A divided panel of the U.S. Court of Appeals for the Second Circuit in Manhattan found United Parcel Service liable Thursday for shipping thousands of cartons of untaxed cigarettes, but slashed its required payout from $247 million to $97.6 million.

The case was brought against Atlanta-based UPS by New York City Corporation Counsel and the state Attorney General’s Office. UPS was represented in the case by a team of attorneys from Gibson, Dunn & Crutcher and Morrison & Foerster.