Scouten v. Mnl-fts LLC, 09 C 7387.

• Court: United States District Courts. 7th Circuit. United States District Court (Northern District of Illinois)
• Writing for the Court: RUBEN CASTILLO
• Citation: 708 F.Supp.2d 729
• Parties: Charles SCOUTEN, Plaintiff,v.MNL-FTS, LLC, a Missouri limited liability company, formerly know as my neurolab.com, LLC, Defendant.
• Docket Number: No. 09 C 7387.,09 C 7387.
• Decision Date: 26 April 2010

708 F.Supp.2d 729

Charles SCOUTEN, Plaintiff,
v.
MNL-FTS, LLC, a Missouri limited liability company, formerly know as my neurolab.com, LLC, Defendant.

No. 09 C 7387.

United States District Court,
N.D. Illinois,
Eastern Division.

April 26, 2010.

708 F.Supp.2d 730

James L. Poznak, Poznak Law Firm, LTD., Oak Brook, IL, for Plaintiff.

Charles C. Bletsas, Stamos & Trucco, Jason Ayres Parson, Anderson, Rasor & Partners, LLP, Chicago, IL, for Defendant. MEMORANDUM OPINION AND ORDERRUBEN CASTILLO, District Judge.

Charles Scouten (“Plaintiff”), filed his complaint in the Circuit Court of DuPage County against MNL-FTS, LLC (“Defendant”) alleging that “contrary to proper and customary accounting principles, [Defendant] knowingly and intentionally misallocated material items of its income and expenses” and “entered those improper allocations into its accounting records.” (R. 1, Notice of Removal, Ex. A, Compl. at 1.) On November 24, 2009, Defendant removed the case to this Court pursuant to 28 U.S.C. § 1441(a). (R. 1, Notice of Removal.) Presently before the Court is Plaintiff's motion to remand. (R. 9, Mot. to Remand.) For the reasons stated below, Plaintiff's motion is denied.

RELEVANT FACTS

Defendant is a Missouri limited liability company, formerly known as My Neurolab.com, LLC, that sells biomedical research instruments. (R. 1, Notice of Removal, Ex. A, Compl.¶ 5(a).) Plaintiff, an Illinois resident, was employed by Defendant from November 20, 2000 until May 14, 2008. ( Id. ¶ 6.) He was responsible for inventing, identifying, and supervising the manufacture of Defendant's products. ( Id.)

The terms and conditions of Plaintiff's employment were set forth in a written employment agreement (the “Agreement”). ( Id. ¶ 11.) Under the Equity Buyback provision of the Agreement, if Plaintiff was terminated without cause, Defendant would repurchase at fair market value any equity interest Plaintiff held in the company or any other related entity. (R. 1, Notice of Removal, Ex. 1, Agreement ¶ 4.4.) “Fair market value” was defined as “five (5) times the average

708 F.Supp.2d 731

net income of [Defendant] (or such other related entity, as the case may be) for the past three (3) fiscal years.” ( Id.) “Net income” was defined as Defendant's “operating income without considering adjustments for payments made to any related entity as a result of excessive corporate overhead allocations.” ( Id.) The Agreement also provided that “[i]n the event of any disagreement with respect to such payments/allocations, a mutually agreeable third party accountant shall review the books of said company and determine whether the proposed expense is appropriate under the terms hereof.” ( Id.) Further, the Agreement was to be governed by Missouri law and provided that if it became necessary for any of the parties to employ an attorney to enforce its terms, the prevailing party in any such action or proceeding shall be entitled to recover costs or attorneys fees. (R. 1, Notice of Removal, Ex. A, Compl. ¶¶ 45, 48.)

On May 14, 2008, Defendant terminated Plaintiff's employment in a written letter that acknowledged Defendant's obligation under the Equity Buyback provision. ( Id., Ex.¶¶ 13, 15.) On November 10, 2008, Defendant delivered its accounting records to Plaintiff and informed him that the company would pay him $16,573 for his equity interest based on the company's average net income. ( Id. ¶¶ 26-27.) Plaintiff alleges that Defendant “entered [i]mproper [a]llocations into its accounting and bookkeeping records” which “materially understate its true net income.” ( Id. ¶¶ 22-24.) In Plaintiff's view, the actual amount he is owed “based on [Defendant]'s true average net income is at least $1,638,883.” ( Id. ¶ 28.)

On October 5, 2009, Plaintiff filed his complaint in the Circuit Court of DuPage County. (R. 1, Notice of Removal, Ex. A, Compl.) As relief, Plaintiff seeks the following: (1) an order directing Defendant to provide him with an accounting sufficient to enable him “to determine the true amount [of his] equity interest”; (2) an order to declare that either the conditions under the Equity Buyback provision for a review by a third party accountant “have not arisen” or that such a review “would fail [ ] its essential purpose, and is therefore [ ] not required”; and (3) an order requiring Defendant to pay him $1,638,883 for his equity interest “or such larger amount as proven at trial” and his...