1 Reed R. Kathrein (139304) Shana E. Scarlett (217895) 2 HAGENS BERMAN SOBOL SHAPIRO LLP 425 Second Street, Suite 500 3 San Francisco, California 94107 Telephone: (415) 896-6300 4 Facsimile: (415) 896-6301 [email protected] 5 [email protected]

6 Steve W. Berman (pro hac vice) Anthony D. Shapiro (pro hac vice) 7 HAGENS BERMAN SOBOL SHAPIRO LLP 1301 Fifth Avenue, Suite 2900 8 Seattle, WA 98101 Telephone: (206) 623-7292 9 Facsimile: (206) 623-0594

10 Counsel for Plaintiffs

11

12 UNITED STATES DISTRICT COURT

13 NORTHERN DISTRICT OF CALIFORNIA, SAN FRANCISCO DIVISION

14 PERSEPOLIS ENTERPRISE, a No. Michigan corporation, 15 Plaintiff, CLASS ACTION COMPLAINT 16 17 v.

18 , INC., a Delaware corporation; UNITED 19 PARCEL SERVICE, INC., an Ohio 20 corporation; and UNITED PARCEL SERVICE, INC., a New York 21 corporation,

22 Defendants.

23 24 For its complaint plaintiff alleges as follows. Plaintiff alleges all facts relating 25 to itself and its experiences based on personal knowledge and all facts relating to 26 other allegations based on information, belief and the investigation of his counsel as 27 follows: 28 CLASS ACTION COMPLAINT- - 1 -

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1 I. INTRODUCTION 2 1. This is a proposed class action on behalf of entities owning and 3 operating United Parcel Service (“”UPS”) franchises across the United States under 4 the Brand, Etc. and UPS store brands, and entities having “6 digit” 5 personal, business and corporate accounts with UPS. 6 2. The action arises from UPS’ manipulation of the dimensional weight 7 system used to determine package size and weight for shipping. UPS has been 8 systematically rebilling franchisees and or UPS “6 digit” account customers based on 9 UPS’ laser weight and measuring devices. Thus, after a franchisee or UPS “6 digit” 10 account customer has measured, weighed and billed a package and calculated its 11 shipping cost, it then sends the package to UPS. UPS then “remeasures” using its 12 laser measuring system. It then charges the franchisee and or UPS “6 digit” account 13 customer for differences between UPS’ measurement and that of the franchisee’s or 14 6 digit account. 15 3. UPS’ laser measurement machines are not properly calibrated and are 16 often inaccurate. Final bills or account reconciliations result in adjustments 17 imposing higher charges for shipping on plaintiffs and members of the class. 18 4. In this lawsuit plaintiff seeks damages from UPS’ inaccurate billing and 19 injunctive relief. 20 II. THE PARTIES 21 5. Plaintiff Persepolis Enterprise, is a Michigan corporation. It operates 22 UPS store No. 2742 pursuant to a franchise agreement with Defendant. 23 6. Defendant United Parcel Service, Inc. is a Delaware corporation with a 24 principal place of business at 55 Glenlake Parkway NW, Atlanta, Georgia 30328. 25 Upon information and belief, it owns and controls respondent United Parcel Service 26 of America, Inc. It is referred to collectively with the other United Parcel Service, 27 Inc. entities as United Parcel Service, Inc. or “UPS.” 28 CLASS ACTION COMPLAINT - - 2 -

