321 F. Supp. 3d 624
E.D. Va.2018Background
- Village Builders (plaintiff) developed house plans, specifications, and cost estimates (the "Plans") for the Watsons and alleged the Watsons and Cowling/Cowling Contracting used those Plans to get a cheaper builder.
- Original state-court complaint pleaded six counts including common-law copyright infringement and statutory conspiracy; defendants removed to federal court invoking federal-question jurisdiction under the Copyright Act.
- Plaintiff amended to drop the copyright-related counts and moved to remand the case to Virginia circuit court; defendants opposed and filed counterclaims (including a Sherman Act claim) and a motion to dismiss.
- Plaintiff's remaining claims in the amended complaint allege tortious interference, trade-secret misappropriation, and unjust enrichment, with facts alleging loss of over $50,000.
- Defendants argued removal still proper because (1) their counterclaim raises a federal antitrust issue and (2) the amended pleading still rests on the same facts that purportedly amount to copyright claims.
- The district court concluded the amended state-law claims do not present a federal question and remanded the action to state court; the federal motion to dismiss was rendered moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether federal-question jurisdiction remains after plaintiff dismissed copyright counts | Amending removed federal claims eliminates original federal jurisdiction and court should remand | Same operative facts mean claims still "arise under" federal copyright law so removal remains proper | Remand granted — defendants failed to meet burden to show a federal question remains |
| Whether counterclaims invoking federal law sustain original jurisdiction | Counterclaim cannot create federal jurisdiction for plaintiff's state-law claims | Counterclaim (Sherman Act) supplies federal issue | Rejected — federal jurisdiction cannot rest on an actual or anticipated counterclaim |
| Whether plaintiff's state-law claims are preempted by Copyright Act §301 | State claims have distinct elements and plead extra elements beyond copyright law; therefore not preempted | Unjust enrichment and other claims are equivalent to copyright claims and thus preempted | Rejected — trade-secret, tortious-interference, and unjust-enrichment claims survive preemption challenge because they include elements or materials beyond copyright protection |
| Whether remand is appropriate under principles of economy, convenience, fairness, and comity | Early stage of litigation; little judicial investment; comity favors state-court resolution of state-law claims | Retention would promote judicial economy because state court might later be found to have preempted claims and case returned | Remand appropriate — factors and strong preference to dismiss state claims when federal basis is gone favor remand |
Key Cases Cited
- Caterpillar Inc. v. Williams, 482 U.S. 386 (well-pleaded complaint rule governs federal-question jurisdiction)
- Vaden v. Discover Bank, 556 U.S. 49 (counterclaims cannot sustain federal jurisdiction over plaintiff's claims)
- Lyons P'ship, L.P. v. Morris Costumes, Inc., 243 F.3d 789 (elements of copyright-infringement claim)
- Avtec Sys., Inc. v. Peiffer, 21 F.3d 568 (trade-secret claim not preempted by Copyright Act)
- Carnegie-Mellon Univ. v. Cohill, 484 U.S. 343 (factors for declining supplemental jurisdiction: economy, convenience, fairness, comity)
- Harless v. CSX Hotels, Inc., 389 F.3d 444 (remand appropriate where plaintiff amends to avoid federal jurisdiction)