New York v. United Parcel Service, Inc. (160 F. Supp. 3d 629, 2016)

United States District Court for the Southern District of New York 2016-02-08

Commerce and Trade Crimes and Criminal Procedure Indians Transportation

Citations

Full opinion text

OPINION & ORDER

KATHERINE B. FORREST, District Judge

This is a large, complex and vigorously litigated action brought by the City and State of New York (the “City” and “State”, respectively) ¿gainst United Parcel Service, Inc. (“UPS”), for various claims relating to UPS’s alleged shipping of contraband cigarettes. In the instant motion, plaintiffs seek to eliminate a large number of UPS’s defenses from the case — thereby narrowing the issues for trial. As set forth below, this Court agrees that some narrowing at this stage is appropriate; certain defenses may not be used with regard to certain claims, or at all. But, with limited exceptions, the Court cannot eliminate certain defenses as to all claims as a matter of law at this stage.

Plaintiffs assert claims pursuant to the Contraband Cigarette Trafficking Act, 18 U.S.C. § 234i et seq. (“CCTA”), the Prevent A1 Cigarette Trafficking Act, 15 U.S.C. § 375 et seq. (“PACT Act”), New York Executive Law § 63(12) (“N.Y. Exec. Law § 63(12)”) and New York Public Health Law § 1399-11 (“N.Y. PHL § 1399-11”), as well for violations of the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. § 1961 et seq. (“RICO”), and breach of an Assurance of Discontinuance (“AOD”) with the New York State Attorney General (“NYAG”). (Second Am. Compl. ¶¶ 2, 95-180, ECF No. 86.) As available, plaintiffs seek penalties, damages and injunctive relief.

Plaintiffs have framed their motion as primarily seeking to eliminate two swathes of defenses — those which they refer to as the “Government Policy Defenses”, and those which they refer to as the “AOD Defenses” — as well as three additional defenses which fall into neither category. As briefed by plaintiffs, the Government Policy Defenses assert that plaintiffs’ conduct or inaction relating to their enforcement of cigarette tax laws bars certain claims or recovery. These include UPS’s Fifth, Sixth, Fourteenth, Sixteenth, and Seventeenth Defenses. According to plaintiffs, each of these defenses is an improper collateral attack on plaintiffs’ enforcement decisions, particularly as to timing and targets: the Fifth Defense asserts a failure to mitigate including by failing to pursue claims against shippers/sellers or customers, the Sixth Defense asserts a reduction in damages based on a failure to collect taxes from others including consumers, the Fourteenth Defense asserts excuse from performance of the AOD based on impracticability or frustration arising from plaintiffs’ conduct, the Sixteenth Defense asserts a bar to all claims based on plaintiffs’ failure to enforce cigarette tax laws, and the Seventeenth Defense asserts Jaches, waiver, estoppel and other equitable doctrines based on plaintiffs’ alleged knowledge of violations of shippers using UPS’s services and failure to notify UPS or to otherwise take appropriate steps to prevent further violations.

As briefed by plaintiffs, the “AOD Defenses” include UPS’s Ninth Defense asserting a lack of consideration, the Tenth Defense asserting lack of enforceability based on alleged misrepresentations set forth therein, the Eleventh Defense asserting that the AOD’s stipulated damages provision is unenforceable as a matter of law, the Twelfth Defense asserting that any claim is barred by plaintiffs’ own nonperformance including breach of the implied covenant of good faith and fair dealing, and the Thirteenth Defense asserting plaintiffs’ own inactivity with regard to the AOD and therefore laches, waiver and es-toppel and similar doctrines.

The three additional defenses plaintiffs also move against are UPS’s Seventh Defense regarding the impact of certain injunctions to § 471 of the New York Tax Law, the Eighth Defense regarding an interpretation of the CCTA, and the Fifteenth Defense, which asserts preemption of some or all claims by the PACT Act and the Federal Aviation Administration Authorization Act of 1994, 49 U.S.C. §§ 14501, 41713.

UPS disagrees both with how plaintiffs frame their defenses and with whether they can, in any event, be dismissed at this stage. In particular, UPS argues that plaintiffs’ reference to the Government Policy Defenses as solely an attack on law enforcement decision-making is incorrect, and that these defenses relate to consequences which it asserts flowed from such decisions (thus, not whether the decisions should or should not have been taken in the first instance). According to UPS, once an enforcement choice has been made— whether to forbear from certain enforcement efforts (as was the case in New York State for a period of time) or not — plaintiffs are not immune from consequences of those decisions which may impact causation or damages. (See Def.’s Opp. Br. at 4, EOF No. Ill (“In fact, UPS’s defenses simply ask the Court to consider whether, given the choice that plaintiffs made, they have established each of the elements of their asserted claims and whether they are entitled to recover the damages sought.”).) In terms of the AOD Defenses, UPS principally argues that the State lacked the authority to enter into or enforce the AOD and that a factual record is necessary before any conclusion may be reached as to the viability of any particular defense. UPS similarly vigorously contests that the remaining three defenses may be resolved at this stage in the absence of a factual record.

The Court does not view the issues raised on this motion as best framed as either plaintiffs or UPS has done. Questions as to what defenses are cognizable are specific both to particular defenses and claims to which they may apply. As to the Government Policy Defenses, when carefully parsed as to whether there is any set of facts with regard to any claim asserted as to which a defense might be cognizable, only two defenses fail altogether; the Sixth and Sixteenth Defenses. Only these two defenses are purely and properly cast as seeking redress based solely on a law enforcement choice. The Sixth Defense argues for a reduction in damages due to governmental entities’ failure to collect taxes from other third parties — an act which is certainly a protected policy choice. The Sixteenth defense explicitly asserts a defense based on plaintiffs’ failure to enforce the tax laws. Plaintiffs are therefore correct that these defenses are not cognizable as a matter of law. But here ends the straightforward resolution of the Government Policy Defenses.

As to the Fifth and Fifteenth Defenses, the Court concludes that they are not cognizable as to certain claims, but they are (or may be) as to others. Thus, the Court does not strike those defenses, but does find that they may not properly be asserted as to certain claims. In this regard, the claims brought under the CCTA, PACT Act, N.Y. Public Health Law and N.Y. Exec. Law are claims in which the State and City are seeking by this action to enforce certain laws in their traditional public capacity. Defenses which assert pri- or enforcement failures or shortcomings are not cognizable defenses against such claims. Thus, the Fifth and Seventeenth Defenses are not cognizable as to these specific claims.

Whether and how these two defenses— the Fifth Defense, which can be read to assert a general failure to mitigate, and the Seventeenth Defense, which asserts a variety of equitable defenses — may be available to UPS in defending against other claims (namely, the RICO and AOD claims) is a question which can only partially be answered on this motion.

