Court Opinion

ID: 4371136
Source: CourtListenerOpinion
Date Created: 2019-02-26 16:00:54.663553+00
Date Added: 2024-06-11T13:30:49.486629
License: Public Domain

UNITED STATES DISTRICT COURT
                             FOR THE DISTRICT OF COLUMBIA

 RGI EVENTS & PUBLIC RELATIONS,
 LLC,

                        Plaintiff,                   Civil Action No. 18-1828 (BAH)

                        v.                           Chief Judge Beryl A. Howell

 AL QURM MANAGEMENT
 CONSULTANCY, et al.,

                        Defendants.

                         MEMORANDUM OPINION AND ORDER

       This removed action raises D.C. contract and tort law claims related to event planning

services that the plaintiff, RGI Events & Public Relations, LLC (“RGI”), provided to defendant

Al Qurm Management Consultancy (“AQC”), a corporation, and two of AQC’s employees,

Bassma El-Afghani and Maria Chin (the “Individual Defendants”). See Compl., ECF No. 1-1;

Defs.’ Resp. to Order to Show Cause (“Defs.’ Resp. to Order”) ¶ 2, ECF No. 27. As discussed

below, this Court lacks jurisdiction to review the merits of those claims. Accordingly, this action

shall be remanded to the Superior Court of the District of Columbia (“D.C. Superior Court”).

I.     BACKGROUND

       RGI initially filed this action in D.C. Superior Court against three defendants—AQC, a

corporation, and two AQC employees, Bassma El-Afghani and Maria Chin—asserting D.C. law

claims for breach of contract, misappropriation of trade secrets, and tortious interference with

business relations. See Compl.; Defs.’ Resp. to Order ¶ 2. The defendants removed the case to

this Court, see Notice of Removal, ECF No. 1, which removal RGI did not contest.

       Subsequently, defendant AQC filed counterclaims against RGI, as well as a third-party

complaint against Rachael Glaws, the sole member of RGI, and two others. See AQC’s Answer,

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Third-Party Compl., and Countercls., ECF No. 6; AQC’s Suppl. Countercls. with Exs., ECF No.

9. The Individual Defendants also filed a third-party complaint against Ms. Glaws. See

Individual Defs.’ Third-Party Compl., ECF No. 7. The parties then filed several dispositive

motions against each other. Specifically, pending before the Court are (1) the Individual

Defendants’ Joint Motion to Dismiss RGI’s Complaint, ECF No. 8; (2) RGI’s Motion for

Judgment on the Pleadings, ECF No. 12; and (3) RGI and Rachael Glaws’s Joint Motion to

Dismiss Defendants’ Counterclaims and Third Party Complaints, or a Motion for Summary

Judgment in the Alternative, ECF No. 14.

       The Court, in reviewing the parties’ filings, questioned its subject matter jurisdiction sua

sponte and ordered the defendants, which bear the burden of pleading jurisdiction in this

removed action, to show cause why the Court has diversity jurisdiction under 28 U.S.C. § 1332.

See Min. Order (Feb. 9, 2019). The defendants submitted a sparse response totaling three

paragraphs. See Defs.’ Resp. to Order. RGI did not file any opposition. For the reasons

explained below, upon consideration of the defendants’ response and the entire record, the Court

concludes jurisdiction is lacking. Thus, this action is remanded to D.C. Superior Court, and the

pending motions are denied as moot.

II.    LEGAL STANDARD

       “[A]ny civil action brought in a State court of which the district courts of the United

States have original jurisdiction, may be removed by . . . the defendants, to the district court of

the United States for the district and division embracing the place where such action is pending.”

28 U.S.C. § 1441(a). “When it appears that a district court lacks subject matter jurisdiction over

a case that has been removed from a state court, the district court must remand the case . . . , and

the court’s order remanding the case to the state court whence it came ‘is not reviewable on

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appeal or otherwise.’” Republic of Venezuela v. Philip Morris Inc., 287 F.3d 192, 196 (D.C. Cir.

2002) (citing 28 U.S.C. § 1447(c) and quoting id. § 1447(d)). Due to the statutory prohibition of

appellate review of remanded cases, the legal standard for removal has largely been developed

by the district courts.

         The defendants, as the parties seeking the exercise of federal court jurisdiction over this

removed case, “bear[] the burden of pleading” the basis for jurisdiction. Novak v. Capital Mgmt.

