Meredith v. e-MDs, Inc.

Filing 13

ORDER signed by Judge John A. Mendez on 6/11/2014 GRANTING 6 Motion to Remand; REMANDING CASE to Superior Court of the State of California, County of Trinity; TERMINATING 4 Motion to Dismiss; VACATING the Motion Hearing on 4 Motion to Dismiss. Copy of remand order sent. CASE CLOSED. (Michel, G)

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UNITED STATES DISTRICT COURT

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EASTERN DISTRICT OF CALIFORNIA

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RANDALL MEREDITH, M.D.,

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14-cv-00899 JAM CMK

Plaintiff,

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No.

v.

ORDER GRANTING PLAINTIFF’S
MOTION TO REMAND

e-MDs, a Texas Corporation,
and DOES 1-10, inclusive,

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Defendants.
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This matter is before the Court on Plaintiff Randall
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Meredith’s (“Plaintiff”) Motion to Remand (Doc. #6) pursuant to
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28 U.S.C. § 1447(c).

Defendant e-MDs, Inc. (“Defendant”) opposes

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the motion (Doc. #7).
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Plaintiff has filed a Reply (Doc. #8).

For the following reasons, Plaintiff’s motion is GRANTED. 1

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I.

FACTUAL ALLEGATIONS AND PROCEDURAL BACKGROUND

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Plaintiff is a medical doctor in Trinity County, California.
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Compl. ¶ 1.

Defendant is a Texas corporation.

Compl. ¶ 2.

On

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This motion was determined to be suitable for decision without
oral argument. E.D. Cal. L.R. 230(g). The hearing was
scheduled for June 4, 2014.
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March 9, 2011, Plaintiff and Defendant entered into a written

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contract, whereby Plaintiff purchased software for use in his

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medical practice.

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was $14,798.

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did not perform as promised.

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Plaintiff was forced to hire a third party IT supplier to resolve

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repeated problems with the software.

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billed $29,000 by the third-party IT supplier.

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June 28, 2013 and August 30, 2013, counsel for Plaintiff sent

Compl. ¶ 10.

Compl. ¶ 11.

The total price for the software

Plaintiff alleges that the product
Compl. ¶ 13.

Compl. ¶ 16.

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letters to Defendant’s counsel.

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DeCarli Declaration, Ex. A.

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total damages in the amount of $57,130.73.

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As a result,

Plaintiff was

Compl. ¶ 20.

On

Griffith Declaration, Ex. 2;

Each letter contains a claim for
Id.

On March 10, 2014, Plaintiff filed the Complaint in Trinity

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County Superior Court.

On April 11, 2014, Defendant removed the

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matter to this Court on the basis of diversity jurisdiction,

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pursuant to 28 U.S.C. § 1332(a) and 28 U.S.C. § 1441(a).

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Plaintiff’s Complaint includes the following causes of action:

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(1) Breach of Express Warranty; (2) Breach of the Implied

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Warranty of Merchantability; (3) Breach of the Implied Warranty

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of Fitness for a Particular Purpose; and (4) Negligent

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Misrepresentation.

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of all relief shall be no more than $74,999.00.”

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Prayer for Relief.

Plaintiff specifically alleges that “the sum
Compl. at 10,

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II.

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OPINION

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A.

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Generally, a state civil action is removable to federal

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Legal Standard

court only if it might have been brought originally in federal
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court.

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construe[s] the removal statute against removal jurisdiction.”

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Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992) (citing

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Boggs v. Lewis, 863 F.2d 662, 663 (9th Cir. 1988); Takeda v.

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Northwestern National Life Insurance Co., 765 F.2d 815, 818 (9th

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Cir. 1985)).

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there is any doubt as to the right of removal in the first

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instance.”

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F.2d 1062, 1064 (9th Cir. 1979)).

See 28 U.S.C. § 1441.

The Ninth Circuit “strictly

Thus, “[f]ederal jurisdiction must be rejected if

Id. (citing Libhart v. Santa Monica Dairy Co., 592
“The ‘strong presumption’

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against removal jurisdiction means that the defendant always has

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the burden of establishing that removal is proper.”

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Nishimoto v. Federman-Bachrach & Associates, 903 F.2d 709, 712 n.

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3 (9th Cir. 1990); Emrich v. Touche Ross & Co., 846 F.2d 1190,

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1195 (9th Cir. 1988)).

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Id. (citing

To establish diversity jurisdiction, the defendant must show

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complete diversity exists among the parties and that the amount

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in controversy exceeds $75,000.

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consider whether the amount in controversy is apparent from the

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face of the complaint.

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116 F.3d 373, 377 (9th Cir. 1997).

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affirmatively alleges an amount of damages under $75,000, there

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are competing views as to the appropriate standard of proof to

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which the defendant should be held.

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under these circumstances, the defendant must establish that the

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amount in controversy requirement is met by the preponderance of

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the evidence.

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2014 WL 651923 (E.D. Cal. Feb. 19, 2014).

