Rodney Lewis v. Moki Doorstep Corp.

JS-6

UNITED STATES DISTRICT COURT

CENTRAL DISTRICT OF CALIFORNIA

CIVIL MINUTES - GENERAL

Case No.: CV 19-09747-AB (MAAx) Date: December 19, 2019

Title: Rodney Lewis v. Moki Doorstep Corp., et al.

Present: The Honorable ANDRE BIROTTE JR., United States District Judge

Carla Badirian N/A

Deputy Clerk Court Reporter

Attorney(s) Present for Plaintiff(s): Attorney(s) Present for Defendant(s):

None Appearing None Appearing

Proceedings: [In Chambers] ORDER REMANDING ACTION FOR LACK OF

SUBJECT MATTER JURISDICTION

Defendants Moki Doorstep Co., Zachary Brown, and Alyssa Brown

(“Defendants”) removed this action on the basis of diversity jurisdiction. On

November 19, 2019, the Court issued an Order to Show Cause (“OSC,” Dkt. No.

12) why the case should not be remanded for lack of subject jurisdiction.

Defendants filed a Response (Dkt. No. 13) to the OSC, and Plaintiff filed a Reply

(Dkt. No. 14).! The Court hereby REMANDS the action to state court.

1 Per the schedule set in the OSC, briefing was closed as of Plaintiffs reply. But

after Plaintiff filed his reply, Defendant filed a Supplemental Declaration of

Zachary Brown (Dkt. No. 15), to which Plaintiff objected (Dkt. No. 16). The

Supplemental Declaration presents new matters Defendants could have and should

have presented in their response, and is tantamount to an unauthorized surreply.

See Local Rule 7-10 (“Absent prior written order of the Court, the [a] party shall

not file a response to the reply.”). The Supplemental Declaration was therefore

wholly unjustified. The Court therefore STRIKES the Supplemental Declaration

(Dkt. No. 15) and has not considered it in resolving the OSC.

CV-90 (12/02) CIVIL MINUTES — GENERAL Initials of Deputy Clerk CB

BACKGROUND

Defendants removed this action based on diversity jurisdiction, which

requires that the parties be in complete diversity and the amount in controversy

exceed $75,000. See 28 U.S.C. § 1332. In its OSC, the Court explained that

Defendants’ Notice of Removal (“NOR”) did not establish that the $75,000

amount in controversy is satisfied. The NOR stated, “Plaintiff seeks compensatory

damages based on his claim that he has an ownership interest in a company whose

product has already generated significant consumer interest and commercial

success. He also seeks disgorgement of any revenues and profits obtained or

received by Defendants. [] Plaintiff also seeks punitive damages in connection with

his fraud and tort claims. [] Plaintiff also seeks attorney fees in connection with his

elder abuse claim pursuant to California Welfare and Institutions Code section

15657.5. [] The amount in controversy exceeds, exclusive of interest and costs, the

sum of $75,000.” NOR ¶¶ 23-26. The Court found that it was not obvious from the

Complaint that the amount in controversy is satisfied, and that Defendants did little

more than repeat from the Complaint the categories of damages Plaintiff seeks.

Defendants provided no allegations or information from which the amount in

controversy can be quantified or from which it can be ascertained that it exceeds

$75,000.

LEGAL STANDARD

“The ‘strong presumption’ against removal jurisdiction means that the

defendant always has the burden of establishing that removal is proper.” Gaus v.

Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). “Because of the Congressional

purpose to restrict the jurisdiction of the federal courts on removal,” statutes

conferring jurisdiction are “strictly construed and federal jurisdiction must be

rejected if there is any doubt as to the right of removal in the first instance.”

Duncan v. Stuetzle, 76 F.3d 1480, 1485 (9th Cir. 1996) (citations and quotations

omitted). Thus, “[i]f it is unclear what amount of damages the plaintiff has sought,

. . . then the defendant bears the burden of actually proving the facts to support

jurisdiction, including the jurisdictional amount.” Gaus, 980 F.2d at 566–67.

DISCUSSION

Defendants have not met their burden. Defendants argue that the amount in

controversy is satisfied because Plaintiff seeks to recover a 50% ownership interest

in Moki Doorstep Co., which they claim is valued at $3 million. This purported

“valuation,” however, was a mere offer to buy the company by an investor on the

reality TV show Sharktank. Defs’ Resp. 2:9-13. The Court finds this purported

valuation is not probative of the company’s actual value for several reasons,

including because, as Defendants themselves admit, “that deal ultimately fell

through.” Id. The Court therefore ignores the retracted $3 million offer presented

on Sharktank. Defendants failed to present a meaningful or substantial metric of

the company’s actual value, so they have not established the amount put in issue by

Plaintiff’s claim for a 50% ownership interest in the company.

Defendants also argue that Plaintiff’s demand letter for $1.5 million plus

$375,000 in attorneys’ fees satisfies the amount in controversy. But these numbers

were expressly tied to Defendants’ claimed $3 million valuation of the company,

which, for the reasons stated above, simply carries no weight. Because that

valuation is illusory, so too is Plaintiff’s demand based expressly thereon. Cf.

Mount Healthy City School District Board of Education v. Doyle, 429 U.S. 274,

276 (1977) (plaintiff’s assertion of amount in controversy will be disregarded if it

appears “the claim is really for less than the jurisdictional amount. . .”). Defendants

also point to Plaintiff’s demand for punitive damages as satisfying the amount in

controversy, but punitive damages turn on the amount of compensatory damages,

and as stated, Defendant has presented no colorable estimate of the latter, and

therefore does not establish the amount put in issue by the punitive damages claim.

CONCLUSION

For the foregoing reasons, Defendants have not met their burden to establish

that the amount in controversy is satisfied. The Court therefore finds that it lacks

subject matter jurisdiction over this action and REMANDS it to the state court

from which it was removed.

IT IS SO ORDERED.