FedEx faces US racketeering lawsuit by former delivery contractor
By Lisa Baertlein
LOS ANGELES (Reuters) — A company that FedEx (NYSE:FDX) once contracted to deliver packages on the California-Oregon border has sued the shipper, alleging it engages in a systemic pattern of illegal and wrongful business practices that violate U.S. anti-racketeering law.
The lawsuit filed Nov. 14 in a California federal court by PYNQ Logistics Services, which has not been previously reported, seeks a court determination that PYNQ's relationship with FedEx Ground is that of an employee rather than a contractor. PYNQ also reserved the right to pursue the case as a class action.
If successful, the case could threaten the promised cost-savings from a restructuring through which FedEx has been shifting significant package volume from its employee-staffed Express unit to its Ground unit that relies on about 6,000 contractors to handle delivery and transportation services.
The case appears to be the first where a former FedEx Ground contractor has sued the global delivery giant under the U.S. Racketeer Influenced and Corrupt Organizations Act (RICO), said attorney Jeffrey Possinger, who represents the plaintiff.
«This is a twist of an attack on the independent contractor relationship. They set this up as fraud claims to avoid arbitration,» said Frank Botta, former in-house attorney for the company that FedEx bought and rebranded as its Ground business. He now defends companies facing legal challenges involving contractors as a partner at Lynch Law Group in Pennsylvania, though he is not involved in this case.
FedEx in a statement said it was aware of the allegations and would «vigorously defend the lawsuit.» As of the close of business on Thursday, FedEx had not filed a response in court.
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