PENNONI ASSOCIATES, INC. v. MEDFORD VILLAGE EAST ASSOCIATES, LLC
Filing
29
OPINION. Signed by Judge Noel L. Hillman on 12/20/2011. (TH, )
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
PENNONI ASSOCIATES, INC.,
Plaintiff,
v.
MEDFORD VILLAGE EAST
ASSOCIATES, LLC,
Defendant.
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Civ. A. No. 11-939 (NLH)(KMW)
OPINION
APPEARANCES:
Stephen McNally, Esq.
Chiumento McNally LLC
Cherry Tree Corporate Center
535 Route 38 East
Suite 360
Cherry Hill, NJ 08002
Attorneys for Plaintiff, Pennoni Associates, Inc.
Peter Jay Boyer, Esq.
Hyland Levin, LLP
6000 Sagemore Drive
Suite 6301
Marlton, NJ 08053-3900
Attorneys for Defendant, Medford Village
East Associates, LLC
David C. Kistler, Esq.
Seth J. Lapidow, Esq.
Blank Rome, LLP
301 Carnegie Center
3rd Floor
Princeton, NJ 08540
Attorneys for Intervenor Plaintiff, U.S. Home Corporation
HILLMAN, District Judge:
Plaintiff, Pennoni Associates, Inc. (“Pennoni”), initiated
this action on February 18, 2011 by filing a complaint for a
declaratory judgment finding that Pennoni is “the exclusive owner
of copyrights in certain engineering plans that are in dispute
between the parties” and that Pennoni therefore is not obligated
to turn over possession of such plans to Defendant, Medford
Village East Associates, LLC (“MVE”).
(Compl. ¶ 1.)
Presently
before the Court is MVE’s motion seeking dismissal of Pennoni’s
claims, with prejudice, for lack of subject matter jurisdiction
pursuant to Fed. R. Civ. P. 12(b)(1) and 12(b)(6).
For the
reasons expressed below, MVE’s motion to dismiss is denied
without prejudice.
I.
BACKGROUND
Although this case is in its procedural infancy, there is a
significant history of litigation between Pennoni and MVE which
is detailed more thoroughly in the Court’s Opinion of April 1,
2011 in the matter captioned Medford Commons, LLC v. Lexon
Insurance Company, Civil Action No. 11-188 (NLH) (hereinafter,
“Lexon litigation”).
As noted in the Opinion, the history
“involves numerous parties, real estate agreements, engineering
plan proposals, and development approvals, as well as extensive
litigation in New Jersey state court, federal bankruptcy court,
2
and, now, the federal district court.”
(Op. 4-5, Apr. 1, 2011.)
The Court shall recite here only those facts necessary to resolve
the pending motion to dismiss.
As noted in the April 1, 2011 Opinion in the Lexon
litigation, MVE owned a 280-acre property in Medford Township and
agreed to sell it to the Township, who, in turn, agreed to sell
portions of the property to different parties.
(Id. at 5.)
Pennoni contracted with one of the parties involved in the
property transaction to perform engineering services, including
the modification of engineering plans and data.
(Id.)
During
the course of the real estate transactions, Pennoni received the
engineering plans and assets of other companies or firms involved
in the property’s ongoing development in order to perform its
work.
(Id.)
In a state court proceeding initiated in or around early
2008, MVE was named as a third-party defendant and filed a
fourth-party complaint against, inter alia, Pennoni.
(Id. at 5.)
In April 2009, MVE filed a more detailed amended fourth-party
complaint against Pennoni.
(Id. at 7.)
As part of the amended
complaint, MVE averred that it “‘retained rights in and to the
engineering plans prepared by Pennoni.’”
omitted).
(Id.) (quotation
In June 2009, Pennoni filed an answer and a
counterclaim for conversion against MVE, stating that Pennoni
3
“‘holds an ownership interest in certain plans associated with
the project which is the subject of this litigation.’”
7-8)(quotation omitted).
