|  | | 2008 News and Press Releases | | |
HEADLINE NEWS:
FedEx Driver Policy Prompts Shareholder Suit
Ryan Davis
Securities Law 360. May 8, 2008
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EXCERPT: In addition to employment class actions across the country, FedEx Corp. is now facing a shareholder suit challenging its practice of classifying delivery drivers as independent contractors rather than employees. Rhode Island-based Plumbers and Pipefitters Local 51 Pension Fund filed the suit Thursday in the U.S. District Court for the Western District of Tennessee, where FedEx's Memphis headquarters is located. According to the suit, the fund purchased FedEx Corp. shares in 2000 and is still a shareholder. The suit claims that members FedEx's board breached their fiduciary duties by allowing the company to engage in illegal labor practices, wasting millions of dollars defending the company's conduct and exposing the company to millions of dollars in damages from lawsuits and tax penalties. The shareholder suit alleges that by allowing the company to engage in what it describes as illegal labor and employment practices, the board is “responsible for the gross and reckless management of FedEx Corp.” and has “severely damaged the company’s reputation and goodwill.” The suit claims the company is “wasting millions in corporate assets by continuing to engage in costly litigation and challenges to various governmental agency rulings, despite the fact that the legal claim being challenged ... is so clearly resolved in opposition to FedEx Ground’s position.” The suit seeks a court order requiring FedEx to change its employment practices to conform with state and federal laws, as well as unspecified injunctive relief and restitution. “This lawsuit is clearly without merit and frivolous,” FedEx spokesman Maury Lane told Reuters. “FedEx has a long record of providing outstanding shareholder value and is led by a board of successful and experienced directors who are committed to the highest quality of corporate governance.” FedEx is currently facing one nationwide class action over its classification of drivers working for FedEx Ground Package System, Inc., as well as separate class actions in each of more than 30 states. |
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