Hix v. FedEx Corporation et al
MEMORANDUM OPINION AND ORDER denying 7 separate defendants FedEx Corporation and FedEx Freight, Inc., Motion to Dismiss for Failure to State a Claim. Signed by Honorable Robert T. Dawson on March 5, 2013. (sh)
IN THE UNITED STATES DISTRICT COURT FOR
THE WESTERN DISTRICT OF ARKANSAS
Case No.: 3:12-CV-03050
FEDEX CORPORATE SERVICES, INC.
FEDEX FREIGHT, INC.
MEMORANDUM OPINION AND ORDER
Plaintiff brings his Complaint (Doc. 1) under the SarbanesOxley Corporate and Criminal Fraud Accountability Act (“SOX”),
18 U.S.C. § 1514, the Dodd-Frank Wall Street Reform and Consumer
Protection Act (“Dodd-Frank”), 12 U.S.C. § 5301, and Arkansas
common law for wrongful termination.
Currently before the Court
are Separate Defendants‟ (FedEx Corporation and FedEx Freight,
Memorandum in Support (Doc. 8), Plaintiff‟s Response (Doc. 10),
Separate Defendants‟ Motion (Doc. 7) is DENIED.
principal place of business in Tennessee that regularly conducts
business in Arkansas.
(Doc. 1, ¶ 2).
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FedEx Corporate Services,
business in Tennessee that regularly conducts business in the
State of Arkansas.
(Doc. 1, ¶
FedEx Freight, Inc. is an
Arkansas Corporation with its principal place of business in
(Doc. 1, ¶ 6).
Plaintiff contends he is a former employee of Defendants,
employed on or around August 1, 2009, until the date of his
termination, April 25, 2011.
(Doc. 1, ¶ 12).
Prior to being
terminated, Plaintiff filed three separate SOX claims against
(Doc. 1, ¶ 13).
Plaintiff alleges his termination
was the result of his filing of those claims in violation of SOX
( Doc. 1, ¶ 19 – 21), Dodd-Frank (Doc. 1, ¶ 25 – 28), and
Arkansas‟ common law for wrongful termination (Doc. 1, ¶ 32 –
This matter is now before the Court on motion of Separate
failure to state a claim upon which relief can be granted and
misjoinder.1 (Doc. 7).
Plaintiff responded to the motion outside
Defendants allege Plaintiff failed to satisfy administrative prerequisites
regarding Plaintiff‟s SOX claim against FedEx Freight, Inc. by failing to
first file a complaint with the Secretary of Labor as required by 18 U.S.C.
§ 1514A(b)(1)(A). However, Miller v. Stifel, Nicolaus & Co., Inc. explains an
important exception: “If the employee has met these requirements [(employee
required to file complaint within 90 days of alleged SOX violation)] for a
particular violation, and a final administrative decision has not [been]
issued within 180 days of the filing of the administrative complaint, the
employee can proceed with an action in federal court based on that
violation.” Miller v. Stifel, Nicolaus & Co., Inc., 812 F. Supp. 2d 975, 983
(D. Minn. Sept. 20, 2011). Defendants‟ own memorandum shows that Plaintiff
filed his complaints with OSHA within the 90-day window. (Doc. 8). Plaintiff
then appealed to the Office of Administrative Law Judges and consolidated all
three SOX claims. (Doc. 8). On November 21, 2011, the Administrative Law
Judge (Judge Sellers) put a stay on the matter. (Doc. 8). After Judge Sellers
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Defendants moved to dismiss Plaintiff‟s claims with prejudice.2
Despite the untimeliness of Plaintiff‟s response,
Separate Defendants move for dismissal on the basis that
Plaintiff was not an employee with either FedEx Corporation or
FedEx Freight, Inc. at the time of Plaintiff‟s SOX complaints
and subsequent firing.
Separate Defendants assert since there
is no employer-employee relationship between them and Plaintiff,
they are improper parties and no relief can be sought against
sufficiently alleges a cause of action against the moving party.
“In considering a Rule 12(b)(6) motion, the court views the
pleadings in the light most favorable to the nonmoving party and
issued an Order setting a 30-day deadline for Plaintiff to file the action
with the federal court, Plaintiff filed his complaint in federal court on
April 4, 2012. The timespan from when the ALJ received the complaints and the
date of decision, or lack thereof, came well outside the 180 window described
in Miller. Id. Therefore, Plaintiff‟s failure to file a complaint with the
Secretary of Labor with regards to FedEx Freight, Inc. does not require this
Court to dismiss Plaintiff‟s claim against FedEx Freight, Inc.
Local Rule 7.2(b) requires a party to file an opposition to a motion within
fourteen days from the date of service. Defendants FedEx Corporation and
FedEx Freight filed their motion to dismiss on April 30, 2012. Plaintiff
filed his response on July 25, 2012. Plaintiff‟s answer was more than ten
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treats the alleged facts as true.”
Erickson v. Wells Fargo
Bank, N.A., No. 11-3123, 2012 WL 1593204, at *2 (D. Minn. Apr.
“A Rule 12(b)(6) motion to dismiss is granted when
the factual allegations, even assumed to be true, do not entitle
that party to relief.” Id.
