Filed Date: Aug. 26, 2005
Closed Date: Oct. 17, 2019
Clearinghouse coding complete
This Multi-District Litigation case included over 40 cases arising in more than half of the states in the U.S. Together, those cases challenged various aspects of the decision by FedEx Ground to classify its drivers as independent contractors under a variety of theories and statutes that included (depending on the case) both state and federal law. During the litigation’s long and complex procedural history, several of the cases were certified as class actions, at least in part, and over 2,000 pleadings or orders were filed. The MDL litigation began in 2005 with the common question of whether FedEx Ground drivers were employees or independent contractors.
The history of this MDL case began in 1998 when FedEx acquired Roadway Package Services, Inc. (RPS) and adopted its independent contractor business model. FedEx adopted the RPS business model without modification and continued to engage its local drivers as independent contractors using the RPS Operating Agreement. FedEx re-branded RPS as FedEx Ground in 2000, but its fundamental business model and relationship with the drivers—including the substantive terms of the contract and the terms and conditions of the drivers' employment—remained unchanged.
RPS's early business decision to conduct its core business operation with the services of workers classified as independent contractors has long faced legal scrutiny. In 1988 and 1989, the NLRB decided two cases case finding the RPS drivers to be employees under the common law agency test in Roadway Package Service, Inc. 288 NLRB 196 (1988) and Roadway Package Service, Inc.292 NLRB 376, 378 (1989) enf'd 902 F.2d 34 (6th Cir. 1990).
Since acquiring RPS, FedEx had steadfastly stood by and defended the independent contractor model in every state and federal legal forum, including a group of class action cases filed between 2004 and 2009 asserting various statutory and common law claims under the laws of over 40 states as well as federal claims arising under the FLSA, ERISA and the FMLA.
The first of the court cases to go to trial was Estrada v. FedEx Ground Package Systems, Inc., which was filed in California in 2000. Liability issues were tried in 2004, and the litigation was finally completed nine years after it started following a merits appeal and completion of the damage computation in early 2009. The plaintiffs' primary claim was for reimbursement of employment related expenses under California Labor Code § 2802. In the nine-year litigation, a class was certified (over FedEx's objection that its relationship with every driver was different, precluding class adjudication), the drivers were held to be employees by the trial and appellate courts under California's Borello standard (a common law agency test with an "economic realities" overlay), and a judgment was entered awarding substantial damages to each class member. The liability issues are discussed in Estrada v. FedEx Ground Package System, Inc. 354 Cal. App. 4th 1 (2007). In its opinion, the California Court of Appeals detailed the substantial right of control reserved to FedEx in the drivers' operating agreement taking account of the substantial class-wide evidence presented by the plaintiff drivers of the actual control FedEx exercised—in conformance with its written policies and procedures—over every "exquisite detail" of the drivers' work.
While Estrada was winding its way through the courts, drivers all over the country filed employment law class actions, as well as individual discrimination and wrongful termination claims in over 40 states. These cases all posed the identical threshold legal question: are the FedEx Ground drivers FedEx's employees, or are they independent contractors who run their own businesses? On FedEx Ground's initiative—over the plaintiffs' strong objections—in 2005 these cases were coordinated into a multi-district litigation docket entitled In re FedEx Ground Package System, Inc. Employment Practices Litigation, MDL 1700 and transferred for all pretrial proceedings to Judge Robert Miller in the Northern District of Indiana. Except for the nationwide ERISA claim pleaded in the Kansas case, and a nationwide FMLA claim pleaded in the California case, virtually all of the claims in these cases were asserted on behalf of statewide classes and pleaded state claims. Source.
The plaintiffs in the class action cases characterized as "Wave 1," "Wave 2" and "Wave 3" moved the district court for class action certification. In re FedEx Ground Package System, Inc., Employment Prac. Litig., F.Supp.2d (N.D. Ind. March 25, 2008). As the court summarized, these class actions "assert that although FedEx Ground represents to its drivers that they are only partnering with FedEx Ground and will essentially own their own businesses, all FedEx Ground drivers sign the FedEx Ground Operating Agreement, which actually reserves to FedEx Ground the right to exercise pervasive control over the method, manner, and means of the drivers' work." FedEx opposed class action treatment, arguing that "the plaintiffs' claims turn on individualized issues, including whether contractors should be classified as employees under the states' statutory tests, and whether any individual contractor can meet the high bar for rescission of his individual contract." In a 164-page opinion, the district court certified the Wave 1, Wave 2 and Wave 3 cases as class actions with respect to cases involving drivers from Alabama, Arkansas, California, Florida, Indiana, Kentucky, Maryland, Minnesota, New Hampshire, New Jersey, New York, Oregon, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, West Virginia and Wisconsin; the court denied class action treatment for drivers from Illinois, Iowa, Massachusetts, Michigan, Mississippi, Missouri, Montana, South Dakota and Virginia. The district court noted that it had previously granted class action certification with respect to drivers from Kansas, bringing to 20 the total number of states for which class action treatment had been approved.
