Luna v. Kemira Specialty, Inc.

• Decision Date: 11 September 2008
• Docket Number: Case No. CV 08-04908 MMM (JCx).
• Citation: 575 F.Supp.2d 1166
• Court: U.S. District Court — Central District of California
• Parties: John S. LUNA, Plaintiff, v. KEMIRA SPECIALTY, INC., a New Jersey corporation, formerly known as Tri-K Industries, Inc.; and Does 1 through 10, inclusive, Defendants.

575 F.Supp.2d 1166

John S. LUNA, Plaintiff, v. KEMIRA SPECIALTY, INC., a New Jersey corporation, formerly known as Tri-K Industries, Inc.; and Does 1 through 10, inclusive, Defendants.

Case No. CV 08-04908 MMM (JCx).

United States District Court, C.D. California.

September 11, 2008.

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COPYRIGHT MATERIAL OMITTED

Brandon Charles Murphy, James G. Morris, Le'Roy T. Roberson, Morris and Associates, Sherman Oaks, CA, for Plaintiff.

Edmund G. Farrell, III, Friedrich W. Seitz, Murchison and Cumming LLP, Los Angeles, CA, Peter J. Pizzi, Connell Foley LLP, Roseland, NJ, for Defendant.

ORDER DENYING PLAINTIFF'S MOTION TO REMAND; GRANTING DEFENDANT'S MOTION TO DISMISS

MARGARET M. MORROW, District Judge.

On June 11, 2008, John S. Luna commenced an action in Los Angeles Superior Court against Kemira Speciality, Inc. ("Kemira"), formerly known as Tri-K Industries, Inc., and certain fictitious defendants. On July 25, 2008, Kemira removed the action to federal court, invoking diversity jurisdiction under 28 U.S.C. § 1332. It filed a motion to stay the case pursuant to 9 U.S.C. § 3, or alternatively, to dismiss, or transfer venue pursuant to 28 U.S.C. § 1404 on August 1. On August 6, 2008, plaintiff filed a motion to remand to state court. This order addresses both of the pending motions.

I. FACTUAL & PROCEDURAL BACKGROUND

A. Plaintiffs Complaint

John S. Luna filed this action in Los Angeles Superior Court on June 11, 2008.¹ Luna is a California resident living in Palmdale, California.² Kemira Speciality, Inc., formerly known as Tri-K Industries, Inc., is incorporated in and has its principal place of business in New Jersey.³ Kemira manufactures and distributes chemicals and other ingredients used to make cosmetics.⁴ Luna was employed by Kemira for 26 years as a commissioned sales representative; his last position with the company was Vice President of West Coast Sales.⁵

The parties' dispute arises out of Luna's employment agreement with Kemira. On March 18, 2005, Tri-K Industries, Inc. entered into a third amended employment agreement with Luna that contained nonsolicitation and non-competition clauses.⁶ The non-competition clause limits Luna's ability to compete with Kemira in order to protect the company's confidential information, trade secrets, customer relations, and overall business prospects.⁷ The contract also contains an arbitration clause, which mandates arbitration of all employment-related disputes "before a single arbitrator in accordance with the National Rules for the Resolution of Employment Disputes of the American Arbitration Association."⁸ The agreement states that the site of any arbitration shall be within Bergen or Essex counties in the state of New Jersey.⁹

On May 27, 2008, Luna resigned from his employment with Kemira.¹⁰ Kemira's representative advised Luna that the company would enforce the one-year noncompetition agreement upon Luna's termination.¹¹ Luna filed this action soon after, asserting that the clause violated California Business and Profession Code § 16600 and constituted an unfair business practice.¹² Luna's complaint seeks an injunction under California Business and Profession Code § 17203(1) preventing enforcement of the covenant not to compete; (2) preventing Kemira from placing similar covenants not to compete in future employment agreements with California employees or persons doing business in California; and (3) prohibiting Kemira and its successors from taking legal action or compelling arbitration against Luna or any other California employee concerning provisions of the employment agreement that prohibit the employees from engaging in competitive activities in California.¹³

B. The Notice of Removal

On July 25, 2008, Kemira removed the action to this court, contending that it fell within the court's diversity jurisdiction under 28 U.S.C. § 1332.¹⁴ Although Luna seeks only injunctive relief, and has not stated a claim for monetary damages, Kemira asserted that the $75,000 amount in controversy requirement was satisfied because "the test for determining the amount in controversy is the pecuniary result to either party which the judgment would directly produce."¹⁵ See In re Ford Motor Co./Citibank (South Dakota), 264 F.3d 952, 958 (9th Cir.2001) (citing Ridder Bros. Inc. v. Blethen, 142 F.2d 395, 399 (9th Cir.1944) (holding that for purposes of calculating amount in controversy, "[t]he value of the thing sought to be accomplished by the action may relate to either or any party to the action")); see also Mangini v. R.J. Reynolds Tobacco Co., 793 F.Supp. 925, 928 (N.D.Cal.1992) ("[I]n non-class action cases, the amount in controversy may be measured either by the value of the relief sought by the plaintiff or the cost to the defendant if the relief is granted" (citations omitted)).

