Cambridge Group Technologies, Ltd v. Motorola, Inc et al
Filing
15
MEMORANDUM Opinion and Order Signed by the Honorable Harry D. Leinenweber on 3/5/2013. (mgh, )
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
CAMBRIDGE GROUP TECHNOLOGIES,
LTD., as Successor in Interest
to KURT FUQUA, d/b/a CAMBRIDGE
GROUP TECHNOLOGIES,
Case No. 12 C 7945
Plaintiff,
Hon. Harry D. Leinenweber
v.
MOTOROLA, INC.; MOTOROLA
SOLUTIONS, INC., as a Successor
to MOTOROLA, INC.; and MOTOROLA
MOBILITY, INC., as a Successor
to MOTOROLA, INC.,
Defendants.
MEMORANDUM OPINION AND ORDER
Before the Court is Plaintiff’s Motion to Remand.
For the
reasons stated herein, the Motion is granted.
I.
BACKGROUND
This action revolves around a software license agreement
between a software developer and Defendants for speech technology
products.
Plaintiff
Cambridge
Group
Technologies,
Ltd.,
(hereinafter, “Cambridge” or “Plaintiff”) is the successor-ininterest to Kurt Fuqua (“Fuqua”) with respect to a contract formed
between Motorola, Inc. and Fuqua.
successors-in-interest,
Motorola
Motorola, as well as its
Solutions,
Inc.
and
Motorola
Mobility, Inc., collectively, are the Defendants (hereinafter,
“Motorola”
or
“Defendants”).
Plaintiff
claims
that
Motorola
breached the agreement, and in doing so was unjustly enriched.
In March 1998, Fuqua, as the sole proprietor of Cambridge
Group Technologies, entered into a contract with Motorola for the
licensing of speech technology products developed by Cambridge.
The contract contemplated that Cambridge would “provide, license
and maintain certain technology for MOTOROLA, and MOTOROLA agreed
to pay Kurt Fuqua specific sums of money upon the performance of
specific ‘milestones’ and to further perform specific services for
the benefit of Kurt Fuqua.”
Am. Compl. at 2-3.
Plaintiff claims
it performed all conditions precedent to receiving payment and
benefits under the contract, yet Motorola failed to fulfill several
of its contractual obligations.
Among other alleged violations of
the contract, Plaintiff claims Motorola failed to pay for several
“milestones” as well as royalties.
Plaintiff brought suit against Defendants on November 21,
2011, in the Circuit Court of Cook County alleging breach of
contract.
The state court later permitted Plaintiff to file a
Motion to Amend its Complaint.
Plaintiff sought to amend its
Complaint, and the parties filed a joint motion informing the court
that Plaintiff’s motion for leave to amend the complaint was
unopposed.
In that same joint motion, the parties requested and
proposed a briefing schedule for Defendants’ Motion to Dismiss the
Amended Complaint.
On September 21, 2012, the state court entered
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an order setting a briefing schedule for the Motion to Dismiss the
Amended
Complaint
as
well
as
a
hearing
for
that
motion
on
October 9, 2012.
Plaintiff’s Amended Complaint included a new unjust enrichment
claim.
On October 3, 2012, Defendants filed a Notice of Removal
based on Plaintiff’s new unjust enrichment claim and statements
made in an affidavit from Fuqua that was included with Plaintiff’s
response to Defendant’s Motion to Dismiss.
Currently before the
Court is Plaintiff’s Motion to Remand.
Plaintiff argues the removal was improper because:
(1) its
motion to amend the complaint was never granted; (2) it pled only
state law causes of action; (3) the Copyright Act does not preempt
those causes of action; and (4) there is no substantial question of
federal law at issue.
Defendants argue that the state court
granted Plaintiff’s motion to amend the complaint when it granted
the joint motion and set a briefing schedule.
Defendants also
argue the addition of the unjust enrichment claim and testimony in
Fuqua’s affidavit provide a cause of action predominated by federal
law,
or
that
substantial
the
unjust
question
of
enrichment
federal
claim
law.
will
Lack
result
of
in
a
diversity
jurisdiction is undisputed.
II.
LEGAL STANDARD
After an action has been filed in state court, “it may be
removed to federal court if the claim is one ‘arising under’
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federal law.”
Beneficial Nat’l Bank v. Anderson, 539 U.S. 1, 6
(2003); 28 U.S.C. § 1441. The “removal statute should be construed
narrowly and against removal.” Illinois v. Kerr-McGee Chem. Corp.,
677 F.2d 571, 576 (7th Cir. 1982). Without diversity jurisdiction,
federal question jurisdiction is required.
Williams, 482 U.S. 386, 392 (1987).
Caterpillar, Inc. v.
Federal question jurisdiction
is proper if it “appears that some substantial, disputed question
of federal law is a necessary element of one of the well-pleaded
state claims. . . .”