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courts have held that the defendant must “prove to a legal

28 U.S.C. § 1332.

A court may

Singer v. State Farm Mut. Auto. Ins. Co.,
When the complaint

Some courts have held that,

See, e.g., Cagle v. C & S Wholesale Grocers, Inc.,

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Conversely, some

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certainty” that the amount in controversy threshold is met, when

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the plaintiff has specifically alleged otherwise.

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Stelzer v. CarMax Auto Superstores California, LLC, 2013 WL

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6795615 (S.D. Cal. Dec. 20, 2013).

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§ 1446(c)(2) provides as follows:

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See, e.g.,

Moreover, 28 U.S.C.

“(A) the notice of removal may assert the amount in
controversy if the initial pleading seeks . . . a money
judgment, but the State practice . . . permits recovery
of damages in excess of the amount demanded; and
(B) removal of the action is proper on the basis of an
amount in controversy asserted under subparagraph (A)
if the district court finds, by the preponderance of
the evidence, that the amount in controversy exceeds
the amount specified in section 1332(a).” (emphasis
added.)

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The clear and authoritative language of 28 U.S.C. 1446(c)(2) is

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consistent with the line of cases holding that, when the

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plaintiff has specifically alleged less than $75,000, the

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defendant seeking removal must prove the amount in controversy by

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the preponderance of the evidence.

See, e.g., Cagle, 2014 WL

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651923 (E.D. Cal. Feb. 19, 2014).

Moreover, the Cagle court’s

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thorough and sprawling analysis of the relevant Ninth Circuit

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case law – including its ultimate conclusion that the

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‘preponderance’ standard is appropriate – is quite persuasive.

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Id.

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discussed below, Defendant fails to meet even the preponderance

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of the evidence standard, and would, therefore, necessarily fail

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under the more demanding “legal certainty” standard as well.

However, the Court need not reach the issue.

As is

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B.

Discussion

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Plaintiff argues that Defendant cannot demonstrate, “without

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speculation and conjecture,” that Plaintiff would be entitled to

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$75,000, even if he prevailed on every claim.
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Mot. at 1.

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Plaintiff maintains that his total damages amount to $57,136.73,

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as reflected in his June 28, 2013 letter.

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Griffith Declaration, Ex. 2).

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Defendant’s estimate of potential attorneys’ fees is too

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speculative to satisfy its burden.

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that Plaintiff’s total damages amount to $57,136.73, but

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maintains that the addition of an estimated $30,615 in attorneys’

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fees means that the $75,000 threshold is easily satisfied.

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at 4.

Mot. at 5 (citing

Moreover, Plaintiff contends that

Mot. at 6.

Defendant agrees

Opp.

Defendant bases this conclusion on “the reasonable

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estimate of tasks, hours and rate submitted by Defendant in its

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notice of removal, and based on Plaintiff’s own representation of

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the attorney’s fees incurred even before the preparation and

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filing of his complaint.”

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Opp. at 4.

As noted above, the parties do not dispute the amount in

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controversy, as it pertains to Plaintiff’s alleged actual

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damages.

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letters from Plaintiff’s counsel to Defendant’s counsel,

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Plaintiff’s alleged actual and compensatory damages are

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$57,136.73.

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Cir. 2002) (holding that “a settlement letter is relevant

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evidence of the amount in controversy if it appears to reflect a

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reasonable estimate of the plaintiff’s claim”); Griffith

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Declaration, Ex. 2; DeCarli Declaration, Ex. A.

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As evident from the June 28, 2013 and August 30, 2013

See Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th

Accordingly, Defendant must establish that, should Plaintiff

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prevail on all of his claims, he would be entitled to at least

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$17,863.27 in attorneys’ fees.

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included in the amount in controversy, where an award of such

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fees is authorized by an underlying statute or contract.

Potential attorneys’ fees may be

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Galt

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G/S v. JSS Scandinavia, 142 F.3d 1150, 1156 (9th Cir. 1998);

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Richmond v. Allstate Ins. Co., 897 F. Supp. 447, 450 (S.D. Cal.

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1995)).

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for an award of attorneys’ fees to the prevailing party.

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Declaration, Ex. A.

The contract between Plaintiff and Defendant provides

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In its Notice of Removal, Defendant contends that “an

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extremely conservative estimate of the attorneys’ fees for

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preparing and presenting plaintiff’s case to a jury totals

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$30,615.”

DeCarli

Notice of Removal at 5.

Defendant arrived at this

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figure by multiplying the estimated number of hours Plaintiff’s

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attorneys would spend on the case (157) by an hourly rate of

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$195.

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figure is “pure speculation.”

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his legal services agreement is a “contingency fee agreement” and

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that Defendant’s estimate assumes that the case “will be taken

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all the way through trial.”

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Notice of Removal at 6-7.

Plaintiff argues that this

Mot. at 6.

Plaintiff notes that

Mot. at 6-7.

