FedEx Ground agrees to settle all claims in independent-contractor case

The ground delivery unit of FedEx Corp. has quietly agreed to settle all of the lawsuits brought by drivers who've alleged the unit treated them like independent contractors, even though they functioned as company employees.

The disclosure, made yesterday by the unit's parent in releasing its fiscal third-quarter results, ends a battle between FedEx Ground and its drivers that stretched over many years and across multiple jurisdictions. Memphis-based FedEx said the unit had reached an agreement in principle to settle 19 pending cases that had been consolidated into one case covering multiple geographies. FedEx said in its statement that it recognized a $204 million liability in the quarter for the projected net loss. The settlement requires court approval, which will take at least six to eight months, according to Beth A. Ross, a California attorney whose firm, Leonard Carder LLP, represented the drivers.

Ross said the proposed awards in the 19 cases total $227 million. Last June, the unit agreed to pay $228 million to settle similar claims by about 2,300 drivers in California who drove for the unit from 2000 to 2007. If the proposed settlements are approved, the company will have paid close to half a billion dollars to settle all of the drivers' suits, which include a few other cases beyond the 19 mentioned publicly, according to Ross.

The company said in the statement that the court in the multidistrict litigation had ruled that the drivers in the 19 cases were independent contractors. It has long insisted that the contractor model in dispute was discontinued in 2011. Since then, FedEx Ground has only contracted with incorporated businesses that treat their drivers as their employees, FedEx said. Executives of the unit did not respond to a request for additional comment.

In an e-mail today, Ross said the settlement was reached after 20 days of mediation in January and February. Each case was mediated separately, with agreements in principle reached in each one.

Ross said the plaintiffs were pleased with the outcome and are "cautiously optimistic" the court will approve the settlements. "These settlements will provide meaningful relief to thousands of FedEx drivers who have waited more than a decade for a resolution of their claims, even in states where—unlike California—the governing ... laws provide for very limited remedies for misclassified independent contractors."

Ross said the multidistrict ruling had been overturned by three appellate courts and that FedEx was facing a losing legal proposition if it continued to fight.