Although a plaintiff need not give a
highly detailed recitation of the facts, the allegations must be
“enough to raise a right to relief above the speculative level
on the assumption that all the allegations in the complaint are
Twombly, 550 U.S. 544, 555 (2007).
Stated further, a motion to
plaintiff can prove no facts which would entitle him to relief.”
Morton v. Becker, 793 F.2d 185, 187 (8th Cir. 1986)3.
the Court initially determines all parties are proper, the Court
may dismiss a party during trial if facts are presented showing
a party is in fact an improper party. Fed. R. Civ. P. 21.
In Plaintiff‟s Memorandum in Response to Defendants‟ Motion to Dismiss (Doc.
11) Plaintiff takes issue with Defendants‟ use of three affidavits (which the
Court believes are Exhibits #1 (Doc. 8-1), #2 (Doc. 8-2), and #3 (Doc. 8-3)
attached to the Memorandum in Support of Defendants‟ Motion to Dismiss (Doc.
to support their motion to dismiss (Doc. 11 ¶ 4). Under Speaker,
Plaintiff alleges that the use of extrinsic evidence by this Court generally
requires the Rule 12(b)(6) motion be converted into a motion for summary
judgment. Speaker v. United States Dep’t. of Health and Human Serv., 623 F.3d
1371, 1379 (11th Cir. 2010). Defendants respond there is a caveat to the
general rule: “[W]here certain documents and their contents are undisputed:
„In ruling upon a motion to dismiss, the district court may consider an
extrinsic document if it is (1) central to the plaintiff‟s claim, and (2) its
authenticity is not challenged.‟” Id. As in Speaker, Plaintiff has not, at
this point, challenged the authenticity of Defendants‟ affidavits. Id. at
consideration and decision. The motion to dismiss is therefore not converted
into a summary judgment motion.
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Employer Requirement for Sarbanes-Oxley claim
SOX gives protection to employees who provide information,
against a “company with a class of securities registered under
section 12 of the Securities Exchange Act of 1934 (15 U.S.C.
78l), or that is required to file reports under section 15(d) of
the Securities Exchange Act of 1934 (15 U.S.C. 78o(d))” “which
section 1341 [mail fraud], 1343 [wire fraud], 1344 [bank fraud],
regulation of the Securities and Exchange Commission [“SEC”], or
shareholders[.]” 18 U.S.C. § 1514A(a) (2012).
To establish a prima facie case, the plaintiff must
show, by a preponderance of the evidence, that: (1)
[plaintiff] engaged in protected activity; (2) the
employer knew or suspected . . . the protected
activity; (3) [plaintiff] suffered an unfavorable
personnel action; and (4) the protected activity was a
contributing factor in the unfavorable personnel
Miller v. Stifel, Nicolaus & Co., Inc., 812 F. Supp. 2d 975, 982
plaintiff must establish an employer-employee relationship with
the defendants in order to seek relief.4
Defendants initially denied they were companies with the securities necessary
or report filing requirement that would make Defendants subject to the
Securities Exchange Act of 1934. However, neither Defendants‟ Memorandum in
Support of Defendants‟ Motion to Dismiss (Doc. 8) nor Defendants FedEx
Corporation and FedEx Freight, Inc.‟s Reply to Plaintiff‟s Response to their
Motion to Dismiss (Doc. 12) raise any argument against the claim that
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Plaintiff’s employment status with regards to FedEx
Plaintiff should be given the opportunity to show FedEx
Corporation was his employer. In the Eighth Circuit, there is a
“„strong presumption that a parent company is not the employer
Fred’s, Inc., 494 F.3d 736, 739 (8th Cir. 2007) (quoting Frank
v. United States West, Inc., 3 F.3d 1357, 1362 (10th Cir. 1993).
These “extraordinary circumstances” are put forth in the “alter
ego/level of control” test:
[a] parent company may employ its subsidiary‟s
employees if (a) the parent company so dominates the
subsidiary‟s operations that the two are one entity
and therefore on employer or (b) the parent company is
linked to the alleged discriminatory action because it
controls individual employment decisions.
Brown at 739 (quoting Leichihman v. Pickwick Int’l, 814 F.2d
1263, 1268 (8th Cir. 1987)) (quotations omitted); see Humphries
v. Bray, 611 S.W.2d 791 (Ark. Ct. App. 1981) (holding a sole
corporation‟s employee‟s injuries).
A parent company controls
Defendants fit into the securities and reporting requirement of the
Securities Exchange Act of 1934. Instead, both Defendants and Plaintiff focus
on whether Defendants FedEx Corporation and FedEx Freight, Inc. were
Plaintiff‟s “employer” for purposes of Plaintiff‟s SOX, Dodd-Frank, and
Arkansas common law for wrongful termination allegations.
