Rocha v. Fedex Corp.

15 F. Supp. 3d 796, 2014 WL 240711, 2014 U.S. Dist. LEXIS 7822
CourtDistrict Court, N.D. Illinois
DecidedJanuary 17, 2014
DocketNo. 12 C 8666
StatusPublished
Cited by5 cases

This text of 15 F. Supp. 3d 796 (Rocha v. Fedex Corp.) is published on Counsel Stack Legal Research, covering District Court, N.D. Illinois primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Rocha v. Fedex Corp., 15 F. Supp. 3d 796, 2014 WL 240711, 2014 U.S. Dist. LEXIS 7822 (N.D. Ill. 2014).

Opinion

MEMORANDUM OPINION AND ORDER

Rubén Castillo, Chief Judge, United States District Court

Carlos G. Rocha and Arize 11, Inc. (collectively, “Plaintiffs”) bring this action alleging seventeen state and federal claims against various FedEx entities and employees: FedEx Corporation (“FedEx Corp.”); FedEx Ground Package System, Inc. (“FedEx Ground” and, collectively with FedEx Corp., “FedEx”); FedEx Home Delivery (“FHD”); Daniel J. Sullivan, Rodger G. Marticke, Clifford P. Johnson, David F. Rebholz, William G. Margar-itis, Scott Ray, Nathan Watts (these seven individuals collectively, “FHD Management”); Ralph Stephens; RJC 80, Inc.; and unknown other persons (“Does 1-60”). Presently before the Court are three motions to dismiss Plaintiffs’ complaint for failure to state a claim upon which relief may be granted pursuant to Federal Rule of Civil Procedure 12(b)(6) — one by Stephens; one by FedEx Corp. and Margari-tis; and one by FedEx Ground, FHD, and six members of FHD Management. For the reasons set forth below, these motions are granted.

RELEVANT FACTS

Rocha delivered packages for FedEx’s Chicago terminal, acting at various times as an employee and an independent contractor, “starting in late 2005 and ending in November 2010,” when FedEx informed him that his services were no longer needed. (R. 37, Second Am. Compl. ¶ 58.) Arize 11 is an Illinois corporation that was formed in 2008 and that is owned by Rocha with its principal place of business in Chicago, Illinois. (Id. ¶¶ 60-61.)

FedEx Corp., a Delaware corporation with its principal place of business in Tennessee, is the parent corporation of FedEx Ground. (Id. ¶¶ 65-66.) FedEx Ground, a Delaware corporation with its principal place of business in Pennsylvania, is in the business of providing package delivery and pick-up service, often under the label of FHD. (Id. ¶¶ 73-74, 77-79.) Sullivan is FedEx Ground’s former President and Chief Executive Officer, (id. ¶ 83), and Re-bholz currently serves in that capacity, (id. ¶¶ 103). Marticke is FedEx Ground’s Executive Vice President and Chief Operating Officer, (id. ¶ 90); Johnson is FedEx Ground’s Vice President and General Counsel, (id. ¶ 95). Margaritis is the Senior Vice President of Global Communications and Investor Relations for FedEx Corp. in Tennessee. (Id. ¶¶ 110-11.) Ray worked in FedEx’s Contractor Relations department in Pennsylvania. (Id. ¶¶ 117-[801]*80118.) Watts managed FHD’s Chicago terminal. (Id. ¶ 122.) Stephens manages numerous routes for FHD’s terminals in Chicago and Hammond, Indiana, {id. ¶ 125); RJC 80 was an Illinois corporation Stephens owned until it was involuntarily dissolved last year, {id. ¶¶ 125, 128-29). Plaintiffs also bring claims against “all unknown persons and entities employed by or otherwise associated with” FedEx (“Does 1-50”), and all unknown persons and entities conspiring with or acting in concert with Watts or Stephens in connection with the alleged conspiracy to extort and defraud Plaintiffs (“Does 51-60”). {Id. ¶¶ 131-36.)

