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Rocha v. Rudd

United States Court of Appeals, Seventh Circuit

June 22, 2016

Carlos G. Rocha, Plaintiff-Appellant,
J. Gordon Rudd, Jr., Anne T. Regan, Patricia A. Bloodgood, Zimmerman Reed PLLP, Gregory J. Meyers, Susan Ellingstad, and Lockridge Grindal Nauen PLLP Defendants-Appellees.

          Argued November 4, 2015

         Appeal from the United States District Court for the Northern District of Illinois, Eastern Division. No. 14 C 4857 - Milton I. Shadur, Judge.

          Before Kanne, Rovner, and Sykes, Circuit Judges.

          Kanne, Circuit Judge.

         Defendants, a group of law firms and several of their attorneys, had previously represented Plaintiff Carlos Rocha and other FedEx delivery drivers in an employment misclassification case against FedEx. The employment misclassification case ultimately settled, but Rocha was excluded from the settlement. Just before the settlement was finalized, Rocha retained Johnson, his current spouse, and discharged Defendants as his counsel. Rocha later sued Defendants in federal district court, alleging several theories of harm, including legal malpractice and fraud, in association with the case against FedEx. The district court dismissed Rocha's amended complaint, and Rocha appealed. We affirm.

         I. Background

         Although not a party here, much of this case's background involves FedEx, which includes FedEx Corporation ("FedEx Corp.") and its subsidiary FedEx Ground Package System, Inc. ("FedEx Ground"), a business that provides package delivery and pick-up service.

         From late 2005 until November 2010, "Rocha delivered packages for FedEx's Chicago terminal, acting at various times as an employee and an independent contractor." Rocha v. FedEx Corp., 15 F.Supp.3d 796, 800 (N.D. Ill. 2014). Rocha is also the owner of Arize 11, an Illinois corporation formed in 2008, through which he contracted with FedEx. Id.

         A. Fluegel v. FedEx Ground Package Sys., Inc.

         On April 20, 2005, a group of FedEx delivery drivers, represented by Defendants, filed a putative class action lawsuit against FedEx in the Northern District of Illinois. Fluegel v. FedEx Ground Package Sys., Inc., No. 1:05-cv-02326, (N.D. Ill. dismissed Sept. 17, 2012). Their key allegation was that FedEx had misclassified them as independent contractors, thereby denying them protections under the Illinois Wage Payment and Collection Act ("IWPCA"), 820 ILCS 115/1 et seq.

         Later that year, Fluegel was consolidated with other cases in a multidistrict litigation ("MDL") proceeding in the Northern District of Indiana. In Fluegel, the MDL court denied class certification but granted partial summary judgment in favor of the plaintiffs, holding that they were employees under the IWPCA. In re Fedex Ground Package Sys., Inc. Emp. Practices Litig., 2010 WL 2243246 at *1 (N.D. Ind. 2010). In the fall of 2010, the MDL court remanded Fluegel to the Northern District of Illinois, and litigation on the case continued.

         On July 20, 2011, Rocha joined the Fluegel action. His retainer agreement with Defendants expressly limited the scope of Defendants' representation because he was pursuing other claims against FedEx on behalf of Arize 11, with separate representation by Johnson (his spouse). The retention agreement also affirmed Rocha's "absolute right to accept or reject any settlement" with FedEx negotiated by Defendants.

         By 2012, over 100 additional plaintiffs had joined the Fluegel action. In April 2012, the parties in Fluegel agreed to mediation. A month later, on May 25, 2012, the parties notified the court that they had reached a tentative settlement. Soon after, Defendants were notified by Rocha, through Johnson, that he would object to the settlement if it required release of his Arize 11 claims.

         On June 5, 2012, Defendants explained in a letter to Rocha the material terms of the proposed settlement, including the total settlement amount, each individual plaintiff's portion, and attorney's fees. Furthermore, this letter stated that for the settlement, FedEx required "from every Plaintiff a release of all claims against FedEx both individually and on behalf of any associated corporation." This letter concluded by reiterating Rocha's ability to make the final determination of whether to join the settlement. Throughout the summer of 2012, on multiple occasions, Defendants discussed with Rocha the proposed settlement terms, including the required release of all claims by Rocha and Arize 11 against FedEx.

         The parties in Fluegel filed a joint motion to approve the settlement agreement, and on August 7, 2012, the district court approved it.

         On September 10, 2012, Johnson filed a notice of appearance as counsel for Rocha in Fluegel. On September 14, 2012, Defendants filed a motion to withdraw as counsel for Rocha, and on September 17, 2012, the district court granted this motion, stating, "Ms. Johnson has informed Plaintiffs' Counsel on behalf of Mr. Rocha, that she does not oppose their withdrawal from representation of Mr. Rocha." Also on September 17, 2012, the Fluegel court dismissed the case with prejudice for all named plaintiffs except Rocha, whose case was voluntarily dismissed without prejudice. Defendants confirmed that Rocha would not have to pay any attorney's fees or other expenses.

         B. Rocha's Lawsuits against FedEx in Federal and State Court

         On October 30, 2012, Rocha and Arize 11, represented by Johnson, filed a 518-paragraph, 16-count complaint against FedEx and numerous FedEx executives, which included allegations of violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), the Sherman and Clayton Acts, and Illinois law. Rocha eventually amended the complaint to 17 counts. In response, FedEx filed a motion to dismiss.

         The district court dismissed Rocha's amended complaint on January 17, 2014, finding it to be "an egregious violation of Rule 8(a)." Rocha, 15 F.Supp.3d at 805 (internal quotation omitted). The dismissal of Rocha's amended complaint was without prejudice, and Rocha was granted leave to file an amended federal complaint if he "can address the fundamental deficiencies set forth in this opinion in no more than 300 clear paragraphs that are not repetitive, speculative, or conclusory." Id. at 813. The court suggested, alternatively, that ...

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