Gonzalez v. Yusen Logistics (Americas) Inc.
| Decision Date | 04 February 2016 |
| Docket Number | No. 15 CV 3030,15 CV 3030 |
| Court | U.S. District Court — Northern District of Illinois |
| Parties | RODRIGUEZ O'DONNELL GONZALEZ & WILLIAMS, P.C. f/k/a RODRIGUEZ O'DONNELL ROSS, Plaintiff, v. YUSEN LOGISTICS (AMERICAS) INC. f/k/a YUSEN AIR & SEA SERVICE (U.S.A.) INC., Defendant. and YUSEN LOGISTICS (AMERICAS) INC. f/k/a YUSEN AIR & SEA SERVICE (U.S.A.) INC., Counter-Plaintiff, v. RODRIGUEZ O'DONNELL GONZALEZ & WILLIAMS, P.C. f/k/a RODRIGUEZ O'DONNELL ROSS; THOMAS J. O'DONNELL; R. KEVIN WILLIAMS; CARLOS RODRIGUEZ; and HENRY GONZALEZ, Counter-Defendants. |
MEMORANDUM OPINION AND ORDER
In 2007, Yusen Logistics (Americas) Inc., a transportation-services company, had the law firm of Rodriguez O'Donnell Ross on retainer to address customs issues as they arose. Thomas O'Donnell, an attorney at the firm, met with some of Yusen's representatives in July 2007 to discuss a pending class-action lawsuit concerning antitrust violations in the air-cargo shipping industry. O'Donnell knew that Yusen was a member of the putative class, and suggested to Yusen's representatives that the Rodriguez firm represent Yusen in the antitrust litigation. Yusen agreed, and executed on November 3, 2007, an engagement letter to that effect. Yusen committed to paying the firm 25% of any monies recovered by Yusen in the suit. Yusen ultimately paid the firm over $478,000 in fees from several settlements. Before an additional settlement was distributed, however, Yusen terminated its relationship with the Rodriguez firm (with respect to the antitrust case). The firm sued Yusen for quantum meruit, and Yusen filed a counterclaim for fraud and fiduciary breach against the firm and its shareholders. Counter-defendants move to dismiss the claims against them. For the reasons discussed below, the motion is granted in part and denied in part.
Rule 8(a)(2) of the Federal Rules of Civil Procedure requires that a claim for relief contain "a short and plain statement of the claim showing that the pleader is entitled to relief." In general, the complaint (or, here, counterclaim) need not include specific facts, but it must provide the defendant with fair notice of what the claim is, and the grounds upon which it rests. Olson v. Champaign Cnty., Ill., 784 F.3d 1093, 1098-99 (7th Cir. 2015) (citing Erickson v. Pardus, 551 U.S. 89, 93 (2007); Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 555 (2007)). The pleading must present enough factual matter, accepted as true, that the claim to relief "is plausible on its face." Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (quoting Twombly,550 U.S. at 570). Where the claim to relief sounds in fraud, however, it must be pleaded with particularity, Fed. R. Civ. P. 9(b), including the "who, what, when, where, and how" of the fraud, Cincinnati Life Ins. Co. v. Beyrer, 722 F.3d 939, 950 (7th Cir. 2013) (citation omitted). In considering a motion to dismiss under Rule 12(b)(6), a district court accepts as true all well-pleaded factual allegations and draws all reasonable inferences in the plaintiff's favor. Id. at 946 (7th Cir. 2013) (quoting Reynolds v. CB Sports Bar, Inc., 623 F.3d 1143, 1146 (7th Cir. 2010)).
