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Inc. v. Fedex Ground Package System, Inc.

United States District Court, N.D. Illinois, Eastern Division

October 31, 2017

LZ 1503, INC., Plaintiff,
v.
FEDEX GROUND PACKAGE SYSTEM INC., Defendant.

          MEMORANDUM OPINION AND ORDER

          Ruben Castillo, Chief Judge United States District Court.

         Plaintiff LZ 1503, Inc. ("LZ") brings this action against Defendant FedEx Ground Package System, Inc. ("FEG") alleging breach of contract, breach of the duty of good faith and fair dealing, and promissory estoppel. (R. 17-1, Second Am. Compl. ¶¶ 14-48.) Pursuant to Federal Rule of Civil Procedure 12(b)(6), FEG moves to dismiss Counts II through V of LZ's second amended complaint for failure to state a claim. (R. 22, Mot.) For the reasons stated below, FEG's motion is granted.

         RELEVANT FACTS

         LZ is an Illinois corporation with its principal place of business in Illinois. (R. 17-1, Second Am. Compl. ¶ 1.) It owns and operates trucking equipment. (Id.) FEG is a Delaware corporation with its principal place of business in Pennsylvania, and it provides small package transportation and delivery services throughout the United States. (Id. ¶¶ 2, 5.) FEG operates a network of nationwide terminals and engages truck owners and operators to transport packages between FEG terminals and FEG customer destinations. (Id. ¶ 5.)

         LZ and FEG allegedly entered into a "linehaul operating agreement" (the "Line-haul Agreement") that requires LZ to arrange for the movement of FEG customer trailers between FEG facilities and FEG customer facilities. (Id. ¶ 7; R. 17-2, Ex. 1 ¶ 1.)

         In addition to the type of work contemplated under the Line-haul Agreement, FEG enters into contracts with truck owners and operators to perform pick-up and delivery ("P&D") services. (R. 17-1, Second Am. Compl. ¶ 27.) P&D services involve the pick-up and delivery of packages at regular stops and at the same time each day on a more local basis than the line-haul work. (Id.) FEG terminal managers enter into oral agreements with local truck owners and operators to perform P&D services. (Id.)

         Beginning in 2015, FEG's Carol Stream, Illinois, terminal manager allegedly entered into an oral agreement with LZ, which required LZ to perform P&D work for J.S. Paluch, an FEG customer. (Id. ¶ 28.) Pursuant to the alleged agreement, LZ regularly performed P&D work for J.S. Paluch from the Carol Stream terminal. (Id.)

         FEG was in the process of building a new terminal in Niles, Illinois, and at some point in late 2015, FEG had almost finished building the new terminal. (See Id. ¶¶ 11, 15.) At a meeting on January 30, 2016, FEG's Niles terminal manager announced to Carol Stream-based truck owners and operators that some P&D work would be moved from the Carol Stream terminal to the new Niles terminal. (Id. ¶ 29.) FEG's Carol Stream terminal manager, Jennifer Davies, allegedly said at the same meeting that Carol Stream-based truck owners and operators would be given "the first opportunity" to redeem any of their P&D runs that were being transferred to the Niles terminal. (Id.) LZ claims that Davies also encouraged it to obtain more P&D work at Carol Stream that could then be transferred to Niles. (Id.) Allegedly relying on such encouragement, in March of 2016, LZ purchased from another track owner and operator the contractual rights to perform two more P&D runs from the Carol Stream terminal: the "FedEx Trade" and "Love Sac" runs. (Id. ¶¶ 28, 45.)

         LZ claims that FEG transferred the J.S. Paluch, FedEx Trade, and Love Sac P&D runs to the Niles terminal, (see Id. ¶¶ 30, 33, 37, 41), but when LZ sought to redeem those runs, the Niles terminal manager allegedly refused to give LZ any P&D work. (See Id. ¶¶ 31, 37, 41.) LZ claims the three P&D runs it lost were given instead to other truck owners and operators that were previously performing P&D runs from the Carol Stream terminal and had not lost any of their Carol Stream runs that were transferred to Niles. (Id. ¶ 31.)

         PROCEDURAL HISTORY

         On February 15, 2017, LZ filed the present action in the Circuit Court of Cook County, Illinois. (R. 1-1, Ex. A.) On March 22, 2017, FEG removed the case to this Court on the basis of diversity jurisdiction. (R. 1, Notice of Removal.) On April 12, 2017, LZ amended its complaint. (R. 8, First Am. Compl.) FEG moved to dismiss the amended complaint, and, in response, LZ filed a second amended complaint, (See R. 11, Mot.; R. 17-1, Second Am. Compl.; R. 20, Min. Entry.)

         The second amended complaint alleges five counts against FEG: Count I, which claims breach of the Line-haul Agreement; Counts II through IV, which allege breach of oral contracts related to to the J.S. Paluch, FedEx Trade, and Love Sac P&D work; and Count V, which asserts promissory estoppel based on the Carol Stream terminal manager allegedly encouraging LZ to obtain more Carol Stream P&D work that could then be transferred to the Niles terminal. (R. 17-1, Second Am. Compl. ¶¶ 26-48.)

         On July 3, 2017, FEG filed a motion to dismiss Counts II through V of the second amended complaint, challenging only the claims related to the P&D work. (R. 22, Mot.; R. 23, Mem.) FEG's motion argues that the Court should dismiss Counts II through V because LZ fails to allege that FEG ever offered or promised any P&D work to LZ. (Id. at 3-5.) FEG also submits that LZ fails to plead sufficient facts supporting the existence of oral contracts for the P&D work, such as the exact person who entered into the contracts on FEG's behalf, the exact promises made, the consideration given, or the material terms of the alleged oral contracts. (Id. at 5-6.) Lastly, FEG asserts that, under Pennsylvania law, LZ cannot maintain a claim for breach of the duty of good faith and fair dealing as a separate basis for liability because LZ has alleged the existence of an oral contract covering the same subject matter. (Id. at 6-7.)

         In response, LZ argues that it pleads all of the essential elements for its breach of oral contract claims and enough factual allegations to survive FEG's motion to dismiss. (R. 28, Opp'n at 3-7.) LZ also maintains that its breach of good faith and fair dealing claims are not alleged as independent breaches separate from its oral contracts with FEG, and that the Court should therefore decline to dismiss LZ's breach of good faith and fair dealing claims. (Id. at 7-8.) Finally, LZ argues that it adequately pleads the requisite elements for its promissory estoppel claim as well as enough supporting facts. (Id. at 8-9.) FEG's reply repeats the ...


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