SECTION 8. OTHER EVENTS.
In July 2012, FedEx Ground Package System, Inc. (“FedEx Ground”), a wholly owned subsidiary of FedEx Corporation (“FedEx” or the “Company”), was named as a defendant in a lawsuit filed in New Mexico state court related to a vehicle accident involving a driver employed by a service provider engaged by FedEx Ground that resulted in three fatalities, including the driver employed by the service provider. The complaint alleged personal injury and wrongful death. After trial, in January 2015, the jury awarded the plaintiffs compensatory damages of $157 million. Following the trial judge’s recusal, this award was affirmed by the substitute judge in July 2015 and by the New Mexico Court of Appeal in February 2018, respectively. FedEx Ground subsequently sought a discretionary appeal to the New Mexico Supreme Court to address what FedEx Ground believed to be an excessive verdict. The New Mexico Supreme Court granted FedEx Ground’s appeal in June 2018. On May 19, 2022, the New Mexico Supreme Court affirmed the decision of the New Mexico Court of Appeal.
A loss reserve in the amount of $7.5 million, representing FedEx Ground’s self-insured retention and insurance deductible, was previously recorded in FedEx’s consolidated financial statements. We believe the base amount of the $157 million award, in excess of FedEx Ground’s self-insured retention and insurance deductible, will be covered by insurance. An expense of $210 million for the accrued pre- and post-judgment interest has been recorded in the fourth quarter of fiscal 2022. We intend to vigorously pursue all insurance coverages for reimbursement of this expense.
FORWARD-LOOKING STATEMENTS
Certain statements in this Current Report on Form 8-K, such as statements relating to FedEx’s expectations regarding insurance coverage, may be considered forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements include those preceded by, followed by, or that include the words “will,” “may,” “could,” “would,” “should,” “believe,” “expected,” “anticipated,” “plans,” “estimates,” “targets,” “projects,” “intends,” or similar expressions. Such forward-looking statements are subject to risks, uncertainties, and other factors which could cause actual results to differ materially from historical experience or from future results expressed or implied by such forward-looking statements. Potential risks and uncertainties include, but are not limited to, failure to receive or collect expected insurance coverage and other factors which can be found in FedEx’s press releases and filings with the U.S. Securities and Exchange Commission. Any forward-looking statement speaks only as of the date on which it is made. FedEx does not undertake or assume any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.
