WOOD v. GENERAL DYNAMICS ADVANCED INFORMATION SYSTEMS, INC.

Filing 26

ORDER AND RECOMMENDED RULING - MAGISTRATE JUDGE signed by MAG/JUDGE P. TREVOR SHARP on 6/17/09 re 19 MOTION to Strike 13 Response in Opposition to Motion, Affidavit of Lawrence A. Martinelli with attached Exhibits filed by CAROLYN S. WOOD be dism issed as moot, 11 MOTION to Remand Action to Alamance District Court filed by CAROLYN S. WOOD be denied. Finally, IT IS ORDERED that Plaintiff be afforded thirty (30) days to make any amendment to her complaint she deems necessary. (Wilson, JoAnne)

I N THE UNITED STATES DISTRICT COURT F O R THE MIDDLE DISTRICT OF NORTH CAROLINA

C A R O L Y N S. WOOD, P l a i n t i f f, v. G E N E R A L DYNAMICS ADVANCED I N F O R M A T I O N SYSTEMS, INC., D efe n d a n t.

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O R D E R AND RECOMMENDATION OF UNITED STATES MAGISTRATE JUDGE

T h is matter comes before the Court on the motion to remand (Docket No. 11) filed b y Plaintiff Carolyn S. Wood ("Plaintiff"). Defendant General Dynamics Advanced

In f o rm a tio n Systems, Inc. ("GDAIS" or "Defendant") has opposed the motion. (Docket No. 1 3 .) Plaintiff has filed a reply. (Docket No. 21.) For the reasons stated herein, the Court c o n c lu d e s that Plaintiff's motion should be denied.1

Also before the Court is Plaintiff's motion to strike the affidavit of Lawrence A. M a rtin e lli, which was submitted in support of Defendant's opposition to remand. (Docket N o . 19.) As discussed infra, the Court concludes that this motion is moot and/or baseless and s h o u ld be denied.

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F A C T U A L AND PROCEDURAL BACKGROUND P la in tif f was employed by Defendant, or its predecessors, between April 1980 and O c to b e r 2001, at which time she was involuntarily terminated. (Docket No. 2, Complaint (" C o m p l." ) ¶¶ 3-5.) Prior to October 2001, Defendant classified Plaintiff as an "employee" a n d provided her with "the full compensation package to which GDAIS salaried employees w e re entitled." (Id. ¶ 5.) In October 2003, Defendant contacted Plaintiff and inquired as to h e r availability to return to work. (Id. ¶ 6.) On April 5, 2004, Plaintiff reported to work at D e f e n d a n t's facility in McLeansville, North Carolina. (Id.) She was advised that she would b e paid for her services as "contract labor," through a "contact [sic] labor house" known as A D E A Solutions ("ADEA"). (Id.) This arrangement lasted until January 7, 2007. (Id. ¶ 8.) P lain tiff alleges, inter alia, that during this time period, she: (1) was supervised by G D A IS personnel; (2) managed the work of GDAIS employees; (3) worked hours established b y GDAIS; (4) submitted GDAIS timesheets; (5) was invited to GDAIS functions; (6) had h e r hourly pay rate and nonexempt status determined by GDAIS; and (7) was provided e q u ip m e n t and work space by GDAIS. (Id. ¶ 8.) In short, Plaintiff maintains that Defendant " re ta in e d the right to control [her] and direct the manner and method" in which she p e rf o rm e d her work; therefore, she concludes that Defendant "improperly classified her as a n `employee' of ADEA, as opposed to an `employee' of GDAIS." (See id. ¶¶ 9-12.) O n October 17, 2007, Plaintiff's counsel sent a letter to GDAIS which stated in re le v a n t part that Plaintiff is entitled to receive retroactive benefits under GDAIS's employee -2-

b e n e f it plans (the "Demand Letter"). (Docket No. 13, Ex. A, Affidavit of Lawrence A. M a rtin e lli (the "Martinelli Aff."), Ex. 3 at 5-6.) In essence, the Demand Letter requested that G D A IS classify Plaintiff as an employee and that it reimburse her for compensation she b e lie v e s she is entitled to. (Compl. ¶¶ 23, 24.) Specifically, the Demand Letter proposed a se ttle m e n t whereby GDAIS would receive a "general release of all claims against [it]" in e x c h a n g e for, inter alia, a payment of $400,000 to Plaintiff and an adjustment to her present s a la ry. (Demand Letter at 5-6.) GDAIS refused Plaintiff's demands. (Compl. ¶¶ 23, 24.) O n July 25, 2008, Plaintiff initiated the present action in the North Carolina District C o u rt for Alamance County. (Id. at 7.) In her complaint, Plaintiff purports to seek only d e c la ra to ry and injunctive relief, pursuant to N.C. Gen. Stat. § 1-253, et seq. (the "Act"), as w e ll as fees and costs. (Id. at 1, 5-6.) Specifically, Plaintiff seeks a declaration that "from A p ril 5, 2004, through January 7, 2007, the Plaintiff met the definition of a GDAIS employee u n d e r the common law [of North Carolina]," and that during that time period, "GDAIS was a n employer of the Plaintiff." (Id. at 5.) Further, Plaintiff also seeks to affirmatively enjoin D e f e n d a n t by requiring it to "reclassify the Plaintiff as an employee of GDAIS" during said tim e period.2 (Id.)

