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John T. Reed’s Opposition to Russ Whitney’s Remand Motion

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF FLORIDA

Case No. ___________________-Civ

WHITNEY INFORMATION NETWORK, INC.,
a Florida Corporation, and RUSS WHITNEY,
an individual,

Plaintiffs,

v.

JOHN T. REED, an individual,

Defendant.

OPPOSITION TO MOTION FOR REMAND AND SUPPORTING MEMORANDUM OF LAW BY DEFENDANT

Defendant John T. Reed pro se hereby opposes the motion for remand of this case to the Florida state court from which it was removed and respectfully asks for an award of reasonable attorney’s fees and costs of opposing this motion, and states as follows:
BACKGROUND
1. On June 25, 2002, Plaintiffs filed a complaint (Case No.: 2:02-CV-288-FTM-29DNF) against Defendant for federal trademark infringement and related state claims as well as state libel and trade libel claims in the United States District Court for the Middle District of Florida (Fort Myers Division). That complaint is attached hereto as Exhibit A.
2. On February 12, 2003, the same Plaintiffs served another complaint [Case No. CACE 03-0178 (21)] on the same Defendant on the same case facts for tortious interference with a business relationship. This second complaint had previously been filed in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida. That complaint is attached hereto as Exhibit B.
3. On February 12, 2003, the same Plaintiffs served an Emergency Motion for Preliminary Injunction on the same Defendant on the same case facts for tortious interference with a business relationship. This motion had previously been filed in the Circuit Court of the 17th Judicial Circuit in and for Broward County, Florida. That motion is attached hereto as Exhibit C.
4. On February 12, 2003, Defendant filed a notice of removal of the aforementioned state complaint with this Court. The grounds for removal were diversity of citizenship (28 USC 1332).
5. On February 14, 2003, Plaintiffs filed an amended complaint with the Broward County state court. The only change in the amended complaint was the addition of the phrase “but less than $75,000” to the damages claimed.
MEMORANDUM OF LAW
I. IMPROPER PURPOSE, BAD FAITH
6. The state court complaint and emergency motion were filed in bad faith for improper purpose. At §120.20[1][a], Moore’s Federal Practice 3d says “A plaintiff might file repetitive suits for one or more of the following reasons:
[A] To obtain speedier ajudication…
[B] To avoid an anticipated adverse judgment after one court issues an adverse interlocutory ruling on a preliminary matter.
[C] To ensure that personal jurisdiction will be obtained over the defendant.
[D] To gain a tactical advantage based on different procedural rules in the two courts.
[E] To “shop” for the most favorable forum.
[F] To become the lead plaintiff in a class action…
[G] To harass the defendant.”
In this case, A does not apply as evidenced by the fact that the federal suit in Fort Myers has an eight-month head start, by the facts that the Plaintiffs have already been ordered once to show cause why the case should not be dismissed for failure to prosecute and that the Plaintiffs are currently three months behind schedule in complying with that court’s Case Management Order.
B, C, and F are not applicable to this case.
D, tactical advantage stemming from state court procedures, must not apply because any such consideration was weighed and rejected by Plaintiffs before the original decision to sue in the Fort Myers federal court.
The only remaining purposes for Plaintiffs to have filed this repetitive suit in state court are E (forum shopping) and G (harassment), both of which are improper.
Moore’s Federal Practice 3d continues: “…‘unreasonable’ and ‘vexatious’ multiplication of proceedings should be avoided, since both parties and attorneys may be subjected to sanctions and awards of costs for filing frivolous pleadings and pursuing vexatious litigation.” (Ibid.)
II. UNPRECEDENTED SITUATION
7. Defendant researched both the law of removal on diversity grounds and the law of remand for lack of diversity. Neither the court decisions nor the treatises cover the present case: filing of a state court suit after previously filing a federal-question suit involving the same parties and facts in federal court. The unprecedented nature of this repetitive litigation is further evidence of the improper purpose of the state court suit. The lack of precedent requires the Court, in part, to interpolate the pertinent law from analogous and opposite situations where the law is more well-settled.
III. POST-REMOVAL AMENDMENTS NOT TO BE CONSIDERED
8. Plaintiffs’ original state complaint specified only that damages sought exceeded $15,000. The amendment to add the phrase “but less than $75,000” was made after the removal and was obviously only added in an attempt to avoid diversity jurisdiction. Accordingly, the “less than $75,000” phrase in the amended complaint should be disregarded by the Court.
“In making its determination the court must consider the pleadings as framed at the time of the removal and subsequent amendments will not be considered.” Federal Procedure Lawyers Edition §69:142 [Cavallini v. State Farm Mutual Auto Ins. Co., 44 F 3d 256 (5th Cir. 1995); Rosenberg v. GWV Travel, Inc., 480 F. Supp. 95 (SDNY 1979); American Bldgs. Co. v. Varicon, Inc., 616 F.Supp. 641 (D. Mass. 1985)]
IV. STATE LAW REGARDING DAMAGES
9. “…in a diversity of citizenship case the federal courts must look to state law to determine the nature and extent of the right that the plaintiff is seeking to have enforced.” Federal Practice and Procedure by Wright, Miller, Cooper §3702 (e.g., Horton v. Liberty Mut. Ins. Co., 1961, 81 S. Ct. 1570)
Pertinent aspects of state law would include:
• availability of punitive damages (Bell v. Preferred Life Assur. Soc. of Montgomery, Alabama, 1943, 64 S.Ct. 5)
• availability of special damages
• whether state law attributes attorney fees for the purpose of calculating the amount in controversy (…attorney fees are includible in computing the jurisdictional amount if the plaintiff may recover them as an element of damages, either pursuant to a governing statute or under the district court’s equitable power to award fees.” Federal Practice and Procedure by Wright, Miller, and Cooper §3702
• statutory limits on damages for the offense in question
• the applicable measure of damages
• whether the initial amount in the complaint can be changed later
Defendant has limited ability to research Florida law in California, but Defendant knows of no Florida law statutory limit on damages for tortious interference with a business relationship.
V. SPLITTING A CASE TO AVOID DIVERSITY JURISDICTION

