Transportation Executive Summary: Appellate Court Affirms Dismissal of §1981 Claim Against Fed Ex Ground

08.04.2022

CASE SUMMARY

Recently, the United States Court of Appeals for the Seventh Circuit affirmed dismissal of a discrimination claim brought by Brandi Johnson, a co-owner of Fairway Delivery, Inc., against FedEx. DJM Logistics, Inc. v. FedEx Ground Package System, Inc., 2022 WL 2445016 (7th Cir. 2022). Johnson was a pro se litigant (that is, she represented herself). The litigation stemmed from alleged racial discrimination in contract assignments. Following a fourth attempt at the lawsuit, Brandi Johnson, on behalf of Fairway, Inc., failed to state a claim upon which relief could be granted. The 7th Circuit Court affirmed the District Court’s dismissal of the claim with prejudice and affirmed the sanctions against Brandi Johnson and her corporations.

It is unusual to see a §1981 claim asserted in the transportation context. The statute allows anyone to have the same rights in a contract as “white citizens.”

BACKGROUND

FedEx Ground Package System, Inc. (“FedEx”) transports freight throughout the country. In order to do so, FedEx contracts with local companies to pick up and delivery packages on its behalf. In 2009, Fairway, Inc. (“Fairway”) contracted with FedEx Ground to deliver packages in the Milwaukee area. FedEx eventually assigned its contract to another company in 2016, which led to a series of lawsuits by Brandi Johnson, an individual, and several corporations of which she owned stock.

PROCEDURAL HISTORY AND COURT RULINGS:

Lawsuit #1: Brandi Johnson filed a pro se complaint on behalf of Fairway in January 2020, alleging breach of contract and racial discrimination. This case was dismissed without prejudice because Brandi Johnson, who is not a licensed attorney, could not represent a corporate plaintiff.

Lawsuit #2: In February 2020, Johnson obtained counsel and filed a new discrimination lawsuit against FedEx, this time naming herself and Fairway as plaintiffs. In March, the plaintiffs voluntarily dismissed the case pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i). In exchange for its dismissal, the parties engaged in arbitration and a settlement was reached in July 2020, which included a clause that Johnson and the other plaintiffs could not sue FedEx and would release all other claims against them.

Lawsuit #3: In August 2020, Brandi Johnson, pro se, filed a third case against FedEx, alleging the same facts as were present in the previous two lawsuits, including a §1981 racial discrimination claim for FedEx’s termination of a contract with Fairway. FedEx moved to dismiss under FRCP 12(b)(6), arguing that Johnson lacked standing because she was not a party to the contract. The day before the hearing, Johnson filed an unauthorized reply in which she alleged FedEx Ground discriminated against her personally. At the hearing, Johnson argued new and additional facts, alleging that FedEx discriminated against her by failing to contract with BN Investment Services, a company in which Johnson was a majority shareholder. FedEx moved to dismiss based on lack of standing, and the district court granted FedEx’s motion to dismiss for failure to state a claim under §1981. Johnson argued that because she was Fairway’s business contact, she qualified as a party to the contract and could, therefore, sue. The District Court rejected this argument, however, relying on agency law which states a shareholder and contracting officer have no rights under a corporation’s contracts.

Despite Johnson’s obvious legal deficiencies, the District Court granted Johnson a reprieve and allowed her two weeks to amend her complaint. The District Court provided Johnson with emphatic directions on amending her complaint.

Lawsuit #4: Eight days later, Johnson filed an amended complaint which included similar, although different, legal errors. Despite the District Court’s clear direction, Johnson had inappropriately named a new corporation, DJM Logistics, as the plaintiff and had asserted new facts which did not support a claim under §1981. Following a hearing on the matter, the District Court dismissed the complaint with prejudice and issued sanctions against Johnson for her blatant disregard of the District Court’s instructions. This appeal followed.

ANALYSIS

The Circuit Court held dismissal of the complaint for failure to state a claim upon which relief could be granted was proper; that the four-year statute of limitations barred the lawsuit; and the Circuit Court affirmed the issuance of sanctions against the pro se litigant. The Circuit Court’s analysis is as follows:

1. Failure to State a Claim Upon Which Relief Could Be Granted: The Circuit Court held dismissal was proper because, under §1981, a plaintiff must identify “an impaired contractual relationship under which the plaintiff has rights.” In this case, Johnson’s complaint stated she “was to be” a majority shareholder of DJM, but did not identify who the shareholders were at the relevant times, any facts to indicate DJM’s imputed racial identity, or explain Johnson’s role in DJM.
2. Statute of Limitations: Additionally, the Circuit Court held that dismissal was proper because the four-year statute of limitations had lapsed. A claim under §1981 necessarily requires a plaintiff to file suit within four years from the alleged discriminatory act.
3. Procedure: The Circuit Court also held dismissal was proper because Johnson named DJM as the plaintiff in the fourth lawsuit, which was improper given Johnson’s status as a non-attorney. Based on the fact that the lower Court had already warned Johnson about this error one year prior, the Circuit Court offered Johnson no reprieve.
4. Leave to Amend: DJM argued the District Court abused its discretion by dismissing the fourth complaint with prejudice. The Circuit Court held that, under Federal Rule of Civil Procedure 15(a)(2), “The Court should freely give leave to amend when justice so requires.” Here, however, the Circuit Court noted the district court had afforded Johnson a number of chances to amend her third complaint to comply with procedural requirements, and further supported its decision based on the fact that Johnson had not requested to amend the fourth complaint.
5. Sanctions: The Circuit Court noted that pro se litigants should be granted appropriate latitude in their dealings with courts and counsel for correct and honorable reasons. However, the Circuit Court opined, being a pro se litigant does not give a party unbridled license to disregard clearly communicated court orders. Specifically, the Circuit Court held: “Latitude with a pro se plaintiff can be limited, and patience can be exhausted, in the fact of persistent violative conduct.” The Circuit Court even went so far as to state the plaintiff should have been required to pay FedEx’s requested attorney fees.

Consequently, this case represents a promising potential for parties to be awarded attorney fees for frivolous filings, despite the common leniency afforded to pro se litigants.

for more information

Contact John F. Fatino for more information about trucking and transportation matters 515-288-6041 or fatino@whitfieldlaw.com. Colleague and associate attorney Katelyn J. Kurt assisted in the preparation of these materials.