Employment Law Daily No malpractice where FedEx driver had viable misclassification claim when he changed counsel
Friday, June 24, 2016

No malpractice where FedEx driver had viable misclassification claim when he changed counsel

By Lorene D. Park, J.D. Affirming the dismissal, with prejudice, of a FedEx driver’s malpractice and fraud claims against the attorneys and firms that initially represented him when he joined an ongoing suit against FedEx, the Seventh Circuit explained that there is no malpractice when the plaintiff has a viable claim (which he did) at the time the representation ended and that he failed to plead fraud with the particularity required by Rule 9(b). His fraud claim also failed because the plaintiff’s own pleadings and exhibits established the defendants’ "honest and clear presentation of the settlement terms, including FedEx’s requirement for release of all claims by individuals and associated corporations" (Rocha v. Rudd, June 22, 2016, Kanne, M.). Two suits against FedEx. In July 2011, the plaintiff in this legal malpractice case had joined an ongoing case by other FedEx drivers who alleged that their misclassification as independent contractors violated the Illinois Wage Payment and Collection Act (IWPCA). His retainer agreement expressly limited the defendant law firms’ representation because he was also pursuing other claims against FedEx on behalf of Arize 11, a corporation through which he contracted with FedEx. His wife was representing him in the Arize 11 action. The retention agreement also affirmed his "absolute right to accept or reject any settlement" with FedEx negotiated by defendants. IWPCA case settles. By the time the plaintiff joined in, the case had already been returned to the federal court in Illinois following a summary judgment conclusion in a multidistrict litigation proceeding that the plaintiffs were "employees" under the IWPCA. By 2012, over 100 additional plaintiffs had joined the suit and they proceeded to mediation. On May 25, 2012, the parties informed the court that they had reached a tentative settlement. The defendants were soon notified by the plaintiff’s wife that he would object to the settlement if it required a release of his Arize 11 claims. In a June 5 letter, the defendants explained the material terms of the proposed settlement, including the total amount, each employee’s portion, and attorneys’ fees. The letter also explained that FedEx required "from every Plaintiff a release of all claims against FedEx both individually and on behalf of any associated corporation." On August 7, the court approved a joint motion to approve a settlement agreement as to the ongoing IWPCA case. Change in counsel, new suits against FedEx. On September 10, the employee’s wife filed an appearance on his behalf. The defendants then moved to withdraw as his counsel. The court granted the motion and soon dismissed the case with prejudice except as to the plaintiff. The next month, the plaintiff and Arize 11 filed a 16-count complaint against FedEx and numerous FedEx executives, including claims under RICO, the Sherman and Clayton Acts, and Illinois law. The court dismissed the complaint, finding it "an egregious violation of Rule 8(a)." Though the court granted leave to amend, it suggested the plaintiff file in state court, which he did. Malpractice action. Meanwhile, the plaintiff filed this suit against the attorneys and law firms that had first represented him against FedEx. He claimed breach of contract, breach of fiduciary duties, fraud, and violation of the Illinois Consumer Fraud and Deceptive Business Practices Act, and legal malpractice. After multiple hearings in which the court repeatedly asked the plaintiff to provide evidence on dispositive issues, including showing that his claims against Fed Ex were not viable when he substituted counsel, the case was dismissed with prejudice. No malpractice where claims viable. Affirming, the Seventh Circuit noted that, among the other elements of a legal malpractice claim under Illinois law, a plaintiff must plead that "but for" the attorney’s malpractice, he would have prevailed in the underlying action. This is assessed as of the time of the termination of the legal services because an attorney’s duty ceases at that time. Thus, if the plaintiff’s claims in the IWPCA case were viable when he discharged the attorneys, he could not establish a legal malpractice claim as a matter of law. Here, at the time that the court voluntarily dismissed the plaintiff’s IWPCA claims without prejudice, he had already retained his wife as counsel and he had an absolute right to refile his IWPCA claims as a new action within one year or within the remaining period of limitation, whichever was greater. Thus, his claims were still viable when the defendants were discharged as his counsel and his legal malpractice claim failed. Fraud claim fails too. Also affirming dismissal of the fraud claim, the appeals court found that the heightened pleading requirements of Rule 9(b) were not met with the plaintiff’s general allegations that the defendants misrepresented or concealed the "terms of the settlement" and the amounts that would be paid. He failed to provide names, dates, times, or content of the alleged misrepresentations or omissions. Moreover, there were multiple defendants and he failed to give each fair notice of his or her alleged participation in the fraud—courts generally reject complaints of fraud that have "lumped together" multiple defendants. Reviewing the plaintiff’s proposed amendment to his complaint, the Seventh Circuit further concluded that his fraud claim was not plausible and would still be dismissed. After discarding all conclusory statements of wrongdoing, it appeared to the court that he merely alleged that the defendants engaged in fraud during communications with him between June and August 2012 regarding the terms of the settlement with FedEx. However, his allegations were completely undercut by his own pleadings and exhibits, "which establish defendants’ honest and clear presentation of the settlement terms, including FedEx’s requirement for release of all claims by individuals and associated corporations."

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