J. Marymount, Inc. v. Bayer HealthCare LLC, No. 3:2009cv03110 - Document 31 (N.D. Cal. 2009)
Court Description: AMENDED ORDER GRANTING PLAINTIFF'S MOTION FOR REMAND. Signed by Judge Jeffrey S. White on 12/3/09. (jjo, COURT STAFF) (Filed on 12/3/2009)
Download PDF
<![CDATA[
J. Marymount, Inc. v. Bayer HealthCare LLC Doc. 31 1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 J. MARYMOUNT, INC., d/b/a CORPORATE SEARCH, a California corporation, 10 No. C 09-03110 JSW 11 v. For the Northern District of California United States District Court Plaintiff, 12 13 AMENDED ORDER GRANTING PLAINTIFF’S MOTION FOR REMAND BAYER HEALTHCARE, LLC; and DOES 110, 14 Defendants. / 15 16 Now before this Court is the motion to remand filed by Plaintiff J. Marymount, Inc., dba 17 Corporate Search (“Corporate Search”). Having carefully reviewed the parties’ papers, and 18 considered the relevant legal authority, the Court hereby GRANTS Corporate Search’s motion 19 for remand. 20 BACKGROUND 21 On July 1, 2009, Corporate Search filed suit against Defendant Bayer Healthcare 22 (“Bayer”), in the Superior Court of the State of California for the County of San Francisco. 23 (Notice of Removal, Ex. A (Compl.).) In its complaint, Corporate Search alleges that Bayer 24 failed to pay Corporate Search a referral fee that it was owed. (Id., ¶¶ 22-24.) 25 Corporate Search alleges that since 2002, it had an ongoing business relationship with 26 Bayer, referring potential candidates to Bayer for employment. (Id., ¶ 6.) Corporate Search 27 provided referral services to Bayer pursuant to a standard written fee agreement. (Id., ¶ 7.) 28 On March 18, 2008, Corporate Search referred KY Chan (“Chan”) to Bayer for the position of Senior Director of QA Development & Life Cycle Management at Bayer’s office in Dockets.Justia.com 1 Berkeley, California. (Id., ¶ 11.) Bayer determined that Chan was not a suitable candidate for 2 the position and did not make Chan an offer of employment, Bayer did not pay Corporate 3 Search a referral fee for this unsuccessful referral. (Id.) Two months later, Bayer engaged 4 another search firm for a position of Associate Director QA at Bayer’s office in Emeryville, 5 CA. This search firm referred Chan for that position. Bayer ultimately hired Chan for the 6 position in Emeryville and paid the other search firm a referral fee for this hire. Corporate 7 Search alleges that because they initially referred Chan, that Corporate Search had the right to 8 represent Chan and that Corporate Search should have been paid the referral fee for his hire. 9 (Id., ¶¶ 13, 14.) For the Northern District of California United States District Court 10 Based on these allegations, Corporate Search asserts the following four causes of action 11 against Bayer: (1) breach of contract; (2) fraud; (3) breach of the covenant of good faith and fair 12 dealing; and (4) unfair competition under California Business and Professions Code section 13 17200. (Id., ¶¶ 19-36.) 14 In its prayer for relief, Corporate Search seeks, inter alia, compensatory damages, 15 punitive damages, attorneys’ fees and costs. (Id., at 6.) Although Corporate Search’s complaint 16 does not specify the precise amount of compensatory damages that it is seeking, Corporate 17 Search alleges that Bayer owes it $52,500 for failing to pay the referral fee. (Id., at ¶¶ 22-24.) 18 In a pre-complaint demand letter to Bayer, Corporate Search offered to settle the dispute for 19 $63,000. (Id., at 15.) The $63,000 proposed settlement covered “all claims, attorneys’ fees, 20 costs, punitive damages, and interest due.” (Id.) Corporate Search has not affirmatively 21 declared that it seeks damages of less than $75,000. 22 On July 9, 2009, Bayer removed the case to this Court on the basis of diversity 23 jurisdiction. (Notice of Removal, ¶ 5.) Bayer asserts, relying on the allegations in the 24 Complaint, that the amount in controversy exceeds $75,000, and that there is complete diversity 25 of citizenship between the parties. (Id., at ¶ 6-9.) Corporate Search now moves to remand this 26 action to state court. 27 28 ANALYSIS A. Legal Standards Relevant to Removal Jurisdiction 2 For the Northern District of California United States District Court 1 “[A]ny civil action brought in a State court of which the district courts of the United 2 States have original jurisdiction, may be removed by the defendant . . . to the district court of 3 the United States for the district and division embracing the place where such action is 4 pending.” Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 7-8 (1983) 5 (citation omitted); 28 U.S.C. § 1441. However, federal courts are courts of limited jurisdiction. 