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The Collaborative Clearinghouse for Lawsuits and Other Claims Against ACE Group Insurance Companies

LSI CORPORATION v. ACE AMERICAN INSURANCE COMPANY et al notice of removal

ATTENTION: It is possible that this information may no longer be current and therefore may be inaccurate. The index contains both open and closed cases and is not a complete list of cases in which an ACE Insurance Group company is involved. This information is provided to give interested persons an idea of the issues disputed in the indexed cases. For a full understanding of a case, one should read the rest of the court file, including the response. For the most up-to-date and complete information on a case, visit www.pacer.gov or contact the clerk of the relevant court.

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19503194v1 -1- CASE NO.
NOTICE OF REMOVAL TO UNITED STATES DISTRICT COURT
SEDGWICK LLP
MARTIN J . O’LEARY Bar No. 106546
BRIAN D. HARRISON Bar No. 157123
333 Bush Street, 30
th
Floor
San Francisco, CA 94104
Telephone: (415) 781-7900
Facsimile: (415) 781-2635
Email: marty.oleary@sedgwicklaw.com
brian.harrison@sedgwicklaw.com
Attorneys for Defendant
ACE AMERICAN INSURANCE COMPANY
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF CALIFORNIA – SAN J OSE DIVISION
TO THE CLERK OF THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF CALIFORNIA, AND TO PLAINTIFF AND ITS ATTORNEYS
OF RECORD:
PLEASE TAKE NOTICE that, pursuant to 28 U.S.C. §§ 1332(a), 1441, and 1446,
defendant ACE American Insurance Company (“ACE American”), by and through its counsel of
record, hereby removes to this Court the state court action described below.
JURISDICTION
1. Removal to this Court is proper pursuant to 28 U.S.C. §§ 1332(a) and 1441(a).
2. 28 U.S.C. § 1332(a) provides in pertinent part: “The district courts shall have
original jurisdiction of all civil actions where the matter in controversy exceeds the sum or value
of $75,000, exclusive of interest and costs, and is between — (1) citizens of different States [or]
LSI CORPORATION,
Plaintiff,
v.
ACE AMERICAN INSURANCE
COMPANY, ACE USA (Improperly
Pled), business entity form unknown, and
DOES 1 through 50, inclusive,
Defendants.
CASE NO.
NOTICE OF REMOVAL OF CIVIL
ACTION TO UNITED STATES
DISTRICT COURT FOR THE
NORTHERN DISTRICT OF
CALIFORNIA; DEMAND FOR JURY
TRIAL
[ORIGINALLY SANTA CLARA COUNTY
SUPERIOR COURT, CASE NO.
114CV269449]
Case5:14-cv-04353-PSG Document1 Filed09/26/14 Page1 of 7
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19503194v1 -2- CASE NO.
NOTICE OF REMOVAL TO UNITED STATES DISTRICT COURT
… (3) citizens of different States and in which citizens or subjects of a foreign state are
additional parties . . . .”
3. 28 U.S.C. § 1441(a) provides in pertinent part, “[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 defendant or the defendants, to the district court of the United States for the
district and division embracing the place where such action is pending.”
THE STATE COURT PLEADING
4. On August 14, 2014, plaintiff LSI Corporation (“LSI”) filed a complaint in the
Superior Court of the State of California, County of Santa Clara, bearing case number
114CV269449, alleging breach of contract and breach of the covenant of good faith and fair
dealing (“Complaint”).
5. Defendant ACE American was served via CT Corporation on August 29, 2014,
with the Service of Process Transmittal, Summons, Civil Case Cover Sheet, Civil Lawsuit
Notice, Alternative Dispute Resolution Information Sheet, and Complaint; true and correct
copies are attached hereto as Exhibit A. Pursuant to 28 U.S.C. § 1446(a), Exhibit A constitutes
all process, pleadings, and orders served on this defendant as of the date of the filing of this
Notice of Removal.
6. Counsel for ACE American will file a copy of the Notice of Removal with the
Clerk of the Court of the Superior Court of the State of California, County of Santa Clara, and
written notice will be provided to counsel for LSI, all in accordance with 28 U.S.C. § 1446(d).
A true copy of this Notice is attached hereto as Exhibit B.
7. ACE American will file a timely responsive pleading to the Complaint in this
Court.
NOTICE OF REMOVAL IS TIMELY
8. As described in paragraph 5 above, defendant ACE American was served, via CT
Corporation, with a copy of the Complaint and the respective Summons on August 29, 2014.
9. This Notice of Removal is timely, having been filed within thirty (30) days of first
service of the Complaint upon ACE American. See 28 U.S.C. § 1446(b)(1).
Case5:14-cv-04353-PSG Document1 Filed09/26/14 Page2 of 7
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19503194v1 -3- CASE NO.
