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Sabol-Krutz v. Quad Electronics, Inc.

United States District Court, E.D. California

July 7, 2015

STACEY SABOL-KRUTZ, an individual, Plaintiff,
v.
QUAD ELECTRONICS, INC. d/b/a CABLCON, a Michigan corporation, Defendant.

MEMORANDUM AND ORDER

MORRISON C. ENGLAND, Jr., Chief District Judge.

Through this action, Plaintiff Stacey Sabol-Krutz ("Plaintiff") sues her former employer, Defendant Quad Electronics ("Defendant"). As a condition of Plaintiff's employment with Defendant, Plaintiff signed a non-compete agreement ("Non-Compete Agreement"). Defendant has terminated Plaintiff's employment and Plaintiff now seeks a declaration that the Non-Compete Agreement is invalid and monetary damages for unpaid commissions earned during the course of her employment. Before the Court are Defendant's Motion to Dismiss for Lack of Subject Matter Jurisdiction (ECF No. 8) and Plaintiff's Motion for Partial Summary Judgment (ECF No. 11). For the reasons that follow, both Motions are DENIED.[1]

BACKGROUND

Plaintiff began working for Defendant in December 2007 as a sales representative. Compl., ECF No. 1, ¶ 6. At the start of her employment, Plaintiff signed a contract that included, in relevant part, a Non-Compete Agreement. Id . ¶¶ 9, 10. The Non-Compete Agreement contains a non-compete provision for a period of twelve months after termination and includes a list of nineteen companies that Plaintiff agrees not to be employed with during that period. See Non-Compete Agreement, ECF No. 8-2, at 29. The Non-Compete Agreement did not contain a choice of law provision.

Plaintiff alleges that Defendant urged her to move to California in 2011 to "essentially run [its] West coast operations." Id . ¶ 7. Defendant, however, contends that the Plaintiff requested to move to California in order to establish residency so that her daughter could pay in-state tuition at California universities. Def.'s Mot. to Dismiss, ECF No. 8-1, at 3. While the reason for the move is disputed, Plaintiff does not dispute that throughout her employment, at least ninety-nine percent (99%) of her business for Defendant concerned accounts outside of California. Id . According to Defendant, "Plaintiff was denied relocation expenses because her move was not business related." Id.

In August 2014, Defendant terminated Plaintiff's employment. Compl. ¶ 11. Plaintiff subsequently accepted a position at Defendant's direct competitor, Great Lakes Wire and Cable. Id . ¶ 12. Great Lakes Wire and Cable is a Michigan Corporation and is one of the nineteen companies identified in the Non-Compete Agreement. Id . ¶ 12; Def.'s Opp'n to Mot. for Summ. J., ECF No. 14, at 2. In January 2015, counsel for the Defendant sent a letter to Plaintiff reminding her of the provisions of the Non-Compete Agreement and demanding that the Plaintiff cease and desist in her interaction with Great Lakes Wire and Cable. Compl. ¶ 13. Plaintiff did not comply and Defendant brought suit against Plaintiff in Michigan state court to enforce the Non-Compete Agreement on February 12, 2015.

On January 26, 2015, Plaintiff filed this action against Defendant seeking a declaration that the Non-Compete Agreement is invalid and monetary damages for unpaid commissions earned during the course of her employment. Plaintiff claims that her unpaid commissions are "well in excess of $75, 000." Id . ¶¶ 3, 24. Subsequent to the filing of the Complaint, Defendant filed a Motion to Dismiss for Lack of Subject Matter Jurisdiction contending that the amount in controversy cannot possibly exceed the requisite $75, 000. ECF No. 8 at 1. Plaintiff then filed a Motion for Partial Summary Judgment stating that, at this early stage in the litigation, the Court should be able to grant declaratory relief prohibiting enforcement of the Non-Compete Agreement given California's strong public policy against enforcement of non-compete agreements. ECF No. 11 at 2-3.

STANDARD

A. Motion to Dismiss for Lack of Subject Matter Jurisdiction

Federal courts are courts of limited jurisdiction and are presumptively without jurisdiction over civil actions. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). The burden of establishing federal jurisdiction rests upon the party asserting jurisdiction. Id . To establish federal subject matter jurisdiction, a plaintiff must prove the matter in controversy exceeds the sum or value of $75, 000, exclusive of interest and costs, and is between citizens of different states. 28 U.S.C. § 1332.

The party opposing the motion has the burden of proving that subject matter jurisdiction does exist, and must present any necessary evidence to satisfy this burden. St. Clair v. City of Chico, 880 F.2d 199, 201 (9th Cir. 1989). If the plaintiff's allegations of jurisdictional facts are challenged by the adversary in the appropriate manner, the plaintiff cannot rest on the mere assertion that factual issues may exist. Trentacosta v. Frontier P. Aircraft Ind., Inc., 813 F.2d 1553, 1558 (9th Cir. 1987). Furthermore, the district court may review any evidence necessary, including affidavits and testimony, in order to determine whether subject matter jurisdiction exists. McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988); Thornhill Pub. Co. v. Gen. Tel. & Elecs. Corp., 594 F.2d 730, 733 (9th Cir. 1979). A court may dismiss an action "when independent facts show that the amount of damages was claimed merely to obtain federal court jurisdiction." Pachinger v. MGM Grand Hotel-Las Vegas, Inc., 802 F.2d 362, 364 (9th Cir. 1986). However, in order to grant a motion to dismiss pursuant to Rule 12(b)(1), a court must find to a legal certainty that the plaintiff cannot recover an award that will meet the amount in controversy requirement. St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938). If the nonmoving party fails to meet its burden and the court determines that it lacks subject matter jurisdiction, the court must dismiss the action. Fed.R.Civ.P. 12(h)(3).

B. Motion for Partial Summary Judgment

The Federal Rules of Civil Procedure provide for summary judgment when "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); see also Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).

A court may grant summary judgment on part of a claim or defense, known as partial summary judgment. See Fed.R.Civ.P. 56(a) ("A party may move for summary judgment, identifying each claim or defense-or the part of each claim or defense-on which summary judgment is sought."); see also Allstate Ins. Co. v. Madan, 889 F.Supp. 374, 378-79 (C.D. Cal. 1995). The standard that applies to a motion for partial summary judgment is the same as that which applies to a motion for summary judgment. See Fed.R.Civ.P. 56(a); State of Cal. ex rel. Cal. Dep't of Toxic Substances Control v. Campbell, 138 F.3d 772, 780 (9th Cir. 1998) (applying summary judgment standard to motion for summary adjudication).

In a summary judgment motion, the moving party bears the initial responsibility of informing the court of the basis for the motion and identifying the portions in the record "which it believes demonstrate the absence of a genuine issue of material fact." Celotex, 477 U.S. at 323. If the moving party meets its initial responsibility, the burden then shifts to the opposing party to establish that a genuine issue of material fact actually does exist. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986); First Nat'l Bank v. Cities Serv. Co., 391 U.S. 253, 288-89 (1968).

The opposing party must demonstrate that the fact in contention is material, i.e., a fact that might affect the outcome of the suit under the governing law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 251-52 (1986); Owens v. Local No. 169, Assoc. of W. Pulp and Paper Workers, 971 F.2d 347, 355 (9th Cir. 1987). The opposing party must also demonstrate that the dispute about a material fact "is genuine, ' that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson, 477 U.S. at 248. As the Supreme Court explained, "[w]hen the moving party has carried its burden under Rule [56(a)], its opponent must do more than simply show that there is some metaphysical doubt as to the material facts." ...


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