Davani v. E-Zassi, LLC et al, No. 3:2018cv00214 - Document 36 (N.D. Cal. 2018)

Court Description: ORDER GRANTING MOTION TO REMAND AND DENYING MOTION TO DISMISS OR TRANSFER by Magistrate Judge Elizabeth D. Laporte on 3/26/2018 denying 15 Motion to Dismiss; granting 21 Motion to Remand. (tlS, COURT STAFF) (Filed on 3/26/2018)
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Davani v. E-Zassi, LLC et al Doc. 36 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 ARYAN DAVANI, 7 Plaintiff, 8 v. 9 E-ZASSI, LLC, et al., 10 Defendants. 11 United States District Court Northern District of California Case No.18-cv-00214-EDL ORDER GRANTING MOTION TO REMAND AND DENYING MOTION TO DISMISS OR TRANSFER Re: Dkt. Nos. 15, 21 Before the Court are two early motions in this wrongful termination case. Defendants e- 12 13 Zassi, LLC, eZassi Inc. and Jennifer Creech (together, “Defendants”) have filed a motion to 14 dismiss pursuant to Rule 12(b)(3) for improper venue or, in the alternative, transfer venue 15 pursuant to 28 U.S.C. § 1404(a).1 Plaintiff Aryan Davani has moved to remand the case back to 16 state court. The Court held a hearing on March 13, 2018. For the following reasons, the Court 17 GRANTS the motion to remand and DENIES the motions to dismiss or transfer as moot. 18 I. BACKGROUND Plaintiff is an Iranian male, who was hired by Defendant E-Zassi on or around August 22, 19 20 2016 as Vice President of Global Sales. Compl., ¶ 22. He was terminated from this position on or 21 around March 10, 2017. Id. As Vice President for Global Sales, Plaintiff was responsible for, 22 among other things, generating leads and closing deals on new and existing accounts. Id., ¶ 23. In 23 this role, Plaintiff had two direct supervisors, each of whom overlapped with Plaintiff during part 24 of his tenure. From August 2016 through December 2016, Plaintiff’s direct supervisor was e- 25 Zassi’s former Chief Executive Officer (“CEO”), Peter Von Dyck. Id., ¶ 25. From January 2017 26 through the end of his employment, Plaintiff’s direct supervisor was Defendant Creech. Id., ¶ 26. 27 28 1 The corporate Defendants will be referred to collectively as “e-Zassi.” Dockets.Justia.com Plaintiff alleges that Creech engaged in a pattern of national and gender harassment that 1 2 targeted Plaintiff from the start of Creech’s appointment as CEO. Id., ¶ 27. Plaintiff traveled from 3 his home in San Francisco, California, to Jacksonville, Florida, where Creech worked, to meet her 4 for the first time. Id., ¶ 28. During that trip, Plaintiff alleges that Creech made a number of 5 harassing statements to him, including that she “doesn’t date Persian men because they are too 6 short, in more ways than one” and asking Plaintiff if he has a “Persian temper.” Id. He alleges 7 that she continued to make harassing comments about his “Persian temper” on many occasions. 8 Id., ¶¶ 29, 35. She also allegedly made a comment to him on or around January 27, 2017 when he 9 approached her about upcoming business travel plans that he should “not go booking anything too far out in advance, we don’t [sic] if you will be in the country at that time after Trump gets done 11 United States District Court Northern District of California 10 with you guys.” Id., ¶ 31. She allegedly also told him that she was directing another e-Zassi 12 employee to attend a meeting with him because she thought “we should have more of an American 13 presence at the meeting and so I am having Walter join you.” Id., ¶ 34. He further alleges that 14 Creech interfered on at least two occasions with his opportunities to work with other female 15 colleagues or potential clients. Id., ¶¶ 30, 33. On or around March 8, 2017, after these comments, Plaintiff made a complaint about 16 17 Creech’s conduct to e-Zassi’s board member Gleb Zarkh. Id., ¶ 36. After speaking with other 18 members of the board, Mr. Zarkh told Plaintiff on March 9, 2017 that he discussed the matter with 19 Creech and he would need to “work with [Creech] directly on these issues and come to a 20 resolution.” Id., ¶ 38. Plaintiff responded with disappointment, and informed Mr. Zarkh that he 21 had filed a complaint with the California Department of Fair Employment & Housing about 22 Creech’s allegedly harassing conduct. Id., ¶ 39. That same day, Plaintiff alleges that he received 23 a call from another board member, Bill Wolf, saying that he was disappointed by the news of the 24 formal complaint with state officials and the company was “backing” Creech. Id., ¶ 40. On 25 March 10, 2017, Defendants terminated Plaintiff’s employment. Id., ¶ 41. 