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City of New York v. FedEx Ground Package System, Inc.

United States District Court, S.D. New York

March 9, 2015

THE CITY OF NEW YORK and THE PEOPLE OF THE STATE OF NEW YORK, Plaintiffs,
v.
FEDEX GROUND PACKAGE SYSTEM, INC. and FEDERAL EXPRESS CORP., Defendants

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[Copyrighted Material Omitted]

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For The City of New York, Plaintiff: Eric Proshansky, NYC Law Department, New York, NY; Leonard Matthew Braman, New York City Law Department, New York, NY.

For People of The State of New York, Plaintiff: Joshua Seth Sprague, LEAD ATTORNEY, Attorney General of the State of New York, New York, NY; Sandra Elizabeth Pullman, LEAD ATTORNEY, Office of the New York Stata Attorney General, New York, NY; Dana Hope Biberman, New York State Office of The Attorney General, New York, NY.

For FedEx Ground Package System, Inc., Defendant: Joel Cohen, LEAD ATTORNEY, Elizabeth C Carter, Michele Lee Pahmer, Stroock & Stroock & Lavan LLP, New York, NY; Kenneth D. Sansom, LEAD ATTORNEY, PRO HAC VICE, Spotswood Sansom & Sansbury LLC, Birmingham, AL.

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OPINION AND ORDER

Edgardo Ramos, United States District Judge.

Plaintiffs The City of New York (" City" ) and The People of the State of New York (" State" ) (collectively, " Plaintiffs" ) bring this action against FedEx Ground Package System, Inc. (" FedEx Ground" or " Defendant" ), alleging that it knowingly delivered unstamped cigarettes throughout the country, including New York City and State, between 2005 and 2012.[1] Plaintiffs seek the appointment of a special master, damages, and penalties under the Contraband Cigarette Trafficking Act, 18 U.S.C. § 2341 et seq. (" CCTA" ) and the Prevent All Cigarette Trafficking Act, 15 U.S.C. § 375 et seq. (" PACT Act" ); treble damages and attorney's fees under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. (" RICO" ); an injunction and penalties under New York State Public Health Law § 1399-ll;

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abatement of a public nuisance; and penalties under the Assurance of Compliance that FedEx entered into with the Attorney General of the State of New York in 2006. Pending before the Court is FedEx Ground's motion to dismiss the CCTA, RICO, N.Y. Public Health Law (" PHL" ), and public nuisance claims. Doc. 28. For the reasons discussed below, Defendant's motion to dismiss is GRANTED in part and DENIED in part.

I. Background

Plaintiffs each impose an excise tax on the sale of cigarettes. Am. Compl. ¶ 26.[2] The excise taxes are pre-paid by licensed cigarette stamping agents, who must affix a tax stamp to every package of cigarettes sold in the State and/or City. Id. ¶ ¶ 27, 28. By law, stamping agents are required to incorporate the amount of the tax into the price of the cigarettes, thereby ultimately passing the tax along to the consumer. Id. ΒΆ 29. New York State ...


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