LOS ANGELES (Reuters) – A federal judge on Monday ruled that a small company contracted to deliver packages for FedEx (NYSE:) on the California-Oregon border must enter arbitration with FedEx over racketeering and other claims against the company. alleged legal violations. .
In granting FedEx Ground’s motion to compel arbitration, Judge Sally Kim wrote that PYNQ failed to show that it would be unconscionable to compel arbitration. Most legal disputes between FedEx Ground and its contractors are resolved outside the courtroom.
FedEx vowed to “vigorously defend the lawsuit” and asked the court to dismiss the case.
On November 14, PYNQ Logistics Services sued FedEx Ground in Northern California federal court, alleging that the company systematically engaged in illegal and unlawful business practices that violated U.S. racketeering laws.
PYNQ asked the court to determine that its relationship with FedEx Ground is that of an employee, not a contractor, and reserved the right to pursue the case as a class action.
This appears to be the first time a former FedEx Ground contractor has sued the global delivery giant under the US Racketeer Influenced and Corrupt Organizations Act (RICO), PYNQ’s lawyer told Reuters.
If a court were to find that FedEx Ground’s roughly 6,000 contractors are employees, it could drive up labor costs and jeopardize the delivery giant’s ongoing efforts to cut costs.