UPS 2011 Annual Report Download - page 111

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UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)
For those matters as to which we are not able to estimate a possible loss or range of loss, we are not able to
determine whether the loss will have a material adverse effect on our business, financial condition or results of
operations or liquidity. For matters in this category, we have indicated in the descriptions that follow the reasons
that we are unable to estimate the possible loss or range of loss.
Judicial Proceedings
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. At this time, we do not believe that any loss associated with these
matters, would have a material adverse effect on our financial condition, results of operations or liquidity.
UPS and our subsidiary Mail Boxes Etc., Inc. are defendants in two lawsuits about the rebranding or
purchase of The UPS Store franchises—Morgate and Samica. We prevailed at the trial court level in both cases,
and plaintiffs appealed. Morgate was filed in March 2003. The plaintiffs are 125 individual franchisees who did
not rebrand and a certified class of all franchisees who did rebrand to The UPS Store. A bellwether trial for three
individual plaintiffs was set for early 2010, but the trial court entered judgment against one of the three plaintiffs
prior to trial, which was affirmed in January 2012. The trial court also granted our motion for summary judgment
against the members of the certified class, which was reversed in January 2012. The remainder of the case has
been stayed pending appeal. Samica was filed in March 2006. The plaintiffs are 250 individual The UPS Store
franchisees who either elected to rebrand or purchased new The UPS Store franchises. Summary judgment was
granted in UPS’s favor and affirmed on appeal in December 2011. There are multiple factors that prevent us from
being able to estimate the amount of loss, if any, that may result from these matters including: (1) three separate
components of these cases are being appealed to federal and state courts following decisions favorable to UPS
and we cannot predict the final outcomes of these appeals; and (2) it remains uncertain what evidence of
damages, if any, plaintiffs will be able to present if any aspects of these cases proceed forward. Accordingly, at
this time, we are not able to estimate a possible loss or range of loss that may result from these matters or to
determine whether such loss, 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 that reported by the
shipper. On June 1, 2011, we reached an agreement in principle to settle the case for an immaterial amount. The
settlement has been preliminarily approved, and remains subject to a final fairness hearing.
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
shipping consultation services. 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. There are multiple factors that prevent us from being able to estimate the amount of
loss, if any, that may result from these matters including: (1) we believe that we have a number of meritorious
defenses; (2) AFMS has not articulated any measure of damages; and (3) the DOJ investigation is ongoing.
Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may result from these
matters or to determine whether such loss, if any, would have a material adverse effect on our financial
condition, results of operations or liquidity.
In Canada, three purported class-action cases were filed against us in British Columbia (2006); Ontario
(2007) and Québec (2006). The cases each allege inadequate disclosure concerning the existence and cost of
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