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Rao v. Tyson Foods

June 12, 2009


The opinion of the court was delivered by: Anthony W. Ishii Chief United States District Judge


Plaintiff Shivram Rao ("Rao") is proceeding with a civil action in this Court against his former employer, Defendant Tyson Foods, Inc. ("Tyson") in which he seeks, inter alia, declaratory relief which would invalidate a non-competition clause. The action was initially filed in state court, but was removed by Tyson on the basis of diversity jurisdiction. Rao filed a motion to remand. The remand motion was referred to the Magistrate Judge pursuant to 28 U.S.C. § 636(b) and Local Rules 72-302 and 72-303.

On April 27, 2009, the Magistrate Judge filed findings and recommendations that Rao's motion to remand the action to state court, request for judicial notice, and an award of attorney's fees be granted. Tyson filed objections on May 28, 2009. The Court has conducted a de novo review of the those portions of the findings to which objection has been made. See 28 U.S.C. § 636(b)(1)(C); United States v. Howell, 231 F.3d 615, 621-22 (9th Cir. 2000).

First Objection

Tyson takes issue with the Magistrate Judge's conclusion that removal was untimely. The Magistrate Judge found that Tyson was on notice of the removability of the action on December 30, 2008. Rao's deposition was taken on that date and, during the deposition, an offer letter (to Rao from his current employer Foster Farms) was introduced as a deposition exhibit by Tyson. The parties at the deposition also stipulated that the amount of compensation in the offer letter was the amount that Rao was receiving at the time of the deposition. The offer letter shows that Rao's salary with Foster Farms easily exceeeds the jurisdictional minimum for this Court.

"In actions seeking declaratory or injunctive relief, it is well established that the amount in controversy is measured by the value of the object of the litigation." Hunt v. Washington State Apple Adver. Comm'n, 432 U.S. 333, 347 (1977); Cohn v. Petsmart, Inc., 282 F.3d 837, 840 (9th Cir. 2002). The value of the object of the litigation may be measured from the perspective of either the plaintiff or the defendant. See In re Ford Motor Co., 264 F.3d 952, 958 (9th Cir. 2001); Ridder Bros. v. Blethen, 142 F.2d 395, 399 (9th Cir. 1944). From Rao's perspective, if the non-competition clause is not held invalid, then his salary and position with Foster Farms is in jeopardy. That salary is more than the jurisdictional minimum. Tyson's objections that it is not attempting to enforce the non-competition clause in California and that a California judgment would not be binding in Arkansas are not persuasive.*fn1 Tyson is trying to enforce the clause against Rao and Foster Farms, albeit through a lawsuit in Arkansas, see March 12, 2009, Skol Declaration Exhibit D, and Tyson has not discussed why an Arkansas court would completely ignore a California judgment/declaration. Simply put, from Rao's perspective and given his current employment, his request for a declaration that invalidates the non-competition clause is worth more than $75,000 to him. This objection is overruled.

Second Objection

Tyson also objects that the law concerning whether depositions constitute an "other paper" under 28 U.S.C. § 1446(b)*fn2 is unclear; thus, introduction of the letter at the December deposition did not trigger the 30-day time period for removal. However, the Ninth Circuit has held that a settlement letter, Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002), as well as a letter sent between attorneys in preparation for mediation, Babasa v. Lenscrafters, Inc., 498 F.3d 972, 975 (9th Cir. 2007), were sufficient to put the respective defendants on notice that the amount in controversy exceeded that required for federal diversity jurisdiction. In this case, the offer letter was made an exhibit to Rao's deposition and the parties stipulated that the amounts stated therein represent Rao's current compensation. The offer letter expressly identifies Rao's salary and the dollar value of other benefits and thus, is sufficiently similar to the settlement letter of Cohn and the letter in preparation of mediation in Babasa to put Tyson on notice of the value of the declaratory relief to Rao. This objection is overruled.

