Worcester Newspaper on Northboro

Although the headline writer at the Worcester newspaper was fooled, the reporter filed a piece that puts the FedEx drivers and Local 170 decision to not hold the Feb 1 election  in the proper context.

-- January 30

Northboro Election Won’t Proceed on Feb 1

After more than 2 years of delay and repeated illegal actions by FedEx in Northboro, Local 170 had to put off the election originally planned for Feb 1.

Much of what happened in Northboro was also documented in the ARAW/LCCR report "Fed Up at FedEx"  with statements by a number of the present and former drivers from that terminal.

The Associated Press  put the decision to not go ahead with the election in the proper context.  The drivers in Northboro continue to cooperate with the Massachusetts Attorney General in her investigation into FedEx Ground's misclassification  of its workforce in the Commonwealth.

This is a step so that we can come back to Northboro when the conditions are safer for the drivers and they feel free to vote without intimidation. 

-- January 29

Appeals Court Panel Unanimously Rules Against FedEx Ground in MDL

After the federal judge in the multi-district litigation certified the class for claims  under the Kansas and ERISA laws, FedEx unsurprisingly went to the U.S. Appeals Court for the 7th Circuit to ask the class certification order be reviewed by the higher court.  The three judge panel for the 7th Circuit unanimously denied FedEx's request.  Like a dog chasing its own tail, FedEx is stuck in the cycle of appeal and lose, appeal and lose, appeal and lose.

And what did FedEx have to say about their latest loss in courts?  Nothing of substance just more denial .

In a decision received today, the United States Court of Appeals for the Seventh Circuit declined to hear the request of FedEx Ground, an operating unit of FedEx Corp. for interlocutory review of the class certification decision in the Kansas case pending before the United States District Court in Indiana. The decision had granted class certification on the Kansas state claims and a national ERISA claim.

The court did not rule on the validity of the contractor model and has not decided class certification in any other multi-district litigation case. FedEx Ground will continue to vigorously defend the MDL.

This procedural ruling does not change any aspect of the FedEx Ground operation and we will continue to provide the world-class service our customers have come to expect.

The most likely next step in this case is that the federal judge in Indiana will certify most if not all of the other state claims.  The stakes will get raised even higher for FedEx after that.

-- January 23

Fred Smith’s “Trust Me” Message to FedEx Employees

If Fred Smith was Tom Cruise and he wanted to make a video about the Ground independent contractor scam, he'd make a promo video like Cruise's video.

Instead, Fred Smith sent this email message to FedEx employees.  An Express guy sent it to us.  This follows FDX's 'come to salvation'  non-event call last week.

From:

Sent: Tue 1/15/2008

Subject: Message from Fred Smith

I want to take this opportunity to thank you for closing out another outstanding Peak season with record-high volumes and service levels. BZ to everyone for delivering such a strong performance - particularly in the face of such difficult economic conditions.

I also want to address some speculative and misleading reports that you may have seen or heard about in recent weeks related to FedEx Ground. I want to personally assure you that this business is operating at very high levels of service and will continue to do so in the future. We have full confidence that our business model is good for our owner-operators as well as our customers. The FedEx leadership team is highly focused on the marketplace challenges facing FedEx Ground and fully committed to our business strategy, our customers and to you.

First and foremost, the bedrock of this company is the Purple Promise, which says we will make every FedEx experience outstanding. At the heart of the Purple Promise is our people and you are the ones who make it come alive every day.

FedEx remains true to our core value of people first and always takes that value into account during the decision-making process. We will continue to provide our team members with opportunities to grow and benefit from the company's success.

Second, I have the utmost confidence in our FedEx team. We are used to dealing with complex issues successfully. Being able to adapt to changing environments and business conditions has been a hallmark at FedEx. We thrive on challenges and opportunities. Our excellent track record over the past 35 years demonstrates our team's intelligent and balanced approach to any challenges we face.

One of the great strengths of FedEx is the ability to adapt quickly to changes in the marketplace. For example, we've been able to expand rapidly at FedEx Kinko's and FedEx Ground, while at the same time building strong networks in China and India, two of the fastest-growing economies in the world. We will continue to remain agile and resilient enough to respond to changing customer needs and marketplace conditions with new innovations and services. We know that a company that does not adapt does not succeed, and we intend to remain a powerful force in the marketplace for years to come.