(Id. at
Moreover, Pennoni averred: “‘MVE . . .
exercise[d] unauthorized and wrongful dominion and control over
the plans which dominion and control was to the exclusion and
inconsistent with the rights of Pennoni.’”
omitted).
(Id. at 8)(quotation
In a separate count, Pennoni asked the state court for
“‘a declaratory judgment determining that it is the sole owner of
the plans and other work product prepared for the Project to the
exclusion of MVE and Stephen D. Samost.’”
(Id.) (quotation
omitted).
After Pennoni filed an answer in the state court proceeding,
there was a clerical error which indicated that MVE’s fourthparty complaint had been dismissed.
(Id. at 9.)
Eventually, in
December 2010, MVE entered into a tentative settlement agreement
with other parties involved in the litigation concerning the
property.
(Id. at 10.)
However, because MVE and Pennoni
continued to dispute the ownership and use of the engineering
plans, MVE requested that the state court enter an order
directing Pennoni to show cause why MVE’s fourth-party amended
complaint should not be reinstated and why Pennoni should not
have to turn over the plans, reports, and other documentation to
which MVE had a right to retain.
(Id.)
4
The state court entered
the order and scheduled a hearing for January 12, 2011.
(Id.)
On January 11, 2011, the day before the hearing in the state
court action, Pennoni filed a Notice of Removal –- thereby
instituting the Lexon litigation previously brought before this
Court -- on the grounds that MVE’s action implicated a federal
copyright issue, thereby engendering a federal question.
10.)
(Id. at
MVE moved to remand the case or, alternatively, for a
preliminary injunction against Pennoni.
(Id.)
In connection with the parties’ briefing on the remand issue
in the Lexon litigation, Pennoni submitted to the Court a letter
dated February 18, 2011 arguing that MVE raised copyright issues
in the state court litigation through its briefing in support of
the request for an order to show cause.
(Cert. of Stephen
McNally, Esquire in Supp. of Opp. to Mot. to Dismiss Pl.’s
Compl., Ex. A at 3.)
Pennoni argued that “[w]hat is apparent
from MVE’s submissions before both this Court and the State Court
is that MVE seeks to subvert exclusive Federal jurisdiction over
the copyright issues in this case, by attempting to mask them
through the vague pleading of State law claims in the Fourth
Amended Complaint.”
(Id. at 4.)
Pennoni further explained that
it was initiating a separate federal litigation –- which is the
litigation that is now before the Court -- to “clarify the
jurisdictional issue for the Court, and squarely present the
5
copyright issues before the Court[.]”
(Id.)
In the Lexon litigation, this Court granted MVE’s motion to
remand, finding that Pennoni did not attempt to remove the case
within the time designated by the federal removal statute.
20, Apr. 1, 2011.)
(Op.
In so finding, the Court concluded that MVE’s
amended fourth-party complaint sufficiently asserted a claim of
ownership by MVE over Pennoni’s engineering plans, reports and
other documents, and that Pennoni could have reasonably
anticipated that the matter implicated a federal question of
copyrights.
(Id. at 14.)
The case was remanded to the Superior
Court of New Jersey on April 1, 2011.
(Order 2, Apr. 1, 2011.)
A few days later, on April 6, 2011, MVE filed in the present
case a motion to dismiss the complaint for lack of subject matter
jurisdiction.
MVE argues that Pennoni is attempting to “do an
end-run around its decision not to remove related state court
litigation to this Court in the Spring of 2009, and to avoid an
Order to Show Cause hearing in that litigation, which seeks the
turnover of reproducible copies of engineering plans and other
information to MVE.”
(Br. in Supp. of Def.’s Mot. to Dismiss
Compl. (hereinafter, “Def.’s Br.”) 1.)
MVE contends that Pennoni
is merely seeking to assert a federal defense to MVE’s state
court claims under the guise of a declaratory judgment action.
(Id. at 6.)
MVE notes that the complaint does not assert that
6
MVE has infringed on any copyright purportedly held by Pennoni.
(Id. at 8.)
Given the purported absence of a justiciable federal
case or controversy, MVE argues that the Court lacks subject
matter jurisdiction.
