FedEx Ground filed a lawsuit on Aug. 26 against the business of its largest contractor, Spencer Patton, for disparaging FedEx Ground through a series of alleged false and misleading statements about its commercial activities. The lawsuit seeks injunctive relief and unspecified monetary damages from Patton.
Hours after filing the lawsuit, FedEx Ground terminated all contracts with Patton's company, Patton Logistics. FedEx maintains that it has contingency plans to replace those routes and that service will not be interrupted.
Patton Logistics has about 275 trucks that served 225 FedEx Ground routes in 10 states. Patton, based in Brentwood, Tennessee, also owns Route Consultant, which advises and provides resources for FedEx Ground contractors, called ISPs (independent service providers). The lawsuit was filed against Route Consultant.
Patton has been an outspoken advocate for the roughly 6,000 contractors that deliver packages for FedEx Ground. He has been delivering a public message that FedEx Ground has expanded its profit margins through proceeds from fuel surcharges without allowing contractors to share in those proceeds. He also maintains that FedEx Ground has not adequately addressed other strains on contractor profits such as Sunday deliveries.
In the lawsuit, FedEx Ground said Patton is urging ISPs to renegotiate their deals with the company as a way to drive business to Route Consultant. The suit alleges that Patton is overestimating the number of service providers in financial distress and that FedEx Ground is consenting to mid-contract negotiations with ISPs.
Patton pleaded the contractors’ case on Fox Business’ digital site, which has garnered over 1.2 million views. He also convened an expo and conference in Las Vegas Aug. 19-21, in which roughly half of the FedEx ISPs were in attendance. At the event and in the foreground of a #PurpleFriday screen, Patton told the audience that “I am unable to continue my business past Nov. 25, 2022” due to inflationary pressures and business conditions that have not been adequately addressed by FedEx Ground.
Directly after the event, though before the lawsuit and termination, Patton told Automotive Fleet that Nov. 25 establishes a timeline to FedEx Ground to restore “financial viability to the ownership of the routes.”
“Right now, I am losing money in my daily operations of my own FedEx Ground routes,” he said to AF. “As the largest contractor in the U.S. I will continue to provide service to FedEx Ground until November 25 of 2022. And many of my fellow contractors making their own independent business decisions have also said that November 25 will also be their last day of providing service to FedEx Ground if there is not a financial change.”
“More than 50% of FedEx Ground contractors are operating at a loss right now," he said. "And we're subsidizing FedEx Ground’s business. And that is just not a viable path forward.”
Originally posted on Automotive Fleet