Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_14-cv-01217/USCOURTS-caed-2_14-cv-01217-0/pdf.json

Parties Involved:
Avolve Software Corporation
Defendant
Randall Scheideman
Plaintiff

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UNITED STATES DISTRICT COURT 

EASTERN DISTRICT OF CALIFORNIA 

RANDALL SCHEIDEMAN, 

Plaintiff, 

v. 

AVOLVE SOFTWARE 

CORPORATION, 

Defendant. 

No. 2:14-cv-01217-MCE-CKD 

MEMORANDUM AND ORDER 

Through this action, Plaintiff seeks relief for alleged violations of California Labor 

Code §§ 201, 203 and 2698. He further alleges wrongful termination. Plaintiff, a citizen 

of California, names as Defendant Avolve Software Corporation, a Delaware corporation 

(“Defendant”). Plaintiff originally filed in state court, and Defendant removed pursuant to 

28 U.S.C. §1441 based on diversity jurisdiction under 28 U.S.C. § 1332. Plaintiff now 

moves to remand. 

For the reasons set forth below, Plaintiff’s motion is denied.1

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 Because oral argument was not of material assistance, the Court ordered this matter submitted 

on the briefs pursuant to E.D. Cal. Local R. 230(g). 

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BACKGROUND 

Plaintiff sold computer software for Defendant from March of 2013 until his 

employment was terminated on December 4, 2013. Plaintiff alleges that he was 

routinely referred to as the top producer of sales and received exemplary praise from 

Defendant’s President and CEO. Plaintiff further alleges that his employment contract 

guaranteed a base salary as well as commissions on sales and maintenance of 

accounts, but that after his termination, Defendant withheld Plaintiff’s final wages, 

commissions, and vacation pay. As indicated above, Plaintiff states claims under 

California Labor Code §§ 201, 203 and 2698, as well as a cause of action for wrongful 

termination. 

In response to Plaintiff’s Complaint, on January 27, 2014, Defendant sent a letter 

offering to settle the case for $8,846. Pl.’s Reply, Ex. A, ECF No. 10. On February 17, 

2014, Plaintiff replied to the letter with a demand of $128,008.98. Def.’s Opp’n, Ex. A, 

ECF No. 9. On March 7, 2014, Defendant responded with an offer of $28,000. Reply, 

Ex. B. On May 19, 2014, Defendant removed the action to federal court, asserting 

diversity jurisdiction under 28 U.S.C. § 1332(a). Pl.’s Mot. to Remand, ECF No. 6. 

Plaintiff now moves to remand back to state court, arguing that the amount in 

controversy is insufficient to invoke this Court’s diversity jurisdiction. 

STANDARD 

When a case “of which the district courts of the United States have original 

jurisdiction” is initially brought in state court, the defendant may remove it to federal court 

“embracing the place where such action is pending.” 28 U.S.C. § 1441(a). There are 

two bases for federal subject matter jurisdiction: (1) federal question jurisdiction under 

28 U.S.C. § 1331, and (2) diversity jurisdiction under 28 U.S.C. § 1332. A district court 

has diversity jurisdiction “where the matter in controversy exceeds the sum or value of 

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$75,000, . . . and is between citizens of different states, or citizens of a State and citizens 

or subjects of a foreign state . . . .” Id. § 1332(a)(1)-(2). 

A defendant may remove any civil action from state court to federal district court if 

the district court has original jurisdiction over the matter. 28 U.S.C. § 1441(a). “The 

party invoking the removal statute bears the burden of establishing federal jurisdiction.” 

Ethridge v. Harbor House Rest., 861 F.2d 1389, 1393 (9th Cir. 1988) (citing Williams v. 

Caterpillar Tractor Co., 786 F.2d 928, 940 (9th Cir. 1986)). Courts “strictly construe the 

removal statute against removal jurisdiction.” Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th 

Cir. 1992) (internal citations omitted). “[I]f there is any doubt as to the right of removal in 

the first instance,” the motion for remand must be granted. Id. Therefore, “[i]f at any 

time before final judgment it appears that the district court lacks subject matter 

jurisdiction, the case shall be remanded” to state court. 28 U.S.C. § 1447(c). 

