Opinion ID: 2585
Heading Depth: 2
Heading Rank: 2

Heading: Allegations Specific to the City's State Law Claims

Text: In addition to RICO claims, the City asserts diversity-based state law claims against defendants for: (1) common law fraud; (2) violations of GBL § 349, a consumer protection statute; and (3) common law public nuisance. The City alleges common law fraud in each of the four cases. It claims that defendants have a statutory duty to provide Jenkins Act reports to the State and to designate all packages they ship into New York as containing cigarettes. In all four cases, the City alleges that defendants intentionally fail to provide the required notice when they ship cigarettes into the City in order to defraud the City of tax revenues. Additionally, in Smokes-Spirits, the City alleges that defendants materially mislead customers by stating cigarette prices to customers that omit the amounts that customers will have to pay to New York City and New York State in taxes. In Nexicon and EZTobacco, the City's common law fraud claims also incorporate allegations that defendants' statements that their cigarettes are `tax-free' and/or that defendants are not required to file Jenkins Act reports are materially deceptive and misleading to New York City consumers. The City alleges claims under GBL § 349 in Nexicon, Smokes-Spirits, and EZTobacco, essentially based on the same allegations as outlined for the fraud claims. Finally, the City makes a public nuisance claim in NCCigarettes and EZTobacco. The public nuisance claims are predicated on New York State's Public Health Law § 1399- ll, which, subject to certain exceptions, bans the shipment of cigarettes via a common carrier to New York State residents. As the City alleges, in enacting that statute, the legislature declared the shipment of cigarettes sold via the Internet to residents of [New York] State to be a `serious threat to public health, safety, and welfare, to the funding of health care, and to the economy of the state.' See N.Y. Pub. Health Law § 1399- ll, ch. 262, § 1. Thus, it is alleged, defendants contribute to a public nuisance, and unreasonably and substantially interfere with rights common to the general public by shipping cigarettes sold over the Internet into New York City.