The Bachman Co. v. Macdonald

Decision Date09 April 2001
Docket NumberNo. CIV. A. 00-5382.,CIV. A. 00-5382.
Citation173 F.Supp.2d 318
PartiesTHE BACHMAN COMPANY, Plaintiff, v. John C. MACDONALD, d/b/a Bachman of Bloomfield, Defendant.
CourtU.S. District Court — Eastern District of Pennsylvania

G. Thompson Bell, III, Stevens and Lee, Reading, PA, Jeffrey D. Bukowski, Stevens & Lee, P.C., Reading, PA, for plaintiff.

John C. MacDonald, East Windsor, CT, pro se.

MEMORANDUM

ROBERT F. KELLY, District Judge.

Defendant John C. MacDonald, d/b/a Bachman of Bloomfield ("Mr. MacDonald" or "Bloomfield Bachman") removed the Action for Declaratory Judgment filed by Plaintiff, The Bachman Company, from the Court of Common Pleas of Berks County, Pennsylvania, to the United States District Court for the Eastern District of Pennsylvania pursuant to 28 U.S.C. sections 1441 and 1446(a).1 Presently before this Court is The Bachman Company's Motion to Remand to State Court and Mr. MacDonald's opposition thereto in addition to Mr. MacDonald's Motion to Dismiss for Improper Venue, or in the Alternative, Transfer to the U.S. District Court, District of Connecticut. For the reasons set forth below, The Bachman Company's Motion to Remand is granted and Mr. MacDonald's Motion to Dismiss is denied as moot.

I. Factual Background

On or about June 15, 1984, Mr. MacDonald, sole proprietor of Bachman of Bloomfield located in East Windsor, Connecticut, entered into a perpetuity "wholesale agreement" contract ("Wholesaler Agreement") with The Bachman Company, a Pennsylvania snack food manufacturer. (Def.'s Mot. Dismiss, or in the Alternative, to Transfer at 2.) The Wholesaler Agreement provides Mr. MacDonald with the exclusive distribution rights within the sales distribution territory of Northern Connecticut and Western Massachusetts.2 (Id.) On September 25, 2000, in the Court of Common Pleas of Berks County, Pennsylvania, The Bachman Company instituted an Action for Declaratory Judgment regarding the price it is required to pay Mr. MacDonald for the repurchase of certain distribution rights pursuant to Paragraph 12.1 of the Wholesaler Agreement.3 (Pl.'s Mem. Law Supp. Mot. Remand State Ct. at 1.) Specifically, The Bachman Company's "declaratory judgment action arises from Bachman's exercise of its right to repurchase [Mr.] MacDonald's Wholesale Distribution Rights to the 7-Eleven, Sam's Club, BJ's Wholesale Club, and Costco stores in his Sales Area, as provided in Paragraph 12.1 of the parties' Wholesaler Agreement."4 (Id. at 5.)

On October 24, 2000, pursuant to 28 U.S.C. sections 1441 and 1446(a), Mr. MacDonald removed The Bachman Company's action for declaratory relief from the Court of Common Pleas of Berks County, Pennsylvania, to this Court.5 (Id. at 1; see also Def.'s Mot. of Removal.) In his Notice of Removal, Mr. MacDonald asserted that this Court has original jurisdiction over the case based on diversity jurisdiction, 28 U.S.C. section 1332.6 (Def.'s Opp'n Br. Remand to State Ct., Ex. B. (Notice of Removal.)) Mr. MacDonald states that this Court has jurisdiction based on 28 U.S.C. section 1332 because complete diversity of citizenship exists between the parties and the matter in controversy exceeds $75,000. (Id.)

On December 18, 2000, Mr. MacDonald filed a Motion to Dismiss [The Bachman Company's Declaratory Action] for Improper Venue, or in the Alternative, Transfer to the U.S. District Court, District of Connecticut. (See Def.'s Mot. Dismiss, or in Alternative, to Transfer.) On January 19, 2001, The Bachman Company filed the instant Motion to Remand to State Court. (See Pl.'s Mot. Remand State Ct.) The Bachman Company premises its Motion to Remand on the basis that this Court lacks subject matter jurisdiction over the removed diversity action because Mr. MacDonald fails to prove that the amount in controversy exceeds $75,000. (Pl.'s Mem. Law Supp. Mot. Remand State Ct. at 1.)

II. Standard

In general, a party is able to remove a civil action filed in state court to federal court if the federal court would have had original jurisdiction to hear the matter. Lumbermans Mut. Cas. Co. v. Fishman, No. 99-0929, 1999 WL 744016, at *1 (E.D.Pa. Sept.22, 1999) (citing 28 U.S.C. § 1441(b) (1999); Boyer v. Snap-On Tools Corp., 913 F.2d 108, 111 (3d Cir.1990), cert. denied, 498 U.S. 1085, 111 S.Ct. 959, 112 L.Ed.2d 1046 (1991)). Once the case has been removed, however, "the federal court may remand if there has been a procedural defect in removal." Kimmel v. DeGasperi, No. 00-143, 2000 WL 420639, at *1 (E.D.Pa. Apr.7, 2000) (citing 28 U.S.C. § 1447(c) (West 1994)). Remand is mandatory if the court determines that it lacks federal subject matter jurisdiction. Id. (citing 28 U.S.C. § 1447(c) (West 1994)). "When a case is removed from state court, the removing party bears the burden of proving the existence of federal subject matter jurisdiction." Id. (citing Boyer, 913 F.2d at 111). Upon a motion to remand, it is the removing party's burden to prove the propriety of removal, and any doubts about the existence of federal jurisdiction must be resolved in favor of remand. Lumbermans, 1999 WL 744016, at *1 (citing Batoff v. State Farm Ins. Co., 977 F.2d 848, 851 (3d Cir.1992); Indep. Mach. Co. v. Int'l Tray Pads & Packaging, Inc., 991 F.Supp. 687 (D.N.J. Jan.5, 1998)). Removal statutes are strictly construed by Courts and all doubts are resolved in favor of remand. Kimmel, 2000 WL 420639, at *1 (citing Boyer, 913 F.2d at 111).

