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Judge Approves UPS Excess-Value Insurance Settlement

A federal judge approved a plan July 30 for United Parcel Service Inc. to provide vouchers to some of its customers to settle a consolidated class-action lawsuit that alleged the company overcharged those customers for package insurance.

U.S. District Court judge Richard M. Berman in the Southern District of New York said UPS would offer vouchers to anyone who can prove they bought “excess value” package insurance between August 1994 and October 2003. UPS would pay no cash, but would grant customers covered by the settlement vouchers for future UPS shipments.

The plaintiffs' attorneys said more than 2 million businesses and consumers from 49 states are eligible.

Individual plaintiffs may object to the settlement, though that is unlikely, UPS spokesman Norman Black said. Though plaintiffs' lawyers valued the vouchers at $205 million, he said, “it's going to be notably less than that.”

UPS, Atlanta, does not expect the voucher program's cost to affect its financial position. However, UPS cannot determine the cost until it knows the number of affected customers who request vouchers.

Past or current UPS account holders who spent less than $1,000 on excess-value coverage from 1994 to 2003 will be mailed a voucher. Those who were not account holders paying $10 or more for excess-value coverage from 1994 to 2003 can obtain a claim form for the voucher as well as procedures by contacting the settlement administrator at 866/808-3540 or www.eviclitigation.com. The vouchers expire 180 days after they are issued.

Berman said the vouchers will be “easily redeemable” for UPS goods and services, and plaintiffs also may sell them.

The settlement resolves 27 class-action lawsuits filed against UPS since 1999, when a federal court said the company violated tax laws by using an offshore entity in connection with its insurance program. Customers cited the ruling as part of their claim that UPS overcharged them for excess-value insurance. An appeals court reversed that ruling in 2001, weakening customers' claims. But UPS was faced with several separate class-action lawsuits in the interim.

The two sides agreed on a tentative settlement in February 2004 regarding the consolidated class-action lawsuit. Black said UPS settled the case strictly for “practical business purposes.”

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