Mark Neubauer v. FedEx Corporation
849 F.3d 400
8th Cir.2017Background
- Neubauer (and his company Marken, Inc.) entered a 2004 Standard Operating Agreement (SOA) with FedEx as an independent contractor to service Primary Service Areas (PSAs); SOA governed by Pennsylvania law and permitted contractors to assign rights to replacement contractors but stated FedEx was not a party to assignment payments.
- Neubauer acquired PSAs by paying outgoing contractors (with FedEx approval) and renewed the SOA until FedEx announced in 2011 it would not renew SOAs and was transitioning to a new Independent Service Provider (ISP) Agreement model.
- Neubauer executed Releases and an ISP Agreement (receiving $10,000) and later alleged he transitioned only to mitigate losses; FedEx terminated Neubauer in 2014 for alleged ISP breaches.
- Neubauer sued in state court asserting breach of contract, fraud (multiple theories), violations of North Dakota’s Franchise Investment Law, and North Dakota RICO; FedEx removed the case and moved to dismiss under Rule 12(b)(6).
- The district court dismissed the amended complaint; the Eighth Circuit reviewed de novo and affirmed dismissal in full, concluding Neubauer’s pleading failed on contract interpretation, fraud particularity, franchise status, and RICO predicate acts.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Breach for refusing SOA-style assignment in 2014 | Neubauer: FedEx breached SOA/assignment obligations by not allowing full-term assignments under SOA terms | FedEx: SOA expired and ISP governs; SOA expressly disclaims FedEx liability for assignment payments | Dismissed — SOA expired and SOA language disclaims FedEx as party to assignment payments |
| Breach by altering SOA terms/non-renewal | Neubauer: Background Statement forbids FedEx from imposing any new terms, so non-renewal/ISP transition breached SOA | FedEx: Background Statement only preserves independent-contractor status and does not bar contract modification or non-renewal consistent with SOA terms | Dismissed — court reads Background Statement in context; Neubauer's interpretation would be absurd and conflict with express SOA provisions |
| Fraud / fraudulent inducement | Neubauer: FedEx made knowing misrepresentations and omissions inducing him to enter SOA/ISP and sign Releases | FedEx: Allegations are conclusory and lack Rule 9(b) particularity (who, what, when, where, how) | Dismissed — fraud claims fail Rule 9(b) for lack of specificity |
| Franchise Investment Law claim | Neubauer: He was effectively a franchisee under ND law | FedEx: Contractors provided services to FedEx, were paid by FedEx, and did not offer/sell services under FedEx’s marketing plan | Dismissed — pleadings do not plausibly allege right to offer/sell/distribute services to customers as required for franchise status |
| North Dakota RICO claim | Neubauer: Predicate acts (fraud, franchise violations, theft) form pattern of racketeering | FedEx: Plaintiff fails to plead criminal predicate acts, required particularity, or two related acts | Dismissed — RICO claim fails because underlying fraud and franchise claims lack sufficient particularity and criminal predicates |
Key Cases Cited
- Topchian v. JPMorgan Chase Bank, N.A., 760 F.3d 843 (8th Cir. 2014) (an amended complaint supersedes the original complaint)
- Gorog v. Best Buy Co., 760 F.3d 787 (8th Cir. 2014) (contract language controls where complaint conflicts with plain terms)
- Ashcroft v. Iqbal, 556 U.S. 662 (2009) (pleading must state a plausible claim with more than labels and conclusions)
- Bell Atlantic Corp. v. Twombly, 550 U.S. 544 (2007) (plausibility standard for complaints)
- U.S. ex rel. Joshi v. St. Luke’s Hosp., Inc., 441 F.3d 552 (8th Cir. 2006) (Rule 9(b) particularity requirements for fraud)
- Quintero Cmty. Ass’n Inc. v. F.D.I.C., 792 F.3d 1002 (8th Cir. 2015) (courts will not mine a complaint to find facts to cure pleading defects)