DAUGHTRY v. ANDREWS et al

Filing 22

MEMORANDUM OPINION AND ORDER. Signed by JUDGE LORETTA C. BIGGS on 7/2/2015, that Defendants' Motion to Dismiss or Stay (ECF No. 9 ) is GRANTED IN PART AND DENIED IN PART, in that Defendants' Motion to Dismiss is DENIED and this action is STAYED pending the resolution of the state trial court proceeding. The parties shall provide the Court with a joint status report every 120 days following entry of this Memorandum Opinion and Order.(Daniel, J)

IN THE UNITED STATES DISTRICT COURT
FOR THE MIDDLE DISTRICT OF NORTH CAROLINA
CHRISTOPHER ADAM DAUGHTRY,

)
)
)
)
)
)
)
)
)
)

Plaintiff,
v.
RYAN ANDREWS, SCOTT
CRAWFORD, and MARK PERRY,
Defendants.

1:14-cv-984

MEMORANDUM OPINION AND ORDER
LORETTA C. BIGGS, District Judge.
Christopher

Adam

Daughtry

(“Daughtry”)

commenced

this

declaratory judgment action, pursuant to Rule 57 of the Federal
Rules

of

Civil

declaration

of

Procedure

and

28

U.S.C.

copyright

ownership

in

§ 2201,
certain

to

obtain

musical

a

works

based on authorship arising under the Copyright Act, 17 U.S.C.
§§ 101 et seq.

(ECF. No. 1 at 1, 5–6.)

Before the Court is

Defendants’ Motion to Dismiss or Stay this action pending the
outcome of a related state court proceeding.

(ECF No. 9.)

Court heard oral argument on April 30, 2015.

The

For the reasons

stated below, the Court grants Defendants’ Motion to Stay.
I.

BACKGROUND
Defendants

and

Daughtry

were

members

of

a

band

called

Absent Element from the fall of 2004 to the summer of 2006.

(ECF

No. 16-1

¶ 12;

ECF

No. 1

¶ 7.)

During

this

time,

parties wrote and recorded an album titled Uprooted.1
No. 1 ¶¶ 7-12.)

the

(See ECF

On April 4, 2006, Defendants filed a copyright

registration with respect to the songs on the Uprooted album,
listing all four members of Absent Element as “co-authors of all
lyrics,

music

Daughtry

and

denies

performance

that

he

had

on
any

all

7

songs.”

knowledge

of

(Id.
the

¶ 8.)

copyright

registrations, contending that the registrations were fraudulent
and that he first learned of them in March of 2012.

(Id. ¶¶ 8,

15.)
In April of 2012, Defendants filed a lawsuit in state court
in Guilford County, North Carolina, alleging among other things
that

the

band,

during

its

existence,

operated

under

a

partnership agreement in which all four members had agreed to
share equally in the band’s profits and songwriting credits for
songs

written

authorship.2

furtherance

of

the

(ECF No. 16-1 ¶¶ 20, 22.)

that Daughtry
authorship

in

has

credit

band,

irrespective

Defendants further claim

failed to account for profits and
as

required

by

the

of

partnership

provide

agreement.

1

This album contained seven songs: (1) Breakdown, (2) Conviction,
(3) Keep Me Close, (4) Weaker Side, (5) So I Lie Awake, (6) Let Me In,
and (7) Seven 4. (ECF No. 1 ¶ 7.)
2

Defendants’ state court lawsuit claims ownership in four songs, two
of which are on the album Uprooted. (ECF No. 16-1 ¶ 33; see ECF No. 1
¶ 7.) Defendants make no claim in connection with the remaining five
songs on Uprooted.

2

(ECF No. 10 at 5-6.)

On May 3, 2012, Daughtry removed the case

to federal court, alleging that Defendants’ claims arise under
the Copyright Act.

Notice of Removal ¶ 6, Andrews v. Daughtry,

No.

2013

1:12-cv-00441,

(“Andrews

I”),

ECF

WL

No. 1.

664564
On

(M.D.N.C.

February

22,

Feb.