26 II. 27 28 PROCEDURAL HISTORY On October 10, 2017, Plaintiff filed a complaint in the Superior Court of California, County of San Francisco. Dkt. No. 1. Defendants were served with the summons and complaint 2 1 on December 11, 2017. Id. His complaint raised allegations relating to his employment 2 Defendants. Id. He asserted the following claims against e-Zassi, LLC and eZassi, Inc.: (1) 3 retaliation for attempting to and exercising rights under, including opposing violations of, 4 Government Code Part 2.8 (FEHA; California Government Code §§ 12900-12996; California 5 Government Code § 12940(h)); (2) Failure to prevent retaliation and harassment (California 6 Government Code § 12940(k)); (3) discrimination based on sex (California Government Code § 7 12940(a)); and (4) wrongful termination in violation of public policy. Id. He raised the following 8 claims against all three Defendants: (5) harassment based upon national origin (California 9 Government Code § 12940(j)); and (6) harassment based on sex (California Government Code § 10 1294(j)). Id. The complaint alleges that Plaintiff is a resident of San Francisco County, California. Id., United States District Court Northern District of California 11 12 ¶ 3. It further alleges that e-Zassi, Inc. is a Florida Limited Liability Company; e-Zassi, Inc. 13 converted into eZassi, Inc. on or around May 31, 2017; and eZassi, Inc. is now a Delaware 14 corporation. Id., ¶¶ 4. It also alleges that Creech is a resident of Jacksonville, Florida, now and 15 was at all relevant times. Id., ¶ 6. Plaintiff’s complaint sought “all actual, consequential, and 16 incidental financial losses, including but not limited to loss of earnings and employment benefits, 17 together with prejudgment interest;” compensatory and general damages; punitive damages; 18 injunctive relief; declaratory relief; and attorneys’ fees and costs. Id., Prayer for Relief. 19 Defendants filed a notice of removal in this Court on January 10, 2018, based on diversity 20 jurisdiction. Id., ¶ 1. On January 17, 2018, Defendants filed a motion to dismiss pursuant to Rule 21 12(b)(3) due to improper venue or, in the alternative, to transfer venue to the United States District 22 Court for the Middle District of Florida under 28 U.S.C. § 1404(a). Dkt. No. 15. Plaintiff filed a 23 motion to remand the case to state court on January 31, 2018. Dkt. No. 15. The Court held a 24 hearing on both motions on March 13, 2018. 25 III. 26 27 28 DISCUSSION A. Motion to Remand 1. Legal Standard Under 28 U.S.C. § 1441(a), a defendant may remove from state court to federal court any 3 1 action in which the federal court has original jurisdiction. District courts have original jurisdiction 2 over all civil actions where the amount in controversy exceeds $75,000, exclusive of interest and 3 costs, and there is complete diversity of citizenship between the opposing parties. 28 U.S.C. § 4 1332(a); Owen Equip. & Erection Co. v. Kroger, 437 U.S. 365, 373-74 (1978). The amount in controversy is an estimate of the total amount in dispute, not a prospective 5 6 assessment of defendant’s liability. See Lewis v. Verizon Commc’ns, Inc., 627 F.3d 395, 400 (9th 7 Cir. 2000). The Supreme Court has explained the distinction that the court must draw between 8 original jurisdiction and removal jurisdiction: 9 [I]n cases brought in the federal court . . . [i]t must appear to a legal certainty that the [plaintiff’s] claim is really for less than the jurisdictional amount to justify dismissal . . . A different situation is presented in the case of a suit instituted in a state court and thence removed. There is a strong presumption that the plaintiff has not claimed a large amount in order to confer jurisdiction on the federal court or that the parties have colluded to that end. 10 United States District Court Northern District of California 11 12 13 Gaus v. Miles, 980 F.2d 564, 566 (9th Cir. 1992) (quoting St. Paul Mercury Indem. Co. v. Red 14 Cab Co., 303 U.S. 283, 288-90 (1938)). 