United States District Court, E.D. California
ORDER GRANTING PLAINTIFF'S MOTION TO REMAND
JOHN A. MENDEZ, District Judge.
This matter is before the Court on Plaintiff Randall Meredith's ("Plaintiff") Motion to Remand (Doc. #6) pursuant to 28 U.S.C. § 1447(c). Defendant, Inc. ("Defendant") opposes the motion (Doc. #7). Plaintiff has filed a Reply (Doc. #8). For the following reasons, Plaintiff's motion is GRANTED.
I. FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND
Plaintiff is a medical doctor in Trinity County, California. Compl. ¶ 1. Defendant is a Texas corporation. Compl. ¶ 2. On March 9, 2011, Plaintiff and Defendant entered into a written contract, whereby Plaintiff purchased software for use in his medical practice. Compl. ¶ 10. The total price for the software was $14, 798. Compl. ¶ 11. Plaintiff alleges that the product did not perform as promised. Compl. ¶ 13. As a result, Plaintiff was forced to hire a third party IT supplier to resolve repeated problems with the software. Compl. ¶ 16. Plaintiff was billed $29, 000 by the third-party IT supplier. Compl. ¶ 20. On June 28, 2013 and August 30, 2013, counsel for Plaintiff sent letters to Defendant's counsel. Griffith Declaration, Ex. 2; DeCarli Declaration, Ex. A. Each letter contains a claim for total damages in the amount of $57, 130.73. Id.
On March 10, 2014, Plaintiff filed the Complaint in Trinity County Superior Court. On April 11, 2014, Defendant removed the matter to this Court on the basis of diversity jurisdiction, pursuant to 28 U.S.C. § 1332(a) and 28 U.S.C. § 1441(a). Plaintiff's Complaint includes the following causes of action: (1) Breach of Express Warranty; (2) Breach of the Implied Warranty of Merchantability; (3) Breach of the Implied Warranty of Fitness for a Particular Purpose; and (4) Negligent Misrepresentation. Plaintiff specifically alleges that "the sum of all relief shall be no more than $74, 999.00." Compl. at 10, Prayer for Relief.
A. Legal Standard
Generally, a state civil action is removable to federal court only if it might have been brought originally in federal court. See 28 U.S.C. § 1441. The Ninth Circuit "strictly construe[s] the removal statute against removal jurisdiction." Gaus v. Miles, Inc. , 980 F.2d 564, 566 (9th Cir. 1992) (citing Boggs v. Lewis , 863 F.2d 662, 663 (9th Cir. 1988); Takeda v. Northwestern National Life Insurance Co. , 765 F.2d 815, 818 (9th Cir. 1985)). Thus, "[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance." Id . (citing Libhart v. Santa Monica Dairy Co. , 592 F.2d 1062, 1064 (9th Cir. 1979)). "The strong presumption' against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper." Id . (citing Nishimoto v. Federman-Bachrach & Associates , 903 F.2d 709, 712 n. 3 (9th Cir. 1990); Emrich v. Touche Ross & Co. , 846 F.2d 1190, 1195 (9th Cir. 1988)).
To establish diversity jurisdiction, the defendant must show complete diversity exists among the parties and that the amount in controversy exceeds $75, 000. 28 U.S.C. § 1332. A court may consider whether the amount in controversy is apparent from the face of the complaint. Singer v. State Farm Mut. Auto. Ins. Co. , 116 F.3d 373, 377 (9th Cir. 1997). When the complaint affirmatively alleges an amount of damages under $75, 000, there are competing views as to the appropriate standard of proof to which the defendant should be held. Some courts have held that, under these circumstances, the defendant must establish that the amount in controversy requirement is met by the preponderance of the evidence. See, e.g., Cagle v. C & S Wholesale Grocers, Inc., 2014 WL 651923 (E.D. Cal. Feb. 19, 2014). Conversely, some courts have held that the defendant must "prove to a legal certainty" that the amount in controversy threshold is met, when the plaintiff has specifically alleged otherwise. See, e.g., Stelzer v. CarMax Auto Superstores California, LLC, 2013 WL 6795615 (S.D. Cal. Dec. 20, 2013). Moreover, 28 U.S.C. § 1446(c)(2) provides as follows:
"(A) the notice of removal may assert the amount in controversy if the initial pleading seeks... a money judgment, but the State practice... permits recovery of damages in excess of the amount demanded; and (B) removal of the action is proper on the basis of an amount in controversy asserted under subparagraph (A) if the district court finds, by the preponderance of the evidence , that the amount in controversy exceeds the amount specified in section 1332(a)." (emphasis added.)
The clear and authoritative language of 28 U.S.C. 1446(c)(2) is consistent with the line of cases holding that, when the plaintiff has specifically alleged less than $75, 000, the defendant seeking removal must prove the amount in controversy by the preponderance of the evidence. See, e.g., Cagle, 2014 WL 651923 (E.D. Cal. Feb. 19, 2014). Moreover, the Cagle court's thorough and sprawling analysis of the relevant Ninth Circuit case law - including its ultimate conclusion that the preponderance' standard is appropriate - is quite persuasive. Id . However, the Court need not reach the issue. As is discussed below, Defendant fails to meet even the preponderance of the evidence standard, and would, therefore, necessarily fail under the more demanding "legal certainty" standard as well.
Plaintiff argues that Defendant cannot demonstrate, "without speculation and conjecture, " that Plaintiff would be entitled to $75, 000, even if he prevailed on every claim. Mot. at 1. Plaintiff maintains that his total damages amount to $57, 136.73, as reflected in his June 28, 2013 letter. Mot. at 5 (citing Griffith Declaration, Ex. 2). Moreover, Plaintiff contends that Defendant's estimate of potential attorneys' fees is too speculative to satisfy its burden. Mot. at 6. Defendant agrees that Plaintiff's total damages amount to $57, 136.73, but maintains that the addition of an estimated $30, 615 in attorneys' fees means that the $75, 000 threshold is easily satisfied. Opp. at 4. Defendant bases this conclusion on "the reasonable estimate of tasks, hours and rate submitted by Defendant in its notice of removal, and based on Plaintiff's own representation of the attorney's fees incurred even before the preparation and filing of his complaint." Opp. at 4.
As noted above, the parties do not dispute the amount in controversy, as it pertains to Plaintiff's alleged actual damages. As evident from the June 28, 2013 and August 30, 2013 letters from Plaintiff's counsel to Defendant's counsel, Plaintiff's alleged actual and compensatory damages are $57, 136.73. See Cohn v. Petsmart, Inc. , 281 F.3d 837, 840 (9th Cir. 2002) (holding that "a settlement letter is relevant evidence of the amount in controversy if it ...