22,

2013)

2013,

the

Court

remanded the case to state court, explaining that Defendants’
claims were based on the alleged partnership agreement and that
Defendants had “carefully pleaded their claims to avoid federal
question

jurisdiction”

complaint rule.

consistent

with

the

well-pleaded

Andrews I, 2013 WL 664564, at *6, *8, *15.

Before filing his answer and counterclaims in the state
proceeding on May 17, 2013, (ECF No. 10-2 at 24), Daughtry filed
on or about January 31, 2013, a correction with the Copyright
Office, notifying the Office that not all of the band members
co-authored each song on Uprooted.

(ECF No. 1 ¶ 14.)

Daughtry

also filed a registration with respect to each of the songs on
Uprooted, outlining what he contends were the correct ownership
and authorship interests in each of the songs on the album.
(Id. ¶ 15.)

Daughtry then filed his Answer to the Complaint and

Counterclaims

Against

All

Plaintiffs

seeking,

among

other

relief, a declaration under the Copyright Act that he was the
sole author and original owner of four Uprooted songs and a coowner and co-author of the remaining three.
¶¶ 15-17.)

(ECF No. 10-2 at 20

On May 20, 2013, Daughtry once again removed the
3

action

to

federal

court,

premising

jurisdiction

counterclaim arising under the Copyright Act.

on

Notice of Removal

¶¶ 1–12, Andrews v. Daughtry, 994 F. Supp. 2d 728
2014) (“Andrews II”), ECF No. 1.

his

(M.D.N.C.

In January of 2014, the Court

for a second time remanded the case to state court, holding that
Daughtry’s removal was untimely and that he failed to show “good
cause”

for

an

§ 1454(b)(2).

of

time

pursuant

to

28

U.S.C.

Andrews II, 994 F. Supp. 2d at 734-36.

Daughtry
alleging

extension

initiated

that

the

this

copyright

action

on

November

registration

filed

24,

in

2014,

2006

was

fraudulent in that it does not reflect the correct ownership
interests

in

the

songs

on

Uprooted.

(ECF

No. 1

¶¶ 8–12.)

Daughtry seeks a declaration, among other things, that he is the
sole

author

and

original

owner

of

the

copyrights

in

four

Uprooted songs and is a co-owner and co-author in the other
three Uprooted songs.
II.

(Id. at 5-6 ¶¶ 2-4.)

DISCUSSION
A. Federal Declaratory Judgment Act
Defendants urge the Court to either dismiss or stay this

action pending the outcome of the state court proceeding because
they

contend

only

that

proceeding

controversy between the parties.
“are

correct

in

their

encompasses

the

entire

They also argue that if they

partnership

law

theories,

which

are

pending in the state lawsuit, then the question of who authored
4

the songs becomes moot.”

(ECF No. 10 at 13, 16.)

counters

the

by

arguing

that

Court

should

deny

Daughtry
Defendants’

request for dismissal or stay because this Court has exclusive
jurisdiction

over

his

“narrowly

tailored”

claims

such

that

“[n]one of the relief he seeks implicates any of the relief that
Defendants are seeking in state court.”3

(ECF No. 15 at 6-8.)

Daughtry further argues that if the Court dismisses this action
as urged by Defendants, it would effectively deny him any forum
to have his claims heard.4
The Federal Declaratory Judgment Act allows federal courts
to

“declare

interested

the
party

rights
seeking

and

other

such

legal

relations

declaration,

further relief is or could be sought.”

of

any

whether

or

not

28 U.S.C. § 2201 (2012).

The court’s power to grant declaratory relief is discretionary
and should be invoked for appropriate cases only.

Centennial

Life Ins. Co. v. Poston, 88 F.3d 255, 256-57 (4th Cir. 1996).
court

may

exercise

jurisdiction

in

a

federal

A

declaratory

3

Daughtry admits that his copyright claim asserted in this action was
also asserted by him as a counterclaim in the state action.
(ECF
No. 15 at 6.) Daughtry explains that when the Court remanded on the
second occasion, he had no choice but to assert his counterclaim
arising under the Copyright Act in state court because of the
uncertainties surrounding (1) the 2011 enactment of the America
Invents Act and (2) whether his claim qualified as compulsory
counterclaim under North Carolina law. (Id.)
4

According to Daughtry, the statute of limitations for him to
challenge the alleged fraudulent copyright registrations ran in March
of 2015. (ECF No. 15 at 7).