In terms of the Fifth Defense, it is not (as explained below) cognizable with regard to plaintiffs’ AOD claim, but may be as to the RICO claims. While the Court certainly appreciates that a defense that touches in any way on enforcement decision-making must be carefully reviewed, it is not prepared at this stage to find as a matter of law that there is no conceivable way in which the result of an enforcement decision (e.g. an asserted increase in trafficked cigarettes based on a forbearance policy or non-enforcement, or knowledge of issues with certain shippers and failure to act) may not be used with regard to plaintiffs’ RICO claim (either in the context of the Fifth or Seventeenth Defenses). In short, a factual record will assist the Court in understanding whether the defense is in the realm of what is out of bounds as attacking an enforcement decision, or within bounds as arguing that whatever the decision, there are consequences that cannot be escaped. The Court has now carefully reviewed the case law in the area of law enforcement discretion and defenses available (or not) against governmental entities. There is no case law directly on point.

Similarly, the Seventeenth Defense asserts, among other theories, equitable es-toppel, waiver, laches and in pari delicto. Plaintiffs are not immune from such theories under all fact patterns as a matter of law — though there may be limits to usage based on the development of the record. It is an open question as to whether, when pursuing certain claims such as a RICO claim, a governmental entity is immune from the impact on third parties (if any) of decisions it has made.

The AOD Defenses must similarly be parsed carefully. Certain of them — the Ninth, Tenth and Eleventh Defenses — are premised on incorrect statements of the law or are implausible based on the facts as alleged. On the other hand, as legal principles governing contract interpretation apply to an agreement such as the AOD (notwithstanding the presence of a governmental entity as a contracting party), the Twelfth Defense for breach of the implied covenant of good faith and fair dealing, the Thirteenth Defense asserting waiver based on inactivity, and the Fourteenth Defense of impracticability or frustration, do not fail as a matter of law. Instead, they require the development of a factual record which would allow the Court to consider them — whether on summary judgment or at trial. While it is clear that plaintiffs believe there is no set of facts UPS will be able to muster with regard to these defenses, that is a question this Court cannot resolve on this motion.

As to the three remaining defenses, the Court concludes that plaintiffs are entitled to judgment as a matter of law as to the Seventh and Eighth Defenses at this stage. UPS’s Fifteenth Defenses may not be resolved in the absence of a factual record, and thus cannot be resolved this stage.

Thus, to unravel whether the defenses are viable requires looking at many things from many angles. For the reasons set forth below, plaintiffs’ motion is GRANTED IN PART AND DENIED IN PART.

I. BACKGROUND

On February 18, 2015, the State and City filed their original complaint against UPS (ECF No. 1), and filed an Amended Complaint on May 1, 2015 (ECF No. 14). The Amended Complaint alleged fourteen causes of action seeking various forms of relief under federal and New York law, including under the CCTA, the PACT Act, RICO, N.Y. Exec. Law § 63(12), N.Y. PHL § 1399-11, and pursuant to the AOD. On May 22, 2015, UPS moved to dismiss the Amended Complaint pursuant to Rule 12(b)(6). (ECF No. 21.) On September 16, 2015, this Court issued a decision that granted in part and denied in part UPS’s motion; specifically, the Court dismissed plaintiffs’ claims brought pursuant to the PACT Act and N.Y. PHL § 1399-11; the Court denied the motion as to the remaining claims. (ECF No. 49.) UPS filed an Answer to the Amended Complaint on September 30, 2015, asserting, inter alia, the defenses at issue in this motion. (ECF No. 52.)

On October 21, 2015, plaintiffs moved for leave to file a Second Amended Complaint, seeking to add back the previously dismissed claims brought under the PACT Act and § 1399-11. (ECF No. 68.) The basis for the motion was that plaintiffs had not anticipated the Court’s interpretation of the PACT Act, and as a result had not previously had an opportunity to plead these claims in light of that interpretation. On November 23, 2015, the Court granted plaintiffs’ motion (ECF No. 85); plaintiffs filed their Second Amended Complaint on November 30, 2015 (ECF No. 86).

On December 4, 2015, plaintiffs filed the instant motion to strike the Fifth through Seventeenth Defenses stated in UPS’s Answer. (ECF No. 89.) UPS filed its opposition on December 18, 2015. (ECF No. 111.) Plaintiffs filed their reply brief on January 5, 2016. (ECF No. 122.) On January 8, 2016, UPS filed a sur-reply letter relating to its Seventh Defense. (ECF No. 127.) With leave of the Court, plaintiffs filed a rejoinder to UPS’s sur-reply on January 14, 2016. (ECF No. 134.)

After the parties addressed plaintiffs’ motion (among other issues) at the status conference held on January 12, 2016 (see ECF No. 136), on January 13, 2016, the Court issued an Order inquiring as to whether the parties would have had materially different arguments if plaintiffs had brought their motion under Rule 12(c) (ECF No. 131). The parties responded in letters on January 14, 2016. (ECF Nos. 132, 133.) Later that day, the Court ordered UPS to make any further arguments in relation to the Rule 12(c) issue no later than January 20, 2016, and ordered plaintiffs to provide any final response no later than January 22, 2016. (ECF No. 135.) On January 20, 2016, UPS responded in an 18-page brief that reframed its position as to all of the defenses at issue. (ECF No. 141.) In light of the length of UPS’s supplemental brief, the Court granted plaintiffs until January 28, 2016 to respond. (ECF No. 144.) Plaintiffs responded on January 28, 2016. (ECF No. 167.)

II. STANDARD OF REVIEW

A. Motion to Strike under Rule 12(f)

Rule 12(f) permits a court to “strike from a pleading an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter.” Fed. R. Civ. P. 12(f). Motions to strike are generally disfavored. Mayfield v. Asta Funding, Inc., 95 F.Supp.3d 685, 696 (S.D.N.Y.2015). To prevail on a motion to strike, the movant must “satisfy a stringent three-pronged test: there must be no question of fact that might allow the defense to succeed; (2) there must be no substantial question of law that might allow the defense to succeed; and (3) the plaintiff must be prejudiced by the inclusion of the defense.” United States v. E. River Hous. Corp., 90 F.Supp.3d 118, 131 (S.D.N.Y.2015) (quotation marks omitted); accord Coach, Inc, v. Kmart Corps., 756 F.Supp.2d 421, 425 (S.D.NY.2010); Specialty Minerals, Inc, v. Pluess-Staufer AG, 395 F.Supp.2d 109, 111 (S.D.NY.2005).

As to the first and second prongs, a court must “apply the same legal standard as that applicable to a motion to dismiss under Rule 12(b)(6).” E. River Hous., 90 F.Supp.3d at 131. As such, a court must accept as true all well-pleaded factual allegations and draw all reasonable inferences in the non-moving party’s favor. Id.; see Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009). The “moving party has the burden of demonstrating to the Court to a certainty that plaintiff would succeed despite any set of facts which could be proved in support of the defense.” Walsh v. City of New York, 585 F.Supp.2d 555, 557 (S.D.N.Y.2008) (quotation marks and alterations omitted); see also Radiancy, Inc. v. Viatek Consumer Products Grp., Inc., No. 13-CV-3767 NSR, 2014 WL 4772340, at *2 (S.D.N.Y. Mar. 28, 2014), as amended (Apr. 1, 2014) (“In assessing the sufficiency of an affirmative defense, the Court ‘should construe the pleadings liberally to give the defendant a full opportunity to support its claims at trial, after full discovery has been made.”’ (quoting Cartier Int’l AG v. Motion in Time, Inc., No. 12 Civ. 8216(JMF), 2013 WL 1386975, at *3 (S.D.N.Y. Apr. 5, 2013))). “If the sufficiency of the defense depends upon disputed questions of fact or law, then the motion to strike will be denied.” Index Fund, Inc. v. Hagopian, 107 F.R.D. 95, 100 (S.D.N.Y.1985).

