Total Quality Logistics, LLC v. CoVar Transportation et al
ORDER granting 15 Motion to Remand to State Court. Signed by Judge Timothy S. Black on 12/22/2017. (ss)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
TOTAL QUALITY LOGISTICS, LLC,
Judge Timothy S. Black
Case No. 1:17-cv-797
COVAR TRANSPORTATION d/b/a
COVAR BROKERAGE, et al.,
ORDER GRANTING PLAINTIFF’S
MOTION TO REMAND (Doc. 15)
This civil case is before the Court on the motion of Plaintiff Total Quality
Logistics, LLC (“TQL”) to remand this case to the Clermont County Court of Common
Pleas (“State Court”) from which it was removed (Doc. 15), and the parties’ responsive
memoranda (Docs. 18, 19).
FACTS AS ALLEGED BY THE PLAINTIFF
TQL is an Ohio limited liability company that is engaged in the highly competitive
business of providing freight brokerage services in every state in the continental United
States. (Doc.4 at ¶ 10).
Defendant Covar Transporation d/b/a Covar Brokerage (“Covar”) is a third-party
logistics broker and a direct competitor of TQL. (Doc. 4 at ¶ 14). Defendants David
Minnis, John Fletcher, Todd Brazeal, Chase Walker, and Cameron Brown are former
employees of TQL (collectively, the “Former TQL Employees”). (Id. at ¶¶ 1-5).
After hiring the Former TQL Employees, TQL provided them with extensive
training on TQL’s services, pricing structure, sales strategies, customers, and general
operations. (Doc. 4 at ¶ 19). TQL entrusted the Former TQL Employees with highly
confidential business information and trade secrets, including information on TQL’s
specialized software, client relationships, pricing, marketing, sales lists, customer lists,
motor carrier lists, and business strategy. (Id. at ¶ 21). TQL protects its confidential
information by, inter alia, requiring all of its employees to agree to TQL’s Employee
Non-Compete, Confidentiality, and Non-Solicitation Agreement (“Agreement”). (Id. at
¶ 23). The Former TQL Employees all voluntarily signed the Agreement as a condition
of their employment with TQL. (Id. at ¶ 24).
By signing the Agreements, the Former TQL Employees agreed to, inter alia,
retain the secrecy of TQL’s confidential information and to use the information only for
TQL’s benefit, to return to TQL all confidential and company information upon the
termination of their employment or upon TQL’s request, not to solicit TQL’s customers
for a period of one year following the termination of employment, not to make use of or
disclose TQL’s confidential information and/or trade secrets, to refrain from recruiting
TQL employees for a period of one year following termination of employment with TQL,
and not to compete against TQL or to work for a TQL competitor for a period of one year
following termination of employment with TQL. (Doc. 4 at ¶ 25).
After their employment with TQL ended, the Former TQL Employees each joined
Covar and began working in a position similar to the one that they held with TQL. (Doc.
4 at ¶ 29).
On November 1, 2017, TQL commenced this action in the State Court. (Doc. 2).
On November 13, 2017, TQL filed a Second Amended Complaint (“Complaint”).
(Doc. 4). The Complaint alleges that the Former TQL Employees have been in contact
with TQL customers and carriers. (Id. at ¶ 32). The Complaint asserts claims of breach
of contract and breach of fiduciary duty against the Former TQL Employees and claims
of misappropriation of trade secrets, intentional interference with contract, and unfair
competition against all Defendants.
In the Complaint, TQL demands temporary, preliminary, and permanent injunctive
relief, as well as:
Compensatory and punitive damages and attorney fees of a maximum
cumulative total of $70,000 from each Defendant, individually and
(Doc. 4 at 12). 1
On November 27, 2017, Defendants removed the case to this Court. (Doc. 1).
The Notice of Removal states that amount in controversy exceeds $75,000 and the parties
are completely diverse, as TQL is an Ohio limited liability company with Ohio members,
The State Court initially issued TQL’s requested temporary restraining order (“TRO”). This
Court denied Plaintiff’s request to extend the TRO after removal because it was issued in a
manner that would violate the Federal Rules of Civil Procedure. (Doc. 14). The Court is
addressing the motion to remand prior to the pending motions for preliminary injunction (Docs.
