UPS must pay $247 million in damages and penalties to New York City and New York State for illegally shipping cigarettes, a federal judge ordered Thursday.
“A very significant award” was necessary because of the public health hazard posed by cigarettes and as a deterrent to future bad conduct, said Judge Katherine B. Forrest of Federal District Court in Manhattan. In her opinion, Judge Forrest wrote that the penalty needed to be substantial enough to send a message to UPS executives.
“The court is convinced that modest penalties would not make a sufficient corporate impact on UPS as a whole,” she wrote.
In March, Judge Forrest found UPS liable for illegally shipping hundreds of thousands of cartons of untaxed cigarettes among Indian reservations, unlicensed dealers and individual consumers. The shipments cost the city and state millions in tax dollars and violated a 2005 agreement between the state and UPS not to ship cigarettes to unlicensed recipients.
Judge Forrest chided UPS in March for having a corporate culture that promoted sales over compliance. On Thursday, she again criticized UPS’s culture, saying that company officials had shown a “lack of acceptance of responsibility for their actions at issue in this case.”