Molex Co. v. Andress

• Decision Date: 10 August 2012
• Docket Number: Civil Action No. 5:12–cv–2098–CLS.
• Parties: MOLEX COMPANY, LLC, and Pacific Mining Reagents, Ltd., Plaintiffs, v. Charles ANDRESS, Defendant.
• Court: U.S. District Court — Northern District of Alabama

887 F.Supp.2d 1189

MOLEX COMPANY, LLC, and Pacific Mining Reagents, Ltd., Plaintiffs,

v.Charles ANDRESS, Defendant.

Civil Action No. 5:12–cv–2098–CLS.

United States District Court,

N.D. Alabama,

Northeastern Division.

Aug. 10, 2012.

G. Bartley Loftin, III, Timothy P. Cummins, Bradley Arant Boult Cummings, Huntsville, AL, Scott R. Ast, Scharnhorst Ast & Kennard PC, Kansas City, MO, for Plaintiffs.

Charles M.R. Vethan, Vethan Law Firm PC, Houston, TX, Howard McGriff Belser, III, H. McGriff Belser III, Attorney at Law, Decatur, AL, for Defendant.

MEMORANDUM OPINION AND ORDER

LYNWOOD SMITH, District Judge.

Plaintiffs Molex Company, LLC (“Molex”) and Pacific Mining Reagents, Ltd. (“Pacific”) originally commenced this action in the Circuit Court of Limestone County, Alabama, asserting claims against defendant Charles Andress, a former consultant for plaintiffs, for a temporary restraining order and injunctive relief to redress violations of the Alabama Trade Secrets Act, Ala.Code § 8–27–1 et seq., monetary damages and permanent injunctive relief under that Act, damages for breach of fiduciary duty, and a declaratory judgment that defendant has an obligation to maintain the confidentiality of and refrain from using plaintiffs' confidential and proprietary information. ¹ Defendant removed the case to this court on June 7, 2012, asserting federal jurisdiction based on satisfaction of the requirements of the diversity statute, 28 U.S.C. § 1332.²

The case currently is before this court on the following motions: (1) plaintiffs' motion to remand; ³ (2) defendant's motion to dismiss for lack of jurisdiction, improper venue, insufficient form and service of process, failure to state a claim upon which relief can be granted, and, alternatively, motion to transfer venue; ⁴ (3) defendant's motion to strike Exhibit 1 to plaintiffs' brief in opposition to defendant's motion to dismiss; ⁵ (4) plaintiff's motion for a lift of stay of discovery and to reset an evidentiary hearing on all pending motions; ⁶ and (5) plaintiffs' motion to compel discovery.⁷

I. MOTION TO REMAND

The motion to remand must be considered first, because it addresses this court's subject matter jurisdiction. Federal district courts are tribunals of limited jurisdiction, “ ‘empowered to hear only those cases within the judicial power of the United States as defined by Article III of the Constitution,’ and which have been entrusted to them by a jurisdictional grant authorized by Congress.” University of South Alabama v. The American Tobacco Co., 168 F.3d 405, 409 (11th Cir.1999) (quoting Taylor v. Appleton, 30 F.3d 1365, 1367 (11th Cir.1994)).

Accordingly, an “Article III court must be sure of its own jurisdiction before getting to the merits” of any action. Ortiz v. Fibreboard Corp., 527 U.S. 815, 831, 119 S.Ct. 2295, 144 L.Ed.2d 715 (1999) (citing Steel Co. v. Citizens for a Better Environment, 523 U.S. 83, 88–89, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998)).

A removing defendant bears the burden of proving that federal jurisdiction exists. See, e.g., Leonard v. Enterprise Rent A Car, 279 F.3d 967, 972 (11th Cir.2002); Williams v. Best Buy Co., 269 F.3d 1316, 1319–20 (11th Cir.2001); Kirkland v. Midland Mortgage Co., 243 F.3d 1277, 1281 n. 5 (11th Cir.2001) (“[T]he burden is on the party who sought removal to demonstrate that federal jurisdiction exists.”) (citing Tapscott v. MS Dealer Service Corp., 77 F.3d 1353, 1356 (11th Cir.1996), overruled on other grounds by Cohen v. Office Depot, Inc., 204 F.3d 1069 (11th Cir.2000)).

Further, removal statutes must be construed narrowly, and “all uncertainties as to removal jurisdiction are to be resolved in favor of remand.” Russell Corp. v. American Home Assurance Co., 264 F.3d 1040, 1050 (11th Cir.2001) (citing Burns v. Windsor Insurance Co., 31 F.3d 1092, 1095 (11th Cir.1994)).

Plaintiffs' argument in support of remand is based solely on the assertion that the $75,000 statutory amount in controversy has not been satisfied. See28 U.S.C. § 1332(a) (setting forth the $75,000 minimal jurisdictional amount in controversy).⁸ “When jurisdiction is premised on the diversity of the parties, the district court is obligated to assure itself that the case involves the requisite amount in controversy.” Morrison v. Allstate Indemnity Co., 228 F.3d 1255, 1261 (11th Cir.2000) (citations omitted). Further, the court must focus upon the amount that was in controversy on the date the case was removed from state court. See, e.g., Burns, 31 F.3d at 1097 n. 13 (“Jurisdictional facts are assessed on the basis of plaintiff's complaint as of the time of removal.”) (emphasis in original) (citations omitted); see also, e.g., Leonard, 279 F.3d at 972 (same).

