FedEx Faces Lawsuit By Former Contractor

FedEx is being sued by a logistics company that it had been contracted with to deliver packages on the California-Oregon border after claims of illegal and wrongful business practices that violate U.S. anti-racketeering law.

PYNQ Logistics Services filed the lawsuit on November 14 in a California federal court, asking it to determine that its relationship with the delivery service was that of an employer and an employee, rather than an independent contractor. It also sought to permanently prevent FedEx from continuing its “illegal and other wrongful” practices.

This is the first case where a former FedEx Ground contractor has sued the global delivery service under the U.S. Racketeer Influenced and Corrupt Organizations Act (RICO), said attorney Jeffrey Possinger, who represents PYNQ.

“This is a twist of an attack on the independent contractor relationship,” said Frank Botta, a former in-house attorney for the company that FedEx bought and rebranded as its Ground business. “They set this up as fraud claims to avoid arbitration.”

FedEx reported in a statement that it was aware of the allegations and would “vigorously defend the lawsuit.”

“The biggest concern is that this case might morph into a class action case. If that happens, it’s going to be a long, hard-fought battle,” said Botta.

PYNQ claims that FedEx violates laws governing contractors by exercising the same level of control over those service providers as it would over employees.

PYNQ owner and former pilot Tara Wright spent $1.13 million to buy two FedEx Ground delivery areas with routes serving northern California’s McKinleyville and Crescent City in 2021. FedEx sent termination letters to both service areas in May and sold one of them without Wright’s consent and compensation.

PYNQ also claims in its 98-page lawsuit that FedEx purposely withheld information that would have been essential to its decision to become a contractor for the company.

“Initial Negotiations of the [independent service provider agreements] are the starting point of FedEx Ground’s fraud, concealment, and false promise[s]” to its contractors, PYNQ claims in the lawsuit. “The true nature of the relationship to FedEx Ground in practice does not become clear until after the contractor begins working for FedEx Ground,” the company added.