Fifth District affirms summary judgment in favor of FedEx in Madison County class action suit over late deliveries

By Bethany Krajelis | Aug 29, 2012



A split panel of the Fifth District Appellate Court last week affirmed a Madison County order that attempted to close the book on a decade-old class action lawsuit seeking damages against Federal Express for late deliveries.

The unpublished ruling of the appeals panel, however, includes a dissent that could give the plaintiffs some ammunition for an appeal to the Illinois Supreme Court.

In March 2011, Madison County Circuit Judge William Mudge granted summary judgment to FedEx in a class action complaint Stephen Fleisher brought against the company in 2001.

The suit was amended in 2003 to add Inland Marketing Services as a plaintiff. Inland claimed that on at least one occasion, FedEx charged it for an expedited delivery, but did not fulfill its promised delivery date.

The plaintiffs' suit included counts for breach of contract and unjust enrichment.

FedEx in 2010 filed a motion for summary judgment, arguing that Inland did not provide notice of the late delivery as required by its money-back guarantee policy laid out in the company's service guide.

In opposition to FedEx's motion, Inland pointed to the billing section of the service guide to argue that a late delivery could be characterized as an "overcharge," which would entitle it to the difference between the price it paid for expedited delivery service and the fee applicable to when its packages were actually delivered.

Now-retired Circuit Judge Daniel Stack denied FedEx's request for summary judgment in November 2010, spurring FedEx to file a motion to reconsider.

Mudge, who took over the case following Stack's retirement, granted the company's motion to reconsider in March 2011.

He determined that the parties had agreed to a contract that limited the remedy for a late delivery to FedEx's money-back guarantee. Mudge also found that the plaintiffs did not send notice of the late delivery within the required 30 days.

"There is no dispute that the complaint was filed long after the 30 day notice period," Mudge wrote in his March 2011 order. "The Court finds the language of the contract to be clear and unambiguous and provides that a money-back guarantee was Plaintiff's exclusive remedy if FedEx breached its contract."

The plaintiffs appealed in April 2011 and last week, a split panel of the appellate court affirmed Mudge's order in an unpublished order written by Justice Stephen Spomer. Justice James Donovan concurred and Justice Melissa Chapman dissented.

The majority of the panel used the Fifth District's 2006 ruling in Moody v. Federal Express Corp. to bolster its reasoning.

Spomer wrote for the appeals panel that the Moody court examined FedEx's service guide "in the context of a lawsuit for a breach of contract for delayed shipment."

In Moody, Spomer wrote, the court determined that "the money-back guarantee provision of the contract, which expressly limited FedEx's liability for a delayed shipment to the actual damages to the item shipped or a full refund of shipping charges, was the exclusive remedy available to a FedEx customer for delayed shipment."

The Moody court further found that the contract required a customer to provide a request for a refund within 30 days of shipment and that allowing a partial refund after that deadline "would render the limitation of liability and notice requirements meaningless," Spomer wrote.

As such, the appeals panel in Moody affirmed the dismissal of the plaintiff's complaint because the remedy she sought in her breach of contract claim was excluded under the contract.

Inland, however, argued on appeal that the ruling in Moody was inapplicable to its case because the court didn't consider the "overcharge" section of FedEx's service guide in its analysis.

Inland claimed that the "overcharge" section allows for a partial refund for a late delivery because a delayed shipment could be considered a billing that results in an incorrect charge.

On behalf of the majority of the appeals panel, Spomer wrote that reading the company's money-back guarantee policy in conjunction with the service guide's "overcharge" section "makes it clear that delayed shipments were intended to be excluded under the "Overcharge" section and limited to the provisions under "Money-Back Guarantee."

Chapman, however, wrote in her dissent that she "would reverse the trial court's order granting a summary judgment for FedEx."

"The majority reads the Moody case to limit plaintiff's remedy to the 'Money-Back Guarantee' section of the service guide," Chapman wrote. "I disagree."

Chapman said she agrees with the previous rulings of Judges Stack and Barbara Crowder, who also briefly presided over the case, that "nothing in Moody precludes a plaintiff from pursuing a remedy under a different provision of the contract not raised and considered by the Moody court," such as the "overcharge" provision.

Chapman wrote that "overcharge" is defined by the service guide as "a charge based on an incorrect rate; an incorrect special handling fee; billing for the wrong type of service; or billing based on incorrect package or shipment weight; or account numbers."

She also noted in her dissent that the "invoice adjustments/overcharge" section of the service guide expands the definition of "overcharge" to include "any billing that results in an incorrect charge."

Reading these two sections together, Chapman wrote, "certainly creates a question as to whether this provision can be used as an alternative remedy to seek a price-difference refund rather than a full money-back guarantee for late delivery."

"Because I believe there remain genuine issues of material fact, FedEx is not entitled to a judgment as a matter of law," Chapman wrote in her dissent.

At the trial level, Edwardsville attorney Mark Goldenberg represented the plaintiffs and Robert Shultz, formerly of Heyl Royster in Edwardsvile who now works for State Farm Mutual Automobile Insurance Company, represented FedEx.

The citation for the appellate court order in this case is Stephen Fleischer and Inland Marketing Services Inc. v. Federal Express Corp., 2012 IL App (5th) 110156-U.

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FedEx Corporation Heyl Royster Illinois Supreme Court

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