Rocha v. FedEx Corp.

• Citation: 164 N.E.3d 640,444 Ill.Dec. 544,2020 IL App (1st) 190041
• Decision Date: 26 March 2020
• Docket Number: No. 1-19-0041,1-19-0041
• Parties: Carlos G. ROCHA and Arize 11, Inc., Plaintiffs-Appellants, v. FEDEX CORPORATION, a Delaware Corporation; FedEx Ground Package System, Inc., a Delaware Corporation; David F. Rebholz; Rodger G. Marticke; Clifford P. Johnson ; Scott Ray; Nathan Watts; Ralph Stephens; Christina Gonzalez; RJC 57, Inc.; Deer, Stone & Maya, P.C.; Jeffrey Deer; Mark Stone; Maria Rojas; and Does 1-50, Defendants, (FedEx Corporation; FedEx Ground Package System, Inc.; David F. Rebholz; Rodger G. Marticke; Clifford P. Johnson ; Scott Ray; Nathan Watts; Ralph Stephens; Christina Gonzalez; RJC 57, Inc.; Deer, Stone & Maya, P.C.; Jeffrey Deer; and Mark Stone, Defendants-Appellees).
• Court: United States Appellate Court of Illinois

2020 IL App (1st) 190041
164 N.E.3d 640
444 Ill.Dec. 544

Carlos G. ROCHA and Arize 11, Inc., Plaintiffs-Appellants,
v.
FEDEX CORPORATION, a Delaware Corporation; FedEx Ground Package System, Inc., a Delaware Corporation; David F. Rebholz; Rodger G. Marticke; Clifford P. Johnson ; Scott Ray; Nathan Watts; Ralph Stephens; Christina Gonzalez; RJC 57, Inc.; Deer, Stone & Maya, P.C.; Jeffrey Deer; Mark Stone; Maria Rojas; and Does 1-50, Defendants,

(FedEx Corporation; FedEx Ground Package System, Inc.; David F. Rebholz; Rodger G. Marticke; Clifford P. Johnson ; Scott Ray; Nathan Watts; Ralph Stephens; Christina Gonzalez; RJC 57, Inc.; Deer, Stone & Maya, P.C.; Jeffrey Deer; and Mark Stone, Defendants-Appellees).

No. 1-19-0041

Appellate Court of Illinois, First District, Fourth Division.

Filed March 26, 2020

Lisa D. Johnson, of Anchor Law Offices, PLLC, of Gurnee, for appellants.

David L. Weinstein and Ryan S. Burandt, of Taft Stettinius & Hollister LLP, of Chicago, and John W. Campbell, of Memphis, Tennessee, for appellees FedEx Corp., FedEx Ground Package System, Inc., Clifford P. Johnson, Rodger G. Marticke, Scott Ray, Nathan Watts, and David F. Rebholz.

Rebecca M. Rothmann, of Wilson Elser Moskowitz Edelman & Dicker LLP, of Chicago, for appellees Deer, Stone & Maya, P.C., Jeffrey W. Deer, and Mark Stone.

No brief filed for other appellees.

JUSTICE BURKE delivered the judgment of the court, with opinion.

164 N.E.3d 647

444 Ill.Dec. 551

¶ 1 Plaintiffs, Carlos G. Rocha and Arize 11, Inc., appeal from various orders and judgments of the circuit court, including the court's decision to sua sponte strike their initial complaint, its denial of their motion for a substitution of judge, its dismissal of count VIII of their third amended complaint, and its grant of summary judgment in favor of a defendant on count II of their fourth amended complaint. All of the defendants, however, initially challenge our jurisdiction in this appeal. For the reasons that follow, we have jurisdiction in this appeal, and we affirm the judgments of the circuit court.

¶ 2 I. BACKGROUND

¶ 3 A. Rocha and FedEx

¶ 4 Plaintiff Rocha worked for FedEx as a delivery driver. In 2006, Rocha signed a standard operating agreement with FedEx, which allowed him to service two routes as an independent contractor. In 2007, Rocha signed a modified standard operating agreement with FedEx, which allowed him to be a "swing" driver, again as an independent contractor, and service routes when other drivers were on vacation or leave. In the spring of 2010, FedEx announced it was transitioning from an independent contractor model in its use of delivery drivers to an independent service provider (ISP) model, a transition prompted by lawsuits alleging that FedEx misclassified its drivers as independent contractors. Under the ISP model, FedEx would contract with incorporated entities that would be responsible for delivering to geographic areas larger than the previous areas for which independent contractors were responsible. Those incorporated entities would, in turn, employ the delivery drivers. In the summer of 2010, in connection with the transition, FedEx sent its drivers currently operating under standard operating agreements a transition guide. The guide described the transition and change to FedEx's business model and discussed the steps contractors could take to become ISPs, which included creating an incorporated entity, acquiring service routes and completing a response to a FedEx request for information.

