By Laura Stevens
FedEx Corp. on Thursday lost a motion to dismiss Justice
Department charges of conspiracy to distribute controlled
substances related to its alleged role in transporting illegal
prescription drugs.
District Judge Charles R. Breyer denied the motion, which argued
FedEx is legally protected as a so-called "common carrier," a
company that is typically defined as a transportation company that
is paid to take cargo indiscriminately and serves the general
public.
The judge ruled in FedEx's favor, however, on a motion to
subpoena certain communication records which the company said will
prove it aided law enforcement.
"The communications will demonstrate what FedEx did: the company
repeatedly cooperated with law enforcement's efforts to combat
rogue Internet pharmacies, including aiding law enforcement
investigations of some of the very entities with whom FedEx is
alleged to have conspired," FedEx argued in an earlier court
filing.
FedEx said in a statement it accepted the rulings of the court,
maintains its innocence and will continue to defend itself.
A spokesman for the U.S. attorney of the Northern District of
California, who brought the charges against the company, declined
to comment.
The case is a key legal test of how much responsibility delivery
companies bear for the contents of packages they deliver. FedEx
argued in its motion to dismiss that it can't reasonably be
expected to police every one of the more than 10 million shipments
it moves daily in search of illegal items. It also argued that U.S.
law provides exclusions from legal responsibility for common
carriers.
The Justice Department filed its original indictment in July
alleging that for years FedEx repeatedly ignored warnings from
government officials that the delivery company was breaking the law
by shipping drugs ordered from online pharmacies that dispensed
them to anyone who filled out an online questionnaire. FedEx
pleaded not guilty.
If FedEx is found guilty, the U.S. attorney's office has said it
could face a maximum fine of $1.6 billion, or twice the revenues it
made engaging in that business. FedEx has previously said it earned
revenue of far less than $820 million from pharmacy shipments and
disputed the fine amount.
Write to Laura Stevens at laura.stevens@wsj.com
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