Third Objection

Similar to the preceding objection, Tyson contends that imposition of attorney's fees as a sanction is not warranted because various courts have recognized that it is not clear whether a deposition is an "other paper." "[C]courts may award attorney's fees under [28 U.S.C.] § 1447(c) only where the removing party lacked an objectively reasonable basis for seeking removal. Conversely, when an objectively reasonable basis exists, fees should be denied." Martin v. Frankline Capital Corp., 546 U.S. 132, 141 (2005); Lussier v. Dollar Tree Stores, Inc., 518 F.3d 1062, 1065 (9th Cir. 2008). "As a general rule, if, at the time the defendant filed his notice [of removal] in federal court, clearly established law demonstrated that he had no basis for removal, then a district court should award a plaintiff his attorney's fees. By contrast, if clearly established law did not foreclose a defendant's basis for removal, then a district court should not award attorneys' fees." Lott v. Pfizer, Inc., 492 F.3d 789, 793 (7th Cir. 2007); see also Lussier, 518 F.3d at 1066 (discussing with approval Lott).

Tyson is correct that some courts hold that a deposition is not an "other paper" or that courts have indicated that the issue is unclear. E.g., Kiedaisch v. Nike, Inc., 2004 U.S. Dist. LEXIS 2828, *5 n.1 (D. N.H. 2004); Smith v. Equitable Life Assur. Co., 148 F.Supp.2d 1247, 1253 (N.D. Ala. 2001); O'Brien v. Powerforce, Inc., 939 F.Supp. 774, 781 (D. Haw. 1996); Fillmore v. Bank of Am., N.T. & S.A., 1991 U.S. Dist. LEXIS 6640, *9 n.4 (N.D. Cal. 1991). However, in Karambelas v. Hughes Aircraft, 992 F.2d 971 (9th Cir. 1993), the Ninth Circuit addressed whether the plaintiff's deposition testimony could form the basis for removal. Karambelas held that the particular deposition testimony was too speculative to show that the plaintiff was alleging an ERISA claim and thus, removal was improper. See id. at 974-75. Prior to reaching that decision, the Ninth Circuit stated,

Ah, says Hughes, but one cannot forget the deposition testimony. We have not forgotten it. We are also aware of the authorities which permit removal based upon facts developed at a deposition. See, e.g., Felton, 940 F.2d at 507;*fn3 Zawacki v. Penpac, Inc., 745 F. Supp. 1044, 1047 (M.D. Pa. 1990); Riggs v. Continental Baking Co., 678 F. Supp. 236, 238 (N.D. Cal. 1988); Brooks v. Solomon Co., 542 F. Supp. 1229, 1230-31 (N.D. Ala. 1982). They do not militate for a finding of jurisdiction in this case.

Id. at 974 (ital. added). The Ninth Circuit distinguished those cases because the testimony was clear and non-speculative, unlike Karambelas's deposition. See id. at 974-75. Riggs, Zawacki, and Brooks are all lower court cases that expressly held that a deposition can constitute an "other paper" under § 1446(b). Zawacki,745 F.Supp. at 1047; Riggs, 678 F.Supp. at 238; Brooks, 542 F.Supp. at 1230-31. Felton did not expressly discuss § 1446(b) because the plaintiffs in that case had failed to preserve any error associated with removal. See Felton, 940 F.2d at 907. Nevertheless, the Karambelas court characterized Felton as a case that permits removal based upon facts developed at a deposition. Thus, the Ninth Circuit acknowledged cases that expressly hold that depositions are "other papers" under § 1446(b), characterized one of its own prior cases as an authority that permits removal based on facts from a deposition, examined Karambelas's deposition testimony, and ultimately distinguished the quality of Karambelas's deposition testimony from those in Felton, Zawaki, Riggs, and Brooks; the Ninth Circuit did not indicate that depositions were not "other papers." In light of Karambelas, the law does not seem unclear in the Ninth Circuit -- depositions, if sufficiently definite/non-speculative, may form the basis for removal and thus, is an "other paper" under 28 U.S.C. § 1446(b). That lower courts from other jurisdictions have concluded that depositions are not "other papers" does not make the law in the Ninth Circuit "unclear."*fn4

In light of Karambelas, Tyson does not have a reasonable basis for contending that the amended complaint, and not the offer letter received at and made an exhibit to the deposition, triggered the 30 day removal ...

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