FedEx Corporation's Latest Quarterly Report
The FedEx Corporation released its latest 10-Q to the Securitites and Exchange Commission on December 22, 2006. The company provided updates on its legal issues as "Contingencies.
Wage-and-Hour. We are a defendant in a number of lawsuits filed in federal or California state courts containing various class-action allegations under federal or California wage-and-hour laws. The plaintiffs in these lawsuits are employees of FedEx operating companies who allege, among other things, that they were forced to work "off the clock" and were not provided work breaks or other benefits. The plaintiffs generally seek unspecified monetary damages, injunctive relief, or both. We have denied any liability and intend to vigorously defend ourselves. Given the nature and preliminary status of these wage-and-hour claims, we cannot yet determine the amount or a reasonable range of potential loss in these matters, if any.
Race Discrimination. On September 28, 2005, a California federal district court granted class certification in Satchell v. FedEx Express, a lawsuit alleging discrimination by FedEx Express in the Western region of the United States against certain current and former minority employees in pay and promotion. The district court's ruling on class certification is not a decision on the merits of the plaintiffs' claim and does not address whether we will be held liable. Trial is currently scheduled for February 2007. We have denied any liability and intend to vigorously defend ourselves in this case. Given the nature of the claim, we cannot yet determine the amount or a reasonable range of potential loss in this matter, if any. It is reasonably possible, however, that we could incur a material loss as this case develops.
Independent Contractor. FedEx Ground is involved in numerous purported class-action lawsuits and other proceedings that claim that the company's owner-operators should be treated as employees, rather than independent contractors. These matters include Estrada v. FedEx Ground, a class action involving single work area contractors that was filed in California state court. Although the trial court granted some of the plaintiffs' claims for relief in Estrada ($18 million, inclusive of attorney's fees, plus equitable relief), the appellate court has reversed the trial court's issuance of equitable relief. We expect to prevail on the rest of the pending appeal as well. Adverse determinations in these matters could, among other things, entitle certain of our contractors to the reimbursement of certain expenses and to the benefit of wage-and-hour laws and result in employment and withholding tax liability for FedEx Ground. On August 10, 2005, the Judicial Panel on Multi-District Litigation granted our motion to transfer and consolidate the majority of the class-action lawsuits for administration of the pre-trial proceedings by a single federal court - the U.S. District Court for the Northern District of Indiana. We strongly believe that FedEx Ground's owner-operators are properly classified as independent contractors and that we will prevail in these proceedings. Given the nature and preliminary status of these claims, we cannot yet determine the amount or a reasonable range of potential loss in these matters, if any.
FedEx Ground is also involved in several lawsuits, including one purported class action, that claim that the drivers of the company's independent contractors were jointly employed by the contractor and FedEx Ground. We strongly believe that FedEx Ground is not an employer of these drivers and that we will prevail in these proceedings. Given the nature and preliminary status of these claims, we cannot yet determine the amount or a reasonable range of potential loss in these matters, if any.
Other. FedEx and its subsidiaries are subject to other legal proceedings that arise in the ordinary course of their business. In the opinion of management, the aggregate liability, if any, with respect to these other actions will not materially adversely affect our financial position, results of operations or cash flows.
The company added some 'color' to the disclosure on the on-going FedEx Ground driver litigation later on in the 10-Q in its discussion of the Ground segment.
Purchased transportation increased 17% in the second quarter of 2007 primarily due to higher package volume and an increase in the rates paid to our independent contractors. Purchased transportation increased 18% in the first half of 2007 principally due to volume growth and an increase in the rates paid to our independent contractors, including fuel supplements. Salaries and employee benefits, as well as other operating costs, increased in the second quarter and first half of 2007 largely due to increases in staffing and facilities to support volume growth. Other operating expenses increased 22% in the second quarter of 2007 and 24% in the first half of 2007 due primarily to increased legal costs.
In the questioning of FedEx management during the quarterly conference call (which can be heard here), one analyst did ask about these legal costs and what expectations were for future legal expenses in the Ground litigation. The company responded that the expenses were expected to be less for the upcoming two quarters. The analysts missed an opportunity to ask questions about the FedEx Ground settlement in New Jersey and its financial and legal implications.
Lastly, the company disclosed that the FedEx Express operations in Europe are now also under investigation by the European Commission for "possible anti-competitve behavior."
