FedEx sues crusading delivery contractor, seeks injunction, damages

© Reuters. Exterior of the new Chicago Loop FedEx Ground Station is seen in Chicago, Illinois, U.S., July 14, 2017. REUTERS/Kamil Krzaczynski/File Photo

By Lisa Baertlein

LOS ANGELES (Reuters) -FedEx Corp on Friday asked a federal judge in Tennessee to stop one of its largest delivery contractors from "spreading misinformation about our business to unlawfully promote its own business for financial gain."

The lawsuit, filed in the U.S. District Court for the Middle District of Tennessee, seeks injunctive relief and monetary damages from a "coordinated and multi-faceted campaign orchestrated" by Spencer Patton, who has 225 FedEx (NYSE:FDX) Ground routes in 10 mostly Midwestern states as well as businesses that provide services to other contractors.

FedEx Ground uses a network of some 6,000 contractors to transport and deliver packages in the United States.

FedEx alleged that Patton is "disparaging" that business "through a series of false and misleading statements" about its commercial activities.

In a statement, Patton said he had not seen the lawsuit and asked how it would help FedEx Ground's struggling contractors.

Patton has been speaking to the media about challenges at FedEX Ground. He says up to 35% of its delivery providers are at risk of financial failure and is urging the company to better compensate them.

FedEx alleged that Patton's statements against its Ground unit are a "promotional campaign" for Route Consultant, his company that offers consultancy, brokerage, and other services to contractors.

Patton is seeking to position Route Consultant as the "industry leader" in providing consultancy and other services to contractors, representing them individually or in collective negotiations with FedEx Ground, FedEx alleged.

FedEx further charged that Patton has encouraged actions that could disrupt its crucial Christmas delivery business.

At a conference hosted by his business last weekend, Patton said he would shutter his FedEx Ground contracting business on Nov. 25 - the start of the holiday shipping season - if terms of his contract were not adjusted.

Although Patton "claimed to be speaking 'only on behalf of (his) individual businesses,' he was plainly attempting to influence a group walk-out or boycott," FedEx said in the lawsuit.

FedEx asked the court for monetary damages for harm to its business and damage control expenses resulting from Patton's statements.