& Dev. Corp., 452 F.3d 902, 906 (D.C. Cir. 2006) (internal quotation marks and citation

omitted); Apton v. Volkswagen Grp. of Am., Inc., 233 F. Supp. 3d 4, 11 (D.D.C. 2017). If the

defendants are unable to make this showing, a “court must remand the case.” Johnson–Brown v.

2200 M Street LLC, 257 F. Supp. 2d 175, 177 (D.D.C. 2003) (citing 28 U.S.C. § 1447(c)).

         “In light of the significant federalism concerns involved, this court ‘strictly construes the

scope of its removal jurisdiction.’” Moses v. SunTrust Mortg., Inc., No. 11-cv-00822 (BJR),

2012 WL 113375, at *2 (D.D.C. 2012) (quoting Breakman v. AOL LLC, 545 F. Supp. 2d 96, 100

(D.D.C. 2008)); accord Wells Fargo Bank, N.A. v. Wilson, No. 18-cv-2381 (RC), 2019 WL
340717, at *1 (D.D.C. Jan. 28, 2019). Even “[w]here the need to remand is not self-evident, the

court must resolve any ambiguities concerning the propriety of removal in favor of remand.”

Animal Legal Def. Fund v. Hormel Foods Corp., 249 F. Supp. 3d 53, 56 (D.D.C. 2017) (internal

quotation marks omitted) (quoting Johnson–Brown, 257 F. Supp. 2d at 177).

III.     DISCUSSION

         The defendants contend that this action is properly removed, based on diversity

jurisdiction under 28 U.S.C. § 1332. Notice of Removal ¶ 3.1 Section 1332 provides that federal

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         The defendants also initially invoked federal question jurisdiction, 28 U.S.C. § 1331, claiming that RGI’s
D.C. law claims “arise under” the “United Nations Convention on the Law Applicable to Contracts for the
International Sale of Goods” (“U.N. Convention”), a “treaty of the United States.” Notice of Removal ¶ 3. The
defendants later abandoned this theory, specifying only diversity as the “basis for this Court’s jurisdiction.” Joint

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courts have “original jurisdiction of all civil actions where the matter in controversy exceeds the

sum or value of $75,000, exclusive of interests and costs, and is between . . . citizens of a State

and citizens or subjects of a foreign state.” Id. § 1332(a)(2). Thus, subject matter jurisdiction

over any action raised in diversity must satisfy a two-prong inquiry: the amount in controversy

must exceed $75,000, and the litigants must be diverse from one another. See id. The

defendants have not sufficiently pleaded either requirement, neither of which is apparent on the

face of the Complaint.

        A.       Amount in Controversy

        Diversity jurisdiction requires that the “the matter in controversy exceeds the sum or

value of $75,000.” Id. § 1332(a). RGI’s Complaint includes three counts for damages. Compl.

¶¶ 28–52. Count I seeks $38,655.33 for a breach of contract claim against AQC only. Id. ¶¶ 28–

32. Counts II and III—for misappropriation of trade secrets and tortious interference with

business relations, respectively—include claims against all three defendants. Id. ¶¶ 33–52. For

each of these latter two counts, damages are “in excess of $50,000.” Id. ¶¶ 43, 52. Thus, none of

RGI’s claims exceed $75,000.

        Undaunted, the defendants argue for two amount-in-controversy calculations, based on

aggregation of RGI’s claims, to satisfy the $75,000 threshold. In the defendants’ view,

aggregated damages for (1) RGI’s claims against AQC, in Counts I through III, equal “at least

$138,655.33,” Notice of Removal ¶ 3; and (2) the claims against all three defendants, in Counts

II and III, exceed $100,000, Defs.’ Resp. to Order ¶ 3. Each calculation is reviewed in turn.

Report of Rule LCvR 16.3(c) Planning Meeting at 4, ECF No. 21. RGI’s D.C. law claims for breach of contract,
misappropriation of trade secrets, and tortious interference do not remotely raise a federal question. See Merrell
Dow Pharm. Inc. v. Thompson, 478 U.S. 804, 808 (1986) (“Since a defendant may remove a case only if the claim
could have been brought in federal court . . . the question for removal jurisdiction must also be determined by
reference to the ‘well-pleaded complaint.’”).

