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FedEx wins dismissal of some claims in drivers' suit

June 29, 2010

FedEx Corp. won partial dismissal of a class-action lawsuit brought by contract drivers who contend they are entitled to full benefits because the company treats them as employees.

A federal judge in South Bend threw out some claims in the suit, saying the workers failed to exhaust out-of- court, administrative procedures that might help them get the medical, dental and retirement benefits they seek.

“Merely showing that FedEx is predisposed to deny the plaintiffs’ claims and has consistently taken that position in this lawsuit isn’t sufficient to show by certainty that the claims would be denied,” U.S. District Judge Robert L. Miller wrote in a June 28 opinion.

Miller’s decision allows the drivers to re-file claims against FedEx, the world’s largest air-cargo carrier, should the named plaintiffs exhaust the administrative process. The Memphis, Tenn.-based company, which has a distribution hub in Indianapolis, says its contract-driver model is legal and was approved for tax purposes by the U.S. Internal Revenue Service in 1994.

“It’s a procedural setback as opposed to a substantive setback,” Lynn Faris, a lawyer for the drivers, said in a phone interview. “We will do exactly as the judge says and have the named plaintiffs file the administrative claims.”

The case is part of a so-called multidistrict litigation, which allows suits filed in courts around the U.S. to be consolidated before a single judge for pretrial hearings.

“The ruling is the latest victory for FedEx Ground in the ongoing legal challenges to the independent contractor model,” FedEx spokesman Maury Lane said in an e-mailed statement. “We believe that all lawsuits in the multi-district litigation are without merit and part of a broad-based assault on independent contractors who have chosen to own and operate their own businesses.”

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