UPS settles Overseas Partners class action
United Parcel Service Inc. has agreed to provide vouchers to its customers to settle a consolidated class action lawsuit that alleged UPS overcharged shippers for excess-value package insurance written by a Bermuda-based company owned by UPS employee-shareholders.
Atlanta-based UPS was hit with 27 such lawsuits across the country after a U.S. Tax Court judge ruled in 1999 that Bermuda-based Overseas Partners Ltd. was a “sham” intended to divert taxable UPS income from the excess-value program. A panel of the 11th U.S. Circuit Court of Appeals later overturned the ruling, finding that OPL served a legitimate business purpose.
The class actions continued, though, after being consolidated before U.S. District Judge Richard Berman in New York. Judge Berman on Friday approved the terms of a settlement, under which UPS would pay no cash but would grant customers covered by the deal vouchers good for future UPS shipments.
While plaintiffs lawyers valued the vouchers at $205 million, a UPS spokesman insisted that “it’s going to be notably less than that.”
UPS has not itself estimated the value of the settlement, the spokesman said, explaining that it is impossible to know how many of those covered will actually request and use the vouchers.
Individual plaintiffs may still object to the settlement, though lawyers in all of the original 27 cases have agreed to its terms, the spokesman added.
Judge Berman, meanwhile, has asked a magistrate judge to review the plaintiff lawyers’ request for $19.3 million in fees, the maximum allowed under the settlement agreement.
