Lewis v. Moki Doorstep Corp.

          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 ...