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1 7. Defendant United Parcel Service, Inc. is a New York corporation with a 2 principal place of business at 55 Glenlake Parkway NW, Atlanta, Georgia 30328. 3 Upon information and belief, it owns and controls respondent United Parcel Service 4 of American, Inc. It is referred to collectively with the other United Parcel Service, 5 Inc. entities as United Parcel Service, Inc. or “UPS.” 6 8. Defendant United Parcel Service, Inc. is an Ohio corporation with a 7 principal place of business at 55 Glenlake Parkway NW, Atlanta, Georgia 30328. 8 Upon information and belief, it owns and controls respondent United Parcel Service 9 of American, Inc. It is referred to collectively with the other United Parcel Service, 10 Inc. entities as United Parcel Service, Inc. or “UPS.” 11 III. JURISDICTION AND VENUE 12 9. Pursuant to 28 U.S.C. § 1332, as amended by the Class Action Fairness 13 Act of 2005, this Court has subject matter jurisdiction over this nationwide class 14 action because the matter in controversy exceeds $5,000,000, exclusive of interest 15 and costs, and some members of the Class are citizens of states other than California. 16 See 28 U.S.C. § 1332(d)(2)(A). 17 10. This Court has personal jurisdiction over the defendant, and venue is 18 proper in this district, pursuant to 28 U.S.C. §§ 1391(a) and (c). Venue is also proper 19 in this district. The largest number of franchisees are located in California, and 20 many are in this district. 21 IV. FACTS 22 11. Founded in 1907 as a messenger company in the United States, UPS has 23 grown into a $42.6 billion corporation by clearly focusing on the goal of enabling 24 commerce around the globe. Today UPS is a global company with one of the most 25 recognized brands in the world. It has become the world's largest 26 company and a leading global provider of specialized transportation and logistics 27 services. It manages the flow of goods, funds, and information in more than 200 28 CLASS ACTION COMPLAINT - - 3 -

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1 countries and territories worldwide (source: 2 http://www.ups.com/content/us/en/about/index.html 3 12. In 2001, UPS ventured toward retail business by acquiring Mail Boxes 4 Etc., Inc., the world's largest franchisor of retail shipping, postal and business 5 service centers. Within two years, approximately 3,000 Mail Boxes Etc. locations 6 in the United States re-branded as “The UPS Store” and began offering lower UPS- 7 direct shipping rates. The stores remain locally owned and operated, and continue 8 to offer the same variety of postal and business services, with the same convenience 9 and world-class service (source: 10 http://www.ups.com/content/corp/about/history/2002.html 11 13. If a customer takes a package to a UPS Store that is not a drop off (pre- 12 paid) package, the customer is then billed by the UPS Store. If a customer ships a 13 package at the UPS Store, the customer is the Franchisee Customer. The franchisee 14 in turn is UPS’s customer and UPS bills the franchisee. 15 14. UPS instructs franchisees on how to measure and weigh packages. UPS 16 does so even though the franchisee agreement proves that the “Participating 17 Franchisee,” in its sole discretion, and not under the direction or control of UPS, 18 provides its services to the general public and that the Participating Franchisee shall 19 determine the means, methods or manner of performing its services.” 20 15. The Franchise Agreement also provides that UPS services shall be 21 provided as stated in “UPS Retail Rate and Service Guides.” 22 16. Plaintiff has followed the UPS Retail Rate and Service Guide in 23 determining the measure of a package as have thousands of franchisees and UPS 24 6 digit account holders. 25 17. Upon receipt of a package, UPS remeasures each package based upon 26 its laser device measuring system and then “adjusts” the balance between the 27 franchisee or 6 digit account holder and UPS. UPS’ laser system has not been 28 CLASS ACTION COMPLAINT - - 4 -

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1 approved by their state Weights and Measures Departments, and its measurements 2 are often inaccurate. As a result of its system, the adjustments predominantly favor 3 UPS. UPS systematically has rebilled plaintiff based on its inaccurate measuring 4 system. This has cost plaintiff hundreds of dollars on a monthly basis. 5 18. The inaccuracies of the UPS system is known to UPS and has recently 6 been criticized by Franchisee members: 7 Platinum Shield Association Says United Parcel Service Charges Unfairly Because of Improper Measurements of 8 Packages Monday April 30, 1:53 pm ET 9 10 NEW YORK, April 30 /PRNewswire/ -- Officials of the Platinum Shield Association (PSA), whose members own 11 and operate United Parcel Service (NYSE: UPS - News) franchises across the United States under the Mail Boxes 12 Etc. brand, charged today that UPS imposes higher 13 shipping costs on franchisees due to UPS’ manipulation of the dimensional weight system used to determine package 14 size and weight for shipping.

15 ‘This is significant, because the franchisees find it almost 16 impossible to dispute the increased costs with UPS once the package is in UPS’ control,’ said Joe Wightman, a 17 UPS/MBE franchisee in New York. “More importantly, we believe this situation may affect all UPS shipping 18 customers,” he added.