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shifted them between the two companies, and supervised their
daily operations.” Johnson v. Flowers Indus., Inc., 814 F.2d
978, 981 (4th Cir. 1987). Some other relevant factors used by
the courts are “1) the commingling of funds and assets; . . . 3)
the severe undercapitalization of the subsidiary; and 4) the
formalities such as keeping separate books and holding separate
E.E.O.C. v. Chemtura Corp., No. 07-1025,
2009 WL 1940076 (W. D. Ark. 2009).
In Exhibit #1 Defendants assert that FedEx Corporation does
not exercise day-to-day control over the employment decisions of
FedEx Freight, Inc., or FedEx Corporate Services, Inc. (Doc. 8-1
¶ 11), that FedEx Freight, Inc. does not exercise day-to-day
control over the employment decisions of FedEx Corporation or
Corporate Services, Inc. does not exercise day-to-day control
over the employment decisions of FedEx Corporation and FedEx
Freight, Inc. (Doc. 8-1 ¶ 13).
Defendants further assert that
(Doc. 8-1 ¶ 9). Even assuming these facts as true, the plaintiff
may still prove that FedEx Corporation had sufficient “control”
over FedEx Freight, Inc. and FedEx Corporate Services, Inc. to
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justify a finding that all three entities are actually a single
Therefore, Plaintiff will be given the opportunity to
prove his case.
Plaintiff’s Employment Status with regards to FedEx
Although never an employee of FedEx Freight, Inc., Separate
Defendant may be liable for the employment decisions of its
sister company based on an extension of “alter ego liability.”5
The Eighth Circuit has no case law on the subject of sister
company liability; however, the Arkansas Supreme Court discussed
the concept in Missouri Pacific R. Co. v. Mackey, 760 S.W.2d 59
In Missouri Pacific, the Court held there was no
“nexus” that connected the corporation at issue with its sister
corporation; therefore, the sister corporation was not a proper
party to the action.
Missouri Pacific at 65.
The concept is
further explained in Greenspan v. LADT, LLC:
Generally, alter ego liability is reserved for the
parent-subsidiary relationship. However, under the
single-enterprise rule, liability can be found between
sister companies. The theory has been described as
follows: In effect what happens is that the court, for
sufficient reason, has determined that though there
are two or more personalities, there is but one
enterprise; and that this enterprise has been so
Plaintiff admits to being an employee of FedEx Corporate Services, Inc., but
makes no such assertion with regards to FedEx Corporation or FedEx Corporate
Services, Inc. (Doc. 11 ¶ 3).
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Greenspan v. LADT, LLC, 121 Cal. Rptr. 3d 118, 138 (Ca. Ct. App.
determined by whether FedEx Corporation was involved with its
subsidiaries to such an extent as to find there to be a “single
As discussed above, Plaintiff will be given the
discovery and trial.
Dodd-Frank extension of Sarbanes-Oxley
The Dodd-Frank Wall Street Reform and Consumer Protection
Act, Pub. L. No. 111-203, 124 Stat. 376 (2010) (West), amended
SOX “by inserting „including any subsidiary or affiliate whose
financial information is included in the consolidated financial
Exchange Act of 1934 (15 U.S.C. 78o(d)).‟”
Street Reform and Consumer Protection Act, Pub. L. No. 111-203,
plaintiff bringing a cause of action against a subsidiary may
also have a cause of action against the parent company depending
information within its own consolidated financial statement.
Separate Defendants assert FedEx Corporate Services, Inc.
and FedEx Freight, Inc. are wholly-owned subsidiaries of FedEx
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(Doc. 8-1 ¶ 5, 7).
However, Separate Defendants
Corporation‟s financial statements.
Therefore, a dismissal at
this point in the proceedings would be premature.
Plaintiff’s Arkansas Common Law Wrongful Termination Claim
Plaintiff alleges he was terminated in violation of the
public policy of the State of Arkansas which is a violation of
Arkansas common law.
(Doc. 1 ¶ 35).
An exception to the
“employment-at-will doctrine” is the “public policy exception.”
Northport Health Serv., Inc. v. Owens, 158 S.W.3d 164, 175 (Ark.
This public policy exception is stated as “an at-will
employee has a cause of action for wrongful discharge if he or
she is fired in violation of a well-established public policy of
the state.” Id.; see City of Green Forest v. Morse, 873 S.W.2d
155 (Ark. 1994) (holding “the exceptions to the at-will doctrine
will be recognized to protect a well-established and substantial
“The public policy of [Arkansas] is contravened if an employer
discharges an employee for reporting a violation of state or
Lynn v. Wal-Mart Stores, Inc., 280 S.W.3d 574,
579 (Ark. Ct. App. 2008).
FedEx Freight, Inc. is a wholly-owned subsidiary of FedEx Freight Corporation
which is a wholly-owned subsidiary of FedEx Corporation.
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SOX and Dodd-Frank are
federal laws and
a violation of
either would constitute a violation of Arkansas common law.
such, if Plaintiff is able to prove at trial that he was an
complaints, Plaintiff‟s wrongful termination claim is justified.
For the reasons stated above, Separate Defendants‟ Motion
to Dismiss (Doc. 7) is DENIED, and Separate Defendants shall
have ten (10) days to respond to Plaintiff‟s Complaint.
IT IS SO ORDERED this 5th day of March, 2013.
/s/ Robert T. Dawson
Honorable Robert T. Dawson
United States District Judge
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