Franchisees Notified of Class Action Against Mail Boxes Etc.
LOS ANGELES – Notices have been sent out to approximately 3,000 franchisees of Mail Boxes Etc. and The UPS Store, giving them the option to be a part of a national class action lawsuit against the franchisor or to opt out. They have until December 9, 2009 to send in their election form requesting to be excluded from the class. Otherwise, they will be listed as a class member.
The court certified a national class consisting of all franchisees in the US, who operated a Mail Boxes Etc. store and converted to The UPS Store through the Gold Shield Amendment on or before March, 2003, regardless if they are still operating their stores. It also certified a subclass (“the California Sub-class”) consisting of all franchisees who meet the above-described criteria and whose centers are or were located in California. Every franchisee who is a member of the California Sub-class is also a member of the Class.
The complaint alleges three claims against defendants: negligent misrepresentations; intentional misrepresentations; and misrepresentations based upon disclosures required by the California Franchise Investment Law (CFIL). Plaintiff alleges that the members of the class were misled by false statements and concealment of material facts contained in five documents provided to franchisees during an organized presentation to franchisees by UPS and MBE, known as the “Gold Shield Program.”
Gold Shield began as a test marketing program after United Parcel Service acquired the Mail Boxes Etc. franchise system, but it soon became the company’s approved method of converting MBE stores to UPS’s new model. When the franchisor amended its franchise agreements to reflect the changes, franchisee groups responded with lawsuits stating they should have been issued new franchise disclosure documents as a result of the major revisions to the brand and model. The Platinum Shield Association filed its lawsuit in April 2003, representing approximately 150 MBE franchisees, claiming UPS/MBE was in violation of a California franchise statute and common law fraud.
Other lawsuits are pending.
Plaintiffs are seeking the recovery of damages from the MBE defendants. In addition, for the alleged violations of the California Investment Law, they are seeking the option to rescind the Gold Shield amendment of their franchise agreements.
Amy Darby of Gordon & Rees LLP, representing franchisees, said their firm drafted the Notice of Pendency of Class Action with MBE/UPS defendants’ counsel. The court approved the notice and approved their claims administrator, Tilghman & Company, who sent the notices out to everyone via first class mail and by email to current UPS Store franchisees.
Details of the class action and subclass are below in the attached notice.
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NOTICE OF PENDENCY OF CLASS ACTION
Morgate LLC v. Mail Boxes Etc., Inc., United Parcel Service, Inc., et al.
Superior Court of California, County of Los Angeles, Case No. BC294647
BECAUSE YOUR LEGAL RIGHTS COULD BE AFFECTED BY THIS CLASS ACTION, YOU SHOULD READ THIS NOTICE CAREFULLY.
THIS IS NOT A LAWSUIT AGAINST YOU, AND YOU ARE NOT BEING SUED. A COURT HAS AUTHORIZED THIS NOTICE. THIS IS NOT A SOLICITATION FROM A LAWYER.
THE DEFINITION OF THE CLASS AND SUBCLASS
The Court has certified a national class (“the Class”) consisting of all franchisees in the U.S. who operated a Mail Boxes Etc. store and who converted their franchise to The UPS Store through the Gold Shield Amendment on or before March 21, 2003, regardless of whether such franchisee is still operating The UPS Store Center.
The Court has also certified a subclass (“the California Sub-class”) consisting of all franchisees who meet the above-described criteria and whose centers are or were located in California. Every franchisee who is a member of the California Sub-class is also a member of the Class.
BRIEF EXPLANATION OF THE CASE
A legal action was filed in Los Angeles Superior Court on behalf of The UPS Store franchise owners who converted Mail Boxes Etc. Centers to The UPS Store Centers during the Gold Shield offering on or before March 21, 2003. The legal action names Defendants Mail Boxes Etc., Inc. (“MBE”) and United Parcel Service, Inc. (“UPS”) (together, “Defendants”). The named representative is DT Woodard, Inc. (“Plaintiff”), a California corporation with its principal place of business in Costa Mesa, California. DT Woodard, Inc. was a MBE franchisee that converted to a The UPS Store during the Gold Shield offering in March of 2003.
