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Melaleuca Inc., An Idaho Corporation v. Brian Bartholomew and Angelique Bartholomew

July 19, 2012


The opinion of the court was delivered by: B. Lynn Winmill Chief Judge United States District Court



The Court has before it Plaintiff's Motion to Remand to State Court (Dkt. 2). For the reasons explained below, the Court will deny the motion.


Melaleuca is a consumer goods company that sells primarily nutritional, personal care, and household products. Melaleuca sells products directly to its customers by using independent contractors called Marketing Executives. When Marketing Executives join Melaleuca, they sign what is called an Independent Marketing Executive Agreement with Melaleuca. The Bartholomews were Marketing Executives at Melaleuca until recently, when they left Melaleuca and joined another multi-level marketing company called Independent Energy Alliance ("IEA").

On April 20, 2012, Melaleuca filed suit against the Bartholomews in the Seventh Judicial District of the State of Idaho. Melaleuca claims that the Bartholomews breached a policy contained in the Independent Marketing Executive Agreement by soliciting other Melaleuca Marketing Executives to join IEA. The Bartholomews removed the case to this Court on May 7. On the same day, Melaleuca moved to remand, claiming lack of jurisdiction for failure to meet the minimum amount in controversy.

In its complaint, Melaleuca claims damages of not less than $25,000 each for past and future losses; a temporary restraining order, preliminary injunction, and permanent injunction directing the Bartholomews to "cease and desist from raiding Melaleuca independent Marketing Executives, clients and Customers;" and attorney's fees and costs of suit. Complaint, at 4-5, ¶¶ 1-4 (Dkt. 1-3). Melaleuca also expressly reserved the right to seek punitive damages in its original complaint. Id., at 5, ¶ 5. The Court has already granted a modified temporary restraining order. Dkt. 13.


Removal from state court is governed by 28 U.S.C. § 1441 and 28 U.S.C. § 1332. Rule 1441(b) allows for removal based on diversity of citizenship, which is further defined by Rule 1332(a). This rule requires that the parties have diverse citizenship and that the amount in controversy exceed the sum or value of $75,000.

Federal courts strictly construe the removal statute against removal. Gaus v. Miles, 980 F.2d 564, 566 (9th Cir. 1992), citing Boggs v. Lewis, 863 F.2d 662, 663 (9th Cir. 1988). In diversity cases where the amount in controversy is in doubt, there is a presumption against removal jurisdiction, which means that the defendant always has the burden of establishing that removal is proper. Id., citing Nishimoto v. FedermanBachrach & Assocs., 903 F.2d 709, 712 n. 3 (9th Cir. 1990). This burden is satisfied if the plaintiff claims a sum greater than the jurisdictional requirement of $75,000 or, if the amount claimed is unclear from the complaint and the defendant proves by a preponderance of the evidence that "more likely than not" the jurisdictional requirement is met. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 (9th Cir. 1996). This "more likely than not" standard strikes an appropriate balance between the plaintiff's right to choose its forum and the defendant's right to remove. Id.; see also Tapscott v. MS Dealer Serv. Corp., 77 F.3d 1353, 1357 (11th Cir. 1996); De Aguilar v. Boeing Co., 11 F.3d 55, 58 (5th Cir. 1993).

To determine whether the defendant has proved that the amount in controversy has been met, the Court should consider (1) the petition for removal and (2) later-filed opposition and affidavits. Cohn v. Petsmart, Inc., 281 F.3d 837, 840 n. 1 (9th Cir. 2002), citing Willingham v. Morgan, 395 U.S. 402, 407 n. 3 (1969). Relief which may be included in the amount in controversy includes (1) compensatory damages, (2) punitive damages, (3) value of injunctive relief, and (4) attorney's fees. Id. at 840; Simmons v. PCR Technology, 2009 F. Supp. 2d 1029, 1033 (N.D. Cal. 2002).


The parties agree that complete diversity is not in question-rather, the conflict concerns the amount in controversy. Because the complaint specifies "at least" $50,000 in damages, the amount in controversy in this case is unclear on its face.*fn1 The burden is therefore upon the Bartholomews to prove by a preponderance of the evidence that it is more likely than not that more than $75,000 is at stake. The Bartholomews suggest that the value of the injunction, attorney's fees and costs, and punitive damages add up to more than $25,000, and ...

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