As to the third prong, which requires the moving party to show prejudice, a court may “consider whether inclusion of the legally insufficient defense would needlessly increase the time and expense of trial or duration and expense of litigation.” E. River Hous., 90 F.Supp.3d at 131 (quotation marks omitted); see Coach, Inc., 756 F.Supp.2d at 426. “A conclusory contention, that the allegations sought to be stricken are highly prejudicial, does not satisfy the defendants’ burden on the motion to strike.” Freydl v. Meringolo, No. 09 Civ. 07196(BSJ)(KNF), 2011 WL 2566082, at *2 (S.D.N.Y. June 16, 2011) (quotations omitted).

B. Motion for Judgment on the Pleadings under Rule 12(c)

Rule 12(c) provides that “[ajfter the pleadings are closed — but early enough not to delay trial — a party may move for judgment on the pleadings.” Fed. R. Civ. P. 12(c). Under Rule 12(c), a party is entitled to judgment on the pleadings “only if it has established that no material issue of fact remains to be resolved and that it is entitled to judgment as a matter of law.” Juster Assocs. v. City of Rutland, Vt., 901 F.2d 266, 269 (2d Cir.1990); Burns Int’l Sec. Servs., Inc, v. Int’l Union, United Plant Guard Workers of Am. (UPGWA) & Its Local 537, 47 F.3d 14, 16 (2d Cir.1995) (“Judgment on the pleadings is appropriate if, from the pleadings, the moving party is entitled to judgment as a matter of law.”); but see, e.g., Hon Hai Precision Indus. Co., Ltd, v. Wi-LAN, Inc., No. 12 Civ. 7900(SAS), 2013 WL 2322675, at *9 (S.D.N.Y. May 28, 2013) (concluding that the Twombly pleading standard does not apply to affirmative defenses, but rather the lower standard of Rule 8(c) governs). “The standard for addressing a Rule 12(c) motion ... is the same as that for a Rule 12(b)(6) motion to dismiss for failure to state a claim.” Cleveland v. Caplaw Enters., 448 F.3d 518, 521 (2d Cir.2006); Ziemba v. Wezner, 366 F.3d 161, 163 (2d Cir.2004) (applying same standard as that applicable to motion under Rule 12(b)(6)). Because motions brought under both Rule 12(c) and Rule 12(f) both apply the same standard as a motion brought under Rule 12(b)(6), the Court’s analysis would not differ with respect to its consideration of the merits of plaintiffs’ motion under either Rule. The only difference is that a Rule 12(c) motion does not require a showing of prejudice.

“Although Rule 12(c) neither specifically authorizes nor prohibits motions for judgment on the pleadings directed to less than the entire complaint or answer ... it is the practice of many judges to permit partial judgment on the pleadings (e.g. on the first claim for relief, or the third affirmative defense).” Savage v. Council on Am.Islamic Relations, Inc., No. C 07-6076 SI, 2008 WL 2951281, at *2 (N.D.Cal. July 25, 2008) (quotation marks and alterations omitted); see also Bradley v. Fontaine Trailer Co., No. 3:06-CV-62WWE, 2009 WL 763548, at *3 (D.Conn. Mar. 20, 2009) (stating that the “modern view of rule 12(c) is to permit a motion for partial judgment on the pleadings”). Because resolution of plaintiffs’ motion would be the same under either Rule 12(c) or Rule 12(f), the Court construes the motion as one under both Rules and addresses the motion on both alternative grounds.

III. IMPACT OF A DENIAL OF THIS MOTION

This is a pre-trial motion. It is necessarily before the Court at a time when the Court lacks the depth of knowledge it will later have regarding this case. Denial of the motion with regard to any defense does not necessarily mean that the Court will ultimately find such defense appropriate or applicable to any particular claim. It means, instead, that at this stage, given its current view of the applicable principles, and without the benefit of a factual record, the Court is unwilling to prevent UPS from pursuing the defense further. The Court may later determine that such defense may not, as a matter of law or fact, be available.

IV. EXECUTIVE DISCRETION AND THE “GOVERNMENT POLICY DEFENSES”

A. The Defenses

What plaintiffs cast as UPS’s five Government Policy Defenses are as follows:

5. To the extent that Plaintiffs have suffered any damages alleged in the Second Amended Complaint, their claims are barred by their own failure to mitigate or avoid these damages, including by failing to pursue claims against the shippers alleged to have sold untaxed cigarettes or against the customers alleged to have purchased untaxed cigarettes from the shippers.

6. To the extent that Plaintiffs have suffered any damages alleged in the Second Amended Complaint, their claims must be reduced by the amounts they collected or should have collected from third parties, including, inter alia, the consumers who allegedly purchased the untaxed cigarettes.

14. UPS was excused from performance under the AOD on grounds of impracticability and frustration, including such grounds created by the conduct of the State of New York or its agents, employees, or representatives.

16. Plaintiffs’ claims are barred or limited by their own conduct, including but not limited to their failure to enforce cigarette tax laws.

17. Plaintiffs’ claims, including their request for civil penalties, are barred, in whole or in part, by the doctrines of waiver, estoppel, laches, unclean hands, in pari delicto, and/or similar doctrines and equitable doctrines, in that, among other things, Plaintiffs had reason to know about unlawful cigarette sales by the shippers named in the Second Amended Complaint, yet failed to take appropriate steps as to them or their customers, or to notify UPS.

(Answer, Defenses and Affirmative Defenses ¶¶ 5, 6, 14, 16, 17, ECF No. 110.) Each defense is premised on an assertion regarding plaintiffs’ own conduct or action/inaction in connection with enforcing cigarette tax laws. With the exception of the Fourteenth Defense, which is limited by its terms to the AOD claims (and thus is addressed separately along with the AOD Defenses), each defense is arguably asserted with regard to each of plaintiffs’ many claims.

B. Law Enforcement Discretion

It is well-established, and both parties on this motion agree, that government actors have broad executive discretion in law enforcement decisions. Heckler v. Chaney, 470 U.S. 821, 831, 105 S.Ct. 1649, 84 L.Ed.2d 714 (1985) (“This Court has recognized on several occasions over many years that an agency’s decision not to prosecute or enforce, whether through civil or criminal process, is a decision generally committed to an agency’s absolute discretion. The recognition of the existence of discretion is attributable in no small part to the general unsuitability for judicial review of agency decisions to refuse enforcement.”); Vives v. City of New York, 524 F.3d 346, 354 (2d Cir.2008) (“An individual who asks a court to direct a local official to enforce a law will likely fail based on the discretion accorded to municipalities and/or individual officers in determining when to enforce state law.”). Executive discretion relates both to the decision not to take action, as well as the decision to take action. E.g., Heckler, 470 U.S. at 831, 105 S.Ct. 1649.

