UPS was accused by the plaintiffs of having shipped dating back to 2010 over 683,00 cartons of cigarettes that were untaxed to wholesalers and retailers who were unlicensed as well as to residences, often from Indian reservations or smoke shops.

This case is similar to ones involving the shipping of prescription drugs from outside the U.S. into the U.S. since there are a number of prescriptions drugs made outside the U.S. that are far less expensive than the same or equal ones in the U.S.