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       First, the defendants initially argued, in a single sentence and without legal authority, that

the amount-in-controversy requirement is met because “the Plaintiff has alleged damages in the

amount of at least $138,655.33.” Notice of Removal ¶ 3. Although the defendants’ cursory

explanation fails to indicate which aggregation rule justifies using this amount, the defendants

appear to have aggregated all of RGI’s claims against AQC in Counts I through III.

       A plaintiff’s claims “against a single defendant” may be aggregated to satisfy the $75,000

jurisdictional threshold. Gordon v. Aetna Life Ins. Co., 467 F.2d 717, 725 n.13 (D.C. Cir. 1971)

(emphasis and internal quotation marks omitted) (quoting Snyder v. Harris, 394 U.S. 332, 335

(1969)); accord Organic Consumers Ass’n v. R.C. Bigelow, Inc., 314 F. Supp. 3d 344, 350

(D.D.C. 2018). Aggregating RGI’s claims against AQC, however, does not result in an amount

in controversy above $75,000. Count I seeks $38,655.33 from AQC, Compl. ¶ 32, and the

remaining two Counts, which include claims against all three defendants, do not specify a

separate amount in controversy for the claims against AQC, see id. ¶¶ 33–52. Therefore, the

aggregated amount in controversy for RGI’s claims against AQC is unknown. See McIntosh v.

Gilley, 753 F. Supp. 2d 46, 62 (D.D.C. 2010) (“[J]urisdiction under section 1332(a) can only be

sustained against those defendants whose respective controversies individually involve matters

exceeding the jurisdictional amount.” (internal quotation marks and citation omitted)); see also

Middle Tenn. News Co. v. Charnel of Cincinnati, Inc., 250 F.3d 1077, 1081 (7th Cir. 2001)

(denying aggregation for a plaintiff’s multiple claims against a defendant because the plaintiff

had not “alleged a separate amount in controversy against” the defendant).

       Second, after the Court questioned the defendants’ initial aggregation theory and ordered

the defendants to clarify why aggregation is permissible, see Min. Order (Feb. 9, 2019) ¶ 3, the

defendants submitted a bare, one-paragraph explanation, Defs.’ Resp. to Order ¶ 3. This time,

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the defendants claimed that the amount-in-controversy requirement may be satisfied by

aggregating Counts II and III, for more than $50,000 each, because these counts include

misappropriation and tortious interference claims against all three defendants. Id.

       This aggregation theory suffers a fatal flaw, however. “Claims against multiple

defendants can be aggregated only when the defendants are jointly liable to the plaintiff.”

GenopsGroup LLC v. Pub. House Invs. LLC, 67 F. Supp. 3d 338, 342 (D.D.C. 2014) (collecting

cases); accord Theus v. Ally Fin., Inc., 98 F. Supp. 3d 41, 46 (D.D.C. 2015); McIntosh, 753 F.

Supp. 2d at 62; Rogers v. Nathan, 721 F. Supp. 1393, 1394 (D.D.C. 1989). Removing

defendants may demonstrate joint liability by, for example, pointing out that the plaintiff

“seek[s] to hold defendants jointly liable,” or providing “indicia of corporate relationship”

between the defendants to show joint liability will attach. GenopsGroup LLC, 67 F. Supp. 3d at

342.

       Here, the defendants have not shown that aggregation of the claims in Counts II and III,

for the defendants to meet the $75,000 threshold, is appropriate under a joint liability rationale.

Indeed, the defendants concede that RGI’s “Complaint makes no explicit reference to ‘joint and

several liability,’” Defs.’ Resp. to Order ¶ 3, and RGI has been silent about whether it seeks to

hold the defendants jointly liable. Moreover, aside from stating that the Individual Defendants

are “employees of AQC,” id. ¶ 2, the defendants fail to provide any information about the

Individual Defendants’ roles within AQC’s corporate structure to demonstrate that the Individual

Defendants may be held liable for acts by AQC, or for each other’s acts. See Middle Tenn. News

Co., 250 F.3d at 1081 (finding aggregation inappropriate when there was “no evidence that

justifies piercing the corporate veil and holding [an individual defendant] liable for corporate

debts”); N. Am. Fin. Grp., LLC v. Suburban Air Sys., Inc., No. 96 CIV. 2330 (JSM), 1996 WL
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345790, at *1 (S.D.N.Y. June 24, 1996) (refusing to aggregate claims on the basis that the

individual defendants were “owners and employees of” a defendant corporation). Similarly, the

defendants leave unanswered whether AQC may be held liable for the Individual Defendants’

acts. See N. Am. Fin. Grp., LLC, 1996 WL 345790, at *1 (concluding aggregation was

impermissible when “no basis” was provided for holding a defendant corporation “vicariously

liable for” individual defendants’ actions). Thus, the “defendants have not suggested—let alone

demonstrated—that they are jointly liable for” the claims in Counts II and III. GenopsGroup

LLC, 67 F. Supp. 3d at 342.

