Nev. Fleet v. FedEx Corp.

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NEVADA FLEET LLC, Plaintiff, v. FEDEX CORPORATION; AUTOMOTIVE RENTALS, INC.; and DOES 1-50, inclusive, Defendants.

No. 2:17-cv-01732-TLN-KJN

United States District Court, E.D. California

March 24, 2022

ORDER

Troy L. Nunley United States District Judge

This matter is before the Court on Defendants FedEx Corporation (“FedEx”) and Automotive Rentals, Inc.'s (“ARI”) (collectively, “Defendants”) Motions to Dismiss. (ECF Nos. 111, 112.) Both motions are fully briefed. (ECF Nos. 115, 117, 120, 121.) For the reasons discussed herein, the Court GRANTS FedEx's motion and GRANTS in part and DENIES in part ARI's motion.

I.Factual and Procedural Background

This case arises from the sale of Defendants' used commercial vehicles to Plaintiff through third-party vehicle auction companies and other commercial vehicle resellers. (See ECF No. 104.) Plaintiff, an independent automotive dealer licensed in California, specializes in the wholesale purchase and sale of FedEx delivery vans, which it would purchase at commercial auctions around the country and directly from ARI via ARI's “ARI Direct” program. (Id. at ¶¶ 17-19, 21.) ARI is a corporate fleet management company that provides a variety of services for corporate fleets. (Id. at ¶ 25.) Relevant here, ARI provides “vehicle remarketing” services, in which ARI will take possession of a fleet vehicle that reaches “end of life, ” market and sell it through several sales channels and numerous auction houses around the country. (Id. at ¶¶ 27- 28.) ARI has had a Fleet Management Services Agreement (the “FMSA”) with FedEx since at least June 1, 2009. (Id. at ¶ 37.) ARI and FedEx amended the FMSA on July 11, 2013 (the “Ninth Amendment”), under which ARI provided vehicle remarketing services on behalf of FedEx. (See Id. at ¶¶ 44-50, 55.)

Plaintiff alleges it purchased FedEx delivery vans, the material conditions of which were misrepresented, such as a gasoline truck delivered in place of a diesel freightliner truck, a diesel freightliner truck delivered in place of a gasoline freightliner truck, non-air-conditioned vans sold as having air conditioners, and inoperable vehicles sold as drivable. (See Id. at ¶¶ 93-104.) Plaintiff further alleges that when it began looking into these issues and complaining to auction houses and ARI, it “was entirely rebuffed by the [a]uction [h]ouses and ARI . . . blaming each other or FedEx.” (Id. at ¶ 106.) Plaintiff alleges it found it was locked out of ARI's Auto Direct website and this suspension “quickly spread across the industry and within a very short period of time [Plaintiff] found itself locked out of bidding on all vehicles at the [a]uction [h]ouses as well.” (Id. at ¶¶ 108-109.)

On August 18, 2017, Plaintiff initiated this action. (ECF No 1.) On August 2, 2021, Plaintiff filed the operative Second Amended Complaint (“SAC”), adding ARI as a Defendant. (ECF No. 104.) Plaintiff asserts the following nine claims: (1) violation of the Vehicle Information and Cost Savings Act, 49 U.S.C. § 32701; (2) intentional misrepresentation or omission; (3) negligent misrepresentation or omission; (4) violation of the Racketeer Influenced and Corrupt Organizations (“RICO”) Act, 18 U.S.C. § 1962(c); (5) intentional interference with prospective economic advantage; (6) breach of express warranty by Defendants; (7) breach of the implied warranty of merchantability; (8) violations of the California Unfair Competition Law, California Business & Professions Code § 17200; and (9) violations of the Sherman Act, 15 U.S.C. § 1. (See id.) All claims are asserted against Defendants collectively with the exception of the fifth and ninth claims, which are asserted against ARI alone. (See id.) On August 20, 2021, FedEx and ARI filed the instant motions to dismiss. (ECF Nos. 111, 112.) The Court will address each in turn.

II.Standard of Law

A motion to dismiss for failure to state a claim upon which relief can be granted under Federal Rule of Civil Procedure (“Rule”) 12(b)(6) tests the legal sufficiency of a complaint. Navarro v. Block, 250 F.3d 729, 732 (9th Cir. 2001). Rule 8(a) requires that a pleading contain “a short and plain statement of the claim showing that the pleader is entitled to relief.” See Ashcroft v Iqbal, 556 U.S. 662, 678-79 (2009). Under notice pleading in federal court, the complaint must “give the defendant fair notice of what the claim . . . is and the grounds upon which it rests.” Bell Atlantic v Twombly, 550 U.S. 544, 555 (2007) (internal quotations omitted). “This simplified notice pleading standard relies on liberal discovery rules and summary judgment motions to define disputed facts and issues and to dispose of unmeritorious claims.” Swierkiewicz v. Sorema N.A., 534 U.S. 506, 512 (2002).

