Court Opinion

ID: 6498150
Source: CourtListenerOpinion
Date Created: 2022-07-06 17:01:22.880998+00
Date Added: 2024-06-11T08:50:44.119817
License: Public Domain

In the

    United States Court of Appeals
                For the Seventh Circuit
                    ____________________
No. 21-3289
DJM LOGISTICS, INC.,
                                                 Plaintiff-Appellant,
                                v.

FEDEX GROUND PACKAGE SYSTEM, INC.,
                                                Defendant-Appellee.
                    ____________________

        Appeal from the United States District Court for the
                   Eastern District of Wisconsin.
         No. 2:20-cv-01311-BHL — Brett H. Ludwig, Judge.
                    ____________________

        ARGUED JUNE 3, 2022 — DECIDED JULY 6, 2022
                 ____________________

    Before SYKES, Chief Judge, and FLAUM and BRENNAN, Cir-
cuit Judges.
    BRENNAN, Circuit Judge. FedEx Ground Package System,
Inc., which transports freight throughout the country, often
contracts with local companies to pick-up and deliver pack-
ages on its behalf. When FedEx Ground ended one such
contract with Fairway Delivery Inc., a small freight delivery
company in suburban Milwaukee, its co-owner Brandi John-
son claimed racial discrimination. In four complaints, spread
2                                                  No. 21-3289

over three cases, Johnson was unable to state a claim upon
which relief could be granted. We conclude that the district
court did not err in dismissing this case and doing so with
prejudice, so we aﬃrm.
                                        I
   This case’s procedural history prescribes its outcome, so
we relay it in some detail.
    In late 2009, Fairway contracted with FedEx Ground to de-
liver packages to its Milwaukee-area customers. Brandi John-
son, who is African-American and Native-American, co-owns
Fairway.
   FedEx Ground assigned its contract with Fairway to an-
other company in September 2016. Johnson believed that
FedEx Ground engaged in racial discrimination and breach of
contract when it did so. In January 2020, she ﬁled a pro se
complaint on behalf of Fairway making these allegations. 1
This ﬁrst case was dismissed without prejudice because John-
son is not a licensed attorney and thus could not represent a
corporate plaintiﬀ.
     About a month later, now represented by counsel, John-
son again sued FedEx Ground. 2 This second case listed John-
son and Fairway Delivery, Inc. as plaintiﬀs. Like the ﬁrst case,
it claimed that FedEx Ground breached its contract with Fair-
way as well as violated 42 U.S.C. § 1981, which prohibits ra-
cial discrimination when making and enforcing contracts. In
this second case, the plaintiﬀs alleged that FedEx Ground

    1   E.D. Wis. case no. 20-cv-114.
    2   E.D. Wis. case no. 20-cv-342.
No. 21-3289                                                              3

forced Fairway to assign its agreement with the plaintiﬀs to a
diﬀerent contractor.
    In March 2020, plaintiﬀs’ then-counsel gave notice that
Johnson and Fairway had voluntarily dismissed the second
case under Federal Rule of Civil Procedure 41(a)(1)(A)(i). The
district court adopted this notice and dismissed the second
case without prejudice. Plaintiﬀs’ claims were then folded
into a pending arbitration. While that proceeding was some-
what opaque, apparently it involved Johnson, Fairway, FedEx
Ground, and perhaps others. According to FedEx Ground, a
settlement was reached in July 2020, under which Johnson
and the other plaintiﬀs agreed not to sue FedEx Ground and
to release all claims against it. Johnson disputes that she was
a party to any settlement. 3
    The next month, Johnson, representing herself, ﬁled a
third case against FedEx Ground. 4 She was the sole plaintiﬀ.
This complaint involved similar facts and arguments as her
two previous lawsuits and the arbitration, including a § 1981
racial discrimination claim for FedEx Ground terminating its
contract with Fairway.
    FedEx Ground moved to dismiss this third case under
Federal Rule of Civil Procedure 12(b)(6), arguing that Johnson
lacked standing to sue because she was not a party to any con-
tract with FedEx Ground. After the motion was fully briefed
the district court set a motion hearing. The day before that
hearing, Johnson ﬁled an unauthorized surreply in which she

