FedEx Corporation (NYSE:FDX) Investor Filed Lawsuit Against Directors

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Company Name(s): 
FedEx
Case Name: 
FedEx Shareholder Derivative Lawsuit 09/12/2014
Case Status: 
Lawsuit Filed
Affected Securities
NYSE: FDX
Lawsuit Overview
Type of Lawsuit: 
Shareholder Derivative Action
Date Filed: 
09/12/2014
Summary: 

September 16, 2014 (Shareholders Foundation) - An investor who currently holds shares FedEx Corporation (NYSE:FDX) filed a lawsuit against certain directors of FedEx over alleged breaches of fiduciary duties.

The plaintiff filed the lawsuit against certain directors of FedEx Corporation over the alleged business practice of allegedly knowingly shipping illegal drugs from online pharmacies, which has led to recent criminal indictments for drug trafficking and money laundering

The plaintiff claims that FedEx Corporation was allegedly aware that it shipped illegal prescription drugs to drug addicts, underage persons, and individuals who either died or accidentally caused another to die as a result of drug overdose and that FedEx’ Founder, CEO and Chairman of the Board Frederick Smith among others stubbornly refuse to take responsibility for their failure to correct known problems.

On July 17, 2014, the FDA announces that the U.S. Attorney for the Northern District of California charged the FedEx Corporation with conspiring with two separate but related online pharmacy organizations to distribute controlled substances and prescription drugs to U.S. consumers without requiring their customers to have a valid prescription, as required by the Federal Food, Drug, and Cosmetic Act. The FDA said that according to the indictment, as of July 2004, FedEx Corporation employees had identified over 200 accounts that were associated with online pharmacies and by September of 2010, the list had increased to over 600 online pharmacy accounts.
On July 17, 2014, FedEx Corporation announced in a regulatory filing that it has received, "requests for information from the U.S. Department of Justice ("DOJ") in the Northern District of California in connection with a criminal investigation relating to the transportation of packages for online pharmacies that may have shipped pharmaceuticals in violation of federal law. On July 17, 2014, the DOJ filed a criminal indictment in the United States District Court for the Northern District of California in connection with the matter. The indictment alleges that FedEx Corporation, FedEx Express and FedEx Services, together with certain pharmacies, conspired to unlawfully distribute controlled substances, unlawfully distributed controlled substances and conspired to unlawfully distribute misbranded drugs."

On August 15, 2014, it was reported that according to a court filing FedEx Corporation was indicted in a U.S. criminal case for alleged conspiracy to launder money over deliveries for illegal online pharmacies. The indictment reportedly said that FedEx Corporation delivered controlled substances and prescription drugs from online pharmacies to individuals who subsequently died or accidentally caused the death of others. FedEx Corporation reportedly could be fined $1.6 billion. FedEx Corporation responded to the indictment and said the company is innocent of these and all of the charges filed in this matter and that the company will plead not guilty.

FedEx Corporation (NYSE:FDX) reported that its Total Revenue rose from $44.28 billion for the 12 months period that ended on May 31, 2013 to over $45.56 billion for the 12 months period that ended on May 31, 2014 and that its respective Net Income increased from over $1.56 billion to over $2.09 billion.