Should FedEx Investors Fret Over Expanded Lawsuit?

Photo of Trey Thoelcke
By Trey Thoelcke Published
This post may contain links from our sponsors and affiliates, and Flywheel Publishing may receive compensation for actions taken through them.

Last week, FedEx Corp. (NYSE: FDX) requested that a U.S. District Court in Manhattan dismiss a suit from the city of New York charging the company with illegally delivering 140 tons of contraband cigarettes to people’s homes. Then on Monday came news that the state of New York was joining the suit against FedEx.

The city sued FedEx last December for delivering untaxed cigarettes from the Shinnecock Smoke Shop in Southhampton, Long Island. The shop has been sued numerous times for selling untaxed cigarettes. Like other New York Indian tribes, the Shinnecock Indian Nation claims that its smoke shops are not subject to state and local cigarette taxes.

The city says the deliveries of online and mail orders were made in defiance of a 2006 agreement with the state that FedEx would cease such deliveries.

State Attorney General Eric Schneiderman said:

FedEx’s blatant disregard for its long-standing agreement with New York, as well as federal and state law, enabled tens of millions of cheap, untaxed cigarettes to be shipped to New Yorkers.

New York imposes an excise tax of $15 or more on each carton of cigarettes, and the suit alleges a loss of more than $10 million. It was filed in the U.S. District Court, Southern District of New York, and it seeks more than $239 million in damages and penalties. Other shipping companies are reportedly being investigated as well.

Investors do not seem overly concerned, as FedEx shares were up fractionally after the opening bell to $133.20. The 52-week range is $90.61 to $144.39.

Photo of Trey Thoelcke
About the Author Trey Thoelcke →

Trey has been an editor and author at 24/7 Wall St. for more than a decade, where he has published thousands of articles analyzing corporate earnings, dividend stocks, short interest, insider buying, private equity, and market trends. His comprehensive coverage spans the full spectrum of financial markets, from blue-chip stalwarts to emerging growth companies.

Beyond 24/7 Wall St., Trey has created and edited financial content for Benzinga and AOL's BloggingStocks, contributing additional hundreds of articles to the investment community. He previously oversaw the 24/7 Climate Insights site, managing editorial operations and content strategy, and currently oversees and creates content for My Investing News.

Trey's editorial expertise extends across multiple publishing environments. He served as production editor at Dearborn Financial Publishing and development editor at Kaplan, where he helped shape financial education materials. Earlier in his career, he worked as a writer-producer at SVE. His freelance editing portfolio includes work for prestigious clients such as Sage Publications, Rand McNally, the Institute for Supply Management, the American Library Association, Eggplant Literary Productions, and Spiegel.

Outside of financial journalism, Trey writes fiction and has been an active member of the writing community for years, overseeing a long-running critique group and moderating workshop sessions at regional conventions. He lives with his family in an old house in the Midwest.

Featured Reads

Our top personal finance-related articles today. Your wallet will thank you later.

Continue Reading

Top Gaining Stocks

CBOE Vol: 1,568,143
PSKY Vol: 12,285,993
STX Vol: 7,378,346
ORCL Vol: 26,317,675
DDOG Vol: 6,247,779

Top Losing Stocks

LKQ
LKQ Vol: 4,367,433
CLX Vol: 13,260,523
SYK Vol: 4,519,455
MHK Vol: 1,859,865
AMGN Vol: 3,818,618