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Carlo Guguelmino and Briant Chun-Hoon v. McKee Foods Corporation
Date: 10-10-2007
Case Number: 05-16144
Judge: Diarmuid F. O’Scannlain
Court: United States Court of Appeals for the Ninth Circuit on appeal from the Nothern District of California (San Francisco County)
Plaintiff's Attorney:
Edward S. Zusman, San Francisco, California, argued the
cause and filed briefs for the plaintiffs-appellants. Kevin K.
Eng, San Francisco, California, was also on the briefs.
Defendant's Attorney:
William H. Pickering, Chattanooga, Tennessee, argued the
cause and filed a brief for the defendant-appellee. Anthony A.
Jackson, Chattanooga, Tennessee, R. Brian Dixon, San Francisco,
California, and Michael Hoffman, San Francisco, California,
were also on the briefs.
We must decide the proper burden of proof to be borne by
the removing defendant when plaintiffs move to remand the
case to state court and their complaint alleges damages less
than the jurisdictional threshold for diversity cases but does
not specify a total amount in controversy.
I
Briant Chun-Hoon and Carlo Guglielmino (collectively
"the Distributors") are distributors of McKee Foods'
("McKee") bakery products to retail stores. Although the precise
meaning of the term "distributor" is at issue in the underlying
case, roughly stated, the Distributors purchase bakery
products (such as Little Debbie snack cakes) from McKee;
they deliver the purchased products to local retail stores; they
stock the retail shelves and are responsible for arranging, displaying
and advertising the products; and they must remove
from the shelves damaged goods or goods that are beyond
their sell-by date. In addition, the Distributors contend that
McKee requires them to buy a specific quantity of product
and further makes them financially responsible for any damaged,
stale, or old product.
The Distributors filed a complaint against McKee in California
Superior Court on January 3, 2005, on behalf of a putative
class of persons who entered into "Distributorship
Agreements" with McKee. The complaint alleged that McKee
had violated various wage and hour laws by treating its distributors
as independent contractors instead of employees.
Specifically, the complaint alleged that McKee: (1) violated
California Labor Code by failing to pay its distributors overtime
wages; (2) intentionally defrauded its distributors; (3)
made negligent misrepresentations to its distributors; (4)
breached its Distributorship Agreements and other oral and
written agreements with its distributors; and (5) violated the
California Business and Professions Code by committing
unlawful, unfair and fraudulent business practices against its
distributors. In addition, in its sixth cause of action, the complaint
sought a declaratory judgment that the distributors of
McKee products are, in fact, employees of McKee and not
independent contractors.
In paragraph four of the complaint, under the heading "Jurisdiction
and Venue," it is alleged that "[t]he damages to
each Plaintiff are less than $75,000. In addition, the sum of
such damages and the value of injunctive relief sought by
plaintiff in this action is less than $75,000." In its "Prayer for
Relief," however, the complaint sought, among other things,
damages under statutory and common law, punitive and
exemplary damages (as to the fraud count), an accounting of
other moneys due to plaintiffs, attorneys' fees, payments of
back taxes and benefits, a declaration of the respective rights
and obligations of the distributors and of McKee, an injunction
prohibiting McKee's unfair business practices, and such
other relief as the Court deemed proper.
On February 10, 2005, McKee filed a notice of removal to
the United District Court for the Northern District of California
pursuant to 28 U.S.C. §§ 1441 and 1332. The removal
notice stated that "[a]lthough the Complaint affirmatively
attempts to allege that the damages suffered by each Plaintiff
are less than $75,000.00 . . . , the categories of damages actually
claimed by Plaintiffs, if recoverable, would be significantly
in excess of the $75,000.00 minimum amount in
controversy (exclusive of interest and costs) required to
invoke diversity jurisdiction." The notice of removal
attempted to calculate the damages suffered by the Distributors
and concluded that economic damages for Hoon would
total roughly $76,000 (without including attorneys' fees, back
taxes, or punitive damages), and that for Guglielmino separately,
economic damages (prior to including attorneys' fees,
back taxes, or punitive damages) would total roughly $150,000. Thus, McKee's calculations purported to show an
amount in controversy sufficient to invoke federal jurisdiction.
On March 14, 2005, the Distributors filed a motion under
28 U.S.C. § 1447 for an order remanding the action to state
court. Although they did not dispute that the plaintiffs were
diverse from McKee, they challenged McKee's calculations
of the amount in controversy and sought to show that less
than $75,000 was at stake. Hoon and Guglielmino each also
filed affidavits stating: "I am not seeking damages in excess
of $75,000."
which a removing defendant must confront, this interlocutory
appeal would never have been certified. The preponderance of
the evidence standard strikes the correct balance between a
plaintiff’s right to remain in state court and a defendant’s statutory
right to remove an action which meets the diversity
requirements. In my view, yet recognizing that binding circuit
precedent is to the contrary, such a preponderance standard
should be applied in all cases where the jurisdictional facts of
the party seeking to invoke federal jurisdiction have been
properly challenged.
About This Case
What was the outcome of Carlo Guguelmino and Briant Chun-Hoon v. McKee Foods Corp...?
The outcome was: If our court applied a single, consistent burden of proof which a removing defendant must confront, this interlocutory appeal would never have been certified. The preponderance of the evidence standard strikes the correct balance between a plaintiff’s right to remain in state court and a defendant’s statutory right to remove an action which meets the diversity requirements. In my view, yet recognizing that binding circuit precedent is to the contrary, such a preponderance standard should be applied in all cases where the jurisdictional facts of the party seeking to invoke federal jurisdiction have been properly challenged.
Which court heard Carlo Guguelmino and Briant Chun-Hoon v. McKee Foods Corp...?
This case was heard in United States Court of Appeals for the Ninth Circuit on appeal from the Nothern District of California (San Francisco County), CA. The presiding judge was Diarmuid F. O’Scannlain.
Who were the attorneys in Carlo Guguelmino and Briant Chun-Hoon v. McKee Foods Corp...?
Plaintiff's attorney: Edward S. Zusman, San Francisco, California, argued the cause and filed briefs for the plaintiffs-appellants. Kevin K. Eng, San Francisco, California, was also on the briefs.. Defendant's attorney: William H. Pickering, Chattanooga, Tennessee, argued the cause and filed a brief for the defendant-appellee. Anthony A. Jackson, Chattanooga, Tennessee, R. Brian Dixon, San Francisco, California, and Michael Hoffman, San Francisco, California, were also on the briefs..
When was Carlo Guguelmino and Briant Chun-Hoon v. McKee Foods Corp... decided?
This case was decided on October 10, 2007.