Smoke-Smuggling Suit May Engulf NY Courier
(CN) - LaserShip, a last-mile delivery service, must face claims that it owes New York City up to $53 million for smuggling tribal cigarettes, a federal judge ruled.
The Big Apple had accused LaserShip last year of smuggling 75,000 cartons of cigarettes from (nonparty) Seneca Nation into the metropolis. In addition to damages of about $3 million, the city seeks a civil penalty of up to $50 million.
It said the large East Coast courier had partnered with a group of upstate smoke shops to deliver untaxed cigarettes to residential customers in New York City and New Jersey.
The Prevent-All-Cigarette-Trafficking Act, passed in 2010, prohibits the U.S. Post Office from carrying cigarettes in the mail.
U.S. District Judge George Daniels in Manhattan refused Thursday to dismiss the allegations against LaserShip.
"Contrary to defendant's assertion, the plain, unambiguous text of the CCTA imposes no 'in a single transaction requirement,'" the ruling states, abbreviating Contraband Cigarette Trafficking Act. "It provides that 'a quantity in excess of 10,000 cigarettes' constitutes contraband. It says nothing to suggest that the relevant quantity must be found in a single transaction."
The court cited additional evidence suggesting that LaserShip delivered cigarettes for Indian Smokes, a smoke shop in upstate New York, even though it knew the business was not compliant with New York tobacco laws.
LaserShip may also be liable for violating federal anti-racketeering law if found to have participated in the "operation or management" of its upstate partner, Regional Integrated Logistics (RIL), according to the ruling.
"Defendant allegedly received and delivered unstamped cigarettes on behalf of RIL, exercised discretion in using its own methods and practices to determine how and when to transport the unstamped cigarettes, provided all of the logistics and delivery support services to RIL that were required for successful delivery, and accepted the financial and other risks of transporting contraband cigarettes on behalf of RIL," Daniels wrote.
Aaron Bloom, the city's lead attorney, applauded the decision for continuing "the city's aggressive campaign against illegal, untaxed cigarettes."
Eric Proshansky, Gail Rubin and Eli Jacobson of the New York City Law Department's Affirmative Litigation Division also worked on the matter.