2014 U.S. Dist. LEXIS 151923
E.D.N.Y.2014Background
- Plaintiffs Sleppin, Teeman, and Think-scan (derivatively) sued former partners Weinberger, Westen, Bornstein and related entities in New York state court seeking dissolution, damages, and relief for alleged misappropriation after Weinberger/Westen left and formed a competing firm (Implicit).
- Defendants removed to federal court arguing Plaintiffs’ state-law claims are completely preempted by the Copyright Act and that defendants’ copyright-related counterclaims supply federal jurisdiction; several defendants joined the removal.
- After removal Plaintiffs amended the complaint to drop certain claims and assert only state-law causes of action: breach of fiduciary duty, trade-secret misappropriation, tortious interference, usurpation of corporate opportunities, and an accounting.
- Defendants answered and asserted counterclaims including declaratory judgments of copyright ownership and non-infringement.
- Plaintiffs moved to remand and for attorneys’ fees; the district court evaluated whether Plaintiffs’ claims or defendants’ counterclaims arise under federal copyright law (including the post-2011 §1454 removal framework for IP counterclaims).
- The court concluded Plaintiffs’ state-law claims include extra elements (fiduciary/confidentiality duties) that make them qualitatively different from copyright claims and that the defendants’ declaratory counterclaims likewise do not require construction of the Copyright Act; remand granted and fee request denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Plaintiffs’ amended (post-removal) complaint controls jurisdictional analysis | Third Am. Compl. is operative and removes federal questions | Defendants: post-removal amendment was forum-shopping and should be ignored | Court: plaintiff may be master of the claim; use Third Am. Compl. to assess jurisdiction (Plaintiff wins) |
| Whether Plaintiffs’ state-law claims are preempted by Copyright Act (17 U.S.C. §301) | Claims are state-law causes (fiduciary, trade secret, tortious interference, usurpation, accounting) not equivalent to copyright rights | Defendants: claims are premised on misappropriation/copying of copyrighted materials and thus completely preempted | Court: claims contain extra elements (fiduciary/confidentiality duties, improper means) so are qualitatively different and not preempted (Plaintiff wins) |
| Whether defendants’ counterclaims (declaratory ownership and non-infringement) invoke federal jurisdiction under §1454 | Plaintiffs: counterclaims filed after removal cannot defeat remand | Defendants: §1454 authorizes removal based on any party’s copyright claim, even counterclaims filed after removal | Court: will consider counterclaims filed after removal but finds they do not arise under copyright law because they hinge on state-law contract/ownership and fiduciary issues; §1454 does not supply jurisdiction here (Plaintiff wins) |
| Whether plaintiffs are entitled to attorneys’ fees under 28 U.S.C. §1447(c) | Removal was improper so fees should be awarded | Defendants: removal was objectively reasonable given unsettled law | Court: denial of fees — removal was objectively reasonable though remand warranted (Defendant wins on fee issue) |
Key Cases Cited
- Lincoln Property Co. v. Roche, 546 U.S. 81 (removal when original federal jurisdiction exists)
- Caterpillar Inc. v. Williams, 482 U.S. 386 (plaintiff is master of the claim; removal only for cases that could have been filed in federal court)
- Briarpatch Ltd., L.P. v. Phoenix Pictures, Inc., 373 F.3d 296 (2d Cir.) (two‑part test for Copyright Act preemption; extra-element test)
- Computer Assocs. Intern., Inc. v. Altai, Inc., 982 F.2d 693 (2d Cir.) (trade-secret/confidentiality extra element avoids preemption)
- Jasper v. Bovina Music, Inc., 314 F.3d 42 (2d Cir.) (not every case involving copyright falls within federal jurisdiction)
- T.B. Harms Co. v. Eliscu, 339 F.2d 823 (2d Cir.) (declaratory copyright ownership claims based on contractual interpretation do not necessarily arise under the Copyright Act)
- Medtronic, Inc. v. Mirowski Family Ventures, LLC, 134 S. Ct. 843 (declaratory judgment jurisdiction requires that a coercive action would necessarily present a federal question)
- Martin v. Franklin Capital Corp., 546 U.S. 132 (attorney’s fees under §1447(c) are discretionary; deny when defendant had objectively reasonable basis for removal)