CLEVELAND (Reuters) -- Global package distributor United Parcel Service Inc. , this week denied allegations by customers it charged them unfairly for insurance coverage and said it would fight the charges in court.

"We have not been served with this lawsuit and have not seen it,'' UPS spokesman Norman Black said.

"Based on press reports, and our understanding of what the press is saying, these allegations are totally without merit and we will fight them with every resource we have in court,'' he added.

Atlanta-based UPS was sued in state court in Dayton, Ohio, on November 18 in a class action brought by what the suit describes as "many thousands of individuals'' in Texas, Ohio, Indiana and Kentucky seeking damages of some $42 billion.

The suit alleges that around January 1, 1984, UPS and other defendants developed a scheme and began charging UPS customers a fee which UPS was to use to purchase shippers' property insurance to cover the declared value of parcels of $100.

It alleges UPS did not purchase the insurance but instead deposited the fees paid into UPS accounts and shared the profits with and/or invested them in an enterprise directed and controlled by UPS and the other defendants.

"The defendants were motivated by an intent to deprive the plaintiffs and other (customers) of UPS of moneys under the false promise and representations that such moneys would be spent on insurance premiums, to conceal the fact that UPS was illegally operating as a self-insurer, and to maximize the profits from this illegal and fraudulent conduct by concealing their operations and by transferring the moneys out of the United States to avoid reporting requirements and taxation,'' according to court documents obtained by Reuters.

Also named in the suit are Overseas Partners, Ltd., spun off by UPS in 1984 and insurer Aon Group (Bermuda) Ltd., both of Hamilton, Bermuda.

Other defendants named are Pittsburgh, Pennsylvania-based National Union Fire Insurance Co., a unit of American International Group Inc. of New York. Joe Norton, a spokesman for AIG, said "the company does not comment on matters that are being litigated.''