Jose Bernal v. FedEx Ground Package System, Inc. et al

Filing 27

ORDER ORDER GRANTING IN PART AND DENYING IN PART DEFENDANT FEDEX GROUND PACKAGE SYSTEM INC.S MOTION TO DISMISS PLAINTIFFS FIRST CAUSE OF ACTION FOR FRAUDAND/OR STRIKE PORTIONS OF PLAINTIFFS FIRST AMENDED COMPLAINT PURSUANT TO FRCP RULES 12(b)(6) and 12(f) by Judge Dean D. Pregerson: FedEx Grounds motion to dismiss is GRANTED without prejudice.The motion to strike is GRANTED in part as to the date portion of the class definition and DENIED as to the request for punitive damages. (shb)

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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JOSE L. BERNAL, on behalf of
himself and all others
similarly situated,

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Plaintiff,
v.
FEDEX GROUND PACKAGE SYSTEM
INC., a Delaware
corporation; FEDEX
CORPORATION, a Delaware
corporation; and FLAT RATE
TRUCK REPAIR, INC., a
California corporation,
Defendants.
___________________________

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Case No. CV 15-01448 DDP (PLAx)

ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANT FEDEX
GROUND PACKAGE SYSTEM INC.’S
MOTION TO DISMISS PLAINTIFFS’
FIRST CAUSE OF ACTION FOR FRAUD
AND/OR STRIKE PORTIONS OF
PLAINTIFFS’ FIRST AMENDED
COMPLAINT PURSUANT TO FRCP RULES
12(b)(6) and 12(f)

[Dkt. No. 23]

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Presently before the Court is Defendant FedEx Ground Package

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System, Inc. (“FedEx Ground”)’s Motion to Dismiss Plaintiffs’ First

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Cause of Action for Fraud and/or Strike Portions of Plaintiffs’

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First Amended Complaint.

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parties’ submissions and heard oral argument, the Court GRANTS the

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motion to dismiss, GRANTS in part and DENIES in part the motion to

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strike, and adopts the following order.

(See Dkt. No. 23.)

Having considered the

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I.

BACKGROUND
Plaintiffs, a group of 73 individuals, are current and former

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pickup truck drivers for FedEx Ground.

(First Amended Complaint

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(“FAC”), Dkt. No. 15, ¶ 1.)

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shipping company and a subsidiary of Defendant FedEx Corporation.

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(Id. ¶ 2.)

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Corporation (collectively, “FedEx”) “contracted and created various

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individuals and companies in California to misclassify Plaintiffs

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as independent contracts [sic] rather than employees.”

Defendant FedEx Ground is a package

Plaintiffs allege that FedEx Ground and FedEx

(Id. ¶ 3.)

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Plaintiffs allege that, as part of this alleged scheme, FedEx

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leased tractor vehicles from various individuals and companies in

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California.

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Corporation, and 32 of the aforementioned “individuals and

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companies” (the “Trucking Companies”) as defendants in the FAC.

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(Id. ¶ 4.)

Plaintiffs name FedEx Ground, FedEx

Plaintiffs bring this lawsuit on behalf of themselves and a

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putative class, defined in the FAC as “[a]ll persons who: 1) drove

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a tractor with a FedEx Ground logo which was leased to FedEx Ground

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Package, Inc. by other trucking companies; 2) received daily routes

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from terminals belonging to FedEx Ground Package, Inc located in

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California; 4) received a W2 or Paycheck from trucking companies;

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and 5) within the employment period from 2010 to the present day or

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date of judgment.”

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(Id. ¶ 18.)

Plaintiffs allege that the Trucking Companies’ primary

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business is leasing tractor vehicles to FedEx, which then uses the

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tractors to connect and transport trailers throughout the country.

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(Id. ¶ 5.)

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2s and paychecks to Plaintiffs, but that the Trucking Companies

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“have no other business purpose and merely serve as shell

Plaintiffs allege that the Trucking Companies issue W-

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companies, payroll or staffing companies” for FedEx.

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Plaintiffs allege that FedEx engaged in a fraudulent scheme to

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misclassify Plaintiffs as independent contractors rather than

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employees, and that FedEx conspired with the Trucking Companies to

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carry out this scheme.

