United States District Court, C.D. California
PRESENT: THE HONORABLE ANDRE BIROTTE JR., UNITED STATES
DISTRICT JUDGE.
CIVIL MINUTES - GENERAL
Proceedings:
[In Chambers] ORDER REMANDING ACTION FOR LACK OF
SUBJECT MATTER JURISDICTION
Defendants
Moki Doorstep Co., Zachary Brown, and Alyssa Brown
("Defendants") removed this action on the basis of
diversity jurisdiction. On November 19, 2019, the Court
issued an Order to Show Cause ("OSC," Dkt. No. 12)
why the case should not be remanded for lack of subject
jurisdiction. Defendants filed a Response (Dkt. No. 13) to
the OSC, and Plaintiff filed a Reply (Dkt. No.
14).[1]
The Court hereby REMANDS the action to state court.
BACKGROUND
Defendants
removed this action based on diversity jurisdiction, which
requires that the parties be in complete diversity and the
amount in controversy exceed $75, 000. See 28 U.S.C.
§ 1332. In its OSC, the Court explained that
Defendants' Notice of Removal (“NOR”) did not
establish that the $75, 000 amount in controversy is
satisfied. The NOR stated, “Plaintiff seeks
compensatory damages based on his claim that he has an
ownership interest in a company whose product has already
generated significant consumer interest and commercial
success. He also seeks disgorgement of any revenues and
profits obtained or received by Defendants. [] Plaintiff also
seeks punitive damages in connection with his fraud and tort
claims. [] Plaintiff also seeks attorney fees in connection
with his elder abuse claim pursuant to California Welfare and
Institutions Code section 15657.5. [] The amount in
controversy exceeds, exclusive of interest and costs, the sum
of $75, 000.” NOR ¶¶ 23-26. The Court found
that it was not obvious from the Complaint that the amount in
controversy is satisfied, and that Defendants did little more
than repeat from the Complaint the categories of damages
Plaintiff seeks. Defendants provided no allegations or
information from which the amount in controversy can be
quantified or from which it can be ascertained that it
exceeds $75, 000.
LEGAL
STANDARD
“The
‘strong presumption' against removal jurisdiction
means that the defendant always has the burden of
establishing that removal is proper.” Gaus v.
Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992).
“Because of the Congressional purpose to restrict the
jurisdiction of the federal courts on removal, ”
statutes conferring jurisdiction are “strictly
construed and federal jurisdiction must be rejected if there
is any doubt as to the right of removal in the first
instance.” Duncan v. Stuetzle, 76 F.3d 1480,
1485 (9th Cir. 1996) (citations and quotations omitted).
Thus, “[i]f it is unclear what amount of
damages the plaintiff has sought, . . . then the defendant
bears the burden of actually proving the facts to support
jurisdiction, including the jurisdictional amount.”
Gaus, 980 F.2d at 566-67.
DISCUSSION
Defendants
have not met their burden. Defendants argue that the amount
in controversy is satisfied because Plaintiff seeks to
recover a 50% ownership interest in Moki Doorstep Co., which
they claim is valued at $3 million. This purported
“valuation, ” however, was a mere offer to buy
the company by an investor on the reality TV show
Sharktank. Defs' Resp. 2:9-13. The Court finds
this purported valuation is not probative of the
company's actual value for several reasons, including
because, as Defendants themselves admit, “that deal
ultimately fell through.” Id. The Court
therefore ignores the retracted $3 million offer presented on
Sharktank. Defendants failed to present a meaningful
or substantial metric of the company's actual value, so
they have not established the amount put in issue by
Plaintiff's claim for a 50% ownership interest in the
company.
Defendants
also argue that Plaintiff's demand letter for $1.5
million plus $375, 000 in attorneys' fees satisfies the
amount in controversy. But these numbers were expressly tied
to Defendants' claimed $3 million valuation of the
company, which, for the reasons stated above, simply carries
no weight. Because that valuation is illusory, so too is
Plaintiff's demand based expressly thereon. Cf. Mount
Healthy City School District Board of Education v.
Doyle, 429 U.S. 274, 276 (1977) (plaintiff's
assertion of amount in controversy will be disregarded if it
appears “the claim is really for less than the
jurisdictional amount. . .”). Defendants also point to
Plaintiff's demand for punitive damages as satisfying the
amount in controversy, but punitive damages turn on the
amount of compensatory damages, and as stated, Defendant has
presented no colorable estimate of the latter, and therefore
does not establish the amount put in issue by the punitive
damages claim.
CONCLUSION
For the
foregoing reasons, Defendants have not met their burden to
establish that the amount in controversy is satisfied. The
Court therefore finds that it lacks subject matter
jurisdiction over this action and
REMANDS it to the state court from
which it was removed.
IT
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