¶ 5 In late fall 2010, although Rocha's modified standard operating agreement was ending, he signed an extended standard operating agreement, in which he continued working with FedEx while the completion of the transition to the ISP model was ongoing. Also around this time, Rocha signed an agreement releasing FedEx from liability and claims related to the transition in exchange for financial compensation, though Rocha would later claim that he never received the compensation. Throughout all of this, Rocha desired to become an ISP and used plaintiff, Arize 11, Inc. (Arize 11), as the incorporated entity. During Rocha's efforts to become an ISP, he enlisted the help of two attorneys and their law firm. Rocha, using Arize 11, also attempted to acquire the necessary amount of service routes, and he executed a business agreement with John Velez to that end.

¶ 6 In late 2010 and into early 2011, Rocha's relationship with FedEx deteriorated. According to FedEx, Rocha had various issues with deliveries, including missing 53 delivery stops in one day; had various communication issues with supervisors; and was accused of sexual harassment. Ultimately, in late February or early March 2011, FedEx disqualified Rocha from performing deliveries. Later in March, Arize 11 sold its assets to another

164 N.E.3d 648

444 Ill.Dec. 552

incorporated entity, though Rocha alleged the sale was coerced by several individuals working in concert with one another, including his own attorneys. Rocha also claimed that the sale price was less than to what he agreed. The allegations and causes of actions in this lawsuit arose from FedEx's transition to the ISP model, Rocha's business dealings with FedEx during such time, the representation from his attorneys, and the sale of Arize 11 assets.

¶ 7 B. Federal Court Litigation

¶ 8 In 2011, prior to the instant litigation, Rocha joined a federal lawsuit captioned Fluegel v. FedEx Ground Package System, Inc., No. l:05-cv-02326 (N.D. Ill.), in which FedEx delivery drivers principally alleged that FedEx had misclassified them as independent contractors and thus deprived them of the protections afforded by the Illinois Wage Payment and Collection Act (Wage Act) ( 820 ILCS 115/1 et seq. (West 2010)). Following mediation, FedEx settled with the Fluegel plaintiffs, but not Rocha, who chose to be excluded from the settlement because he would have had to sign a release of all claims against FedEx that included any associated entities.

¶ 9 Thereafter, plaintiffs filed a lawsuit in federal court against FedEx, as well as several of the other defendants in the instant lawsuit, alleging violations of the Racketeer Influenced and Corrupt Organizations Act ( 18 U.S.C. § 1961 et seq. (2012) ), other federal laws, and Illinois laws. Rocha v. FedEx Corp. , 15 F. Supp. 3d 796, 804-05 (N.D. Ill. 2014). In ruling on motions to dismiss filed by the defendants, the federal court found plaintiffs' complaint " ‘an egregious violation’ " of the federal pleading standards with its "sheer volume and repetitiveness" and the ubiquity of legal conclusions disguised as facts. Id. at 805-06 (quoting Hartz v. Friedman , 919 F.2d 469, 471 (7th Cir. 1990) ). Ultimately, the federal court determined that plaintiffs failed to sufficiently state federal law claims for relief and, because of this, found no compelling reason to retain jurisdiction on their state law claims. Id. at 808-13. The federal court accordingly dismissed plaintiffs' complaint but allowed them leave to file an amended complaint "if they can address the fundamental deficiencies" of the complaint "in no more than 300 clear paragraphs that are not repetitive, speculative, or conclusory." Id. at 813. Alternatively, the federal court observed that they "remain free to proceed in state court instead of trying to establish federal jurisdiction for this dispute where none may exist." Id. Plaintiffs ultimately chose the latter. But before they filed their action against FedEx in state court, Rocha filed a lawsuit against the attorneys who represented him in the Fluegel action for breach of contract, breach of fiduciary duties, fraud, and legal malpractice. Rocha v. Rudd , 826 F.3d 905 (7th Cir. 2016). That case was dismissed by the federal district court and affirmed on appeal by the Seventh Circuit Court of Appeals. Id. at 909, 912.

¶ 10 C. The Instant Litigation

¶ 11 1. Initial Complaint

¶ 12 In January 2015, plaintiffs filed their complaint in the circuit court against FedEx Corporation; FedEx Ground Package System, Inc.; David F. Rebholz; Rodger G. Marticke; Clifford P. Johnson; Scott Ray; Nathan Watts; Ralph Stephens; Christina Gonzalez; RJC 57, Inc.; Deer, Stone & Maya, P.C.; Jeffrey Deer; Mark Stone; Maria Rojas; and "Does 1-50."

¶ 13 FedEx Corporation (FXC) is the parent corporation to FedEx Ground Package System, Inc. (FXG), who sometimes does business as FedEx Ground or FedEx Home Delivery. The companies are in the business of providing package delivery and pick-up service throughout the

164 N.E.3d 649

444 Ill.Dec. 553

United States (collectively, FedEx). At the time plaintiffs filed their complaint, Rebholz was the president and chief executive officer of FXG, Marticke was the executive vice president and chief operating officer of FXG, Johnson was the vice president and general counsel of FXG, Ray was a manager in FXG's contractor relations department, and Watts was senior manager for FXG's Chicago terminal (collectively, the FedEx defendants). RJC 57, Inc., is a dissolved corporation that was owned by Stephens and Gonzalez (collectively, the...