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(Id.)

(Id. ¶¶ 6, 9.)

Plaintiffs allege that they are employees of both the Trucking

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Companies and FedEx.

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rather than the Trucking Companies, controlled the terms of their

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employment and their pay, including “the method and calculation of

(Id. ¶ 9.)

Plaintiffs allege that FedEx,

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payments . . . by compensating Plaintiffs using a complex method

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and system, and only for authorized routes and assignments.”

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¶ 11.)

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relationship with FedEx should not have gone beyond the lease of

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the tractors; instead, Plaintiffs allege, the Trucking Companies

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improperly inserted themselves in Plaintiffs’ employment

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relationship with FedEx by (1) issuing W-2s and paychecks to

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Plaintiffs and (2) assisting FedEx in hiring Plaintiffs.

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10.)

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and suspend,” and therefore, under California law, Plaintiffs

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should have been classified as FedEx employees.

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26.)

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(Id.

Plaintiffs allege that the Trucking Companies’

(Id. ¶

Plaintiffs allege that FedEx “decided who to hire, terminate,

(Id. ¶¶ 12, 13,

Plaintiffs further allege that FedEx’s practices with respect

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to Plaintiffs’ daily routes and assignments violated California

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employment and labor codes.

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FedEx employees and dispatchers gave drivers their daily routes and

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assignments at FedEx terminals, after which the drivers’ tractors

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would be connected to FedEx trailers in order to drive packages to

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various terminals and hubs across the country.

(Id. ¶ 26.)

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Plaintiffs allege that

(Id. ¶ 27.)

Once

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drivers would reach their destination terminal, Plaintiffs allege

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that FedEx would instruct drivers either to “drop and hook” new

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trailers or to wait for the next assignment.

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Plaintiffs allege that the wait time would often take hours or

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days.

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drivers run quick local routes while they waited for the next

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assignment, and that if the drivers refused, they would be

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retaliated against or terminated.

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they returned home without waiting for a new route or assignment,

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(Id.)

(Id. ¶ 28.)

Plaintiffs allege that FedEx would request the

(Id.)

Plaintiffs allege that if

they were not compensated for the return mileage.

(Id.)

Additionally, Plaintiffs allege that Defendants made false

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statements in conjunction with Plaintiffs’ employment that harmed

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Plaintiffs.

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told Plaintiffs that (1) they would be employed and hired by FedEx,

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and (2) that they were employed by FedEx.

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also allege that Defendants’ representations to Plaintiffs included

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a badge on which the FedEx logo was printed but that stated:

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“NOTICE: The holder of this badge is a VENDOR to FedEx Ground.

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holder is not an employee of FedEx Ground.

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be duplicated.”

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that Defendants posted various job listings that clearly stated

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that Plaintiffs would be working for FedEx.

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Plaintiffs also allege that FedEx made it appear as if the Trucking

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Companies were the sole employers of Plaintiffs and instructed the

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Trucking Companies to issue W-2s and paychecks to Plaintiffs,

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despite the fact that Plaintiffs were employees of FedEx.

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58, 60.)

(Id. ¶ 49.)

Plaintiffs allege that Defendants falsely

(Id. ¶ 51 & Exh. E.)

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(Id. ¶ 50.)

Plaintiffs

The

This badge is not to

Plaintiffs further allege

(Id. ¶ 52 & Exh. F.)

(Id. ¶¶

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Plaintiffs allege, that due to FedEx’s misclassification of

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Plaintiffs and FedEx’s driver policies, Defendants violated various

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California labor code provisions and committed fraud.

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TAC alleges ten causes of action against Defendants: (1) fraud; (2)

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failure to pay earned wages, in violation of Labor Code § 204; (3)

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failure to pay overtime wages, in violation of Labor Code § 1194;

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(4) failure to provide meal periods, in violation of Labor Code §§

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512,226.7, 204, and 1198; (5) failure to provide rest periods, in

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violation of Labor Code §§ 226.7, 204, and 1198; (6) recovery of

Plaintiffs

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deductions from wages, pursuant to Labor Code §§ 221 and 223; (7)

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waiting time penalties, pursuant to Labor Code § 203; (8) failure

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to provide accurate itemized statements, in violation of Labor Code

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§ 226; (9) unlawful, unfair and fraudulent business practices, in

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violation of Business & Professions Code § 17200, et seq.; and (10)

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violation of the Labor Code Private Attorneys General Act of 2004

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and Labor Code § 2698.

