United States District Court, C.D. California
ORDER GRANTING MOTION FOR REMAND AND DENYING MOTION
HONORABLE ANDRÉ BIROTTE JR. UNITED STATES DISTRICT
the Court is Plaintiff Independent Sports & Entertainment
LLC's (“ISE”) Motion for Remand (Dkt. No. 12)
and Defendant Daniel Fegan's (“Fegan”) Motion
to Dismiss. (Dkt. No. 8.) Oppositions and replies were filed
for both motions. The Court heard oral argument on May 1,
2017. For the following reasons, the Court GRANTS the motion
for remand and DENIES the motion to dismiss.
alleges that Fegan breached a non-competition agreement, and
in this action seeks a preliminary injunction, pending a
related arbitration, barring Fegan from continuing to breach
that agreement. The relevant allegations of the Complaint
(“Compl., ” Dkt. No. 1-1) are as follows.
a sports management company that represents athletes in
several leagues, including the National Basketball
Association (“NBA”). Compl. ¶ 4. Fegan is a
well-known sports agent who represents NBA players.
Id. ¶ 5. In 2013, ISE and Fegan entered into an
Asset Purchase Agreement (“APA”) whereby ISE
agreed to purchase Fegan's basketball business assets and
goodwill in exchange for cash and stock in ISE. Fegan also
agreed to become an employee of ISE so he could continue to
represent his NBA clients as an employee of ISE. Id.
included non-competition provisions whereby Fegan promised,
as relevant, “[t]o refrain from directly or indirectly
owning, managing, operating, controlling, or working for any
business or organization that engages in sports marketing,
representation, recruiting, or that otherwise competes with
ISE from March 15, 2013 through February 15, 2018
(‘Non-competition Period').” Id.
¶ 31; see also APA (Bauman Decl. (Dkt. No.
12-3) Exh. F), § 8.1. The APA also has a
non-solicitation agreement whereby Fegan agreed to not
compete with ISE by soliciting any of ISE's employees,
agents, or consultants. Compl. ¶ 31; APA § 8.2.
alleges that Fegan violated the APA by, among other things,
running a side business in violation of the noncompetition
clause, undermining ISE employees' loyalty to ISE,
repeatedly violating the non-solicitation clause, and
otherwise failing to perform satisfactorily, so ISE
terminated his employment for cause on March 10, 2017.
Id. ¶ 49. The same day, pursuant to an
arbitration clause in the APA, ISE brought two arbitrations
against Fegan for his breach of the APA and the employment
agreement. In those arbitrations, ISE seek damages and an
injunction to enforce the noncompetition agreement.
Id. ¶ 2.
March 10, 2017, ISE filed this action in state court.
ISE's Complaint states only one cause of action: for a
preliminary and permanent injunction pending the
arbitrations, pursuant to Cal. Code Civ. Proc. §§
525-527. ISE states that it “only seeks injunctive
relief to enforce the non-compete covenant and maintain the
status quo” until the arbitrations are concluded or the
noncompetition covenant expires on February 15, 2018.
Id. ¶ 59. As relevant to the motions, the
Complaint seeks an order prohibiting Fegan from:
b. Competing with ISE by directly or indirectly owning,
managing, operating, joining, controlling, or participating
in the ownership management, operation or control, or being
involved as a director, officer, employee, partner, or
consultant, of any profit or non-profit business that
competes with ISE in the sports marketing, sports
representation, sports recruiting, and/or sports business
management fields. This includes owning any equity interest
in such a firm or business.
c. Competing with ISE in his individual capacity by directly
or indirectly soliciting NBA players, coaches, or their
agents and representatives that he currently does not
represent, or to do anything to expand the representation of
his current NBA clients under existing SPACs in a way that
would be competitive to ISE.
Compl. Prayer or Relief ¶ A(b) and A(c), 21:7-20.
March 17, the state court issued a TRO enjoining Fegan from
engaging in the activities referenced in paragraph (b).
March 28, 2017, Fegan removed the action to federal court on
the ground that it is completely preempted by § 301 of
the Labor Management Relations Act (“LMRA”), 29
U.S.C. § 185. ISE then filed a motion for preliminary
injunction to bar Fegan from:
engaging in, committing, performing, directly or indirectly,
by any means whatsoever, the following acts: owning,
managing, operating, controlling, or having any
involvement with a business organization that competes with
ISE in violation of a valid noncompete clause during the
non-competition time period, which expires on February 15,
See Dkt. No. 11-10, 3:12-15.
now moves to dismiss the Complaint on the same ground on
which he removed it: that it is completely preempted by the
LMRA. ISE argues that its claim is not completely preempted
and seeks an order remanding the action back to state court.
defendant may remove from state to federal court any civil
action over which the district court would have had original
jurisdiction. 28 U.S.C. § 1441(a). Federal district
courts have original jurisdiction over “all civil
actions arising under the Constitution, laws, or treaties of
the United States.” 28 U.S.C. § 1331. Federal
jurisdiction exists only if the federal question appears on
the face of the plaintiff's “well-pleaded
complaint.” Caterpillar Inc. v. Williams, 482
U.S. 386, 392, (1987). Under the well-pleaded complaint rule,
a defense based on federal law, including the defense of
preemption, does not establish a federal question and does
not render a state law action removable. Id. at 393
(“it is now settled law that a case may not be
removed to federal court on the basis of a ...