FedEx Appeals Ruling On Late Delivery Class Action Suit

[retired]

From Dow Jones:

excerpt:
FedEx Appeals Ruling On Late Delivery Class Action Suit

WASHINGTON -(Dow Jones)- FedEx Corp. (FDX) said its FedEx Express unit expects the U.S. Court of Appeals for the 9th Circuit to rule on its appeal of a class-action judgment in 12 to 18 months, according to a document filed Friday with the Securities and Exchange Commission.

The class-action lawsuit was filed in Federal District Court in San Diego against FedEx Express, alleging that customers who had late deliveries during the 1997 Teamsters strike at United Parcel Service Inc. (UPS) were entitled to a full refund of shipping charges under a money-back guarantee, regardless of whether they gave timely notice of their claim.

At the hearing on the plaintiffs' motion for summary judgment, the court ruled against FedEx Express and ordered a judgment totaling about $68 million, including interest and fees for the plaintiffs' attorney.

The company has denied any liability for this claim, the filing said.

Because FedEx Express says it believes the case is without merit and that it will win its appeal, no accrual for the liability has been recorded.

Separately, an Illinois state court has granted preliminary approval to a settlement of the Illinois fuel surcharge class-action lawsuit against the company, according to the filing.

The lawsuit alleges that FedEx Express imposed a fuel surcharge in a manner not consistent with the terms and conditions of its contracts with customers.

Under the proposed settlement, the company would issue coupons to qualifying class members toward the purchase of future FedEx Express shipping services.

The coupons would be subject to terms and conditions and would be redeemable for one year after they're issued.

Although the court has granted preliminary approval of the settlement, class members will have an opportunity to object.

A hearing to consider any objections and to approve the settlement is expected by the end of December, the filing said.

FedEx Express said the cost under the proposed settlement agreement won't be material.

 

[peacock71]

Did I also here that the IRS is auditing FEDEX for how they acounted fir Airline Maintenace charges?

Go UPS!

P71

 

[robonono]

FedEx said that the U.S. District Court in Memphis has set a trial date of February 2003 for the company to contest Internal Revenue Service proposed adjustments on some of its maintenance costs.

In connection with an IRS audit for the tax years 1993 and 1994, the agency proposed adjustments characterizing routine jet engine maintenance costs as capital expenditures that must be recovered over seven years, rather than as
expenses that are deducted immediately.

The company filed an administrative protest of these adjustments and held discussions with the appeals office of the IRS.

After these discussions didn't result in a settlement, FedEx paid $70 million in tax and interest in 2001 related to the IRS-imposed adjustments.

FedEx filed suit in Federal District Court for a complete refund of the amounts paid, plus interest.

The court has ordered the parties to hold pretrial settlement discussions, which are scheduled for Nov. 4, the filing said.

The company said that the IRS has continued to assert its position in audits for the years 1995 through 1998.

Based on these audits, the total proposed deficiency for the 1995-1998 period, including tax and interest through Aug. 31, totaled roughly $191 million, according to the filing.

FedEx said it has continued to expense these types of maintenance costs since 1998 because it believes that practice is correct, and is consistent with industry practice and certain IRS rulings.

Meanwhile, FedEx said it expects its pension costs to increase by about $80 million in the fiscal year ending May 31, 2003, as a result of effects of decreased returns on pension plan assets and a lower discount rate used to
measure its pension obligations.

The company said it anticipates continued increases in its pension and health-care costs over the near term.

FedEx also said that higher maintenance costs are anticipated during the second quarter of 2003 due to previously scheduled maintenance activities,
with maintenance costs becoming comparable to the prior year during the second half of 2003.

The company plans to continue to focus on managing discretionary costs, while further improving productivity, the filing said.

In addition, the company said it expects to realize sustained "double-digit" growth in its FedEx Ground unit volumes through the rest of the fiscal year.

FedEx provides air delivery, freight, parcel and logistics services.