United States District Court, C.D. California
February 4, 2015
WHITNEY RINDELS, Plaintiff,
TYCO INTEGRATED SECURITY, LLC, a Delaware limited liability company, STEPHEN LITTON II, an individual, and DOES 1 through 100, INCLUSIVE Defendants.
ORDER RE: MOTION TO REMAND CASE TO LOS ANGELES SUPERIOR COURT 
RONALD S.W. LEW, Senior District Judge.
Currently before the Court is Plaintiff Whitney Rindel's Motion to Remand Case to Los Angeles Superior Court . For reasons explained below, Plaintiff's Motion is GRANTED and this case shall be remanded to Superior Court. Plaintiff's request for attorney's fees, and Defendant's request for Rule 11 sanctions, are DENIED.
Plaintiff formerly worked for Defendant Tyco Integrated Security LLC ("TIS") at its Chatsworth and Torrance offices, selling security services to businesses in Beverly Hills. Compl. ¶ 10. Plaintiff alleges that she was fired from TIS after rebuking the sexual advances of her supervisor, Defendant Litton ("Litton"). On July 24, 2014, Plaintiff filed her Complaint against Defendants in Superior Court, alleging the following claims: (1) Quid Pro Quo Sexual Harassment; (2) Gender-based Discrimination (Disparate Treatment); (3) Retaliation; (4) Failure to Prevent Discrimination, Harassment, & Retaliation; (5) Intentional Infliction of Emotional Distress; and (6) Wrongful Termination in Violation of Public Policy. Mot. 1:10-15; Opp'n 2:8-13. Plaintiff seeks compensatory damages, "including, but not limited to, lost earnings, future earning capacity and other employment benefits" as well as emotional distress damages for "severe emotional distress and physical manifestations of that emotional distress" including depression, anxiety, loss of sleep, shame, loss of appetite, humiliation, and pain and suffering. Compl. ¶¶ 26, 33, 43, 50, 57, 62; Opp'n 2:14-21.
On August 19, 2014, Defendants filed a Notice of Removal, stating that this Court has federal diversity jurisdiction over this case because there is complete diversity and the alleged amount in controversy exceeds $75, 000. Not. of Removal ¶¶ 10-28. Defendants assert that the amount in controversy exceeds $75, 000 because it is "more likely than not" that if Plaintiff succeeds on her claims, her damages will amount to "more than $75, 000 for back wages and related employment benefits, punitive damages, attorneys' fees and damages for mental and emotional distress." Id. ¶ 28. Defendants assert that complete diversity exists between the parties under the Hertz test because TIS is a citizen of the State of Florida, incorporated in the State of Delaware, and TIS' "nerve center" is located in Boca Raton, Florida. Id. ¶¶ 13-16.
Currently before the Court is Plaintiff's Motion to Remand this case back to State Court. Plaintiff claims removal was improper because Defendants failed to show that the requisite amount in controversy exceeds $75, 000 and that full diversity exists. Plaintiff further seeks attorneys' fees as a result of Defendants' removal. Defendants seek sanctions against Plaintiff because she cites to an incorrect test for diversity of citizenship (the no-longer used "total activities" test instead of the correct "nerve center" test).
Pursuant to 28 U.S.C. § 1441, "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants." Original jurisdiction is based on diversity or federal question according to 28 U.S.C. §§ 1331 and 1332. All district courts have diversity jurisdiction over all civil actions between citizens of different states where the amount in controversy exceeds $75, 000. 28 U.S.C. § 1332.
A case may be remanded to state court for lack of subject matter jurisdiction or due to defects in removal procedure. 28 U.S.C. § 1447(c). The removing party bears the burden of establishing federal jurisdiction. Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988). Generally, on a motion to remand, the opposing party has the burden of proving by a preponderance of evidence that diversity jurisdiction exists. Gaus v. Miles Inc., 980 F.2d 564, 566 (9th Cir.1992) (per curiam) (holding that opposing party must prove by a preponderance of evidence that the amount in controversy exceeded $50, 000); Guryev v. Life Investors Ins. Co. of Am., No. 00-2679, 2000 U.S. Dist. LEXIS 18079, at *2 (N.D. Cal. Dec. 4, 2000).
