Total Quality Logistics, LLC v. All. Shippers, Inc.

• Decision Date: 15 June 2020
• Docket Number: Case No. 1:19-cv-1052
• Parties: TOTAL QUALITY LOGISTICS, LLC, Plaintiff, v. ALLIANCE SHIPPERS, INC., et al., Defendants.
• Court: U.S. District Court — Southern District of Ohio

TOTAL QUALITY LOGISTICS, LLC, Plaintiff, v. ALLIANCE SHIPPERS, INC., et al., Defendants.

Case No. 1:19-cv-1052

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF OHIO WESTERN DIVISION

June 15, 2020

Judge Timothy S. Black

ORDER DENYING PLAINTIFF'S MOTION TO REMAND (Doc. 8)

This civil case is before the Court on Plaintiff Total Quality Logistics, LLC ("TQL")'s motion to remand (Doc. 8) and the parties' responsive memoranda (Docs. 10, 11). For the reasons stated below, Plaintiff's motion is denied.

I. BACKGROUND

TQL, a freight brokerage and third-party logistics company, filed the instant action in the Clermont County Court of Common Pleas against former employee, James Rehak, and his new employer, Alliance Shippers, Inc. ("Alliance Shippers"), alleging that Rehak violated his non-compete agreement with TQL by leaving to work for Alliance Shippers—a competitor. (Doc. 3 at 2-3). The complaint seeks damages and preliminary and permanent injunctive relief, alleging breach of contract claims against Rehak, misappropriation of trade secrets against Rehak and Alliance Shippers, and tortious interference with a contract against Alliance Shippers. (Id. at ¶¶ 39-67).

On December 11, 2019, Defendant Alliance Shippers, with the consent of Rehak, removed the case to this Court on the basis of diversity jurisdiction pursuant to 28 U.S.C. §§ 1332, 1441, and 1446. (Doc. 1). Following removal, Plaintiff filed an amended complaint limiting the damages sought to less than $75,000 (Doc. 6) and moved to remand on the basis that the amended complaint clarifies that the amount in controversy does not exceed the jurisdictional threshold. (Doc. 8).

Plaintiff's original complaint states separately for Count 1 (breach of contract), Count 3 (misappropriation of trade secrets), and Count 4 (tortious interference with a contract) that TQL seeks "damages in an amount to be determined at trial in excess of $25,000."¹ (Doc. 3 at ¶¶ 45, 61, 67). The prayer for relief repeats that TQL seeks compensatory damages "in an amount in excess of $25,000" for each of Counts 1, 3, and 4. (Id. at 13).

Plaintiff's amended complaint states generally that "the amount in controversy exceeds $25,000 but is not greater than $75,000 inclusive of compensatory damages, punitive damages, attorney's fees, and injunctive relief." (Doc. 6 at ¶ 13) (emphasis added). The amended complaint repeats under Counts 1, 3, and 4 that "TQL has suffered past and future damages in an amount to be determined at trial in excess of $25,000 but not more than $75,000." (Id. at ¶¶ 45, 61, 67). At the close of the amended complaint, the prayer for relief reiterates TQL's request for compensatory damages "in excess of $25,000 but not more than $75,000, inclusive of any award of punitive damages,attorney's fees and injunctive relief" and similarly requests punitive damages "in an amount of not more than $75,000, inclusive of any award of compensatory damages, attorney's fees, and injunctive relief." (Id. at 13).

II. ANALYSIS

Federal district courts have original jurisdiction over "all civil actions where the matter in controversy exceeds the sum or value of $75,000, exclusive of interest and costs," and is between citizens of different states. 28 U.S.C. § 1332(a)(1). A party may remove an action from state court when the federal court to which the action is removed would otherwise have had original jurisdiction. 28 U.S.C. § 1441(a). When a plaintiff's complaint seeks an unspecified amount of damages, the removing party has the burden of establishing that the amount in controversy requirement is met by a preponderance of the evidence. Halsey v. AGCO Corp., 755 F. App'x 524, 526 (6th Cir. 2018). "[T]he removal statute should be strictly construed and all doubts resolved in favor of remand." Shupe v. Asplundh Tree Expert Co., 566 F. App'x 476, 478 (6th Cir. 2014) (quoting Eastman v. Marine Mech. Corp., 438 F.3d 544, 550 (6th Cir. 2006)).

A. Plaintiff's attempt to limit damages

Because the plaintiff is considered the master of his complaint, "the general rule is that the amount claimed by a plaintiff in his complaint determines the amount in controversy." Heyman v. Lincoln Nat'l Life Ins. Co., 781 F. App'x 463, 469 (6th Cir. 2019) (quoting Rosen v. Chrysler Corp., 205 F.3d 918, 920-21 (6th Cir. 2000)). In addition, whether a federal court has jurisdiction is determined at the time of removal. Williamson v. Aetna Life Ins. Co., 481 F.3d 369, 375 (6th Cir. 2007). Thus, ordinarily, "apost-removal stipulation reducing the amount in controversy to below the jurisdictional limit does not require remand to state court." Heyman, 781 F. App'x at 469 (quoting Rogers v. Wal-Mart Stores, Inc., 230 F.3d 868, 872 (6th Cir. 2000)).

