A federal court recently dismissed a lawsuit filed the State of New York and the City of New York against FedEx Ground and FedEx Freight. The plaintiffs alleged that FedEx knowingly shipped unstamped cigarettes to unauthorized recipients in violation of several laws, including the Contraband Cigarette Trafficking Act ("CCTA") the Prevent All Cigarette Trafficking ("PACT") Act, the Racketeer Influenced and Corrupt Organizations Act ("RICO"), New York State law, and a 2006 Assurance of Compliance ("AOC") between the State and FedEx.
The court dismissed the CCTA claim on the ground that the plaintiffs pled insufficient allegations that FedEx shipped unstamped cigarettes to unauthorized recipients. The plaintiffs did not allege, for example, who shipped the cigarettes, the date of the shipments or the frequency of the shipments. The court was clearly concerned that the lawsuit's overbroad allegations would lead to a discovery "fishing expedition" involving all FedEx shipping records over a ten-year period. The plaintiffs' claims under the PACT Act, RICO, New York Law and the AOC all failed for the same reason – the court saw no reason to plausibly believe that FedEx shipped unstamped cigarettes based on the complaint's bare allegations.
Although the court gave the plaintiffs the opportunity to amend their complaint to add more detail, they have not done so as of the time of this blog. However, this is not the first time that the City and State of New York have pursued delivery services for alleged shipments of contraband cigarettes. We previously reported on New York's litigation against UPS here and here. It is therefore reasonable to assume that the City and State will continue their pursuit of companies that they believe are facilitating the shipment of contraband cigarettes. However, under the court's decision, it seems that the plaintiffs must have more specifics regarding the nature of the allegedly unlawful shipments.
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