“It is the settled policy of the courts not to review the exercise of discretion by public officials in the enforcement of State statutes, in the absence of a clear violation of some constitutional mandate.” Gaynor v. Rockefeller, 15 N.Y.2d 120, 131, 256 N.Y.S.2d 584, 204 N.E.2d 627 (1965); see also Town of Castle Rock, Colo, v. Gonzales, 545 U.S. 748, 761, 125 S.Ct. 2796, 162 L.Ed.2d 658 (2005) (identifying the “deep-rooted nature of law-enforcement discretion”). As the Supreme Court has explained, an executive agency “is far better equipped than the courts to deal with the many variables involved in the proper ordering of [enforcement] priorities.” Heckler, 470 U.S. at 831, 105 S.Ct. 1649. This is no less true with respect to the executive’s decision whether to prosecute one party and not another. Id.; Wayte v. United States, 470 U.S. 598, 607-08, 105 S.Ct. 1524, 84 L.Ed.2d 547 (1985) (“Examining the basis of a prosecution delays the criminal proceeding, threatens to chill law enforcement by subjecting the prosecutor’s motives and decisionmaking to outside inquiry, and may undermine prosecutorial effectiveness by revealing the Government’s enforcement policy. All these are substantial concerns that make the courts properly hesitant to examine the decision whether to prosecute.”).

Courts have routinely held that, when acting in a capacity to enforce public rights in the public interest and discharge statutory responsibilities, government entities are not subject to all equitable defenses — such as laches or estoppel — that could ordinarily be invoked against a private actor. See Utah Power & Light Co. v. United States, 243 U.S. 389, 409, 37 S.Ct. 387, 61 L.Ed. 791 (1917) (“As a general rule, laches or neglect of duty on the part of officers of the government is no defense to a suit by it to enforce a public right or protect a public interest.”); see also Nevada v. United States, 463 U.S. 110, 141, 103 S.Ct. 2906, 77 L.Ed.2d 509 (1983) (same); LaTrieste Rest. & Cabaret Inc, v. Vill. of Port Chester, 40 F.3d 587, 590 (2d Cir.1994) (“[P]rinciples of laches or estoppel do not bar a municipality from enforcing ordinances that have been allowed to lie fallow.”); City of New York v. City Civil Serv. Comm’n, 60 N.Y.2d 436, 449, 470 N.Y.S.2d 113, 458 N.E.2d 354 (1983) (“[E]stoppel may not be applied to preclude a State or municipal agency from discharging its statutory responsibility.”); Matter of Hamptons Hosp. & Med. Ctr. v. Moore, 52 NY.2d 88, 93, 436 N.Y.S.2d 239, 417 N.E.2d 533 (1981) (“The doctrine of estoppel is not applicable to the State acting in a governmental capacity.”); Jamestown Lodge 1681 Loyal Order of Moose, Inc, v. Catherwood, 31 A.D.2d 981, 982, 297 NY.S.2d 775 (3d Dep’t 1969) (“Laches, waiver, or estoppel may not be imputed to the State in the absence of statutory authority.”).

In support of their arguments regarding executive discretion, plaintiffs cite numerous cases invoking principles of broad executive discretion. The common trait in these cases is that an outside party sought to challenge a government entity’s decision-making as to when and under what circumstances to enforce a statute, ordinance or court order which that government entity was charged with enforcing. The case law in the area of executive discretion generally relates to a party’s attempt to require particular enforcement, or hold a public entity responsible for lack of or inadequate enforcement. The cases are generally unlike, the facts here where the question presented is whether a particular enforcement choice causes consequences cognizable in a separate suit.

For instance, in Wayte, an individual who had been indicted for knowingly and willfully failing to register with the Selective Service System challenged the constitutionality of the Government’s passive enforcement policy, pursuant to which it prosecuted only those who reported themselves as having violated the law or who were reported by others, 470 U.S. at 600-04, 105 S.Ct. 1524. The Supreme Court rejected the defendant’s argument, stating, among other reasons, that the Government’s enforcement priorities, including whether or not to prosecute, generally rests within its discretion. Id. at 607, 105 S.Ct. 1524. In Heckler, several prison inmates convicted of capital offenses and sentenced to death by lethal injection of drugs petitioned the FDA to take various law enforcement actions to prevent the use of those drugs on the basis that such use violated the Federal Food, Drug, and Cosmetic Act. 470 U.S. at 823, 105 S.Ct. 1649. Relying in part on principles of agency discretion not to prosecute or enforce, the Supreme Court concluded that the FDA’s decision not to take enforcement actions requested by the inmates was not subject to judicial review under the APA. Id. at 831, 837-38. In Town of Castle Rock, a plaintiff sought to require the local police force to enforce a state-law restraining order that she had previously obtained against her husband. 545 U.S. at 751, 125 S.Ct. 2796. Relying on the “deep-rooted nature of law-enforcement discretion,” the Supreme Court declined to find that the plaintiff had a property interest in her restraining order such that the police could be required to enforce it. Id. at 761, 125 S.Ct. 2796.

Courts have, in numerous other instances, declined to probe into government actors’ decision-making in circumstances where the government was acting in the sphere of enforcing public rights in the public interest. E.g., Harrington v. Cnty. of Suffolk, 607 F.3d 81, 35 (2d Cir.2010) (failure to investigate plaintiffs’ son’s death); Vives, 524 F.3d at 354 (decisions not to enforce certain provisions of state penal law); Leland v. Moran, 80 Fed.Appx. 133, 135 (2d Cir.2003) (summary order) (failure to enforce zoning ordinances); Gaynor, 15 N.Y.2d at 131, 256 N.Y.S.2d 584, 204 N.E.2d 627 (refusing to intervene in public officials’ administration of various public construction projects).

None of these eases stand for the sweeping proposition that there is no set of facts pursuant to which an equitable defense might be asserted against a governmental entity. There are certainly cases this Court has found in which estoppel and other equitable defenses may, in fact, be asserted against governmental entities. E.g., Inv’rs Research Corp. v. Sec. & Exch. Comm’n, 628 F.2d 168, 174 n. 34 (D.C.Cir.1980) (“The fundamental principle of equitable estoppel applies to government agencies, as well as private parties.”); United States v. Wharton, 514 F.2d 406, 410-12 (9th Cir.1975) (explaining that equitable estoppel may be applied against the government based on government officials’ “affirmative misconduct” where “serious injustice” would otherwise result); see also ATC Petroleum, Inc. v. Sanders, 860 F.2d 1104, 1111 (D.C.Cir.1988) (acknowledging that equitable estoppel could apply against the government but that the case for es-toppel “must be compelling”); 2 Kenneth Culp Davis, Administrative Law Treatise § 17.06 (1st ed. 1958) (citing cases applying estoppel against state or local governments).

