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FedEx Settles Suit Over Claims It Overcharged Customers

July 9 (Bloomberg) -- FedEx Corp., the world’s largest cargo airline, agreed to settle a lawsuit over claims the company was “systematically overcharging” customers by billing for deliveries to businesses and government offices at higher residential rates.

A “preliminary settlement approval hearing” is set for July 23, according to a filing yesterday in federal court in Memphis, Tennessee, where the company is based. Terms of the accord weren’t disclosed in the filing.

“The details will be released when we move for preliminary approval,” Steven Rosenwasser, an attorney for the plaintiffs, said today in a phone interview. The plaintiffs will request certification of a national class of consumers for purposes of the settlement, he said.

“We have reached a tentative settlement in this case which will be subject to court approval,” Shea Leordeanu, a FedEx spokeswoman, said in an e-mailed statement.

FedEx was accused in the 2011 complaint of overcharging commercial and government customers as much as $3 each for tens of thousands of packages delivered.

The plaintiffs asked to proceed on behalf of all customers of the company’s FedEx Express unit since 2010 who paid the alleged overcharges and those who were overcharged by its FedEx Services unit after August 2008.

FedEx charged residential rates to destinations including the U.S. Citizenship and Immigration Office in Chicago, a Bank of America Corp. facility in Tampa, Florida, and the Safariland Group body armor company in Jacksonville, Florida, according to an amended complaint filed in December.

Triple Damages

The plaintiffs, claiming violations of federal civil racketeering law, asked for three times the amount of the alleged overcharges in their lawsuit.

FedEx denied the overcharging allegations and said customers could avail themselves of a procedure for challenging the charges, according to court filings.

FedEx rose 6.8 percent to $105.62 at 12:24 p.m. in New York Stock Exchange composite trading.

The case is Gokare PC v. Federal Express Corp., 11-cv-02131, U.S. District Court, Western District of Tennessee (Memphis).

To contact the reporters on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net; Andrew Harris in Chicago at aharris16@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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