Yusen Logistics is a logistics and transportation-services firm. [7] ¶ 1.1 In 2007, Yusen had on retainer the law firm of Rodriguez O'Donnell Ross (later Rodriguez O'Donnell Gonzalez & Williams, P.C.) to address customs issues on an as-needed basis. See id. ¶¶ 3, 7, 11. The firm had been performing similar legal services, addressing tariff classifications, free-trade agreements, etc., for more than ten years. See id. ¶ 9. In July 2007, an attorney at the firm named Thomas O'Donnell spoke with one of Yusen's customs supervisors about the firm representing Yusen in a federal class-action suit in the Eastern District of New York. See id. ¶¶ 3, 12, 14. The litigation concerned alleged antitrust violations in the air-cargo shipping industry. See id. ¶ 12. O'Donnell knew that Yusen, as a frequent purchaser of air-freight shipping services, was a member of the putativeclass in the antitrust action, and told the customs supervisor that Yusen should participate in the suit. O'Donnell also suggested that Yusen hire the Rodriguez law firm to represent the company's interests in the litigation. See id. ¶¶ 13-14.
O'Donnell continued to talk to Yusen about the antitrust action over the next several months, and in October 2007, O'Donnell met with the customs supervisor, and one of Yusen's customs brokers, to further discuss the issue. See id. ¶¶ 11, 14-16. At the meeting, O'Donnell again offered to represent Yusen in the class-action suit, and proposed a contingent-fee arrangement whereby the law firm would be awarded 25% of any monies recovered by Yusen in the antitrust litigation. See id. ¶ 16. On October 26, another attorney at the firm (Henry Gonzalez) filed an appearance in the antitrust case on Yusen's behalf. See id. ¶ 18.
A week later, on November 2, 2007, O'Donnell sent a formal engagement letter to Yusen. See id. ¶ 19. The letter stated:
November 2, 2007 Letter from Thomas J. O'Donnell to Mark Hogan, [1-1] at 17-18 ().2 Yusen executed the agreement on November 3, 2007. [1-1] at 18; [7] ¶ 20. O'Donnell did not advise Yusen to seek independent legal review of the proposed contingent-fee agreement, and Yusen agreed to the representation without seeking any such review. See [7] ¶ 21.
On October 29, 2013, and again on April 10, 2014, the Rodriguez firm sent invoices to Yusen, each seeking payment of 25% of settlements recovered by Yusen in the antitrust action. See id. ¶ 33. Yusen paid the firm $478,783.90 in response tothese demands. See id. ¶ 34. Yusen received notice in September 2014 of an additional settlement (the fourth thus far), which was anticipated to exceed $362 million in funds for the class. See [7-C] ¶ 30. In October 2014, before any funds from the new settlement were distributed, Yusen contacted the Rodriguez firm and demanded that, moving forward, the firm bill only on an hourly basis. See id. ¶ 29.3 The firm would not agree to hourly billing, and Yusen terminated the attorney-client relationship with respect to the antitrust case. See id. ¶¶ 35-38.
The Rodriguez firm sued Yusen in March 2015 in Illinois state court, bringing claims under Illinois law for quantum meruit, unjust enrichment, and promissory estoppel. [1-1]. Yusen removed the case to federal court on the basis of diversity jurisdiction4, [1], and filed counterclaims for fraud (Count I) and breach of fiduciary duty (Counts II and III) against the firm and its individual shareholders (O'Donnell, Gonzalez, Carolos Rodriguez, and Kevin Williams), [7] ¶¶ 36-58. Counter-defendants filed a motion to dismiss Yusen's claims, arguing that none of them states a proper claim to relief. [11].
Yusen's fraud claim is presented in two parts. The first is based on representations that the Rodriguez firm made in the November 2007 engagement letter; the second is based on facts that Yusen says the law firm concealed from the company.
To state a claim for fraudulent misrepresentation in Illinois, the plaintiff must allege: (1) a false statement of material fact; (2) that the party making the statement knew of its falsity; (3) an intent to induce the plaintiff to act; (4) that the plaintiff reasonably relied on the truth of the statement; and (5) damages to the plaintiff as the result of their reliance. See Antonacci v. Seyfarth Shaw, LLP, 39 N.E.3d 225, 238 (Ill. App. Ct. 2015) (citing Neptuno Treuhand-Und Verwaltungsgesellschaft MBH v. Arbor, ...
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