Lawsuit against UPS certified as class-action

California Court Certifies National Class Action Suit Against United Parcel Service (UPS)

LOS ANGELES, Oct. 19 /PRNewswire/ -- A California court has certified a
national class action brought by United Parcel Service franchisees against
UPS (NYSE: UPS). The class action involves claims of intentional
misrepresentation and multiple statutory violations relating to UPS'
conversion of more than 3400 Mail Boxes Etc. franchises to the UPS store.

The suit contends that UPS misled franchisees into believing that the UPS
Store model would be more profitable for the franchisees. Instead the suit alleges that the conversion was for the purpose of moving profits to UPS. (huge surprise here :wink:). The class action seeks rescission of the conversion and monetary damages.

"This is a huge win for our organization," said Howard Spanier, a
Malibu, Calif. franchisee for over eighteen years who was forced by UPS to give up his Mail Boxes Etc. identity in 2006; "We look forward to UPS
having to finally answer for its actions."

Spanier is the president of the Platinum Shield Association,
representing current and former MBE franchisees who filed suit against UPS over the alleged misrepresentations referenced in Wednesday's appellate court decision.

The appellate court noted the background of the dispute in its lengthy
opinion, stating, "After evaluating a plan to create a network of 1,700 to
2,000 UPS-operated stores, UPS rejected that plan as requiring an initial
investment and management costs that were too high. Instead, on April 30, 2001, UPS acquired MBE (based in San Diego) and transferred MBE's assets and liabilities to MBE Inc., a wholly owned subsidiary of UPS. UPS intended to acquire the MBE franchise system by converting MBE franchises into 'The UPS Store.'"

Spanier and his fellow MBE franchisees allege that to persuade them to
convert to the UPS Store, the Atlanta-based shipping giant withheld
critical documents regarding tests UPS conducted in Seattle and St. Louis
and other smaller cities for a new business model that was ultimately
called The UPS Store. "We were never provided the information we needed to make an informed decision about our stores," Spanier said, "and when the conversion took place for those who agreed to it, the full impact of UPS' scheme was unavoidable and disastrous for many."

If successful, each franchisee class member will have the opportunity
to rescind its UPS Store contract and to seek related damages. The impact of such a result would be significant to UPS both in terms of lost revenue and destruction of its retail network.

In its decision, the appellate court said, "We find that the trial
court made erroneous assumptions of law finding that individual issues
predominated over common issues of law and fact with regard to reliance. Plaintiff (DT Woodard, a California franchisee of the former Mail Boxes Etc which UPS acquired in 2001) has alleged facts which create at least an inference of plaintiff's reliance on defendants' (UPS) representations, which induced plaintiff to agree to amend a franchise agreement."