CAMSOFT DATA SYSTEMS, INC., Plaintiff-Appellee-Cross-Appellant v. SOUTHERN ELECTRONICS SUPPLY, INCORPORATED; Active Solutions, L.L.C.; Brian Fitzpatrick; Henry J. Burkhardt; Ignace Perrin, Defendants-Third Party Plaintiffs-Appellants-Cross-Appellees Dell, Incorporated; Ciber, Incorporated; Dell Marketing, L.P.; Mark Kurt, Defendants-Appellants-Cross-Appellees Steve Renecker; Billy Ridge; Heather Smith; Bill Tolpegin; Donald Berryman; Earthlink, Incorporated; Motorola, Incorporated; MMR Constructors, Incorporated, doing business as MMR Communications, Defendants-Cross-Appellees v. Zurich American Insurance Company; American Zurich Insurance Company; Continental Casualty Company, Third Party Defendants-Appellants-Cross-Appellees.
No. 12-31013
United States Court of Appeals, Fifth Circuit
June 19, 2014
756 F.3d 327
Mark Aaron Cunningham, Jones Walker LLP, New Orleans, LA, James Connor Percy, Esq., Jones Walker LLP, Baton Rouge, LA, for Defendant-Appellant Cross-Appellee.
Karli Glascock Johnson, Kean Miller, L.L.P., Christine Lipsey, Juston Michael O‘Brien, Brook Landry Thibodeaux, McGlinchey Stafford, P.L.L.C., Baton Rouge, LA, Christopher Allen Riley, Andrew Jacob Tuck, Alston & Bird, L.L.P., Atlanta, GA, Thomas P. Anzelmo, Sr., McCranie, Sistrunk, Anzelmo, Hardy, McDaniel & Welch, L.L.C., Metairie, LA, Kyle Paul Kirsch, Esq., Kevin Paul Kress, Attorney, McCranie, Sistrunk, Anzelmo, Hardy, McDaniel & Welch, L.L.C., New Orleans, LA, for Defendants-Appellants-Cross-Appellees.
Lawrence A. Slovensky, King & Spalding, L.L.P. Atlanta, GA, John Michael Parker, I, Esq., Taylor, Porter, Brooks & Phillips, L.L.P., Michael Reese Davis, Sr., Hymel Davis & Petersen, L.L.C., Tiffany Thornton Kopfinger, Esq., Baton Rouge, LA, for Defendant-Cross-Appellees.
Michael P. Kenny, Alston & Bird, L.L.P., Kacy McCaffrey, Alston & Bird, L.L.P., Atlanta, GA, Tara Montgomery Madison, Kean Miller, L.L.P., Baton Rouge, LA, for Defendants-Appellants-Cross-Appellees/Defendants-Cross-Appellees.
Michael Don Peytavin, Gaudry, Ranson, Higgins & Gremillion, L.L.C., Gretna, LA,
Before BENAVIDES, CLEMENT, and GRAVES, Circuit Judges.
FORTUNATO P. BENAVIDES, Circuit Judge:
Before the court is the appeal of a district court‘s decision not to exercise supplemental jurisdiction over the case. Defendants-Appellants argue that the court erred in remanding the case to state court. Plaintiff-Appellee moves to dismiss the case, arguing that removal was improper and that we lack jurisdiction to review the remand order. An untimely cross-appeal raises various issues regarding several court orders.
The central issue in this case is whether a district court has jurisdiction over an inventorship dispute where the contested patent has not yet issued. The case was removed from Louisiana court pursuant to
I. Background
The present case relates to an ongoing controversy regarding a wireless urban surveillance system installed in New Orleans beginning in 2005. Prior to the implementation of that system, Camsoft Data Systems, Inc., had worked with two defendants1—Active Solutions, L.L.C., and Southern Electronics Supply, Inc.—on a pilot project involving wireless surveillance cameras. Southern Electronics then entered into a contract with the City of New Orleans to install the system at issue here. Camsoft was not party to that contract, nor did it have a written agreement with Active Solutions or Southern Electronics. There was, however, allegedly an understanding that Camsoft technology and labor would be used in conjunction with the project. Ultimately, Camsoft did not participate in the implementation of the system, which was mired in political scandal after reports revealed that certain officials may have accepted kickbacks during the municipal bidding process.