The Court observes that even though Plaintiff's complaint does not include a s p e c if ic request for "damages," it does allege that GDAIS "violated her property rights," in c lu d in g her "monetary rights." (Compl. ¶ 25.) Moreover, Plaintiff's complaint makes clear th a t she demanded monetary reimbursement from GDAIS prior to initiating the present suit (se e id. ¶¶ 23, 24), which Plaintiff's counsel confirmed at oral argument was a direct ref ere n ce to the Demand Letter. -3-

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O n September 3, 2008, Defendant removed the matter to this Court on the putative b a se s of diversity jurisdiction and federal question jurisdiction. (Docket No. 1, Pet. for R e m o v a l.) Defendant alleged that this Court has "diversity jurisdiction over this action under 2 8 U.S.C. § 1332(a) because there is complete diversity of citizenship between Plaintiff and G D A IS and the amount in controversy exceeds the sum or value of $75,000, exclusive of in te re st and costs." (Id. ¶ 9.) Further, Defendant maintained that this Court has jurisdiction u n d e r 28 U.S.C. § 1331 because Plaintiff's claims are "preempted" by the Employee R e tir e m e n t Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1001, et seq. (Id. ¶ 10.) O n October 3, 2008, Plaintiff filed the motion to remand that is presently before this C o u rt. (Docket No. 11.) On October 27, 2008, Defendant filed a memorandum of law o p p o s in g remand, which included an Affidavit from its Director of Human Resources and B e n e f i t s Administration, Lawrence A. Martinelli. (Docket No. 13, Martinelli Aff. ¶ 2.) A m o n g other things, Mr. Martinelli attached a copy of the Demand Letter to his affidavit. (M a rtin e lli Aff., Ex. 3.) On November 14, 2008, Plaintiff filed, pursuant to Fed. R. Civ. P. 1 2 (f ), a motion to strike this affidavit and its exhibits, which is also presently before this C o u rt. (Docket No. 19.) O n May 19, 2009, the Court heard oral argument from the parties on Plaintiff's m o tio n to remand. The majority of the hearing focused generally on the issue of diversity ju ris d ic tio n , and in particular on whether and how the Court should "value" the relief sought b y Plaintiff in conducting its "amount in controversy" analysis. -4-

D IS C U S S IO N P la in tif f seeks to strike the Martinelli Affidavit, including the Demand Letter, from the record and to have this matter remanded to state court pursuant to 28 U.S.C. § 1447(c). D e f en d a n t opposes both motions on the merits and contends that removal was proper based o n federal question and diversity jurisdiction. The parties have filed briefs and other d o c u m e n ts in support of their positions. The Court will address each motion in turn, b e g in n in g with Plaintiff's motion to strike. A. T h e Martinelli Affidavit F e d . R. Civ. P. 12(f) allows courts to "strike from a pleading an insufficient defense o r any redundant, immaterial, impertinent, or scandalous matter." (Emphasis added). While ac k n o w led g in g that an affidavit is not a "pleading," as defined in Fed. R. Civ. P. 7(a), P lain tiff urges the Court to nonetheless use this rule to strike the Martinelli Affidavit and its e x h ib its from the record, or, alternatively, to disregard that rule and simply inquire into the u l tim a te admissibility of the information contained therein and to exclude it on other grounds. T h e Court is not inclined to do so at this time. A s an initial matter, the Martinelli Affidavit recites that it was made with all the n o rm al indicia of reliability/admissibility (i.e., with personal knowledge of the matters c o n ta in e d within, under penalty of perjury, etc.); however, after careful review, the Court has d e te rm in e d that the only portion of the affidavit which is particularly germane to resolving th e present motion to remand is the Demand Letter, which is attached as Exhibit 3. Indeed, -5-

