Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_06-cv-02449/USCOURTS-caed-2_06-cv-02449-0/pdf.json

Nature of Suit Code: 190
Nature of Suit: Other Contract Actions
Cause of Action: 28:1441 Petition for Removal- Declaratory Judgement

---

1 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

IN THE UNITED STATES DISTRICT COURT 

FOR THE EASTERN DISTRICT OF CALIFORNIA 

PAUL DAVIS, 

Plaintiff, 

v. 

ADVANCED CARE TECHNOLOGIES, 

INC., a Connecticut 

corporation; WORLD WIDE 

TECHNOLIGIES, LLC, a 

Connecticut limited liability 

company; and BRACHYSCIENCES, 

INC., a Connecticut 

corporation, and DOES 1-10, 

 Defendants. /

No. CIV S 06-02449 DFL DAD 

Memorandum of Opinion

and Order

Plaintiff Paul Davis moves to remand this diversity case on 

grounds that defendants have failed to demonstrate the requisite 

amount in controversy. Because it is clear that over $75,000 is 

in controversy, the motion is DENIED. 

I. Facts

From 2003 until October 2006, Davis worked for defendants, 

a coalition of pharmaceutical companies, first as a sales 

Case 2:06-cv-02449-RRB-DAD Document 17 Filed 05/02/07 Page 1 of 7
2 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

representative and then as sales manager for the western United 

States. Defendants develop and market brachytherapy products 

such as radioactive “seeds” used to treat prostate and other 

cancers. Plaintiff signed a confidentiality and non-competition 

agreement that forbids him from revealing defendants’ trade 

secrets or working for a competing company for two years after 

leaving defendants’ employ. 

While he was defendants’ sales manager, plaintiff generated 

over two million dollars in sales. In 2005, defendants paid 

plaintiff $80,016 in salary and over $70,000 in commissions, 

plus benefits. 

In October 2006, Davis resigned and became western regional 

sales manager for a competing purveyor of brachytherapy 

products. Aware that defendants had sought to enforce 

noncompetition agreements against other employees, in October 

2006 Davis filed an action in Sacramento Superior Court seeking 

a declaratory judgment that the noncompetition provisions of his 

contract with defendants are unenforceable under California law. 

His suit did not challenge the contract’s requirement that he 

not disclose defendants’ confidential information. 

Defendants timely filed notice of removal based on 

diversity. Davis does not contest that the parties are diverse 

(he is a California citizen, whereas defendants are citizens of 

Connecticut), but he seeks remand on grounds that the amount in 

Case 2:06-cv-02449-RRB-DAD Document 17 Filed 05/02/07 Page 2 of 7
3 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

controversy requirement is not met. Defendants assert that well 

over $75,000 is in controversy. 

II. Analysis

The burden of establishing federal jurisdiction rests on 

the defendant seeking removal. Abrego Abrego v. Dow Chem. Co., 

443 F.3d 676, 682-83 (9th Cir. 2006). This includes 

establishing the requisite amount in controversy of more than 

$75,000. Id.; see 28 U.S.C. § 1332. If it is “facially 

apparent” from the complaint that the plaintiff seeks damages 

sufficient to create federal jurisdiction, then the case should 

be remanded “only if it appears to a legal certainty that the 

claim is actually for less than the jurisdictional minimum.” 

Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373, 377 (9th 

Cir. 1997); Abrego Abrego, 443 F.3d at 683 n.8 (citations and 

internal quotation marks omitted). 

Davis makes two arguments for the proposition that the 

jurisdictional amount-in-controversy requirement is not met. 

First, he argues that his challenge to the contract’s 

noncompetition provisions does not implicate defendants’ trade 

secrets – which unquestionably are worth far more than $75,000 –

because the contract contains separate nondisclosure provisions. 

According to Davis, if the purpose of the noncompetition 

provisions were to protect defendants’ trade secrets, then the 

contract’s separate confidential information provisions “would 

Case 2:06-cv-02449-RRB-DAD Document 17 Filed 05/02/07 Page 3 of 7
4 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

be redundant and surplusage.” Davis’s second argument is that 

because California law prohibits noncompetition agreements, the 

noncompetition provisions in his contract with defendants have 

no value. 

