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FedEx Ground sues delivery contractor for creating ‘fictionalized crisis’

Lawsuit sheds light on Patton’s business structure, accuses him of capitalizing on contractor fear

Spencer Patton addresses FedEx Ground contractors last weekend in Las Vegas. (Photo: Route Consultant)

FedEx Ground has sued one of its largest delivery contractors, claiming he is spreading false and misleading information about the company and its relationships with contractors to boost the fortunes of his web of businesses.

In a filing early Friday, the U.S. ground-delivery unit of FedEx Corp. (NYSE: FDX) accused Spencer Patton of “creating a fictionalized crisis” between FedEx Ground and its approximately 6,000 contractors so he could drive contractor business to his companies. According to the suit, Patton has exaggerated financial hardships facing FedEx Ground contractors so they will use one of his businesses, Route Consultant, to renegotiate their contracts with the unit.

Patton’s push to paint a dire picture of the situation at FedEx Ground is a “promotional campaign for the consultancy, brokerage and other services of Route Consultant” directed at the unit’s contractors, the suit alleged.

Patton has warned that up to 35% of the unit’s contractors are in some level of financial distress due to rapidly escalating operating costs and a slowdown in e-commerce delivery volumes. Some contractors may not make it through the year without help from FedEx Ground. The company pays local delivery drivers a per-stop fee and line-haul drivers a per-mile fee.

The suit, filed in federal district court in Tennessee, charges Route Consultant with violating federal and state laws by making unfounded allegations that have damaged FedEx Ground’s brand and reputation. The suit seeks unspecified financial damages, a disgorgement of Route Consultant’s profits that have been generated through Patton’s alleged behavior, and an injunction permanently blocking Patton from engaging in the allegedly unlawful conduct on behalf of his company.

In an emailed statement on Friday, Patton said the lawsuit avoids the central issue of the suffering being endured by many contractors.


“It’s unclear how a lawsuit against their contractors — many who are really struggling financially — solves the problem of inflation, high gas prices and a driver shortage,” Patton said. 

In a separate statement, Patton said he wasn’t afraid of legal action and that he knew “when he started speaking on behalf of small business owners in the community that a lawsuit was a likely weapon FedEx would deploy.”

Earlier this week, Patton said through a spokesperson that concerns about his business arrangements are a sideshow that distracts from the pressing fact that about one-third of the 6,000-member contractor network are in financial peril.

Patton added that Route Consultant’s success remains dependent on the success of FedEx Ground. He scoffed at the notion that his primary goal is to feather his nest. Patton said it would be ludicrous to deliberately create a crisis climate knowing the adverse publicity might damage the value of all the independently owned contractor businesses.

Focus on business structure

Based on the allegations in the suit, Patton’s business structure will be a major topic of conversation. As a contractor, Patton Logistics operates in 10 states with 275 trucks. Route Consultant, which Patton founded after starting up a contractor, offers a broad range of advisory and consulting services.

One of Patton’s most prominent services is the brokering of geographic territories that are bought and sold. He offers a three-month course to teach potential investors how to identify, acquire and operate a FedEx Ground territory, according to the suit. For new contractors, Route Consultant provides post-closing “milestone support” for the first 90 days after a purchase, the suit said. 

For the past eight and a half years, Patton has been president of ADTP Inc., which is an entry-level driver training program that is owned and operated by FedEx Ground contractors, according to his LinkedIn profile. He also runs Patton Holdings, a portfolio of rental commercial and residential properties in Nashville, Tennessee, where he is based.

The suit comes less than a week after Patton, speaking before about 3,500 contractors at a two-day conference in Las Vegas, said he would shut the contractor business by Nov. 25, the day after Thanksgiving known as Black Friday, unless FedEx Ground provided financial help to his business before then. 

Patton’s keynote last Saturday accused FedEx Ground of being out of touch with the needs of contractors and being staffed with managers who don’t have a strong understanding of the day-to-day operations. 

Patton also criticized FedEx Ground CEO John Smith for not responding to his invitation to speak before the group.

Patton repeated previous claims that he is not looking to place a deadline on when FedEx Ground needs to take action. However, he said last weekend that “we need to have a timeline” to ensure contractors can stay afloat to provide reliable service during peak season.

Patton has formed the Trade Association of Logistics Professionals, which he has said will be open to all contractors who work on behalf of transport and logistics companies. Within that group is expected to be a 10-person committee that will act on behalf of FedEx Ground contractors. 

FedEx Ground has said it will only negotiate contractual changes on an individual basis and not through any form of third-party bargaining unit. The unit’s parent has been adamantly anti-union for its 50 years in business and has interpreted Patton’s reference to Nov. 25, arguably the busiest day of the year for the unit, as an ultimatum.

Cease-and-desist

On July 26, FedEx Ground sent Patton a cease-and-desist letter demanding that he stop all “advocacy” on behalf of any service providers besides his own, that he stop disparaging the company’s brand and reputation, and that he stop any plans to form a committee that would negotiate on behalf of other contractors.

FedEx Ground has said that collective bargaining in any form is a breach of the contract between the unit and its contractors. Based on Patton’s actions since then, he apparently has no plans to disband the committee.

The unit acknowledges the contractor network is under pressure, and said it is taking steps to mitigate the pain. One step has been to suspend Sunday deliveries across about 15% to 20% of the national network. Patton has said repeatedly that Sunday service should be scrapped entirely because there aren’t enough volumes to offset the operating costs and it disrupts the package flow fluidity of the entire network.

