FedEx Driver Arbitration Contracts Ruled "Unconscionable"
1 1 1 1 1 1 1 1 1 1 Rating 5.00 (1 Vote)
Follow us on Twitter and Facebook for the latest Lawsuit News!

 

FedEx Driver Arbitration Contracts Ruled "Unconscionable"

By Matt O'Donnell

 

FedEx
(LEGAFI) -- A federal judge in California has ruled that the mandatory arbitration clauses in FedEx contracts with its drivers are so one-sided that they are “unconscionable” and “unenforceable,” and therefore an employee lawsuit against the shipping company can move to trial without arbitration. 

In a ruling issued earlier this month, U.S. District Court Senior Judge Charles Lovell struck down FedEx’s theory that an employee lawsuit over wrongful termination could not proceed to trial until arbitration. Lovell agreed to dismiss four of the eight complaints made by former FedEx driver Tracy LaSalle in his wrongful discharge lawsuit against FedEx Ground Package System, including the complaints of malice, unjust enrichment and unpaid overtime.

However, in his nine-page order, Judge Lovell wrote that LaSalle’s lawsuit could proceed to trial without arbitration on four other counts because, under the law, an arbitration clause is unenforceable when it is both “procedurally and substantially unconscionable,” as this case constitutes. The four counts were breach of contract, fraud, constructive fraud and violation of Montana’s wage laws.

Judge Lovell cited certain parts of FedEx’s arbitration clause as proof of its one-sidedness, including that each party must bear the costs of arbitration, which can total over $10,000 “just for the opportunity to arbitrate his claim.” Another problem the judge found with the arbitration clause is that it prohibits the arbitrator from producing a written opinion on the outcome.

“This provision has no purpose other than to ‘hamper a reviewing court’s ability to determine whether to vacate or otherwise correct the arbitrator’s opinion,’” the judge wrote. 

The most one-sided provision, according to Lovell, is “while the contractor must arbitrate his claims of wrongful termination of the contract, FedEx does not have to arbitrate its claims of wrongful termination by the contractor.”

“Such a unilateral provision is unconscionable because it requires ‘binding arbitration of the weaker bargaining party’s claims, but allows the stronger bargaining party the opportunity to see judicial remedies to enforce contractual obligations,’” Lovell wrote. “This type of disparity can become so one-sided and unreasonable ‘that the agreement becomes unconscionable and oppressive.’

“This arbitration clause is a procedurally unconscionable contract of adhesion, i.e. a ‘take-it-or-leave-it’ agreement prepared by a party with excessive bargaining power, which contains numerous substantively unconscionable provisions.”

Lovell has set a trial date for March 11, 2013. His ruling could have a positive impact on several class action lawsuits pending against FedEx over misclassifying drivers as independent contractors in order to avoid paying overtime and holiday pay. 

 

Updated October 18th, 2011

All updates are located in the Lawsuit News section of Legafi. 

LEGAL INFORMATION IS NOT LEGAL ADVICE

Legafi Legal Statement 

©2011 Legafi®

Various Trademarks held by their respective owners. Legafi® is a Registered Trademark of Top Class Actions LLC

Comments   

 
#2 harry 2013-06-09 16:39
also would like to talk to someone about my situation you have my email ill
 
 
#1 harry 2013-06-09 16:30
any update
 

Add comment

Security code
Refresh