Transtar Industries, Inc. v. Lewis et al
Filing
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Opinion and Order. Plaintiff's Motion for Fees and Costs (Related doc # 12 ) is denied. Judge Christopher A. Boyko on 9/16/2016. (H,CM)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION
TRANSTAR INDUSTRIES, INC.,
Plaintiff,
vs.
ANTHONY LEWIS, et al.,
Defendants.
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CASE NO. 1:15CV1735
JUDGE CHRISTOPHER A. BOYKO
OPINION AND ORDER
CHRISTOPHER A. BOYKO, J.:
This matter comes before the Court upon the Motion (ECF DKT #12) of Plaintiff,
Transtar Industries, Inc., for Fees and Costs. For the following reasons, the Motion is denied.
I. BACKGROUND
On August 27, 2015, Defendants, Anthony Lewis and Whatever It Takes
Transmission and Parts, Inc. (“WIT”), removed this case from Cuyahoga County Common
Pleas Court on the basis of diversity jurisdiction.
Lewis executed a Non-Competition, Non-Disclosure, Non-Solicitation and
Confidentiality Agreement on December 12, 2011, as a condition of his employment with
Transtar. According to the Agreement, Lewis is prohibited, for a period of twelve (12)
months after termination from employment with Transtar, from accepting employment with a
competitor located within 100 miles of the Transtar branch from which Lewis’s employment
is based, from soliciting Transtar’s customers, from soliciting Transtar’s employees, from
soliciting Transtar’s vendors and from using or disclosing Transtar’s confidential business
information. In his positions as Branch Manager and later as Regional Manager, Lewis
allegedly had access to Transtar’s business plans, pricing models, customer lists, employee
lists, vendor lists and other confidential and proprietary business information that provides
Transtar with a competitive advantage.
On July 7, 2015, Lewis voluntarily resigned from his employment with Transtar and
accepted employment almost immediately with WIT. Transtar alleges that Lewis is the lead
WIT employee in the opening of the new WIT Arizona branch office that will directly
compete with the Transtar branch office he formerly managed.
Transtar’s Complaint, filed in state court on August 11, 2015, is captioned “Complaint
for Injunctive Relief With Jury Demand.” The Complaint quotes Defendant Lewis’s NonCompetition, Non-Disclosure, Non-Solicitation and Confidentiality Agreement, paragraph 2:
“Transtar would suffer irreparable harm from a breach or threatened breach by Employee of
any of the covenants or agreements contained herein and money damages would be an
inadequate remedy for such breach or threatened breach.” Each Count concludes with:
“unless injunctive relief is granted, Defendants’ actions will cause Transtar to suffer
irreparable harm.” Count V is solely a claim for injunctive relief. The Prayer is for injunctive
relief requiring Lewis’s compliance with the Agreement; requiring WIT to cease employing
Lewis; requiring WIT to return Transtar’s confidential business information; demanding
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reasonable attorneys’ fees pursuant to Ohio statutory and common law; demanding costs
incurred in prosecuting this action; and any other appropriate relief that this Court deems just
and equitable.
On September 3, 2015, the Court undertook an obligatory diversity jurisdiction
analysis, focusing on the facts as they existed at the time the action was removed. Since
removal jurisdiction must be narrowly construed, since any doubt should be resolved in favor
of remand, and since Defendants, Lewis and WIT, failed to meet their burden of establishing
the requirements of diversity jurisdiction by a preponderance of the evidence, the Court
remanded the above-captioned case to Cuyahoga County Common Pleas Court. (ECF DKT
#9). The Court further expressed a willingness to entertain a request for fees based upon
wrongful removal.
Plaintiff filed the instant Motion for Fees and Costs on September 10, 2015, arguing
that Defendants’ removal on the basis of diversity jurisdiction was objectively unreasonable
because the Complaint sought only injunctive relief and did not allege any claims for
compensatory or punitive damages. Consequently, Defendants failed to establish the amount
in controversy of $75,000 for diversity jurisdiction.
II. LAW AND ANALYSIS
If the court determines that removal was improper, the matter must be remanded; and
the remand order “may require payment of just costs and any actual expenses, including
attorney fees, incurred as a result of the removal.” See 28 U.S.C. § 1447(c). (Emphasis
added). “District courts have considerable discretion to award or deny costs and attorney fees
under 28 U.S.C. § 1447(c).” Warthman v. Genoa Twp. Bd. of Trs., 549 F.3d 1055, 1059 (6th
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Cir. 2008). In Martin v. Franklin Capital Corp., 546 U.S. 132 (2005), however, the Supreme
Court limited a district court’s discretion to award fees to situations where “the removing
party lacked an objectively reasonable basis for seeking removal.” Id. at 141. The Sixth
Circuit “has similarly instructed that an award of costs, including attorney fees, is
inappropriate where the defendant’s attempt to remove the action was ‘fairly supportable,’ or
where there has not been at least some finding of fault with the defendant’s decision to
remove.” Warthman, 549 F.3d at 1059-60 (quoting Bartholomew v. Town of Collierville, 409
F.3d 684, 687 (6th Cir. 2005).
In the instant case, Defendants supported removal by estimating “the value of the
object of the litigation,” Hunt v. Wash. State Apple Adver. Comm’n, 432 U.S. 333, 347
(1977), or “the value of the right to be protected or the extent of the injury to be prevented”
Goldsmith v. Sutherland, 426 F.2d 395, 398 (6th Cir. 1970). Defendants evaluated Transtar’s
potential lost revenue, lost customers and diminished good will due to Defendants
“unofficially” opening a competing branch office in Phoenix, Arizona. Unfortunately,
because Defendants failed to satisfy their burden by a preponderance of the evidence, the
Court was forced to speculate whether the jurisdictional amount of $75,000 was met.
Courts in the Sixth Circuit have not clearly defined when a party has an “objectively
reasonable basis” for seeking removal; but even erroneous removals have been found
objectively reasonable in certain circumstances. Geriak v. ARNCO, No. 1:10cv2856, 2011
WL 1576087 at *7 (N.D.Ohio Mar. 3, 2011).
Congress permitted awards of costs and attorney’s fees under 28 U.S.C. §
1447(c) to deter defendants from abusing the right of removal. Congress did
not intend sanctions for those who merely erroneously remove their cases, as
“there is no reason to suppose Congress meant to confer a right to remove,
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while at the same time discourag[e] its exercise in all but obvious cases.” (Internal citations omitt
Thus, even though the Court decided that Defendants erroneously maintained that the
jurisdictional amount was satisfied, that did not mean that the removal was objectively
unreasonable.
III. CONCLUSION
For these reasons, the Motion (ECF DKT #12) of Plaintiff, Transtar Industries, Inc.,
for Fees and Costs is denied.
IT IS SO ORDERED.
s/ Christopher A. Boyko
CHRISTOPHER A. BOYKO
United States District Judge
Dated: September 16, 2016
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