Extensive civil and criminal litigation resulted, with Active Solutions and Southern Electronics winning a $12 million dollar jury award from technology vendors and the city‘s chief technology officer.2 After
On December 14, 2009, the case was removed on the basis of federal question jurisdiction under
The district court presided over the case for over three years, adjudicating various dispositive motions and ultimately dismissing several claims with prejudice. The court found that Camsoft had failed to adequately plead several of its state claims, resulting in dismissal under Rule 12(b)(6). In addition, the court dismissed the federal anti-trust and racketeering claims, finding that Camsoft had no standing under the governing statutes. The court also granted a defendant‘s motion for summary judgment on the issue of joint ventureship, which served as the foundation for most of Camsoft‘s remaining state claims. The court later denied Camsoft‘s motion to certify these dismissal orders as final judgments for interlocutory appeal.
Most recently, after Camsoft moved to file a fourth amended complaint and to recuse the judge, the district court remanded the case by sua sponte declining to exercise supplemental jurisdiction over remaining claims.4 When some of the defendants appealed the remand to the Federal Circuit, Camsoft cross-appealed, seeking review of every adverse decision. Camsoft later filed a motion to dismiss, arguing that jurisdiction never existed, or, in the alternative, that the court lacked jurisdiction to review the remand. After requesting briefs on the question of jurisdiction, the Federal Circuit transferred the appeal to this court.5 We now consider the parties’ arguments.
Camsoft moves to dismiss this case for lack of appellate jurisdiction, arguing that this court has no authority to review the remand order. This court has jurisdiction to review a remand order unless the case was remanded for lack of subject matter jurisdiction or a defect in removal procedure.
Camsoft nevertheless contends that the court effectively remanded for lack of jurisdiction because the federal claims were dismissed under Rule 12(b)(1). See
Our jurisdiction exists notwithstanding the Federal Circuit‘s decision not to entertain the present appeal. The Federal Circuit has exclusive jurisdiction over any appeal where the district court‘s “jurisdiction was based, in whole or in part, on
“This court necessarily has the inherent jurisdiction to determine its own jurisdiction.” Scherbatskoy v. Halliburton Co., 125 F.3d 288, 290 (5th Cir.1997). We also have jurisdiction to evaluate district court jurisdiction. See Filer v. Donley, 690 F.3d 643, 647 (5th Cir.2012). This is true even where the asserted jurisdiction arises from patent law. Scherbatskoy, 125 F.3d at 290. The issues before this court are not questions of patent law such that the appeal must be adjudicated by the Federal Circuit. Instead, the parties dispute the existence of jurisdiction over a complaint that allegedly implicates patent law. Accordingly, we may entertain the appeal. This conclusion is not inconsistent with the Federal Circuit‘s order. If that court had found a lack of appellate jurisdiction, it would have remanded to the district court instead of transferring the appeal to this circuit.
Camsoft‘s motion to dismiss is therefore denied. Insofar as Camsoft‘s motion raises any arguments not addressed by the foregoing discussion, those arguments are rendered moot in light of the remainder of this opinion. See ITL Int‘l Inc. v. Constenla, S.A., 669 F.3d 493, 501 (5th Cir.2012) (dismissing ancillary motion as moot after finding district court lacked jurisdiction over claims).
III. Removal
Before reviewing the contested remand, we consider whether removal was proper in the first place. All issues of subject matter jurisdiction are questions of law that this court reviews de novo. Oviedo v. Hallbauer, 655 F.3d 419, 422 (5th Cir.2011). Any underlying findings of fact are subject to review for clear error. Young v. United States, 727 F.3d 444, 446 (5th Cir.2013). A case originating in state court may be removed where the district court has original jurisdiction over any claim.