n o tw ith sta n d in g any questions regarding the ultimate admissibility of the Martinelli A f f id a v it, the Court determines that it may consider the Demand Letter, and consequently r e so l v e the underlying motion to remand, on other, independent grounds. In point of fact, the Plaintiff conceded at oral argument, that her complaint makes m u ltip le references to the Demand Letter. (Compl. ¶¶ 23, 24.) Accordingly, the Court may ta k e cognizance of the actual document itself. See, e.g., Tellabs, Inc., v. Makor Issues & R ig h ts , Ltd., 551 U.S. 308, 127 S. Ct. 2499, 2509 (2007) ("[C]ourts must consider the co m p lain t in its entirety," including "documents incorporated . . . by reference."). Moreover, it is amply clear that the Court may consider evidence outside the complaint in order to d e te rm in e the amount in controversy, such as affidavits and demand letters. See, e.g., Cohn v . Petsmart, Inc., 281 F.3d 837, 840 n.3 (9th Cir. 2002) (rejecting the argument that Fed. R. E v id. 408 prohibits the use of settlement offers in determining the amount in controversy); s e e also Rising-Moore v. Red Roof Inns, Inc., 435 F.3d 813, 816-17 (7th Cir. 2006) (same); M c P h a il v. Deere & Co., 529 F.3d 947, 956 (10th Cir. 2008) (same); accord Meridian Sec. In s . Co. v. Sadowski, 441 F.3d 536, 541-52 (7th Cir. 2006) (The amount in controversy may b e established by reference to the plaintiff's contentions, interrogatories, admissions, c a lc u la tio n s based on the complaint, the plaintiff's informal estimates or settlement demands o r by the introduction of evidence, such as affidavits.). In any event, it is clear that the Court may consider the Demand Letter. As such, the q u e stio n s raised by the parties as to whether Rule 12(f) is the proper vehicle to strike an -6-

af fid av it, and whether the factual statements contained in the Martinelli Affidavit are a d m is s ib le become academic. Accordingly, the Court finds that Plaintiff's motion to strike th e Martinelli Affidavit should be dismissed as moot. B. D iv e r sity Jurisdiction P u r s u a n t to 28 U.S.C. § 1332, diversity jurisdiction exists when the parties are of d iv e rs e citizenship and the amount in controversy exceeds $75,000. As the parties agree that c o m p l e te diversity exists (see Pl.'s Reply Br. at 6; see also Def.'s Br. at 5), the only real issue th a t needs to be addressed is whether the "amount in controversy" requirement has been met. T h e Court concludes that it has. D e sp ite the fact that Plaintiff's complaint does not actually seek damages, Defendant h a s argued that the Court should look to the Demand Letter and determine that the "value" o f the declaratory and injunctive relief sought by Plaintiff exceeds the statutory minimum re q u ire d to exercise diversity jurisdiction. On the other hand, Plaintiff has insinuated that the C o u rt need not "value" the relief she seeks, and argued that if it does, it should determine that th e value is "nil," because she seeks a simple declaration and injunction, rather than a s p e c if ic sum of money. The Court finds the latter argument to be unpersuasive. " In actions seeking declaratory or injunctive relief, it is well established that the a m o u n t in controversy is measured by the value of the object of the litigation." Hunt v. W a sh ing ton State Apple Adver. Comm'n, 432 U.S. 333, 347 (1977). Where the relief sought is equitable in nature, courts in the Fourth Circuit must apply the "either viewpoint" test to -7-

d e te rm in e the "value of the object of the litigation." See, e.g., Gov't Employees Ins. Co. v. L a lly , 327 F.2d 568, 569 (4th Cir. 1964)); see also Dixon v. Edwards, 290 F.3d 699, 710-11 (4 th Cir. 2002); Hudson Const. Co. v. Dillingham Const. Co., 169 Fed. Appx. 769, 770-71 (4 th Cir. 2006) (unpublished); Market Am., Inc. v. Tong, No. 1:03CV00420, 2004 WL 1 6 1 8 5 7 4 (M.D.N.C. July 15, 2004); accord Candor Hosiery Mills, Inc. v. Int'l Networking G r o u p , Inc., 35 F. Supp. 2d 476, 479-80 (M.D.N.C. 1998) (applying the "either party" test). In applying this test, courts are required to look to the underlying rights and o b lig a tio n s of the litigants to "calculate the potential pecuniary impact of [a] judgment to e ith e r party." Tong, 2004 WL 1618574, at *2 (citing Candor, 35 F. Supp. 2d at 479-80); see a l so Moore v. Cabot Oil & Gas Corp., No. 2:06-0538, 2007 WL 1302546, at *5 (S.D.W.Va. M ay 2, 2007); In re Microsoft Corp. Antitrust Litig., 127 F. Supp. 2d 702, 718-19 (D. Md. 2 0 0 1 ); accord Dixon, 290 F.3d at 711 (citing Lally, 327 F.2d at 569). "In so doing, the Court m a y not weight the merits of the case, but should consider all the evidence in the record, in c lu d in g the pleadings and the affidavits submitted by the parties." Tong, 2004 WL 1 6 1 8 5 7 4 , at *2 (citing St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 292 (1 9 3 8 ); Dash v. FirstPlus Home Loan Trust, 248 F. Supp. 2d 489, 498 (M.D.N.C. 2003)). If its jurisdictional allegations are challenged, the party advocating the exercise of f e d e ra l jurisdiction must present "competent proof" to establish that the "amount in c o n tro v e rs y" requirement has been met by a preponderance of the evidence. See, e.g., M c N u tt v. Gen. Motors Acceptance Corp., 298 U.S. 178, 189 (1936); see also Candor, 35 -8-

