News & Information

LABOR & EMPLOYMENT LAW — 2/05/08

FedEx Ground's appeal of class certification of delivery drivers is denied

FedEx Ground will not have an opportunity to challenge a 2007 district court ruling that certified two classes of delivery drivers in ongoing lawsuits related to their status as independent contractors.

On January 22, the Seventh Circuit Court of Appeals declined to hear the request of FedEx Ground, an operating unit of FedEx Corp, for interlocutory review of the class certification decision in a Kansas case pending before a US District Court in Indiana. The ruling paves the way for a the court to rule on remaining class certification decisions.

Last fall, a district court ruled in a Kansas case (the first class certification issue decided in several consolidated FedEx cases) that the Ground and Home Delivery drivers could proceed with their case in Kansas as a class action. The court certified two classes: one class for the Kansas state law claims, and one national class based on ERISA claims.

"The Seventh Circuit's refusal to accept FedEx's appeal avoids a delay of at least a year, and opens the door for the District Court to issue class certification decisions on the remaining 35 or so cases," according to a joint website administered by the attorneys who are challenging the FedEx contractor model in various states.

The appeals 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 noted, in a statement announcing that its appeal had been rejected. "FedEx Ground will continue to vigorously defend the [multi-district litigation]," the company added.

FedEx Corp, the parent company of FedEx Ground, reiterated its support for the beleaguered courier and "confidence in the company's ability to continue to grow the FedEx Ground business, gain market share and provide excellent service to customers," according to a formal statement released on January 10, two weeks before the Seventh Circuit denied its appeal.

"FedEx recognizes its ground-contractor model faces challenges on several fronts," said Frederick W. Smith, FedEx Corp chairman, president and chief executive officer. "We continue to aggressively address these issues, and we have strong defenses to these challenges. We continue to believe that FedEx Ground's owner-operators are properly classified, and the business remains fundamentally strong. It is business as usual at FedEx Ground."

Teamsters cancel election. FedEx did, however, hail a small victory in the larger battle over the independent contractor status of its subsidiaries' drivers: The Teamsters union, on January 29, voluntarily canceled an organizing election scheduled for February 1 at a FedEx Home Delivery facility in Worcester, Massachusetts.

The Teamsters have a vested interest in the employment status of FedEx drivers, of course, as they would hope for the chance to organize FedEx drivers across the country--an opportunity that hinges on the drivers' status as employees, not independent contractors. In 2007, the National Labor Relations Board ruled that the Worcester Home Delivery drivers were employees and, as such, were eligible to vote in a Teamsters election. Ultimately, FedEx late last year paid out $253,000 to five drivers in order to settle unfair labor practice charges with the Board, clearing the way for the (now-canceled) election.

The withdrawal signals a defeat for the union, which, according to FedEx, had been trying to organize its "owner operators" for some time. The election scheduled for February 1 was originally to have taken place in 2006, but the Teamsters delayed it, FedEx said. "This is the Teamsters' fourth failed attempt to organize contractors in Worcester," the company noted.

"This is a complete victory for FedEx Home Delivery contractors in Worcester and a total defeat for the Teamsters," said Paul Callahan, FedEx Ground's senior vice president of contractor relations. "These 18 independent contractors sent a clear message to the union that they want to remain just that--independent. As small business owners, they want to make business decisions for themselves, without third-party interference.

"At FedEx Home Delivery, we believe contractors have the right to make their own decisions and we will continue to defend their right to do so," Callahan added.

"We appreciate the relationship we have with our contractors," Callahan said. "Moreover, we support our contractors' desire to manage and grow their own businesses and to continue delivering the exceptional service our mutual customers in Massachusetts have come to expect."

For more information on this and other topics, consult CCH Employment Practices Guide or CCH Labor Relations.

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