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COMPLAINT 16 17 V 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 UNITED PARCEL SERVICE, 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 - 001968-11 168953 V1 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 Mail Boxes 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 - 001968-11 168953 V1 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 package delivery 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 - 001968-11 168953 V1 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 - 001968-11 168953 V1 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 - 001968-11 168953 V1 1 unprofitable circumstance. “UPS scans the packages with its own lasers after the box is out of our hands and then 2 restates the charges.
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