 If the district court determines that removal was improper, then the court may also 

award the plaintiff costs and attorney fees accrued in response to the defendant’s 

removal. 28 U.S.C. § 1447(c). The court has broad discretion to award costs and fees 

whenever it finds that removal was wrong as a matter of law. Balcorta v. TwentiethCentury Fox Film Corp., 208 F.3d 1102, 1106 n.6 (9th Cir. 2000). 

ANALYSIS 

Plaintiff does not dispute that the parties are citizens of different states, only that 

Defendant fails to prove that the amount in controversy exceeds $75,000.00. According 

to Plaintiff, a demand letter seeking more than that amount is insufficient, standing 

alone, to confer diversity jurisdiction. In essence, Plaintiff argues that despite his 

demand of some $128,000.00 to settle the case, the fact that Defendant offered far less 

means that Defendant cannot rely on Plaintiff’s settlement demand to establish amount 

in controversy. 

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After a case is removed from state court based on diversity jurisdiction, Defendant 

has the burden of proving by a preponderance of the evidence that the amount in 

controversy is over $75,000. Sanchez v. Monumental Life Ins. Co., 102 F.3d 398, 404 

(9th Cir. 1996). The Ninth Circuit has stated that “[a] settlement letter is relevant 

evidence of the amount in controversy if it appears to reflect a reasonable estimate of 

the plaintiff's claim.” Cohn v. Petsmart, Inc., 281 F.3d 837, 840 (9th Cir. 2002). 

In Cohn, the Ninth Circuit explained that the demand contained in a settlement 

letter, while relevant with respect to the amount in controversy, is not necessarily 

determinative since a plaintiff can still “argue[] that the demand letter was inflated and 

not an honest assessment of damages.” Id. Plaintiff’s demand letter in that case simply 

indicated that the trademark at issue was “worth more than $100,000 to him.” Id. 

Although he demanded that sum to settle the case, on appeal Cohn nonetheless argued 

that this was insufficient to satisfy the requisite amount in controversy. The court 

rejected that argument, noting that Cohn never made any “attempt to disavow his letter 

or offer contrary evidence.” Id 

Despite Plaintiff’s apparent argument to the contrary, Cohn shows that a demand 

contained in a plaintiff’s settlement demand is evidence of the amount in controversy. 

While that case recognizes that this may not always be the case if, for example, the 

demand in question is inflated or not an “honest” assessment at damages, that 

distinction does not help Plaintiff here. The demand letter submitted by Plaintiff in this 

matter breaks down the total amount demanded between various alleged violations, 

including unpaid commissions, waiting time penalties for wages and vacation, wrongful 

termination and attorney’s fees. Opp’n, Ex. A. This itemized breakdown qualifies as a 

“reasonable estimate of Plaintiff’s claim.” Cohn, 281 F.3d at 840. Furthermore, Plaintiff 

in this case, like the plaintiff in Cohn, never disputed that the settlement demand he 

made represented anything less than a realistic evaluation of his claim. . 

According to Plaintiff, Defendant cannot meet its burden of proof because 

Defendant’s own settlement letters offered amounts significantly less than $75,000.00. 

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Reply, Ex. A, B. Amount in controversy, however, is defined as “the damages claimed or 

relief demanded by the injured party in a lawsuit.” Black's Law Dictionary (9th ed. 2009) 

(emphasis added). The fact that Defendant may view the value of the injured party’s 

claim differently is not germane to this definition. Here Plaintiff, as the injured party, 

demanded a total of $128,008.98 by letter, backed up that demand with a detailed 

itemized accounting of claimed damages, and at no point contended that this figure was 

anything less than accurate or realistic. Under the circumstances the Court finds 

Plaintiff’s settlement demand sufficient to satisfy the amount in controversy needed to 

confer diversity jurisdiction. 

CONCLUSION 

For the reasons set forth above, Plaintiff Randall Scheideman’s Motion to 

Remand (ECF No. 6) is DENIED. 

IT IS SO ORDERED. 

Dated: October 16, 2014 

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