Franchise Tax Bd. of Cal. v. Constr. Laborers
Vacation Trust for S. Cal., 463 U.S. 1, 13 (1983).
Because federal
courts are courts of limited jurisdiction, it is presumed that the
cause lies outside of that jurisdiction, and the party asserting
federal jurisdiction bears the burden of establishing the contrary.
Hart v. FedEx Ground Package Sys. Inc., 457 F.3d 675, 679 (7th Cir.
2006).
To
determine
whether
a
federal
question
jurisdiction
is
present, courts use the “well-pleaded complaint rule,” meaning
there is federal jurisdiction only when a federal question is
presented
“on
complaint.”
the
face
of
the
plaintiff’s
Caterpillar, 482 U.S. at 392.
properly
pleaded
A defense “that relies
on the preclusive effect of a prior federal judgment or the preemptive effect of a federal statute will not provide a basis for
removal.”
Anderson, 539 U.S. at 6.
“A plaintiff who has both
state and federal claims available may avoid federal court by
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limiting his or her complaint to only state law claims.”
Fedor v.
Cingular Wireless Corp., 355 F.3d 1069, 1071 (7th Cir. 2004).
Two exceptions allow state claims to be removed to federal
court:
(1) when Congress expressly allows it, or (2) when a
federal statute displaces the state law cause of action through
complete preemption.
Anderson, 539 U.S. at 8.
Regarding complete
preemption, occasionally the Supreme Court “has concluded that the
pre-emptive force of a statute is so ‘extraordinary’ that it
‘converts an ordinary state common-law complaint into one stating
a federal claim for purposes of the well-pleaded complaint rule.’”
Caterpillar, 482 U.S. at 393.
When a federal court considers a motion to remand, the party
seeking to preserve removal of the case from state court has the
burden of establishing federal jurisdiction.
Leto v. RCA Corp.,
341 F.Supp.2d 1001, 1004 (2004).
III.
A.
ANALYSIS
State Court Granted Plaintiff’s Motion to Amend
Plaintiff argues that the only complaint this Court should
examine is the original complaint, because the state court never
actually ruled on Plaintiff’s motion for leave to file an amended
complaint.
As such, Plaintiff claims that the unjust enrichment
claim, which Defendants argue creates federal jurisdiction, is not
even before the Court.
This Court disagrees.
In response to the
parties’ joint motion, the state court set a briefing schedule and
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a hearing on Defendants’ motion to dismiss the amended complaint.
Defs.’ Resp. Ex. B, ECF No. 13.
This clearly indicates that the
motion for leave to amend the complaint was granted.
There is no
requirement that the state court memorialize its order.
B.
The Copyright Act Does Not Preempt Plaintiff’s
Unjust Enrichment Claim
Defendants maintain the case was removed properly as the
Copyright
Congress
Act
has
preempts
not
Plaintiff’s
allowed
unjust
expressly
for
enrichment
removal
in
claim.
these
circumstances, thus the Court turns to the complete preemption
doctrine.
There are two types of preemption:
complete preemption.
conflict preemption and
Chicago Board Options Exchange, Inc. v.
Int’l. Sec. Exchange, LLC, No. 06 C 6852, 2007 WL 604984 at *4
(N.D. Ill. Feb. 23, 2007).
Conflict preemption is a defense and
does not authorize removal to federal court.
at 1004-05.
Leto, 341 F.Supp.2d
Only the doctrine of complete preemption has the
preemptive force to surmount the well-pleaded complaint rule.
Id.
at 1005.
So removal in this case is only proper if Plaintiff’s claims
are “preempted completely” by federal law.
This occurs when
“federal law so occupies the field that it is impossible even to
frame a claim under state law. . . .”
Ceres Terminals, Inc. v.
Indus. Comm’n, 53 F.3d 183, 185 (7th Cir. 1995); see also Chicago
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Board, 2007 WL 604984 at *4.
The complete preemption doctrine has
“limited applicability,” only applying when “the preemptive force
of a statute is so ‘extraordinary’ that it converts an ordinary
state common-law complaint into one stating a federal claim for
purposes of the well-pleaded complaint rule.”
Chicago Board, 2007
WL 604984 at *4.
Defendant
relies
upon
Briarpatch
Ltd.,
L.P.
v.
Phoenix
Pictures, Inc., 373 F.3d 296 (2d Cir. 2004), to support their
assertion that the Copyright Act preempts completely Plaintiff’s
unjust enrichment claim.
In that case, the Second Circuit found
that “district courts have jurisdiction over state law claims
preempted by the Copyright Act.” Id. at 305.
Thus, according to
the reasoning in Briarpatch, “preemption by the Copyright Act is no
longer just a defense to state law claims brought in state court,
but is now a basis for removal.”
Leto, 341 F.Supp.2d at 1005.
