New York, UPS spar over proposed $872 million fine for cigarette shipments

New York state and city authorities
sparred with United Parcel Service Inc on Wednesday during closing arguments in a trial over whether the world's largest package delivery
company should be fined for allegedly delivering untaxed cigarettes from smoke shops on Native-American reservations.
The closing arguments came in a lawsuit over whether UPS illegally shipped more than 683,000 cartons of untaxed cigarettes, mostly from
reservation smoke shops. The suit is part of a broader effort by the state to combat smuggling of cigarettes from lower-tax areas.
John Oleske, a lawyer for New York state, urged U.S. District Judge Katherine Forrest in Manhattan to impose an $872 million fine. He said such a steep penalty was justified because the company acted with an "entitled sense of disregard" in failing to vet shipments from entities with a history of dealing in contraband.
Attorneys for UPS countered that no penalty was appropriate because the company had abided by a prior agreement with the state on compliance.
Jamie Levitt, an attorney for UPS, said that if any fine were levied, it should be a small fraction of what the state had proposed.
"The penalties that are sought here are excessive and unconstitutional," Levitt said.
UPS has denied the allegations. The company said in a statement it is "vigorously" fighting the case and believes the state and city are overreaching.
In addition to financial damages, the lawsuit, which was filed in February 2015, seeks a court-appointed monitor to police compliance.
On Wednesday, Forrest, who will decide the case, said she would consider such a measure cautiously.
"I think a monitor on a corporation is a very big deal," the judge said. Forrest also questioned the state's and city's arguments, including how to reconcile evidence that the bulk of some shipments were cigars instead of cigarettes.