Finally, one of the most important assets we have is our shining FedEx reputation. An excellent reputation enables us to attract and retain the best and brightest human talent, build customer loyalty and grow our business. Some groups are trying to chip away at the reputation we have all worked very hard to build over the years. As ambassadors of the FedEx brand, you have the greatest power to deflect their efforts. By continuing to deliver seamless service to our customers and collaborative support to team members, you prove that FedEx remains one of the best companies in the world. Once again, thank you for your commitment and hard work. I am deeply grateful to have each and every one of you on our team.

To keep you current on what we're communicating to our external stakeholders, I'd like to share the following statement. These were my opening remarks during a conference call with analysts and reporters last week to address some of the misinformation related to the recent decision by the IRS related to our FedEx Ground independent contractors.

"Last time we chatted was the morning of December 20 during our quarterly earnings call. Later that day, we got a preliminary notification from the IRS about a preliminary finding related to the classification of our owner-operators at FedEx Ground. The next day, we filed our 10-Q. Over the holidays, we received some questions, which we answered and sent out some more information. The reason we are having this call today is primarily to give us the opportunity to address the speculative, and, in some cases, unfounded reporting regarding this issue. I wanted to give you a chance to catch up on this directly with me and our management team.

First, I want to tell you that today, tomorrow and every day going forward, our customers will continue to receive the level of "absolutely, positively" service that FedEx has delivered for 35 years. That's true in every sector of our business.

Specifically to our FedEx Ground segment, we have full confidence that we will continue to provide excellent service. We just finished our Peak season and at Ground, we delivered record volumes and we posted our best service levels ever. Morale at FedEx Ground remains at very high levels.

Now I know there have been a lot of questions recently about our Ground business. We believe the business model we use is good for our contractors and good for our customers. As you know, there are millions of people in this country who have chosen to work for themselves. I personally believe that's what freedom is all about. We've given that entrepreneurial opportunity to thousands of contractors - to own, grow and expand their own business and provide financial security to themselves and their families. This model provides quality service at a very competitive price for our customers.

I've been in this business for 35 years, and I know that continuing success in any business means constant change and evolution to meet customer needs. Let me give you one recent example. Last fall in California, we announced incentives for contractors to become multi-route contractors or sell their routes. Virtually all of our 735 single-route contractors accepted this offer. From the point of view of our California customers, this transition has been business as usual. I want to point out that on a national level, more than half of all Ground packages are delivered through multi-route contractor arrangements, so this isn't new to us. This is only one of many ways we have adjusted our business over the years to meet evolving conditions and customer needs. Our track record on this is very clear. We will continue to do what it takes to make us the ground shipper of choice for customers.

On this matter with the IRS preliminary finding, as we said in our 10-Q, we believe that no loss is probable. We are surprised at the preliminary finding because in 1994, the IRS—through a settlement agreement and ruling letter - affirmed FedEx Ground's treatment of the owner-operators who perform pick-up and delivery services as independent contractors for tax purposes. We have relied on that 1994 ruling and we strongly disagree with their tentative conclusion.

IRS proceedings are often very long processes, with final resolution years away. Some of you will remember a disagreement we had with the IRS over jet engine maintenance. That took more than ten years to resolve, and in the end we won. In terms of the current IRS matter, we are confident in our position.

I'm sure you've got some questions and we'll get to those shortly. Please understand, however, that although we are actively managing these issues, we will not be able to discuss the specifics at this time given the proprietary and strategic nature of these issues.

You know, our top management team has been together a long time, and we are used to dealing with complex issues successfully. In the past few years for example, we've put together networks to offer superior value propositions to our customers in two of the fastest-growing economies in the world - China and India. That's not a simple thing to do, but it's just part of how we keep evolving FedEx. Certainly we will see continuing evolution in our U.S. business as well. We believe our track record over the last 35 years demonstrates our team's ability to deal successfully with challenges we face. What won't change is the commitment of 290,000 FedEx people to meet the evolving needs of our customers."

-- January 18

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