On a motion to dismiss, the factual allegations of the complaint must be accepted as true. Cruz v. Beto, 405 U.S 319, 322 (1972). A court is bound to give the plaintiff the benefit of every reasonable inference to be drawn from the “well-pleaded” allegations of the complaint. Retail Clerks Int'l Ass'n v. Schermerhorn, 373 U.S. 746, 753 n.6 (1963). A plaintiff need not allege “‘specific facts' beyond those necessary to state his claim and the grounds showing entitlement to relief.” Twombly, 550 U.S. at 570.

Nevertheless, a court “need not assume the truth of legal conclusions cast in the form of factual allegations.” U.S. ex rel. Chunie v. Ringrose, 788 F.2d 638, 643 n.2 (9th Cir. 1986).

While Rule 8(a) does not require detailed factual allegations, “it demands more than an unadorned, the defendant-unlawfully-harmed-me accusation.” Iqbal, 556 U.S. at 678. A pleading is insufficient if it offers mere “labels and conclusions” or “a formulaic recitation of the elements of a cause of action.” Twombly, 550 U.S. at 555; see also Iqbal, 556 U.S. at 678 (“Threadbare recitals of the elements of a cause of action, supported by mere conclusory statements, do not suffice.”). Moreover, it is inappropriate to assume the plaintiff “can prove facts that it has not alleged or that the defendants have violated the . . . laws in ways that have not been alleged.” Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526 (1983).

Ultimately, a court may not dismiss a complaint in which the plaintiff has alleged “enough facts to state a claim to relief that is plausible on its face.” Iqbal, 556 U.S. at 697 (quoting Twombly, 550 U.S. at 570). “A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Id. at 680. While the plausibility requirement is not akin to a probability requirement, it demands more than “a sheer possibility that a defendant has acted unlawfully.” Id. at 678. This plausibility inquiry is “a context-specific task that requires the reviewing court to draw on its judicial experience and common sense.” Id. at 679.

In ruling on a motion to dismiss, a court may only consider the complaint, any exhibits thereto, and matters which may be judicially noticed pursuant to Federal Rule of Evidence 201. See Mir v. Little Co. of Mary Hosp., 844 F.2d 646, 649 (9th Cir. 1988); Isuzu Motors Ltd. v. Consumers Union of U.S., Inc., 12 F.Supp.2d 1035, 1042 (C.D. Cal. 1998).

If a complaint fails to state a plausible claim, “‘[a] district court should grant leave to amend even if no request to amend the pleading was made, unless it determines that the pleading could not possibly be cured by the allegation of other facts.'” Lopez v. Smith, 203 F.3d 1122, 1130 (9th Cir. 2000) (en banc) (quoting Doe v. United States, 58 F.3d 494, 497 (9th Cir. 1995)).

III.Analysis

A. FedEx's Motion to Dismiss

FedEx moves to dismiss all of Plaintiff's claims pursuant to Rule 12(b)(6). (See ECF No. 111-1.) FedEx argues Plaintiff does not state an agency theory of liability against FedEx in the claims asserted against it - Claims One through Four and Six through Eight. (Id. at 11-13.) FedEx argues in the alternative that Plaintiff fails to state a claim in all of these claims. (Id. at 13-24.) Because the Court finds Plaintiff does not state a theory of liability against FedEx, it will only address the sufficiency of the allegations regarding an agency theory of liability and decline to address whether Plaintiff adequately states a claim.

FedEx argues that the SAC “provides no more factual support for its agency theories than it did in its prior pleadings” - namely, Plaintiff “makes no allegations of fact demonstrating the requisite elements of ostensible agency, including that [Plaintiff] reasonably believed that ARI had agency authority, that FedEx somehow caused [Plaintiff] to believe ARI had agency authority, or that [Plaintiff's] purported reliance could be based on anything but its own negligence.” (Id. at 11-12.) FedEx asks the Court to reject Plaintiff's theory that FedEx was “the selling party, [and] ultimately responsible for the manner in which its vehicles were marketed and sold, ” as it already rejected this exact theory based on exhibits Plaintiff attached to its First Amended Complaint (“FAC”) that disprove the agency theory (which were not attached to the SAC). (Id. at 12-13.) In opposition, Plaintiff asserts the SAC alleges both an actual agency relationship between FedEx and ARI, as well as an ostensible agency relationship. (ECF No. 117 at 7-11.) Plaintiff further asserts the question of whether ARI was FedEx's agent is a question of fact that cannot be determined on a Rule 12 motion.^[1] (Id. at 10.)

The Court will first address whether Plaintiff sufficiently pleaded an actual agency relationship and then whether Plaintiff sufficiently pleaded an ostensible agency relationship.

i.Actual Agency

Plaintiff...