Opinion
Case No. SACV 04-1477-JVS(JTLx).
April 1, 2005
Minute Order re Plaintiffs' Motion to Remand and For Attorneys' Fees
Pursuant to 28 U.S.C. §§ 1441(c) and 1447(c), plaintiffs Troy Group, Inc. ("Troy"), Patrick J. Dirk and Brian P. Dirk (collectively, "Troy Parties"), have filed the instant motion to remand this action to the Superior Court of California for the County of Orange and for attorneys' fees. The Troy Parties bring this motion on the ground that Defendant Whitney Tilson ("Tilson") has failed to meet his burden of showing that the amount in controversy exceeds $75,000 exclusive of interest and costs. The Court denies the motion.
Legal Standard
Under 28 U.S.C. § 1441(a), a defendant may remove a civil action from state court to federal court so long as original jurisdiction would lie in the court to which the action is removed. City of Chicago v. Int'l College of Surgeons, 522 U.S. 156, 163 (1997). Where removal is based on diversity, as it is here, the matter in controversy must exceed $75,000, exclusive of interest and costs, and the citizenship of the plaintiff must differ from that of all the defendants. 28 U.S.C. § 1332. "In measuring the amount in controversy, the court must assume that the allegations in the complaint are true and assume that a jury will return a verdict for the plaintiff on all claims made in the complaint." Kenneth Rothschild Trust v. Morgan Stanley Dean Witter, 199 F. Supp. 2d 993, 1001 (C.D. Cal. 2002) (quotation omitted).
According to the Ninth Circuit, courts should "strictly construe the removal statute against removal jurisdiction." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). Doubts as to removability should be resolved in favor of remanding the case to the state court. Id. This "'strong presumption' against removal jurisdiction means that the defendant always has the burden of establishing that removal is proper." Id. (quoting Nishimoto v. Federman-Bachrach Assocs., 903 F.2d 709, 712 n. 3 (9th Cir. 1990)). If the amount in controversy is not clear on the face of the complaint, the defendant must "actually prov[e] facts to support jurisdiction, including the jurisdictional amount," by a "preponderance of the evidence." Id. at 567; accord Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996);Littel v. Bridgestone/Firestone, Inc., 259 F. Supp. 2d 1016, 1020 (C.D. Cal. 2003).
"Under this burden, the defendant must provide evidence establishing that it is more likely than not that the amount in controversy exceeds" $75,000. Sanchez, 102 F.3d at 404 (internal quotation marks omitted). A defendant may accomplish this showing through the submission of summary-judgment-type evidence, Matheson v. Progressive Specialty Ins. Co., 319 F.3d 1089, 1090 (9th Cir. 2003). Conclusory allegations and speculative assertions, however, are insufficient. See, e.g., Matheson, 319 F.3d at 1090-91; Conrad Assocs. v. Hartford Accident Indem. Co., 994 F. Supp. 1196, 1198 (N.D. Cal. 1998).
While the "underlying facts" supporting the existence of diversity jurisdiction, including the amount in controversy, must be included in the notice of removal, Gaus, 980 F.2d at 567, courts may permit a defendant to offer evidence supporting these facts in its opposition to a motion for remand. See Cohn v. Petsmart, Inc., 281 F.3d 837, 840 n. 1 (9th Cir. 2002) (concluding that the district court "did not err in construing [defendant's] opposition as an amendment to its notice of removal"); see also Willingham v. Morgan, 395 U.S. 402, 407 n. 3 (1969) (stating that "it is proper to treat the removal petition as if it had been amended to include the relevant information contained in the later filed affidavits").
Discussion
Tilson has, by a preponderance of the evidence, satisfied his burden to show that, if the Troy Parties succeed on their claims, "it is more likely than not" that they will recover a sum in excess of $75,000. Sanchez, 102 F.3d at 404. In deciding this motion, the Court considered the underlying facts Tilson sets forth in his Notice of Removal, as well as the more detailed "summary-judgmenttype" evidence they provided in his Opposition to this motion, which the Court deems an amendment to their Notice of Removal. Cohn, 281 F.3d at 840 n. 1.
The Court finds that Tilson's Notice of Removal satisfies 28 U.S.C. 1446, which requires only a "short and plain statement of the grounds for removal." Unlike the decisions that the Troy Parties cite finding notices of removal insufficient, the Tilson did not baldly assert, without any justification, that the amount in controversy exceeds $75,000. See, e.g., Gaus, 980 F.2d at 567 (finding allegation that "the matter in current controversy . . . exceeds" the jurisdictional amount, without any supporting facts, insufficient).
