Raulerson v. Elwood Staffing Services, Inc.

Filing 17

MEMORANDUM OPINION. Signed by Judge Virginia Emerson Hopkins on 2/23/2017. (JLC)

FILED
2017 Feb-23 AM 09:09
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
MIDDLE DIVISION
DEREK RAULERSON,
Plaintiff,
v.
ELWOOD STAFFING SERVICES,
INC.,
Defendant.

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) Case No.: 4:17-CV-128-VEH
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MEMORANDUM OPINION
On January 20, 2017, this civil action was initiated by the Plaintiff, Derek
Raulerson, filing a “Verified Complaint for Declaratory Judgment and Injunctive
Relief” in the Circuit Court of Etowah County, Alabama. (Doc. 1-1 at 2). Defendant,
Elwood Staffing Services, Inc. (“Elwood”), removed the case to this Court on January
24, 2017, alleging that this Court has subject matter jurisdiction via 28 U.S.C. § 1332.
(Doc. 1 at 1). The plaintiff has now filed a motion to remand. (Doc. 15). For the
reasons stated herein, the motion will be GRANTED.
I.

STANDARD
“[T]he burden of establishing removal jurisdiction rests with the defendant

seeking removal.” Scimone v. Carnival Corp., 720 F.3d 876, 882 (11th Cir. 2013).

“Where . . . the plaintiff has not pled a specific amount of damages, the removing
defendant must prove by a preponderance of the evidence that the amount in
controversy exceeds the jurisdictional requirement.” Williams v. Best Buy Co., 269
F.3d 1316, 1319 (11th Cir. 2001). Federal courts “‘strictly construe[ ] the right to
remove’ and apply a general ‘presumption against the exercise of federal jurisdiction,
such that all uncertainties as to removal jurisdiction are to be resolved in favor of
remand.’” Scimone, 720 F.3d at 882 (quoting Russell Corp. v. Am. Home Assurance
Co., 264 F.3d 1040, 1050 (11th Cir.2001)).
II.

ANALYSIS
As noted, the Defendant removed this case alleging diversity jurisdiction

pursuant to 28 U.S.C. § 1332, which provides that “[t]he district courts shall have
original jurisdiction of all civil actions where the matter in controversy exceeds the
sum or value of $75,000, exclusive of interest and costs, and is between . . . citizens
of different States[.]” 28 U.S.C. § 1332(a)(1). It is undisputed and clear that this case
is between “citizens of different states.” However, the Defendant has failed to meet
its burden of proving that the amount in controversy exceeds $75,000.
In the instant case, the Complaint seeks only declaratory and/or injunctive
relief. The Complaint alleges that “[p]rior to becoming formally employed with
Elwood, Plaintiff was required to sign a ‘Non-Compete, Non-Solicitation and
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Confidentiality Agreement.’” (the Agreement). (Doc. 1-1 at 4). It continues:
The Agreement provides, in pertinent part, that for one (1) year
following the conclusion of the Plaintiff’s employment with [the]
Defendant, the Plaintiff may not engage in a business similar to that of
Elwood . . . and in a capacity and/or role that is “substantially similar”
to the capacity and/or role within which the Plaintiff performed services
for [the] Defendant within seventy-five (75) miles of any branch of
Elwood.
(Doc. 1-1 at 4). The Plaintiff seeks a declaration that the Agreement is “invalid and
unenforceable.” (Count One) (Doc. 1-1 at 8). He also seeks an order enjoining the
Defendant from enforcing the Agreement. (Count Three). (Doc. 1-1 at 9).1
Because there is no claim for money damages, the Defendant must prove, by
a preponderance of the evidence, that the value of the relief the Plaintiff seeks is in
excess of $75,000. The
value of injunctive or declaratory relief for amount in controversy
purposes is the monetary value of the object of the litigation that would
flow to the plaintiffs if the injunction were granted.” Leonard v. Enter.
Rent a Car, 279 F.3d 967, 973 (11th Cir.2002). When the value of
injunctive relief is “too speculative and immeasurable,” it will not be
included in the amount in controversy. Id. (internal quotation marks
omitted) (holding that the injunctive relief in question—requiring
insurers to compensate class members for diminished value on any
future damaged vehicle claims—was too speculative). We are mindful
that “[o]nly prophetic ken of a rare order could forecast what will
ensue.” Vicksburg, S. & P. Ry. Co. v. Nattin, 58 F.2d 979, 980 (5th
Cir.1932).

