Madison County, Mississippi v. Warnock et al

Filing 39

ORDER denying 10 Motion to Remand; and deferring ruling on 24 Motion to Dismiss. Signed by District Judge Carlton W. Reeves on 09/21/16 (rg)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
NORTHERN DIVISION

MADISON COUNTY, MISSISSIPPI
by and through the Madison County Board
of Supervisors

PLAINTIFF

V.

CAUSE NO. 3:16-CV-240-CWR-FKB

RUDY WARNOCK and
WARNOCK & ASSOCIATES

DEFENDANTS

V.
DAN GAILLET; TREY BAXTER;
SHELIA JONES; DAVID BISHOP;
GERALD STEEN; and PAUL GRIFFIN
THIRD-PARTY DEFENDANTS

MEMORANDUM OPINION AND ORDER
Before the Court are plaintiff Madison County’s Motion to Remand and the third-party
defendants’ Motion to Dismiss. Docket Nos. 10 and 24. The motions are fully briefed and ready
for adjudication.
I. Background
Prior to January 4, 2016, defendant Rudy Warnock served as the County Road
Engineer/Manager and State Aid County Engineer for Madison County. Docket No. 1-2. Along
with his engineering firm, the parties entered into contracts for the provision of State Aid,
General Engineering, and Project Specific Engineering Services.1 On January 4, 2016, the
Madison County Board of Supervisors voted to terminate the contracts.

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Hereinafter, the defendants are referred to collectively as “Warnock.”

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On March 24, 2016, Warnock filed a lawsuit against Madison County and the third-party
defendants in this Court alleging breach of contract, copyright infringement, contributory
infringement, and vicarious infringement. See Warnock & Associates, LLC and Rudolph M.
Warnock Jr. v. Madison County, et al., No. 3:16-CV-68-CWR-FKB (S.D. Miss.) [hereinafter
Warnock I]. According to the complaint in that case, the contractual agreement “granted
Madison County a non-exclusive license to utilize [Warnock’s] copyrights in connection with
past and ongoing projects, but such license was specifically contingent upon full payment.” Id.
at Docket No. 3. Warnock contended that Madison County failed to make full payment for
services rendered and continues to use the copyrighted plans to complete the projects, in
violation of the Copyright Act. Warnock argued, because “the County admittedly failed to remit
full payment for the use of [Warnock]’s Copyrighted Work, all licenses are accordingly void,”
and any further use of the plans by Madison County amounts to infringement under the
Copyright Act. Id. Warnock sought monetary, declaratory, and injunctive relief.
Madison County and the other defendants challenged this Court’s jurisdiction, alleging
that Warnock’s claims did not arise under the Copyright Act. In that case, this Court ruled that
Warnock’s complaint stated a claim of Copyright Infringement and this Court had jurisdiction
over the case. See id. at Docket No. 37.
On March 30, 2016, while the other action was pending, Madison County filed the instant
lawsuit in the Madison County Circuit Court claiming breach of contract, intentional interference
with contract, professional negligence, conversion, and breach of the duty of good faith and fair
dealing. The County sought an accounting, injunctive relief, and punitive damages. On April 4,
2016, Warnock timely removed the case to this Court pursuant to 28 U.S.C. §§ 1441(c) and
1454. Warnock argues that this Court has jurisdiction because Madison County’s state law

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claims actually arise under the Copyright Act. Warnock also argues that jurisdiction is proper
because he asserted counterclaims that arise under the Copyright Act.
The motions presently before the Court followed.
II. Standard of Review
“[F]ederal courts are courts of limited jurisdiction, having only the authority endowed by
the Constitution and that conferred by Congress.” Halmekangas v. State Farm, 603 F.3d 290,
292 (5th Cir. 2010) (citation and quotation marks omitted). Article III of the Constitution gives
federal courts jurisdiction over cases “arising under” federal law. Merrell Dow Pharmaceuticals
Inc. v. Thompson, 478 U.S. 804, 807 (1986) (citation omitted).
“[A]ny civil action brought in a State court of which the district courts of the United
States have original jurisdiction, may be removed . . . to the district court of the United States for
the district and division embracing the place where such action is pending.” 28 U.S.C. §
1441(a). “[A]ny contested issues of facts and any ambiguities of state law must be resolved in
the [non-removing party’s] favor.” Cuevas v. BAC Home Loan Servicing, LP., 648 F.3d 242,
248 (5th Cir. 2011). “[B]ecause removal raises significant federalism concerns, the removal
statute is strictly construed and any doubt as to the propriety of removal should be resolved in
favor of remand.” Church v. Nationwide Ins. Co., No. 3:10-CV-636, 2011 WL 2112416, at *2
(S.D. Miss. May 26, 2011) (quoting Guiterrez v. Flores, 543 F.3d 248, 251 (5th Cir. 2008)); see
Williams v. Brown, No. 3:11-CV-273, 2011 WL 3290394, at *3 (S.D. Miss. July 28, 2011)
(“Doubts about whether federal jurisdiction exists following removal must be resolved against
finding jurisdiction.”).