Because it had previously granted class action treatment on behalf of the Kansas drivers, the district court used its prior ruling as a benchmark against which it considered the new class action certification motions. The court held that class action complaints containing only former drivers as named plaintiffs could still proceed as class actions on behalf of former and current drivers because "courts have held that former employees have standing to represent a class consisting of both current and past employees." But with respect to defense efforts to defeat class action treatment on the ground that individual inquiries would be required to determine whether the Operating Agreements were valid and the manner and extent to which the "right to control" will impact the validity of the Operating Agreements, the federal court rejected this argument with respect to the laws of certain states, but agreed with FedEx Ground that common questions would not predominate under the laws of other states. That presented the primary basis for the difference among states for which the court certified class actions and states for which it denied motions for class certification. Source.
In 2009 and 2010, while the MDL docket was still active, the Eighth Circuit and the D.C. Circuit were both called on to decide cases addressing the employment status of FedEx drivers who worked under a nearly identical operating agreement as the plaintiffs in the MDL docket. The two Circuit courts reached different conclusions.
The first case, FedEx Home Delivery v. National Labor Relations Board, 563 F.3d 492 (D.C. Cir. 2009) was a petition to enforce an NLRB order directing FedEx bargain with a Teamsters local that had been certified to represent drivers at FedEx's Wilmington, Massachusetts terminal. In the administrative proceedings, the NLRB again concluded that the FedEx drivers are employees. The D.C. Circuit denied the enforcement petition. A divided panel of the court agreed with FedEx that the drivers are properly classified as independent contractors. To get there, the majority applied a novel—and now controversial—formulation of traditional common law agency test. Rather than focusing on FedEx's reserved right to control the method and means of the drivers' work, the Circuit instead focused on the drivers' asserted "entrepreneurial opportunities".
The second case, Huggins v. FedEx Ground Package Systems, Inc. 592 F.3d 893 (8th Cir. 2010), was a negligence case arising from a trucking accident in which FedEx was sued by the injured plaintiff. The Eighth Circuit reversed the trial court's grant of summary judgment, finding that a triable issue of fact existed under Missouri's common law agency test as to whether the over-the-road driver who caused the accident was a FedEx employee so that liability could be imputed to FedEx under the respondeat superior doctrine. The court's analysis was founded on the premise that the "touchstone" of the traditional agency test is "the right of control." While the court noted that the driver who caused the accident did not have a direct relationship with FedEx but instead was employed by a FedEx contractor, it concluded that there was sufficient evidence in the record to support a reasonable inference that FedEx had a right to control his performance and was therefore his employer under the common law test. Source.
Status of In Re Fedex
On August 11, 2010, the court granted summary judgment with respect to the claims of FedEx’s Kansas drivers. Applying Kansas law, and focusing on the “right of control,” the court concluded the terms of the FedEx operating agreements under which the drivers worked did not render them employees. Finding the agreement to be controlling, the court largely rejected arguments by the plaintiffs regarding the control they claimed that the company actually exercised, and drew a distinction between the company’s requirements as to results versus the manner and means by which work was to be performed. Following that decision, the court directed the parties to brief the same issues regarding the cases in states other than Kansas.
On December 13, 2010, the district court issued an opinion granting summary judgment for FedEx in most of the other states. Even after granting so much of FedEx’s summary judgment motion, however, several large cases remained. For example, the FLSA and FMLA claims remained as well as certain state law tort or statutory claims. The court did grant summary judgment in favor of the plaintiffs for a few claims, such as the Kentucky Wage Payment statute claim. 758 F.Supp.2d 638 (N.D. Ind. 2010).
