Appellate Court upholds summary judgment for FedEx

By Steve Gonzalez | Oct 26, 2006

The Illinois Appellate Court affirmed Madison County Circuit Judge Nicholas Byron's decision to grant FedEx's motion for summary judgment in a class action suit.

Erin Moody filed a one-count breach-of-contract class action complaint against FedEx in 2002, alleging that FedEx breached its shipping contract by charging customers higher rates for express delivery and failing to deliver the packages by the agreed delivery time.

Authoring the opinion for the court, Justice Steve McGlynn wrote, "Moody does not allege any damages to the package, nor did she seek a refund of her money-instead she seeks a partial refund of her shipping charges for the delayed shipment, claiming this to be her common law remedy for the alleged breach of contract."

According to court records, on Jan.22, 2002, Moody completed a "Fed Ex USA Airbill" and chose to send a package "FedEx Priority Overnight, Next Business Morning."

In exchange for $41.31, FedEx agreed to deliver Moody's package by 8 a.m. the next morning, court documents show.

Moody was seeking damages in the amount of money she paid for the priority shipment less the amount she could have paid for the service she actually received.

She also sought the certification of a national class of litigants who experienced a similar plight in their dealings with FedEx and offered herself as the representative of that class.

In April 2005, FedEx filed a motion for summary judgment claiming Moody's breach-of-contract claim was preempted by the Airline Deregulation Act.

FedEx argued that Moody's breach-of-contract claim violated the Airline Deregulation Act because it sought a remedy outside the four corners of the contract.

In response, Moody argued that her breach-of-contract claim was not preempted by the Airline Deregulation Act because the price-difference remedy she sought was a common law remedy permitted by her contract with FedEx and that she could seek this remedy because FedEx's contractual remedies for delayed shipment were not exclusive.

FedEx replied that Moody's sought-after remedy was not even allowed at common law and that a reasonable construction established that the contractual remedies were exclusive.

Byron held a hearing on Aug. 12, 2005, and agreed with FedEx and held that Moody's breach-of-contract claim was preempted by the Airline Deregulation Act because it was not based on the actual terms of Moody's contract.

Moody appealed, arguing Byron erred in finding her claim preempted by the Airline Deregulation Act of 1978.

McGlynn also wrote, "The contract expressly limited FedEx's liability for a delayed shipment to the actual damages to the item shipped resulting from the delay and required that Moody file a claim for actual damages within 15 days of shipment. The contract then provided an additional remedy for late delivery-a full refund of shipping charges under the money-back guarantee. To recover this remedy, Moody's contract required that she provide a request for a full refund within 30 days of the shipment.

"Finally, the contract included integration language providing that the service guide and airbill contain the entire agreement between Moody and FedEx. The contract, therefore, effectively precluded Moody from seeking any other remedy except actual damages as defined in the contract and a full refund of her shipping charges under the money-back guarantee. To allow a partial refund so long after notice-of-claim deadlines have lapsed would be to render the limitation of liability and notice requirements meaningless. The remedy sought by Moody is therefore excluded under the contract.

"The trial court initially dismissed the plaintiff's claim without prejudice with leave to amend, presumably to amend the remedy sought to be one afforded by the contract. The plaintiff elected to stand on her original complaint, and the court dismissed the claim with prejudice. Because the plaintiff elected to stand on the claim seeking a remedy not afforded for a breach of the FedEx contract, we affirm the circuit court's order dismissing the claim with prejudice."

Presiding Justice Stephen Spomer concurred with McGlynn and Justice James Donovan specially concurred.

Donovan wrote, "I concur in the majority's decision, but I believe that this court must initially address the preemption issue. I would find that the plaintiff's cause of action is not preempted based on the reasoning set forth in Hicks v. Airborne Express, Inc.,

In Hicks, former Madison County Circuit Judge Kardis entered a summary judgment in favor of Airborne Express, finding that the parties had agreed to an exclusive remedy by giving Hicks another Flight-Ready envelope.

Jeffrey Hicks of Financial Planning Advisors filed the lawsuit in 2002, claiming Airborne, now DHL, failed to deliver a package by noon the next business day.

On June 7, Madison County Circuit Judge Don Weber dismissed Hicks' second class action lawsuit against UPS.

Hicks could have received a full refund of $14.95 for the late delivery of a package, but he chose to be the named plaintiff in a nationwide class action lawsuit.

Hicks had asked Weber to rewrite the contract and fashion a new "common law" remedy despite UPS' refund and credit policy.

"This class action plaintiff is not happy with the $14.95 credit or refund; he asks instead for a refund of $5 per class member per package," Weber wrote in his order.

"This 'common law' remedy would result in each class member receiving $5 less that the contractual remedy stated in the UPS guarantee. Of course, if successful, this purported nationwide class action would generate millions of dollars in plaintiff's attorney's fees," Weber also wrote.

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