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Defendant FedEx Ground now moves to dismiss for failure to

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state a claim Plaintiffs’ first cause of action for fraud, and

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further moves to strike portions of the FAC.

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II.

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(Dkt. No. 23.)

LEGAL STANDARD
A 12(b)(6) motion to dismiss requires the court to determine

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the sufficiency of the plaintiff's complaint and whether or not it

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contains a “short and plain statement of the claim showing that the

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pleader is entitled to relief.”

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Rule 12(b)(6), a court must (1) construe the complaint in the light

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most favorable to the plaintiff, and (2) accept all well-pleaded

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factual allegations as true, as well as all reasonable inferences

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to be drawn from them.

Fed. R. Civ. P. 8(a)(2).

Under

See Sprewell v. Golden State Warriors, 266
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F.3d 979, 988 (9th Cir. 2001), amended on denial of reh’g, 275 F.3d

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1187 (9th Cir. 2001); Pareto v. F.D.I.C., 139 F.3d 696, 699 (9th

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Cir. 1998).

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In order to survive a 12(b)(6) motion to dismiss, the

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complaint must “contain sufficient factual matter, accepted as

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true, to ‘state a claim to relief that is plausible on its face.’”

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Ashcroft v. Iqbal, 556 U.S. 662, 663 (2009) (quoting Bell Atl.

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Corp. v. Twombly, 550 U.S. 544, 570 (2007)).

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“[t]hreadbare recitals of the elements of a cause of action,

However,

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supported by mere conclusory statements, do not suffice.”

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556 U.S. at 678.

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cognizable legal theory or sufficient facts to support a cognizable

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legal theory.”

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1097, 1104 (9th Cir. 2008); see also Twombly, 550 U.S. at 561-63

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(dismissal for failure to state a claim does not require the

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appearance, beyond a doubt, that the plaintiff can prove “no set of

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facts” in support of its claim that would entitle it to relief).

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complaint does not suffice “if it tenders ‘naked assertion[s]’

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devoid of ‘further factual enhancement.’” Iqbal, 556 U.S. at 678

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(quoting Twombly, 550 U.S. at 556).

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plausibility when the plaintiff pleads factual content that allows

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the court to draw the reasonable inference that the defendant is

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liable for the misconduct alleged.”

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as true “legal conclusions merely because they are cast in the form

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of factual allegations.”

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F.3d 1136, 1139 (9th Cir. 2003).

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Iqbal,

Dismissal is proper if the complaint “lacks a

Mendiondo v. Centinela Hosp. Med. Ctr., 521 F.3d

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“A claim has facial

Id.

The Court need not accept

Warren v. Fox Family Worldwide, Inc., 328

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III.

DISCUSSION

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A.

Motion to Dismiss

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FedEx Ground argues that Plaintiffs’ fraud claim should be

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dismissed because it is predicated on alleged misrepresentations of

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law, which cannot form the basis of a claim for fraud.

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contend that they do allege FedEx Ground made misrepresentations of

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fact - specifically, that FedEx Ground falsely stated that the

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staffing and work assignments for drivers would be established by

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the contractor Trucking Companies and not FedEx Ground.

Plaintiffs

Plaintiffs

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also argue that the badge given to the drivers was misleading,

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since it had a FedEx logo and bar code, and therefore led drivers

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to believe they worked for FedEx.

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Misrepresentations of law cannot form the basis for a fraud

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claim.

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Cir. 2004).

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expressions of opinion which are generally not actionable in fraud

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even if they are false.”

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misrepresentations of law could form the basis of an actionable

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fraud claim when the party making the representation: “1) purports

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to have special knowledge; 2) stands in a fiduciary or similar

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relation of trust and confidence to the recipient; 3) has

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successfully endeavored to secure the confidence of the recipient;

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4) or has some other special reason to expect that the recipient

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will rely on his opinion, misrepresentations of law may result in

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actionable fraud.”

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See Miller v. Yokohama Tire Corp., 358 F.3d 616, 621 (9th
Statements of law are “normally regarded as

Id.