The cases involving claims which were not certified for class adjudication, that include a mixture of certified and uncertified claims, or that pleaded individual claims only but which were transferred to the MDL docket have been—or are in the process of being—remanded to the transferor courts for trial or other further proceedings. These include cases that pleaded class claims which were not certified by the Court such as those from California, Colorado, Connecticut, Kentucky, Massachusetts, Missouri, Montana, Nevada, New Hampshire, Ohio, Oregon, South Dakota, Texas, Vermont, and Virginia.
On August 27, 2014, the Ninth Circuit reversed the MDL court and ruled that FedEx driers in California and Oregon were employees. 765 F.3d 981 (9th Cir. 2014). On June 12, 2015, FedEx settled with the drivers in California and agreed to pay $228 million. The settlement covered approximately 2,300 drivers in California only, and covered the time period 2000-07 only. It did not resolve the myriad of other misclassification lawsuits that had been filed by FedEx Ground drivers in other states.
On June 15, 2016, parties in the cases pending in twenty states (Alabama, Arizona, Georgia, Indiana, Kansas, Louisiana, Maryland, Minnesota, North Carolina, New Jersey, New York, Ohio, Pennsylvania, Rhode Island, South Carolina, Tennessee, Texas, Utah, West Virginia, and Wisconsin) moved for preliminary approval of their settlement agreement. The twenty class settlements proposed to the court were the product of mediation. Judge Robert J. Miller, Jr. found that the amount of the proposed settlements were within the range of possible approval and should be preliminarily approved. The court granted preliminary approval of the proposed settlements on August 17, 2016.
On February 9, 2017, Judge Miller denied an emergency injunction request by co-lead counsel for the class and the defendant, which would have limited the communications of members of the class in the New Jersey case who objected to the proposed settlement to other members of the class. Judge Miller found that the class representatives did not misrepresent their objections about the proposed settlement, and that they had the right to inform other members of the class about their misgivings. Despite this, he found the New Jersey settlement agreement to be valid on February 14, 2017, finding it to be sufficiently fair despite the misgivings of the class representatives.
On March 15, 2017, Judge Miller granted the motions for indicative ruling granting final approval of the class action settlements in the remaining states, including New Jersey. The United States Court of Appeals for the 7th Circuit granted the motion for limited remand on March 22, 2017. The various settlements were approved on April 28, May 1, and June 19, 2017, and attorneys' fees were partially awarded. The Seventh Circuit Court of Appeals dismissed the appeal on October 16, 2017.
The ERISA class action settlement was preliminarily approved on September 5, 2018. The settlement included a $13,325,000 fund to resolve all ERISA claims, with a maximum of $4,377,062 from the fund going to attorney's fees. 52% of the remaining money was apportioned to resolve life insurance claims to legal heirs and estates, and 48% was allocated to resolve ERISA benefits claims. On March 22, 2019, the Court gave final approval to the settlement and dismissed the action with prejudice.
The plaintiffs' attorneys disputed how the settlement allocated attorney's fees amongst themselves, but they resolved their issues with the help of a special master, and the court approved a modified fee award on October 17, 2019. This case is now closed.
Summary Authors