       In a last gasp argument, the defendants contend that Counts II and III “refer to the

damages caused by and claimed collectively against ‘the Defendants,’” implicitly indicating that

RGI seeks to hold all three defendants jointly liable. Defs.’ Resp. to Order ¶ 3. The defendants

offer no legal support for this position. See id. Indeed, contrary to the defendants’ position,

aggregation has been found to be inappropriate when the sole basis for purported joint liability is

the fact that a single count includes claims against multiple defendants. See Shirk v. Gonzales,

No. 17-CV-1129 MCA/KK, 2018 WL 2411601, at *3 (D.N.M. May 29, 2018) (explaining that

even though “Count II is brought against both Defendants,” aggregation would be inappropriate

because “neither party addresse[d] whether Defendants would be jointly liable under Count II”).

       Furthermore, contrary to the defendants’ suggestion that the allegations in Counts II and

III are “collectively” against the defendants, Defs.’ Resp. to Order ¶ 3, the Complaint identifies

“separate and distinct” torts by each of the Individual Defendants, suggesting joint liability may

not be contemplated, GenopsGroup LLC, 67 F. Supp. 3d at 342. For example, RGI’s

misappropriation and tortious interference claims are rooted in allegations that Individual

Defendant El-Afghani wrongfully called RGI’s “print media vendor” and “transportation

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vendor” to obtain “sensitive and confidential information,” Compl. ¶¶ 21–24, while Individual

Defendant Chin separately emailed RGI’s “hotel management” contact to obtain other “sensitive,

confidential financial information,” id. ¶ 26. The Complaint does not allege that these two

defendants acted together or were directed by AQC to engage in those allegedly wrongful acts.

Additionally, the misappropriation and tortious interference claims stem from confidentiality

obligations in RGI’s event-planning services contract with AQC, see id. ¶¶ 7, 34, 47, and the

defendants admit that RGI has not alleged the Individual Defendants are “parties to any contract”

with RGI, Defs.’ Resp. to Order at 3 n.1; see also GenopsGroup LLC, 67 F. Supp. 3d at 342

(concluding a plaintiff did not “seek to hold defendants jointly liable” because the “plaintiff’s

claims arise out of separate contracts”).

       Although the Complaint includes allegations that the “Defendants” wrongfully contacted

RGI’s vendors to obtain confidential information, see, e.g., Compl. ¶¶ 18, 27, suggesting

collective action, other allegations appear to separate liability among the defendants, see, e.g.,

Compl. at 3–4 (claiming liability due to the “individual co-defendants’ intentional interference”);

id. ¶ 23 (alleging a tort committed by Individual Defendant El-Afghani alone); id. ¶ 26 (pleading

tort committed by AQC, “by and through” Individual Defendant Chin, without reference to

Individual Defendant El-Afghani). Aggregation in the face of such ambiguity is inappropriate.

See Devito v. Wood, No. 2:09-CV-423-FtM-36DNF, 2011 WL 13175834, at *4 (M.D. Fla. Aug.

2, 2011) (denying request for aggregation because “[i]n some paragraphs,” the plaintiff appeared

to be asserting claims against defendants jointly, and “[i]n other paragraphs,” the plaintiff

appeared to be suing an individual defendant “as an individual”); see also Johnson–Brown, 257
F. Supp. 2d at 177 (“Where the need to remand is not self-evident, the court must resolve any

ambiguities concerning the propriety of removal in favor of remand.”).

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       The defendants fail to show that aggregation of Counts II and III is proper. Thus, the

amount-in-controversy requirement has not been satisfied, and diversity jurisdiction is lacking.