5, 9) at the parties’ oral request.
Covar is a Florida limited liability company with Florida members, and the Former TQL
Employees are residents of Florida. (Id. at ¶¶ 2-14).
On December 4, 2017, TQL filed the instant motion to remand, which argues that
the amount in controversy is less than the jurisdictional threshold. (Doc. 15).
A party can remove an action from state court if the federal court to which the
action is removed would otherwise have had original jurisdiction. 28 U.S.C. § 1441(a).
Generally, where the citizenship of the parties is diverse and the amount in controversy
exceeds $75,000, a federal court has jurisdiction to hear the case. 28 U.S.C. § 1332(a).
The existence of subject matter jurisdiction is determined by examining the complaint as
it existed at the time of removal. Harper v. AutoAlliance Int’l., Inc., 392 F.3d 195, 210
(6th Cir. 2004). A defendant desiring to remove a case has the burden of proving the
diversity jurisdiction requirements and must do so by a preponderance of the evidence.
Rotschi v. State Farm Mut. Auto. Ins. Co., Case No. 96-5494, 1997 U.S. App. LEXIS
11771, at * 6 (6th Cir. May 15, 1997).
When a defendant does not satisfy its burden of demonstrating that removal was
proper, the district court may remand the case back to the state court from which it was
removed. 28 U.S.C. § 1447(c). “Because lack of jurisdiction would make any decree in
the case void and the continuation of the litigation in federal court futile, the removal
statute should be strictly construed and all doubts resolved in favor of remand.” Eastman
v. Marine Mech. Corp., 438 F.3d 544, 549-50 (6th Cir. 2006) (citation omitted).
A. Defendants have not established, by a preponderance of the evidence, that
the amount in controversy exceeds $75,000.
TQL argues that the amount-in-controversy requirement is not satisfied because
TQL specifically requested “compensatory damages and punitive damages and attorney
fees of a maximum cumulative total of $70,000 from each Defendant, individually and
severally.” (Doc. 15 at 7). 2
The Court agrees. Generally, the sum claimed by the plaintiff controls. Everett v.
Verizon Wireless, Inc., 460 F.3d 828, 822 (6th Cir. 2006). The Supreme Court has
acknowledged that a plaintiff who does not wish to try his claims in federal court “may
resort to the expedient of suing for less than the jurisdictional amount, and though he
would justly be entitled to more, the defendant cannot remove.” St. Paul Mercury Indem.
Co. v. Red Cab. Co., 303 U.S. 283, 294 (1938). That is precisely what TQL did here. By
demanding a “maximum” recovery of less than $75,000, TQL has limited the amount in
controversy in this action to below the jurisdictional threshold.
Defendants assert two main arguments in response. First, Defendants argue that
TQL has valued its claims at $70,000 per defendant, and accordingly, Covar could
potentially be liable for up to $350,000 in damages to TQL for alleged intentional
interference with each of the Former TQL Employees’ contracts. (Doc. 18 at 5). This
argument is not well-taken.
TQL does not address the “diversity” requirement of 28 U.S.C. § 1332. The Court accepts
Defendants’ assertion that the parties are completely diverse. (Doc. 1 at ¶¶ 2-7).
Initially, the Court notes that TQL’s demand for a “maximum cumulative total of
$70,000 from each Defendant, individually and severally” is ambiguous. It is unclear
whether this statement demands a maximum of $70,000 total, or a maximum of $70,000
per each Defendant. 3
However, assuming arguendo that Defendants’ interpretation of the demand is the
correct one, this argument fails as a matter of law. Claims against individual defendants
cannot be “aggregated” to meet the amount-in-controversy requirement unless the
defendants are jointly liable for the amount sought. Fechheimer Bros. Co. v. Barnwasser,
146 F.2d 974, 976 (6th Cir. 1945). As the Sixth Circuit explained:
Jurisdiction cannot be conferred on a federal trial court by joining in one
action, against distinct defendants, claims of which none reached the
requisite jurisdictional amount. Citizens’ Bank v. Cannon, 164 U.S. 319,
322, 17 S. Ct. 89, 41 Led. 451. The plaintiff is not entitled to secure
jurisdiction in the federal court by joining separate defendants whose
aggregate indebtedness to him exceeds the jurisdictional amount, unless the
test of jurisdiction of joint liability of the defendants to him be met. Walter
v. Northeastern R. Co., 147 U.S. 370, 373, 374, 13 S. Ct. 348, 37 L.Ed.