On December 19, 2006, FedEx Express received a formal request for certain information in connection with an ongoing investigation by the Directorate General for Competition of the European Commission into possible anti-competitive behavior relating to air freight transport services in the European Union/European Economic Area. This investigation is in addition to the ongoing investigation by the Antitrust Division of the U.S. Department of Justice that was disclosed in our Annual Report. We do not believe that we have engaged in any anti-competitive activities, and we are cooperating with both the EC and the DOJ.
The announcement of the investigation was reported on briefly following the company's release.
-- December 27
Wilmington Victory Profiled by Change To Win
The Teamsters joined the Change to Win federation to spur active organizing that would bring the benefits of union membership to thousands of workers. The victory by FedEx Home Delivery drivers in electing Teamsters Local Union 25 is the type of jolt of energy that Change to Win wants to highlight. So the Change to Win website has done a profile of the Wilmington victory.
-- December 14
Labor Lawyers Wanted at FedEx Ground HQ
Lumps of coal and pink slips in some of FedEx lawyers' Christmas stocking this year?
FedEx Ground's Legal Department currently has three (3) openings for experienced Litigation Attorneys who will provide legal counsel and trial support in the ordinary and special activities of the corporation to ensure maximum protection of its legal rights and maintain its operations within the limits prescribed by law.
EDUCATION:
# Mandatory requirement: Juris Doctor DegreeEXPERIENCE:
7+ years trial experience in a law firm, large corporate legal department, or the government; outstanding professional credentials; in-depth and demonstrated knowledge and first chair experience in employment, commercial, and/or class action cases. Preferred: bar admissions in more than one state.WORK RELATED SKILLS:
These positions will focus on handling employment, class action, and/or commercial litigation and trial work, selecting outside counsel and managing litigation delegated to them, overseeing and evaluating the performance and progress of outside counsel representing the corporation, including counsel's effective advocacy and compliance with billing and budget guidelines. and providing legal advice and representing the company before administrative agencies, federal, state and local courts. They will also: implement policies and procedures to ensure that the company is operating in compliance with regulations and that regulatory reporting requirements are met, interpret federal, state and local laws and government regulations affecting the operation of the company; and ensure effective human resource and quality management within the department. Proficiency in Microsoft Office, excellent communication skills, attention to detail and ability to successfully work in fast paced environment and handle multiple tasks is required.
Odd that they are potentially looking for two types of lawyers.
FedEx Ground's Legal Department currently has an opening for an experienced labor and employment attorney who will provide legal counsel in the ordinary and special activities of the corporation to ensure maximum protection of its legal rights and maintain its operations within the limits prescribed by law with a special focus on labor and employment law counseling.
EDUCATION:
# Mandatory requirement: Juris Doctor DegreeEXPERIENCE:
3+ years employment-related trial experience and/or labor and employment law experience in a law firm, large corporate legal department, or the government; outstanding professional credentials. Preferred: transportation law experience and/or experience working with an independent contractor workforce.WORK RELATED SKILLS:
With a focus on labor and employment work: Provide legal advice and guidance to the corporation in the implementation of policies and procedures to ensure that the company is operating in compliance with regulations and that regulatory reporting requirements are met, interpret federal, state and local laws and government regulations affecting the operation of the company, selecting outside counsel and managing arbitration and other matters delegated to them, overseeing and evaluating the performance and progress of outside counsel representing the corporation, including counsel's effective advocacy and compliance with billing and budget guidelines, and providing legal advice and representing the company before administrative agencies and in arbitrations. Proficiency in Microsoft Office, excellent communication skills, attention to detail and ability to successfully work in fast paced environment and handle multiple tasks is required.
The company seems intent on circling the wagons and on hiring more lawyers to sue more states like in California and Oregon. Looks like 2007 will be a lot like 2006.
-- December 08
New York Times Investigate Federal Motor Carrier Rules
The New York Times began a series of investigative reports on how regulation impacts our daily lives with a lengthy article on federal transportation and motor carrier safety rules.
Although FedEx is not mentioned in the piece, the general issues raised in the report will be immediately recognized by anyone who follows the company.In decisions that had the support of the White House, the motor carrier agency has eased the rules on truckers' work hours, rejected proposals for electronic monitoring to combat widespread cheating on drivers' logs and resisted calls for more rigorous driver training.
While applauded by the industry, those decisions have been subject to withering criticism by federal appeals court panels in Washington who say they ignore government safety studies and put the industry's economic interests ahead of public safety.
-- December 04