However, "[a] plaintiff may stipulate [post-removal] to a claim less than the federal jurisdictional amount 'where a plaintiff provides specific information about the amount in controversy for the first time . . . .'" Shupe, 566 F. App'x at 481 (quoting Egan v. Premier Scales & Sys., 237 F. Supp. 2d 774, 778 (W.D. Ky. 2002)). This is in recognition that certain states, including Ohio, do not permit plaintiffs to include a specific claim for damages in the complaint. See Ohio Civ. R. 8(A) ("If the party seeks more than twenty-five thousand dollars, the party shall so state in the pleadings but shall not specify in the demand for judgment the amount of recovery sought . . . .").

Accordingly, when a plaintiff stipulates to less than the jurisdictional amount after removal, and when that stipulation is the first specific piece of information concerning the amount of controversy, courts consider such a stipulation to be a clarification rather than a reduction of the amount of recovery sought. Heyman, 781 F. App'x at 469-70 (citing Egan, 237 F. Supp. 2d at 778). Yet, "only unequivocal statement[s] and stipulation[s] limiting damages will serve this purpose." Shupe, 566 F. App'x at 481 (quoting Egan, 237 F. Supp. 2d at 778). "An actual limitation on the amount of a potential judgment is essential to any such stipulation." Id.

In the instant case, Plaintiff seeks remand based on its amended complaint, which it claims provides specific information regarding damages for the first time and clarifies that the damages sought are less than $75,000, inclusive of compensatory damages,punitive damages, injunctive relief, and attorney's fees. (Doc. 8 at 5). In response, Defendants argue that the amended complaint is not the first instance in which Plaintiff has provided specific information concerning the amount of damages sought. Defendants point to a statement by TQL contained in a brief filed in a prior lawsuit involving TQL and Alliance Shippers that Rehak generated at least $74,098 in profit after moving to Alliance Shippers. (Doc. 10 at 4). In light of Plaintiff's prior statement, combined with the fact that Plaintiff is seeking injunctive relief and punitive damages, Defendants' position is that Plaintiff's amended complaint impermissibly seeks to change the amount of damages sought rather than to clarify damages for the first time. (Id. at 5). However, Plaintiff's attempt to remand fails for a more fundamental reason—Plaintiff's amended complaint does not constitute an unequivocal limitation on damages.

In Heyman, the Sixth Circuit, in an unpublished opinion, found that a plaintiff's complaint requesting damages "not to exceed $75,000" did not constitute an unequivocal limitation on damages because such a statement would not be binding in state court. 781 F. App'x at 469-70. In that case, the complaint stated that plaintiff was seeking "all available damages including an amount of money sufficient to satisfy his claims (not to exceed $75,000) inclusive of pre- and post-judgment interest, attorneys' fees and costs, including the cost of any experts, and any other and further relief as the Court deems appropriate." Id. at 467. In denying the plaintiff's motion to remand, the court reasoned that the statement was not unequivocal, because under Kentucky law, a statement in a complaint limiting damages to less than $75,000 "is insufficient to affirmatively establish that the amount in controversy requirement for diversity jurisdiction cannot be met." Id.at 470 (citing Cook v. Estate of Moore, No. 3:12-cv-485, 2012 WL 5398064, at *1 (W.D. Ky. Nov. 2, 2012)); see also id. at 470 (noting that under Kentucky Rule of Civil Procedure 54.03, "every final judgment shall grant the relief to which the party in whose favor it is rendered is entitled, even if the party has not demanded such relief in his pleadings.") (emphasis added).

Application of Ohio law leads to the same result—the language in Plaintiff's amended complaint does not unequivocally limit damages to below the federal jurisdictional threshold. Like the Kentucky pleading rules, Ohio law prevents a plaintiff from indicating the amount of damages sought in the complaint other than to inform that the amount exceeds the minimum necessary to establish jurisdiction of the state court. See Ohio Civ. R. 8(A) ("If the party seeks more than twenty-five thousand dollars, the party shall so state in the pleadings but shall not specify in the demand for judgment the amount of recovery sought . . . ."). Further, like in Kentucky, Ohio courts may award a plaintiff damages above the amount a plaintiff requested in the complaint. Eversole v. Deutsche Bank Nat'l Trust Co., No. 12-cv-1901, 2012 WL 8887637, at *5 (N.D. Ohio Oct. 16, 2012); Ohio Civ. R. 54(C) ("Except as to a party against whom a judgment is entered by default, every final judgment shall grant the relief to which the party in whose favor it is rendered, even if the party has not demanded the relief in the pleadings.").

Thus, TQL's attempt to cap damages to less than the federal jurisdictional amount by asserting that it seeks "not more than $75,000" inclusive of compensatory damages, punitive damages, attorney's fees, and injunctive relief, would not have its intended effect in state court. (Doc....