FedEx Labor Practices Spur Shareholder Suit

     MEMPHIS (CN) – FedEx, sued repeatedly for classifying drivers as independent contractors and thus avoiding overtime pay, now faces a shareholder class action saying directors who adopted that policy cost the company $319 million in taxes and penalties for 2002 alone, and exposed FedEx to hundreds of millions more in class action lawsuits and legal fees.

     Shareholders accuse FedEx directors of gross mismanagement, breach of duties, abuse of control, corporate waste and unjust enrichment.
     Since 2002, the plaintiffs say, “the Director Defendants: (i) caused FedEx Ground to engage in illegal employment and labor practices in violation of state laws, including the laws of California, Massachusetts, Montana, New Jersey, Oregon and Washington; (ii) exposed FedEx Corp. to an IRS tax assessment and penalties to date amounting to at least $319 million for fiscal year 2002 alone; (iii) cause damage to FedEx Corp. by forcing the Company to incur tens of millions of dollars in legal expenses to defend itself for this unlawful conduct in actions brought by various private plaintiffs and governmental entities; (iv) exposed the Company to hundreds of millions of dollars in damages in class action lawsuits brought by FedEx ground driver because Defendants misclassified them as independent contractors, when in reality they are employees; and (v) severely damaged the Company’s reputation and goodwill.”
     Plaintiffs, the Plumbers and Pipefitters Local 51 Pension Fund, Derivatively on Behalf of FedEx Corp., are represented by Barrett, Johnston & Parsley of Nashville and Coughlin Stoia Geller of San Diego.

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