Opinion
CASE NO. 1:19CV1230
06-07-2019
TRANSTAR INDUSTRIES, LLC, Plaintiff, v. CHADD LESTER, et al., Defendant.
OPINION AND ORDER CHRISTOPHER A. BOYKO , J. :
This matter comes before the Court on Plaintiff's Motion to Remand. (Doc. 3). Because the amount-in-controversy is greater than $75,000, Plaintiff's Motion is DENIED.
I. BACKGROUND
On May 29, 2019, Defendants Chadd Lester, Cary Young, Alven Rivera, Seal Aftermarket Products, LLC ("SAP") and TranzDepot, LLC ("TranzDepot") (collectively, "Defendants") removed this case from Cuyahoga County Common Pleas Court on the basis of diversity jurisdiction. Defendants allege the parties are diverse and the amount-in-controversy is greater than $75,000.
Plaintiff disagrees. According to Plaintiff, this case concerns the unfair advantage Defendants will gain unless they are enjoined from their proposed operations. Plaintiff previously employed Lester, Young and Rivera. As a condition of employment, Lester, Young and Rivera each executed a confidentiality agreement with Plaintiff. Lester also executed a non-competition agreement with Plaintiff. These agreements were necessary because Plaintiff's employees each have access to valuable and confidential trade-secret information that provides Plaintiff certain competitive advantages.
SAP is a competitor of Plaintiff. In 2015, Lester left Plaintiff to join SAP. While Plaintiff was initially weary of Lester's new employment, Lester convinced Plaintiff that his role would not compete with Plaintiff's interests.
The crux of the Complaint stems from competition in the Detroit, Michigan market. Plaintiff has had a presence in Detroit since 2012, while SAP has had no market presence in Detroit. In 2018, Plaintiff decided to relocate its Detroit operations just a few miles down the road. According to Plaintiff, SAP improperly learned of the move and decided to pounce.
SAP, through Lester, began soliciting employees of Plaintiff, including Young and Rivera. SAP also incorporated TranzDepot as a Michigan corporation designed to compete with Plaintiff in the Detroit market. In fact, Plaintiff claims TranzDepot intends to open in the same location as Plaintiff previously operated. In May of 2019, both Young and Rivera accepted employment with SAP.
On May 23, 2019, Plaintiff filed its "Complaint for Injunctive Relief with Jury Demand" in state court. The Complaint alleges claims for Misappropriation of Trade Secrets; Tortious Interference with Economic and/or Business Relations; Breach of Contract; and Injunctive Relief. Each Count concludes with "unless injunctive relief is granted, Defendants' actions will cause [Plaintiff] to suffer irreparable harm." Finally, the Prayer for Relief request injunctive relief mandating Defendants comply with the confidentiality agreements; SAP and TranzDepot cease employing Lester, Young and Rivera; return of confidential business information and trade secrets; and attorney fees and costs.
Defendants contend that, although the Complaint is not for monetary relief, the amount-in-controversy still exceeds $75,000. Defendants attempt to prove this by attaching Affidavits of Lester, Young and Rivera which reflect a monetary amount based on current salaries and previous worked performed for Plaintiff. Plaintiff disputes this rational and instead asks the Court to remand the case back to state court. On June 4, 2019, Defendants opposed the Motion to Remand. Plaintiff filed its Reply in support the next day.
II. LAW AND ANALYSIS
A party can remove an action from state to federal court if federal court would otherwise have had original jurisdiction. 28 U.S.C. § 1441(a). For a federal district court to have original jurisdiction over a civil action based on diversity of citizenship, the amount in controversy must exceed $75,000, exclusive of interest and costs. 28 U.S.C. § 1332(a). The removing party has the burden of showing by a preponderance of the evidence ("more likely than not") that the amount-in-controversy requirement has been met. See Hayes v. Equitable Energy Res. Co., 266 F.3d 560, 572 (6th Cir. 2001).