19 Wightman quoted a recent memo the UPS Store Area 20 Franchise Developer sent to UPS franchises, which confirmed that UPS is changing the shipping weight of 21 packages: “If you as a franchisee are being hit with substantial UPS billing adjustments for restated dimensions 22 of your store's shipments, and you are convinced that your 23 original dimensions are accurate ... Look carefully at your bill to see if UPS changes the dimensions of these boxes 24 and increases the billed amount based upon their laser scanning based audit.” Wightman pointed out that this 25 places the franchisees in an impossible position, because they are in dispute with their shipping vendor, which also 26 owns their franchise. 27 Wightman characterized the issue as an inexcusable abuse 28 of UPS franchisees, many of whom are already in an CLASS ACTION COMPLAINT - - 5 -

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1 unprofitable circumstance. “UPS scans the packages with its own lasers after the is out of our hands and then 2 restates the charges. How is this equitable? Our 3 experience suggest that the restating of shipping costs to higher levels results from the impact of packages being 4 deformed after being piled on each other by UPS during transit and not by any conscious measurement errors by the 5 franchisees. How can UPS justify such a practice?”

6 Wightman added that his organization, PSA, believes 7 Federal and state government agencies should intervene to insure shipping consumers that the amount they are being 8 charged is fair and accurate.

9 19. In reviewing actual bills received by plaintiff, a franchise owner of a 10 “UPS Store,” there are many instances of packages that were measured by the 11 franchise owner in accordance with UPS directions and then later being rebilled or 12 adjusted by UPS for larger packages. 13 20. A few examples are as follows: 14 DATE MEASURED BY MEASURED BY AMOUNT CHARGED 15 FRANCHISE OWNER UPS LASER BACK TO OWNER 5/30/06 15X11X11 17X16X16 $12.63 16 8/3/06 52X24X14 51X27X14 $31.43 17 11/27/06 20X12X12 20X20X20 $3.52 18 12/18/06 20x20x12 20X20X13 $3.64 19 2/12/07 30X30X8 30X30X10 $4.22 2/16/07 22X15X7 22X16X8 $4.42 20 21 21. The above table was constructed from a random sampling of dozens of 22 charge back amounts from plaintiff’s one store, of over 4,000 UPS stores. The 23 amounts charged for all other UPS account holders is unknown at this time but 24 certainly cumulatively have the probability of running in the millions of dollars. 25 22. UPS has internally acknowledged that the laser measuring devices are 26 prone to error. 27 23. Once an adjustment is made to the franchisee’s account, that franchisee 28 cannot rebill the customer, and thus must incur the deduction made by UPS. CLASS ACTION COMPLAINT - - 6 -

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1 V. CLASS ACTION ALLEGATIONS 2 24. Plaintiff brings this action pursuant to Fed. R. Civ. P. 23 on behalf of a 3 class defined as: 4 All entities worldwide that operate franchises under the UPS Store or Mail Box Etc. brands, or entities who are “6 5 digit” account customers with UPS, and who have received 6 an upward adjustment from UPS based on UPS’ remeasurement of a package. 7 25. Excluded from this class are (a) defendant and any entity in which 8 defendant has a controlling interest, and its legal representatives, officers, directors, 9 assignees and successors, (b) any co-conspirators, and (c) any governmental entities. 10 Also excluded from the class is any judge or justice to whom this action is assigned, 11 together with any relative of such judge or justice within the third degree of 12 relationship, and the spouse of any such person. 13 26. The class consists of thousands of individuals or entities throughout the 14 United States and in many countries, making individual joinder impractical, in 15 satisfaction of Rule 23(a)(1). The disposition of the claims of the class members in a 16 single class action will provide substantial benefits to all parties and to the Court. 17 27. The claims of the representative Plaintiff is typical of the claims of the 18 class, as required by Rule 23(a)(3), in that the representative Plaintiff is an entity 19 who, like all class members, was subject to a UPS billing adjustment. Such 20 representative Plaintiff, like all class members, have been damaged by defendant’s 21 misconduct. 22 28. The factual and legal bases of defendant’s misconduct are common to 23 all members of the class and represent a common thread of fraud and other 24 misconduct resulting in injury to Plaintiff and all members of the class. 25 29. There are many questions of law and fact common to the class and those 26 questions predominate over any questions that may affect individual class members, 27 28 CLASS ACTION COMPLAINT - - 7 -

