FedEx Indicted For Failing To Look Into Its Packages...

[Mike]

Back in March of last year, we were somewhat disturbed by UPS agreeing to forfeit $40 million to the US government for shipping drugs from "illegal internet pharmacies." Not that such drugs or pharmacies should be legal (that's a whole different discussion), but it's insane to pin the blame for the shipments on the shipping company, whose sole job is to get packages from point A to point B. In fact, we don't want shipping companies to be liable for what's in packages, because then they have not just the incentive, but the mandate to snoop through all our packages.

Apparently, FedEx was unwilling to fall on its sword and cough up a similar amount to the US government, so the DEA and DOJ have announced they've gotten a grand jury to indict the company for delivering drugs associated with internet pharmacies. You can read the full indictment, which tries to spin a variety of stories into evidence that somehow FedEx "knew" what was in those packages. The indictment does describe FedEx deliveries to vacant homes and parking lots where carloads of people would be waiting.

As early as 2004, FEDEX couriers and customer service agents in Kentucky, Tennessee, and Virginia expressed safety concerns to their management, including the following: FEDEX trucks had been stopped on the road by Internet pharmacy customers demanding packages of pills; delivery addresses included parking lots, schools, and vacant homes where people would wait for deliveries of drugs; customers would jump on FEDEX trucks and demand Internet pharmacy packages; FEDEX drivers were threatened if they insisted on delivering a package to the address instead of giving the package to the customer who demanded it; and customers would use multiple names and identification documents to pick up packages of drugs.

A FEDEX employee also raised concerns to FEDEX management that some recipients of Internet pharmacy packages were engaged in "doctor shopping," were "known to be selling and using," and that "some of the recipients have overdosed and died."

While that may sound damning, remember this is the DEA/DOJ's spin on things. Even if everything above is true, FedEx's job is to deliver packages, not examine everything inside those packages to make sure they're legal. Even in some of the cases -- as described in the indictment -- where FedEx becomes aware that some of the companies ran into trouble with the DEA for selling drugs illegally, it's hard to see how that means FedEx should automatically drop all business connections with those entities. Presumably, a firm that was caught selling drugs illegally could have other legitimate business to continue and would make use of services like FedEx going forward. It's not FedEx's job to examine everything in those packages.

This is, quite literally, blaming the messenger.

FedEx is fighting these claims pretty aggressively, insisting that it's crazy to make it responsible for what's in the packages:

"We are a transportation company �” we are not law enforcement."

Furthermore, the company notes that it has long asked the DOJ to provide it with a list of online pharmacies that it shouldn't do business with, so that it didn't have to just guess. The government did not provide the list, and seems to think that FedEx must be psychic (and should know what's in all packages and whether or not they're illegal."

"We have repeatedly requested that the government provide us a list of online pharmacies engaging in illegal activity," [VP Patrick Fitzgerald] said. "Whenever DEA provides us a list of pharmacies engaging in illegal activity, we will turn off shipping for those companies immediately. So far the government has declined to provide such a list."

Even a former DEA official interviewed by Bloomberg, Larry Cote, claimed the situation was extreme and unprecedented:

The criminal case is an unprecedented escalation of a federal crackdown on organizations and individuals to combat prescription drug abuse, said Larry Cote, an attorney and ex-associate chief counsel at the U.S. Drug Enforcement Administration.

“Targeting a company that’s two, three steps removed from the actual doctor-patient, pharmacy-patient relationship is unprecedented,” said Cote....

“The DEA does believe that everyone in the supply chain is responsible and has an obligation to understand where their products are ending up,” said Cote, calling that “a stretch.”

We often talk about secondary liability on the internet, but it's the same basic principal here. The company that's merely acting as the conduit shouldn't be liable for what's traversing over its system. The implications of changing that, and holding a company liable are very serious. It's going to create massive incentives for shipping companies to not just open up and look at what's in our packages, but to also make on-the-fly determinations of whether or not they think it's legal.

Originally Published: Sat, 19 Jul 2014 02:39:00 GMT
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