C. The State’s Forbearance Policy

Based upon the briefing on this motion, it appears that, in substantial part, UPS’s Government Policy Defenses will be based on the New York State Department of Taxation and Finance’s (“DTF”) public “forbearance” policy, which was in effect from at least the mid-1990’s until February 2010. UPS appears to argue that the forbearance policy, pursuant to which the DTF did not enforce tax regulations governing on-reservation sales of cigarettes to non-Native Americans, has relevance to the issues of both causation and damages. In particular, UPS argues that the forbearance policy may have led to an increase in trafficking, or have led to a view that forbearing was necessarily accompanied by a tolerance for methods of such trafficking.

The existence and history of the DTF’s forbearance policy has been well-documented in previous cases. E.g., City of New York v. Milhelm Attea & Bros., 550 F.Supp.2d 332, 338 (E.D.N.Y.2008); see also United States v. Morrison, 686 F.3d 94, 99-101 (2d Cir.2012); Oneida Nation of New York v. Cuomo, 645 F.3d 154, 159 (2d Cir.2011). To give proper context to UPS’s argument, a brief history of the DTF’s forbearance policy follows.

N.Y. Tax Law § 471, first enacted in 1939, imposes a tax on “all cigarettes possessed in the state by any person for sale, except that no tax shall be imposed on cigarettes sold under such circumstances that this state is without power to impose such tax.” N.Y. Tax Law § 471. Section 471 is a general taxation requirement applicable to all persons in New York State. Over the years, various sub-sections have attempted to grapple with the particular issues raised by taxation of sovereign Indian nations and tribes.

Prior to 1988, despite Supreme Court precedent suggesting that states could permissibly tax cigarettes sold on reservations to non-Native Americans, see Washington v. Confederated Tribes of Colville Indian Reservation (“Colville”), 447 U.S. 134, 151, 100 S.Ct. 2069, 65 L.Ed.2d 10 (1980), New York had not attempted to collect taxes on such sales, Morrison, 686 F.3d at 99; City of New York v. Golden Feather Smoke Shop, Inc., 597 F.3d 115, 122 (2d Cir.2010) (stating that the State did not enforce § 471 against Native American vendors until 1988). In 1988, the DTF made the determination that nonNative Americans were purchasing large quantities of unstamped cigarettes from on-reservation retailers; it estimated that the volume of tax-exempt cigarettes sold on New York reservations in 1987-88 would, if consumed exclusively by tax-immune Native Americans, correspond to a consumption rate 20 times higher than that of the average New York resident. Dep’t of Taxation & Fin. of New York v. Milhelm Attea & Bros., Inc., 512 U.S. 61, 65, 114 S.Ct. 2028, 129 L.Ed.2d 52 (1994). Having determined that the State was being deprived of a substantial amount of tax revenue by non-tax exempt cigarette purchases, in 1988 the DTF adopted regulations requiring reservation retailers to pay sales and excise taxes on cigarettes; in order to ensure that exempt purchasers could still obtain cigarettes without having to pay taxes, the DTF’s regulations allowed reservation retailers to purchase a limited quantity of untaxed cigarettes based on estimated demand for such cigarettes by tribe members. Morrison, 686 F.3d at 99; Milhelm Attea, 550 F.Supp.2d at 338. This regulation was challenged by reservation wholesalers on the ground that the DTF’s regulations were preempted by the federal Indian Trader Statutes, 25 U.S.C. § 261 et seq., but the regulations were ultimately upheld by the United States Supreme Court. Milhelm Attea, 512 U.S. at 78, 114 S.Ct. 2028. The DTF, however, did not act to enforce its 1988 regulations following the Supreme Court’s decision, instead re-adopting its prior forbearance policy. Morrison, 686 F.3d at 100.

Although in 1996 Governor George Pa-taki announced his intention to enforce the DTF’s 1988 regulations (which were unenforced but still on the books), he reversed course in 1997 and called for a repeal of the DTF’s regulations. Id. Governor Pataki’s announcement was prompted by a “combination of legal barriers presented by tribal immunity and the resistance of New York’s Native American population.” Id. That resistance — sparked by the State’s aggressive enforcement strategies including interdiction of cigarette shipments headed onto reservations — included “civil unrest, personal injuries, and significant interference with public transportation on New York highways.” Id. The DTF’s regulations were repealed in April 1998. Id.; Milhelm Attea, 550 F.Supp.2d at 338. In their complaint, plaintiffs allege that reservation sellers have continued to fight tax enforcement efforts by refusing to participate in the tax stamping system for the collection of cigarette taxes. (Second Am. Compl. ¶¶ 19-24.)

To fill the void left by the State’s repeal of the DTF’s regulations pertaining to the calculation and collecting of taxes from Native American cigarette retailers, in 2003 the State enacted § 471-e, which directed the DTF to promulgate rules and regulations necessary to implement the collection of sales, excise and use taxes on cigarettes purchased by a non-Native American person from a recognized reservation seller. N.Y. Tax Law § 471-e (McKinney 2003); see Cayuga Indian Nation of New York v. Gould, 14 N.Y.3d 614, 649, 904 N.Y.S.2d 312, 930 N.E.2d 233 (2010). Effective March 1, 2006, the State substantially amended § 471-e to require wholesalers to sell only stamped cigarettes to Native American tribes, and provided that the State was to establish a coupon system to ensure that Native American tribe members could purchase stamped cigarettes on reservations without paying taxes. Milhelm Attea, 550 F.Supp.2d at 338. The DTF, however, failed to adopt the regulations necessary to implement § 471-e’s coupon scheme. Id. Because the DTF failed to adopt the regulations necessary to implement the provisions of § 471-e, enforcement of § 471-e was preliminarily enjoined by the New York State Supreme Court. Id.; see also Day Wholesale, Inc. v. State, 51 A.D.3d 383, 386-88, 856 N.Y.S.2d 808 (4th Dep’t 2008) (affirming grant of injunction and concluding, based on the language of § 471-e and legislative intent, that the amended version of § 471-e could not be in effect until the DTF implemented the coupon scheme provided for in the statute). On March 16, 2006, prior to the injunction, the DTF issued an Advisory Opinion in response to a request by Milhelm Attea & Bros., a cigarette wholesaler, in which the DTF referenced its “longstanding policy of allowing untaxed cigarettes to be sold from licensed stamping agents to recognized Indian Nations and reservation-based retailers making sales from qualified Indian reservations” and stated that the DTF had “no intention to alter” its policy of forbearance. Milhelm Attea, 550 F.Supp.2d at 338; see also Morrison, 686 F.3d at 100. The DTF finally revoked the forbearance policy in February 2010. Oneida Nation, 645 F.3d at 159.