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1 within the meaning of Rule 23(a)(2) and 23(b)(3). Common questions of law and 2 fact include, but are not limited to, the following: 3 (a) Whether UPS uses a laser measuring system;

4 (b) Whether the system is inaccurate; 5 (c) Whether UPS has systematically adjusted bills or accounts 6 based on this system; 7 (d) Whether “adjustment” to bills based on that system are lawful; and 8 9 (e) the amount of damages owing to the class. 10 VI. COUNTS 11 COUNT I

12 BREACH OF CONTRACT 13 30. Plaintiff incorporates by reference the preceding allegations as if fully 14 set forth herein. 15 31. Pursuant to its agreements with franchisees, UPS had a contractual 16 obligation to honor and accept as correct the weight or size of packages as measured 17 using the UPS Rate and Service Guide and upon information and belief, UPS had not 18 contractual right to charge its franchisees for alleged mismeasurements. UPS failed 19 to honor this obligation and instead improperly charged franchisees for alleged 20 mismeasurements. 21 32. In measuring any package, UPS’ measurements would have to be 22 determined using the same instructions that the class members are required to use. 23 33. Moreover, UPS has an obligation to deal fairly and in good faith with its 24 franchisees and account holders. This obligation includes, at a minimum, 25 (1) ensuring that the franchisees’ and account holders’ rights are considered and 26 protected; permitting timely access to the packages to verify measurements that are 27 challenged; and (2) using only accurate, properly calibrated, and tested machines. 28 CLASS ACTION COMPLAINT - - 8 -

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1 34. UPS has breached its obligation to franchisees and corporate accounts 2 holders. 3 35. As a result, franchisees and corporate account holders have been 4 damaged. 5 COUNT II

6 FRAUD 7 36. Plaintiff realleges the preceding allegations as if fully set forth herein. 8 37. UPS had an obligation to follow its published UPS Rate and Service 9 Guide and printed and/or software measuring guidelines for corporate accounts. 10 38. Instead UPS has measured package using a laser system that is 11 inaccurate and uncalibrated, has concealed the inaccuracies of the system, and has 12 intentionally adjusted plaintiff and class members’ bills to the advantage of UPS. 13 39. Plaintiff and the class relied upon UPS’ Service Guide or other 14 software/instructional material that specified how to measure packages and have 15 been damaged as a result. 16 COUNT III

17 UNJUST ENRICHMENT 18 40. Plaintiff incorporates by reference all preceding paragraphs as if fully 19 set forth herein. 20 41. As a result of their conduct, Defendants have been unjustly enriched 21 from the adjustments made to plaintiff and class members shipping charges. 22 42. Defendants voluntarily accepted and retained these payments with full 23 knowledge that as a result of their wrongdoing plaintiff was deprived of money to 24 which plaintiff and the class were entitled. 25 26 27 28 CLASS ACTION COMPLAINT - - 9 -

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1 VII. PRAYER FOR RELIEF 2 WHEREFORE, Plaintiff respectfully pray as follows: 3 A. For judgment against defendant on their claims together with an award 4 of all damages available under such laws; 5 B. For judgment against defendant on their claims of unjust enrichment to 6 the defendant, including restitution of defendant’s wrongful profits, revenues, and 7 benefits to the extent, and in the amount, deemed appropriate by the Court, as well as 8 such other relief as the Court deems proper to remedy defendant’s unjust enrichment; 9 and 10 C. For such other and further relief as the Court may deem just and proper. 11 DEMAND FOR JURY TRIAL 12 Pursuant to Federal Rule of Civil Procedure 38(b), Plaintiff demands a trial by 13 jury on all issues so triable. 14 DATED: May 2, 2007. 15 HAGENS BERMAN SOBOL SHAPIRO LLP

16 17 By Reed Kathrein (139304) 18 Shana Scarlett (217895) 425 Second Street, Suite 500 19 San Francisco, CA 94107 Telephone: (415) 896-6300 20 Facsimile: (415) 896-6301 21 Steve W. Berman 22 HAGENS BERMAN SOBOL SHAPIRO LLP 1301 Fifth Avenue, Suite 2900 23 Seattle, WA 98101 24 Telephone: (206) 623-7292 Facsimile: (206) 623-0594 25 www.hagens-berman.com

26 Attorneys for Plaintiff 27 28 CLASS ACTION COMPLAINT - - 10 -

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