UPS 2014 Annual Report Download - page 107

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
95
On March 29, 2013, we entered into a Non-Prosecution Agreement (“NPA”) with the United States Attorney's Office in
the Northern District of California in connection with an investigation by the Drug Enforcement Administration of shipments
by illicit online pharmacies. Under the NPA, we forfeited $40 million to the government, admitted to a Statement of Facts
describing the conduct leading to the agreement, and agreed to implement an online pharmacy compliance program. The term
of the NPA is two years. We have petitioned the government to shorten that term in its discretion to a lesser period pursuant to
the terms of the NPA. The NPA did not have a material impact on our financial condition, results of operations or liquidity.
In January 2014, we received a Civil Investigative Demand from the DOJ seeking documents related to possible
violations of the False Claims Act ("FCA") in connection with delivery services provided to government customers where
guaranteed commitment times allegedly were not met. The General Services Administration - Office of Inspector General had
previously sought similar documents. The Company has been cooperating with these inquiries and is in discussions with the
DOJ to resolve all claims by the federal government regarding this matter. We do not believe that a negotiated resolution would
have a material adverse effect on our financial condition, results of operations or liquidity. We also have been contacted by
several states requesting this information. The Company has been cooperating with these inquiries.
It is not possible to predict the potential outcome of the state inquiries at this stage, or to reasonably estimate the range or
amount of possible loss, if any, that may result from these investigations based on a number of factors, including: (1) the
investigations are not complete; (2) these matters are at an early stage and there are unresolved questions of law and fact that
could be of importance to the ultimate resolution of these matters; (3) the scope and size of potentially affected government
customers and the time period covered by potential claims remains uncertain; and (4) our current intention to vigorously defend
any claims of FCA violations. Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may
result from these matters or to determine whether such loss, if any, would have a material adverse effect on our financial
condition, results of operations or liquidity.
On February 18, 2015, the State and City of New York filed suit against UPS arising from alleged shipments of cigarettes
to New York State and City residents. The complaint asserts claims under various federal and state laws. The complaint also
includes a claim that UPS violated the Assurance of Discontinuance it entered into with the New York Attorney General
concerning cigarette deliveries in 2005. There are multiple factors that prevent us from being able to estimate the amount of
loss, if any, that may result from this case, including: (1) we are vigorously defending ourselves and believe we have a number
of meritorious factual and legal defenses; and (2) it remains uncertain what evidence of their claims and damages, if any,
plaintiffs will be able to present. Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may
result from this matter or to determine whether such loss, if any, would have a material adverse effect on our financial
condition, results of operations or liquidity.
We are a defendant in various other lawsuits that arose in the normal course of business. We do not believe that the
eventual resolution of these other lawsuits (either individually or in the aggregate), including any reasonably possible losses in
excess of current accruals, will have a material adverse effect on our financial condition, results of operations or liquidity.