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Friday, February 29, 2008

FedEx, Best Buy and AT&T, oh my!

Quick, what do these three companies have in common? Easy answer is that they all sponsor a Cup team. More difficult answer is that they are all are involved in multi million dollar judgments against their companies.

AT&T just recently agreed to a settlement that could result in over 10 million dollars returned to costumers and will also will pay 2.5 million dollars to the State of Florida and contribute $500,000 to a ‘safe internet’ customer protection group. All total, in Florida alone, the bill to AT&T could be as high as 13 million dollars. While not a complete primary sponsorship for a Cup season, it is about 2/3 of one. Problem is, that this judgment is only for one state, there could also be 49 states to go. We all know that AT&T wants to continue their Nascar sponsorship despite agreeing in principle to leave and not compete with the title sponsor, but if more of this type of settlement is required in the future, there may not be the dollars to hand over to a Cup team.

Best Buy was handed a 54 million dollar tort claim for misplacing a customer’s laptop that was under a Best Buy extended warranty and as being serviced. On the surface, 54 million dollars might seem extreme, however the Best Buy customer in question was very thorough in her documentation of the many contacts, and customer service reps she spoke with over a course of just a few months after purchasing the laptop. Best Buy not only gave her the run around, but flat out lied to her about this situation.

Once Best Buy finally admitted that the lap top was never serviced but missing, Best Buy offered her a $900 in-store gift certificate for a defected laptop she paid over $1,100 just three months before. Not to mention the lost personal data and software she had purchase. (At Best Buy) t was not until she contact the Attorney General’s Office in Washington D.C. that Best Buy offered the full purchase price plus a $500 in-store gift certificate, but the person in question had enough.

She had originally asked Best Buy for $2,100 but always was denied. It was not until she filed the 54 million dollar suit that Best Buy agreed to her original offer, however Best Buy has another problem. Her personal information and even tax returns were stored on the laptop’s hard drive and Best Buy had violated Washington security breach notification laws by not telling her about the potential identity loss. To date, Best Buy still has not followed federal law and notified her. 54 million dollars might sound high, but then again that is about 2 ½ seasons of primary Cup sponsorship.

But probably the Cup sponsor that maybe hit the must in the pocketbooks is the recent IRS judgment against Federal Express of 319 million dollars. That’s right, 319 million clams! Turns out that FEDEX has been wrongfully claiming that their FEDEX Ground drivers were independent contractors and because of that, federal withholding taxes were not the responsibility of FEDEX. The IRS doesn’t agree. But the catch is that this 319 million is JUST FOR 2002! The IRS is also investigating from 2003 to 2006, probing if workers were wrongly classified in order for FEDEX to gain tax benefits. To make matters worse for FEDEX, FEDEX is involved in 24 different state lawsuits that are investigating the same issue, so the company could be on the hook for even more taxes and penalties across the country on its classification of drivers as contractors rather than full employees. Adding to its woes, FedEx also received a grand jury subpoena from the Department of Justice for documents, investigating possible price-fixing among airfreight forwarders.

So the next time a Cup sponsorship ‘pulls out’ of Nascar, it may not be because of the failure of drivers like Jeff Burton, Denny Hamlin, Elliott Sadler, or the team, or even the common theme that ‘Nascar is in a downward trend’, it may have more to do with the financial position of the company and their own legal problems.


Vroom said...

Tort this!

Trixie said...

Yikes! Makes me want to rethink buying electronics at Best Buy, change my cell phone provider and well I don't ship anything Fed Ex since I support the USPS. Postman works for them and well..they pay the bills.