By Maria Armental
FedEx Corp. has reached a roughly $35 million agreement to resolve a years-long battle in New York over alleged contraband cigarettes.
The proposed settlement, days before a trial was to begin in a Manhattan federal court, would resolve lawsuits dating to 2013, when the City of New York sued in the final days of Mayor Michael Bloomberg's administration, accusing the company of shipping thousands of cartons of untaxed cigarettes.
A FedEx spokeswoman Meredith Miller said FedEx Ground reached the settlement agreement, which is yet to be finalized and would have to be approved by the court, "after a thorough review of the court's order."
"As a transportation company, we remain committed to complying with the law and to cooperating with federal and state law enforcement agencies as appropriate," FedEx said in a statement. "We will also continue to honor the privacy of our customers, who trust us to transport their packages safely and securely."
A judge had found that FedEx violated the law and a 2006 settlement agreement with the state of New York by shipping cigarettes to New York residents.
In an Oct. 5 opinion, the court found that "certain FedEx employees knew that FedEx was shipping unstamped cigarettes" and, "insofar as FedEx knew it was shipping cigarettes, it also knew [as a matter of law] it was shipping unstamped cigarettes."
In New York, cigarettes are taxed by the city and state.
Under the terms of the proposed settlement, a consultant would be appointed to review the company's internal controls and legal compliance, said Amy Spitalnick, spokeswoman for New York Attorney General Barbara Underwood. FedEx said FedEx Ground wouldn't admit liability as part of the settlement.
The company's stock, which lags the market with a 13% decline this year, rose 1.7% to $221 in recent after-hours trading.
-- Josh Beckerman contributed to this article.
-- Write to Maria Armental at firstname.lastname@example.org