As a threshold matter, the parties disagree as to whether we should even entertain Camsoft‘s objections to removal. After unsuccessfully contesting removal, Camsoft seemingly resigned itself to its jurisdictional fate by amending its complaint to include federal anti-trust and RICO claims. Appellants ask this court to hold that Camsoft waived its jurisdictional arguments by voluntarily pleading these causes of action. We have indeed held that “[w]here the disgruntled party takes full advantage of the federal forum and then objects to removal only after losing at the district court level, that party has waived all objections to removal jurisdiction.” Kidd v. Sw. Airlines, Co., 891 F.2d 540, 546 (5th Cir.1990) (emphasis added). Yet where—as here—a plaintiff objects to
Camsoft‘s objection having been properly preserved, we now turn to the merits of its argument. District courts have original jurisdiction over any civil action arising under patent law.
The district court lacked removal jurisdiction because inventorship served as the only possible basis for removal, and Camsoft‘s complaint did not allege that a patent had issued. At the time of removal, the district court noted the complaint‘s lack of specificity with respect to the disputed patent. Camsoft‘s complaint clearly alleged that Active Solutions or Southern Electronics had tried to patent the surveillance technology and had falsely claimed sole inventorship.8 Yet the court was unable to ascertain the status of the patent application. In fact, Camsoft had “no proof that the Active Defendants [had] even filed a patent application” at all. Nevertheless, because the complaint clearly referred to a pending patent, and because neither Active Solutions nor Southern Electronics denied applying for a patent, the district court analyzed jurisdiction under the assumption that an application was pending. At oral argument before this court, the parties indicated that an application had been filed but that no patent had issued.9
The federal courts have no authority to adjudicate inventorship with respect to pending patents. Congress has explicitly vested the Patent and Trademark Office with sole discretion over the “granting and issuing of patents.”
Whenever through error a person is named in an application for patent as the inventor, or through error an inventor is not named in an application, and such error arose without any deceptive intention on his part, the Director may permit the application to be amended accordingly, under such terms as he prescribes.
Congress then explained the role of the courts in adjudicating contested inventorship:
Whenever through error a person is named in an issued patent as the inventor, or through error an inventor is not named in an issued patent and such error arose without any deceptive intention on his part ... [t]he court before which such matter is called in question may order correction of the patent on notice and hearing of all parties concerned and the Director shall issue a certificate accordingly.
tain arguments regarding inventorship with respect to patents that have not yet issued. The sections that refer to unissued patents make no mention of courts at all. “[W]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.” Russello v. United States, 464 U.S. 16, 23, 104 S.Ct. 296, 78 L.Ed.2d 17 (1983) (citation omitted) (alteration original). Consequently, a “district court lack[s] jurisdiction to review the inventorship of an unissued patent.” E.I. Du Pont de Nemours & Co. v. Okuley, 344 F.3d 578, 584 (6th Cir.2003).
