NEW YORK – Attorney General Letitia James and City Corporation Counsel Zachary W. Carter announced a $35.3 million settlement today with FedEx Ground Package System, Inc. (“FedEx”) to resolve claims over illegal cigarette deliveries to residents throughout New York City and State made by FedEx over a ten-year period. This settlement resolves three lawsuits against FedEx alleging that it partnered with cigarette trafficking businesses to illegally ship hundreds of thousands of untaxed cigarettes to New Yorkers. In addition to the payment, FedEx will implement internal reforms and hire an independent consultant that will oversee FedEx’s compliance with the law and provide compliance reports to the City and State.
The settlement follows the October 2018 ruling by federal district judge for the Southern District of New York, Edgardo Ramos, finding that FedEx’s conduct over many years for customers with such names as “Cigarettes Direct To You” established without the need for a trial that FedEx had knowingly violated a federal anti-cigarette trafficking statute and a 2006 Assurance of Compliance with the New York Attorney General’s Office in which, to avoid prosecution, FedEx expressly agreed to cease residential cigarette deliveries and comply with a New York law prohibiting those deliveries.
“For years, FedEx knowingly engaged in illegal and harmful behavior at the expense of New Yorkers’ health,” said Attorney General Letitia James. “Not only did FedEx violate laws created to protect the public from the serious health risks associated with cigarettes, but they also swindled New York City and State out of millions of dollars in tax revenue. Let this serve as a message that we will never allow companies – however large or small – to cheat or harm New Yorkers.”
“This settlement forces FedEx into compliance with State and City laws enacted to discourage smoking through the imposition of cigarette taxes. For the worst of reasons – profit – FedEx shipped millions of untaxed cigarettes to residents throughout the State, cheating the City out of millions of dollars in tax revenue and with apparent indifference to the impact on public health,” said Zachary W. Carter, City Corporation Counsel. “The illegal deliveries cheated the City out of millions of dollars in tax revenue in addition to violating public health laws intended to deter access to cigarettes by young people.”