(Id. at 9.)
MVE notes that Pennoni’s
actions contravene the limitation requirements on removal, as any
party attempting to remove a state court action on the basis of a
federal defense could bypass the requirements of the removal
statute by filing a separate declaratory judgment action and
seeking a stay of the state court action.
(Id. at 10.)
In opposition, Pennoni argues that it filed this action
because only federal courts can decide issues of copyright
ownership and infringement.
(Pennoni Assoc., Inc.’s Br. in Opp.
to Medford Village East, LLC’s Mot. to Dismiss (hereinafter,
“Pl.’s Opp. Br.”) 1.)
Pennoni acknowledges that in light of this
Court’s remand of the Lexon litigation, two of the three requests
for relief in this action – the requests for a declaration that
MVE has no ownership interest in the engineering plans and that
Pennoni is not obligated to surrender to MVE the engineering
plans – can only be decided in the state court action.
3.)
(Id. at
Pennoni argues that the Court can nonetheless resolve in
this case the issue of whether Pennoni is the exclusive owner of
the copyright in the engineering plans, which issue allegedly
does not arise as a defense to MVE’s state law claims.
7
(Id. at
3, 6.)
According to Pennoni, MVE does not and cannot establish
in the state court action ownership of a copyright.
(Id. at 8.)
The issue of ownership of the copyright, Pennoni alleges, can
only be determined in federal court.1
II.
JURISDICTION
Pennoni alleges in the complaint that this Court has subject
matter jurisdiction over the case pursuant to 28 U.S.C. §§ 1331
and 1338(a) because the matter arises under the Copyright Act, 17
U.S.C. § 101 et seq. and the Declaratory Judgment Act, 28 U.S.C.
§§ 2201 and 2202.
Although MVE challenges this Court’s subject
matter jurisdiction, the Court has “an independent obligation to
satisfy itself that it has subject matter jurisdiction over a
case.”
Adamczewski v. Emerson Elec. Co., No. Civ. A. 10-4862,
2011 WL 1045162, at *1 (D.N.J. Mar. 22, 2011) (citing Meritcare
Inc. v. St. Paul Mercury Ins. Co., 166 F.3d 214, 217 (3d Cir.
1999), overruled on other grounds by Exxon Mobil Corp. v.
Allapattah Svcs., Inc., 545 U.S. 546 (2005)).
1. In connection with its attempt to establish ownership,
Pennoni alleges that it created the engineering plans which
purportedly are an original work of authorship belonging to
Pennoni and are protected under the Copyright Act. (Compl. ¶¶
15, 17.) Pennoni represents that in November 2010, it submitted
an application to the United States Copyright Office for
registration of the copyrights of the engineering plans and
obtained a Certificate of Registration for such plans on December
29, 2010. (Id. at ¶ 18.)
8
III. DISCUSSION
A.
Standard of Review
Rule 12(b)(1) provides for dismissal of an action based on
lack of subject matter jurisdiction.
Fed. R. Civ. P. 12(b)(1).
When the existence of subject matter jurisdiction is challenged
under Rule 12(b)(1), the plaintiff bears the burden to show that
the court has the requisite jurisdiction to hear the case.
See,
e.g., Hedges v. United States, 404 F.3d 744, 750 (3d Cir. 2005);
Mortensen v. First Fed. Sav. & Loan Ass'n, 549 F.2d 884, 891 (3d
Cir. 1977).
If a court lacks subject matter jurisdiction, it
must dismiss the case without prejudice.
In re Orthopedic “Bone
Screw” Prod. Liab. Litig., 132 F.3d 152, 155–56 (3d Cir. 1997).
A motion to dismiss for lack of subject matter jurisdiction
may either (1) “attack the complaint on its face” or (2) “attack
the existence of subject matter jurisdiction in fact, quite apart
from any pleadings.”
Mortensen, 549 F.2d at 891.
In a facial
attack, all allegations in the complaint are considered true.
Id.
In a factual attack, by contrast, the court need not presume
the truth of the allegations and “is free to weigh the evidence
and satisfy itself as to the existence of its power to hear the
case.”