5

judgment proceeding when (1) the complaint shows that there is
an actual controversy between the parties, (2) the claim arises
under federal law, and (3) the exercise of jurisdiction is not
an abuse of discretion.

See Volvo Constr. Equip. N. Am., Inc.

v. CLM Equip. Co., 386 F.3d 581, 592 (4th Cir. 2004).
Neither party has raised any issues related to the first
two

requirements

necessary

for

this

Court

to

jurisdiction in this declaratory judgment proceeding.

exercise
Thus, the

issue to be decided here is whether the exercise of jurisdiction
by

this

Court,

in

light

of

the

pending

related

state

court

proceeding and the unique procedural posture of the parties’
claims, would amount to an abuse of discretion.
It

is

discretion

well
in

settled

determining

that

district

whether

to

courts

entertain

enjoy
a

broad

declaratory

judgment action. See Wilton v. Seven Falls Co., 515 U.S. 277,
286-87 (1995); Brillhart v. Excess Ins. Co. of Am., 316 U.S.
491, 494 (1942).

While such discretion is not limitless, “a

district court’s discretion ‘is especially crucial when . . .
[a] related proceeding is pending in state court.’”

Riley v.

Dozier Internet Law, PC, 371 F. App’x 399, 401 (2010) (quoting
New Wellington Fin. Corp. v. Flagship Resort Dev. Corp., 416
F.3d 290, 297 (4th Cir. 2005)).

Within the declaratory judgment

context, the United States Supreme Court has explained that “the
normal principle that federal courts should adjudicate claims
6

within

their

practicality

jurisdiction

and

wise

yields

judicial

to

considerations

administration.”

of

Wilton,

515

U.S. at 288; see also Brillhart, 316 U.S. at 494 (“Although the
District Court had jurisdiction of the suit under the Federal
Declaratory

Judgments

Act,

it

was

exercise that jurisdiction.”).
stated

that

it

is

under

no

compulsion

to

The Supreme Court in Brillhart

“uneconomical

as

well

as

vexatious

for

a

federal court to proceed in a declaratory judgment suit where
another suit is pending in a state court presenting the same
issues, not governed by federal law, between the same parties.”
Brillhart, 316 U.S. at 495.

The court must therefore determine

whether the controversy “can better be settled in the proceeding
pending in the state court.”
requires

the

court

to

take

Wilton, 515 U.S. at 282.
into

federalism, efficiency, and comity.”

account

This

“considerations

of

United Capitol Ins. Co. v.

Kapiloff, 155 F.3d 488, 493 (4th Cir. 1998).
To assist district courts with balancing the federal and
state principles articulated by Brillhart and Wilton, the Fourth
Circuit

has

set

forth

four

factors

that

the

court

should

consider:
(1) whether the state has a strong interest in
having the issues decided in its courts; (2)
whether the state courts could resolve the issues
more efficiently than the federal courts; (3)
whether the presence of “overlapping issues of
fact
or
law”
might
create
unnecessary
“entanglement” between the state and federal
7

courts; and (4) whether the federal action is
mere “procedural fencing,” in the sense that the
action is merely the product of forum-shopping.
Kapiloff, 155 F.3d at 493–94 (“Kapiloff factors”).
not

to

“treat

the

factors

as

a

‘mechanical

Courts are

checklist,’ but

rather should apply them flexibly in light of the particular
circumstances

of

each

case.”

VRCompliance

LLC

v.