Id.; see also Woodmen of World v. O’Neill, 266 U.S. 292, 295 (1924) (“in a suit based on
diversity of citizenship brought against several defendants to enjoin the collection of
claims against the plaintiff which are separate and distinct—although depending for their
validity upon a common origin—the test of jurisdiction is the amount of each separate
claim, and not their aggregate amount.”).
This ambiguity is likely due to the fact that the Ohio Rules of Civil Procedure, which governed
the Complaint at the time it was filed in State Court, prohibit a plaintiff from specifying the exact
recovery sought if the amount is more than $25,000. Ohio R. Civ. P. 8(A).
Here, the Complaint does not seek to hold the Defendants jointly liable; to the
contrary, it expressly states Defendants are “individually and severally” liable. (Doc. 4 at
12). Accordingly, even if TQL intends to seek $70,000 from each Defendant, the Court
cannot aggregate those amounts for purposes of determining the amount in controversy.
Fechheiber Bros., 146 F.2d at 976.
Second, Defendants argue that TQL’s requested injunctive relief, combined with
its requested monetary damages, satisfies the amount-in-controversy requirement. This
argument is not well-taken.
In valuing injunctive relief for jurisdictional purposes, the Court’s focus is on the
economic value of the rights which the plaintiff seeks to protect through the requested
relief rather than upon the economic cost to the defendant if an injunction were granted.
See Midwest Motor Supply Co. v. Addis, 2006 U.S. Dist. LEXIS 4663, at * 11 (S.D. Ohio
Jan. 23 2006) (Smith, J); see also Buckeye Recyclers v. Chep United States, 228 F. Supp.
2d 818, 821 (S.D. Ohio 2002) (Rice, J) (explaining that, in considering the value to be
attributed to a claim for injunctive relief, “the better approach is to determine the amount
in controversy from the perspective of the plaintiff, with a focus on the economic value of
the rights he seeks to protect”) (citing McIntire v. Ford Motor Co., 142 F. Supp. 2d 911,
920 (S.D. Ohio 2001) (Rice, J))
Here, Defendants argue the value of TQL’s requested injunction exceeds the
jurisdictional threshold because Defendants’ costs of complying with the injunction,
including costs involved with Covar terminating the Former TQL Employees and hiring
and training their replacements, exceeds $75,000. (Doc. 18 at 6-8). This argument fails
because the Court is to consider the value of the injunction to TQL, not Defendants’ cost
of compliance. Addis, 2006 U.S. Dist. LEXIS 4663, at * 11. Defendants—who have the
burden of establishing subject matter jurisdiction—have not even attempted to formulate
an argument as to what the value of the requested injunction is to TQL.
Further, when the rights the plaintiff seeks to protect with an injunction are the
same rights that form the basis of the plaintiff’s request for compensatory damages, the
Court will not count those rights twice for purposes of determining the amount in
controversy. See Houchens v. Gov’t Emples. Ins. Co., Case No. 3:13-cv-00214-CRS,
2013 U.S. Dist. LEXIS 151245, at * 9 (W.D. Ky. Oct. 21, 2013).
In Houchens, Plaintiffs were injured in a motor vehicle accident, and their insurer
(GEICO) denied their claim for no-fault reparation benefits. 2013 U.S. Dist. LEXIS at **
1-2. Plaintiffs filed suit in state court, demanding, inter alia, an injunction and
accompanying declaration requiring GEICO to conduct an independent medical
examination when contesting a claim for reparation benefits, as well as compensatory
damages for GEICO’s denial of plaintiffs’ claims. Id. at ** 2-3. GEICO removed the
case to federal court and plaintiffs moved to remand, arguing that GEICO failed to satisfy
the amount-in-controversy requirement. Id. at * 3.