15 If at any time before judgment it appears that the district court lacks subject matter 16 jurisdiction over a case removed from state court, the case must be remanded. 28 U.S.C. § 17 1447(c). The Ninth Circuit “strictly construe[s] the removal statute against removal jurisdiction.” 18 Gaus, 980 F.2d at 566. Federal jurisdiction must be rejected if there is any doubt as to the right of 19 removal. Id.. “The ‘strong’ presumption against removal jurisdiction means that the defendant 20 always has the burden of establishing that removal is proper.” Id. 21 Where the state court complaint does not specify the amount in controversy, the defendant 22 bears the burden of proving the amount by a preponderance of evidence. Sanchez v. Monumental 23 Life Ins. Co., 102 F.3d 398, 403-04 (9th Cir. 1996). With respect to the amount in controversy, 24 “[i]f it is unclear what amount of damages the plaintiff has sought . . . then the defendant bears the 25 burden of actually proving the facts to support jurisdiction, including the jurisdictional amount.” 26 Gaus, 980 F.2d at 566 (citing Garza v. Bettcher Indus., Inc., 752 F. Supp. 753, 763 (E.D. Mich. 27 1990)). 28 Courts have generally used the following framework for determining the amount in 4 1 controversy on removal. First, “[t]he district court may consider whether it is ‘facially apparent’ 2 from the complaint that the jurisdictional amount is in controversy. If not, the court may consider 3 facts in the removal petition, and may ‘require parties to submit summary-judgment-type evidence 4 relevant to the amount in controversy at the time of removal.’”2 Singer v. State Farm Mut. 5 Automobile Ins. Co., 116 F.3d 373, 377 (9th Cir. 1997); see also De Aguilar v. Boeing Co., 11 6 F.3d 55, 57 (5th Cir.1993) (holding that it was facially apparent from complaint that jurisdictional 7 amount was exceeded, given claims were for wrongful death, terror in anticipation of death, loss 8 of companionship, and funeral expenses; contrasting this case to another in which it was not 9 facially apparent that jurisdictional amount was exceeded since that case involved only damages for the skin rashes and lost income of small-scale Columbian fishermen); Gwyn v. Wal-Mart 11 United States District Court Northern District of California 10 Stores, Inc., 955 F. Supp. 44, 46 (M.D.N.C.1996) (“[U]ntil jurisdiction becomes determinate, the 12 court may consider any evidence of the amount in controversy.”). 13 2. Analysis Plaintiff’s state court complaint does not allege what the amount in controversy is, so 14 15 Defendants must demonstrate by a preponderance of the evidence that it exceeds $75,000. 16 Plaintiff argues that Defendants have not bet their burden of demonstrating that the amount in 17 controversy exceeds $75,000 at the time of removal. Defendants raise several arguments in 18 support of their position that the amount in controversy exceeds the statutory minimum, but 19 ultimately the Court finds that Defendants have not met their burden to establish that the 20 requirement is met. 21 a. Lost Back Wages Defendants’ notice of removal alleges that the amount in controversy exceeds $75,000 22 23 because Plaintiff’s annual salary at the time of his termination on March 10, 2017 was $120,000. 24 Notice, ¶ 16; Creech Decl., ¶¶ 12-13. Thus, Defendants state that “[b]ased on Plaintiff’s salary at 25 2 26 27 28 Defendants cite Cagle v. C&S Wholesale Grocers, Inc., 2014 WL 651923 (E.D. Cal. Feb. 19, 2014), for the proposition that “defendants need not provide summary judgment-type evidence” to carry this burden and calculations can be made on “assumptions and speculation.” Id. at *7. Although the district court held that “summary judgment-type evidence” was not required to meet the defendant’s burden, it did require detailed information supporting the claimed amount in controversy and did not adopt an “assumptions and speculation” standard. Id. 5 1 the time of his termination, and his request for lost earnings and employment benefits since the 2 time of his termination 10 months ago, in conjunction with his request for compensatory damages, 3 and punitive damages, it is more likely than not, that the amount in controversy exceeds $75,000 4 irrespective of fees and costs.” Id. Ten months of this