Id.
In such a case, “the court can consider affidavits
attached to the moving papers or even require such affidavits to
be submitted[.]”
New Hope Books, Inc. v. Farmer, 82 F. Supp. 2d
9
321, 324 (D.N.J. 2000) (citing Growth Horizons, Inc. v. Delaware
County, Pa., 983 F.2d 1277, 1281 n.4 (3d Cir. 1993)).2
A federal court does not have subject matter jurisdiction
simply because relief is requested under the federal Declaratory
Judgment Act.
“[T]he operation of the Declaratory Judgment Act
is procedural only.”
227, 240 (1937).
Aetna Life Ins. Co. v. Haworth, 300 U.S.
A federal district court has jurisdiction to
render a declaratory judgment pursuant to the Declaratory
Judgment Act if an “actual controversy” exists.
Id.
The “actual
controversy” requirement under the Declaratory Judgment Act is
coextensive with the “case or controversy” requirement of Article
III of the United States Constitution.
Id.
A “controversy” under the Declaratory Judgment Act “must be
definite and concrete, touching the legal relations of parties
having adverse legal interests.”
Id. at 240-41.
In determining
whether a case satisfies the case-or-controversy requirement,
2. Although MVE argues that it is asserting a facial attack, the
Court finds that the motion to dismiss attacks the existence of
subject matter jurisdiction as a matter of fact. MVE is not
simply arguing that the averments set forth in the complaint fail
to demonstrate the existence of subject matter jurisdiction.
Rather, MVE seeks dismissal of the complaint based upon the
litigation history of the parties and the claims already before
the state court. While the amended complaint certainly details
some of the procedural history, the challenge to jurisdiction is
not based solely on the sufficiency of the allegations in the
complaint.
10
courts should consider “‘whether the facts alleged, under all the
circumstances, show that there is a substantial controversy,
between parties having adverse legal interests, of sufficient
immediacy and reality to warrant the issuance of a declaratory
judgment.’”
MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118,
127 (2007) (internal quotation omitted).
Even if there is an immediate controversy, such controversy
must independently create jurisdiction.
In a typical case, a
declaratory judgment action is brought as an anticipatory defense
to an expected action in state court.
Under these circumstances,
the Court must consider the character of the threatened state
court action, and not the character of the defense, in deciding
whether the case arises under federal law.
Public Service Comm’n
v. Wycoff Co., 344 U.S. 237, 248 (1952) (“Where the complaint in
an action for declaratory judgment seeks in essence to assert a
defense to an impending or threatened state court action, it is
the character of the threatened action, and not of the defense,
which will determine whether there is federal-question
jurisdiction in the District Court.”).
Whether a particular case “arises under” federal law “must
be determined from what necessarily appears in the plaintiff's
statement of his own claim in the bill or declaration, unaided by
anything alleged in anticipation of avoidance of defenses which
11
it is thought the defendant may interpose.”
234 U.S. 74, 75-76 (1914).
Taylor v. Anderson,
“[A] right or immunity created by the
Constitution or laws of the United States must be an element, and
an essential one, of the plaintiff's cause of action.”
First Nat’l Bank, 299 U.S. 109, 112 (1936).
Gully v.
Even if both parties
admit that the federal defense is the primary or only question at
issue in a case, under the well-pleaded complaint rule the Court
considers only the elements of the plaintiffs' legal claims, and
jurisdiction is not established by the presence of a federal
defense.
See Franchise Tax Bd. v. Construction Laborers Vacation
Trust, 463 U.S. 1, 14 (1983).
Applying these principles to cases for declaratory judgment
based on a threatened or impending suit, courts must determine
whether a federal question would appear on the face of the yetto-be-filed complaint.
Courts cannot look to the nature of the
declaratory judgment claim itself, which is in essence a defense
to an impending action.
While this inquiry may be difficult when
such claims are in the abstract, here the inquiry is simple
because the claims are already pending in the state court action.
B.
