Total Quality Logistics LLC v. Johnson

TOTAL QUALITY LOGISTICS, LLC, Plaintiff, v. CHRISTOPHER JOHNSON, et al ., Defendants.

No. 1:21-cv-386

United States District Court, S.D. Ohio, Western Division

July 7, 2021

ORDER DENYING MOTION TO REMAND

Timothy S. Black United States District Judge

This civil case is before the Court on Plaintiff Total Quality Logistics, LLC's motion to remand (Doc. 5) and the parties' responsive memoranda (Docs. 6, 7).

I. BACKGROUND

The following facts are taken from allegations in the Amended Complaint (Doc. 4) and the Notice of Removal (Doc. 1). TQL is a third-party logistics company, operating in the freight brokerage industry. (Doc. 4 at ¶ 10). Defendant Christopher Johnson, a North Carolina resident, is a former employee of TQL. (Id. at ¶ 1). Johnson worked for TQL from September 2015 to July 2020, rising to the level of Senior Logistics Account Executive. (Id. at ¶ 18).

Johnson signed an Employee Non-Compete, Confidentiality and Non-Solicitation Agreement (the “Agreement”) with TQL. (Id. at ¶ 1; see also Doc. 4-1). The Agreement prohibits, among other acts, misappropriation of trade secret and confidential information. (Doc. 4-1). The Agreement's non-solicitation period is twelve months. (Id. at § 9(b)(v)). It also provides that TQL may seek an injunction restraining the employee from violating the agreement, and, if TQL is successful, Johnson “shall be liable for costs, expenses, and reasonable attorneys' fees incurred by TQL.” (Id. at § 9(c)).

On June 23, 2020, Johnson formed Defendant Patriots Logistics Services, LLC (“Patriots”) (collectively “Defendants”), a North Carolina limited liability company.^[1](Doc. at ¶ 23). Johnson obtained federal brokerage authority for Patriots on July 22, 2020. (Id.) Johnson resigned from TQL on July 23, 2020. (Id.). TQL contends that Patriots is a competitor. (Id. at ¶ 13).

On June 4, 2021, TQL filed a verified complaint for injunctive relief and damages in the Clermont County, Ohio Court of Common Pleas. (Doc. 1-1). TQL also filed a motion for temporary restraining order and preliminary injunction, seeking to enforce the Agreement. (Doc. 1-2). On June 8, 2021, Defendants filed a notice of removal with this Court, asserting diversity jurisdiction. (Doc. 1).

Pursuant to Local Rule 65.1, the Court held an informal conference with the parties, during which conference TQL indicated its intent to move to remand the action to state court. (6/14/2021 Minute Entry and Notation Order). The Court set an expedited briefing schedule on the motion to remand. (Id.)

TQL then filed a Verified Amended Complaint. (Doc. 4). In the Amended Complaint, TQL verifies the following:

This suit seeks injunctive relief to prevent continued irreparable harm to TQL and damages of more than $25, 000 up to a maximum cumulative total of $75, 000 from the Defendants on the claims of breach of contract and misappropriation of trade secrets. To be clear, TQL stipulates that it will not accept damages in a total amount over $75, 000.

(Id. at ¶ 9). In TQL's request for relief, TQL further verifies that it requests:

A. Award TQL a temporary, preliminary, and permanent injunction against Defendants, as set forth above; find that the running of the 1-year restrictive covenants in Johnson's Agreement have been tolled; order Defendants to pay TQL compensatory damages, attorney fees, and punitive damages; and award TQL such other and further relief as this Court finds just and proper, altogether in a sum to be determined at trial in excess of $25, 000 up to a maximum cumulative total of $75, 000, as TQL stipulates that it does not seek and will not accept damages over $75, 000 in total for all claims combined; and

B. Award TQL pre-judgment interest and costs incurred in connection with this action.

(Doc 4 at Relief Requested).

Following the Amended Complaint, TQL moved to remand this action to state court, arguing that jurisdiction is lacking because the amount in controversy has not been met. (Doc. 5).

II. STANDARD OF REVIEW

A party can remove an action from state court if the federal court to which the action is removed would otherwise have had original jurisdiction. 28 U.S.C. § 1441(a). Generally, where the citizenship of the parties is diverse and the amount in controversy exceeds $75, 000, a federal court has jurisdiction to hear the case. 28 U.S.C. § 1332(a). The existence of subject matter jurisdiction is determined by examining the complaint as it existed at the time of removal. Harper v. AutoAlliance Int'l., Inc., 392 F.3d 195, 210 (6th Cir. 2004). A defendant desiring to remove a case has the burden of proving the diversity jurisdiction requirements and must do so by a preponderance of the evidence. Rotschi v. State Farm Mut. Auto. Ins. Co., Case No. 96-5494, 114 F.3d 1188, 1997 WL 259352, at *2-3 (6th Cir. May 15, 1997).

