NEW YORK (AP) — The City of New York filed a civillawsuit on Monday accusing FedEx of illegally
delivering tons of untaxedcigarettes to city residents from a distributor on an Indianreservation on Long
Island.The suit, filed at a federal court inManhattan, accuses FedEx of knowingly violating the terms of a
2006settlement with New York’s attorney general in which the company agreedto stop all deliveries of
mail-order cigarettes to state residents.Citylawyers said that even as that deal was being negotiated,
FedExcontinued to deliver cigarettes from select tobacco dealers, includingthe Shinnecock Smoke Shop,
located on the Shinnecock reservation ineastern Long Island.Between 2005 and 2012 the company shipped
atleast 55,000 cartons of cigarettes from the shop to consumers in NewYork City, according to the lawsuit.
That total — an estimated 20 tons —doesn’t include cartons shipped elsewhere in the state or the
country.FedExhad a public policy of not delivering cigarettes to homes anywhere inthe U.S., but the city
claims the shipper ignored that policy when itcame to the Shinnecock shop. The suit said FedEx even signed a
writtenagreement giving the smoke shop discounted rates because it was doing somuch business.The city is
seeking $825,000 in lost tax revenue, plus nearly $2.5 million in penalties.FedExsaid in a statement that it
supported the city’s efforts to stopillegal cigarette shipments and had ceased doing business with the
shopinvolved, but it said the city’s claims are "overstated and not foundedin law."The phone rang
unanswered at the Shinnecock Smoke Shop on Monday evening.InMarch, FedEx agreed to pay the city $2.4 million
to settle anaccusation that it delivered 70 tons of untaxed cigarettes from amail-order company in Kentucky.
That company was shut down by federalagents in 2009. FedEx said at the time that it was paying the money
toavoid expensive litigation, and not because it had done anything wrong.NewYork City’s legal department has
also sued smaller delivery companiesthat did business with cigarette shops based on the state’s
Indianreservations.Cigarette dealers on tribal land do a brisk businesssupplying cigarettes to New York
smokers at huge discounts, because thepacks do not carry state or city taxes, which can drive up the price
byas much as $5.85 per pack.That business has been chiseled awaysomewhat in recent years by lawsuits and
federal laws, which now make itillegal to ship cigarettes through the U.S. mails and also putrestrictions on
private delivery companies.Copyright 2013 The Associated Press. All rightsreserved. This material may not be
published, broadcast, rewritten orredistributed.