Analysis
This case does not involve a claim of copyright
infringement, but rather seeks a declaration concerning copyright
ownership.
MVE concedes that there is a controversy between the
12
parties given the history of the underlying state court action
and MVE’s attempt to obtain the purportedly copyrighted
engineering plans through that action.
Under the circumstances,
there is a real and reasonable apprehension that MVE will obtain
a court order requiring Pennoni to produce the engineering plans
to MVE.
Notwithstanding the existence of this controversy,
however, the Court must still decide whether Pennoni’s claim
independently creates subject matter jurisdiction given that it
is filed in anticipation of a state court order requiring
production of the allegedly copyrighted documents.
Despite Pennoni’s efforts to couch this case as an attempt
to obtain ownership of a copyright that arises independently of
the state court litigation, the allegations of the complaint
demonstrate that this case was filed solely a result of
proceedings in the state court litigation.
Pennoni contends that
MVE has challenged Pennoni’s ownership of and copyright in the
engineering plans and has sought in the state court action to
obtain an order requiring production of the engineering plans.
(Compl. ¶¶ 24, 27.)
Under these circumstances, Pennoni avers, a
controversy exists between the parties.
(Id. at ¶ 35.)3
Pennoni
3. The Court also notes Pennoni’s admission in its brief that
this case “is before the Court to prevent threatened copyright
infringement.” (Pl.’s Opp. Br. 6.)
13
alleges that MVE’s vague pleading in the state court action was
merely an attempt to “obscure the very real dispute between
Pennoni and MVE arising under the Copyright Act as to Pennoni’s
ownership of copyrights in the [engineering plans]” and to
“deprive the United States District Court of its exercise of
exclusive jurisdiction over claims arising under the Copyright
Act.”
(Id. at ¶¶ 32-33.)
Therefore, it is clear that this case
is not independent of the state court action; it is the state
court proceedings that provide the “case or controversy” at the
heart of this declaratory judgment action.4
Having concluded that Pennoni’s claim is not an independent
basis for the exercise of federal subject matter jurisdiction,
the Court next considers the nature of the state court action to
determine whether it presents a basis for jurisdiction.
Generally, courts that undertake this inquiry look to the
hypothetical case that would be filed by a defendant.
As noted
above, in this case the defense is not anticipatory; it is in
response to an actual state court action already commenced.
It
is thus simple to determine the character of the state court
4.
Indeed, if the state court action was not the basis for
Pennoni’s declaratory judgment claim, and Pennoni merely seeks a
declaration of copyright ownership without any practical need to
establish ownership, the Court would likely find that there is no
case or controversy under Article III.
14
action to see whether that action involves a claim under federal
law.
This Court has already conducted such analysis in the Lexon
litigation.
In that case, as previously noted, the Court
concluded that Pennoni’s attempt to remove the case exceeded the
thirty-day limit imposed by 28 U.S.C. § 1446(b).
1, 2011.)
(Op. 14, Apr.
In so finding, the Court noted that through MVE’s
fourth-party amended complaint, by which MVE asserted a claim of
ownership over Pennoni’s engineering plans, Pennoni could have
“reasonably ascertained that the matter implicated a federal
question of copyrights.”
(Id.)
The Court also noted that in
light of the averments in the fourth-party amended complaint,
“Pennoni could have reasonably ascertained a challenge to its
ownership over its plans that may have implicated a federal
copyright issue,” and that Pennoni had “knowledge of MVE’s claims
and the existence of a federal question[.]”
(Id. at 15, 20.)
As
such, it is clear based on the Court’s prior finding that the
claims in the fourth-party amended complaint in the state court
action implicate a federal question of copyright.5
MVE argues that the Third Circuit’s unpublished decision in
5.
The Court notes both parties’ assertion that the fourthparty amended complaint does not assert a claim of copyright
ownership. The Court concluded otherwise in the Lexon
litigation, and neither party has challenged that decision.
15
Board of Chosen Freeholders of County of Burlington v. Tombs, 215
Fed. Appx. 80 (3d Cir. 2006), is dispositive of this matter.