In the suit, FedEx Ground repeated previously reported claims that only 10% of contracts have been submitted for renegotiation since the start of the year. Since July 1, shortly before Patton fired his first salvo, FedEx Ground has consented to 40% of renegotiation requests, the suit said, noting that more than 90% of those negotiations resulted in higher contractual payments.

According to the suit, an unnamed industry analyst recently valued the 100 provider businesses listed for sale on Route Consultant’s website and said they generated 16% operating margins. The businesses were being sold at an average multiple of 0.8x sales and more than 2 times their fleet value, according to the analyst.

“These are certainly not businesses in distress,” the analyst was quoted in the suit as saying.

33 Comments

  1. daniel kostov

    Been a FedEx ground contractor for 18 years now, 2021 was tough but 2022 is one of our better years. 57 employees, have health care plan for employees and six former UPS drivers who hated it there working for us. We have our own mechanic shop for the trucks with second floor office in a building we own. I have no complaints with FedexGround whatsoever it’s been great for us, took a while to master it but if you want to work hard and run a small business FedExground is excellent. Though I admit it’s not for everyone, I have previous experience with other similar models. We are based in Canada.

  2. Scott

    So compared to ups drivers that do about the same thing as fedex ground drivers what do they make a year. Most UPS package drivers are at 44 bucks and hour plus benefits and pension and vacation. They average over 120k a year total package. What does a fedex ground driver make.

  3. Disgruntled

    Dumb founded that a company the size of FedEx would be such a liar and bully! It’s fact not even in question the contractors are loosing large amounts of money all while FedEx profits grow. I promise the system is crumbling. I doubt the shareholders or the board have any idea how bad thing really are. Ive been doing this many years and the last year and a half in this business have taken every cent Ive saved in my life time. FedEx is not telling the truth and they are ruining many lives.

    1. W. Darrwtt

      FedEx truly needs to go out of business. They lie often that packages are delayed because of weather conditions when no such conditions exist. My recently passed four deliveries were delayed due to falsified weather lies. All weather delays happen in California when package is stuck in the Sacramento area for 3-4 days to be deliveries to Fresno, CA (183 miles)

    2. Nicole

      They have just got done ruining mine. They are a fraud and sham. They should not be allowed to get away with what they do. I now too face bankruptcy and I am woman so this coming to light actually could not have at the best time ever. Now I know there night be some hope. Thank You Spencer Patton

  4. Dale Heinlein

    Yes, I made a good living at one time with FedEx. But every contract is based on potential growth which currently is not happening. The talent that FedEx had in management has moved on to Amazon.
    Simply put new management has NO clue.
    They are 3rd stringers or just sit on the bench
    Looking like their doing something great.

  5. Steve Lorenc

    FedEx has chosen to continue to lie. They are digging in there heals instead of addressing the issue and their responsibility. I hope the DOT has a heart to keep people safe on the road. From the amount of dishonesty from FedEx it’s clear that they can’t be trusted. I understand that they have all terminal management and any Fedex district employees are not allowed to communicate any negotiation or policies via email or text with contractors. They have been programmed to always communicate in conversation only as to leave no documentation. Why keep everything in the dark. This us most likely why FedEx has no talent. The talent leaves after seeing the dishonesty and true lack of a heart to provide better service etc…

    1. Nicole

      Absolutely True. I just fought with them over this. I was told to stop emailing station nmangeent with with questions since I was new to industry and basically started out blind we got no training at all on any aspect.
      She informed her entire staff not to respond to any of my emails. In my professional career I thought this was most unprofessional, unreasonable, unrealistic and most absurd thing I have ever seen in my entire career. I refused to communicate with them unless it was by email or text another reason I was unethically pushed out. That would only allow me to be in contact with the station management and BDS whom all were completely useless. BDS s a joke.

  6. Peter Brownsey

    I have requested shippers not to use Fedex because of delayed and damaged deliveries. Some deliveries we left one mile from our house next to someone else’s garage.

  7. Stephen Webster

    In ont 🇨🇦 a number of contractors have lost money. This just FedEx being a bully. We need fed gov to step and set min standards and rates including A C above certain temperatures. Yet the C T A defends FedEx and is upset that the fed gov says truck drivers should have 10 sick days ( including subcontractors?).

    1. Ryan

      As a former FedEx ground driver out of the boulder terminal in Colorado, it’s has been proven many time over that the contractors have zero support from FedEx as a company. It’s simply this, if you cannot handle the ridiculous amount of volume they continue to accept, you will lose your contract. I worked for a few contracts and it’s simple. FedEx does everything to save face and nothing to address the problems within its own business. Mainly loaders and management. So that being said. It’s just another cooperation doing business as usual. Screw the workers and profit is king.

      1. Wendy

        Well said my friend. Those that have never worked for a contractor through FedEx have no clue of all the lies and bullying that is done by FedEx itself. Thank you for stating what you stated. I am out of the Toledo hub.

Comments are closed.

Mark Solomon

Formerly the Executive Editor at DC Velocity, Mark Solomon joined FreightWaves as Managing Editor of Freight Markets. Solomon began his journalistic career in 1982 at Traffic World magazine, ran his own public relations firm (Media Based Solutions) from 1994 to 2008, and has been at DC Velocity since then. Over the course of his career, Solomon has covered nearly the whole gamut of the transportation and logistics industry, including trucking, railroads, maritime, 3PLs, and regulatory issues. Solomon witnessed and narrated the rise of Amazon and XPO Logistics and the shift of the U.S. Postal Service from a mail-focused service to parcel, as well as the exponential, e-commerce-driven growth of warehouse square footage and omnichannel fulfillment.