HomeAway,

Inc., 715 F.3d 570, 573 (4th Cir. 2013).
B. Kapiloff Factors
Analysis

of

the

Kapiloff

factors

leads

this

Court

to

conclude that this action should be stayed pending resolution of
the state court trial proceeding.5
1. The State’s Interest
It is undisputed that North Carolina has a strong interest
in

resolving

the

dispute

concerning

5

the

alleged

partnership

Daughtry argues that the presence of a federal claim and the lack of
a parallel state proceeding compel the Court to entertain his claims
brought under the Federal Declaratory Judgment Act.
(See ECF No. 15
at 20.)
“[E]ven in cases involving federal law, ‘[t]he Declaratory
Judgment Act [i]s an authorization, not a command.
It g[ives] the
federal courts competence to make a declaration of rights; it d[oes]
not impose a duty to do so.’” Riley, 371 F. App’x at 405 (alterations,
except first, in original) (quoting Pub. Affairs Assocs., Inc., v.
Rickover, 369 U.S. 111, 112 (1962) (per curiam)). Moreover, “[t]here
is no requirement that a parallel proceeding be pending in state court
before a federal court should decline to exercise jurisdiction over a
declaratory judgment action.” Aetna Cas. & Sur. Co. v. Ind-Com Elec.
Co., 139 F.3d 419, 423 (4th Cir. 1998). Although the existence of a
parallel state action is “a significant factor in the district court’s
determination[,] . . . it is not dispositive.”
Id.
The Kapiloff
factors continue to be the criteria the Court should balance in
determining whether to entertain a federal declaratory action.
See
id. at 423-24; see also Riley, 371 F. App’x at 405-06.

8

agreement.

Who owns the present interest in the songs at issue

turns on whether they are assets of the alleged partnership
agreement, a disputed issue in the state court proceeding that
implicates North Carolina partnership law.

The Chief Justice of

the North Carolina Supreme Court has designated the state case
as

an

“exceptional”

civil

case

under

Rule

2.1

of

the

North

Carolina General Rules of Practice for the Superior and District
Courts.

(ECF No. 10 at 4.)

To qualify as an “exceptional civil

case,” the Chief Justice considers a number of factors, which
include,

among

other

things,

the

diverse

interests

of

the

parties, the amount and nature of pretrial discovery, and the
complexity of legal issues involved.
Cts.

2.1(d).

Had

Daughtry’s

N.C. R. Super. & Dist.

complaint

in

this

federal

declaratory judgment action requested relief that can only be
provided

through

application

of

the

Copyright

Act,

state would likely have no interest in this action.

then

the

However,

because certain relief sought by Daughtry in this action could
overlap with resolution of the partnership issue,6 which is a
state law matter, North Carolina has a strong interest in having

6

(See ECF No. 1 ¶ 20 (“Plaintiff brings this claim for a judgment
declaring that Defendants . . . do not hold equal undivided interests
in the copyright and publishing rights to . . . Breakdown, [and]
Conviction . . . .”).) At the hearing, Daughtry’s counsel represented
to the Court that Daughtry did not intend to plead relief that would
conflict with a ruling in the state court action, but he has not
amended his Complaint to reflect his stated intention.

9

its courts first resolve these complex issues of North Carolina
law.
2. Efficiency
As

a

general

rule,

the

first

priority over a later filed suit.

suit

filed

should

have

Riley, 371 F. App’x at 403.

Here, the state court proceeding was filed first.

In addition,

in the state proceeding, the parties have completed nine months
of

fact

discovery,

which

included

extensive written discovery.

eleven

depositions

(ECF No. 10 at 4.)

and

A mediation,

though unsuccessful, was held on January 7, 2015, which was
followed by briefing and a hearing on Daughtry’s motion for
summary judgment on March 11, 2015.
September 14, 2015.

(Id.)

Trial is set for

(Id.)

Defendants claim that if the Court exercised jurisdiction
over Daughtry’s complaint for a declaratory judgment, then it
would lead to a piecemeal resolution of this case.
The

Court

does

circumstances
claims

are

determination

of

not

this

pending
of

find

this

case.
in

copyright

argument
Although

the

(Id. at 14.)

compelling

under

Daughtry’s

state

court

ownership

based

copyright

proceeding,
on

a

the

a

disputed

allegation of co-authorship presents a federal question under
the Copyright Act that Congress has expressly stated cannot be
resolved by a state court.