The Court explained that the value of plaintiffs’ requested injunction was “the
amount of reparation benefits [Plaintiffs] claim GEICO illegally denied them” because
that was the “object” of the litigation. Id. at * 8. The Court rejected GEICO’s argument
to aggregate this amount with plaintiffs’ request for compensatory damages, because both
claims were premised on the same “object:”
GEICO seeks to aggregate this figure with the amount in controversy
relative to Plaintiffs’ claims for compensatory damages. However, because
the value of Plaintiffs’ injunctive and declaratory relief lies exclusively in
the amount of reparation benefits that they claim GEICO illegally denied
them, the amount in controversy relative to Plaintiffs’ injunctive and
declaratory relief effectively subsumes any amount in controversy that might
be credited to Plaintiffs’ claims for compensatory damages. In other
words, GEICO cannot twice count the amount of reparation benefits
sought by Plaintiffs in calculating the amount in controversy.
Id. at ** 10-11.
Here, TQL’s claims for monetary damages and injunctive relief seek to protect the
exact same “object,” TQL’s rights in its proprietary information and relationships. TQL
has valued those rights at “a maximum cumulative total of $70,000 from each Defendant,
individually and severally.” (Doc. 4 at 12). Even if Defendants had set forth an
argument demonstrating the value of an injunction to TQL—and they did not—the Court
would not add that value to TQL’s requested monetary damages, as that calculation
would inappropriately count the rights at issue in this case twice. Houchens, 2013 U.S.
Dist. LEXIS at ** 10-11.
Simply put, TQL deliberately demanded less than the jurisdictional threshold, and
Defendants have not shown, by a preponderance of the evidence, that the amount in
controversy exceeds $75,000. Accordingly, the Court GRANTS Plaintiff’s motion to
remand. (Doc. 15).
B. TQL is not entitled to recoup costs or fees.
When a district court grants a motion to remand, it may “require payment of just
costs and any actual expenses, including attorney fees, incurred as a result of the
removal.” 28 U.S.C. § 1447(c). Defendants argue that, if the Court remands this case, it
should not award TQL fees and costs. The Court agrees. 4
As the Supreme Court of the United States explained, the standard for awarding
fees and costs after remanding a removed case “should turn on the reasonableness of the
removal.” Martin v. Franklin Capital Corp., 546 U.S. 132, 141 (2005). Courts may
award attorney’s fees under § 1447(c) “only where the removing party lacked an
objectively reasonable basis for seeking removal.” Id. Conversely, “when an objectively
reasonable basis exists, fees should be denied.” Id.
Here, Defendants’ primary argument in support of jurisdiction is that this case
satisfies the amount-in-controversy requirement of 28 U.S.C. § 1332 because the cost to
Defendants of complying with TQL’s requested injunction would exceed $75,000. This
is a reasonable position. The Sixth Circuit has recognized that there is a circuit split as to
whether a court may value a request for injunctive relief from the perspective of either
party, or whether a court may consider only the plaintiff’s viewpoint. See Everett v.
Verizon Wireless, Inc., 460 F.3d 818, 829 (6th Cir. 2006). While it is “generally agreed”
in the Sixth Circuit that the amount in controversy should be determined from the
perspective of the plaintiff, the Sixth Circuit has not definitively adopted either position.
See Woodmen of the World/Omaha v. Scarbro, 129 Fed. Appx. 194, 195-96 (6th Cir.
2005). The Court cannot conclude that Defendants’ basis for removal is objectively
unreasonable, and therefore, no costs or fees will be rewarded. Martin, 546 U.S. at 141.
TQL did not expressly request fees or costs, or set forth any argument demonstrating its
entitlement to either, in its motion to remand.
For the foregoing reasons:
1. TQL’s motion to remand (Doc. 15) is GRANTED;
2. This case is REMANDED to the state court from which it was removed;
3. The parties shall bear their own costs and fees; and
4. This case is TERMINATED from the docket of this Court.
IT IS SO ORDERED.
Timothy S. Black
United States District Judge
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