6 See, e.g., Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). Accordingly, 7 the burden of establishing federal jurisdiction for purposes of removal is on the party seeking 8 removal, and the removal statute is strictly construed against removal jurisdiction. Valdez v. 9 Allstate Ins. Co., 372 F.3d 1115, 1117 (9th Cir. 2004); Gaus v. Miles, Inc., 980 F.2d 564, 566 10 (9th Cir. 1992) (per curiam). “Federal jurisdiction must be rejected if there is any doubt as to 11 the right of removal in the first instance.” Gaus, 980 F.2d at 566 (citation omitted). 12 In order to remove on the basis of diversity jurisdiction, the action may be removed only 13 if no defendant is a citizen of the same state as any plaintiff and “only if none of the parties in 14 interest properly joined and served as defendants is a citizen of the State in which the action is 15 brought.” 28 U.S.C. § 1441(b); see also 28 U.S.C. § 1332(a)(1). In addition, the removing 16 party “must show that ‘the matter in controversy exceeds the sum or value of $75,000, exclusive 17 of interest and costs.’” Valdez, 372 F.3d at 1116 (quoting 28 U.S.C. § 1332(a)). 18 B. 19 Corporate Search’s Motion to Remand Corporate Search argues that Bayer has failed to meet its burden of establishing 20 diversity jurisdiction. (Mot. at 1.) Specifically, Corporate Search argues that Bayer failed to 21 establish that the amount in controversy exceeds $75,000, and failed to establish complete 22 diversity of citizenship between the parties. (Id. at 3, 5.) 23 1. 24 The amount in controversy for diversity cases must exceed $75,000, and “[i]t must Bayer fails to establish that the amount in controversy exceeds $75,000. 25 appear to a legal certainty that the claim is really for less than [$75,000] to justify dismissal.” 26 St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 289 (1938); 28 U.S.C. § 1332(a). 27 “The amount in controversy includes claims for general and special damages (excluding costs 28 and interests), attorneys fees if recoverable by statute or contract, and punitive damages if 3 For the Northern District of California United States District Court 1 recoverable as a matter of law.” Conrad Assocs. v. Hartford Accident & Indem. Co., 994 F. 2 Supp. 1196, 1198 (N.D. Cal. 1998) (citations omitted). 3 “[I]n cases where a plaintiff’s state court complaint does not specify a particular amount 4 of damages, the removing defendant bears the burden of establishing, by a preponderance of the 5 evidence, that the amount in controversy exceeds $[75,000].” Sanchez v. Monumental Life Ins. 6 Co., 102 F.3d 398, 404 (9th Cir. 1996); Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 7 2002) (per curiam). In order to determine whether a removing defendant has met its burden, a 8 “court may consider facts in the removal petition” as well as any “summary-judgement-type 9 evidence relevant to the amount in controversy at the time of removal.” Kroske v. U.S. Bank 10 Corp., 432 F.3d 976, 980 (9th Cir. 2005) (citations omitted). “Conclusory allegations as to the 11 amount in controversy are insufficient.” Matheson v. Progressive Specialty Ins. Co., 319 F.3d 12 1089, 1091 (9th Cir. 2003). 13 Here, Bayer submits evidence of Corporate Search’s pre-complaint settlement offer, 14 evidence of punitive damage verdicts in purportedly comparable cases, and evidence of 15 attorneys’ fee awards in purportedly comparable cases. (Bayer’s Request for Judicial Notice 16 (“RJN”), Exs. 1-5.)1 As is discussed below, this evidence is not sufficient to prove by a 17 preponderance of the evidence that the amount in controversy in this case exceeds $75,000. See 18 Cohn, 281 F.3d at 840. 19 20 a. Settlement offer Corporate Search’s pre-complaint settlement offer does not establish that the amount in 21 controversy exceeds $75,000. “A settlement letter is relevant evidence of the amount in 22 controversy if it appears to reflect a reasonable estimate of the plaintiff’s claim.” Cohn, 281 23 F.3d at 840 (citations omitted). The parties do not dispute that prior to filing its complaint, 24 Corporate Search offered to settle “all claims, attorneys’ fees, costs, punitive damages, and 25 interest due” for $63,000. (Compl., at 15.) Bayer points out that Corporate Search’s “offer[] to 26 compromise” is “only $12,000 below the jurisdictional limit,” and seems to argue by 27 28 1 Defendants’ request for judicial notice is granted. See Fed. R. Evid. 201. 4 1 implication that this Court can infer that the amount in controversy is met due to the proximity 2 of the settlement offer to the jurisdictional limit. (Opp. at 4) (emphasis in original). For the Northern District of California United States District Court 3 This District dealt with a similar situation in Faulkner v. Astro-Med, Inc., 1999 U.S. 4 Dist. LEXIS 15801 (N.D. Cal. Oct. 1, 1999). In Faulkner, the plaintiff made an initial offer to 5 settle his claims including “all compensatory damages, attorney’s fees and punitive damages” 6 for “$72,000, with each side to bear their own fees and costs.” Id. at *8. Subsequently, the 7 Plaintiff made a second settlement offer for $50,000 that “also included compensatory damages, 8 attorney’s fees and punitive damages.” Id. The Court found that the two settlement offers 9 supported “plaintiff’s claim that he [was] seeking a total of less than $ 75,000,” and ultimately 10 found that the defendant had not shown that the amount in controversy exceeded $75,000. Id. 11 *8, 12. 