155 F. Supp. 3d 411
S.D.N.Y.2015Background
- City of New York sues Regional Integrated Logistics, Inc. (RIL) and Gordon Defendants for PACT Act, CCTA, Cigarette Marketing Standards Act, NY tax law, and RICO violations.
- Gordon Defendants settled; this memorandum concerns RIL's unopposed summary-judgment motion against RIL.
- RIL operated a shipping/distribution network for Seneca Nation of Indians smoke shops, moving untaxed cigarettes into New York City.
- Evidence shows RIL created a dedicated unit (RPS) to transport cigarettes and coordinated with shippers and smoke shops to deliver to residences.
- The City seeks taxes lost from August 2010 to June 2013 and argues RIL violated CCTA and RICO through continuous, illicit shipments.
- Court granted liability on liability theories but denied damages on the papers for lack of admissible evidence calculating city zip-code–specific tax loss.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| CCTA liability for shipping untaxed cigarettes | RIL knowingly shipped untaxed cigarettes in violation of CCTA. | RIL contends it lacked knowledge about tax status and did not knowingly distribute contraband. | Sufficient evidence supports liability under CCTA. |
| RICO liability based on enterprise and pattern | RIL and Gordon Defendants formed an association-in-fact and engaged in a pattern of racketeering through cigarette trafficking. | Defendant challenges sufficiency of enterprise and continuity. | Evidence supports RICO liability (association-in-fact and pattern). |
| Damagesability on summary judgment | Damages for lost taxes are readily calculable from disclosed records. | City failed to provide admissible basis for zip-code–specific tax loss. | Damages denied on papers; referred to magistrate for further proceedings. |
Key Cases Cited
- LaserShip, Inc. v. City of New York, 33 F. Supp. 3d 303 (S.D.N.Y. 2014) (no single-transaction requirement under CCTA)
- Khan v. United States, 771 F.3d 367 (7th Cir. 2014) (knowledge not required about contraband status)
- Hemi Group, LLC v. City of New York, 559 U.S. 1 (U.S. 2010) (causation too attenuated for RICO in online sales case)
- DeFalco v. Bernas, 244 F.3d 286 (2d Cir. 2001) (RICO predicate acts and causation framework)
- United States v. Morrison, 686 F.3d 94 (2d Cir. 2012) (knowingly distributing contraband cigarettes suffices without knowledge of law violation)