       B.      Diversity of Citizenship

       Second, even if the amount-in-controversy requirement had been satisfied, jurisdiction

under § 1332 requires diversity of citizenship between the parties, such as when the action is

between “citizens of a State and citizens or subjects of a foreign state.” 28 U.S.C. § 1332(a)(2).

The defendants allege diversity because RGI, a limited liability company, is “domiciled in

Washington, D.C.,” and the three defendants are all citizens of the United Arab Emirates. See

Notice of Removal ¶ 3; Defs.’ Resp. to Order ¶¶ 1–2. In relevant part, the defendants posit that

RGI is “domiciled in” Washington, D.C. since the Complaint lists RGI’s business address in

Washington, D.C., and RGI filed a “‘domestic entity’ business license filing” with the D.C.

government. Defs.’ Resp. to Order ¶ 1.

       The defendants’ rationale ignores the Court’s order, which asked the defendants to

provide RGI’s citizenship under § 1332, and explained that an LLC’s citizenship is determined

by the citizenship of its members. See Min. Order (Feb. 9, 2019) ¶ 1 (citing Carden v. Arkoma

Assocs., 494 U.S. 185, 195–96 (1990), and Hoch v. Eli Lilly & Co., 736 F. Supp. 2d 219, 220–21

(D.D.C. 2010)). Thus, when an LLC’s sole member is an individual, the LLC’s citizenship is

determined by that individual’s domicile. See Herbin v. Seau, 317 F. Supp. 3d 568, 572 (D.D.C.

2018) (“For purposes of assessing diversity jurisdiction, an individual is a citizen of the state in

which she is domiciled.” (citing Prakash v. Am. Univ., 727 F.2d 1174, 1180 (D.C. Cir. 1984))).

Domicile, in turn, requires “‘physical presence in a state’ as well as the ‘intent to remain there

for an unspecified or indefinite period of time.’” Id. (quoting Prakash, 727 F.2d at 1180).

       Here, the defendants merely allege that RGI’s sole member, Rachael Glaws, “resides in

Virginia.” Defs.’ Resp. to Order ¶ 1. This “residency allegation,” however, “raises a threshold

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problem” because “an allegation of residence alone is insufficient to establish the citizenship

necessary for diversity jurisdiction.” Novak, 452 F.3d at 906 (emphasis in original) (internal

quotation marks and citation omitted). The defendants neither provide Ms. Glaws’s domicile,

nor suggest whether she intends to remain in Virginia. See Defs.’ Resp. to Order ¶ 1.

         The Court is unable to determine RGI’s citizenship due to the defendants’ failure to

provide Ms. Glaws’s domicile, even after the Court specifically asked for “the state in which

each member” of RGI “is domiciled.” See Min. Order ¶ 1 (Feb. 9, 2019). The defendants’

pleading defect is “not a mere technicality” because “[c]itizenship is an essential element of

federal diversity jurisdiction,” Novak, 452 F.3d at 906, and the “party seeking the exercise of

diversity jurisdiction bears the burden of pleading the citizenship of each and every party to the

action,” id. (internal quotation marks and citation omitted). Accordingly, this action is remanded

to D.C. Superior Court, and the three pending motions are denied as moot. See Simon v.

Mitchell, 199 F. Supp. 3d 244, 246 (D.D.C. 2016) (“Because a . . . district court, acting sua

sponte, may raise the court’s lack of subject matter jurisdiction, a court may also issue a remand

order on its own initiative.”).

IV.      CONCLUSION AND ORDER

         Upon consideration of the memoranda, exhibits, and declarations submitted in support of,

and opposition to, the pending motions, and the entire record herein, for the reasons set forth in

in this Memorandum Opinion and Order, it is hereby

      ORDERED that the Clerk of Court shall REMAND this action to D.C. Superior Court; and

it is further

      ORDERED that the Individual Defendants’ Joint Motion to Dismiss RGI’s Complaint, ECF

No. 8; RGI’s Motion for Judgment on the Pleadings, ECF No. 12; and RGI and Rachael Glaws’s

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Joint Motion to Dismiss Defendants’ Counterclaims and Third Party Complaints, or a Motion for

Summary Judgment in the Alternative, ECF No. 14, are DENIED as moot; and it is further

   ORDERED that the Clerk of Court is directed to close this case.

   SO ORDERED.

   Date: February 26, 2019

                                                  __________________________
                                                  BERYL A. HOWELL
                                                  Chief Judge

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