Defendants effectively refute both arguments. They 

persuasively argue that the nondisclosure and noncompetition 

provisions of the contract work in concert to protect their 

trade secrets – the nondisclosure provisions punitively, by 

creating a cause of action after a disclosure; the 

noncompetition provisions prophylactically, by creating a cause 

of action for conduct likely to lead to disclosure. Davis’s 

argument rests on the fallacy that if one contract provision is 

aimed at protecting a particular interest, another provision 

cannot be aimed at protecting the same interest. 

Davis’s second argument is also unpersuasive. He argues 

that because the noncompetition provisions of the contract are 

void under California law,1 their value to defendants is zero. 

But just because Davis asserts a possibly meritorious defense to 

liability on the contract does not mean the value of the 

contract is not in controversy. First, as defendants argue, it 

 

1 California Business and Professions Code § 16600 provides 

that “every contract by which anyone is restrained from engaging 

in a lawful profession, trade or business of any kind is to that 

extent void.” 

Case 2:06-cv-02449-RRB-DAD Document 17 Filed 05/02/07 Page 4 of 7
5 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

is not certain that California law governs this case. The 

contract contains a choice-of-law provision stating that 

Connecticut law controls. “California courts generally respect 

contractual choice-of-law clauses.” VFD Consulting, Inc. v. 

21st Services, 425 F.Supp.2d 1037, 1046 (N.D. Cal. 2006) (citing 

Nedlloyd Lines v. Superior Court, 3 Cal. 4th. 459, 464-65 

(1992).2 

Second, and more important, a court cannot consider the 

validity of possible defenses in determining the amount in 

controversy on a motion for remand. See Kovacs v. Chesley, 406 

F.3d 393, 396 (6th Cir. 2005) (citing St. Paul Mercury Indemnity 

Co. v. Red Cab Co., 303 U.S. 283, 289 (1938)). Otherwise, a 

court would have to examine the merits before determining 

whether it had jurisdiction, which would be to put the cart 

 

2 In his reply, Davis cites United Rentals v. Pruett, 296 

F.Supp.2d 220 (D. Conn. 2003), for the proposition that under 

Connecticut choice-of-law principles, California law should 

apply to this case. Defendants have not had the opportunity to 

respond to this argument. As Davis contends, the circumstances 

at issue in United Rentals were similar in many ways to those in 

this case. Nevertheless, there are differences, which, after 

full briefing, might affect the analysis. For instance, the 

employee in United Rentals left one California company and went 

to work for another. Id. at 232. Here, Davis left a California 

company to work for one based in Washington. Thus, it is not 

certain that California law should apply. Moreover, even if 

California law did apply, further briefing, research and 

analysis would be required to determine whether it provides 

Davis with a successful defense to the non-competition 

provisions of his contract. 

Case 2:06-cv-02449-RRB-DAD Document 17 Filed 05/02/07 Page 5 of 7
6 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

before the horse. Accordingly, the fact that Davis may have a 

valid defense is irrelevant to determining the amount in 

controversy. 

It is clear that the amount in controversy here exceeds 

$75,000. “In actions seeking declaratory or injunctive relief, 

it is well established that the amount in controversy is 

measured by the value of the object of the litigation.” Hunt v. 

Washington State Apple Advertising Com’n, 432 U.S. 333, 347 

(1977) (citations omitted). Where the object of the litigation 

is a noncompetition agreement designed to protect a company’s 

confidential information, the value to the company of protecting 

that information is the amount in controversy. See Union 

Pacific R. Co. v. Mower, 219 F.3d 1069, 1071 n.1 (9th Cir. 

2000). Given the undisputed nature and scale of defendants’ 

business, the value of the trade secrets and other confidential 

information known to Davis surely exceeds $75,000. 

It is worth noting that the value of the controversy also 

exceeds the jurisdictional minimum from Davis’s perspective. 

Judging by his compensation when employed by defendants, Davis 

would stand to lose well over $75,000 if he were prevented from 

working in his new position for two years. 

/// 

/// 

Case 2:06-cv-02449-RRB-DAD Document 17 Filed 05/02/07 Page 6 of 7
7 

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

For the above stated reasons, the motion to remand is 

DENIED. 

IT IS SO ORDERED. 

Dated: May 1, 2007 

 /s/ David F. Levi___________

 DAVID F. LEVI 

United States District Judge 

Case 2:06-cv-02449-RRB-DAD Document 17 Filed 05/02/07 Page 7 of 7