Seventh Circuit has not ruled on the matter explicitly.
The
However,
even if this Court accepted the Second Circuit’s reasoning, it does
not justify removal in this case because the rights protected by
the unjust enrichment claim are not equivalent to those protected
by the Copyright Act.
The Copyright Act will preempt a state law claim provided two
conditions apply:
(1) the work giving rise to the plaintiff’s
claim is fixed in a tangible medium of expression and falls within
the subject matter of copyright, and (2) the rights protected by
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the state law claim are equivalent to one of the rights protected
by the Copyright Act.
17 U.S.C. § 301; Balt. Orioles, Inc. v.
Major League Baseball Players Ass’n, 805 F.2d 663, 674 (7th Cir.
1986). The statute states explicitly that the state law claim will
not be preempted unless both of these requirements are met.
17
U.S.C. § 301(b).
Here,
there
expression:
was
work
fixed
within
a tangible
medium
of
the software Cambridge provided under the contract.
See ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1453 (7th Cir. 1996)
(stating
that
expression).
by
the
software
is
fixed
in
a
tangible
medium
of
The issue thus turns on whether the rights protected
unjust
enrichment
claim
are
protected in the Copyright Act.
equivalent
to
the
rights
“A right under state law is
‘equivalent’ to one of the rights within the general scope of
copyright if it is violated by the exercise of any of the rights
set
forth
in
§
106.”
Baltimore
Orioles,
805
F.2d
at
676.
Section 106 of the Copyright Act deals with exclusive rights in
copyrights.
17 U.S.C. § 106.
As one court in this district
explained:
A right is equivalent to a copyright if . . .
it
is
infringed
by
the
mere
act
of
reproduction, performance, distribution, or
display, and even if the claim requires
additional elements to make out a cause of
action, unless the additional elements . . .
differ in kind from those necessary for
copyright infringement, it is preempted.
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Int’l Union of Operating Eng’rs v. Team 150 Party, Inc., No. 07 C
3972, 2008 WL 4211561 at *4 (N.D. Ill. Sept. 5, 2008).
Thus, it is necessary to view the elements of an unjust
enrichment claim.
Under Illinois law, to state a claim for unjust
enrichment, “a plaintiff must allege that the defendant voluntarily
accepted a benefit that would be inequitable for the defendant to
retain without compensating the plaintiff.”
De David v. Alaron
Trading Corp., 796 F.Supp.2d 915, 923 (N.D. Ill. 2010).
Many courts in this district have considered whether the
Copyright Act preempts an unjust enrichment cause of action.
have held that the claim is not preempted.
Some
See, e.g., Team 150
Party, 2008 WL 4211561; G.D. Searle & Co. v. Philips-Miller &
Assocs., 836 F.Supp. 520, 526 (N.D. Ill. 1993).
the claim is preempted.
Others have held
See, e.g., Vaughn v. Kelly, No. 06 C 6427,
2007 WL 804694, at *4 (N.D. Ill. Mar. 13, 2007); Igram v. Page,
No. 98 C 8337, 2000 WL 263707, at *4 (N.D. Ill. Feb. 28, 2000).
The outcome tends to turn on “plaintiff’s failure, through its
factual allegations, to establish that its unjust enrichment claim
qualitatively differs from its copyright claim.”
Team 150 Party,
2008 WL 4211561 at *4.
Plaintiff here has not asserted a copyright claim.
Indeed,
after reviewing the allegations contained in Plaintiff’s Amended
Complaint, the Court does not find the unjust enrichment claim to
be based on unfair copying or derivative works, either.
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Instead,
Plaintiff’s
unjust
enrichment
claim
is
based
on
Defendants’
“failure to adhere to the Contract and pay CAMBRIDGE for delivered
milestones” and its failure “to compensate CAMBRIDGE for its
services and products rendered.”
Am. Compl. at 11.
Plaintiff is
not claiming that Defendants are infringing unlawfully on its
copyright; instead, Plaintiff is claiming that Defendants have been
enriched unjustly by withholding payments and royalties owed under
an agreement.
Plaintiff’s unjust enrichment claim in this case
requires agreed upon terms between the parties and a financial
benefit for Defendants, yet a copyright claim does not.
This
unjust enrichment claim, like those in Team 150 Party and G.D.
Searle, is not preempted by the Copyright Act.
Defendants
claim
that
statements
in
the
Fuqua
affidavit
Plaintiff attached to one of its pleadings indicate that despite
artful
pleading,
infringement
claim
Plaintiff’s
disguised
claim
as
an
is
really
unjust
a
copyright
enrichment
claim.
Defendant points specifically to the following language in the
affidavit:
10.
I learned in May 2012 that Motorola has been
and currently is distributing the software
which was licensed to them under the Contract.
11.
I have personally compared the source code
which is being distributed by Motorola in its
recent products and affirm that it is the
source code which I wrote and which was
licensed to Motorola under the Contract.