III. DISCUSSION

Mr. MacDonald's Notice of Removal states that this Court has diversity jurisdiction over this controversy based on 28 U.S.C. section 1332. (See Notice of Removal.) Under 28 U.S.C. section 1332, this Court has jurisdiction over this case only if the parties are of diverse citizenship and the amount in controversy exceeds $75,000, exclusive of interest and costs. 28 U.S.C. § 1332(a)(1). While it is undisputed that complete diversity of citizenship exists among the parties, the question before this Court is whether Mr. MacDonald has established that the amount in controversy exceeds $75,000. In its Motion to Remand to State Court, The Bachman Company argues that remand is proper in this case because the Court lacks subject matter jurisdiction since "Mr. MacDonald has failed to establish that the amount in controversy exceeds $75,000." (Pl.'s Mot. Remand State Ct. at 1.) The Bachman Company specifically argues that Mr. MacDonald has failed to establish the requisite amount in controversy, because his calculations of the amount in controversy are based on outdated, irrelevant and unverified data. (Id. at 5.)

A. Mr. MacDonald's Burden in Removal

As the party asserting jurisdiction, Mr. MacDonald bears the burden of establishing that the matter is properly before this Court. As mentioned earlier, in removal actions, all doubts regarding jurisdiction should be resolved in favor of remand. See supra section II. In determining whether the requisite jurisdictional amount has been met, the court must first look to the complaint. Johnson v. Costco Wholesale, No. 99-3576, 1999 WL 740690 at *2 (E.D.Pa. Sept.22, 1999) (citing Angus v. Shiley, Inc., 989 F.2d 142, 145 (3d Cir. 1993)). "If the complaint does not contain a demand for an exact monetary amount, however, the court must make an independent appraisal of the claim and `after a generous reading of the complaint, arrive at the reasonable value of the rights being litigated.'" Id. at *2 (quoting Feldman v. New York Life Ins. Co., No. CIV.A.97-4684, 1998 WL 94800, at *3 (E.D.Pa. Mar.4, 1998); Angus, 989 F.2d at 146). Such appraisal is required to include the reasonable value of potential compensatory and punitive damages. Id. (citing Angus, 989 F.2d at 145-46). In assessing the amount in controversy, the court may also look to the Notice of Removal, stipulations and discovery evidence such as depositions, affidavits, and other documentation that is relevant to the value of the claims at issue. Id. (citing Mangano v. Halina, No. CIV.A.97-1678, 1997 WL 697952, at *5 (E.D.Pa. Nov.3, 1997)); See also Irving v. Allstate Indemnity Co., 97 F.Supp.2d 653, 654 (E.D.Pa. May 3, 2000) (citing Meritcare Inc. v. St. Paul Mercury Ins. Co., 166 F.3d 214, 222 (3d Cir.1999)).

The United States Court of Appeals for the Third Circuit ("Third Circuit") has not delineated a precise burden that applies to removing defendants in cases where he or she must show that the amount in controversy exceeds the jurisdictional amount. Burkhardt v. Contemporary Services Corp., No. 98-2911, 1998 WL 464914, at *2 (E.D.Pa. Aug.7, 1998) (citing Neff v. Gen. Motors Corp., 163 F.R.D. 478, 481 (E.D.Pa.1995)). As a result, "[c]ourts have imposed three different burdens on removing defendants that require them to show that the amount in controversy is greater than the jurisdictional amount." Id. at *2. The burden on removing defendants has been defined in the following ways:

(1) defendant must prove to a `legal certainty' that plaintiff could ... recover more than $75,000,7 Morris v. Brandeis Univ., No 99-2642, 1999 WL 817723, at *3 (E.D.Pa. Oct.8, 1999); (2) defendant must show that the claim exceeds the amount in controversy requirement by a preponderance of the evidence, Werwinski v. Ford Motor Co., No. 00-943, 2000 WL 375260, at *1 (E.D.Pa. Apr.11, 2000); (3) defendant need only demonstrate a reasonable probability that the amount in controversy meets the jurisdictional amount. Int'l Fleet Auto Sales v. Nat'l Auto Credit, No. 97-1675, 1999 WL 95258 (E.D.Pa. Feb.22, 1999).

Irving, 97 F.Supp.2d at 655. In the instant action, Mr. MacDonald argues that the preponderance of the evidence standard applies, while The Bachman Company argues that the legal certainty standard should apply. (Def.'s Opp'n Br. Pl.'s Mot. Remand State Ct. at 3; Pl.'s Mem. Law Supp. Mot. Remand State Ct. at 4.) Although the Third Circuit has not clarified which standard a defendant must employ to meet its burden, Mr. MacDonald fails to prove the requisite jurisdictional amount under any of the three (3) possible...

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