Before final judgment, if it appears that the district court lacks subject matter jurisdiction over a case that has been removed to federal court, the case must be remanded. 28 U.S.C. § 1447(c). The removal statute is construed against removal jurisdiction and if there is any doubt as to the right of removal in the first instance, federal jurisdiction must be rejected. See Shamrock Oil § Gas Corp. V. Sheets, 313 U.S. 100, 108-09 (1941) (finding that statutes of removal are to be construed in favor of remand to protect state court jurisdiction).
1. Amount in Controversy
Where a complaint is unclear or ambiguous about the amount in controversy, the court applies a preponderance of the evidence standard that requires the removing defendant to establish that it is more likely than not that the amount in controversy requirement is settled. Guglielmino v. McKee Foods Corp., 506 F.3d 696, 699 (9th Cir. 2007) (quoting Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996). In determining whether the jurisdictional minimum is met, the Court considers all recoverable damages, including compensatory damages, emotional distress damages, punitive damages, statutory penalties, and attorneys' fees. See Hunt v. Washington State Apple Adver. Comm'n, 432 U.S. 333, 347-48 (1977); Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1155-56 (9th Cir. 1998); Anthony v. Sec. P. Fin. Servs., Inc., 75 F.3d 311, 315 (7th Cir. 1996).
A district court may accept certain post-removal admissions in its discretion as determinative of the amount in controversy. Davis v. Chase Bank U.S.A., N.A., 453 F.Supp.2d 1205, 1208 (C.D. Cal. 2006)(quoting Sanchez, 102 F.3d at 404). Even assuming, arguendo, that the Court may consider all the evidence Defendants have presented in support of their Removal and Opposition, the evidence of economic damages includes only the Declaration of Jennifer Underwood, which states that Plaintiff earned, from February 25, 2011 to April 12, 2013, a total of $64, 488.03, at an average weekly rate of $580.97 and average annual gross earnings of $30, 210.61. Decl. of Jennifer Underwood ¶ 3. Thus, Defendants allege that Plaintiff's economic damages are at least $45, 318.92 as of the removal date, based on their estimations of her previous salary applied to a period of at least eighteen months of unemployment. Opp'n 11:5-7. Plaintiff alleges that she is presently employed and had been employed for over a year at the time of filing her Reply. Reply 2:19-20. Plaintiff was fired on or about April 5, 2013. Compl. ¶ 16; Mot. 2:26-27;3:1; Opp'n 2:8. She filed her Reply on October 8, 2014. Accordingly, Plaintiff seems to have been unemployed for approximately six months, not the eighteen months Defendants allege. Further, Defendants offer no information as to whether or not Plaintiff may have received unemployment insurance payments that would mitigate her damages-information they, as her employers, should possess. Accordingly, the Court finds Defendants' arguments regarding a starting point of over $45, 000 of economic damages suspect.
With respect to attorneys fees, Defendants argue, for example, that "the attorney who drafted the instant motion to remand... is not even lead counsel in this matter as one other attorney appears in the caption above her name." Opp'n 9:9-11. Defendants note that Plaintiff's attorney averred in her Declaration that the value of her time devoted to this Motion will exceed $2400. Id. at 9:11-13. That the attorney who has represented Plaintiff in this matter may be supervised or occasionally collaborate with another, more senior attorney, also does not establish that attorneys fees are, more likely than not, substantial enough to meet the amount-in-controversy requirement. Certainly, they may; as Defendants argued,
"[e]ven using the conservative rate of $300 per hour, it would take only 250 hours of attorney time to exceed the $75, 000 jurisdictional mark. This would easily be met by the two-person team spending one week on trial preparation and a second week on appearing for trial in this matter.... This estimate ignores the time incurred in pre-filing investigation, preparation and filing of the complaint, engaging in discovery, and opposing a motion for summary judgment. The realities of law practice and common sense confirm that projected attorneys' fees in excess of $75, 000 is more likely than not....