The Parties do not dispute that Plaintiff and Defendants are diverse in citizenship. --------
Plaintiff claims this Court lacks subject matter jurisdiction because the Complaint is solely for injunctive relief and not for damages in excess of $75,000. "In actions seeking declaratory or injunctive relief, it is well established that the amount in controversy is measured by the value of the object of the litigation." Hunt v. Wash. State Apple Adver. Comm'n, 432 U.S. 333, 347 (1997); see also Cleveland Housing Renewal Project v. Deutsche Bank Trust Co., 621 F.3d 554, 560 (6th Cir. 2010). Courts dispute from whose perspective the 'value of the object of the litigation' must be determined from - perspective of either party or only consider plaintiff's viewpoint. See Everett v. Verizon Wireless, Inc., 460 F.3d 818, 829 (6th Cir. 2006), abrogated on other grounds by Hertz Corp. v. Friend, 559 U.S. 77 (2010) (citing Olden v. Lafarge Corp., 383 F.3d 495, 503 n. 1 (6th Cir. 2004) ("[T]here is a circuit split as to whether a court may determine the amount in controversy from the perspective of either party (the "either viewpoint rule") or whether a court may only consider the plaintiff's viewpoint").
Under the plaintiff's viewpoint, courts typically consider "the value to plaintiff of conducting [its] business...affairs free from the activity sought to be enjoined." Absolute Mach. Tools, Inc. v. Clancy Mach. Tools, Inc., 410 F. Supp. 2d 665, 669 (N.D. Ohio 2005). When valuing non-competition agreements, "the court will usually look to the profits earned by the employer on business generated by the employee during the period immediately preceding his termination." Id. (quoting Basicomputer Corp. v. Scott, 791 F. Supp. 1280, 1286 (N.D. Ohio 1991). Under the "either viewpoint rule," the Sixth Circuit has observed "that the 'costs of complying with an injunction...may establish the amount-in-controversy.'" Cleveland Housing, 621 F.3d at 560 (quoting Everett, 460 F.3d at 829).
Defendant has demonstrated by a preponderance of the evidence that, under either of the competing views above, the object of this litigation is greater than $75,000. From the Plaintiff's perspective, Defendant has demonstrated that Young and Rivera generated approximately $4,900,000 in revenue and over $1,562,000 in profits. (Docs. 1-2, 1-3). While Young and Rivera did not sign non-competition agreements, Plaintiff is asking the Court the prevent Young and Rivera from working for Defendants by virtue of their confidentiality agreements. The Court sees no difference in outcome between a non-competition agreement and confidentiality agreement when Plaintiff is asking the Court to restrict competition. The value to Plaintiff is not having Young and Rivera use confidential information to compete against Plaintiff for the same revenue and profits. Since this revenue and profits are both greater than $75,000, Defendants have satisfied their burden.
Moreover, from Defendant's perspective, the costs of complying with the requested injunction is greater than $75,000. Plaintiff asks the Court to enjoin SAP and TranzDepot from employing Lester, Young and Rivera. Defendant has produced sufficient evidence establishing the respective salaries for these individuals. Should the Court grant Plaintiff's requested relief, Lester, Young and Rivera would forfeit over $391,000 in salaries. Plainly then, the costs of complying with the requested injunction are greater than the $75,000 threshold. Accordingly, Defendants have satisfied their burden in establishing the amount-in-controversy is greater than $75,000.
Plaintiff relies almost exclusively on the Court's prior decision in Transtar Industries, Inc. v. Lewis, 2015 WL 5173023 (N.D. Ohio Sept. 3, 2015) (Boyko, J.). However, the Court agrees with Defendants that the underlying case is distinguishable from Lewis. In Lewis, the defendants did not produce any evidence that the amount-in-controversy was greater than $75,000. While Defendants here make similar arguments as in Lewis, Defendants also supplement those arguments with Affidavits and evidence to support their position. Plaintiff does not dispute Defendants' evidence. Accordingly, Lewis is distinguishable and Defendants have satisfied their burden in demonstrating the amount-in-controversy is greater than $75,000.
III. CONCLUSION
Defendants have demonstrated by a preponderance of the evidence that the amount-in-controversy in this case is greater than $75,000. Therefore, Plaintiff's Motion to Remand is DENIED. Defendants' Notice of Removal was not objectively unreasonable and Plaintiff's request for attorneys fees and costs is similarly DENIED.
Finally, the Court is aware of the Plaintiff's outstanding Motion for Temporary Restraining Order. The Court deems Plaintiff's Motion filed as of the date of this Order. Defendants shall file their Opposition no later than June 14, 2019. Plaintiff may file its Reply by June 19, 2019.
IT IS SO ORDERED.
s/ Christopher A. Boyko
CHRISTOPHER A. BOYKO
United States District Judge Dated: June 7, 2019