896 F. Supp. 2d 275
S.D.N.Y.2012Background
- Plaintiff is an online retailer of motorcycle gear that uses FedEx Ground for shipping.
- FedEx Ground is a subsidiary of FedEx; FedEx Services oversees billing and IT related to FedEx Ground.
- Plaintiff alleges a scheme to upweight shipment weights and charge for inflated charges across many transactions.
- Plaintiff also alleges Canadian Customs overcharges and a labyrinthine BRE Model to conceal overcharges.
- Plaintiff alleges a missing-discount scheme under FedEx pricing, with improper application of promised discounts.
- Defendants moved to dismiss SAC on contract, RICO, and state-law grounds; court granted in part and denied in part.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether License/E-Agreement venue/contract provisions bar the claims. | SAC relies on conduct outside software use; agreements not controlling. | License/E-Agreement require Tennessee venue for software-related claims. | License/E-Agreement do not bar the claims; not governing the alleged conduct. |
| Whether FedEx Ground Enterprise is distinct from FedEx and FedEx Services for RICO purposes. | Formal corporate separation suffices for distinctness. | Entities are in a unified corporate structure. | FedEx Ground Enterprise plausibly distinct from FedEx and FedEx Services. |
| Whether the RICO predicate acts show relatedness and open-ended/closed-ended continuity. | Numerous upweighting and Canadian Customs overcharges show relatedness and continuity. | Need more precise pattern and continuity evidence. | Relatedness and open-ended/closed-ended continuity plausibly alleged. |
| Whether the RICO conspiracy claim is pled with sufficient plausibility. | Conspiracy evidence through inter-entity agreements and coordinated acts. | Conspiracy allegations largely conclusory and lacking specific agreement. | Count II dismissed for lack of plausible conspiracy allegations. |
| Whether Section 13708(b) private right of action and NY GBL §349 are viable claims. | Section 14704(a)(2) provides private remedy; 13708(b) governs truth-in-billing; NY §349 applies to consumer misuse. | No private action under 13708(b); not consumer-oriented; §349 inapplicable to business shipping. | Count IV dismissed; Count V dismissed. |
Key Cases Cited
- Cedric Kushner Promotions, Ltd. v. King, 533 U.S. 158 (U.S. 2001) (distinctness of corporate person and enterprise for RICO)
- City of N.Y. v. Smokes-Spirits.com, Inc., 541 F.3d 425 (2d Cir. 2008) (RICO distinctness and relatedness considerations)
- Discon, Inc. v. NYNEX Corp., 93 F.3d 1055 (2d Cir. 1996) (discussed distinctness in corporate structures under RICO)
- H.J. Inc. v. Northwest Bell Tel. Co., 492 U.S. 229 (U.S. 1989) (defining pattern of racketeering and continuity concept)
- Cosmos Forms Ltd. v. Guardian Life Ins. Co., 113 F.3d 308 (2d Cir. 1997) (relatedness and continuity in pattern of frauds)
- Reves v. Ernst & Young, 507 U.S. 170 (U.S. 1993) (operation/management threshold for RICO liability)
- First Capital Asset Mgmt., Inc. v. Satinwood, Inc., 385 F.3d 159 (2d Cir. 2004) (continuity standard for RICO before and after)
- S.Q.K.F.C., Inc. v. Bell Atl. TriCon Leasing Corp., 84 F.3d 629 (2d Cir. 1996) (pleading mail and wire fraud with particularity under Rule 9(b))
- Hecht v. Commerce Clearing House, Inc., 897 F.2d 21 (2d Cir. 1990) (requirements for pleading conspiracy under RICO)
- Spool v. World Child Int’l Adoption Agency, 520 F.3d 178 (2d Cir. 2008) (continuity/relatedness considerations for RICO)