Rapid Enters. v. United States Postal Serv.

• Docket Number: 2:22-cv-00627-JNP-JCB
• Decision Date: 13 March 2024
• Citation: Rapid Enters. v. United States Postal Serv., 2:22-cv-00627-JNP-JCB (D. Utah Mar 13, 2024)
• Parties: RAPID ENTERPRISES, LLC, d/b/a EXPRESS ONE, a Utah limited liability company, Plaintiff, v. UNITED STATES POSTAL SERVICE, and UNITED STATES OF AMERICA, Defendants.
• Court: U.S. District Court — District of Utah

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RAPID ENTERPRISES, LLC, d/b/a EXPRESS ONE, a Utah limited liability company, Plaintiff, v. UNITED STATES POSTAL SERVICE, and UNITED STATES OF AMERICA, Defendants.

No. 2:22-cv-00627-JNP-JCB

United States District Court, D. Utah

March 13, 2024

MEMORANDUM DECISION & ORDER

GRANTING DEFENDANTS' MOTION

TO DISMISS FOR FAILURE TO STATE

A CLAIM

JILL N. PARRISH, UNITED STATES DISTRICT COURT JUDGE

Rapid Enterprises, LLC, doing business as Express One (“Express One”), filed suit against the United States Postal Service (“USPS”).It asserts claims arising out of or otherwise related to business arrangements it formerly had with USPS.Before the court is Defendants' Motion to Dismiss the Amended Complaint for Failure to State a Claim.ECF No. 71(“Motion” or “Mot.”).For the reasons outlined below Defendants' Motion is GRANTED.

FACTUAL BACKGROUND

USPS formerly contracted with private companies to act as third-party resellers of its services.ECF No. 36(“Amended Complaint” or “Am. Compl.”)at 1.From January 2013 to September 2022, USPS entered into two such contracts with Express One. Mot.at 3.The first contract, executed in January 2013, was originally for a term of five years and later extended, through amendment, to a total term of eight years.Id.;Am. Compl. ¶¶ 15-19.In April 2019, USPS signaled an intent to cancel the reseller program and terminate the 2013 contract.Mot.at 3.USPS reversed course, however, and elected to extend the reseller program.Id.

In December 2019, USPS entered into a second shipping services agreement (the contract-at-suit in this action) with Express One, set to expire on December 31, 2023.ECFNo. 36-4(“Contract” or “2019 Contract”) at 12.Under its terms, USPS could terminate the Contract prior to December 31, 2023 by providing Express One with written notice 90 calendar days in advance.See2019 Contractat 12.In mid-2022, USPS exercised this contractual right and terminated the Contract, having decided to end the reseller program and launch its own, disintermediated ecommerce platform following internal evaluation of program's costs and benefits.^[1]

Among other things, the 2019 Contract required Express One to provide USPS with its customer pricing and volume information.Am. Compl. at 10;2019 Contractat 3.Express One asserts that USPS used this information for purposes other than those specified in the 2019 Contract.Am. Compl. at 15-21.For example, Express One claims that USPS used the customer lists that Express One had provided pursuant to the 2019 Contract to inappropriately poach Express One's former customers.Id. at 22.

On September 23, 2022, Express One filed suit.SeeECF No. 2.On October 18, 2022, Express One filed its Amended Complaint, ECF No. 36, which asserts that:

1.USPS breached the 2019 Contract (“Claim One”);

2.USPS breached the implied covenant of good faith and fair dealing (“Claim Two”);

3.USPS breached the implied duty to disclose superior knowledge (“Claim Three”); 4.USPS engaged in misrepresentation to induce Express One to enter the 2019 Contract (“Claim Four”);

5.USPS was unjustly enriched (“Claim Five”);

6.USPS misappropriated Express One's trade secrets in violation of the Defend Trade Secrets Act (“DTSA”), 18 U.S.C. § 1836 et seq.(“Claim Six”);

7.USPS misappropriated Express One's trade secrets in violation of Utah's Uniform Trade Secrets Act (“UTSA”), § 13-24-1 et seq.(“Claim Seven”);

8.USPS committed common law misappropriation (“Claim Eight”);

9.USPS misappropriated Express One's trade secrets in violation of the Fifth Amendment,U.S. CONST. art. V. (“Claim Nine”); and

10.Express One is entitled to avail itself of the doctrine of equitable estoppel (“Claim Ten”).

SeeAm. Compl. ¶¶ 108-207.^[2]

On October 31, 2022, USPS moved this court to dismiss the Amended Complaint for lack of jurisdiction pursuant to FED. R. CIV. P. 12(b)(1).SeeECF No. 50.On September 14, 2023, this court granted in part and denied in part Defendants' Rule 12(b)(1) motion, dismissing Express One's Fourth, Sixth, Seventh, Eighth, Ninth, and Tenth Claims in their entirety.See generallyECF No. 86(“12(b)(1)Order”).^[3]Additionally, this court held that it lacked jurisdiction to hear Express One's tort claims or any claim predicated on the Postal Accountability and Enhancement Act of 2006(codified at 39 U.S.C. § 3600 et seq.)(“PAEA”).Thus, in resolving the present Motion, the court considers only the sufficiency of the pleading of Express One's claims arising under contract and quasi-contract-that is, the First, Second, Third, and Fifth Claims.

