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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
amount of secured indebtedness that may be incurred by the company, and limit the amount of sale-leaseback
transactions that the company may engage in, to 10% of net tangible assets each. As of December 31, 2008 and
for all prior periods, we have satisfied these financial covenants. As of December 31, 2008, 10% of net tangible
assets is equivalent to $2.156 billion, however we have no qualifying sale-leaseback transactions or secured
indebtedness outstanding. We do not expect these covenants to have a material impact on financial condition or
liquidity.
NOTE 9. LEGAL PROCEEDINGS AND CONTINGENCIES
We are a defendant in a number of lawsuits filed in state and federal courts containing various class-action
allegations under state wage-and-hour laws. In one of these cases, Marlo v. UPS, which was certified as a class
action in a California federal court in June 2004, plaintiffs allege that they improperly were denied overtime, and
seek penalties for missed meal and rest periods, and interest and attorneys’ fees. Plaintiffs purport to represent a
class of 1,300 full-time supervisors. In August 2005, the court granted summary judgment in favor of UPS on all
claims, and plaintiff appealed the ruling. In October 2007, the appeals court reversed the lower court’s ruling. In
April 2008, the Court decertified the class and vacated the trial scheduled for April 29, 2008. We have denied
any liability with respect to these claims and intend to vigorously defend ourselves in this case. At this time, we
have not determined the amount of any liability that may result from this matter or whether such liability, if any,
would have a material adverse effect on our financial condition, results of operations, or liquidity.
In another case, Hohider v. UPS, which in July 2007 was certified as a class action in a Pennsylvania federal
court, plaintiffs have challenged certain aspects of the Company’s interactive process for assessing requests for
reasonable accommodation under the Americans with Disabilities Act. Plaintiffs purport to represent a class of
over 35,000 current and former employees, and seek back-pay, and compensatory and punitive damages, as well
as attorneys’ fees. In August 2007, the Third Circuit Court of Appeals granted the Company’s Petition to hear the
appeal of the trial court’s certification order. Oral argument took place in November 2008. The appeal will likely
take one year. We have denied any liability with respect to these claims and intend to vigorously defend
ourselves in this case. At this time, we have not determined the amount of any liability that may result from this
matter or whether such liability, if any, would have a material adverse effect on our financial condition, results of
operations, or liquidity.
UPS and Mail Boxes Etc., Inc. are defendants in various lawsuits brought by franchisees who operate Mail
Boxes Etc. centers and The UPS Store locations. These lawsuits relate to the rebranding of Mail Boxes Etc.
centers to The UPS Store, The UPS Store business model, the representations made in connection with the
rebranding and the sale of The UPS Store franchises, and UPS’s sale of services in the franchisees’ territories.
We have denied any liability with respect to these claims and intend to defend ourselves vigorously. At this time,
we have not determined the amount of any liability that may result from these matters or whether such liability, if
any, would have a material adverse effect on our financial condition, results of operations, or liquidity.
UPS Freight, along with several other companies involved in the LTL freight business, is a defendant in a
Multi-District Litigation pending in the United States District Court for the Northern District of Georgia. The
lawsuits allege that the defendants conspired to fix fuel surcharge rates, and they seek injunctive relief, treble
damages and attorneys’ fees. We have denied any liability with respect to these claims and intend to vigorously
defend ourselves in these cases, and defendants’ motion to dismiss is pending for decision by the Court. These
cases are at a preliminary stage and at this time, we have not determined the amount of any liability that may
result from this matter or whether such liability, if any, would have a material adverse effect on our financial
condition, results of operations, or liquidity.
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