By Paul Ziobro 

A federal judge ruled Friday that United Parcel Service Inc. illegally shipped millions of cigarettes to New York state from Indian reservations, opening up the parcel carrier to damages and other penalties for skirting taxes on tobacco products.

In a 218-page ruling, Judge Katherine Forrest said New York state and New York City are entitled to compensatory damages and monetary penalties that have yet to be determined.

The case, filed in the Southern District of New York, stems from UPS allegedly failing to establish proper procedures to flag tobacco shipments from Indian reservations when they were shipped into New York.

The suit, filed in 2015, sought $180 million in damages and penalties. It accused UPS of shipping nearly 700,000 cigarette cartons between 2010 and 2014, depriving the city of $5 million in taxes and the state of $30 million.

In a statement, UPS said it was still evaluating the decision. "We are pleased that the court found that UPS's current tobacco compliance program is adequate, and declined to award plaintiffs the injunctive relief they sought or to appoint a monitor to oversee UPS's compliance program," the company said.

A similar suit is also pending against UPS rival FedEx Corp.

Write to Paul Ziobro at Paul.Ziobro@wsj.com

 

(END) Dow Jones Newswires

March 24, 2017 21:00 ET (01:00 GMT)

Copyright (c) 2017 Dow Jones & Company, Inc.
United Parcel Service (NYSE:UPS)
Historical Stock Chart
From Feb 2024 to Mar 2024 Click Here for more United Parcel Service Charts.
United Parcel Service (NYSE:UPS)
Historical Stock Chart
From Mar 2023 to Mar 2024 Click Here for more United Parcel Service Charts.