In computing the amount in controversy, a court considers all compensatory and punitive damages that a plaintiff would receive if the allegations in its complaint were true. See Surber v. Reliance Nat'l Indem. Co., 110 F. Supp. 2d 1227, 1232 (N.D. Cal. 2000) (including attorneys fees and punitive damages along with compensatory damages in its calculation of the amount in controversy). Here, Tilson contends that, if the allegations in the Troy Parties' complaint are taken as true, it is more likely than not that their compensatory and punitive damages will exceed $75,000 for two reasons: "(1) Patrick J. Dirk and Brian P. Dirk are wealthy, well-compensated individuals, and Troy is a profitable public corporation, so their alleged damages under applicable law would almost certainly exceed the jurisdictional amount; and (2) courts and juries in analogous defamation cases have routinely found both compensatory and punitive damages far in excess of the jurisdictional amount." (Opp'n, p. 10.)
In their Reply, the Troy Parties assert that this Court should reject this argument as inconsistent with Tilson's position in his concurrently pending motions to dismiss and strike. In those motions, Tilson argues that the Troy Parties cannot prove special damages because Tilson sent his email only to four people, while, here, he contends that Troy, Patrick J. Dirk and Brian P. Dirk each suffered special damages in excess of $75,000. The Court, however, disagrees that Tilson's arguments are inconsistent. In this motion, Tilson must assume that the Troy Parties are able to recover special damages and, with this assumption in mind, present evidence that these damages would exceed $75,000. In his motions to strike and dismiss, on the other hand, Tilson need not make this assumption and, therefore, can argue that the Troy Parties will not even be able to recover special damages.
Tilson advances several arguments in connection with the first reason. As to Troy, in light of the evidence presented, the Court finds one argument most persuasive: Tilson's contention that lost business opportunities and revenues will exceed $75,000. In order to obtain damages for lost business opportunities and revenues, Troy must establish a causal connection between the alleged defamation and the losses suffered. Jensen v. Hewlett-Packard Co., 14 Cal.App.4th 958, 972 n. 15 (1993). In light of the fact that Troy's most recently reported revenues exceeded $56 million and most recent calculation of assets topped $34 million (Declaration of Jeffrey M. Rosenfeld, ¶¶ 2, 4 Exhs. A, at 23, C, at 3), it is clear that, unless these damages are well above $75,000, they would be too insignificant to support any reliable causal connection. Any damages below the jurisdictional amount could simply represent a mere statistical fluctuation in Troy's revenues. Accordingly, the Court agrees with Tilson that, if Troy succeeds in establishing a causal connection between the defamation and lost business opportunities and revenues, it is more likely than not that the damages would exceed $75,000.
The Court also finds that, if the Troy Parties succeed, Patrick J. Dirk and Brian P. Dirk will recover damages in excess of $75,000. According to the Complaint, Patrick J. Dirk and Brian P. Dirk have both "enjoyed a good reputation for personal integrity, both generally and in his occupation." (Declaration of Valerie M. Wagner, Ex. A, Complaint, ¶¶ 2,3.) The Complaint further alleges that Tilson's September 8 email "clearly exposes Plaintiffs to hatred, contempt, ridicule, and obloquy because it charges them with commission of a crime, and because it has a tendency to injure them in their occupations because it falsely imputes dishonesty to them." (Id., ¶ 13.) In light of these allegations and Patrick J. Dirk's and Brian P. Dirk's positions as highly paid executives, and prominent members of the business community, the Court finds that, if they succeed on their claims, they will, more likely than not, each recover damages for loss or reputation, shame, mortification and hurt feelings and lost business opportunities and revenues in excess of $75,000. Accordingly, the Court finds that Tilson has satisfied his burden of proving, by a preponderance of the evidence, that Patrick J. Dirk's and Brian P. Dirk's claims each satisfy the amount in controversy.
Based on the foregoing, the Court denies the Troy Parties' motion to remand this action to the Superior Court of California for the County of Orange. In addition, because the Court has denied the Troy Parties' motion to remand, the Court also denies the Troy Parties' related request for attorneys' fees.
In light of the Court's finding that the amount in controversy has been met under the arguments Tilson advanced under his first reason, the Court declines to address those presented in the context of his second reason, i.e., that damages in this case would be greater than $75,000 because courts and juries in analogous defamation cases routinely award compensatory and punitive damages that far exceed the jurisdictional amount.