Coin v. Fedex Corp.

• Decision Date: 12 September 2013
• Docket Number: No. 12–2778.,12–2778.
• Citation: 971 F.Supp.2d 754
• Parties: UNIVERSAL COIN AND BULLION, LTD., Plaintiff, v. FEDEX CORPORATION, Defendant.
• Court: U.S. District Court — Western District of Tennessee

971 F.Supp.2d 754

UNIVERSAL COIN AND BULLION, LTD., Plaintiff,

v.FEDEX CORPORATION, Defendant.

No. 12–2778.

United States District Court,

W.D. Tennessee,

Western Division.

Sept. 12, 2013.

Bryan O. Blevins, Jr., Provost Umphrey Law Firm, Beaumont, TX, Michael Hamilton, Provost Umphrey Law Firm, LLP, Nashville, TN, for Plaintiff.

Thomas W. Southerland, III, Justin M. Ross, Federal Express Corporation–Hacks Cross Rd., Memphis, TN, for Defendant.

ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT'S MOTION TO DISMISS

SAMUEL H. MAYS, JR., District Judge.

Before the Court is Defendant FedEx Corporation's (“FedEx”) November 19, 2012 Motion to Dismiss (the “Motion”). (Mot. to Dismiss, ECF No. 5.) Plaintiff Universal Coin and Bullion, LTD. (“UCB”) responded on December 21, 2012 (the “Response”). (Resp. to Mot. to Dismiss, ECF No. 9.) FedEx replied on January 14, 2013. (Reply, ECF No. 13.) FedEx seeks an order dismissing UCB's Complaint under Rule 12(b)(6) of the Federal Rules of Civil Procedure. For the following reasons, FedEx's Motion is GRANTED IN PART and DENIED IN PART.

I. Background¹

UCB brings suit for gross negligence, negligence, breach of contract, interference with a prospective advantage or business relationship, and breach of the duty of good faith and fair dealing arising from FedEx's disclosure of confidential information to third-party New York coin dealers (the “Coin Dealers”). (Compl. ¶ 1.) UCB markets, sells, and distributes precious metals, including gold coins. ( Id. ¶ 7.) UCB contracted with FedEx for the shipment of coins to or from clients and “to pick up checks from customers of UCB who have purchased coins from UCB and chosen to pay for the coins by personal check or money order.” ( Id. ¶ 9.) UCB's use of FedEx was “uniquely limited to [UCB's] high value clients.” ( Id. ¶ 10.)

Beginning in 2009, UCB learned that several of its clients had been contacted by the Coin Dealers. ( Id. ¶ 20.) On March 17, 2010, UCB representatives met with an Assistant United States Attorney for the Eastern District of New York, who informed UCB that the Coin Dealers had defrauded UCB's clients. ( Id. ¶ 22.) The Coin Dealers used confidential information obtained from FedEx account invoices to contact UCB customers and convince them to purchase gold coins worth as little as five percent of their represented value. ( Id. ¶¶ 43–44, 46.) Many of the Coin Dealers have been indicted for mail fraud, wire fraud, and money laundering, among other things. ( Id. ¶ 49.)

UCB and FedEx were parties to a number of agreements. They include standard shipping contracts, a FedEx Credit Card Remittance Agreement, FedEx Pricing Agreement, FedEx Service Guide, Contract of Carriage, FedEx Smart Post Shipments, FedEx Express Terms & Conditions, and Website Modifications to the Agreements (collectively, the “FedEx Agreements”). ( Id. ¶¶ 12–13.) (Mot. to Dismiss, ECF No. 5 at 13.)

The FedEx Agreements “contained numerous references to the importance of confidentiality and privacy of information involving the account.” ( Id. ¶ 14.) The FedEx Credit Card Remittance Agreement “recognizes that all credit card account information shall be treated as strictly confidential and provides that FedEx shall keep such confidential information in good order and not disclose such information to any person without consent unless the law requires disclosure.” ( Id. ¶ 15.) The FedEx Pricing Agreement specifically recognizes mutual confidentiality between the client and FedEx. ( Id. ¶ 16.) The FedEx Service Guide “recognizes the potential for improper illegal or other misuse of a FedEx account” and “also recognizes the need for safekeeping of the account number, the account information and the protection from any misuse of the account.” ( Id. ¶ 17.) The contractual relationship between FedEx and UCB “foresaw the potential for improper, illegal or other misuses of the FedEx account informationand the importance of protecting the confidential nature of account information including account invoices.” ( Id. ¶ 19.)

II. Jurisdiction and Choice of Law

Under 28 U.S.C. § 1332(a), this Court has original jurisdiction of all civil actions between citizens of different states “where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs.” 28 U.S.C. § 1332(a)(1). UCB is a Texas corporation with its principal place of business in Beaumont, Texas. (Compl. ¶ 7.) FedEx is a Delaware corporation headquartered in Memphis, Tennessee. ( Id. ¶ 8.) UCB alleges “millions of dollars” of damages. ( Id. ¶ 58.) The parties are completely diverse, and the amount-in-controversy requirement is satisfied.