LEGAL STANDARD

Dismissal of a claim under Rule 12(b)(6) of the Federal Rules of Civil Procedure is appropriate where the plaintiff fails to state a claim upon which relief can be granted.When considering a motion to dismiss for failure to state a claim, a court“accept[s] as true all well-pleaded factual allegations in the complaint and view[s] them in the light most favorable to the plaintiff.”Burnett v. Mortg. Elec. Registration Sys., Inc., 706 F.3d 1231, 1235(10th Cir.2013).

“To survive a motion to dismiss, a complaint must contain sufficient factual matter, accepted as true, to state a claim to relief that is plausible on its face.”Ashcroft v. Iqbal, 556 U.S. 662, 678(2009)(citation omitted).The complaint must allege more than labels or legal conclusion and its factual allegations “must be enough to raise a right to relief above the speculative level.”Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555(2007).^[4]

ANALYSIS

USPS moves for the dismissal of Express One's contract and quasi-contract claims for failure to state a claim upon which relief can be granted pursuant to FED. R. CIV. P. 12(b)(6).Express One responds by arguing that, under its interpretation of the 2019 Contract, it has properly alleged breach of contract, violations of the implied duty of good faith and the duty to disclose superior knowledge, and unjust enrichment.SeeECF Nos. 81(unsealed opposition memorandum), 83 (sealed opposition memorandum)(“Opp'n Mem.”)passim.

At the outset, the court notes that the parties, through their respective memoranda, do not seem to agree on what substantive body of law ought to be applied to Express One's contract claims.USPS, in its Motion and reply memorandum, ECF No. 90(“Reply Mem.”), relies primarily on federal case law.^[5]Express One, in its response memorandum, relies largely on Utah common law.Thus, the court finds it appropriate to briefly outline the law to be applied before considering the sufficiency of Express One's pleadings.

The 2019 Contract states that it is governed and should be construed “in accordance with principles of federal law.”2019 Contractat 16.Contractual choice-of-law elections such as this one are, absent special circumstances appropriately honored by reviewing courts.SeeBoyd Rosene & Assocs., Inc. v. Kan. Mun. Gas Agency, 174 F.3d 1115, 1121(10th Cir.1999).And, generally, “obligations to and rights of the United States under its contracts are governed exclusively by federal law.”Boyle v. United Techs. Corp., 487 U.S. 500, 504(1988).

Additionally, this action arises under federal law and is not a diversity action, SeeAm. Compl. ¶ 10, therefore presumptively requiring the application of federal common law.Mirrow v. Barreto, 80 Fed.Appx. 616, 618(10th Cir.2003)(unpublished)(citingKing v. United States, 301 F.3d 1270, 1275-77(10th Cir.2002));Pirkheim v. First Unum Life Ins., 229 F.3d 1008, 1010-11 & n.3(10th Cir.2000));seeHamilton Stores, Inc. v. Hodel, 925 F.2d 1272, 1279(10th Cir.1991).

However, in the arena of contracts, “knowing whether federal law governs . . . does not much advance the ball.”United States v. Turley, 878 F.3d 953, 956(10th Cir.2017)(quotingO'Melveny & Myers v. F.D.I.C., 512 U.S. 79, 85(1994)).This is because there is a “presumption that state law should be incorporated into federal common law,”Turley, 878 F.3d at 956(quotingKamen v. Kemper Fin. Servs., Inc., 500 U.S. 90, 98(1991)).

Although a provision stating that the contract be governed by “principles of federal law” implicitly permits this court to incorporate state law (because of the nature of the federal common law of contract), this court relies on rules of decision as provided by the federal common law per se to give maximum effect to the expectations of the contracting parties as expressed in the Contract.^[6]

I.First Claim: Breach of Contract

Express One's First Claim is for breach of contract.Am. Compl. ¶¶ 108-15.This court begins its inquiry into Express One's breach-of-contract claims by referring to the language of the contract itself.Under federal contract principles, if the terms of a contract are not ambiguous, this court determines the parties' intent from the language of the agreement itself.Citizen Potawatomi Nation v. Oklahoma, 881 F.3d 1226, 1239(10th Cir.2018)(citingAnthony v. United States, 987 F.2d 670, 673(10th Cir.1993), andArizona v. Tohono O'odham Nation, 818 F.3d 549, 560-61(9th Cir.2016)).^[7]

A contract must also be construed as a whole and “in a manner that gives meaning to all of its provisions and makes sense.”Bell/Heery v. United States, 739 F.3d 1324, 1331(Fed. Cir.2014).Under federal law, contract interpretation is a matter of law and may be addressed in the resolution of a motion to dismiss to determine whether the facts a plaintiff alleges would, if true, establish a breach of contract.Id.;Sunrez Corp. v. United States, 157 Fed.Cl. 640, 647(2022).^[8] Express One pleads that USPS breached the 2019 Contract in four ways:

(a) wrongfully terminating the 2019 Contract in violation of applicable administrative regulations and procedures and in contravention of numerous

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