In a case solely comprised of state-law claims to enforce employment covenants, a United States District Judge in the North District of Texas ruled last week in Leica Microsystems Inc. v. Hernandez et al., No. 3:15-CV-2531-D, 2015 WL 7424770 (Nov. 23, 2015) that a defendant’s characterization of the plaintiff’s complaint as conduct violating federal antitrust laws was insufficient to establish federal jurisdiction.

The plaintiff, an alleged global leader in anatomical pathology solutions, sued a former employee and his new business after terminating the former employee for cause. The plaintiff alleged the former employee’s new business competed against the plaintiff’s business in violation of the former employee’s employment agreement. The plaintiff’s claims included breach of contract and trade secret misappropriation. The plaintiff also sought an injunction prohibiting defendants from, e.g., using the plaintiff’s confidential information and using that information to contact the plaintiff’s customers.

All parties agreed that the plaintiff’s claims comprises solely state-law causes of action. The former employee nonetheless consented to removal of the case (the party removing the case had been dismissed with prejudice) and argued against the plaintiff’s motion to remand. The former employee argued that federal question jurisdiction existed because, according to the former employee, plaintiff’s complaint “is asking the state court to enforce [the plaintiff’s] anti-competitive practices, in direct violation of the Sherman Anti-Trust Act (“Sherman Act”), 15 U.S.C. §§ 1 and 2.” Specifically, the former employee argued that the plaintiff raised federal issues in its complaint by admitting that it had engaged in exclusionary, monopolistic conduct that violated federal antitrust law. Moreover, the defendant argued that plaintiff’s ability to recover any of the damages it sought hinged on whether its conduct is a violation of federal antitrust law. Accordingly, according to the defendants, “substantial federal issued act[ed] as a cloud over the entire proceeding.”

Judge Sydney A. Fitzwater held, however, that “[a]lthough defendants rely on various ‘federal issues,’ none is necessary to determine any of [the plaintiff’s] state-law claims.” Judge Fitzwater held that at most, the defendants had “identified a federal-law defense, i.e., that [the plaintiff] cannot obtain certain injunctive relief because awarding such relief would constitute an unreasonable restraint on trade or a monopoly.” This federal-law defense, the judge held, was insufficient as a matter of law to create federal-question jurisdiction. Accordingly, the judge remanded the case and awarded the plaintiff fees and expenses, holding that the removal was unreasonable.