Plaintiffs allege that in 1999 or 2000, agents of FHD “devised a deceptive business model whereby FedEx Ground would falsely represent itself ... as an association of independent individuals and corporations while actually operating as a single corporation[.]” {Id. ¶ 139.) FedEx promised potential contractors the exclusive right to service all FHD customer accounts within their routes, returns on their investments, and the associated right to profits and income from those services rendered. {Id. ¶¶ 166-67.) Plaintiffs allege that FedEx did not intend to, and did not, entrust contracting individuals and corporations with the rights to offer, sell, or distribute its ground transportation services to the public. {Id. ¶¶ 140-41.) Plaintiffs allege that FedEx targeted unsophisticated individuals to be contractors, which allowed it to “retain full control” of operations and defraud its contractors. (Id. ¶¶ 140-44.)

Plaintiffs allege that FedEx “has a substantial or controlling interest in the market available to independent contractors seeking business opportunities in the ground transportation business,” which limits the competing opportunities that are available to independent contractors. (Id. ¶¶ 53-55.) Plaintiffs state that FedEx maintains this controlling interest through “an ambiguous and misleading” Standard Operating Agreement (the “SOA”). (Id. ¶ 145.) According to Plaintiffs, the ambiguous provisions in the SOA “bolster the false belief that investing contractors would nonetheless be independent and free from FedEx’s interference and control” while actually allowing FedEx to, inter alia, approve or disapprove independent contractors’ vehicles, drivers or helpers, and vehicle sales, to assign pick-up and delivery stops to specific drivers, to require the purchase of specific insurance plans, to require drivers to perform service at certain times, and to delineate many other conditions of contractors’ employment. (Id. ¶¶ 147-48.) Plaintiffs contend that Rocha and other independent contractors would not have executed the SOA if they had known about the misrepresentations it contained. (Id. ¶ 273.) Plaintiffs further allege that FedEx prevented contractors from using their vehicles for any purpose other than driving for FedEx. (Id. ¶¶ 335-36.)

Rocha began driving for FedEx in 2005 as a temporary employee. (Id. ¶¶ 211-12.) In order to acquire a route, FedEx required Rocha, like other independent contractors, to purchase a specific model truck. (Id. ¶¶ 213-16, 226.) Rocha was “misled by the [Chicago] terminal manager” to believe that he was purchasing a brand new truck from FedEx when he in fact purchased a used truck. (Id. ¶¶ 231-34.) The Chicago terminal manager offered Rocha a route in January 2006, and Rocha executed the SOA on February 23, 2006. (Id. ¶¶ 170-71, 242-44.) Rocha subsequently acquired a second route and a second truck. (Id. ¶¶ 237-40.)

Plaintiffs also allege that independent contractors were required to purchase various bundled products and services as part [802]*802of the Business Support Package (“BSP”). (Id. ¶¶ 259-62.) The costs of the BSP were collected through involuntary deductions from their wages. {Id. ¶ 251.) Plaintiffs allege, for example, that FedEx made and refused to refund involuntary deductions from Rocha’s wages for uniform rental fees even though Rocha had purchased all the uniforms necessary for his business. {Id. ¶ 261.) Plaintiffs allege that the products and services were not competitively priced and that FedEx profited from the contractors’ purchases of the products and services. {Id. ¶¶ 252-55.) The SOA Plaintiffs attached to the complaint, however, states that contractors are not required to purchase the BSP and in fact requires contractors to affirmatively elect to purchase the BSP and have the costs deducted from their wages. (R. 37-3, SOA Ex. 6.) Rocha affirmatively elected to participate in the BSP when he executed his SOA. {Id.)

Plaintiffs allege that after a California State court ruled that FedEx’s control over FHD drivers made them employees rather than independent contractors,1

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Bluebook (online)
15 F. Supp. 3d 796, 2014 WL 240711, 2014 U.S. Dist. LEXIS 7822, Counsel Stack Legal Research, https://law.counselstack.com/opinion/rocha-v-fedex-corp-ilnd-2014.