Admittedly, it seems paradoxical that disputed inventorship is exclusively a question of federal law and yet sometimes fails to imbue the district courts with federal question jurisdiction. Yet such a scenario is hardly unusual. There are many federal questions whose jurisdiction has been vested outside the district courts. Citizenship and naturalization, for example, are exclusively issues of federal law. See
We recognize the lack of judicial consensus as to this issue. Compare HIF Bio, Inc., 600 F.3d 1347 (the Federal Circuit finding jurisdiction), with Okuley, 344 F.3d 578 (the Sixth Circuit finding none). The Federal Circuit has held that inventorship disputes regarding pending patents give rise to subject matter jurisdiction. HIF Bio, Inc., 600 F.3d at 1353. In HIF Bio, that court considered a removed complaint in which the plaintiffs sought a declaration that they were the “true” inventors of certain chemical compound. Id. at 1352. Noting that a patent had not issued at the time of removal, the court construed the claim as an action under
We respectfully disagree with our sister circuit‘s interpretation. There is no doubt that the district courts have jurisdiction to review the inventorship of patents pursuant to
IV. Remand
Our analysis does not end with the improper removal, however, because
In arguing for and against remand, both parties rely heavily on Caterpillar, Inc. v. Lewis, 519 U.S. 61, 117 S.Ct. 467, 136 L.Ed.2d 437 (1996). Caterpillar involved state claims removed on the basis of diversity jurisdiction. Id. at 64. The plaintiff vigorously opposed removal, but its motion to remand was denied. Id. Later, the undisputed facts indicated that diversity had not existed at the time of removal. Id. at 70. But prior to final judgment, the plaintiff had voluntarily settled with the sole non-diverse defendant, thereby creating the diversity necessary to give rise to federal jurisdiction. Id. at 64. After a jury returned a verdict in favor of the defendant, the plaintiff appealed on the ground that the district court had never entertained jurisdiction over the case. Id. at 66-67. After acknowledging that the jurisdictional challenge had been preserved and holding that removal had been improper, the Supreme Court explained that the removal defect was cured via the dismissal of the lone non-diverse defendant. Id. at 73. The Court then declined to remand for a new trial in state court, noting that where a removal defect has been cured and a case has proceeded to trial on the merits, “considerations of finality, efficiency, and economy” are “overwhelming.” Id. at 75, 77-78.
So Caterpillar analysis involves three considerations: first, whether a meritorious removal challenge has been preserved; second, whether a post-removal development cured the defect that existed at removal; and third, whether the case was tried on the merits such that finality and economy preclude remand. See Grupo Dataflux v. Atlas Global Grp., L.P., 541 U.S. 567, 572, 124 S.Ct. 1920, 158 L.Ed.2d 866 (2004) (explaining that whether the defect is cured and whether economy precludes remand are distinct inquiries). Remand is proper here because there has been no trial on the merits, as required by Caterpillar‘s third analytical prong. Courts have long made an exception to the time-of-filing and time-of-removal jurisdictional rules for cases tried on the merits. See Grubbs v. Gen. Elec. Credit Corp., 405 U.S. 699, 702-03, 92 S.Ct. 1344, 31 L.Ed.2d 612 (1972) (tracing the distinction back to 1900). As the Supreme Court observed in
Appellants disagree, arguing that the district court‘s Rule 12 dismissals are the functional equivalent of trial on the merits. This court, however, has already held that claim dismissal does not forestall remand under Caterpillar. See Waste Control Specialists, L.L.C. v. Envirocare of Tex., Inc., 199 F.3d 781 (5th Cir.2000), opinion withdrawn and superseded in part, 207 F.3d 225 (5th Cir.2000) (superseding allocation of attorney‘s fees). In Waste Control, we relied on the Supreme Court‘s reasoning in Caterpillar to analyze facts similar to those of the instant case. The district court had allowed removal after erroneously concluding that federal anti-trust law preempted the plaintiff‘s claims. Id. at 782-84. After its motion to remand was denied, the plaintiff added a federal cause of action. But when the entire case was dismissed on a Rule 12(b)(6) motion, the plaintiff appealed, arguing that the case must be remanded because the district court never had jurisdiction over the case. Id. at 782-83. After finding that removal had been improper and that the jurisdictional argument had been preserved, we held that remand was not precluded by Caterpillar. Id. at 787. In reaching that conclusion, we emphasized that whereas Caterpillar had been tried to verdict, Waste Control involved “no trial on the merits.” Id. at 786. Before instructing the district court to remand the case, we explicitly stated that Caterpillar‘s reach “stops short of a Rule 12(b)(6) dismissal.” Id. In fact, we are aware of no improperly removed case in which this court denied remand following a Rule 12 dismissal.
