Apex Compounding Pharmacy LLC v. Best Transp. Servs., Inc.

Decision Date18 March 2021
Docket NumberCAUSE NO.: 2:16-CV-73-TLS
CourtUnited States District Courts. 7th Circuit. United States District Court of Northern District of Indiana

Sometime prior to July 17, 2015, the Plaintiff, Apex Compounding Pharmacy LLC, sought delivery services from the Defendant, Best Transportation Services, Inc. The parties entered into a contract, under which the Defendant would deliver medications manufactured by the Plaintiff to its customers in the Chicago metropolitan area. The Plaintiff alleges that on July 17, 2015, it was notified that the Defendant's delivery person, Katherine Rodriguez, failed to complete eight deliveries. After this discovery, the Plaintiff sued the Defendant in Indiana state court. See State Court Compl., ECF No. 3. The Plaintiff's Complaint asserts breach of contract, negligence, and respondeat superior claims against the Defendant. The Defendant contends that Indiana law prohibits all but the Plaintiff's breach of contract claim and that the Plaintiff's recovery for such a claim is limited to, as per the terms and conditions of service agreed upon by both parties, $800.00. This lawsuit was removed to federal court based on diversity jurisdiction, see Notice of Removal, ECF No. 1, and the parties then proceeded to trial without a jury, see Bench Trial, ECF Nos. 108, 109. Pursuant to Federal Rule of Civil Procedure 52(a), after observation of the witnesses at trial and review of the trial exhibits, the Court enters the following written findings of facts and conclusions of law.


Prior to the Bench Trial, the following undisputed material facts were established:

Best operates a for-hire delivery service that is registered with the United States Department of Transportation. Apex manufactures and sells specialized prescription medication. Apex had an agreement with eight customers to deliver prescriptions for medication to them. Apex engaged Best to pick up the prescriptions at Apex's location in Dyer, Indiana, and deliver them to the customers in Chicago and various Illinois suburbs of Chicago, namely: Lansing, Oak Lawn, Park Forest, and Crete. Katherine Rodriguez, an agent for Best, picked up the prescriptions.

Aug. 20, 2018 Op. & Order 1, ECF No. 75. At trial, the Court heard testimony from the following witnesses:

• Cassi Hammar, assistant office manager at Apex Compounding Pharmacy, LLC;
Denita Wuske, account executive/business development manager at Best Transportation Services, Inc.;
Brett Dines, founder of Apex Compounding Pharmacy, LLC;
Benjamin Kuehl, senior systems analyst at Best Transportation Services, Inc.;
Daniel Meehan, president and chief executive officer of Best Transportation Services, Inc.

The following facts are based on admitted exhibits and from testimony elicited at trial.

The Plaintiff submitted orders through the Defendant's online portal seeking delivery services for the eight medications that are at issue in the instant case. Tr. Ex. 6. The Plaintiff submitted a valuation of $100.00 for six of the medications and no valuation, which appears as a valuation of $0.00, for two of the medications. Tr. v.2, p. 285, ECF No.112; Tr. Ex. 6. The Defendant engaged Katherine Rodriguez to deliver the medications at issue. Aug. 20, 2018 Op. & Order 1. On July 17, 2015, Katherine Rodriguez failed to deliver the medications. See, e.g.,Tr. v.1, p. 38-39, 50-53, 76-77, ECF No. 111. The medications were not returned to and could not be recovered by either the Plaintiff or the Defendant. The week following July 17, 2015, the Plaintiff remanufactured the medications, and the Defendant delivered them to the Plaintiff's clients. Tr. Ex. 10.

The Plaintiff contends that Katherine Rodriguez was the Defendant's employee; however, the Defendant argues that she was an independent contractor. The following was established about the Defendant's and industry practices:

The Defendant's delivery persons were staffed by a third-party company, Contract Resource Services (Tr. v.1, p. 107-08; Tr. v.2, p. 313);
• Contract Resource Services compensated the Defendant's delivery persons, provided the delivery persons' health insurance and tax documentation, and conducted background checks and drug tests on the delivery persons (Tr. v.2, p. 313-314, 346);
The Defendant's delivery persons were required to use their own vehicles and provide their own vehicle insurance (Tr. v.1, p. 108; Tr. v.2, p. 315);
The Defendant leased a handheld device to some delivery persons (Tr. v.2, p. 341);
The Defendant's delivery persons could use their own smartphone instead of leasing a handheld device (Id.);
The Defendant leased software to its delivery persons, which could be used on their handheld device or smartphone to manage delivery jobs (Id. at 340-42);
• Although not required for every job, the Defendant's delivery persons could provide their own uniform or lease a uniform from a third-party provider (Id. at 317, 361);
The Defendant's delivery persons were required to pay their own expenses, such as vehicle maintenance expenses and toll payments (Tr. v.1, p. 109);
The Defendant's delivery persons accepted jobs by calling the Defendant or through the leased software, and were permitted to accept as many or as few delivery jobs as they desired (Tr. v.2, p. 315, 340-42);
The Defendant's delivery persons were not required to accept a certain number of delivery jobs per week and they were free to stop accepting delivery jobs at any time (Id. at 312-13);• The Defendant's delivery persons were free to maintain other employment, including with the Defendant's direct competitors (Id.);
The Defendant's delivery persons were not on its payroll; rather the Defendant paid Contract Resource Services on an invoice for services rendered (Id. at 313);
The Defendant provided an identification badge to its delivery persons (Id. at p. 316);
The Defendant provided some level of training and instruction to its delivery persons, and the training and instructions were based on client demands (Id. at 315-16, 324, 338, 349-50);
The Defendant maintained a dispatch department that was used to communicate with its clients and delivery persons and confirm when shipments were picked up from the client and delivered to the client's customer (Tr. v.1, p 34, 37, 47, 78-79, 84, 110; Tr. v.2, p. 338-39, 351-52);
The Defendant's dispatch department could be contacted by a delivery person if the delivery person experienced issues while completing their deliveries (Tr. v.1, p 34, 37, 78-79, 84, 110; Tr. v.2, p. 338-39, 351-52);
• The software used by the Defendant provided its delivery persons with a delivery route generated by the client's orders that could be accepted or declined by the delivery person (Tr. v.2, p. 359-60);
The Defendant's delivery persons used standard forms for each job, including a driver manifest sheet and ticket book, which contained the Defendant's terms and conditions of service (Id. at 265, 269-70, 276, Tr. Exs. A, B.);
The Defendant's clients submitted orders by telephone or by using an online portal (Tr. v.2, p. 276, 309);
• To use the Defendant's online portal, clients were required to set up an account and agree to the Defendant's terms and conditions of service (Tr. v.2, p. 276-77, 380);
The Defendant's terms and conditions of services provided that "unless otherwise specifically indicated the value of no total shipment or no single piece, package, parcel or article in this delivery, including the contents thereof, exceeds, $100.00 upon which declaration the charge for delivery is based. Any claim in excess of the said $100.00 is hereby released and discharged." (Tr. Exs. A, B);
• It is standard practice in the shipping and delivery industry for customers to declare the value of the item(s) they are shipping so the price of shipping services and the necessary amount of insurance can be determined (Tr. v.1, p. 64; Tr. v.2, p. 287, 299-300, 306-11, 334).

Despite the above detailed practices being established by witness testimony and trial exhibits, some details are absent from the record. Regarding the Defendant's practices, it is unclear whether its delivery persons were required to maintain constant communication with the dispatch department (as opposed to simply confirming receipt and delivery of a package) and whether the Plaintiff required the Defendant's delivery persons to receive specialized training before they were staffed on the Plaintiff's delivery jobs. Furthermore, the record is lacking in facts and details particularized toward Katherine Rodriguez's tenure as a Best delivery person. Specifically, no evidence was introduced indicating how long she worked for or how many deliveries she made for the Defendant, whether she leased a uniform or a handheld device, whether she received any training, or whether she used the route generated by her leased software. Evidence was introduced indicating that Katherine Rodriguez contacted the dispatch department on July 17, 2015; however, this communication occurred only after she experienced difficulties during her delivery job. See Tr. v.1, p. 79.


The Pre-Trial Order [ECF No. 105] presented the following issues for trial:

1. The actions of non-party Katherine Rodriguez;
2. The relationship between the Defendant and non-party Katherine Rodriguez;
3. Whether fraud had been perpetrated by the Defendant upon Plaintiff which caused damages to the Plaintiff;
4. The responsibility of the Defendant for actions alleged in this matter;
5. The contractual requirements and limitation related to the Plaintiff's request for services from the Defendant; and
6. The recoverable damages of the Plaintiff, if any.

Pre-Trial Order 1-2, ECF No. 105. The Plaintiff's Amended Complaint [ECF No. 19] alleges the following claims against the Defendant: Breach of Contract (Count VI), Gross Negligence(Count I), and Respondeat Superior (Counts III, V, VIII). Am. Compl., ECF No. 19. The Court will...

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