10. Case law permits aggregating multiple complaints for the purpose of raising the amount in controversy above the jurisdictional amount. (Bullard v. City of Cisco, 1933, 54 S. Ct. 177) Logic and fairness dictate that the plaintiff cannot have it both ways. A defendant whose citizenship is different from a plaintiff should not be deprived of federal jurisdiction because the plaintiff simply divides, say, a $140,000 diversity case into two $70,000 state claims. “It is well settled that two or more claims between a single plaintiff and a single defendant may be aggregated for purposes of determining whether the jurisdictional amount requirement has been met for removal purposes. (Burns v. Windsor Ins. Co., C.A. 11th, 1994, 31 F 3d 1092) This means that a defendant can remove when the total value of the claims asserted against him by a single defendant, or by plaintiffs asserting joint claims, exceeds the statutory amount.” Federal Practice and Procedure (Wright, Miller, and Cooper) §3725
11. In this case, the Plaintiffs could have sought both injunctive relief and damages under their new Florida tortious interference claim by simply amending their pre-existing federal complaint in the Fort Myers Division. That court can apply Florida law under its pendent jurisdiction. So there was no reason for them to have brought the separate state case except for the improper purposes of splitting the amount in controversy to create a state case for less than the federal jurisdictional threshold in order to engage in forum shopping and harassment.
12. The tortious interference case filed in Broward County has the exact same parties and case facts as the case Plaintiffs previously filed in the Fort Myers Division. Both cases are part of the same case and the Court should determine the amount in controversy by combining the cases as Plaintiffs could have and should have combined them.
VI. EFFECT OF REQUEST FOR INJUNCTIVE RELIEF
13. “…it is well settled that the amount in controversy is said to be measured for subject matter jurisdiction purposes by the value of the right that the plaintiff seeks to enforce or to protect against the defendant or the value of the object that is the subject matter of the action. Accordingly, when a person seeks an injunction or other form of specific relief, it is the value to the plaintiff of conducting his business or personal affairs free from the activity sought to be enjoined that is the yard stick for measuring whether the amount in controversy requirement has been satisfied..” Federal Practice and Procedure by Wright, Miller, and Cooper § 3708
14. In both the case filed in the federal Fort Myers Division and the state case originally filed in Broward County, the Plaintiffs seek injunctive relief. The Emergency Motion filed in Broward County asks the court to shut down Defendant’s entire Web site. On page 8 of their Emergency Motion for Preliminary Injunction, Plaintiffs state, “Plaintiffs’ continued loss of profits, as well as the damage to their reputation and goodwill clearly outweighs the harm that may be caused by enjoining Defendant…” In that same paragraph, Plaintiffs cite Davidoff v. CIE v. PLD International Corp., 263 F 3d 1297 (11th Cir. 2001), as saying, “…a preliminary injunction was merited if ‘the probable loss of consumer goodwill for [Plaintiffs] outweighs the costs of delay that [Defendant] will incur in not being able to sell [its products] until a decision on the merits.’”
15. These statements that Plaintiffs’ damages “clearly outweigh…the costs of delay that [Defendant] will incur in not being able to sell [its products]…” explicitly mean that the amount in controversy in the Broward County case exceeds Defendant’s Web site profits. As Defendant states in his affidavit in support of this opposition to Plaintiffs’ motion for remand, Defendant’s Web site is his sole source of income and his annual net income is six-figures. If Plaintiffs’ damages exceed Defendant’s costs of having his entire Web site shut down, then Plaintiffs’ damages must also be in six figures, which means they exceed the five-figure jurisdictional threshold of $75,000.
16. A number of federal courts have found that removal jurisdiction is proper if more than $75,000 is in controversy when considered from the viewpoint of either party, that is, either the value to the plaintiff of the damages and injunction being sought or the cost to the defendant of complying with that injunction and paying those damages. (McCarty v. Amoco Pipeline Co., C.A. 7th 1979, 595 F 2d 389; Ronzio v. Denver & R.G.W.R. Co., CCA 10th, 1940, 116 F 2d 604; International Gateway Communications, Inc. v. Communications Telesystems, Int’l. Inc., D.C. Ill. 1994, 885 F. Supp. 1126)
VII. VALUE OF PLAINTIFF CORPORATION
17. There are two plaintiffs in this case:
• Russell A. Whitney, an individual
• Whitney Information Network, Inc., a publicly traded company (WIN)
18. The public record contains considerable information regarding the size and value of Whitney’s individually owned businesses and of WIN.
19. According to WIN documents filed with the Securities and Exchange Commission (SEC), WIN has 8,096,624 shares of common stock outstanding. According to the Harris Direct Web site (Exhibit D), the value of a share of WIN stock on the day the original Broward County complaint was filed was approximately $4.00. That would give a total value for the corporation of 8,096,624 x $4 = $32,386,496. The jurisdictional threshold of $75,000 is just 00.2% of the value of the company’s stock. To avoid federal diversity jurisdiction, Plaintiffs must therefore claim that the alleged tortious interference with their hundreds of thousands of business relationships will have an effect smaller than 00.2% on their stock value.
20. On the same day that Defendant filed the Notice of Removal, WIN filed a Form S-1 with the SEC (Exhibit E) announcing their intention to offer one million new shares to the public immediately. The “Proposed Maximum Unit Price Per Unit” in the Form S-1 (page 1) is $6.00. At that price the offering would raise $6 million. Establishing that price for all WIN stock would raise the value of the whole post-offering company to 9,096,624 shares x $6 per share = $54,579,744. The jurisdictional threshold of $75,000 is just 00.1% of that amount.
VIII. ANNUAL GROSS SALES OF PLAINTIFF CORPORATION
21. The most recent filing by WIN with the SEC was a Form S-1. In that filing which was dated February 12, 2003, WIN claimed its sales for the nine months ending September 30, 2002 were $46,863,355 (page 6). If you annualize that nine-month figure by dividing by .75, you get annual sales of $46,863,355 ÷ .75 = $62,484,473. The jurisdictional threshold of $75,000 is just $75,000 ÷ $62,484,473 = 00.12% of the annual sales.
IX. CUMULATIVE SALES DURING DISPUTED PERIOD
22. Plaintiffs have not limited their suit to calendar year 2002. Rather, they seek damages for approximately the period 1999 to the present and continuing. According to WIN SEC filings, the total profits for the period 1999 through 2002 are