Erin Pamukcu (12/1/2015)
Elizabeth Heise (9/29/2018)
Jonah Feitelson (4/10/2020)
For PACER's information on parties and their attrorneys, see: https://www.courtlistener.com/docket/4509251/parties/in-re-mdl-1700-fedex-ground-package-system-inc-employment-practices/
Damrell, Frank C. Jr. (California)
Fletcher, William A. (California)
Furgeson, William Royal Jr. (Texas)
Gotsch, Michael G. Sr. (Indiana)
Hamilton, David Frank (Indiana)
Heyburn, John Gilpin II (Kentucky)
Lozano, Rodolfo (Indiana)
Luthi, Jeffrey N. (California)
Miller, Robert Lowell Jr. (Indiana)
Nuechterlein, Christopher A. (Indiana)
Damrell, Frank C. Jr. (California)
Fletcher, William A. (California)
Furgeson, William Royal Jr. (Texas)
Gotsch, Michael G. Sr. (Indiana)
Hamilton, David Frank (Indiana)
Heyburn, John Gilpin II (Kentucky)
Lozano, Rodolfo (Indiana)
Luthi, Jeffrey N. (California)
Miller, Robert Lowell Jr. (Indiana)
Nuechterlein, Christopher A. (Indiana)
Tinder, John Daniel (Indiana)
Vratil, Kathryn Hoefer (Kansas)
Agostino, Peter J. (Indiana)
Barton, George A. (Missouri)
Bartos, Jeffrey A. (District of Columbia)
Brault, Darcie R (Michigan)
Brinkley, J. Allen (Alabama)
Brownlow, Joree (Tennessee)
Carlson, R. Bruce (Pennsylvania)
Cialkowski, David M. (Minnesota)
Costello, Kevin M. (New Jersey)
Cureton, Jerald R. (New Jersey)
DeGroff, Ginger A. (Florida)
DeRose, Robert E. II (Ohio)
Driscoll, Kevin J. (Iowa)
Ellingstad, Susan E. (Minnesota)
Fagan, Barry S. (Michigan)
Faris, Lynn Rossman (California)
Fernandez, Jacqueline Mezquita (Florida)
Ferraro, Monica (Ohio)
Fink, Eric M. (California)
Firsten, Robert K. (Michigan)
Fitzpatrick, B. James (California)
Forman, Edward Reilley (Ohio)
Foster, Wood R. Jr. (Minnesota)
Friel, Mark A. (Oregon)
Frost, Merrie M. (Ohio)
Fuoco, Philip Stephen (New Jersey)
Gangemi, Salvatore G. (New York)
Garcin, Robert A. (Colorado)
Garfinkel, Martin S. (Washington)
Gilreath, R. Christopher (Tennessee)
Golston, Larry A. Jr. (Alabama)
Goodin, Eileen S. (Ohio)
Gorby, Michael J. (Georgia)
Gordon Rudd Jr., J (Minnesota)
Grayson, Deborah R. (Ohio)
Halunen, Clayton D. (Minnesota)
Handelman, Robert K. (Ohio)
Harwood, Robert (New York)
Hilmes, Jack D. (Iowa)
Hommel, William S. (Texas)
Houston, Matthew M. (New York)
Iglitzin, Dmitri (Washington)
Kahn, Andrew J. (California)
Kanter, Maureen H. (Wisconsin)
Kim, Soye (District of Columbia)
Kohn, Greg M. (New Jersey)
Larson, Steve D. (Oregon)
Lee, Jennifer Tatum (Texas)
Lewis, Donald B. (Pennsylvania)
Lichten, Harold L. (Massachusetts)
Liss-Riordan, Shannon E. (Massachusetts)
Luttjohann, Larry L. (Kansas)
Lynch, Gary F. (Pennsylvania)
Markowitz, Paula R. (Pennsylvania)
Marshall, John Spencely (Ohio)
Meizlish, Bruce H. (Ohio)
Morin, Tina L. (Montana)
Morton, Eleanor I. (California)
Moss, Tyler G. (Montana)
Myers, Daniel O. (South Carolina)
Nauen, Charles N. (Minnesota)
O'Malley, Todd J. (Pennsylvania)
Osefchen, Joseph A. (New Jersey)
Overs, Peter W. (New York)
Perkins, Cheryl F. (South Carolina)
Peters, Mary Donne (Georgia)
Phillips, Richard T. (Mississippi)
Puma, Michael J. (New York)
Purdie, Alan M. (Mississippi)
Regan, Anne T. (Minnesota)
Rikard, Robert G. (South Carolina)
Ross, Beth A. (California)
Smith, Dan S. (New Jersey)
Staack, James A. (Florida)
Tanenbaum, Richard (Tennessee)
Taylor, Donald R. (Texas)
Thomas, Edith A. (California)
Thome, Joni M (Minnesota)
Tobin, Matthew T. (South Dakota)
Walsh-Dempsey, Mary D. (Pennsylvania)
Wasylyk, Peter (Rhode Island)
Watton, Michael J. (Wisconsin)
Whetstone, Charles W. (South Carolina)
Winebrake, Peter D. (Pennsylvania)
Zerger, Kirsten L. (California)
Ames, Robert G. (District of Columbia)
Banks, Michael L. (Pennsylvania)
Becker, Evelyn L. (District of Columbia)
