UPS 2010 Annual Report Download - page 102

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
UPS and our subsidiary 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. In one of the actions, which is pending in California state court, the court certified a class consisting of
all Mail Boxes Etc. branded stores that rebranded to The UPS Store in March 2003. 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.
In Barber Auto Sales v. UPS, which a federal court in Alabama certified as a class action in September
2009, the plaintiff asserts a breach of contract claim arising from UPS’s assessment of shipping charge
corrections when UPS determines that the “dimensional weight” of packages is greater than reported by the
shipper. 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 AFMS LLC v. UPS and FedEx Corporation, a lawsuit filed in federal court in the Central District of
California in August 2010, the plaintiff asserts that UPS and FedEx violated U.S. antitrust law by conspiring to
refuse to negotiate with third party negotiators retained by shippers and/or to monopolize a so-called market for
the time sensitive delivery of letters and packages. The Antitrust Division of the U.S. Department of Justice
(“DOJ”) has informed us that it has opened a civil investigation of our policies and practices for dealing with
third party negotiators. We are cooperating with this investigation. We deny any liability with respect to these
matters and intend to vigorously defend ourselves. 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.
We are a defendant in various other lawsuits that arose in the normal course of business. We believe that the
eventual resolution of these cases will not have a material adverse effect on our financial condition, results of
operations or liquidity.
As of December 31, 2010, we had approximately 250,000 employees employed under a national master
agreement and various supplemental agreements with local unions affiliated with the International Brotherhood
of Teamsters (“Teamsters”). These agreements run through July 31, 2013. We have approximately 2,800 pilots
who are employed under a collective bargaining agreement with the Independent Pilots Association (“IPA”),
which becomes amendable at the end of 2011. Our airline mechanics are covered by a collective bargaining
agreement with Teamsters Local 2727, which became amendable in November 2006. We began formal
negotiations with Teamsters Local 2727 in October 2006, and have been under the guidance of the National
Mediation Board since January 2008. In January 2011, we reached a tentative agreement with Teamsters Local
2727 which will run through November 1, 2013 when ratified. In addition, the majority (approximately 3,300) of
our ground mechanics who are not employed under agreements with the Teamsters are employed under
collective bargaining agreements with the International Association of Machinists and Aerospace Workers
(“IAM”). Our agreement with the IAM runs through July 31, 2014.
We participate in a number of trustee-managed multi-employer pension and health and welfare plans for
employees covered under collective bargaining agreements. Several factors could cause us to make significantly
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