    3 Any settlement agreement is not part of the record, so we rely on the

parties’ representations for these characterizations. See, e.g., Oral Argu-
ment at 5:20–7:44, 19:51–20:56.
    4   E.D. Wis. case no. 20-cv-1311.
4                                                 No. 21-3289

alleged FedEx Ground discriminated against her by refusing
to allow Fairway to assign its contract to her. During the next
day’s court hearing, Johnson repeated her claim that FedEx
Ground not only blocked a contract assignment to her as an
individual, but also prevented a contract assignment to BN
Investment Services, Inc., a company of which she was the
majority shareholder.
    In a September 27, 2021 written order, the district court
granted FedEx Ground’s motion to dismiss this third case.
The court concluded that Johnson’s complaint failed to state
a claim under § 1981. Johnson had argued that because she
was Fairway’s business contact, that qualiﬁed her as a party
to the contract. The court rejected that argument, relying on
corporate and agency law that a shareholder and contracting
oﬃcer has no rights under a corporation’s contracts, Domino’s
Pizza, Inc. v. McDonald, 546 U.S. 470, 477 (2006), and the con-
tract at issue was between Fairway and FedEx Ground and
did not involve Johnson. Johnson also had not alleged her lat-
est assignment-denial theory in this third complaint, the court
noted.
    Nevertheless, the district court granted Johnson a
reprieve. Based on her surreply and her statements at the mo-
tion hearing, she was granted two weeks to amend her com-
plaint. The court’s order gave Johnson precise and emphatic
directions:
      The Court strongly cautions Johnson, how-
      ever, not to ﬁle an amended complaint assert-
      ing this new theory unless she has proof of
      these new allegations. If the record later shows
      that Johnson never asked FedEx to approve an
      assignment of the Fairway contract to Johnson
No. 21-3289                                                  5

      individually, and she nevertheless proceeds
      with a claim that such a request was denied,
      she may face possible sanctions for making
      false representations to the Court in violation
      of the Federal Rule of Civil Procedure 11(b).
(Emphases in original.)
   Eight days later, on October 5, 2021, Johnson ﬁled an
amended complaint in which she replaced herself as the
plaintiﬀ with a corporation, DJM Logistics Inc., the appellant
here. Johnson asserted she “was to be the majority share-
holder and owner” of DJM.
    This was the fourth complaint, each alleging the same
claims, that Johnson and/or one of her companies had ﬁled:
the complaints by Fairway and Johnson as plaintiﬀs prior to
the arbitration, and the complaints by Johnson and DJM as
plaintiﬀs after the arbitration. This fourth complaint did not
allege that FedEx Ground had blocked an attempted assign-
ment of contract rights to Johnson individually, as she had
said in her surreply and at the motion hearing. Instead, the
pleading alleged a diﬀerent version of the facts in which
FedEx Ground blocked an assignment to DJM. FedEx Ground
immediately moved to dismiss this fourth complaint under
Federal Rule of Civil Procedure 12, and it requested relief un-
der 28 U.S.C. § 1927 for Johnson unreasonably and vexa-
tiously multiplying these proceedings.
   The district court dismissed this fourth complaint with
prejudice in December 2021. The court stated “[n]either this
argument nor any other argument in the amended complaint
conform[ed] to the requirements speciﬁed in the Court’s pre-
vious order or otherwise stat[ed] a claim under Federal Rule
6                                                  No. 21-3289

of Civil Procedure 8(a).” This “failure alone [was] suﬃcient …
to grant FedEx’s motion to dismiss the amended complaint.”
The fourth complaint was defective for two other reasons, the
court ruled. First, it “name[d] DJM as the plaintiﬀ instead of
Johnson, and Johnson again made the ﬁling without represen-
tation of counsel.” Second, the “four-year statute of limita-
tions for Johnson’s Section 1981 claim ha[d] elapsed.”
    Johnson was also ordered to show cause why, given her
conduct, sanctions were not appropriate. She responded by
counsel, arguing the district court had only required she al-
lege a discriminatory refusal of assignment. That requirement
was satisﬁed, she said, when she claimed DJM was refused
the assignment. For the ﬁrst time she also asserted that the
two weeks the court had granted her within which to ﬁle an
amended complaint were inadequate for her to retain coun-
sel. Finding Johnson’s response deﬁcient, the district court
“admonished her for proceeding with her litigation.”
    This appeal followed. We review de novo the challenge to
the district court’s dismissal of DJM’s complaint for failure to
state a claim upon which relief could be granted. Peterson v.
Wexford Health Sources, Inc., 986 F.3d 746, 751 (7th Cir. 2021).
The appeal of the dismissal of DJM’s complaint with preju-
dice is reviewed for abuse of discretion. Jauquet v. Green Bay
Area Cath. Educ., Inc., 996 F.3d 802, 811–12 (7th Cir. 2021).
                               II
                               A
    DJM argues the district court erroneously dismissed its
amended complaint for failure to state a claim upon which
relief could be granted. This pleading met the requirements
No. 21-3289                                                   7

