“American Dream” Leads to Dead End: Contractors Sue FedEx Corporation
Case Update: On Monday, March 10th, the Circuit Court for Washington County, Tennessee granted Plaintiff’s request for discovery (including but not limited to depositions and document requests) and accordingly determined it will not rule on the Plaintiff’s Motion for Temporary Restraining Order or Defendant’s Motion to Compel Arbitration until discovery is completed by the parties “with all deliberate speed.”
“The importance of the Discovery ruling allows Plaintiffs to more clearly understand why FedEx is conducting the activities they say they are entitled to conduct,” says Senior Partner Greg Coleman.
On Friday, Tennessee entity LCQ Logistics filed a complaint in Washington County court against FedEx Corporation seeking injunctive relief for alleged breach of contract.
Founders of LCQ Logistics contend they were contracted by FedEx Corporation to deliver packages across various Tennessee counties and now face “irreparable catastrophic harm” to their business resulting from the transportation corporation’s conduct.
In its breach of contract allegations, the complaint cites FedEx’s demand of thousands of dollars in refuted liquidated damages against LCQ Logistics stemming from extreme weather incidents, the unwarranted seizure of LCQ Logistics territory, and refusal to negotiate a new contract in good faith.
A temporary restraining order was also filed on Friday to prevent FedEx from “unilaterally terminating its franchisee contract” as scheduled.
Redan Logistics
Before becoming LCQ Logistics, FedEx contractor Redan Logistics was formed and operated by two entrepreneurs in Washington County. One of Redan’s founding partners, Joseph Sponcia, described his experience.
“Contracting with FedEx used to be one of the best kept secrets in America,” Sponcia explains. “For years, the company would contract with local business-people in protected zip codes, with predictable revenue each week. We were responsible for hiring a team locally, providing trucks to service each zip code, light accounting, and management oversight to ensure each package was delivered safely and on time.”
“It was a dream scenario for me personally, as I had always wanted to operate my own business. For years, we operated on a very predictable net profit that was fair for both FedEx and local contractors.”
Sponcia claims his American dream quickly turned into a nightmare in the Spring of 2024, following the merger of FedEx Ground and FedEx Express (now FedEx Corporation).
Margins suddenly dropped to the low single digits, undue corporate pressure on both contractors and hired drivers began to mount, stark comparative differences in driver pay between local drivers and competitors like UPS became glaring, and FedEx’s failure to accommodate economic variables sent waves throughout the contractor community.
“We all felt abandoned,” Sponcia claims. “If you spoke up during local business review meetings with FedEx, you were either ignored or told to get more efficient, which for many of us was a non-starter due to our safety concerns.”
Sponcia notes some businesses even faced local retaliation for raising viable concerns.
According to Sponcia, large national contractors had their routes stripped by FedEx across multiple states after advocating for their workers. “At that moment,” Sponcia explains, “we all became afraid for our livelihood.”
Following the merger, contractors were allegedly bombarded by a flurry of contractual amendments, even though most contracts were originally signed for just one- or two-year terms.
“The contracts became absurdly one-sided and win-lose. What was meant to be a partnership became FedEx profiting at our expense,” Sponcia claims. “After investing years of my life and millions of dollars into the business, it’s difficult to just walk away, but that’s exactly what is happening. Many of my personal friends have been forced to file bankruptcy.”
LCQ Logistics
In September 2023, Acie Perry began a management position with Redan Logistics. In 2024, Perry – along with the two Redan founding partners – formed a new entity, LCQ Logistics, thereby purchasing all Redan assets and delivery routes franchised from FedEx Corporation.
During one of his FedEx Corporation training sessions, Perry was advised LCQ Logistics would be granted a grace period – “typically 60 or 90 days” – prior to having to enforce certain contractual requirements.
The training session also covered protocol for weather exceptions, which grant the contractor “discretionary decision-making power” for any serious weather events.
Perry claims FedEx did not fulfill either obligation, alleging LCQ Logistics was never granted its promised grace period, and that FedEx, “overrode [LCQ’s] discretion, dictated performance objectives and punished alleged breaches of contract.”
Hurricane Helene
Hurricane Helene made landfall across the Southeastern U.S. in September of 2024, wreaking havoc across several states with flash flooding, landslides, and catastrophic injury. According to the complaint, more than half of Mr. Perry’s service routes were impacted by the devastation.
Some roads were impassible for weeks.
According to the complaint, “despite dangerous flooding… FedEx Corporation still expected” deliveries to be made and severely impacted areas to be serviced.
Perry approached Al Malburg – a FedEx Corporation representative – to advocate on behalf of his drivers, claiming the delivery potential was either “too dangerous or impossible,” given the road and river conditions.
Regardless, Malburg encouraged the routes to be dispatched. According to Perry, Malburg stated he was, “more concerned with a volcano erupting in the middle of Elizabethton (Tennessee) than any of those rivers.”
FedEx would accuse LCQ Logistics of breach of contract for failure to perform, although LCQ contends the corporation has neither “explained nor provided any proof of an alleged breach.”
However, LCQ explicitly accuses FedEx of violating its Independent Service Provider Agreement, after FedEx began to “supervise and direct and dictate the methods, manners or means of LCQ’s contracted services.”
Beyond overriding Perry’s discretionary determination with Hurricane Helene, the complaint also accuses FedEx of stripping delivery routes from LCQ and appointing them elsewhere after a January snowstorm rendered roads along the route unsafe for several days.
The delivery routes were never returned to LCQ.
Despite following protocol, LCQ claims this maneuver left eight of its eighteen drivers without work; the drivers remained on LCQ’s payroll for one month prior to being laid off.
“Substantial Duress”
On February 10, 2025, Perry met with Malburg and William Brown – another FedEx Corporation representative – and was presented with yet another contract, an agreement to terminate the ISPA.
Brown allegedly advised Perry that he had two options: sign the termination agreement and agree to mutually end the ISPA on February 28, 2025, or refuse to sign and the ISPA would be terminated effective immediately.
During this meeting, Perry was also advised of invoices for “liquidated damages” that LCQ allegedly owed FedEx, both relating to weather exemption incidents. Perry alleges he was never provided with how the purported damages had been calculated.
When asked if he may phone his wife to discuss the decision, Perry was denied, and was allegedly told he must make a decision, “before leaving the room.”
Eventually he was granted fifteen minutes to make the phone call.
Perry returned to the meeting and asked what the consequences would be if he refused to sign. According to the complaint, Brown responded, “it would not matter, FedEx will not accept a new agreement.”
According to the complaint, Perry ultimately signed under duress.
Driven Out of Business
Without another contract in place, the February 28th termination of the Independent Service Provider Agreement between LCQ Logistics and Fedex Corporation will effectively put LCQ out of business.
Further, LCQ will be unable to pay its truck drivers, continue to maintain its fleet of trucks, or adequately satisfy any other debts owed by the company.
The complaint attributes all costs to FedEx’s alleged breach of contract.
Senior Partner Greg Coleman of Milberg Coleman Bryson Phillips Grossman is the lead attorney representing LCQ Logistics.
A jury trial has been demanded.
I have personal friends who love this business, who have been contractors for more than ten years, who are being forced out,” says Sponcia. “The vast majority of contractors are hardworking, salt of the Earth people, many of whom drove trucks and saved up all their lives to get a small slice of the American dream. As entrepreneurs, we are more than willing to take risks, however, FedEx’s decision to put packages ahead of people is disappointing on a scale I can hardly describe. Contractual agreements must be upheld.