Appellants nevertheless contend that we once anticipated an untried case that had “remain[ed] in the federal court system for [such] a significant length of time” that “considerations of finality and economy [would] result in affirming a judgment.” McAteer v. Silverleaf Resorts, Inc., 514 F.3d 411, 416 (5th Cir.2008). First of all, it is not clear exactly what the McAteer court intended with that comment, as that language was not explained and was not used to resolve the case. Id. That case—much like this one—involved the improper removal of claims that were later dismissed under Rule 12(b)(6). Id. at 414. On appeal from that dismissal, we vacated the dismissal and instructed the district court to remand to the state, notwithstanding the fact that a post-removal development resulted in a case that could have been filed in federal court. Id. at 416. So McAteer is not a particularly strong case for Appellants. On the contrary, it only serves to illustrate this court‘s consistent treatment of 12(b)(6) adjudication as insufficient to forestall an otherwise proper remand.
Regardless, to whatever extent McAteer implies that some improperly removed cases must remain in federal court based solely on considerations of finality and economy, we are not persuaded that this is such a case. There is no finality here, as this is an interlocutory appeal. In fact, the heart of this dispute—Camsoft‘s original breach of contract claim against South-
In fact, due to the related cases, the Louisiana bench may be able to handle this litigation more efficiently than the federal court. The Louisiana courts have already presided over multiple cases involving the same parties and arising out of the same set of underlying facts, so the state court may be better positioned to efficiently discern the merits of Camsoft‘s allegations, which are based largely on facts already litigated. Indeed, the intensely local nature of this litigation only underscores the propriety of remand. After all, improper removal undermines federalism by depriving a sovereign state of the right to adjudicate its own cases and controversies. Gasch v. Hartford Accident & Indem. Co., 491 F.3d 278, 281 (5th Cir.2007). For that reason, this court resolves any jurisdictional doubt “in favor of remand.” Id. at 281-82.
In any event, there is little doubt that remand will result in a certain degree of inconvenience. Yet we must respect the outer limit of our jurisdiction “regardless of the costs” imposed. Grupo Dataflux, 541 U.S. at 571. As one of our brothers observed, “the so-called ‘waste’ of judicial resources that occurs when we dismiss a case for lack of jurisdiction is the price that we pay for federalism.” Atlas Global Grp., L.P. v. Grupo Dataflux, 312 F.3d 168, 177 (5th Cir.2002) (Emilio Garza, J., dissenting to cure of defective diversity removal, and anticipating the Supreme Court‘s eventual reversal). In Grupo Dataflux, the Supreme Court cautioned this court against creating new jurisdictional exceptions for the sake of immediate judicial economy. 541 U.S. at 580-81. We had established a new rule whereby defective diversity jurisdiction is cured when a lone non-diverse party establishes new citizenship. 312 F.3d at 171 (majority opinion). The Supreme Court rejected the rule, explaining that even a significant investment of judicial resources will not preclude an otherwise proper remand. 541 U.S. at 571, 577-78. The Court further emphasized the short-sightedness of establishing a new jurisdictional exception for the sake of a case immediately at bar: “the policy goal of minimizing litigation over jurisdiction is thwarted whenever a new exception to the time-of-filing rule is announced.” Id. at 580-81. Consequently, rules introduced to avoid immediate jurisdictional implications serve only to undermine judicial economy rather than to facilitate it.
Returning to the case at hand, Appellants propose a new rule whereby 12(b)(6) adjudication sometimes constitutes “trial on the merits” such that remand is precluded by Caterpillar and Grubbs. Given that the Supreme Court has expressly dis-
V. Conclusion
This case should have been remanded upon Camsoft‘s timely motion following removal. As explained herein, the patent laws could not provide a basis for removal because any inventorship allegation did not implicate a perfected patent or allege that such a patent existed. Furthermore, our examination of the removed complaint reveals no alternate basis for removal, and Appellants have identified no authority that precludes remand. Accordingly, as the district court had no jurisdiction to remove this case, the remand order is AFFIRMED as amended herein. The district court‘s other orders are vacated for lack of jurisdiction. Camsoft‘s motion to dismiss is DENIED, and its cross-appeal is DISMISSED as moot in light of the foregoing.
FORTUNATO P. BENAVIDES
CIRCUIT JUDGE