of Federal Rule of Civil Procedure 8(a), DJM submits, and was
not precluded by a four-year statute of limitations.
    DJM’s arguments fall short for a number of reasons. “Any
claim brought under § 1981 … must initially identify an im-
paired contractual relationship … under which the plaintiﬀ
has rights.” Domino’s Pizza, Inc., 546 U.S. at 476 (footnote and
internal quotation marks omitted). DJM’s amended com-
plaint, ﬁled in October 2021, states that Johnson “was to be” a
majority shareholder of DJM. But it did not identify DJM’s
shareholders at the relevant time. It pleads no facts compliant
with Rule 8(a) as to DJM’s imputed racial identity, or John-
son’s role in DJM, to support a claim for relief under § 1981.
The amended complaint therefore fails to show that the
pleader, DJM, was a party to an allegedly impaired contract
and entitled to relief.
    Further, between her third and fourth complaints, Johnson
switched the party to whom FedEx Ground had allegedly
blocked an attempted assignment of the delivery contract. On
September 27, 2021, the district court granted Johnson leave
to amend her third complaint. If she had proof of new allega-
tions, she could bring a new claim that FedEx Ground dis-
criminated against her when it refused to allow Fairway to
assign its contract to her. This leave was with speciﬁc bold and
underlined conditions, relayed above. Presumably, the dis-
trict court granted Johnson this opportunity out of patience,
notwithstanding that Johnson raised this contention in an un-
authorized surreply, and then reiterated it during the motion
hearing.
   Still, the amended fourth complaint that Johnson ﬁled for
DJM in October 2021 did not include factual support for her
tardy contention that she was denied an assignment of the
8                                                                No. 21-3289

Fairway contract. Instead, that pleading alleged FedEx
Ground interfered with Fairway’s attempt to assign its con-
tract to DJM. Johnson therefore failed to comply with the
court’s September 27, 2021 order, as well as Rule 8(a) and
what was required to claim a violation of § 1981. This fourth
complaint was also defective because it named DJM as the
plaintiﬀ, but the ﬁling was by Johnson—the same error she
had made the previous year in her ﬁrst complaint in Eastern
District of Wisconsin case no. 20-cv-114.
    The fourth complaint is also deﬁcient because the four-
year statute of limitations for a § 1981 claim had elapsed. DJM
incorrectly asserts that its claim was subject to a six-year lim-
itations period. Rather, this court has ruled that “[§] 1981
claims must be ﬁled within four years of the alleged discrim-
inatory act.” Riley v. Elkhart Cmty. Sch., 829 F.3d 886, 891 (7th
Cir. 2016) (citing 28 U.S.C. § 1658(a) among other authori-
ties). 5 Johnson claims FedEx Ground ended Fairway’s con-
tract on or about September 2, 2016, more than four years be-
fore the amended complaint was ﬁled on October 5, 2021.

    5 “On December 1, 1990, Congress adopted a four-year statute of lim-
itations for federal claims.” Campbell v. Forest Pres. Dist. of Cook Cnty., Ill.,
752 F.3d 665, 667 (7th Cir. 2014) (citing 28 U.S.C. § 1658)). The Supreme
Court has interpreted this statute “to apply only ‘if the plaintiff’s claim
against the defendant was made possible by a post–1990 enactment.’” Id.
at 667–68 (quoting Jones v. R.R. Donnelley & Sons Co., 541 U.S. 369, 382
(2004)). Because Johnson’s assignment-theory claim relies on a provision
enacted by the Civil Rights Act of 1991—42 U.S.C. § 1981(b)—the four-
year statute of limitations applies to her claim. Campbell, 752 F.3d at 668
(explaining that the Civil Rights Act of 1991 amended § 1981 to make pos-
sible new “claims based on conduct that occurred after the formation of a
contract, such as wrongful-termination claims” (citation omitted)).
No. 21-3289                                                    9

                               B
    DJM also argues that the district court abused its discre-
tion by dismissing the fourth complaint with prejudice, with-
out leave to amend, and without suﬃcient time to retain
counsel.
    Federal Rule of Civil Procedure 15(a)(2) provides that the
court should “freely give leave [to amend] when justice so re-
quires.” But “[w]e will not reverse a district court’s decision
[to dismiss a complaint with prejudice], when the court
provides a reasonable explanation for why it denied the pro-
posed amendment.” Jauquet, 996 F.3d at 812 (quoting Gonza-
lez-Koeneke v. West, 791 F.3d 801, 808 (7th Cir. 2015)).
    The district court did aﬀord Johnson the chance to amend
her third complaint. She was granted 14 days to amend from
the court’s September 27, 2021 order dismissing that com-
plaint without prejudice. Johnson ﬁled her fourth complaint
eight days later. She did not seek leave to further amend her
complaint before, during, or after this time period. A court
does “not abuse its discretion by failing to order, sua sponte,
an amendment” when the plaintiﬀ does not request one. Wag-
ner v. Teva Pharms. USA, 840 F.3d 355, 359 (7th Cir. 2016). Here,
the district court did not abuse its discretion for failing to
grant a request that was never made.
    DJM also contends that the amendment process was af-
fected because Johnson could not aﬀord counsel, and she was
concerned that FedEx Ground improperly inﬂuenced her for-
mer attorneys. But DJM did not ask the district court for more
time to retain counsel to ﬁle an amended complaint. And
Johnson and her related companies knew how to retain coun-
sel—recall, Johnson and Fairway retained counsel for her
10                                                    No. 21-3289