See 28 U.S.C. § 1338(a) (“No State

court shall have jurisdiction over any claim for relief arising
10

under

any

Act

Cambridge

of

Congress

Literary

Props.,

relating
Ltd.

v.

to . . .

W.

copyrights.”);

Goebel

Porzellanfabrik

G.m.b.H. & Co. Kg., 510 F.3d 77, 86 (1st Cir. 2007) (“[T]he
federal

circuit

courts

of

determination

of

allegation

co-authorship

of

copyright

appeal . . .

ownership
presents

agree
on

based
a

that

disputed

federal

a

question

a

that

arises under, and must be determined according to, the Copyright
Act.”).
theory

Defendants have advanced the argument that if their
of

the

proceeding,

partnership

then

the
are

agreement

prevails

question

of

silent

what

on

in

the
is

authorship
happens

state
moot.

Interestingly,

they

if

they

are

unsuccessful.

If the state court concludes that there is no

partnership agreement that governs the present ownership of the
disputed

songs,

then

it

would

appear

that

resolution

of

ownership of the songs based on authorship, including present
ownership, will be determined pursuant to the Copyright Act and,
therefore,

in

this

Court.

Consequently,

a

stay

pending

resolution of the state court proceeding could prevent needless
duplication of effort and minimize the unnecessary expenditure
of

judicial

resources

while

at

the

federal forum for Daughtry’s claims.
Co.,

88

F.3d

at

258.

Thus,

the

time

preserving

a

See Centennial Life Ins.

stay

resolution of the entire controversy.

11

same

allows

for

an

orderly

3. Entanglement
Requiring

simultaneous

litigation

in

state

court often invites unnecessary entanglement.
state

proceeding

and

this

declaratory

and

federal

Here, both the

judgment

proceeding

include the same parties as well as common issues of law and
fact.

In addition, it is uncertain what impact the alleged

partnership

agreement

entitled to receive

will

have

on

any

relief

Daughtry

is

in this action, assuming that the state

court finds that such an agreement exists, is valid, and is
enforceable.
entanglement

Daughtry
because

contends

his

that

original

there

ownership

is

no

claims

risk

of

based

on

authorship have no bearing on the issues pending in state court,
specifically
partnership

the

state

agreement.

issue
Even

of

whether

though

or

the

not

Court

there

has

is

a

exclusive

jurisdiction over original ownership claims based on authorship
pursuant to the Copyright Act, the similarity of issues between
the

same

parties

inconsistent
proceed

in

rulings

both
should

simultaneously,

proceedings
this

“thereby

progress of the [] proceedings.”

Court

increases
and

the

frustrat[ing]

the

risk

state
the

of

court

orderly

Riley, 371 F. App’x at 403

(alterations in original) (internal quotation mark omitted).
4. Procedural Fencing
Defendants claim that this action “appears to be an end run
around

the

Court’s

two

remand
12

decisions”

in

Andrews

I

and

Andrews II.

(ECF No. 10 at 16-17.)

While this Court does not

take lightly the fact that Daughtry has unsuccessfully sought
removal to federal court twice, this Court cannot conclude that
Daughtry is engaging in “mere” procedural fencing by filing this
federal action, as Defendants argue.

“Procedural fencing occurs

when . . . ‘a party has raced to federal court in an effort to
get certain issues that are already pending before the state
courts resolved first in a more favorable forum’” or when a
party files suit directly in federal court to secure a federal
forum in a case that is otherwise not removable.

Riley, 371 F.

App’x at 403–04 (quoting Great Am. Ins. Co. v. Gross, 468 F.3d
199, 212 (4th Cir. 2006)).