Plaintiffs, principally relying on the Second Circuit’s decision in Morrison, argue that the forbearance policy does not excuse UPS’s deliveries of the cigarette shipments at issue in this case. (Pls.’ Opening Br. at 11, ECF No. 91.) In Morrison, the Second Circuit considered whether the DTF’s forbearance policy precluded a conviction under the CCTA of a smoke shop’s managing partner who engaged in frequent, large, wholesale transactions of untaxed cigarettes and knew that customers re-sold the cigarettes at off-reservation locations. Morrison, 686 F.3d at 96-97. The Court concluded that the DTF’s forbearance policy did not permit the defendant to engage in large-scale cigarette bootlegging conduct, finding that such conduct went far beyond whatever ambiguity existed as to the scope of Native American cigarette retailers’ tax liability for on-reservation cigarette sales. Id. at 105-06 (“New York’s decision, for political and practical reasons, to refrain from enforcing [New York’s cigarette tax law] did not grant [defendant] leave to sell massive quantities of untaxed cigarettes to non-Native Americans. New York had the power to impose that tax and state law mandated that the tax be paid.”).

According to UPS, the relevance of the DTF’s forbearance policy is not limited to that discussed in Morrison. UPS argues that, rather than challenging the wisdom of the forbearance policy, it seeks only to argue that the State’s choice to forbear from enforcing tax laws during certain periods of time and as to certain shipments renders the State causally responsible for certain trafficking, or that the policy is at least relevant to questions of, inter alia, waiver and mitigation. (Def.’s Opp. Br. at 6.) UPS further argues that, in light of federal law requiring common carriers to “provide transportation or service on reasonable request,” 49 U.S.C. § 14101(a), the forbearance policy raises a substantial legal question as to whether federal law required UPS to provide service for shipments that the DTF’s policy permitted. (Def.’s Opp. Br. at 6.)

Plaintiffs counter that, as a matter of law, the State’s forbearance policy cannot serve as a superseding cause of UPS’s own alleged violations of federal and state law. (Pls.’ Reply Br. at 7-8, ECF No. 122); see also Morrison, 686 F.3d at 106 (‘“The failure of the executive branch to enforce a law does not result in its modification or repeal.’”) (quoting District of Columbia v. John R. Thompson Co., 346 U.S. 100, 113— 14, 73 S.Ct. 1007, 97 L.Ed. 1480 (1953)); see also United States v. Russell, 411 U.S. 423, 435, 93 S.Ct. 1637, 36 L.Ed.2d 366 (1973) (“[T]he fact that officers or employees of the Government merely afford opportunities or facilities for the commission of the offense does not defeat the prosecution.”).

D. Application of Law Enforcement Discretion to UPS’s Defenses

Having reviewed the relevant legal principles, the Court considers each of the so-called Government Policy Defenses against the particular claims that plaintiffs have alleged. As discussed above, the Court concludes that the Sixth and Sixteenth Defenses fail as to all claims and therefore strikes those defenses from UPS’s Answer. As to the Fifth and Seventeenth Defenses, the Court concludes that they are not cognizable as to certain claims, but do survive at this stage as to others. Specifically, plaintiffs’ Fifth and Seventeenth Defenses may be cognizable as to the RICO claims; and the Seventeenth Defense may be cognizable as to the AOD claim.

1. Sixth and Sixteenth Defenses

UPS’s Sixth Defense argues for a reduction in damages due to plaintiffs’ failure to collect taxes from third parties. (Answer, Defenses and Affirmative Defenses ¶ 6.) The decision whether to collect taxes from third parties constitutes a protected policy choice as to whether and as to whom to take enforcement action. See, e.g., Levin v. Commerce Energy, Inc., 560 U.S. 413, 421-22, 130 S.Ct. 2323, 176 L.Ed.2d 1131 (2010); Abuzaid v. Mattox, 726 F.3d 311, 315-16 (2d Cir.2013). This sort of enforcement decision falls in the heartland of a State’s broad discretion in the area of law enforcement decision-making. See, e.g., Heckler, 470 U.S. at 831, 105 S.Ct. 1649.

UPS’s Sixteenth Defense, similarly asserts a defense based on plaintiffs’ failure to enforce the tax laws. (Answer, Defenses and Affirmative Defenses ¶ 16.) As noted above, to the extent this defense can be read as invoking general equitable principles such as waiver and estoppel, the Court deems this defense to be duplicative of the Seventeenth Defense; the Court therefore construes it more narrowly in accordance with its express terms. Viewing the Sixteenth Defense in its appropriately narrow context, it seeks solely to question plaintiffs’ tax enforcement decisions, an area where, again, a government actor is entitled significant broad discretion. See, e.g., Heckler, 470 U.S. at 831,-105 S.Ct. 1649. Plaintiffs are correct that these defenses are never cognizable as a matter of law as to any claim. The Court therefore strikes these two defenses.

2. Fifth and Seventeenth Defenses

The Court’s analysis as to the Fifth and Seventeenth Defenses is more complicated. The Fifth Defense argues that plaintiffs’ claims must be barred (or their damages reduced) by their failure to mitigate by not pursuing claims against shippers who allegedly sold untaxed cigarettes or consumers who allegedly purchased them. (Answer, Defenses and Affirmative Defenses ¶ 5.)

The law imposes a duty, as to certain types of claims, upon a party subjected to injury to make reasonable exertions to minimize its injury. Holy Properties Ltd., L.P. v. Kenneth Cole Prods., Inc., 87 N.Y.2d 130, 133, 637 N.Y.S.2d 964, 661 N.E.2d 694 (1995); see also Borger v. Yamaha Int’l Corp., 625 F.2d 390, 399 (2d Cir.1980). This is known as the duty to mitigate. This duty is generally understood to apply in the context of claims sounding in breach of contract and negligence. Den Norske Ameriekalinje Actiesselskabet v. Sun Printing & Publ’g Ass’n, 226 N.Y. 1, 9, 122 N.E. 463 (1919) (drawing a distinction, as to application of duty to mitigate damages, between claims for breach of contract and negligence on the one hand and malicious or willful intent to injure on the other); Trepel v. Dippold, No. 04 Civ. 8310(DLC), 2006 WL 3054336, at *7 (S.D.N.Y. Oct. 27, 2006) (recognizing that “the duty to mitigate does not apply to intentional injuries where there is malice and willful intent to injure”); see also Sands v. Runyon, 28 F.3d 1323, 1329 (2d Cir.1994) (“[A] victim of employment discrimination has the same duty to mitigate his damages as any victim of a tort or breach of contract.”); Fed. Deposit Ins. Corp. v. Ornstein, 73 F.Supp.2d 277, 287 (E.D.N.Y.1999) (applying duty to mitigate in negligence action brought by FDIC where FDIC was acting in capacity as receiver of failed bank). Notably, UPS cites no case in which a court determined that it would be proper to reduce a government entity’s damages for failure to mitigate where that government entity was acting in a public enforcement role.

The Seventeenth Defense argues that plaintiffs’ claims are barred, at least in part, under the equitable doctrines of waiver, estoppel, laches, unclean hands and in pari delicto because they knowingly failed to take steps to prevent or limit the shipment of untaxed cigarettes, including by notifying UPS of ongoing violations. (Answer, Defenses and Affirmative Defenses ¶ 17.)