salary equals $100,000. On its face, this 5 simple arithmetic seems to establish that the amount in controversy is met and the Court has 6 subject matter jurisdiction over the case. 7 Plaintiff contends, however, that the notice of removal does not meet Defendants’ burden 8 for several reasons. First, Plaintiff argues that Defendants’ statement lacks foundation because it 9 was based on Creech’s declaration that “[a]t the time of Plaintiff’s termination, his salary was $120,000.” Creech Decl., ¶ 13. He argues that there is no evidentiary support for this statement 11 United States District Court Northern District of California 10 because a witness’s statement must be based on her personal knowledge of the facts asserted, Fed. 12 R. Civ. P. 602, but she has simply stated that her declaration was based on “personal knowledge of 13 the following facts” and offered no foundation for that statement. However, Creech’s declaration 14 states that it is based on her personal knowledge as CEO of e-Zassi, which is an adequate 15 foundation for establishing Plaintiff’s salary in his position at the company. Significantly, 16 Plaintiff does not put forward any evidence that this was not his salary, which is a tacit admission 17 that the declaration is accurate. 18 More persuasively, Plaintiff next argues that Defendants have not established the amount 19 in controversy because they did not consider his mitigation of damages. See Lamke v. Sunstate 20 Equip. Co., 319 F. Supp. 2d 1029, 1033 (N.D. Cal. 2004) (considering the plaintiff’s mitigation of 21 damages in determining of the defendant met its burden to prove the amount in controversy in 22 removal case). He has provided a declaration that he has mitigated his economic damages by 23 earning approximately $62,500 from subsequent employment after his termination through the 24 date of Defendants’ notice of removal. Davani Decl., ¶ 3. Defendants concede that this was an 25 adequate mitigation of damages and they do not contest the $62,500 figure. 26 Plaintiff also put forward evidence that Defendants’ notice of removal fails to take into 27 account that they continued to pay him through April 10, 2017 for an additional thirty days of 28 wages after his termination. Davani Decl., ¶ 2. Defendants do not dispute this evidence. Thus, 6 1 even accepting that he earned $120,000 a year as an e-Zassi employee, Plaintiff’s his lost wages 2 from April 11, 2017 through January 10, 2018 were no more than $27,500 (9 months at $10,000 3 per month, minus $62,500 in mitigation). At the hearing, both sides agreed that the amount of lost 4 back wages that should be used to assess the amount in controversy is $27,500. This amount by 5 itself plainly falls well below the amount in controversy threshold for federal jurisdiction. 6 7 b. Lost Future Wages Defendants argue that the Court should also include lost future wages in considering whether they have established the amount in controversy requirement. While Plaintiff’s 9 mitigation of damages does not eliminate a potential claim for future lost earnings if his current 10 employment does not compensate him in a similar manner as his job at e-Zassi, Defendants have 11 United States District Court Northern District of California 8 not met their burden to provide a factual basis for the Court to determine what a reasonable 12 estimate of Plaintiff’s lost future wages is. For example, although his recent pay appears to be 13 somewhat lower, he may receive raises or obtain other better paid employment. Without any 14 evidence to establish the amount of future lost wages, the Court cannot factor this element of 15 damages into a calculation of the amount in controversy at the time of removal. 16 17 c. Punitive Damages With respect to his request for punitive damages, Defendants’ notice of removal merely 18 stated that Plaintiff’s state court complaint sought punitive damages, but it did not provide an 19 estimate of what those punitive damages, if any, would be. Notice, ¶ 15. Plaintiff cites two other 20 district court cases where the courts concluded that the possibility of a punitive damages award is 21 insufficient to prove the amount in controversy requirement has been met. See Burk v. Med. Sav. 22 Ins. Co., 348 F. Supp. 2d 1063, 1069-70 (D. Ariz. 2004) (only evidence of possible punitive 23 damages award was statement that “there is not a single reported Arizona case decided in the last 24 15 years in which punitive damages did not exceed $75,000,” which the court found was 25 insufficient to establish “likely punitive damages”); Surber v. Reliance Nat’l Indem. Co., 110 F. 26 Supp. 2d 1227, 1232 (N.D. Cal. 2000) (the defendant failed to meet its burden to prove punitive 27 damages when no evidence on the issue was introduced and the facts in the complaint merely 28 suggested the possibility of a punitive damages award). 