Opinion
Civil No. 1:01CV01005
June 5, 2002
MEMORANDUM OPINION
This matter is before the court on Plaintiff's motion to remand pursuant to 28 U.S.C. § 1447. Plaintiff originally filed a Complaint against Defendant in the North Carolina General Court of Justice, Superior Court Division, Guilford County, alleging five claims for relief and seeking actual and compensatory damages, treble damages for unfair and deceptive trade practices, punitive damages, and a declaratory judgment that Plaintiff has not violated the Wisconsin Fair Dealership Law and owes no money to Defendant, as well as costs and attorney's fees. Defendant subsequently removed Plaintiff's action from state court to this court. For the following reasons, the court will deny Plaintiff's motion to remand.
FACTS
Plaintiff Wysong Miles Company ("Plaintiff") is a corporation organized and existing under the laws of the State of North Carolina with its principal place of business in Greensboro, North Carolina. Defendant Weller Machinery Company ("Defendant") is a corporation organized and existing under the laws of the State of Wisconsin with its principal place of business in Pewaukee, Wisconsin.
In or about September of 1999, Defendant contacted Plaintiff and requested the opportunity to sell Plaintiff's machines in Wisconsin. In October of 1999, Plaintiff gave Defendant and another company, Fabrication Machinery and Services, Inc. ("FMS"), the opportunity to sell Plaintiff's machines in Wisconsin. Over the next six months Defendant outperformed FMS as a dealer for Plaintiff. Therefore, on April 17, 2000, Plaintiff appointed Defendant as the exclusive dealer of Plaintiff's machines in Wisconsin.
From the date Defendant began its exclusive dealership, April 17, 2000, until October 1, 2000, Defendant sold only one of Plaintiff's machines. On several occasions beginning in October of 2000, Plaintiff threatened to terminate Defendant as a dealer of Plaintiff's machines. On October 2, 2000, Plaintiff threatened to terminate defendant and "find other representation in Wisconsin" if Plaintiff did not "see multiple orders in the next 90 days." (Adkisson Aff. Ex. C.) on January 4, 2001, Plaintiff gave Defendant until January 31, 2001, to improve its sales performance. (Adkisson Aff. Ex. D.) On March 1, 2001, Plaintiff informed Defendant that if Plaintiff did not see sales by Defendant in March, Plaintiff would "open the territory up on April 1." (Adkisson Aff. Ex. E.)
Defendant sold one of Plaintiff's machines in October of 2000 and one in June of 2001. The June 2001 sale occurred after Plaintiff changed the parties' prior practice by demanding that Defendant pay Plaintiff the cost of the machine up front. (Adkisson Aff. Ex. F.) Defendant sent a check to cover the cost but then stopped payment on its check after Plaintiff shipped the machine Defendant requested. As a result of Defendant's actions, Plaintiff did two things in July of 2001: (1) Plaintiff notified the Pewaukee Police Department about Defendant's actions relating to the stop payment; and (2) Plaintiff filed a Complaint against Defendant in the North Carolina General Court of Justice, Superior Court Division, Guilford County, alleging five claims for relief and seeking actual and compensatory damages, treble damages for unfair and deceptive trade practices, punitive damages, and a declaratory judgment that Plaintiff has not violated the Wisconsin Fair Dealership Law and that Plaintiff owes no money to Defendant, as well as costs and attorney's fees. Thereafter, Defendant made no more sales of Plaintiff's machines.
On October 1, 2001, Plaintiff terminated Defendant as a dealer, giving Defendant until the end of that month to close out any pending orders. Defendant's sales of Plaintiff's products in 2000 yielded total gross profits of approximately $115,000. Defendant's steadily declining performance is reflected by the fact that Defendant's sales yielded only approximately $15,000 in profits in 2001. At the time of termination, Defendant allegedly was offering for sale Plaintiff's machines to seventeen customers.
Plaintiff filed an Amended Complaint on October 2, 2001, alleging essentially the same facts and seeking the same relief as in Plaintiff's original Complaint. On November 2, 2001, Defendant removed to this court pursuant to 28 U.S.C. § 1441, alleging that the court has proper subject matter jurisdiction over Plaintiff's claims by virtue of the diversity jurisdiction statute, 28 U.S.C. § 1332. Plaintiff now seeks a remand of this action to state court, arguing that removal was improper because this court lacks diversity jurisdiction over Plaintiff's claims due to Plaintiff's failure to meet the amount in controversy requirement.
DISCUSSION
Section 1441 of Title 28 of the United States Code provides for removal of an action originally filed in state court if the action could have been filed in federal court. The text of Section 1441(a) reads:
Except as otherwise expressly provided by Act of Congress, any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division embracing the place where such action is pending.28 U.S.C. § 1441 (a).
Defendant removed Plaintiff's state action to this court on the premise that the court has original jurisdiction over the action pursuant to the diversity jurisdiction statute, 28 U.S.C. § 1332. Section 1332 grants the district courts jurisdiction over actions between "citizens of different States" where the "matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs." 28 U.S.C. § 1332 (a). Plaintiff and Defendant are citizens of different states. Thus, the jurisdictional question centers upon whether Plaintiff's claims satisfy the amount in controversy requirement, that is, whether the "matter in controversy exceeds the sum or value of $75,000."