12 Other districts have come to similar conclusions. In Vasquez v. CSX Transportation 13 Inc., the plaintiff made a settlement offer of $70,000. See id., 2009 U.S. Dist. LEXIS 57835, *1 14 (N.D. Ill. July 1, 2009). There, the court acknowledged that “when litigants settle lawsuits, they 15 usually take the risk of going to trial into account. Thus, plaintiffs usually settle for less than 16 what they believe they could get if they prevailed at trial.” Id. at *7. However, the court noted 17 that the $70,000 settlement offer was an initial offer, and typically initial offers are used “to 18 anchor the negotiations in [a party’s] favor by starting the process with a high number.” Id. 19 Accordingly, the court refused “to jump to the conclusion that because [the plaintiff’s] initial 20 settlement offer was $70,000, the amount in controversy” exceeded $75,000. Id. at *7-8. 21 The Court finds the reasoning of Faulkner and Vasquez convincing. Corporate Search 22 made a pre-complaint settlement offer of $63,000. Although this amount is relatively close to 23 the jurisdictional limit, it is substantially lower than the amounts that the courts in Faulkner and 24 Vasquez found did not demonstrate the amount in controversy exceeded $75,000. Moreover, 25 this offer was an initial offer which Corporate Search acknowledges was artificially inflated 26 based on its incorrect calculation of the referral fee. (Reply, at 2.) Corporate Search 27 subsequently reduced the amount it seeks to recover in its complaint after it learned the correct 28 amount of the candidate’s salary. (Reply, at 2.) Though perhaps a bit artificially inflated, the 5 1 $63,000 figure contained in Corporate Search’s settlement offer still “appears to reflect a 2 reasonable estimate of [Corporate Search’s] claim,” and thus the Court gives great weight to it. 3 Cohn, 281 F.3d at 840 (citations omitted). The fact that the settlement offer covered “all 4 claims, attorneys’ fees, costs, punitive damages, and interest due,” is also compelling. (Compl., 5 at 15.) Therefore, the Court finds that Corporate Search’s settlement offer does not demonstrate 6 that the requisite amount in controversy has been met. 7 8 For the Northern District of California United States District Court 9 b. Evidence of punitive damage awards Second, Bayer fails to establish that any award of punitive damages, when taken in conjunction with any compensatory damages is likely to exceed $75,000. “It is well established 10 that punitive damages are part of the amount in controversy in a civil action.” Gibson v. 11 Chrysler Corp., 261 F.3d 927, 945 (9th Cir. 2001) (citations omitted). “Under California law, 12 punitive damages are not available for breaches of contract no matter how gross or willful.” 13 Tibbs v. Great Am. Ins. Co., 755 F.2d 1370, 1375 (9th Cir. 1985) (citation omitted). “Punitive 14 damages are recoverable, however,” if the defendant “breaches the implied covenant of good 15 faith and fair dealing and is guilty of oppression, fraud or malice.” Id.; see also Las Palmas 16 Assocs. v. Las Palmas Ctr. Assocs., 235 Cal. App. 3d 1220, 1238-39 (1991). “However, the 17 mere possibility of a punitive damages award is insufficient to prove that the amount in 18 controversy requirement has been met.” Burk v. Med. Sav. Ins. Co., 348 F. Supp. 2d 1063, 1069 19 (D. Ariz. 2004) (citing Surber v. Reliance Nat’l Indem. Co., 110 F. Supp. 2d 1227, 1232 (N.D. 20 Cal. 2000)). Rather, a defendant must present evidence to show that any “punitive damages, 21 coupled with other relief that Plaintiff seeks, will more likely than not exceed the jurisdictional 22 minimum.” McCaa v. Mass. Mut. Life Ins. Co., 330 F. Supp. 2d 1143, 1149 (D. Nev. 2004). 23 Such evidence includes “evidence of jury verdicts in cases involving analogous facts.” 24 Simmons v. PCR Tech., 209 F. Supp. 2d 1029, 1033 (N.D. Cal. 2002). 25 Here, Bayer has provided the Court with three verdicts reached in cases it contends are 26 comparable. (RJN, Exs. 1-3.) The sole California case Bayer submits, Barry M. Gold & Co. v. 27 Lockton Insurance Brokers Inc., does not assist Bayer in establishing the amount of a punitive 28 damage award. (RJN, Ex. 2.) In Barry M. Gold, the jury “awarded Gold $250,000 in quantum 6 1 meruit . . . and the court awarded Gold prejudgment interest of approximately $29,000.” 