While procedural fencing generally

contemplates a litigant shopping for a more favorable forum, it
appears that Daughtry seeks to ensure that he is not foreclosed
from having his claims heard in any forum.
Defendants maintain, however, that the Court in Andrews II
rejected Daughtry’s argument that his copyright claims can only
be heard in federal court, contending that the Court observed
“that if Congress had in fact intended there to be exclusive
federal

jurisdiction

over

a

counterclaim

for

copyright

ownership, Congress would not have imposed the ordinary time
limits applicable to removal.”
in

Andrews

University

II
of

made

no

Kentucky

such

(ECF No. 10 at 18.)
observation.

Research
13

Foundation,

Nor

The Court

does

Inc.

v.

it

cite

Niadyne

Inc., No. 13-16-GFVT, 2013 WL 5943921, (E.D. Ky. Nov. 5, 2013),
for such observation.

The actual language in Andrews II to

which Defendants refer is as follows:
Daughtry urges the court to find cause for
removal on the ground that the federal courts are
the exclusive forum for his copyright claims.
But, as noted by the Niadyne court, if Congress
shared that view, “it would have simply removed
all time limitations” in section 1454.
It did
not.
Andrews

II,

994

F.

Supp.

2d

at

735-36

(emphasis

added)

(citations omitted) (quoting Niadyne, 2013 WL 5943921, at *10).
The Court made that statement as it was rejecting Daughtry’s
argument that the “cause” standard set forth in 28 U.S.C. § 1454
could be satisfied based on an argument that federal courts are
the exclusive forum for claims arising under the Copyright Act.
The Court did not rule, as Defendants proclaim, that the state
court had jurisdiction over Daughtry’s copyright claims under
the Copyright Act.

Defendants’ expansive reading of Andrews II

must be rejected by this Court.
Moreover, Daughtry offers a reason for filing this federal
suit

after

statute

of

the

Court’s

limitations

second
for

remand

him

to

decision—that
challenge

the

is,

the

alleged

fraudulent copyright registrations ran in March of 2015, (ECF
No. 15 at 7), and that he would be precluded from having his
copyright issues heard, (id. at 19).
explanation

reasonable.

The Court finds Daughtry’s

Accordingly,
14

in

light

of

Daughtry’s

concern about the statute of limitations and his well-founded
belief that the state court will likely be unable to resolve his
copyright counterclaim, the Court cannot say that this action
represents procedural fencing on the part of Daughtry.
However, if for the sake of argument, there is procedural
fencing by Daughtry in attempting to secure a federal forum on a
case that is not removable, its effect is minimized by a stay of
this action pending resolution of the state court proceeding.
For the reasons outlined above, the Kapiloff factors weigh
in favor of staying this action pending the outcome of the state
trial court proceeding.7

This result is consistent with the

Court’s inherent power to stay proceedings to “maintain an even
balance” between the parties, Landis v. N. Am. Co., 299 U.S.
248, 254-55 (1936), and to control the progress of a case in the
interest of justice, Carlisle v. United States., 517 U.S. 416,
438 n.1 (1996) (quoting Enelow v. N.Y. Life Ins. Co., 293 U.S.
379, 381–82 (1935)).

7

The Court also rejects Daughtry’s argument that this Court cannot
stay or dismiss this action under the Colorado River Doctrine.
(See
ECF No. 15 at 20.)
In Colorado River Water Conservation District v.
United States, 424 U.S. 800 (1976), the Supreme Court held that a
federal court may abstain from hearing non-declaratory claims in favor
of a parallel suit under certain circumstances.
See id. at 814-17.
However, this doctrine is inapplicable to cases seeking only
declaratory relief under the Federal Declaratory Judgment Act.
See
VonRosenberg v. Lawrence, 781 F.3d 731, 735 (4th Cir. 2015).

15

ORDER
IT IS THEREFORE ORDERED that Defendants’ Motion to Dismiss
or Stay (ECF No. 9) is GRANTED IN PART AND DENIED IN PART, in
that Defendants’ Motion to Dismiss is DENIED and this action is
STAYED

pending

proceeding.

the

resolution

of

the

state

trial

court

The parties shall provide the Court with a joint

status report every 120 days following entry of this Memorandum
Opinion and Order.
This, the 2nd day of July, 2015.

/s/ Loretta C. Biggs
United States District Judge

16