1

There is no “Count Two” in the Complaint.
3

Mann v. Unum Life Ins. Co. of Am., 505 F. App'x 854, 856 (11th Cir. 2013).
Citing Weiner v. Tootsie Roll Indus., Inc., 412 F. App'x 224 (11th Cir. 2011),
the Defendant insists that “[t]he Eleventh Circuit has held that, for purposes of
establishing the amount in controversy in a declaratory judgment action challenging
a non-competition agreement, the amount in controversy is the value received by the
plaintiff for entering into the agreement.” (Doc. 16 at 2). Actually, the panel in
Weiner was clear that “a covenant not to compete ‘generally [is] not susceptible to an
abstract fair market valuation.’” Weiner, 412 F. App'x at 227 (quoting Better
Beverages, Inc. v. United States, 619 F.2d 424, 429 (5th Cir.1980)). Contrasting the
situation before it with that in the Better Beverages case, the Court wrote:
Tootsie Roll does not seek to “tether [ ] [value] to the fact of the
transaction,” [Better Beverages, 619 F.2d at 430]. In contrast to the
situation in Better Beverages, where a taxpayer sought to assign a value
to his covenant not to compete when there was no allocation made for
the components of the business he sold, Weiner and Tootsie Roll
assigned millions of dollars of value to the goodwill of the companies
transferred to Tootsie Roll, and Weiner acknowledged in paragraph 52
of his complaint that his agreement not to compete was a component of
that goodwill. Although Weiner alleged in his complaint that the
“goodwill associated with [his] reputation is de minimis,” Weiner was
compensated handsomely for the goodwill transferred to Tootsie Roll,
and even a small percentage of that total exceeds the jurisdictional
threshold. In addition, Tootsie Roll presented undisputed evidence that
Weiner collected millions of dollars in 2003 for his ownership interest
in the companies and that, in 2003 and 2004, Weiner and several
high-ranking salaried employees of Concord Confections and Alpharetta
Confections earned more than the jurisdictional threshold. The district
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court did not clearly err when it found that Tootsie Roll established by
a preponderance of the evidence that the value of the relief sought by
Weiner exceeds the required amount in controversy.
Weiner, 412 F. App'x at 227–28 (emphasis added).
The Defendant argues that the amount it paid the Plaintiff, while he was
employed at Elwood, some $94,658.27, is evidence that the amount in controversy
is satisfied. However, unlike in Weiner, this transfer was not consideration for a one
time transfer of goodwill. Instead, here the non-competition agreement was a
condition of employment. (See doc. 16 at 1) (“Plaintiff’s employment was expressly
contingent upon his agreement to the restrictive covenants which he seeks to nullify
in this case.” ) (emphasis added). The amount paid to the Plaintiff by Elwood is
consideration for the work the Plaintiff performed while employed there. The
“plaintiff's prior salary [is] irrelevant in determining the benefit which would flow
to the plaintiff if the . . . agreement [is] invalidated as it was wholly speculative what
future economic value the plaintiff would derive[.]” Moorad v. Affordable Interior
Sys., LLC, No. 1:11-CV-2580-RWS, 2012 WL 162289, at *4 (N.D. Ga. Jan. 18, 2012)
(discussing the holding of Crump Insurance Services Inc. v. All Risks Ltd.,
1:10–cv–1555, 2011 WL 176892 (N.D.Ga. January 18, 2011)) (emphasis in original).
Instead, a better value to the Plaintiff of an order invalidating the Agreement would
be his current salary in the new position he now holds, and which, according to the
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Defendant, the Agreement prevents him from holding. The Defendant has offered no
evidence of that figure.2
The Court also rejects the Defendant’s argument that “there is additional value
in this case based upon Plaintiff’s knowledge of [D]efendant’s proprietary staffing
models and process – which were developed at a cost well in excess of $100,000.”
(Doc. 16 at 2-3). This argument addresses the potential value to the Defendant of
enforcing the non-competition agreement. “The financial loss the defendant may
suffer if the noncompetition clauses in the Agreement are declared invalid and the
plaintiff is permitted to compete against the defendant is irrelevant. What does matter
is the value of the benefit that will flow to the plaintiff if declaratory or injunctive
relief is granted.” D & R Party, LLC v. Party Land, Inc., 406 F. Supp. 2d 1382, 1385
(N.D. Ga. 2005) (citing Ericsson GE Mobile Commc'ns, Inc. v. Motorola Commc'ns
& Elecs., Inc., 120 F.3d 216, 218 (11th Cir. 1997)).3
2

Even if the amount which the Plaintiff made while working for Elwood were relevant
to this inquiry, the Court holds that the figure that Elwood paid the Plaintiff over a two-year
period, $94,658.27, would not be an accurate measure of the value of enjoining a noncompetition agreement which, at most, had a one-year time limit from the date the Plaintiff was
terminated–June 8, 2016.
3

The Defendant cites Davis v. Advanced Care Techs., Inc., No. CVS 06 02449 DFL
DAD, 2007 WL 1302736, at *2 (E.D. Cal. May 2, 2007), where the California district court,
citing precedent from the Ninth Circuit, held: “ Where the object of the litigation is a
noncompetition agreement designed to protect a company’s confidential information, the value to
the company of protecting that information is the amount in controversy.” Davis, 2007 WL
1302736, at *2 (citing Union Pacific R. Co. v. Mower, 219 F.3d 1069, 1071 n. 1 (9th Cir.2000)).
Only decisions of the Supreme Court or the Eleventh Circuit Court of Appeals are binding in this
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III.

CONCLUSION
Because the Defendant has not shown by a preponderance of the evidence that

the amount in controversy in this case is satisfied, the motion to remand will be
GRANTED.
DONE this 23rd day of February, 2017.

VIRGINIA EMERSON HOPKINS
United States District Judge

Court. Jaffree v. Wallace, 705 F.2d 1526, 1532 (11th Cir. 1983), prob. juris. noted in part,
judgment aff'd in part, 466 U.S. 924, 104 S. Ct. 1704, 80 L. Ed. 2d 178 (1984), and aff'd, 472
U.S. 38, 105 S. Ct. 2479, 86 L. Ed. 2d 29 (1985) (The only courts a district court must be
obedient to are the Circuit within which it is found and the Supreme Court of the United States.).

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