12.
Motorola has not included my copyright notice
or trademarks as required by the terms of the
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Contract, or made attribution of the product
to me.
Defs.’ Resp. Ex. C, ECF No. 13.
Defendant argues that this
affidavit should be considered under 28 U.S.C. § 1446(b), which
states that removal is permitted based on an “amended pleading,
motion, order or other paper” from which removability can first be
ascertained.
Assuming Fuqua’s affidavit is an “other paper” under
§ 1446, it is still not enough.
These paragraphs simply indicate
that Fuqua has verified that the technology that is the subject of
the
contract
is
still
being
used
by
Defendant.
And
while
paragraph 12 includes both the words “copyright” and “trademarks,”
as currently drafted, the unjust enrichment claim does not appear
to be based on Motorola’s failure to include Fuqua’s copyright
notice or trademarks.
The foundation of the well-pleaded complaint rule is that the
plaintiff is the master of his complaint, and by choosing to forego
federal claims, he may have his cause heard in state court.
Caterpiller, 482 U.S. at 398-99.
See
Here, Plaintiff chose to pursue
solely state law claims against Defendant in state court.
As the
Seventh Circuit explained: “[t]his court, like a defendant, cannot
recharacterize a plaintiff’s claim in order to create federal
question jurisdiction, for if we did so, then ‘the plaintiff would
be master of nothing,’ and the well-pleaded complaint rule would be
undermined.”
Rice v. Panchal, 65 F.3d 637, 646 (7th Cir. 1995).
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This Court also declines to rewrite Plaintiff’s complaint to create
federal jurisdiction.
C. Plaintiff’s Unjust Enrichment Claim Does
Not Result in a Substantial Question of Federal Law
Defendants maintain that, even if the Court concludes that
Plaintiff’s unjust enrichment claim is not preempted, that the
claim will still result in a substantial question of federal law.
Defendants argue that federal courts have developed a large body of
case law applying the Copyright Act to the software developing
context, and that having uniform federal decisions in the area of
copyright law is an important Constitutional issue.
argue
that
Plaintiff’s
unjust
enrichment
claim
As such, they
presents
a
substantial federal question.
Federal question jurisdiction is confined “over state-law
claims to those that ‘really and substantially involve a dispute or
controversy respecting the validity, construction or effect of
federal law.’”
Grable & Sons Metal Prods., Inc. v. Darue Eng’g &
Mfg., 545 U.S. 308, 313 (2005).
doctrine
permits
federal
The substantial federal question
jurisdiction
in
only
small,
special
categories and requires more than merely a federal element to arise
under federal law.
Empire Healthchoice Assur., Inc. v. McVeigh,
547 U.S. 677, 699-701 (2006).
The claims require a fact-specific
application of rules that come from both federal and state law,
rather than a context-free inquiry into the meaning of a federal
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law.
Navistar Int’l Corp. v. Deloitte & Touche LLP, 837 F.Supp.2d
926, 930 (N.D. Ill. 2011).
Defendants rely upon People v. Williams, 920 N.E.2d 446, 452
(Ill. 2009) to support their argument that Plaintiff’s unjust
enrichment claim presents a substantial federal question because
there is a need for national uniformity in copyright protection.
But Williams and the other cases cited by Defendants miss the mark
here,
because
this
case
is
not
about
copyright
protection.
Plaintiff’s unjust enrichment claim is predicated on the alleged
activity
of
Defendants
keeping
and
using
Plaintiff’s
product
without paying for the benefit received according to agreed-upon
terms.
As
previously
copyright violation.
discussed,
Plaintiff did
not
assert a
The issue is whether Defendants received a
benefit from Plaintiff without compensation, not whether there was
actionable copying, fair use, or independent creation under federal
copyright law.
While uniformity in copyright protection may indeed be an
important Constitutional issue, so is maintaining the limited
jurisdiction of the federal courts.
Plaintiff’s unjust enrichment
claim will not result in deciding a substantial question of federal
law, and thus Plaintiff should not be forced to litigate it before
this Court.
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D.
Plaintiff’s Request for Fees is Denied
Attorney fees are recoverable under 28 U.S.C. 1447(c) only if
the removing party “lacked an objectively reasonable basis for
seeking removal.”
Cir. 2007).
Lott v. Pfizer, Inc., 492 F.3d 789, 792 (7th
The Court finds that Defendants had an objectively
reasonable basis, as the Seventh Circuit has not decided the
underlying issues.
Plaintiff’s request for fees is denied.
IV.
CONCLUSION
For the reasons stated herein, Plaintiff’s Motion to Remand is
granted. The case is remanded to state court. Plaintiff’s request
for fees is denied.
IT IS SO ORDERED.
Harry D. Leinenweber, Judge
United States District Court
Date:3/5/2013
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