UPS 2013 Annual Report Download - page 104

UNITED PARCEL SERVICE, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
92
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.
UPS and FedEx have moved for summary judgment. There has been no ruling on those motions. The case does not have a trial
date scheduled. 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) the Court has not ruled on the pending dispositive motions; and (3) the DOJ investigation is
pending. 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 also has been dismissed. We deny all liability and are vigorously defending
the one outstanding case in Ontario. There are multiple factors that prevent us from being able to estimate the amount of loss, if
any, that may result from this matter, 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 this matter. Accordingly, at this time, we are not able to estimate a possible loss or range of loss that may result
from this matter or to determine whether such loss, if any, would have a material adverse effect on our financial condition,
results of operations or liquidity.
Other Matters
On March 29, 2013, we entered into a Non-Prosecution Agreement (“NPA”) with the United States Attorney's Office in
the Northern District of California in connection with an investigation by the Drug Enforcement Administration of shipments
by illicit online pharmacies. Under the NPA, we forfeited $40 million to the government, admitted to a Statement of Facts
describing the conduct leading to the agreement, and agreed to implement an online pharmacy compliance program. The term
of the NPA is two years, although we can petition the government to shorten that term in its discretion to one year. The NPA
did not have a material impact on our financial condition, results of operations or liquidity in 2013.
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, the Commerce Commission of Singapore initiated an
investigation with respect to similar matters.
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.