Plaintiffs did not request a specific amount of damages on any of the claims in their complaint.⁹ Therefore, the removing defendant bears the burden of proving that the requisite jurisdictional amount was in controversy on the date of removal because, whenever a plaintiff “fails to specify the total amount of damages demanded” in a state court complaint—either by demanding a specific sum in compensatory damages, but an indefinite amount as punitive damages, or by not designating any amounts at all ( e.g., “compensatory and punitive damages in such amounts as the jury may award”)—then “a defendant seeking removal based on diversity jurisdiction must prove by a preponderance of the evidence that the amount in controversy exceeds the $75,000 jurisdictional requirement.” Leonard, 279 F.3d at 972 (emphasis supplied) (citing Tapscott, 77 F.3d at 1356–57 (“[W]here a plaintiff has made an unspecified demand for damages in state court, a removing defendant must prove by a preponderance of the evidence that the amount in controversy more likely than not exceeds the [$75,000] jurisdictional requirement.”)).

Defendant cannot satisfy his burden through pure speculation, without offering any supporting facts or specific allegations. Lowery v. Alabama Power Co., 483 F.3d 1184, 1209, 1215 (11th Cir.2007). On the other hand, “specific factual allegations establishing jurisdiction and [supporting] them (if challenged by the plaintiff or the court) with evidence combined with reasonable deductions, reasonable inferences, or other reasonable extrapolations” will suffice. Pretka v. Kolter City Plaza II, Inc., 608 F.3d 744, 754 (11th Cir.2010) (bracketed alteration supplied). A removing defendant may offer “a wide range of evidence,” including affidavits, depositions, or other “summary judgment-type evidence” to establish the amount in controversy. Id. at 754–56.

Most of defendant's arguments in support of satisfaction of the amount in controversy are either unpersuasive or premised upon inaccurate interpretations of the law.

In his Amended Notice of Removal, defendant makes two statements about the amount in controversy. First, he states that plaintiffs' complaint “indicates that Plaintiff [sic] seeks monetary relief in excess of $75,000.00 and Defendant herein alleges that the actual amount of damages is in excess of the minimum amount in controversy requirement for diversity jurisdiction pursuant to 28 U.S.C. § 1332.” ¹⁰ Defendant also

affirmatively alleges that the damages sought by Plaintiff exceed the $75,000.00 jurisdictional minimum amount of controversy for diversity and alienage jurisdiction. Plaintiff's “Complaint for Temporary Restraining Order, Preliminary Injunction and Monetary Relief” is attached hereto, and hereby incorporated by reference.... This controversy involves amounts in excess of $100,000.00.¹¹

To support that allegation, defendant references paragraph 12 of plaintiffs' complaint, which states:

Defendant became involved [in] Molex's Frother Product development efforts early on. Molex needed to test and validate its various prototype formulations to measure their performance in mining applications. Defendant is a metallurgist with mining experience, who in the 1990's was employed by one of Molex's customers. Defendant agreed to be a consultant to Molex and, over the years, assisted in the testing verifying and validating the performance of the prototype formulations. Defendant receivedin excess of$100, 000 in exchange for his consulting services.¹²

Plaintiffs aptly point out that their allegations in paragraph 12 do not “relate in any way” to the amount of their damages.¹³ Instead, paragraph 12 only alleges that plaintiffs paid defendant a significant sum for his consulting services, a fact that defendant has not disputed. The amount of defendant's paycheck has nothing to do with how much plaintiffs were harmed by defendant's alleged actions.¹⁴

In his response to plaintiffs' remand motion, defendant also points to paragraph 8 of plaintiffs' complaint, in which plaintiffs state that they spent “hundreds of thousands of dollars” developing the Frother Products. ¹⁵ Defendant asserts that plaintiffs' development costs are “potentially recoverable” in this lawsuit.¹⁶ Defendant relies upon the decision of the former Fifth Circuit Court of Appeals in University Computing Co. v. Lykes–Youngstown Corp., 504 F.2d 518 (5th Cir.1974),¹⁷ where the Court stated that the “reasonable royalty” measure of damages in trade secret cases has sometimes “been taken to mean the difference in costs to the defendant of developing the trade secret on his own, using the actual development costs of the plaintiff as the complete measure of damages.” Id. at 538 (citing Servo Corp. v. General Electric Co., 342 F.2d 993 (4th Cir.1965), cert. denied,383 U.S. 934, 86 S.Ct. 1061, 15 L.Ed.2d 851 (1966)). However, the former Fifth Circuit's opinion in the University Computing case went on to criticize that method because it “simply uses the plaintiff's actual costs, and in our view is frequently inadequate in that it fails to take into account the commercial context in which the misappropriation occurred.” Id. Based upon those statements, the court does not consider plaintiffs' product development costs to be...