LOS ANGELES (Reuters) – A federal judge ruled on Monday that a small company contracted to deliver packages for FedEx (NYSE:) on the California-Oregon border must go to arbitration with FedEx over claims it made against the company for extortion and other alleged legal violations. .
In granting FedEx Ground's request to compel arbitration, Judge Sally Kim wrote that PYNQ failed to prove that it would be unreasonable to require arbitration. Most legal disputes between FedEx Ground and its contractors are resolved outside of the courtroom.
FedEx pledged to “vigorously defend the lawsuit” and asked the court to dismiss the case.
Logistics company PYNQ sued FedEx Ground on November 14 in federal court in Northern California, alleging that it engaged in a systematic pattern of illegal and illicit business practices that violated the U.S. Racketeering Act.
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.
The case appears to be the first in which a former FedEx Ground contractor has sued the global delivery giant under the U.S. Racketeer Influenced and Corrupt Organizations (RICO) Act, a PYNQ lawyer told Reuters.
Had the court determined that FedEx Ground's nearly 6,000 contractors were employees, it could have driven up labor costs and threatened the delivery giant's ongoing efforts to cut costs.