F . Supp. 2d at 479-80; Tong, 2004 WL 1618574, at *2; Gwyn v. Wal-Mart Stores, Inc., 955 F . Supp. 44, 46 (M.D.N.C. 1997); cf. Chandler v. Cheesecake Factory Rests., Inc., 239 F .R .D . 432, 438 (M.D.N.C. 2006). Further, at least two circuit courts have held that "[o]nce th e defendant in a removal case has established the requisite amount in controversy, the p lain tiff can defeat jurisdiction only if `it appears to a legal certainty that the claim is really f o r less than the jurisdictional amount.'" See, e.g, Oshana v. Coca-Cola Co., 472 F.3d 506, 5 1 1 (7th Cir. 2006) (citing Sadowski, 441 F.3d at 541; Red Cab, 303 U.S. at 289); see also D e A g u ila r v. Boeing Co., 47 F.3d 1404, 1412 (5th Cir. 1995); cf. Barr v. Frannet, LLC, No. 3 :07 -C V -12 2 2 -M , 2008 WL 59295, at *1 (N.D. Tex. Jan. 3, 2008). H e re , the "objects" of this litigation are Plaintiff's requests for declaratory and in ju n c tiv e relief (i.e., that she be declared an "employee" of GDAIS during the relevant time p e rio d and that GDAIS be affirmatively enjoined to classify her as such). At oral argument, P la in tif f did not dispute that she intended to take the state-court ruling she presently seeks (w h ic h she also maintains would be binding on a federal court subsequently reviewing her e n title m e n t to ERISA benefits), to the administrator of GDAIS's ERISA benefit plans, so that she may seek retroactive benefits for the time she was classified as "contract" labor. In s te a d , the main point of contention between the parties on the issue of diversity jurisdiction w a s quite simply whether the Court should "value" the declaration and/or injunctive relief th a t she seeks, and if so, how it should do so.

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D e f e n d a n t maintained that the declaration and injunction sought by Plaintiff were, in e f f e c t, conditions precedent to her ability to seek ERISA benefits under the terms of G D A IS ' s respective benefits plans, a point which Plaintiff did not directly contest. Ergo, D e f en d a n t reasoned that because Plaintiff valued her putative ERISA benefits at settlement v a lu e of $400,000, the declaratory and injunctive relief she sought was worth that same a m o u n t, as the latter could not be obtained without the former. Plaintiff's response to this arg u m en t was that, notwithstanding its Demand Letter, which did indeed value Plaintiff's p u tativ e ERISA claims at least at $400,000, it would be too speculative an endeavor to a tte m p t to value her claims at this juncture. W h ile it is true that ambiguities should generally be construed in favor of remand, this C o u rt does not find that this matter is infected with any undue degree of vagueness. Indeed, th e Court considers the Demand Letter to be good evidence that Plaintiff values her alleged E R IS A claims, which she has plainly stated she intends to seek after obtaining declaratory a n d injunctive relief, at a value well in excess of the statutory minimum required to assert f e d e ra l jurisdiction. Thus, the mere fact that Plaintiff may not ultimately be successful in o b ta in in g all the relief to which she believes she is entitled does not materially alter the c o n c lu s io n that the "potential" impact of a judgment in this matter could have the effect of re s u ltin g in either a $400,000 "gain" to Plaintiff, or "loss" to Defendant. Accordingly, absent some concession by Plaintiff that her Demand Letter was a rtif ic ia lly inflated and/or sent in bad faith, the Court cannot help but conclude that -10-

D e f en d a n t has carried its burden of establishing, by a preponderance of the evidence, that the " v a lu e " of the objects of this litigation (i.e., the declaration of employment status and/or the re q u e st for injunctive relief) satisfy the amount in controversy requirement. Moreover, aside f ro m its conclusory statements in court, Plaintiff has not produced any evidence to show that th e value of the relief she seeks is less than $75,000, let alone any such evidence which w o u ld , to a legal certainty, support such a conclusion. C O N C L U SIO N F o r the foregoing reasons, IT IS RECOMMENDED that Plaintiff's motion to re m a n d (Docket No. 11) be denied. IT IS FURTHER RECOMMENDED that Plaintiff's m o tio n to strike (Docket No. 19) be dismissed as moot. Finally, IT IS ORDERED that P la in tif f be afforded thirty (30) days to make any amendment to her complaint she deems n e c e s s a ry.

/s/ P. Trevor Sharp United States Magistrate Judge

D a te : June 17, 2009

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