UPS will settle big US lawsuit

United Parcel Service Inc. will soon be giving away tens of millions of dollars in free shipping as part of its settlement of a class-action lawsuit that alleged the company overcharged for package insurance over the past two decades.

Atlanta-based UPS is offering customers who are part of the lawsuit vouchers for UPS service — some worth up to $8,000 apiece — if they can prove they bought the “excess value” package insurance from UPS going as far back as 1984.

Several million customers from 49 states are eligible for vouchers under the nationwide settlement, according to attorneys for the plaintiffs in the case, which was filed in U.S. District Court in New York. The court recently approved a preliminary settlement of the lawsuit.

UPS settled a similar lawsuit in Illinois three years ago after the company agreed to give a maximum of $38.5 million worth of UPS vouchers to as many as 90,000 consumers who had bought the package insurance (not all vouchers were claimed).

Given the significantly larger potential class size in the New York suit, UPS could end up giving away much more in voucher value than it did in Illinois, class-action experts said.

Whatever the final cost, UPS says the settlement will not have a huge impact on its balance sheet. The company earned $2.9 billion on revenues of $33.5 billion for 2003.

In the settlement agreement, attorneys for UPS reiterated their belief that the company’s conduct was “at all times entirely proper, lawful and fair” and that UPS consistently charged 50 percent to 70 percent less for package-insurance premiums than its competitors.

“At all times, our customers have gotten value [from the insurance] and the lowest price available, and they have never been harmed by purchasing excess-value insurance from us,” said Norman Black, spokesman for UPS.

Black said UPS decided to settle the case strictly for “practical business purposes.”

“We made a sound and practical decision to avoid the expense and disruption of continuing to fight this case,” Black said. “We don’t believe any of the claims have any validity at all. Zero. Nada. Zip.”

Plaintiff attorney Sanford P. Dumain, a partner with Milberg Weiss Bershad Hynes & Lerach LLP, said the settlement was “very fair” for the millions of potential class members who bought UPS’ excess-value insurance.

“Fortunately, we do live in a country where consumers have rights, and this is an example of consumers protecting their rights,” Dumain said. “We think it’s a very fair settlement.”