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III. Copyright and Jurisdiction
District courts have exclusive original jurisdiction over civil actions arising under federal
copyright laws. See 28 U.S.C. § 1338(a).
“[A]n action ‘arises under’ the Copyright Act if and only if the complaint is for a
remedy expressly granted by the Act . . . or asserts a claim requiring constructing
of the Act, . . . or, at the very least and perhaps more doubtfully, presents a case
where a distinctive policy of the Act requires that federal principles control the
disposition of the claim.”
Goodman v. Lee, 815 F.2d 1030, 1031 (5th Cir. 1987) (quoting T.B. Harms Co. v. Eliscu, 339
F.2d 823, 828 (2d Cir. 1964)). This is known as the Harms test.
To establish a claim of infringement under the Copyright Act, a plaintiff must show: “(1)
ownership of a valid copyright, and (2) copying of constituent elements of the work that are
original.” Architettura, Inc. v. DBSI Cumberland at Granbury LP, 652 F. Supp. 2d 775, 780
(N.D. Tex. 2009) (citing Feist Publications, Inc. v. Rural Tel. Service Co., 499 U.S. 340, 360
(1991)).
It is well-established that “a federal counterclaim, even when compulsory, does not
establish ‘arising under’ jurisdiction.” Vaden v. Discover Bank, 556 U.S. 49, 60 (2009) (citation
omitted). Congress, however, recently created an exception to that general proposition. See 28
U.S.C. § 1454. Defendants with patent or copyright counterclaims are no longer precluded from
federal court jurisdiction based on the plaintiff’s well-pleaded state law complaint. Donahue v.
Tokyo Electron America, Inc., 42 F. Supp. 3d 829, 834 (W.D. Tex. 2014); Team Express
Distributing LLC v. Junction Solutions, Inc., No. 5:15-CV-994, 2016 WL 3081020, at *2 (W.D.
Tex. May, 31, 2016) (citations omitted). Under § 1454(a), federal courts have jurisdiction over
“[a] civil action in which any party asserts a claim for relief arising under any Act of Congress
relating to ... copyrights.” 28 U.S.C. §1454(a) (emphasis added). The addition of a claim

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involving a copyright, however, is insufficient to give federal courts jurisdiction. Rather, the
court must determine whether the action “arises under the Copyright Act.’ Id. (citing 28 U.S.C.
§ 1338(a)).
Where a defendant’s counterclaims are asserted after removal and arise under the
Copyright Act, “federal courts have jurisdiction over the counterclaims, and [may] exercise
supplemental jurisdiction over [the] plaintiff’s claims.” Acorne Productions, LLC v.
Tjeknavorian, 33 F. Supp. 3d 175, 182 (E.D.N.Y. 2014) (citing 28 U.S.C. § 1454(d)(1)).
IV. Discussion
Here, Warnock’s counterclaims are the same claims previously alleged in his lawsuit
against Madison County. See Warnock I. In that case, this Court concluded that it possessed
subject matter jurisdiction over Warnock’s claims because they arose under the Copyright Act.
Id. at Docket No. 37. Because the original claims and the counterclaims are the same, the Court
finds that it has subject matter jurisdiction over Warnock’s counterclaims and supplemental
jurisdiction over Madison County’s state law claims.
V. Conclusion
Based on the foregoing, the plaintiffs’ motion to remand is denied. The third-party
defendants’ motion to dismiss based on qualified immunity is carried with this case.2
SO ORDERED, this the 21st day of September, 2016.
s/ Carlton W. Reeves
UNITED STATES DISTRICT JUDGE

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In the Court’s previous order, the third-party defendants’ motion to dismiss for lack of jurisdiction was denied and
the qualified immunity defense raised in their motion was carried with that case. Warnock I, at Docket No. 37.

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