C. Pending Motions and Related Litigation

On August 1, 2008, Kemira filed a motion to stay under 9 U.S.C. § 3. Alternatively, it sought dismissal of the action under Rule 12(b)(6), or transfer of venue pursuant to 28 U.S.C. § 1404(a). Kemira represents that, in response to Luna's complaint, on June 30, 2008, it filed a petition in the United States District Court for the District of New Jersey to compel arbitration in accordance with the arbitration clause in the employment agreement.¹⁶ On August 13, 2008, the district court in New Jersey issued an order compelling arbitration of "all claims asserted by the parties arising out of the non-compete and confidentiality provisions of John S. Luna's employment contract with Tri-K Industries, Inc., and/or Kemira Specialty, Inc."¹⁷

Approximately a week earlier, on August 6, Luna moved to remand this action to state court, arguing that Kemira has failed to show that the amount in controversy exceeds $75,000.

II. DISCUSSION

A. Plaintiff's Motion to Remand

1. Standard Governing Removal to Federal Court Based on Diversity Jurisdiction

Unless expressly excepted by some other federal statute, "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). District courts have original diversity jurisdiction over civil actions between citizens of different states where the matter in controversy exceeds $75,000. Id., § 1332(a). Remand is mandatory "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction." Id., § 1447(c).

The Ninth Circuit "strictly construe[s] the removal statute against removal jurisdiction." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992) (citing Boggs v. Lewis, 863 F.2d 662, 663 (9th Cir.1988), and Takeda v. Northwestern Nat'l Life Ins. Co., 765 F.2d 815, 818 (9th Cir.1985)). "The `strong presumption' against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper." Id. (citing Nishimoto v. Federman-Bachrach & Assocs., 903 F.2d 709, 712 n. 3 (9th Cir.1990), and Emrich v. Touche Ross & Co., 846 F.2d 1190, 1195 (9th Cir.1988)); Befitel v. Global Horizons, Inc., 461 F.Supp.2d 1218, 1221 (D.Haw.2006) ("In diversity cases, the burden of proving all jurisdictional facts rests on the party seeking jurisdiction," citing Kanter v. Warner-Lambert Co., 265 F.3d 853, 857-58 (9th Cir.2001)). Where the complaint does not identify the amount of damages sought, the removing defendant has the burden of proving that the amount in controversy requirement is met. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir.1996) ("[W]e hold that in cases where a plaintiffs state court complaint does not specify a particular amount of damages, the removing defendant bears the burden of establishing, by a preponderance of the evidence, that the amount in controversy exceeds [the jurisdictional amount]"). If there is any doubt regarding the existence of federal jurisdiction, the court must resolve those doubts in favor of remanding the action to state court. Gaus, 980 F.2d at 566 ("[f]ederal jurisdiction must be rejected if there is any doubt as to the right of removal in the first instance," citing Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir.1979)); Befitel, 461 F.Supp.2d at 1221 ("Diversity jurisdiction is to be strictly construed and any doubts are to be resolved in favor of remand to the state court" (citations omitted)).

2. Whether Defendant Has Satisfied the Amount in Controversy Requirement

Where a lawsuit seeks 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. Washington State Apple Advertising Comm'n, 432 U.S. 333, 347, 97 S.Ct. 2434, 53 L.Ed.2d 383 (1977); International Padi, Inc. v. Diverlink, No. 03-56478, ___ Fed.Appx. ___, ___, 2005 WL 1635347, *1 (9th Cir. July 13, 2005) (Unpub. Disp.) ("[I]n determining the amount in controversy, we may also include the value of the requested injunctive relief to either party" (citation omitted)); In re Ford Motor Co./Citibank (South Dakota), 264 F.3d at 958 ("In Sanchez, we observed en banc that `Ridder . . . rejected the "plaintiff-viewpoint" rule, which states that courts attempting to determine the value of a claim for purposes of the amount in controversy requirement should look only to the benefit to the plaintiff, rather than to the potential loss to the defendant,'" quoting Sanchez, 102 F.3d at 405 n. 6).

"The value of an injunction may not be capable of precise determination, but precision is not required." Mailwaukee Mailing, Shipment and Equipment, Inc. v. Neopost, Inc., 259 F.Supp.2d 769, 772 (E.D.Wis.2003) (citing Hedberg v. State Farm Mut. Auto. Ins. Co., 350 F.2d 924, 929 (8th Cir.1965) ("[A]lthough injury in an injunction suit may not be capable of exact valuation in money, this...