NOTICE OF REMOVAL TO UNITED STATES DISTRICT COURT
THE PARTIES ARE OF DIVERSE CITIZENSHIP AND
THIS MATTER EXCEEDS THE JURISDICTIONAL MINIMUM
10. As described in paragraphs 11 to 20 below, this action is a civil action in which
this Court has original jurisdiction under 28 U.S.C. § 1332(a), and is one which may be removed
to this Court by ACE American pursuant to the provisions of 28 U.S.C. § 1441(a) and (b) in that
it is a civil action wherein the matter in controversy exceeds $75,000, exclusive of interest and
costs, and is between citizens of different states.
11. On information and belief, both at the time of the filing of the Complaint and at
the time of this removal, LSI was, and continues to be, a domiciled-in-citizen of the State of
California. Paragraph 1 of the Complaint alleges that “[a]t all times mentioned herein, plaintiff
LSI Corporation (hereinafter “LSI” or Plaintiff”) was an active corporation qualified to do
business and doing business in Santa Clara County, State of California.”
12. A corporation is a citizen of the state in which it was incorporated and the state in
which its principal place of business is located. 28 U.S.C. § 1332(c)(1). ACE American is a
corporation organized and incorporated under the laws of the State of Pennsylvania, with its
principal place of business in Pennsylvania. Hertz Corp. v. Friend, 130 S. Ct. 1181, 1192 (2010)
(“We conclude that ‘principal place of business’ is best read as referring to the place where a
corporation’s officers direct, control, and coordinate the corporation’s activities. It is the place
that Courts of Appeals have called the corporation’s ‘nerve center.’”).
13. Purported Defendant “ACE USA” is improperly named as a party in light of the
fact that “ACE USA” is a service mark and is not an actual entity. Declaration of Kenneth D.
Milbauer in Support of Removal of Civil Action to United States District Court for the Northern
District of California; Demand for J ury Trial, ¶ 2.
14. Although the Complaint names 50 “DOE” defendants, “[t]he citizenship of
fictitious defendants is disregarded for removal purposes[.]” Soliman v. Philip Morris Inc., 311
F.3d 966, 971 (9th Cir. 2002); see also 28 U.S.C. § 1441(b)(1).
15. This action involves an amount in controversy that exceeds the sum of $75,000,
exclusive of interest and costs, based on the following:
Case5:14-cv-04353-PSG Document1 Filed09/26/14 Page3 of 7
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19503194v1 -4- CASE NO.
NOTICE OF REMOVAL TO UNITED STATES DISTRICT COURT
16. The amount in controversy is determined from the allegations or prayer of the
complaint. See St. Paul Mercury Indem. Co. v. Red Cab Co., 303 US 283, 289 (1938).
17. This is a suit for breach of contract and bad faith. (Complaint, ¶¶ 6-38.) The suit
alleges that ACE American issued a Management Protection Policy, policy number DON
G23648350, effective J uly 1, 2013 through J uly 1, 2014, with $15 million limits of liability
(“Policy”), which includes a duty to pay Loss and Defense Costs as defined by the Policy.
(Complaint, ¶¶ 7-8.) The suit alleges that on or about J anuary 30, 2014, City of Orlando Police
Pension Fund and Northern California Pipe Trades Pension Plan, stockholders of LSI, filed a
consolidated class action complaint against LSI in the Court of Chancery of the State of
Delaware (“Stockholder Action”) claiming that LSI and its directors and CEO breached fiduciary
duties owed in connection with a planned merger of LSI and Avago Technologies Limited.
(Complaint, ¶ 11.). LSI alleges that the Stockholder Action was tendered to ACE American,
which accepted coverage pursuant to the terms of the Policy. (Complaint, ¶¶ 12-13.) Thereafter,
the Stockholder Action was settled and the terms of the settlement required, among other
obligations, LSI to provide and pay for notice to be sent to members of the Stockholder Action
class. (Complaint, ¶ 14.) LSI alleges that on or around April 8 and 17, 2014, LSI informed ACE
American that LSI would be required to provide the notification of the settlement to the class,
that notification expenses was to be borne by LSI and, by these acts, LSI expected and intended
ACE American to pay and reimburse these notification expenses. (Complaint, ¶ ¶15-16.)
Thereafter, LSI retained the Garden City Group to disseminate notice and carry out related tasks
regarding same, per the Stockholder Action settlement agreement and court order. (Complaint, ¶
18.) On or around May 16, 2014, LSI sent ACE American a Garden City Invoice in the amount
of $1,139,440.87 for the initial notification expenses and requested ACE American to pay the
invoice, and on J une 26, 2014, sent ACE American a second Garden City invoice in the amount
of $1,145,601.82 for additional notification expenses, for a total of $2,285,042.69. (Complaint,
¶¶ 19-20.) On J une 11, 2014, ACE American acknowledged receipt of the payment requests, but
refused to pay the amount of $2,285,042.69 incurred, citing Section X.B., as amended by
Endorsement No. 11 of the Policy, which provides: “The Insureds agree not to settle or offer to
Case5:14-cv-04353-PSG Document1 Filed09/26/14 Page4 of 7
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19503194v1 -5- CASE NO.
