UPS 2012 Annual Report Download - page 98

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
86
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 by individually imposing policies that prevent shippers from using such negotiators.
The case is scheduled to go to trial in August 2013. The Antitrust Division of the U.S. Department of Justice (“DOJ”) has an
ongoing 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) discovery is ongoing; 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, four purported class-action cases were filed against us in British Columbia (2006); Ontario (2007) and Québec
(2006 and 2013). The cases each allege inadequate disclosure concerning the existence and cost of brokerage services provided
by us under applicable provincial consumer protection legislation and infringement of interest restriction provisions under the
Criminal Code of Canada. The British Columbia class action was declared inappropriate for certification and dismissed by the
trial judge. That decision was upheld by the British Columbia Court of Appeal in March 2010, which ended the case in our
favor. The Ontario class action was certified in September 2011. Partial summary judgment was granted to us and the plaintiffs
by the Ontario motions court. The complaint under the Criminal Code was dismissed. No appeal is being taken from that
decision. The allegations of inadequate disclosure were granted and we are appealing that decision. The motion to authorize the
2006 Québec litigation as a class action was dismissed by the motions judge in October 2012; there was no appeal, which ended
that case in our favor. The 2013 Québec litigation is in the earliest stages. We deny all liability and are vigorously defending
the two outstanding cases. 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 are vigorously defending ourselves and believe that we have a number of
meritorious legal defenses; and (2) there are unresolved questions of law and fact that could be important to the ultimate
resolution of these matters. 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 operation or liquidity.
Other Matters
In May and December 2007 and August 2008 we received and responded to grand jury subpoenas from the DOJ in the
Northern District of California in connection with an investigation by the Drug Enforcement Administration. We also have
responded to informal requests for information in connection with this investigation, which relates to transportation of packages
on behalf of online pharmacies that may have operated illegally. We have been cooperating with this investigation and are
exploring the possibility of resolving this matter, which could include our undertaking further enhancements to our compliance
program and a payment. Such a payment may exceed the amounts previously accrued with respect to this matter, but we do not
expect that the amount of such additional loss would have a material adverse effect on our financial condition, results of
operations or liquidity.
We received a grand jury subpoena from the Antitrust Division of the DOJ regarding the DOJ's investigation into certain
pricing practices in the freight forwarding industry in December 2007. In January 2013, we received a letter from the DOJ
confirming that it is not pursuing a case against UPS with respect to the investigation.
In August 2010, competition authorities in Brazil opened an administrative proceeding to investigate alleged
anticompetitive behavior in the freight forwarding industry. Approximately 45 freight forwarding companies and individuals are
named in the proceeding, including UPS, UPS SCS Transportes (Brasil) S.A., and a former employee in Brazil. UPS will have
an opportunity to respond to these allegations. In November 2012, we also received a request for information related to similar
matters from authorities in Singapore.
We are cooperating with each of these investigations, and intend to continue 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 are vigorously defending each matter and believe that we have a number of meritorious legal defenses;
(2) there are unresolved questions of law that could be of importance to the ultimate resolutions of these matters, including the
calculation of any potential fine; and (3) there is uncertainty about the time period that is the subject of the investigations.
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.