March 31, 2014 11:45 AM, EDT
FedEx Lawsuit Over Untaxed Cigarettes Joined by New York State

New York State joined a federal racketeering lawsuit filed by New York City contending FedEx Corp. wrongly delivered more than 140 tons of untaxed cigarettes ordered over the Internet or by mail.

The deliveries were made in defiance of a 2006 agreement with the state that FedEx would cease the practice, lawyers for the city and state said in an amended complaint filed March 30 in New York City.

Some of the cigarettes allegedly came from Indian reservations, including the Shinnecock Smoke Shop in Southhampton, Long Island.

New York City imposes a $15 excise tax on each carton of cigarettes. New York Indian tribes, including the Shinnecock Indian Nation, have claimed that their smoke shops are not subject to state and local cigarette taxes.

FedEx said in a statement it “believes the claims made by the city and state lack legal foundation. While the lawsuit identifies several shippers of untaxed cigarettes with which we stopped doing business, those shippers are not being sued in the case, nor are any recipients who evaded paying applicable taxes.”

“Instead, the city and state have chosen to target us for our role as a carrier. While we work closely with all legal and regulatory authorities to ensure our networks are not inappropriately used for the shipment of prohibited items, we must also protect the privacy of our customers and will not open packages to determine their contents without reason,” the statement said.

The company said it fully supports New York’s efforts “and believe we would be most productive in this initiative working together. We intend to continue working with the city, state and all applicable regulatory agencies while vigorously defending this case.”