In
Tombs, the Burlington County Board of Chosen Freeholders
commissioned the creation of maps and provided free copies of the
maps to government agencies.
Id. at 81.
to non-government entities for a fee.
The Board sold the maps
Id.
Robert Tombs then
requested copies of the maps pursuant to the New Jersey Open
Public Records Act (hereinafter, “OPRA”), and the Board responded
that he may pay the ordinary fee for such maps.
Id.
Tombs then
threatened to obtain judicial relief, and the Board filed a
complaint in federal court seeking a declaration that the federal
copyright law preempts the OPRA request.
Id.
The district court
dismissed the action for lack of subject matter jurisdiction.
Id.
The Third Circuit affirmed on appeal in an unpublished
decision, finding that the complaint for declaratory judgment was
essentially a defense to a threatened state court action.
81-82.
Id. at
The Third Circuit noted that district courts must
determine whether they have federal question jurisdiction by
considering the character of the threatened state court action.
Id.
The Third Circuit found that the Board could not “invoke
federal jurisdiction by asserting its federal copyright as a
defense against Mr. Tombs’ OPRA claim.”
16
Id. at 82.
The Third
Circuit also concluded that the complete preemption doctrine did
not apply to the threatened OPRA claim because federal copyright
law “does not wholly displace state statutory or common law
rights to public records[.]”
Id.
Pennoni attempts to distinguish Tombs on the basis that the
plaintiff in that case did not seek construction of the Copyright
Act.
(Pl.’s Opp. Br. 8.)
In deciding the jurisdiction issue,
the Third Circuit looked only to the character of the threatened
state court action; it did not look to the character of the
federal action.
Tombs, 215 Fed. Appx. at 81.
Therefore,
although the nature of the federal claim in Tombs is different
from the federal claim asserted by Pennoni here, the distinction
is irrelevant to the Third Circuit’s decision.
The more compelling distinction between Tombs and the
present case is that in Tombs, the federal claim was asserted as
a defense to a threatened state law claim, whereas in this case
the claim in the state court action implicates a federal
question.
The Third Circuit in Tombs applied the well-settled
principle discussed above that federal jurisdiction cannot be
based on a federal defense and must be based on the allegations
in a complaint.
Such rationale is not instructive as to the
outcome when the claim in the underlying litigation itself
involves a question of federal law, as is the case here.
17
The Court notes MVE’s argument that the copyright claim
asserted by Pennoni is a federal defense to a state law claim
(Def.’s Br. 2), but this argument is inconsistent with the
Court’s decision in the Lexon litigation.
The Court in Lexon did
not remand the case on a finding that Pennoni was seeking to
assert a federal defense.
Rather, the Court concluded that there
was a federal question in the fourth-party amended complaint that
triggered Pennoni’s time to remove the matter under 28 U.S.C. §
1446.6
Accordingly, the Court rejects MVE’s assertion in this
case that the copyright claim is merely a defense to a claim
based on state law.
6. The Court notes Pennoni’s assertion that it seeks
construction of the Copyright Act in establishing ownership of
the copyrights embodied in the engineering plans. Several cases
have held that establishing copyright ownership may not invoke a
federal question if the inquiry is limited to contractual rights,
even if the subject of the contract is a copyright. See Rogers
v. Younce, Civ. A. No. 07-CV-704, 2008 WL 2853207, at *5 (N.D.
Okla. July 21, 2008)(collecting cases in which courts held that
suits concerning copyright ownership do not present federal issue
when ownership turns on interpretation of contract). By
contrast, when a party seeks construction of the Copyright Act to
establish ownership, the claim is federal in nature. Id. at *3
(citing T.B. Harms Co. v. Eliscu, 339 F.2d 823 (2d Cir. 1964)).
Pennoni does not explain in this case why the Copyright Act must
be interpreted in connection with its ownership claim. In any
event, Pennoni’s briefing in the Lexon litigation indicates that
Pennoni seeks construction of the Copyright Act because there is
a question as to whether MVE is a “joint author” of the
engineering plans. See Merchant v. Levy, 92 F.3d 51 (2d Cir.