Waiver is defined as “the intentional relinquishment of a known right.” United States v. RePass, 688 F.2d 154, 158 (2d Cir.1982); see also Jordan v. Can You Imagine, Inc., 485 F.Supp.2d 493, 499 (S.D.N.Y.2007) (“Waiver requires the voluntary and intentional abandonment of a known right which, but for the waiver, would have been enforceable. Waiver may be established by affirmative conduct or by a failure to act that evinces the intent to abandon the right.” (citations omitted)). Equitable estoppel applies when a party, by its conduct, including language, acts or silence, knowingly makes a representation or conceals material facts which it intends or expects will be acted upon by the other party. United States v. Wynshaw, 697 F.2d 85, 87 (2d Cir.1988); see also ATC Petroleum, 860 F.2d at 1111 (Equitable estoppel “is a means of precluding a litigant from asserting an otherwise available claim or defense against a party who has detrimentally relied on that litigant’s conduct.”). Laches “is an equitable defense that bars a plaintiffs equitable claim where he is guilty of unreasonable and inexcusable delay that has resulted in prejudice to the defendant.” Ikelionwu v. United States, 150 F.3d 283, 237 (2d Cir.1998). “A party asserting laches must establish that: (1) the plaintiff knew of the defendant’s misconduct; (2) the plaintiff inexcusably delayed in taking action; and (3) the defendant was prejudiced by the delay.” Id. The defense of “unclean hands” is premised on the maxim that a party “who has acted fraudulently, or who by deceit or any unfair means has gained an advantage” is not entitled to obtain equitable relief. PenneCom B.V. v. Merrill Lynch & Co., 372 F.3d 488, 493 (2d Cir.2004). Finally, the doctrine of in pari delicto may bay a claim where the plaintiff bears at least substantially equally responsibility for its injury; the defense rests on the principles that “courts should not lend their good offices to mediating disputes among wrongdoers” and that “denying judicial relief to an admitted wrongdoer is an effective means of deterring illegality.” Bateman Eichler, Hill Richards, Inc. v. Berner, 472 U.S. 299, 306-07, 105 S.Ct. 2622, 86 L.Ed.2d 215 (1985).

As to the Fifth and Seventeenth Defenses, the Court must segregate its analysis as to the CCTA, PACT Act, N.Y. Exec. Law § 63(12), and N.Y. PHL § 1399-11 claims on the one hand (“Group 1” claims), from plaintiffs’ RICO and AOD claims on the other (“Group 2” claims).

a) Group 1 Claims

The CCTA provides that “[i]t shall be unlawful for any person knowingly to ship, transport, receive, possess, sell, distribute, or purchase contraband cigarettes .... ” 18 U.S.C. § 2342(a). The CCTA defines “contraband cigarettes” as “a quantity in excess of 10,000 cigarettes, which bear no evidence of the payment of applicable State or local cigarette taxes in the State or locality where such cigarettes are found ... and which are in the possession of’ a non-exempt person. 18 U.S.C. § 2341(2). The CCTA provides that a State or local government may bring a civil action in federal court to “restrain violations” of the CCTA and “obtain any other appropriate relief ... including civil penalties, money damages, and injunctive or other equitable relief.” 18 U.S.C. § 2346(b); see also City of New York v. Milhelm Attea & Bros., Inc., No. 06-CV-3620, 2012 WL 3579568, at *27 (E.D.N.Y. Aug. 17, 2012) (observing that “the CCTA does not specify a penalty amount for violations of its core prohibition on transacting in contraband cigarettes”). Congress enacted the CCTA “with the aim of reducing evasion of state cigarette taxes.” Attorney Gen, of Canada v. R. J. Reynolds Tobacco Holdings, Inc., 268 F.3d 103, 129 (2d Cir.2001). Plaintiffs here seek damages under the CCTA of “no less than the total value of each [State or City] excise tax stamp that was required to have been affixed to each pack of cigarettes that defendant UPS shipped, transported, and/or distributed in or into” the State or City. (Second Am. Compl. ¶¶ 97, 100.) Courts have approved this damages calculation method in CCTA claims. See City of New York v. Golden Feather Smoke Shop, Inc., No. 08-CV-03966 CBA JMA, 2013 WL 3187049, at *33 (E.D.N.Y. June 20, 2013). Neither party cites any precedent indicating whether the legal concept of mitigation should apply to a claim for damages assessed in this manner, nor has the Court identified any such precedent.

The PACT Act provides that “no person who delivers cigarettes or smokeless tobacco to consumers, shall knowingly complete, cause to be completed, or complete its portion of a delivery of any package for any person whose name and address are on the [ATF Non-Compliance] list.” 15 U.S.C. § 376a(e)(2)(A). The PACT Act provides that a common carrier violator shall be subject to a civil penalty of $2,500 in the case of a first violation, or $5,000 for any violation within 1 year of a prior violation. 15 U.S.C. § 377(b)(1)(B). The PACT Act provides that a State or local government may bring an action in federal court to “prevent and restrain violations ... by any person or ... obtain any other appropriate relief ..., including civil penalties, money damages, and injunctive or other equitable relief.” 15 U.S.C. § 378(c)(1)(A). Plaintiffs seek civil penalties under the PACT Act (Second Am. Compl. ¶¶ 139, 146), as well as damages of “no less than the total value of each [State or City] excise tax stamp that was required to have been affixed to each pack of cigarettes that defendant UPS shipped, transported, and/or distributed in or into” the State or City (Second Am. Compl. ¶¶ 153,160).

N.Y. PHL § 1399 — 11 makes it unlawful “for any common or contract carrier to knowingly transport cigarettes to any person in [New York] reasonably believed by such carrier to be other than a person described in [§ 1399-11(1)].” N.Y. PHL § 1399-11(2). As amended in 2013, § 1399— 11 provides that the NYAG “may bring an action to recover the civil penalties provided by [§ 1399 — 11(5)] and for such other relief as may be deemed necessary” and that “the corporation counsel of any political subdivision that imposes a tax on cigarettes may bring an action to recover the civil penalties provided by [§ 1399-11(5)] and for such other relief as may be deemed necessary with respect to any cigarettes shipped ... in violation of this section to any person located within such political subdivision.” N.Y. PHL § 1399-11(6). The City seeks civil penalties of $5,000 per delivery (as provided for in § 1399 — 11(5)) of cigarettes made by UPS to unauthorized recipients within the City. (Second Am. Compl. ¶ 165.)

Under, N.Y. Exec. Law § 63(12), the NYAG has authority to initiate an action in New York State Supreme Court to seek injunctive relief or “restitution and damages” against any person engaging in “repeated fraudulent or illegal acts” or otherwise “demonstrating] persistent fraud or illegality in the carrying on, conducting or transaction of business.” N.Y. Exec. Law § 63(12). Based on violations of N.Y. PHL § 1399 — 11, the State seeks civil penalties of $5,000 per delivery of cigarettes made by UPS to unauthorized recipients within the State. (Second Am. Compl. ¶ 171.)

