FedEx Loses Motion to Dismiss DOJ Drug-Shipping Charges -- Update

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.

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