2002 2 Cal. App. Unpub. LEXIS 8625 at *13 (Cal. Ct. App. Sept. 13, 2002). The jury did not award 3 any punitive damages. Id. Accordingly, Barry M. Gold, is not relevant to the discussion of 4 potential punitive damage awards. For the Northern District of California United States District Court 5 Bayer also relies in part on Bill Pepper Inc. v. Temperature Systems Inc. and 6 Management Recruiters of Greenville v. R. J. R. Mechanical Inc.. (RJN, Exs. 1, 3.) However, 7 both of these cases are distinguishable. In both Bill Pepper and Management Services, referral 8 agencies referred candidates to prospective employers. (RJN, Ex. 1, 3.) The candidates were 9 hired, but the hiring employers did not pay referral fees to the referral agencies. (Id.) In both 10 cases, juries found that the hiring employers had intentionally withheld the fees from the 11 referral agencies. (Id.) 12 Here, although Corporate Search alleges that Bayer failed to pay it a referral fee for a 13 candidate Bayer hired, Bayer did not flatly refuse to pay any referral fee. Rather, Bayer paid 14 the referral fee to another agency who referred Chan, the candidate, two months after Corporate 15 Search had referred Chan for another position in a different office. Corporate Search alleges 16 that Bayer paid the referral fee to the wrong agency. These facts are not as nefarious as the 17 facts in Bell Pepper and Management Recruiters. Therefore, the Court finds that these cases are 18 not factually analogous, and thus, do not demonstrate that punitive damages, coupled with other 19 relief that Corporate Search seeks, will more likely than not exceed the jurisdictional minimum. 20 21 c. Evidence of attorneys’ fee awards Third, Bayer’s estimation of the attorney’s fees in this case is not sufficient to find that 22 the amount in controversy exceeds $75,000. Claims for attorneys’ fees may be included in 23 computing the amount in controversy when an underlying statute or contract authorizes such 24 fees. Kroske, 432 F.3d at 980 (citing Galt G/S v. JSS Scandinavia, 142 F.3d 1150, 1155-56 (9th 25 Cir. 1998)). Under California law, attorneys’ fees may be awarded for claims brought under 26 California Business and Professions code section 17200. However, any award of attorneys’ 27 fees under this section must comply with California Code of Civil Procedure section 1021.5. 28 See generally Baxter v. Salutary Sportsclubs, Inc., 122 Cal. App. 4th 941 (2004) (discussing the 7 1 interplay of Cal. Bus. & Prof. Code § 17200 and Cal. Civ. Proc. Code § 1021.5). Section 2 1021.5 limits the award of attorneys’ fees to any “action which has resulted in the enforcement 3 of an important right affecting the public interest,” and has conferred “a significant benefit” on 4 the public. Cal. Civ. Proc. Code § 1021.5. As courts have noted, section 1021.5 places a high 5 burden on those parties seeking to recover attorneys’ fees under its provisions. Id. at 948 6 (discussing cases where California courts have refused to award attorneys fees under section 7 1021.5 because there was not “a significant benefit” to the public). 8 For the Northern District of California United States District Court 9 Bayer relies on out of state decisions to support its assertion that any attorneys’ fees, when taken with other damages, will exceed $75,000. (RJN, Exs. 4-5.) Reliance on these cases 10 is misplaced. In both cases, the courts awarded attorneys’ fees under the law of Texas and not 11 that of California. Bayer does not even attempt to address Corporate Search’s ability to 12 recovery attorneys’ fees under the rigid standards of California Civil Code section 1021.5. 13 Therefore, the Court finds that Bayer has failed to show by a preponderance of the evidence that 14 any attorneys’ fees award in conjunction with any other damages would exceed $75,000 in the 15 present case. 16 17 Accordingly, Bayer fails to meet its burden to demonstrate that the amount in controversy exceeds $75,000.2 18 19 CONCLUSION For the foregoing reasons, the Court GRANTS Corporate Search’s motion for remand. 20 The case is remanded to the Superior Court of the State of California for the County of San 21 Francisco. The Clerk shall close the file. 22 IT IS SO ORDERED. 23 24 Dated: December 3, 2009 JEFFREY S. WHITE UNITED STATES DISTRICT JUDGE 25 26 27 28 2 Because this Court finds that Bayer has failed to establish that the amount in controversy exceeds $75,000, it need not address the diversity of citizenship between the parties. 8
]]>
Some case metadata and case summaries were written with the help of AI, which can produce inaccuracies. You
should read the full case before relying on it for legal research purposes.
This site is protected by reCAPTCHA and the Google
Privacy Policy and
Terms of Service apply.
