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City of New York v. LaserShip, Inc.

United States District Court, S.D. New York

July 10, 2014

THE CITY OF NEW YORK, Plaintiff,
v.
LASERSHIP, INC., Defendant

Decided July 9, 2014

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For The City of New York, Plaintiff: Aaron Michael Bloom, Eric Proshansky, New York City Law Department, New York , NY.

For Lasership, Inc., Defendant: Kelly Anne Librera, Winston & Strawn LLP (NY), New York , NY; Seth C. Farber, Dewey & LeBoeuf, L.L.P.(NYC), New York , NY.

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MEMORANDUM DECISION AND ORDER

GEORGE B. DANIELS, United States District Judge.

Plaintiff, the City of New York, brings this action against Defendant LaserShip, Inc., alleging that the Defendant delivered untaxed cigarettes to New York consumers. Specifically, Plaintiff claims that by delivering untaxed cigarettes to New York consumers LaserShip violated the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. (" RICO" ) (Claims III and IV), the Contraband Cigarette Trafficking Act, 18 U.S.C. § 2341 et seq. (" CCTA" ) (Claims I and II), the New York Public Health Law 1399-ll (" N.Y. PHL § 1399-ll" ) (Claims VII and VIII), and the Prevent All Cigarette Trafficking Act, 15 U.S.C. § 375 et seq. (" PACT Act" ) (Claims V and VI). The City also seeks injunctive relief (Claim IX). Defendant moved pursuant to Fed.R.Civ.P. 12(b)(6) and 12(b)(1) to dismiss the Complaint. See ECF No. 8. Defendant's motion to dismiss is DENIED in its entirety.

Background[1]

Defendant LaserShip, Inc., is a Delaware corporation that is engaged in package delivery and courier services. See Compl. ¶ 19. Between approximately 2011 and 2013, LaserShip allegedly partnered with Regional Integrated Logistics (" RIL" ) as a " key link" in the illicit cigarette distribution network created by RIL to service smoke shops that were owned by the Seneca Nation of Indians (" SNI" ). Id. ¶ 13. The Complaint alleges that Defendant received, via intermediate carriers, cigarettes picked-up by RIL from the SNI smoke shops. LaserShip then delivered the cigarettes to residences and businesses of consumers in the New York City metropolitan area and New Jersey. Id. at ¶ ¶ 13, 31.

Plaintiff alleges that LaserShip had actual knowledge that it was delivering untaxed cigarettes. The Complaint alleges that in early 2011, RIL met with two LaserShip representatives, as well as the President of GMV Express, a company in the business of setting up package delivery networks. During this meeting, LaserShip was allegedly informed that it would deliver packages containing untaxed cigarettes. Id. ¶ ¶ 53-57.

Under their delivery arrangement with RIL and GMV, RIL picked up the packages from the SNI smoke shops and transported them to RIL's warehouse. RIL then sorted the packages and arranged for them to be shipped to regional hubs, including LaserShip's New York warehouse. Id. at ¶ 31. LaserShip allegedly delivered these packages of untaxed cigarettes to New York consumers. The Complaint alleges that over a two year period, LaserShip delivered approximately 74,974 cartons of cigarettes to New York consumers. Id. ¶ ¶ 31, 60.

The Complaint alleges that LaserShip participated in the management and operation

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of RIL by controlling the receipt of unstamped cigarettes from RIL and its third-party common carriers and the delivery of the cigarettes to end consumers in New York City and State. Specifically, LaserShip allegedly: (a) received unstamped cigarettes from RIL (via RIL's third party common carriers) for ultimate distribution and delivery to consumers; (b) used its own methods and practices to determine how and when to transport and distribute the unstamped cigarettes; (c) routinely shared information with RIL and the SNI smoke shops from LaserShip's package tracking systems; (d) shared information with customers of the SNI smoke shops from LaserShip's package tracking systems; (e) held contraband cigarettes in LaserShip's terminal for customer pick-up; (f) provided all of the logistics and delivery support services to RIL that would be required for the successful delivery of contraband cigarettes from the Seneca reservation to consumers in the City and elsewhere; and (g) accepted the financial and other risks of transporting contraband cigarettes. Id. ¶ 77.

Legal Standard

A complaint must have " enough facts to state a claim to relief that is plausible on its face" to survive a motion to dismiss. Bell A. Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). " Where a complaint pleads facts that are 'merely consistent with' a defendant's liability, it 'stops short of the line between possibility and plausibility of entitlement to relief.'" Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 557). Plausibility requires " more than labels and conclusions." Id. at 555. Legal conclusions must be supported by well-pleaded factual allegations. See Iqbal, 556 U.S. at 679. " When there are well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief." Id. At this stage, the court is to ...


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