7 1 Defendants argue that the Court should accept a 1:1 ratio method of punitive damages to 2 economic damages, which the Ninth Circuit accepted in Guglielmino v. McKee Foods Corp., 506 3 F.3d 696, 698-71 (9th Cir. 2007), as an adequate approximation of punitive damages in this case. 4 However, Defendants have not offered any basis for concluding that the facts or legal issues in 5 Guglielmino are analogous in any way to the facts alleged in this case in order to demonstrate that 6 this is an appropriate ratio to apply here. Furthermore, based on the allegations in the complaint, it 7 is not apparent that it is more likely than not that Plaintiff would be entitled to punitive damages, 8 which are the exception, not the rule. Accordingly, the Court will not consider an unspecified and 9 unsupported amount of punitive damages in considering whether the amount in controversy 10 exceeds $75,000. United States District Court Northern District of California 11 d. General Damages 12 Defendants also argue that Plaintiff’s claim for general damages is likely to include 13 damages for the “mental anguish and emotional suffering” that he allegedly suffered as a result of 14 Defendants’ conduct. While that is a reasonable assumption, Defendants do not put forward any 15 basis for how the Court should estimate what those damages are. Instead, they attempt to shift the 16 burden to Plaintiff to prove those damages by stating that “Plaintiff’s Motion to Remand omits any 17 discussion of Plaintiff’s general damages and does not refute the escalating effect that general 18 damages would have on the amount in controversy.” See Cable v. Merit Life Ins. Co., 2006 WL 19 1991664, at *3 (E.D. Cal. July 14, 2006) (concluding that the defendant’s argument that emotional 20 distress damages exceeded the jurisdictional threshold was insufficient when the “[d]efendant 21 provide[d] no reliable basis for determining the amount of emotional distress damages likely to be 22 recovered in this case”). Because it is Defendants’ burden to prove these damages and they have 23 not provided any evidence for doing so, they have failed to carry their burden as to general 24 damages. 25 26 a. Attorneys’ Fees Plaintiff’s prayer for relief also seeks attorneys’ fees. While attorneys’ fees are not usually 27 considered part of the amount in controversy for diversity purposes, they may be included in the 28 calculation when the underlying statute authorizes an award of attorneys’ fees. See Galt G/S v. 8 1 JSS Scandinavia, 142 F.3d 1150, 1155-56 (9th Cir. 1998). Plaintiff has brought claims under the 2 FEHA, which allows the Court to award reasonable attorneys’ fees and costs to the prevailing 3 party. See Cal. Gov’t Code § 12965(b). 4 It is unclear whether attorneys’ fees should include fees accrued after the date of removal 5 for purposes of determining the amount in controversy. Compare Dukes v. Twin City Fire Ins. 6 Co., 2010 WL 94109, at *2 (D. Ariz. Jan. 6, 2010) (only considering fees through the date of 7 removal); Faulkner v. Astro-Med, Inc., 1999 WL 820198, at *4 (N.D. Cal. Oct. 4, 1999) (same), 8 with Brady v. Mercedes-Benz USA, Inc., 243 F. Supp. 2d 1004, 1010-11 (N.D. Cal. 2002) 9 (including reasonable estimate of attorneys’ fees likely to be expended). Plaintiff argues that Defendants have failed to meet their burden on fees because they have not provided any evidence 11 United States District Court Northern District of California 10 of what fees Plaintiff has “accrued up until the date remand is considered.” Defendants have 12 offered no argument on what period of attorneys’ fees is appropriate. 