When a defendant does not satisfy its burden of demonstrating that removal was proper, the district court may remand the case back to the state court from which it was removed. 28 U.S.C. § 1447(c). “Because lack of jurisdiction would make any decree in the case void and the continuation of the litigation in federal court futile, the removal statute should be strictly construed and all doubts resolved in favor of remand.” Eastman v. Marine Mech. Corp., 438 F.3d 544, 549-50 (6th Cir. 2006) (citation omitted).

III. ANALYSIS

As a general rule, a plaintiff is the master of his or her own complaint; thus, a plaintiff wishing to avoid removal can sue in state court for less than the jurisdictional amount, thereby preventing removal even if the parties are diverse. Heyman v. Lincoln Nat'l Life Ins. Co., 781 Fed.Appx. 463, 469 (6th Cir. 2019). However, under Ohio civil rules, “the only statement that a plaintiff is generally allowed to make regarding alleged damages in a complaint is that the amount sought is more than $25, 000, ” and any limitations capping damages in the complaint “are not enforceable under Ohio law.” Total Quality Logistics, LLC v. Summit Logistics Grp., LLC, No. 1:20-CV-519, 2020 WL 6075712, at *2 (S.D. Ohio Oct. 14, 2020) (citing Ohio Civ. R. 8(A); Civ. R. 54(c)). “As a result, a defendant facing suit in Ohio court is free to remove an action, even if the Ohio state court complaint purports to cap the amount in controversy below $75, 000, so long as the defendant can assert in good faith in its removal papers that the amount in controversy in fact exceeds the jurisdictional threshold.” Id.

When a defendant removes an action based on a good faith belief that the amount in controversy exceeds the jurisdictional threshold, a plaintiff has options when seeking to remand back to state court: (1) respond to the removal by clearly stipulating in federal court that the plaintiff is not seeking, and will not accept, more than $75, 000 in the action, binding the plaintiff on its potential recovery and depriving the federal court of subject matter jurisdiction; or (2) move to remand, disputing the allegations made in the defendant's removal papers.

Here, TQL filed suit in Ohio state court, alleging damages “in excess of $25, 000.” (Doc. 1-1). Defendants removed, purporting in good faith, the amount in controversy exceeded $75, 000. (Doc. 1). TQL then decided to pursue both remand options. First, TQL filed a Verified Amended Complaint, seeking to stipulate that “cumulative damages” are more than $25, 000 but less than $75, 000. (Doc. 4). Then, TQL moved to remand, disputing Defendants' allegations related to the amount in controversy in Defendants' notice of removal. (Doc. 5). The Court considers each of TQL's options in support of remand.

A. Stipulation

TQL filed a Verified Amended Complaint, seeking to stipulate to a limitation of damages. In that Amended Complaint, TQL makes the following statements on damages: (1) “To be clear, TQL stipulates that it will not accept damages in a total amount over $75, 000” “on the claims of breach of contract and misappropriation of trade secrets;” and, (2) that TQL's relief sought is “altogether in a sum to be determined at trial in excess of $25, 000 up to a maximum cumulative total of $75, 000, as TQL stipulates that it does not seek and will not accept damages over $75, 000 in total for all claims combined.” (Doc 4 at ¶ 9, Relief Requested).

“[O]nly an unequivocal statement and stipulation limiting damages will serve this purpose [of requiring remand.] To merely say that one will not accept money in excess of a certain amount limits neither the judgment nor the demand.” Heyman, 781 Fed.Appx. at 470 (emphasis added). However, a stipulation asserting that the plaintiff “will not seek or accept damages in excess of $75, 000…has been found in [certain] cases sufficient to limit a plaintiff's monetary recovery.” Id. (collecting cases).

If TQL were only seeking monetary damages, its statements in the Amended Complaint would likely be sufficient because TQL “stipulated that it does not seek and will not accept damages over $75, 000.” However, the problem with TQL's statements is that such statements only unequivocally stipulate to the amount of damages. The statements do not seek or accept to limit the value of TQL's requested injunctive relief. (Doc. 4 at Relief Requested). See Total Quality Logistics v. Summit 2020 WL 6075712 at *4; see also Jefferson v. Hyatt Corp. of Delaware, No. 3:14-CV-00601-TBR, 2015 WL 1611834, at *1 (W.D. Ky. Apr. 10, 2015) (stipulation unequivocal when plaintiff stipulated: “will not seek or accept an award of damages in excess of $74, 999.00 inclusive of punitive damages, attorneys' fees, and the fair value of any injunctive relief) (emphasis added).^[2] Thus, the Court finds that TQL's statements in the Amended Complaint do not unequivocallyestablish the amount of relief that TQL seeks and will accept is below the...