By Laura Stevens
FedEx Corp. filed to dismiss Justice Department charges of
conspiracy to distribute controlled substances for its role in
allegedly transporting illegal prescription drugs, arguing that it
is legally protected as a company that carries goods for the
public.
The FedEx motion, filed in San Francisco district court
Wednesday, argues that as a common carrier, FedEx cannot reasonably
be expected to police the millions of packages it carries each day
that might potentially contain an illegal item. A common carrier is
typically defined as a transportation company that is paid to take
cargo indiscriminately and serves the general public, which can
include railroads, trucking companies and airlines.
The case is a key test for h ow much legal responsibility
delivery companies bear for the contents of packages they deliver.
FedEx moves more than 10 million shipments a day on average and
says it can't police every one.
FedEx attorneys point to exclusions under U.S. law that say
common carriers aren't criminally responsible for holding or
transporting controlled substances.
"The common carrier exemptions appear affirmatively to establish
that common carriers may transport pharmaceuticals without being
subject to criminal sanction," according to the FedEx motion. "No
common carrier could reasonably have been expected to understand
that it faced criminal liability for transporting prescription
medications."
A spokeswoman for the U.S. attorney of the Northern District of
California, who brought the charges against the company, didn't
immediately respond to a request for comment.
The Justice Department filed an indictment in July alleging that
FedEx repeatedly ignored warnings from government officials from as
far back as 2004 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. It charged FedEx
with conspiracy to distribute controlled substances, conspiracy to
distribute misbranded drugs, distribution of controlled substances
and misbranding drugs.
The department filed a superseding indictment in August,
alleging that FedEx knew that payments from certain pharmacies
resulted from invalid prescriptions and charging it with conspiracy
to launder money.
FedEx pleaded not guilty.
While FedEx attorneys said in the new motion that the case
should be dismissed on a question of law, they also argued that
FedEx was innocent of the charges.
"The evidence at trial would show that FedEx did not act with
knowledge of specific intent that would be required for conviction.
But a trial is not necessary, and this prosecution should end now,"
lawyers for FedEx wrote in the filing.
If FedEx is found guilty, the U.S. attorney's office has said it
could face a potential maximum fine of twice the revenues it made
engaging in that business, or about $1.6 billion. FedEx has
previously disputed that amount, saying it had revenue of far less
than $820 million from pharmacy shipments.
In its quarterly filing with the Securities and Exchange
Commission last week, FedEx said it couldn't estimate how much a
loss in the case might cost, "however, it is reasonably possible
that it could be material if we are convicted."
Write to Laura Stevens at laura.stevens@wsj.com
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