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Irwin v. Federal Express Corp.

United States District Court, M.D. North Carolina

November 4, 2014

DAVID IRWIN, Plaintiff,
v.
FEDERAL EXPRESS CORP., d/b/a FEDEX EXPRESS, Defendant.

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, District Judge.

This case involves multiple claims by David Irwin arising from his termination by Defendant Federal Express Corporation ("FedEx"). Before the court is FedEx's motion to dismiss two of them: the complaint's claims for fraud and constructive fraud. (Doc. 3.) For the reasons set forth below, the motion is denied as to the former but granted as to the latter.

I. BACKGROUND

In 1999, FedEx acquired an air freight forwarding company that was then renamed Caribbean Transportation Services ("CTS"). (Compl. ¶ 5.) Irwin was one of CTS's three officers and, after the acquisition, became its senior vice president. (Id.)

Around June 1, 2009, FedEx merged with CTS, turning CTS into another division of FedEx, now named FedEx Latin America. (Id. ¶ 6.) As a result of the merger, many positions were eliminated - including Irwin's. (Id.) Irwin began negotiating a severance package with FedEx but stopped when the president of FedEx Latin America asked him to remain employed as managing director of Caribbean operations, which Irwin did. (Id.)

In February 2013, FedEx drafted, and Irwin signed, an employment agreement. (Id. ¶ 8.) Under the agreement, Irwin committed to continue working for FedEx until November 30, 2013, and not to compete against FedEx for one year following the end of his employment. (Id.) In return, FedEx agreed to pay Irwin approximately $275, 000.00 upon his departure. (Id. ¶¶ 8, 14.) The employment agreement also contained the following provision, section 13(n), allowing FedEx to terminate Irwin's employment unilaterally: "[I]f after executing this Agreement, but prior to the effective date, [Irwin] engages in conduct or has performance deficiencies that would normally result in termination, he will be terminated and his Agreement will be null and void." (Id. ¶ 18.) The agreement did not define what conduct would "normally result in termination." (Id. ¶ 19.) Irwin signed this agreement after his supervisor, Julio Columba, told him that FedEx "would likely be going through a restructuring process" and that Irwin's employment "may be in immediate jeopardy if the agreement was not signed." (Id. ¶ 8.)

Later, FedEx tried to persuade Irwin to abandon the agreement. In the summer of 2013, a FedEx agent[1] asked Irwin to terminate his employment on August 31, 2013, rather than November 30 2013, the latter of which accorded with the terms of the employment agreement. (Id. ¶ 9.) Irwin was told that this request came because of FedEx's "desire to achieve salary cost savings." (Id.) This agent told Irwin that "if he accepted the offer, his Employment Agreement would be honored." (Id.) Irwin refused this offer to ensure a "smooth management transition." (Id.)

On October 31, 2013, Irwin's manager asked him to attend a meeting on the next day, which Irwin thought could be for a retirement party. (Id. ¶ 10.) As it turned out, that next day Irwin was told that he was being suspended. (Id.) He was not provided a reason. (Id.) Two weeks later, on November 15, Irwin was called into his office to meet with two auditors. (Id. ¶ 11.) The auditors asked him about events occurring "nearly five years earlier." (Id.) Irwin explained that he was not involved in the issues they raised. (Id.)

Shortly thereafter, on November 27, FedEx told Irwin that he would be fired, effective November 29, 2013. (Id. ¶ 12.) FedEx also informed Irwin that the employment agreement was "null and void in its entirety." (Id.) FedEx did not cite any "facts or evidence" for terminating Irwin or for declaring the agreement void. (Id. ¶ 13.) The company relied on the above-quoted section 13(n) of the employment agreement for the termination. (Id. ¶ 18.) Irwin denies ever having engaged in conduct that would "normally result in termination" under the terms of the agreement. (Id. ¶¶ 19-20.)

Irwin sought to review the evidence supporting his alleged misconduct so he could respond, because he had so far carried "an unblemished record, with no prior warnings or write-ups of any kind." (Id. ¶ 15.) FedEx refused; Irwin then filed internal appeals, which FedEx denied. (Id. ¶¶ 16-17.) According to Irwin, had he worked for one more day, he would have been entitled to $275, 000 in compensation under the employment agreement. (Id. ¶ 14.)

Irwin alleges that he has honored all of his obligations under the employment agreement and that FedEx has wrongfully refused to honor its own. (Id. ¶ 21.) He brought suit initially in the superior court of Guilford County, North Carolina. (Doc. 1.) FedEx removed the action to this court based on diversity jurisdiction. (Id.) In his complaint, Irwin alleges seven claims for relief: two claims for breach of the employment contract; two claims for violations of North Carolina's Wage and Hour Act; one violation of North Carolina's Unfair and Deceptive Trade Practices Act; fraud; and constructive fraud. FedEx now moves to dismiss Irwin's fraud (fourth claim for relief) and constructive fraud (seventh claim for relief) claims pursuant to Rules 12(b)(6) and 9(b) of the Federal Rules of Civil Procedure.

II. ANALYSIS

A. Standard of Review

Under Federal Rule of Civil Procedure 12(b)(6), "a complaint must contain sufficient factual matter... to state a claim to relief that is plausible on its face.'" Ashcroft v. Iqbal , 556 U.S. 662, 678 (2009) (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 570 (2007)). A claim is plausible "when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Id . (quoting Bell Atl. Corp. v. Twombly , 550 U.S. 544, 557 (2007)). A 12(b)(6) motion to dismiss "challenges the legal sufficiency of a complaint ...


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