The complaint alleges three claims against Defendants: (a) Negligent misrepresentations; (b) intentional misrepresentations; and (c) misrepresentations based upon disclosures required by the California Franchise Investment Law (“CFIL”). Plaintiff alleges that the members of the Class were misled by false statements and concealment of material facts contained in five (5) documents provided to franchisees during an organized presentation to franchisees by UPS and MBE, known as the “Gold Shield Program.” The purpose of the presentations was to inform franchisees regarding the conversion of their Mail Boxes Etc. Centers to The UPS Store Centers through the Gold Shield Program. The documents alleged to contain the misrepresentations and omissions are: (1) the Summary of the Gold Shield Program; (2) the Gold Shield Amendment; (3) the UPS Contract Carrier Agreement; (4) Frequently Asked Questions; and (5) the PowerPoint presentation given to franchisees at Gold Shield “Road Shows.” Plaintiffs allege these documents omitted material information regarding the profitability of The UPS Stores under the Gold Shield Program and misrepresented the reliability and validity of testing conducted by Defendants which, purportedly, supported the claims regarding the performance of The UPS Store test centers.
The court certified for national certification the following claims alleged on behalf of the Class against the Defendants: (1) for negligent misrepresentation; (2) for intentional misrepresentation; and (3) for violation of the CFIL section 31201 for allegedly selling a franchise by means of written communications which includes an untrue statement of material fact or omits to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.
The court certified the following additional claims alleged on behalf of the California Sub-class: (1) violation of CFIL section 31101 for allegedly failing to disclose in writing information concerning the specific sections of the franchise agreement proposed to be modified by the Gold Shield Amendment, and (2) for violation of CFIL section 31202 for allegedly willfully making untrue statements of fact in the disclosures that were made.
Plaintiff seeks, on behalf of itself and the Class, the recovery of damages from the Defendants. In addition, for the alleged violations of the CFIL, Plaintiff seeks on behalf of itself, the Class and the Sub-class, the option to rescind the Gold Shield Amendment.
Defendants MBE and UPS deny these allegations. MBE contends it offered the Gold Shield Program because it believed that the franchisees would benefit from the Program and believe that the franchise network has benefitted from the Gold Shield Program. MBE also asserts that it complied with the CFIL including because it was exempt from making disclosures about the Gold Shield Program in writing and, in all events, did disclose any required information about the Gold Shield Program in writing. Because MBE believes no violation of the CFIL occurred, it does not believe that any franchisee can rescind the Gold Shield Amendment. Defendants also deny that any franchisee has suffered damages caused by converting their center to The UPS Store.
EXCLUSION
Each franchisee in the Class has the choice whether or not to remain a Class member.
If you as the franchisee do not wish to be a member of the Class, you must take steps to exclude yourself from the Class, which is sometimes referred to as “opting out” of the Class.
If the franchisee is a corporation or partnership or has more than one owner, the corporation, the controlling shareholder, partner or owners must determine whether the franchisee will exclude itself from the Class. Each person with an ownership interest in the franchise does not have an individual right to request exclusion. If a form is received requesting exclusion for a franchisee, that franchisee will be excluded, and all individuals with any interest in that franchise will be bound by that exclusion.
Unless the franchisee excludes itself, it will remain in the Class, and all of the court’s orders will apply to it. If the franchisee does not exclude itself from the Class then it will be bound by any resolution of the class action by judgment or settlement, whether or not it is favorable or unfavorable to the Class.
If franchisee desires to be excluded from the Class, it must do so by completing and returning the attached ELECTION TO BE EXCLUDED form by mailing it in an envelope postmarked no later than December 9, 2009, to the following address:
Notice Administration
P.O. Box 13005
Birmingham, AL 35202-3005
THE LAWYERS REPRESENTING YOU
The members of the Class are represented in this case by M. D. Scully, H. Scott Sirlin, and Amy M. Darby of the law firm of Gordon & Rees, LLP. The address for Gordon & Rees is 633 West Fifth Street Suite 4900 Los Angeles, California 90071. These lawyers are called Class Counsel.
You may contact Class Counsel at Gordon & Rees, LLP at (213) 576-5000. Do not contact UPS or MBE about this litigation. You may continue to contact UPS or MBE about any other matter.
If you do not request exclusion from the class action, you may choose to be represented by your own lawyer. If you want to be represented by your own lawyer, you may hire one at your own expense. If you would like to make an appearance in this action you may do so through your own legal counsel.
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