Beisner, John (District of Columbia)
Blalack, Kenneth Lee II (District of Columbia)
Bouchard, Sarah E. (Pennsylvania)
Bremer, Laura C. (California)
Brenner, Guy (District of Columbia)
Brunner, Thomas J. (Indiana)
Bruno, Rosemary J. (New Jersey)
Bunnell, Stevan (District of Columbia)
Camunez, Michael C. (California)
Caperton, David G. (District of Columbia)
Clouatre, Mark T. (Colorado)
Cooney, James P. III (North Carolina)
Corr, Kelly P. (Washington)
Cranmer, Thomas W. (Michigan)
Dean, Robin (California)
Dennis, Steve (Texas)
Duddleston, David J (Minnesota)
Efkeman, Edward J. (Tennessee)
Ferron, Benjamin J. (New York)
Fiala, William T. (Tennessee)
Forbes, Randall J. (Kansas)
Fox, Alison G. (Indiana)
Freeman, Palmer (South Carolina)
Garrison, Michael W. Jr. (California)
Haltom, William H. Jr. (Tennessee)
Hauf, Stacy J. (District of Columbia)
Haynes, Kenneth G. (Kentucky)
Heck, Jeff R. (Indiana)
Hicks, Patrick H. (Nevada)
Hill, Benjamin H. III (Florida)
Hobbs, Eric E. (Wisconsin)
Hollinger, Chris A (California)
Jarrell, Dorothy Anne (New York)
Jenkins, Ronald E. (Missouri)
Jih, Victor H. (California)
Jirgal, Thomas P. (California)
Joshi, Aparna B. (District of Columbia)
Kelso, Steven Matthew (Colorado)
Kopp, Michael W. (California)
Krincek, Wendy M. (Nevada)
Kruse, Karen P. (Washington)
Kubota, Carolyn J. (California)
Lea, Joe E. Jr. (Texas)
LeMoine, Bryan D. (Missouri)
LyJordan, Anh-Nguyet Tran (New York)
Macaluso, Carla D. (New Jersey)
McFarland, Robert William (Virginia)
McGuinness, Michael G. (California)
Merrick, Matthew J. (New York)
Merzon, Jennifer Lee (New York)
Michelson, Guy P. (Washington)
Milcoff, Joseph P. (Pennsylvania)
Millman, Raquel A. (New York)
Moran, Christopher J. (Pennsylvania)
Morell, Rafael Eloy (District of Columbia)
Mulroy, James R. II (Tennessee)
Murphy, Michael J. (District of Columbia)
Nestler, Jeffrey S. (District of Columbia)
Nolan, John M. (New Jersey)
Olson, Steven J (California)
Paliotta, Shannon H. (Pennsylvania)
Pate, Lesley A. (District of Columbia)
Penny, Robert James (Colorado)
Perl, Justin H. (Minnesota)
Pope, Dulany Lucetta (Indiana)
Preston, Brett J. (Florida)
Puckett, Nora M. (California)
Pyle, C. Victor (South Carolina)
Renick, John B. (Missouri)
Roberts, Richard R. (Tennessee)
Robinson, Laura E. (California)
Roblan, Aaron (Washington)
Roskelley, Rick D. (Nevada)
Rumbaugh, Eric H. (Wisconsin)
Rygiel-Boyd, Jennifer A. (New York)
Schroeder, Theodore B. (District of Columbia)
Schwartz, Robert M. (California)
Simbalenko, Jessica G. (Colorado)
Sullivan, Patricia A. (Rhode Island)
Trimarchi, Jeffrey A. (New York)
Voelz, Scott (California)
Weiner, Andrew M. (District of Columbia)
Wierenga, Robert J. (Michigan)
Yates, John J. (Missouri)
Zonn, Sidney (Pennsylvania)
Rosenbaum, James Michael (Minnesota)
See docket on RECAP: https://www.courtlistener.com/docket/4509251/in-re-mdl-1700-fedex-ground-package-system-inc-employment-practices/
Last updated Aug. 11, 2022, 3:02 a.m.
State / Territory: Indiana
Case Type(s):
Special Collection(s):
Private Employment Class Actions
Key Dates
Filing Date: Aug. 26, 2005
Closing Date: Oct. 17, 2019
Case Ongoing: No
Plaintiffs
Plaintiff Description:
The plaintiffs are Fedex delivery persons from across the United States
Plaintiff Type(s):
Public Interest Lawyer: No
Filed Pro Se: No
Class Action Sought: Yes
Class Action Outcome: Granted
Defendants
FedEx Ground Package System, Inc, Private Entity/Person
Case Details
Causes of Action:
Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001
Special Case Type(s):
Multi-District Litigation (MDL)
Availably Documents:
Outcome
Prevailing Party: Plaintiff
Nature of Relief:
Source of Relief:
Form of Settlement:
Amount Defendant Pays: 241,325,000