NOTICE OF REMOVAL TO UNITED STATES DISTRICT COURT
settle any Claim, incur any Defense Costs or otherwise assume any contractual obligation or
admit any liability with respect to any Claim without the prior written consent of the Insurer,
which consent shall not be unreasonably withheld.” (Complaint, ¶ 21.) LSI alleges that ACE
American’s refusal to pay based on this provision was erroneous, and that LSI performed all
terms and conditions of the Policy and notified ACE American of its error in relying upon the
cited provision. (Complaint, ¶¶ 23-24.) LSI further alleges that ACE American breached the
terms of the Policy by refusing to pay the notification expenses of the Garden City Group
invoices in the amount of $2,285,042.69 that LSI was obligated to pay by reason of the
settlement and court order, communicating by letter its refusal to pay such invoices even after
LSI pointed out ACE American’s alleged error in interpreting the Policy, and continuing to
refuse to pay the amount of $2,285,042.99 despite LSI’s repeated requests. (Complaint, ¶¶ 23-
24.) In addition, LSI claims that ACE American has failed to pay and reimburse Defense Costs
incurred in the amount of $182,386.25, without cause, justification or sufficient explanation, and
that ACE American has breached the Policy by refusing to pay such Defense Costs. (Complaint,
¶¶ 25-26.) As a proximate result of ACE American’s refusal to pay covered Loss under the
Policy, LSA will have to pay the sum of at least $2,467,428.94 in outstanding Garden City
Group Invoices and other Defense Costs, and will be damaged in that amount, as well as
attorneys’ fees to obtain such benefits and other loss. (Complaint, ¶¶ 28-30.) LSI further alleges
that ACE American’s breach and related conduct was unreasonably and in bad faith.
(Complaint, ¶¶ 31-37.)
18. In the Complaint, LSI “prays for judgment” “[f]or general and special damages
according to proof, in excess of $2,467,428.94; [f]or interest on said damages at the legal rate,
according to proof; [c]osts of suit incurred herein; [and] [f]or such other and further relief as the
Court may deem just and proper.” (Complaint, Prayer for Relief at ¶¶1-4 under “On the First
and Second Causes of Action”.) Therefore, the amount in dispute with respect to the subject
action is at least $2,467,428.94, and such amount in controversy exceeds the jurisdictional
minimum of $75,000. (Emphasis added.)
Case5:14-cv-04353-PSG Document1 Filed09/26/14 Page5 of 7
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19503194v1 -6- CASE NO.
NOTICE OF REMOVAL TO UNITED STATES DISTRICT COURT
19. Further, Plaintiff LSI seeks punitive damages in connection with the claims for
alleged bad faith. (Complaint, ¶ 38, Prayer at ¶2 under “On the Second Cause of Action”.) A
claim for punitive damages is considered in deciding whether the “matter in controversy”
requirement has been satisfied. See E.G. Gibson v. Chrysler Corp., 261 F.3d 927, 945 (9th Cir.
2001), citing Bell v. Preferred Life Assurance Society, 320 U.S. 238, 240 64 S. Ct. 5, 88 Ltd.Ed.
15 (1943) (“It is well established that punitive damages are part of the amount in controversy in a
civil action.”).
20. Although ACE American denies that the foregoing potential damages are merited
in this case, Plaintiff’s Complaint has placed them in controversy. Accordingly, the amount in
controversy exceeds $75,000.
WHEREFORE, ACE American hereby requests that this action now pending in the
Superior Court of the State of California for the County of Santa Clara be removed directly to the
San J ose Division of the United States District Court, Northern District of California.
DATED: September 26, 2014 SEDGWICK LLP
By: /s/ Brian D. Harrison
Martin J . O’Leary
Brian D. Harrison
Attorneys for Defendant
ACE AMERICAN INSURANCE COMPANY
Case5:14-cv-04353-PSG Document1 Filed09/26/14 Page6 of 7
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19503194v1 -7- CASE NO.
NOTICE OF REMOVAL TO UNITED STATES DISTRICT COURT
DEMAND FOR JURY TRIAL
ACE American hereby demands a trial by jury in this action.
DATED: September 26, 2014 Respectfully submitted,
SEDGWICK LLP
By: /s/ Brian D. Harrison
Martin J . O’Leary
Brian D. Harrison
Attorneys for Defendant
ACE AMERICAN INSURANCE COMPANY
Case5:14-cv-04353-PSG Document1 Filed09/26/14 Page7 of 7

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date: 
Fri, 2014-09-26
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