13 The Court need not decide this issue because Defendants have not put forward sufficient 14 evidence to establish any reasonable estimate of the amount of attorneys’ fees that have been 15 incurred up to any point in this litigation. They have provided evidence from which the Court can 16 infer that Plaintiff’s counsel has spent some amount of time on this case through the removal 17 petition by pointing to Plaintiff’s initial demand letter, sent by counsel, as well as the complaint’s 18 allegation that Plaintiff pursued his administrative remedies through the Department of Fair 19 Employment and Housing and that Plaintiff had counsel’s assistance in drafting and filing the state 20 court complaint and propounding written discovery requests. The parties dispute whether that 21 amount of time is significant or whether it merely represents minor preliminary litigation work. 22 Although there is no indication of how many hours Plaintiff’s counsel has spent or what 23 his billing rate is, Defendants argue that it is more likely than not that the attorneys’ fees combined 24 with this $27,500 in past lost earnings, claimed future earnings, general damages, and punitive 25 damages will exceed $75,000. Defendants’ cite Guglielmino, which affirmed denial of motion to 26 remand where the district court found that the defendants met their burden based on economic 27 damages, attorneys’ fees estimated at a “conservative” 12.5% of economic damages, and punitive 28 damages at a “conservative” ratio of 1:1 to economic damages. 506 F.3d at 698-71. 9 While it can be surmised, based on Defendants’ proffered evidence, that Plaintiff’s counsel 1 2 has incurred some amount of attorneys’ fees at least through the notice of removal, the Court has 3 no way of estimating what those fees may be, much less that they exceed $47,500 (the amount 4 necessary to make up the difference between $75,000 and the $27,500 of lost back wages). See 5 Ragano v. Urban Fulfillment Serv. LLC, 2016 WL 1610594, at *3-4 (C.D. Cal. Apr. 21, 2016) 6 (granting motion to remand where the defendant “fail[ed] to demonstrate adequately that 7 attorney’s fees in this case would more likely than not exceed $75,000” where neither the 8 defendant’s “declaration nor the biography attached indicate the estimated billable hours, the 9 approximate amount of work to be completed, plaintiff’s counsel’s hourly billing rate, or indicate the amount of fee awards granted by courts in similar cases”); Surber, 11 F. Supp. 2d at 1232 11 United States District Court Northern District of California 10 (“Defendant has not estimated the amount of time that the case will require, nor has it revealed 12 plaintiff’s counsel’s hourly billing rate” and the defendant’s “bald statement [that fees “may well, 13 in and of themselves, exceed the jurisdictional minimum”], unsupported by any evidence, does not 14 suffice to create subject matter jurisdiction.”). Defendants have not supplied the Court with any 15 evidence of Plaintiff’s counsel’s experience or credentials or evidence of what the average billing 16 rate is in the area for this type of work. Even if the Court applied the rate of 12.5% of economic 17 damages from Guglielmino that Defendants advocate, attorneys’ fees at that rate would only add 18 approximately $3,400 (12.5% of $27,500), to the amount in controversy because $27,500 is the 19 only figure of economic damages that Defendants have proven with any specificity. In short, Defendants have failed to prove by a preponderance of the evidence that this 20 21 dispute has an amount in controversy in excess of $75,000. Both sides agree that Plaintiff’s past 22 loss wages are $27,500. Beyond that, however, Defendants have put forward essentially no 23 evidence upon which the Court should reasonably estimate what the remaining damages are. 24 Thus, there is no basis to find that the amount in controversy exceeds $75,000, and the Court 25 grants Plaintiff’s motion to remand this case to state court. 26 IV. 27 28 CONCLUSION For the reasons set forth above, the Court GRANTS Plaintiff’s motion to remand to state court. Accordingly, the Court DENIES Defendants’ motions to dismiss or transfer as moot. 10 1 2 3 IT IS SO ORDERED. Dated: March 26, 2018 4 5 ELIZABETH D. LAPORTE United States Magistrate Judge 6 7 8 9 10 United States District Court Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 11