second complaint in Eastern District of Wisconsin case no.
20-cv-342, as well as during the arbitration. Even more, DJM
responded to the district court’s September 27, 2021 order
granting leave to amend on October 5, 2021—six days before
the court-imposed deadline of October 11, 2021. DJM’s asser-
tions on this point are too late and oﬀered without evidence
of any attempts to retain counsel during that time frame.
    Dismissal with prejudice of the fourth complaint was war-
ranted because the amendment of the third complaint failed
to comply with the district court’s earlier order. Johnson knew
from the district court’s dismissal of her ﬁrst complaint in
Eastern District of Wisconsin case no. 20-cv-114 that only an
attorney could represent a corporation in court. Yet when
Johnson amended her third complaint, she substituted a cor-
poration, DJM, for herself, and she did so on a form captioned,
“AMENDED COMPLAINT (for non-prisoner ﬁlers without
lawyers).” Johnson knew from the earlier dismissal that she
could not represent a corporation in this manner.
   Given the opportunities Johnson was aﬀorded in four
complaints over three cases, the district court oﬀered a rea-
sonable explanation and thus did not abuse its discretion
when it dismissed the fourth complaint with prejudice.
                                C
     We close with some comments about Johnson’s conduct
and sanctions. “We recognize that litigation presents signiﬁ-
cant challenges for all pro se plaintiﬀs.” Pruitt v. Mote, 503 F.3d
647, 660 (7th Cir. 2007) (en banc). Pro se litigants should be
granted appropriate latitude in their dealings with courts and
counsel for correct and honorable reasons. “But being a pro se
litigant does not give a party unbridled license to disregard
No. 21-3289                                                   11

clearly communicated court orders.” Downs v. Westphal, 78
F.3d 1252, 1257 (7th Cir. 1996).
    Based on Johnson’s conduct during the history of this dis-
pute, the district court was well within its discretion to sanc-
tion Johnson and/or her corporations. Indeed, that court could
have gone further and awarded FedEx Ground the reasonable
attorneys’ fees it incurred in defending Johnson’s various
suits and complaints. Latitude with a pro se plaintiﬀ can be
limited, and patience can be exhausted, in the face of persis-
tent violative conduct.
    After two pleading attempts, one of which was dismissed
for violating the requirement that an attorney must represent
a corporation, Johnson voluntarily dismissed her claim,
which was then apparently settled after an arbitration. Not-
withstanding that resolution, the next month Johnson had re-
turned to court and ﬁled her third case trying to make the
same claims. That third case reached the cusp of dismissal
when she raised an assignment-denial theory in an unauthor-
ized surreply and which she reiterated during a court hearing.
So, the district court granted her—with clear and emphatic
directions—a fourth opportunity to plead her claim. In re-
sponse, Johnson violated those instructions. She reverted to
her previous behavior and ﬁled a fourth complaint on behalf
of a diﬀerent corporation in which she pleaded diﬀerent facts
than she had previously represented to the court in writing
and orally. She also violated the requirement that only an at-
torney can represent a corporation—a rule she was aware of
from a previous dismissal in this same dispute—and she did
so on a form with a caption that states in bold it was to be used
by nonlawyers, so it could not be used for a corporate plain-
tiﬀ.
12                                                 No. 21-3289

    These circumstances justiﬁably frustrated FedEx Ground,
as the goal of a “speedy” and “inexpensive” determination of
this dispute was not met. See FED. R. CIV. P. 1. Patience can
properly expire when litigation becomes the shell game that
was perpetrated here. Given this procedural history, the dis-
trict court could have done more than admonish Johnson.
FedEx Ground could have been awarded its reasonable attor-
neys’ fees for having to respond to the frivolous allegations of
Johnson and her companies.
                        *      *      *
   For these reasons, we AFFIRM the district court’s judgment.
The costs of this appeal are to be taxed against the appellant
pursuant to FED. R. APP. P. 39(a)(2).