Legal Showdown - FedEx Accused Of Wrongful Practices By Former Contractor: Report

FedEx Corp FDX has found itself into legal turmoil after PYNQ Logistics Services, a company previously contracted by FedEx to handle deliveries in the California-Oregon border region, reportedly filed a lawsuit against the company. 

PYNQ accused the shipping giant of engaging in a systematic pattern of illegal and wrongful business practices that violate U.S. anti-racketeering law, reported Reuters.

The legal action seeks to establish that PYNQ's relationship with FedEx Ground should be considered that of an employee rather than a contractor.

If successful, the case could affect the cost savings from a restructuring through which FedEx has been shifting significant package volume from its employee-staffed Express unit to its Ground unit, as per the report.

The case appears to be the first instance where a former FedEx Ground contractor has invoked the U.S. Racketeer Influenced and Corrupt Organizations Act (RICO) in a lawsuit against the global delivery giant.

According to the report, PYNQ alleged that FedEx violates laws governing contractors by exercising the same level of control over those service providers as it would over employees.

The lawsuit alleges that FedEx knowingly withheld crucial information that would have influenced PYNQ's decision to become a contractor and claimed that FedEx hindered PYNQ's ability to make business improvements for profitability and prevented the recouping of its investment through the sale of delivery areas.

Price Action: FDX shares traded higher by 2.49% at $273 on Friday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

Photo Via Company