1996) (“copyright ownership by reason of one's status as a
co-author of a joint work arises directly from the terms of the
Copyright Act itself.”), cert. denied, 519 U.S. 1108 (1997).
18
For all of the above reasons, the Court concludes that it
has subject matter jurisdiction in this action.7
This
determination, however, does not end the inquiry because the
Court is not required to exercise jurisdiction over a declaratory
judgment action.
The Supreme Court held in Brillhart v. Excess
Ins. Co., 316 U.S. 491 (1942), and reaffirmed in Wilton v. Seven
Falls Co., 515 U.S. 277 (1995), that when a plaintiff brings a
declaratory judgment action, the district court has discretion in
deciding whether to assert jurisdiction over the action or
abstain from hearing it.
This discretion stems from the
Declaratory Judgment Act, which expressly provides that district
courts “may declare the rights and other legal relations of any
interested party seeking [a] declaration, whether or not further
relief is or could be sought.”
28 U.S.C. § 2201(a).
The Supreme
Court has noted that “[i]n the declaratory judgment context, the
7.
Having so found, the Court does not address whether it also
may exercise diversity jurisdiction over the parties, as the
complaint does not provide a sufficient basis for such analysis.
While Pennoni avers that it is a Pennsylvania corporation with a
principal place of business in Pennsylvania, and that MVE is a
limited liability company with its principal place of business in
New Jersey, the complaint does not set forth the citizenship of
each member of MVE or allege that the amount in controversy
exceeds $75,000. See Zambelli Fireworks Mfg. Co., Inc. v. Wood,
592 F.3d 412, 418 (3d Cir. 2010) (holding that LLC should be
treated as partnership for purposes of establishing citizenship
and noting that partnership “takes on the citizenship of each of
its partners.”); 28 U.S.C. § 1332.
19
normal principle that federal courts should adjudicate claims
within their jurisdiction yields to considerations of
practicality and wise judicial administration.”
at 288.
Wilton, 515 U.S.
Thus, even when a court has jurisdiction, it “is
authorized, in the sound exercise of its discretion, to stay or
to dismiss an action seeking a declaratory judgment[.]”
Id.
In Brillhart, the Supreme Court provided some guidance as
the factors governing a district court’s exercise of discretion.
Brillhart, 316 U.S. at 495.
The Court indicated that a district
court should examine “the scope of the pending state court
proceeding and the nature of defenses open there.”
Id.
This
inquiry requires consideration of “whether the claims of all
parties in interest can satisfactorily be adjudicated in that
proceeding, whether necessary parties have been joined, whether
such parties are amenable to process in that proceeding, etc.”
Id.
The Supreme Court declined, however, to set forth a
“comprehensive enumeration of what in other cases may be revealed
as relevant factors governing the exercise of a district court’s
discretion.”
Id.
The parties have not addressed whether the Court should, in
its discretion, exercise jurisdiction over this declaratory
judgment action.
Therefore, while the Court finds that it has
subject matter jurisdiction and shall deny MVE’s motion to
20
dismiss, such dismissal is without prejudice because the Court is
not satisfied at this time that it should in its discretion
exercise jurisdiction in this case.
The Court is hesitant to entertain this suit when it appears
to be an artful attempt to circumvent Pennoni’s failed attempt to
successfully remove the Lexon litigation.
Allowing Pennoni to
pursue this case in federal court would permit Pennoni to
accomplish in its declaratory judgment case what could not be
accomplished under the removal statute.
The Court also notes that the parties have not briefed in
connection with the pending motion whether the state court can
resolve the issue of copyright ownership raised by Pennoni in
this case.
As a general matter, state courts have concurrent
jurisdiction over federal claims, unless there is “‘an explicit
statutory directive, [an] unmistakable implication from
legislative history, or . . . a clear incompatibility between
state-court jurisdiction and federal interests[.]’”
Hathorn v.
Lovorn, 457 U.S. 255, 266 (1982) (citation omitted).