In removal cases, because it is the defendant who requests that the district court exercise jurisdiction over the matter, the burden rests upon the defendant to prove compliance with the amount in controversy requirement. Mulcahey v. Columbia Organic Chems. Co., 29 F.3d 148, 151 (4th Cir. 1994) (citation omitted); see also McNutt v. General Motors Acceptance Corp. of Indiana, 298 U.S. 178, 189 (1936) (holding that the "prerequisites to the exercise of jurisdiction" are "conditions which must be met by the party who seeks the exercise of jurisdiction in his favor"). This court previously has held that a defendant in a removal case must prove the amount in controversy by a preponderance of the evidence. Candor Hosiery Mills, Inc. v. Int'l Networking Group, Inc., 35 F. Supp.2d 476, 479-80 (M.D.N.C. 1998). Because removal jurisdiction raises federalism concerns, removal jurisdiction is strictly construed in favor of remand. Mulcahey, 29 F.3d at 151. Furthermore, the defendant must make more than a mere allegation that the value of the matter exceeds the amount in controversy requirement. See Gaus v. Miles, Inc., 980 F.2d 564, 567 (9th Cir. 1992). If the existence of federal jurisdiction is in doubt "a remand is necessary." Mulcahey, 29 F.3d at 151.
Cases, such as the present one, in which the plaintiff seeks equitable relief necessitate a determination of the "value of the object of the litigation." Hunt v. Washington State Apple Adver. Comm'n, 432 U.S. 333, 347 (1977) (citations omitted) Determining the value of the object of litigation requires evaluating the potential benefit to the plaintiff of the requested relief and/or the potential cost to the defendant of complying with the requested relief. The circuits are split as to whose viewpoint controls; however, the Fourth Circuit appears to follow the either-party approach. Government Employees Ins. Co. v. Lally, 327 F.2d 568, 569 (4th Cir. 1964)
Courts have determined the amount in controversy based upon the viewpoint of (1) the plaintiff; (2) either the plaintiff or the defendant; or (3) the party invoking jurisdiction. 15 Moore's Federal Practice ¶ 102.109 (Matthew Bender 3d ed.) (collecting cases and discussing the various viewpoints).
Defendant contends that the declaratory judgment that Plaintiff seeks calls into question whether Plaintiff's termination of the dealership violates the Wisconsin Fair Dealership Law, Wis. Stat. § 135.01 et seq., thereby placing in controversy Defendant's right to future profits under the dealership. See Candor Hosiery Mills, Inc., 35 F. Supp.2d at 480 (plaintiff seeking a declaration as to existence or non-existence of agreements between plaintiff and defendant puts the entire value, including future sums of money, in issue). Defendant seeks to show that its future profits under the dealership would have been in excess of the amount in controversy requirement.
An analysis of Plaintiff's Amended Complaint reveals that Plaintiff did place in controversy Defendant's right to future profits under the dealership. In its Amended Complaint, Plaintiff seeks a declaration that it has not violated the Wisconsin Fair Dealership Law. A dealer may bring an action under the Wisconsin Fair Dealership Law upon receipt of a written notice of termination or substantial change in competitive circumstances that does not conform with the Wisconsin Fair Dealership Law. Les Moise, Inc. v. Rossignol Ski. Co., 361 N.W.2d 653 (Wis. 1985). Therefore, a determination of whether Plaintiff has violated the Wisconsin Fair Dealership Law requires an analysis of Plaintiff's written notices to Defendant threatening termination and/or creating a substantial change in the competitive circumstances of the parties' dealership relationship. Should any of these written notices fail to conform with the Wisconsin Fair Dealership Law, Defendant would likely be able to obtain injunctive relief, barring Plaintiff from terminating the dealership relationship for some indefinite amount of time. Wis. Stat. § 135.06. The possibility of such relief necessarily places in question Defendant's right to future dealing and profits under the dealership relationship.
Because Defendant's right to future dealing and profits under the dealership relationship are in question, the court must determine whether such future dealing and profits enable Defendant to meet its burden of demonstrating that Plaintiff's claims meet the amount in controversy requirement. Using Defendant to meet its burden of demonstrating that Plaintiff's claims meet the amount in controversy requirement. Using Defendant's past sales performances — approximately $115,000 in gross profits from the sale of Plaintiff's machines in the year 2000 alone — as an indicator of its future profits, the court finds that Defendant has met its burden with regard to the amount in controversy. Accordingly, diversity jurisdiction exists over Plaintiff's claims and remand is improper.
CONCLUSION
For the foregoing reasons, the court will deny Plaintiff's motion to remand.
The court will address in a forthcoming memorandum opinion and order Defendant's motion to transfer to the United States District Court for the Eastern District of Wisconsin unless otherwise advised that issue has become moot.
An order in accordance with this memorandum opinion shall be entered contemporaneously herewith.