However, reliance on

Id.

As an initial matter, none of the four exceptions to the rule

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in Miller appear to be present here.

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that FedEx purported to have some special knowledge, and the Court
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Plaintiffs have not alleged

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cannot see how FedEx would have some special knowledge of

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employment law in this context.

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alleged that Defendants stood in a fiduciary relationship with

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Plaintiffs or that Defendants “endeavored to secure the confidence”

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of any of the Plaintiffs.

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that Defendants had a special reason to expect that any of the

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Plaintiffs would rely on the alleged misrepresentations.

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the relationships alleged in the FAC would appear to the Court to

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be standard employee/employer or contractor/employer relationships.

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Plaintiffs similarly have not

Finally, Plaintiffs have not alleged

All of

Furthermore, the alleged misrepresentations in the FAC appear

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to be misrepresentations of law.

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the FAC fall seemingly into two categories of misrepresentations

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that form the basis of the alleged fraud: (1) Defendants misled

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Plaintiffs in materials stating that Plaintiffs were contractors,

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because Plaintiffs were in actuality employees of FedEx; and (2)

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Defendants misled Plaintiffs to believe they were employed by FedEx

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when in fact they were employed by the independent Trucking

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Companies.

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Plaintiffs cannot have it both ways; they cannot argue on one hand

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that the fraud was committed when FedEx lied to them by convincing

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them they were hired and employed by FedEx, while at the same time

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arguing that the fraud was based on misrepresentations that

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Plaintiffs were contractors when in fact they should have been

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classified as employees.

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The alleged misrepresentations in

These allegations appear to be self-contradictory.

As for the first category of misrepresentations, the Court

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concludes that these are misrepresentations of law, not fact.

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statement that an individual is a contractor, vendor, or an

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employee of a contractor, is a statement of law.
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See Harris v.

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Vector Mktg. Corp., 656 F. Supp. 2d 1128, 1136 (N.D. Cal. 2009)

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(stating that under federal and state law, the legal conclusion of

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whether workers are employees or independent contractors is a

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question of law).

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show that Plaintiffs were misclassified as contractors rather than

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employees, a misrepresentation by Defendants that Plaintiffs were

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employed by the Trucking Companies could not form the basis of a

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fraud claim.

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Therefore, although the facts may ultimately

As for the second category of misrepresentations, the FAC does

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not allege facts that support Plaintiffs’ contention that FedEx

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Ground told Plaintiffs they would be employed by FedEx.

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references a badge that has the FedEx logo; however, the FAC also

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alleges that the badge (an image of which is attached to the FAC as

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Exhibit E) clearly states that the bearer is a “vendor” of FedEx

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and disclaims that the bearer is an employee.

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Craigslist ad attached as Exhibit F to the FAC states that a “FedEx

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ground contractor” is hiring, not FedEx itself.

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F.)

The FAC

Furthermore, the

(FAC ¶ 52 & Exh.

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B.

Motion to Strike

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FedEx Ground also moved to strike portions of the FAC.

First,

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FedEx Ground requested that the Court strike Item 11 in the “Prayer

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for Relief,” which pertains to Plaintiffs’ request for punitive

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damages with respect to the fraud claim.

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FedEx Ground requests that the Court strike the portion of the

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class definition that includes individuals who were employed “from

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2010,” arguing that the longest statute of limitations for any of

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Plaintiffs’ claims reaches back only to July 22, 2010.

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18.)
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(See FAC at 34.)

Second,

(See id. ¶

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Because Plaintiffs do not oppose the motion to strike the

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“from 2010” portion of the class definition, the Court GRANTS the

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motion to strike this language from the FAC.

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dismissing Plaintiffs’ fraud claim with leave to amend, the Court

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DENIES the motion to strike Plaintiffs’ request for punitive

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damages as moot.

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IV.

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Because the Court is

CONCLUSION
For the foregoing reasons, FedEx Ground’s motion to dismiss is

GRANTED without prejudice.

The motion to strike is GRANTED in part

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as to the date portion of the class definition and DENIED as to the

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request for punitive damages.

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IT IS SO ORDERED.

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Dated: July 14, 2015
DEAN D. PREGERSON
United States District Judge

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