1999 $26,775,589
2000 $32,859,857
2001 $42,157,740
2002 $62,484,473 (annualized as described above)
Total $164,277,659

23. The jurisdictional threshold of $75,000 is just $75,000 ÷ $164,277,659 = 00.05% of the cumulative sales for the years 1999 through 2002. This amount will be increase by additional sales between now and the day of the trial verdict.
X. NUMBER OF CUSTOMERS
24. WIN’s Form S-1 dated February 12, 2003 says that WIN trains 12,000 attendees per month and that tuition ranges from $3,000 to $32,000 per course of study (page 3). Estimating conservatively that the average customer buys more than one course and thereby spends an average of $5,000, the Court can see that the jurisdictional threshold of $75,000 is met by a mere $75,000 ÷ $5,000 per student = 15 students, which is a mere 15 ÷ (12 x 12,000) = 15 ÷ 144,000 = 00.01% of WIN’s annual persons trained and a mere 15 ÷ (4 years x 144,000) = 15 ÷ 576,000 students = 00.003% of the total number of students WIN claims to have trained in the years during which Plaintiffs claim Defendant has been harming them.
XI. RUSSELL WHITNEY HAS ADDITIONAL BUSINESS INTERESTS OF UNKNOWN SIZE
24. WIN is not the only plaintiff. Russell A. Whitney as an individual is also suing Defendant. According to the WIN Proxy Statement for the September 23, 2002 annual meeting of shareholders (Exhibit F), “Mr. Whitney is an executive officer of a number of privately-held Florida-based companies which are engaged in real estate development, publishing, marketing, software development, and mortgage services.” The amount in controversy in this litigation involves effects on these non-WIN businesses and therefore adds to an unknown amount of damages to Plaintiffs’ claim.
XII. STATEMENTS MADE BY PLAINTIFFS IN THEIR COMPLAINTS AND MOTIONS
25. The size of Plaintiffs’ businesses and the harm claimed are both so great that an award of less than $75,000 would be “…outside the range of permissible awards…” if Plaintiffs prevailed in all claims. [Burns v. Windsor Insurance Co., (11th Cir. 1994) 31 F 3d 1092]
26. Plaintiffs described the amount in controversy in their two complaints and their emergency motion as follows:

Broward County Emergency Motion and Memorandum (Exhibit C)
• [Defendant’s behavior] “…has resulted in, and continues to result in, substantial harm to Plaintiffs.” [Emphasis added]
• [Plaintiffs] “…have lost and continue to lose, substantial profits” [Emphasis added]
• “many [of Plaintiff’s prospective and existing customers have either refrained] from purchasing Plaintiffs’ services [or] ceased to continue utilizing Plaintiffs’ products and services.” [Emphasis added]
• [Plaintiffs’ reputation has been harmed and their goodwill has been] “severely” [damaged] [Emphasis added]
• [Plaintiffs state they are] “…consistently losing an immeasurable number of customers and an undeterminable amount of money due to…”[Defendant’s actions] [Emphasis added]
• “countless numbers of customers are lost.” [Emphasis added]
• “…an insurmountable amount of damages…” [Emphasis added]
• [Plaintiffs are losing] “…countless consumers…” [Emphasis added]

Complaint filed in Broward County (Exhibit B)
• [Plaintiffs] “…have lost and continue to lose, substantial profits” [Emphasis added]
• “many [of Plaintiff’s prospective and existing customers have either refrained] from purchasing Plaintiffs’ services [or] ceased to continue utilizing Plaintiffs’ products and services.” [Emphasis added]
• [Plaintiffs’ reputation has been harmed and their goodwill has been] “severely” [damaged] [Emphasis added]
• “…Plaintiffs have been damaged including, but not limited to, loss of significant profits and loss of goodwill.” [Emphasis added]

Complaint filed in Fort Myers federal court (Exhibit A)
• “Defendant’s aforesaid acts have harmed Plaintiffs’ reputation, severely damaged Plaintiffs’ goodwill…” [Emphasis added]
• “Defendant’s aforesaid acts have caused and will cause great…injury to Plaintiffs…” [Emphasis added]
• [Plaintiffs seek] “treble damages” [Emphasis added]
• [Plaintiffs seek] “punitive damages” [Emphasis added]
• [Plaintiffs seek] attorney fees and “…such further relief as the Court may deem just and proper.”

27. It is inconceivable that the harm described in such dire terms in the Plaintiffs’ court papers could only affect businesses the size of Plaintiffs’ by the tiny ratios calculated above. Mr. Whitney has been a driven man for decades and has built up his various business interests to impressive levels of gross sales and market capitalization. One of the disadvantages of these accomplishments is that Mr. Whitney and his company may no longer avail themselves of such “small claims court-like” venues as suing a defendant located on the other side of the continent for broadly-worded trademark and libel claims in Florida courts.
XIII. CASE WAS ORIGINALLY BROUGHT IN FEDERAL COURT
28. 28 USC 1441 (a) authorizes removal of case that originally might have been brought in federal court. This case not only “might” have been brought originally in federal court; it was originally brought in federal court. The exact same Plaintiffs sued the exact same Defendant on the exact same facts in federal court in Fort Myers on June 25, 2002. Plaintiffs could have amended that federal Fort Myers complaint to add the tortious interference cause claimed in the Broward County complaint.
XIV. STANDARD OF PROVING AMOUNT IN CONTROVERSY
29. In Tapscott v. MS Dealer Serv. Corp., (C.A. 11th, 1996, 77 F 3d 1353), as in this case, plaintiffs claimed an indeterminate amount of damages. In that case, the Eleventh Circuit said that the defendant had to prove by a preponderance of the evidence that the amount involved in the litigation exceeded the jurisdictional threshold. Other courts have said that the defendant need only show “some reasonable probability” that the amount in controversy will exceed $75,000 (Leslie v. BancTec Serv. Corp., D.C.N.Y. 1996, 928 F. Supp. 341)
For the reasons stated above, the Court should deny Plaintiffs’ motion to remand.

February 22, 2003 ________________________________
Date John T. Reed, pro se Defendant
John T. Reed Publishing
342 Bryan Drive, Alamo, CA 94507
925-820-6292, Fax: 925-820-1259
johnreed@johntreed.com
John T. Reed on real-estate-investment information | Real estate investment page | Order form | Real estate investment books
John T. Reed, a.k.a. John Reed, Jack Reed, 342 Bryan Drive, Alamo, CA 94507, Voice: 925-820-7262, Fax: 925-820-1259, Email: johnreed@johntreed.com

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