“[E]ven a
finding of exclusive federal jurisdiction over claims arising
under a federal statute usually ‘will not prevent a state court
from deciding a federal question collaterally.’”
Id. (citation
omitted).
Pennoni contends in conclusory fashion that only federal
21
courts can decided issues of copyright.
28 U.S.C. § 1338(a)
provides that “[t]he district courts shall have original
jurisdiction of any civil action arising under any Act of
Congress relating to patents, plant variety protection,
copyrights and trademarks.
Such jurisdiction shall be exclusive
of the courts of the states in patent, plant variety protection
and copyright cases.”
28 U.S.C. § 1338(a).
Notwithstanding this
language, the Supreme Court has not extended the doctrine of
complete preemption to copyright claims, and there is
disagreement among circuits as to whether the doctrine is
applicable to such claims.
Rogers v. Younce, Civ. A. No.
07-CV-704, 2008 WL 2853207, at *10 (N.D. Okla. July 21, 2008)
(collecting cases).
The Court notes that the Third Circuit, in
Tombs, appears to have rejected complete preemption in the
copyright context.
Tombs, 215 Fed. Appx. at 82.
Furthermore, the Court notes that Pennoni has cited in its
opposition brief cases in which courts consider the abstention
doctrine set forth in Colorado River Water Construction Districts
v. United States, 424 U.S. 800 (1976).
These cases are not
instructive with respect to the issue of whether the Court should
exercise its discretion in maintaining jurisdiction over a
declaratory judgment action.
See State Auto Ins. Cos. v. Summy,
234 F.3d 131, 134 (3d Cir. 2000)(“Reviewing the declaratory
22
judgment remedy at some length, the [Supreme Court] reaffirmed
Brillhart's standard of broad discretion and rejected Colorado
River's restrictive ‘exceptional circumstances’ test as
inappropriate for the Declaratory Judgment Act.”) (quoting
Wilton, 515 U.S. at 286).
Therefore, to the extent Pennoni
argues that the Court should in its discretion exercise
jurisdiction in this case, it must provide the Court with more
compelling authority to support such contention.
Finally, the Court questions whether resolution of the
copyright ownership issue will resolve issues concerning MVE’s
rights to the engineering plans.
Pennoni argues that ownership
of a copyright is distinct from ownership of any material object
in which the work is embodied.
(Pl.’s Opp. Br. 8.)
Even
assuming that Pennoni owns the copyrights embodied in the
engineering plans, it is unclear whether MVE would be entitled to
the engineering plans pursuant to contractual agreements between
other parties.
Cf. Huurman v. Foster, No. Civ. A. 07-9326, 2010
WL 2545865, at *10 (S.D.N.Y. June 21, 2010) (“An additional
factor that weighs against exercising our discretion to declare
ownership of the motion picture’s copyright is that doing so
would not necessarily resolve the dispute between the parties
regarding ownership of the master copy of the DVD. . . . In this
instance, ownership of the master copy of the DVD may be governed
23
by the terms of agreements that apparently existed between
[various parties].”).
In view of the foregoing, the Court directs the parties to
file supplemental briefs addressing the above considerations and
any other factors that they believe should be considered by the
Court in deciding whether to exercise jurisdiction over this
declaratory judgment action.
The Court shall thereafter make a
determination as to whether it will continue to maintain
jurisdiction in this case.
IV.
CONCLUSION
As set forth above, the Court finds that there is a
controversy between the parties based on the proceedings in the
state court and that the underlying state court litigation
implicates a federal question.
Notwithstanding these findings,
the Court has not yet determined whether it should in its
discretion exercise jurisdiction over the sole remaining claim in
this case under the Declaratory Judgment Act.
Therefore, MVE’s
motion to dismiss the complaint is denied without prejudice.
The
parties shall be directed to file supplemental briefs addressing
whether the circumstances of this case warrant the exercise of
federal jurisdiction.
Dated: December 20, 2011
At Camden, New Jersey
s/ Noel L. Hillman
NOEL L. HILLMAN, U.S.D.J.
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