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FedEx reaches $21.5M settlement in overcharging suit

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FedEx Corp., the world’s largest cargo airline, will pay $21.5 million to settle a lawsuit over claims that it overcharged customers by billing for deliveries to businesses and governments at higher residential rates.

The settlement was filed July 26 in federal court in Memphis, Tenn. A hearing on preliminary court approval is set for Aug. 1. The settlement covers a class of 200,000 customers, according to the filing.

FedEx (NYSE: FDX) was accused in the 2011 complaint of overcharging commercial and government customers as much as $3 each for tens of thousands of packages delivered. FedEx denied the overcharging allegations and said customers could avail themselves of a procedure for challenging the charges.

Under the settlement, FedEx “has agreed to no longer rely solely on a third-party database or customer designations to make business/residential classifications,” in addition to paying refunds, according to the filing.

FedEx charged residential rates to destinations including the U.S. Citizenship and Immigration Office in Chicago, a Bank of America Corp. facility in Tampa, Fla., and the Safariland Group body armor company in Jacksonville, Fla., according to an amended complaint filed in December.

FedEx agreed to settle “despite these provisions,” citing challenges to them by plaintiffs’ lawyers, according to the filing. “Absent settlement, this case is likely to take additional years to reach a final resolution,” FedEx and plaintiffs’ lawyers said in the filing, seeking court preliminary approval of the agreement.

The case is Gokare PC v. Federal Express Corp., 11-cv- 02131, U.S. District Court, Western District of Tennessee (Memphis).

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