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Paramount Sports & Entertainment Management, LLC v. Shah

United States District Court, E.D. Virginia, Norfolk Division

December 7, 2018

PARAMOUNT SPORTS & ENTERTAINMENT MANAGEMENT, LLC, Plaintiff/Counterclaim Defendant,
v.
SANAT SHAH, Defendant/Counterclaim Plaintiff. and ALVIN KEELS, JR. Counterclaim Defendant,

          MEMORANDUM OPINION AND ORDER

          Raymond A. Jackson United States District Judge.

         This matter is before the Court on a Motion to Remand as well as a Motion to Dismiss Count III of the Counterclaim, both submitted by Plaintiff/Counterclaim Defendant Paramount Sports & Entertainment Management, LLC ("Paramount") and Counterclaim Defendant Alvin Keels. These matters have been fully briefed and are ripe for disposition. The Court finds that a hearing will not aid judicial determination. For the reasons stated herein, this case is REMANDED to the Circuit Court for the City of Norfolk, Virginia as Defendant Sanat Shah ("Defendant") has waived removal. As such, Paramount's Motion to Dismiss is MOOT.

         I. FACTUAL AND PROCEDURAL HISTORY

         Defendant is a player agent in professional sports, and specifically the National Football League ("NFL"). Counterclaim ("CC") ¶ 8. Paramount, whose CEO is Alvin Keels, acquired Defendant's agency business by bringing him in-house at Paramount. CC ¶ 9. On November 24, 2014, Defendant Shah and Paramount entered into an Assignment and Assumption Agreement (the "AAA"), which provided for Shah to assign to Paramount Shah's fees under his representation agreements with his then-existing player-clients in exchange for Paramount's payment to Shah of $1, 550, 000 over the course of a five-year payment schedule (the "Earn-Out Payments"). CC ¶ 9. The AAA contains a forum selection clause at Section 7(i) (the "AAA clause"), which states as follows:

Any lawsuit or other legal proceeding involving any dispute or matter arising under this Agreement may only be brought in the state courts situated in the City of Norfolk, Virginia, or in the federal courts located in the Eastern District of Virginia, in either case a court having jurisdiction over the subject matter of the dispute or matter. All parties herby irrevocably consent to the exclusive exercise of personal jurisdiction and venue by any such Court with respect to any such proceeding. CC, Exh. 1, §7(i).

         On the same day as the execution of the AAA, Defendant Shah and Paramount also became parties to an Employment Agreement ("EA"), pursuant to which Defendant became an employee of Paramount in the role of "Player Agent, with the title 'Executive Vice President.'" CC ¶ 10. The EA also contains a forum selection clause at Section 12(e) (the "EA Clause"), which states:

This Agreement shall be governed by and construed in accordance with the laws of the Commonwealth of Virginia. Employer and employee hereby irrevocably submit to the exclusive jurisdiction and venue of the Circuit Court for the City of Norfolk, Virginia, in any action or proceeding regarding this Agreement or the employment relationship established herein. Employer and Employee hereby irrevocably agree that any such action or proceeding shall be heard and determined exclusively in such court. CC, Exh. 2, § 12(e).

         As a result of a change in the default rate of player commission negotiated by the NFL Players Association ("NFLPA") on November 2016, some of Defendant Shah's and Paramount's clients began agitating for lower commissions. CC ¶ 17. For economic necessity, Defendant and Paramount reduced some of their respective clients' commissions with Paramount's approval. CC ¶ 20. Subsequently, Paramount suspended Shah's Earn-Out payments in order to compensate for the loss of commission revenue to Paramount. CC ¶124, 61.

         On June 11, 2018, Paramount sued Shah in the Circuit Court for the City of Norfolk, Virginia, alleging in its Complaint two Counts: Declaratory Judgment as to a suspension and offset of certain amounts that should have been or should be paid to Shah under the AAA (Count I), and breach of contract related to both the EA and AAA (Count II). See ECF No. 1-1. Shah removed the case to this Honorable Court on July 31, 2018, answered, and filed a Counterclaim on August 6, 2018. See ECF Nos. 2 & 3. Count I of the Counterclaim seeks a Declaratory Judgment as to the rights of the parties under the AAA and the EA. Count II alleges breach of contract against Paramount under those Agreements. Count III alleges a business conspiracy against Keels and Paramount as a result of their joinder with third-party investors to suspend the Earn-Out payments, which as noted flowed from preemployment business relationships of Defendant Shah that were assigned to Paramount under the AAA.

         In response to the Counterclaim, the Paramount has filed a Motion to Remand and memorandum in support (ECF Nos. 7-8), a Motion to Dismiss Count III and memorandum in support (ECF Nos. 9-10), and an Answer (ECF No. 11).

         II. LEGAL STANDARD

         Federal courts are courts of limited jurisdiction and may not exercise jurisdiction absent a statutory basis. Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 552 (2005). "A court is to presume, therefore, that a case lies outside its limited jurisdiction unless and until jurisdiction has been shown to be proper." United States v. Poole, 531 F.3d 263, 274 (4th Cir. 2008) (citing Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994)).

         Unless a matter involves an area over which federal courts have exclusive jurisdiction, a district court has subject matter jurisdiction over a case only where the matter involves a federal question arising "under the Constitution, laws or treaties of the United States," 28 U.S.C. § 1331 (2012), or if "the matter in controversy exceeds the sum or value of $75, 000, exclusive of interests and costs, and is between citizens of different States," 28 U.S.C. § 1332(a)(1).

         A defendant however may remove any action from state court to federal court in which the federal court has original jurisdiction, or if there is diversity of citizenship between the parties. See 28 U.S.C. § 1441(a), (b). But, "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c). A district court has an independent duty to ensure that jurisdiction is proper and must raise a lack of subject-matter jurisdiction claim on its own motion, ...


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