With regard to the Group 1 claims, the Court concludes that UPS’s Fifth and Seventeenth Defenses are not viable as a matter of law. In the context of these statutes, the State and City are acting in a law enforcement capacity in their roles as government entities. As explained above, the claims they assert may exclusively be pursued by local government entities, and not by private parties. In other words, as to these claims, plaintiffs are decidedly not acting in a capacity akin to that of a private entity. Rather, plaintiffs are acting in a law enforcement capacity as to which they have broad discretion, and for which ordinarily applicable equitable defenses do not apply. E.g., Utah Power, 243 U.S. at 409, 37 S.Ct. 387; LaTrieste Rest., 40 F.3d at 590; see also United States v. Philip Morris Inc., 300 F.Supp.2d 61, 75 (D.D.C.2004). In addition and in significant part, plaintiffs seek civil penalties authorized by statute as to these claims. This Court has found no case law applying the concepts of mitigation or the asserted equitable defenses in relation to a claim seeking such relief. Given the nature of these claims, UPS’s Fifth and Seventeenth Defenses, which assert prior enforcement failures or shortcomings in enforcement decisions, are not cognizable as a matter of law.

b) Group 2 Claims

As to plaintiffs’ RICO and AOD claims, however, the Court is not convinced that, at this stage, the same reasoning applies. The RICO and AOD claims must be distinguished because, as to these claims, plaintiffs are acting in a role that is more akin to that of a private actor, rather than in the role of a public enforcer of the public interest.

“RICO provides a private cause of action for ‘[a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter.’” Hemi Grp., LLC v. City of New York, 559 U.S. 1, 6, 130 S.Ct. 983, 175 L.Ed.2d 943 (2010) (quoting 18 U.S.C. § 1964(c)); see Agency Holding Corp. v. Malley-Duff & Associates, Inc., 483 U.S. 143, 151, 107 S.Ct. 2759, 97 L.Ed.2d 121 (1987) (analogizing civil RICO to Clayton Act and stating that both are “designed to remedy economic injury” and “bring to bear the pressure of ‘private attorneys general’”). A plaintiff may recover treble damages, costs, and attorney’s fees. 18 U.S.C. § 1964(c). This civil provision, which may be invoked by any private entity, is in contrast to RICO’s criminal penalties, which are recoverable only by the United States. See 18 U.S.C. § 1963. Importantly, it is the civil RICO provision — available to any aggrieved private party (or local governmental entity) who meets standing (and other) requirements — pursuant to which plaintiffs have brought their claims here. (See Second Am. Compl. ¶¶ 107,114,123,132.)

As set forth in further detail below, the AOD is a contract between the State and UPS. While the AOD would not have been entered into absent the State’s investigation and ability to bring an enforcement action against UPS under state law, the State’s position in asserting its AOD claim is akin to that of a private contracting party. Perry v. United States, 294 U.S. 330, 352, 55 S.Ct. 432, 79 L.Ed. 912 (1935) (“When the United States, with constitutional authority, makes contracts, it has rights and incurs responsibilities similar to those of individuals who are parties to such instruments.”); see also United States v. Winstar Corp., 518 U.S. 839, 912, 116 S.Ct. 2432, 135 L.Ed.2d 964 (1996). In its AOD claim, the State seeks stipulated damages of $1,000 for each violation of the AOD, as provided for in the AOD. (Second Am. Compl. ¶ 174.) As a claim subject to stipulated damages, the concept of mitigation in the Fifth Defense appears inapplicable to this claim. While the State’s AOD claim seeks to enforce contractual obligations and not a statutory violation, the damages provision is not amenable to mitigation — it is a binary issue — either there is a violation, in which case the amount is established by contract, or not. There is no contractual basis for reduction. Thus, for different reasons than those recited above as to the Group 1 claims, the Fifth Defense is not applicable to the AOD claim.

As to plaintiffs’ RICO claims, the Court certainly appreciates that to a certain extent, these claims involve enforcement decision-making. However, the Court is not prepared at this stage to find as a matter of law that there is no conceivable way in which the consequences of an enforcement decision may not be asserted defensively as to these claims. In short, the Court needs to better understand the factual record to understand whether the proffered use of this defense vis-a-vis the RICO claims is in the realm of what is out of bounds as attacking an enforcement decision, or within bounds as arguing that whatever the decision, there are consequences that cannot be escaped and for which UPS should not be liable.

With respect to the use of the Seventeenth Defense as to the RICO and AOD claims, the question posed on a motion to strike or for judgment on the pleadings is whether plaintiffs are immune from theories such as equitable estoppel, waiver and in pari delicto as a matter of law when plaintiffs are acting in a role akin to that of a private actor, rather than as an enforcer of public rights or protector of a public interest. See Inv’rs Research Corp, 628 F.2d at 174 n. 34; Wharton, 514 F.2d at 410-11. The Court observes, however, that there may be limits to usage of these equitable defenses based on the development of the record. Nevertheless, it is an open question as to whether, when pursuing certain claims such as a RICO claim, a governmental entity is immune from the impact on third parties (if any) of decisions it has made. This applies equally to plaintiffs’ AOD claim, which, as discussed above, is, effectively, an ordinary breach of contract claim.

V. THE AOD AND THE “AOD DEFENSES”

A. The Defenses

UPS has asserted five defenses which are specifically directed by their terms to plaintiffs’ AOD claim — the Fourteenth Defense (set forth above) is cast by plaintiffs as a “Government Policy Defense”, but is also by its terms directed solely at the AOD and properly included within this section as well:

9. The AOD is unenforceable due to a failure of consideration, including because the State had no viable legal claims under N.Y. Exec. L. § 63(12) and N.Y. PHL § 1399-11 at the time it entered into the AOD and/or because any promises made by the State were illusory.

10. The AOD is unenforceable due to misrepresentations by the State. ... The statements made by the Attorney General’s Office were intended to induce reliance by UPS and did induce such reliance, through UPS’s execution of the AOD. UPS would not have entered into the AOD if it had known that the statements made by the Attorney General’s Office were false and that this Office had admitted elsewhere its lack of civil enforcement authority under N.Y. PHL § 1399-11. By entering into an unenforceable contract that, among other things, exposed UPS to a penalty provision, while receiving nothing in exchange, UPS was harmed by its reliance upon the State’s misrepresentations.

11. The penalty provision of the AOD is unenforceable, as it is beyond the permissible scope of relief in an Assurance under Executive Law § 63 and/or New York contract law.

12. The State’s claim for violation of the AOD is barred, in whole or in part, by

its breach of or nonperformance with respect to the AOD, including but not limited to any covenants implied therein, such as the implied covenant of good faith and fair dealing.

13. The State’s own inactivity under the AOD, and with respect to cigarette tax laws more generally, bars, estops, or otherwise precludes it from complaining of, or seeking relief based on, UPS’s alleged performance and/or nonperformance under the AOD, including, but not limited to, under principles of laches, waiver, estoppel, and similar doctrines.

14. UPS was excused from performance under the AOD on grounds of impracticability and frustration, including such grounds created by the conduct of the State of New York or its agents, employees, or representatives.

(Answer, Defenses and Affirmative Defenses ¶¶ 9-14.)

B. The AOD

On