Opp'n 9:14-22. However, another court in this district recently rejected explicitly this exact argument and hypothetical scenario, concluding instead that while the Ninth Circuit has yet to clarify whether the amount-in-controversy includes attorneys' fees likely to accrue, "the better view is that attorneys' fees incurred after the date of removal are not properly included because the amount in controversy is to be determined as of the date of removal." Davis v. Staples, Inc., No. CV 13-8937 FMO PLAX, 2014 WL 29117, at *3 (C.D. Cal. Jan. 3, 2014) (quoting Dukes v. Twin City Fire Ins. Co., 2010 WL 94109, *2 (D. Ariz. 2010); see also Palomino v. Safeway Ins. Co., 2011 WL 3439130, *2 (D. Ariz. 2011) ("This court agrees with the Seventh Circuit and concludes that the better view is that attorneys' fees incurred after the date of removal are not properly included in calculating the jurisdictional amount.") The evidence submitted indicates that Plaintiff has accrued attorneys fees in excess of $2400 for her attorney's work on this Motion; presumably, she has accrued additional fees for time spent drafting the Complaint, though Defendants do not make this contention. Regardless, Defendants have not established that it is more likely than not that Plaintiff's attorney fees thus far accrued are so substantial as to significantly advance the amount in controversy toward the diversity jurisdiction threshold.
Finally, Defendants cite to a host of litigation decisions, including employment decisions, that resulted in high damage amounts and high attorney fees. Opp'n 11:24-13:26. Defendants do not, however, do sufficient work to draw parallels between the instant case and those decisions, nor is there any specific allegation of these damages. See Bennett v. Alaska Airlines, Inc., No. CV 14-2804 FMO RZX, 2014 WL 1715811, at *2 (C.D. Cal. Apr. 30, 2014) (finding that non-economic damages, including punitive and emotional damages, while recoverable by statute, could not be considered in the amount in controversy requirement because they were too speculative).
Further, as Plaintiff correctly notes, Mot. 6:5-13, all cited cases went through trial and resulted in noteworthy verdicts. If Defendants' argument is that large judgments are possible, they are correct. Defendants' burden of proof, however, requires that they establish that it is more likely than not that damages will satisfy the amount-in-controversy. In citing to other employment cases, Defendants make arguments such as "the realities of modern law practice' indicate the reality of the huge potential exposure, " Opp'n 8:23-24 (quoting Miera v. Dairyland Ins. Co., 143 F.3d 1337, 1340 (10th Cir. 1998), and "[a]ttorney's fees are a reality in employment litigation cases, " Opp'n 8:26. These generalities simply do not provide the Court with sufficient evidence, paired with analysis of analogous case law, to find it more likely than not that in this instance, attorneys fees will be so substantial as to carry the amount in controversy over the threshold. See e.g., Mireles v. Wells Fargo Bank, N.A., 845 F.Supp.2d 1034, 1055 (C.D. Cal. 2012) (remanding where defendants "proffer[ed] no evidence that the lawsuits and settlements alleged in the complaint are factually or legally similar to plaintiffs' claims.")