In a diversity action, state substantive law governs. See Brocklehurst v. PPG Indus., Inc., 123 F.3d 890, 894 (6th Cir.1997) (citing Erie R.R. Co. v. Tompkins, 304 U.S. 64, 78, 58 S.Ct. 817, 82 L.Ed. 1188 (1938)). A federal district court applies the choice-of-law rules of the state in which it sits. See Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); Montgomery v. Wyeth, 580 F.3d 455, 459 (6th Cir.2009) (citation omitted).

Tennessee courts generally “honor a contractual choice-of-law provision, so long as it meets certain requirements.” Yang Ming Marine Transp. Corp. v. Intermodal Cartage Co., Inc., 685 F.Supp.2d 771, 780 (W.D.Tenn.2010) (citations omitted). A choice-of-law provision must: (1) be executed in good faith; (2) bear a material connection to the parties' business; (3) be reasonable and not merely sham or subterfuge; and (4) not be contrary to a fundamental policy of a state that possesses “a materially greater interest” and whose law would otherwise govern. Id. (citations and internal quotation marks omitted).

The FedEx Express Terms & Conditions provide that, “[t]o the extent that any court finds that state rather than federal law applies to any provision of this contract, the controlling law is the substantive law of the state in which you tendered your shipment to us.” (Defendant Ex. 1, ECF No. 5–1 at 10). UCB tendered its shipments in Texas. (Compl. ¶ 7.) The choice-of-law provision was executed in good faith. Tennessee does not have a materially greater interest in the contract claims in this case. Neither party disputes the application of Texas law. The Court will apply Texas substantive law to the contract claims.

Both parties also agree that Texas substantive law applies to the tort claims. (Mot. to Dismiss, ECF No. 5 at 5); (Response, ECF No. 9 at 16.) When “the parties agree to the particular state law application, the court will apply [that state's] law and will not conduct a choice of law analysis sua sponte.” AutoZone, Inc. v. Glidden Co., 737 F.Supp.2d 936, 941 (W.D.Tenn.2010) (citing Americoach Tours, Inc. v. Detroit Diesel Corp., No. 04–2016 B/V, 2005 WL 2335369, at *1 (W.D.Tenn. Sept. 23, 2005)). See also In re Korean Air Lines Disaster of Sept. 1, 1983, 932 F.2d 1475, 1495 (D.C.Cir.1991) (“Unlike jurisdictional issues, courts need not address choice of law questions sua sponte.”). The Court will apply Texas substantive law to the tort claims.

III. Standard of Review

In addressing a motion to dismiss for failure to state a claim under Federal Rule of Civil Procedure 12(b)(6), the court must construe the complaint in the light most favorable to the plaintiff and accept all well-pled factual allegations as true. League of United Latin Am. Citizens v. Bredesen, 500 F.3d 523, 527 (6th Cir.2007). A plaintiff can support a claim “by showing any set of facts consistent with the allegations in the complaint.” Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 563, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). This standard requires more than bare assertions of legal conclusions. Bovee v. Coopers & Lybrand C.P.A., 272 F.3d 356, 361 (6th Cir.2001). “[A] formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555, 127 S.Ct. 1955. Any claim for relief must contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” Erickson v. Pardus, 551 U.S. 89, 93, 127 S.Ct. 2197, 167 L.Ed.2d 1081 (2007) ( per curiam ). “Specific facts are not necessary; the statement need only ‘give the defendant fair notice of what the ... claim is and the grounds upon which it rests.’ ” Id. (quoting Twombly, 550 U.S. at 555, 127 S.Ct. 1955).

Nonetheless, a complaint must contain sufficient facts “to ‘state a claim to relief that is plausible on its face’ ” to survive a motion to dismiss. Ashcroft v. Iqbal, 556 U.S. 662, 129 S.Ct. 1937, 1949, 173 L.Ed.2d 868 (2009) (quoting Twombly, 550 U.S. at 570, 127 S.Ct. 1955). “The plausibility standard is not akin to a ‘probability requirement,’ but it asks for more than a sheer possibility that a defendant has acted unlawfully.” Id. (citing Twombly, 550 U.S. at 556, 127 S.Ct. 1955). “Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.” Id. at 1949 (citation omitted). A plaintiff with no facts and “armed with nothing more than conclusions” cannot “unlock the doors of discovery.” Id. at 1950.

UCB did not attach the FedEx Agreements to its Complaint because it sought to avoid having a motion to dismiss converted into a motion for summary judgment. ( See Response 6) (“Because FedEx filed a Rule 12(b)(6) Motion to Dismiss, and not a Motion for Summary Judgment, UCB need not and should not attach documents and evidence to this Opposition, lest the Motion to Dismiss be converted into a Motion for Summary Judgment.”) FedEx attached the FedEx Agreements as exhibits to the Motion.

“[W]hen a document is referred to in the pleadings and is integral to the claims, it may be considered without converting a motion to dismiss into one for summary judgment.” Commercial Money Ctr., Inc. v. Illinois Union Ins. Co., 508 F.3d 327, 335–36 (6th Cir.2007). The Court “retains the discretion to consider or exclude [ ] extrinsic evidence presented with ...