CWS 3.0: November 7, 2012

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Former IC Sues FedEx Ground

A new lawsuit claims FedEx Ground Package System Inc. violated the U.S. Racketeer Influenced Corrupt Organization Act in how it operates through independent contractor drivers.

In addition to the company, the lawsuit names the current and present CEOs of FedEx Ground and other top executives as defendants.

The suit was filed in federal court in Illinois. The plaintiff is Carlos G. Rocha; he is a resident of West Palm Beach, Fla., who served as a “driver, employee and/or contractor” for FedEx Ground over a 10-year period starting in 2000, according to the lawsuit.

Rocha worked for FedEx in both Florida and Chicago.

The suit claims FedEx Ground implemented a “scheme” through “a complex pattern of racketeering involving mail fraud, wire fraud, extortion, contractual tie-ins, trade restrictions and other forms of commercial interference resulting in significant financial losses and harm to individuals fraudulently induced to contract with FedEx.”

The 111-page complaint in the lawsuit includes numerous allegations, including a grievance about a requirement that independent contractor drivers acquire trucks from FedEx Ground. It claims contractors received the standard operating agreement only after purchasing or leasing a truck from FedEx.

The complaint at another point says “the standard operating agreement executed by Mr. Rocha and other [FedEx Home Delivery] drivers deliberately misclassified drivers as independent contractors and otherwise misrepresented the true nature of the business relationship intended by FedEx, the manner in which FedEx managed its business and existing network of contractors, and the risks and costs associated with drivers’ investment and decision to become part of FedEx’s network of contractors.”

The complaint includes a broad array of allegations.

In one instance, the complaint alleges FedEx attempted to use the “break-up” between Rocha and another driver — who claimed sexual harassment against Rocha — to support ending an agreement between the Rocha and the company. The lawsuit said police dismissed the sexual harassment claim and that the driver’s new boyfriend had demanded money from Rocha.

In a response to Rocha's lawsuit, FedEx Ground said it believes its independent contractor program will be  validated by the court.

“FedEx Ground is aware of the plaintiff’s meritless claims in this case. We are confident that in this case the company’s independent contractor model will be validated as it has been by more than 100 previous state and federal rulings, including the U.S. Court of Appeals for the D.C. Circuit,” according to a statement by the company.

“From the very beginning, FedEx Ground has proudly contracted with independent small businesses that are created by entrepreneurs who are hiring employees, purchasing equipment and paying taxes throughout the U.S. These business owners and their companies help to deliver what customers consistently tell us is the fastest, most reliable and cost-effective service available. This business model has enabled thousands of small businesses to thrive, grow and deliver exceptional customer service.”

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