Finally, the fact that Plaintiff refuses to stipulate to damages below the threshold is not a compelling reasons to establish jurisdiction. Defendants argue that the Declaration of defense counsel Linda Claxton, which states that Plaintiff's counsel "did not agree to stipulate that the amount in controversy did not exceed $75, 000, " Decl. Linda Claxton ¶ 2, raises an inference that Plaintiff seeks at least the jurisdictional amount. Opp'n 5-18. Evidence of failure to stipulate to the amount in controversy requirement is at best a factor in determining the amount, and at worst irrelevant to the determination. Compare Schudy v. Gordon, No. 06-00136-CV-W-DW, 2006 WL 859279, at *1 (W.D. Mo. Mar.28, 2006) (in determining amount in controversy, court found plaintiff's refusal to stipulate "reinforce[d] the Court's amount in-controversy decision") and Pendergrass v. Time Ins. Co., No. 5:09-cv-00215-R, 2010 WL 989154, at *2 (W.D.Ky. Mar.12, 2010) (noting plaintiff's refusal to stipulate that amount in controversy does not exceed jurisdictional minimum) with Conrad Assocs. v. Hartford Accident & Indem. Co., 994 F.Supp. 1196, 1199 (N.D. Cal. 1998), Bassel v. 4Access Communs. Co., No. 07cv2346-L(JMA), 2008 WL 2157005, at * 3 (S.D. Cal. 2008) ("attempting to force the plaintiff to enter a stipulation regarding the potential amount of damages would serve no effect in determining the actual amount in controversy") and Valle v. State Farm Mutual Auto. Ins., No. C 97-1659 FMS, 1997 WL 564047, at *2 (N.D. Cal. 1997) ("Nor does the Court consider plaintiff's refusal to stipulate to lesser damages persuasive in evaluating the worth of her claims."). Accordingly, the Court does not find that Plaintiff's refusal to stipulate to an amount in controversy less than the diversity jurisdictional threshold is a persuasive factor in establishing jurisdiction. See Schiller v. David's Bridal, Inc., No. 1:10-CV-00616 AWI, 2010 WL 2793650, at *5 (E.D. Cal. July 14, 2010).
In sum, given that any doubt regarding the existence of subject matter jurisdiction must be resolved in favor of remanding the action to state court, see Gaus, 980 F.2d at 566, the Court is not persuaded that Defendants have met their burden of proving by a preponderance of the evidence that the amount in controversy meets the $75, 000 threshold. See Matheson, 319 F.3d at 1090 ("Where it is not facially evident from the complaint that more than $75, 000 is in controversy, the removing party must prove, by a preponderance of the evidence, that the amount in controversy meets the jurisdictional threshold. Where doubt regarding the right to removal exists, a case should be remanded to state court."); Valdez, 372 F.3d at 1117. Accordingly, Plaintiff's Motion to Remand this Action is GRANTED on those grounds. It is therefore unnecessary for the Court to evaluate the question of complete diversity.
2. Attorneys' Fees
Section 1447(c) states that an order remanding the case may require payment of "just costs and any actual expenses, including attorney fees, incurred as a result of the removal." The award of attorney's fees is not a punitive award against defendants; it is simply reimbursement to plaintiffs of wholly unnecessary litigation costs the defendant inflicted. While no showing of bad faith by defendants is required to impose costs and fees, absent unusual circumstances, attorney's fees should not be awarded when the removing party has an objectively reasonable basis for removal. Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). Defendants appear to have had an objectively reasonable basis for removal. Accordingly, the Court DENIES Plaintiff's request for attorneys' fees.
3. Rule 11 Sanctions
The test imposed by Rule 11 is an objective one. Zaldivar v. City of Los Angeles, 780 F.2d 823, 831 (9th Cir. 1986). The certification requirements of Rule 11 are violated "if the paper filed... is frivolous, legally unreasonable, or without factual foundation, even though... not filed in subjective bad faith." Id. Rule 11 "must be read in light of concerns that it will... chill vigorous advocacy." Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 393 (1990). The decision to impose a sanction is within the discretion of the court. Fed.R.Civ.P. 11(c). Defendants ask this Court to sanction Plaintiff's counsel because they failed to cite to the appropriate test to determine diversity jurisdiction. Without a doubt, this was an egregious fault on counsel's part. No doubt such a fault shook the confidence of counsel's client and the court's confidence in this attorney's skills. However, it appears that, no matter how grave the mistake, Plaintiff's counsel simply made a mistake. Accordingly, the Court DENIES Defendants' request for sanctions.
For the foregoing reasons, the Court GRANTS Plaintiff's Motion to Remand Case to Superior Court. The Court DENIES Plaintiff's request for attorneys' fees. The Court DENIES Defendants' request for Rule 11 sanctions.
IT IS SO ORDERED.