The Court finds that Defendant’s estimate of Plaintiff’s

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eventual attorneys’ fees is highly speculative, for a number of

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reasons.

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all of his claims.

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attorneys’ fees on his negligent misrepresentation claim, as

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there is no statutory provision authorizing such an award.

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Compl. ¶¶ 48-54.

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amount in controversy, the Court must assume that Plaintiff will

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prevail on all of his claims, including those which support an

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award of attorneys’ fees.

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Stanley Dean Witter, 199 F. Supp. 2d 993, 1001 (C.D. Cal. 2002).

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However, it is impossible to predict what percentage of the work

First, Plaintiff is not entitled to attorneys’ fees on
Specifically, Plaintiff is not entitled to

Of course, for purposes of determining the

Kenneth Rothschild Trust v. Morgan

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done by Plaintiff’s counsel would be in furtherance of his

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contractual claims versus his negligent misrepresentation claim.

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Therefore, it is unduly speculative to predict whether Plaintiff

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would be entitled to attorneys’ fees for the entirety of the work

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performed by his counsel.

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motion to remand for this very reason.

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Hartford Acc. & Indem. Co., 994 F. Supp. 1196, 1200 (N.D. Cal.

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1998) (noting that “defendant has not attempted to demonstrate

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which percentage of those [attorneys’] fees were incurred to

Several other courts have granted a
See Conrad Associates v.

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recover contract damages . . . and which percentage of those fees

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were expended to seek extra-contractual damages”); see Burk v.

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Med. Sav. Ins. Co., 348 F. Supp. 2d 1063, 1068-69 (D. Ariz. 2004)

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(noting that “it is unclear what portion of those [attorneys’

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fees] would be recoverable as fees incurred to obtain contract

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benefits”).

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Second, Defendant’s estimate assumes that the case will

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proceed to trial.

Notice of Removal at 6-7.

Even if the case

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cannot be resolved through a voluntary settlement, it may well be

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resolved at the summary judgment stage.

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estimate, resolution prior to trial would eliminate at least 54

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of the 157 attorney hours (34%) predicted by Defendant.

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uncertainty is precisely why a number of courts have held that

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attorneys’ fees incurred after the date of removal are not

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included in the amount in controversy.

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CarMax Auto Superstores California, LLC, 2013 WL 6795615 (S.D.

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Cal. Dec. 20, 2013).

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amount in controversy includes forecasted attorneys’ fees for the

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duration of the case, the Court need not address this issue at

Using Defendant’s

This

See, e.g., Stelzer v.

Although other courts have held that the

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this time.

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Supp. 2d 1004, 1011 (N.D. Cal. 2002).

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considering potential attorneys’ fees for the duration of

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Plaintiff’s case, the speculative nature of such a figure is only

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exacerbated by the uncertainty of the case’s ultimate lifespan.

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Third, as noted by Plaintiff, the hourly rate used by

See, e.g., Brady v. Mercedes-Benz USA, Inc., 243 F.
It merely notes that, even

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Defendant in its attorneys’ fee calculation is taken from a

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previous case handled by the law firm representing Plaintiff in

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the case at bar, not the individual attorneys handling

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Plaintiff’s case.

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those billed by a partner and a senior associate at the firm.

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Notice of Removal at 6.

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Plaintiff’s current attorney is billing at a similar rate in this

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case.

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is unsupported by sufficient proof to draw a reliable conclusion.

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Mot. at 7.

Significantly, these rates were

Defendant makes no showing that

Therefore, any prediction based on the hourly rate of $195

Finally, the Court acknowledges Plaintiff’s argument that

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this case is being handled on a contingency fee arrangement, but

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notes that this fact is of little import.

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Irrespective of the contingency fee agreement, Plaintiff would

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still be eligible for reasonable attorneys’ fees under his

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contract with Defendant.

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attorneys’ fees are calculated using the “lodestar” calculation,

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which Defendant has used.

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Citrus Growers, 904 F.2d 1301, 1311 (9th Cir. 1990).

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Accordingly, the existence of a contingency fee arrangement does

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not negate Defendant’s attempts to calculate likely attorneys’

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fees using the lodestar method.

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Mot. at 7.

Traditionally, statutory/contractual

Six (6) Mexican Workers v. Arizona

Nevertheless, for the reasons noted above, the Court
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concludes that Defendant’s estimate is too speculative to

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establish, by the preponderance of the evidence or to a legal

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certainty, that Plaintiff would be entitled to at least

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$17,863.27 in attorneys’ fees.

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satisfied its burden in establishing that the $75,000 amount in

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controversy requirement is met, and Plaintiff’s Motion to Remand

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is GRANTED.

Therefore, Defendant has not

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III.

ORDER

For the reasons set forth above, the Court GRANTS

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Plaintiff’s Motion to Remand.

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Defendant’s Motion to Dismiss (Doc. #4) is terminated and the

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June 18, 2014 hearing date is vacated.

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Consistent with this Order,

IT IS SO ORDERED.
Dated: June 11, 2014

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