Huckshold v. Hssl, L.L.C.

• Decision Date: 16 November 2004
• Docket Number: No. 4:04cv0475 TCM.,4:04cv0475 TCM.
• Citation: 344 F.Supp.2d 1203
• Parties: Curt M. HUCKSHOLD, d/b/a Omni Data Systems, Plaintiff, v. HSSL, L.L.C., d/b/a Hair Saloon for Men, and The Miller Group, Inc., Defendants.
• Court: U.S. District Court — Eastern District of Missouri

Page 1203

344 F.Supp.2d 1203

Curt M. HUCKSHOLD, d/b/a Omni Data Systems, Plaintiff, v. HSSL, L.L.C., d/b/a Hair Saloon for Men, and The Miller Group, Inc., Defendants.

No. 4:04cv0475 TCM.

United States District Court, E.D. Missouri, Eastern Division.

November 16, 2004.

Michael A. Kasperek, Vincent D. Vogler, Vogler and Associates, St. Louis, MO, for Plaintiff.

Andrew J. Martone, Marvin L. Lindmark, III, Gretchen E. Rowan, Bobroff and Hesse, Jennifer M. Arthur, Levine Law, LLC, St. Louis, MO, John J. Dwyer, Piper Rudnick, LLP, Reston, VA, for Defendants.

MEMORANDUM AND ORDER

MUMMERT, United States Magistrate Judge.

Curt M. Huckshold ("Plaintiff"), doing business as Omni Data Systems ("Omni Data"), filed suit in state court in March 2004 against HSSL, L.L.C., doing business as Hair Saloon for Men ("HSSL"), and the Miller Group, Inc. ("Miller"), characterizing his complaint as one for breach of contract (Count I), tortious interference with a contract (Count II), and misappropriation of trade secrets (Count III). Characterizing the suit as one for copyright infringement, HSSL, with Miller's consent, removed the action to this Court.¹ See 28 U.S.C. § 1441(b). HSSL now moves to dismiss the two counts against it, Counts I and III, on the grounds that they are barred by the three-year statute of limitations for copyright infringement actions.² [Doc. 10] Miller also moves to dismiss the two counts against it, Counts II and III, on the same grounds. [Doc. 8] Plaintiff opposes both motions.

Background

Plaintiff creates computer software for the hair salon and barber shop industry. (Comp. ¶ 4.) Doing business as Omni Data, he entered into an agreement to develop software for the tracking and maintenance of a customer database (the "Software") for HSSL. (Id. ¶ 6.) The agreement prohibited HSSL from printing or copying, in whole or in part, the Software or related materials, and from selling, giving, assigning, sublicensing, or otherwise transferring, in whole or in part, the Software or related material without obtaining in each instance prior written consent from Plaintiff. (Id. ¶ 8.) Plaintiff delivered the Software to HSSL in March 1999. (Id. ¶ 7.)

On April 12, 2000, Plaintiff learned that Miller was copying the Software from one of HSSL's computers. (Id. ¶ 9.) Miller "admitted that it was copying said software for the purpose of developing similar software." (Id. ¶ 10.) On April 17, Plaintiff demanded that Miller return the Software; Miller did. (Id. ¶ 11.)

Plaintiff alleges in Count I that HSSL breached their agreement by allowing Miller to "copy and download" the Software. (Id. ¶ 12.) In Count II, he alleges that Miller tortiously caused HSSL to commit this breach. (Id. ¶ 18.) And, in Count III, he alleges that the Software he developed for HSSL was a trade secret, as defined by Mo.Rev.Stat. § 417.457, that Miller is in the business of developing software, and that by allowing Miller to copy the Software HSSL breached its duty to Plaintiff to maintain the secrecy of the Software and limit its use. (Id. ¶¶ 23-25.)

Discussion

"[W]hen it appears from the face of the complaint itself that the limitations period has run, a limitations defense may properly be asserted through a [Federal Rule of Civil Procedure] 12(b)(6) motion to dismiss." Varner v. Peterson Farms, 371 F.3d 1011, 1016 (8th Cir.2004) (alteration added; interim quotations omitted). When determining whether to grant such a motion, "`[a]ll facts alleged in the complaint are taken as true and construed in the light most favorable to the plaintiff.'" Id. (quoting Kottschade v. City of Rochester, 319 F.3d 1038, 1040 (8th Cir.2003)) (alteration added).

Acceptance at "face" value of the allegations in the complaint is also required under the well-pleaded complaint rule when an action is removed from state court based on federal question jurisdiction. See Krispin v. May Department Stores, 218 F.3d 919, 922 (8th Cir.2000); Gore v. Trans World Airlines, 210 F.3d 944, 948 (8th Cir.2000). "[T]he well-pleaded complaint rule provides that a federal question must be presented on the face of the properly pleaded complaint to invoke federal court jurisdiction." Id. (citing Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987)) (alteration added). This rule precludes a defendant from injecting a federal question into a state-law action and then removing the action to federal court on grounds of federal question jurisdiction, "`even if the defense is anticipated in the plaintiff's complaint[.]'" Id. (quoting Rivet v. Regions Bank of Louisiana, 522 U.S. 470, 475, 118 S.Ct. 921, 139 L.Ed.2d 912 (1998)) (alteration added).

An exception to this rule exists if Congress has evidenced an intent that federal law completely displace state law. Lyons v. Philip Morris, Inc., 225 F.3d 909, 912 (8th Cir.2000); Krispin, 218 F.3d at 922; Gore, 210 F.3d at 949." `Once an area of state law has been completely pre-empted, any claim purportedly based on that pre-empted state law is considered, from its inception, a federal claim, and therefore arises under federal law.'" Husmann v. Trans World Airlines, Inc., 169 F.3d 1151, 1152 (8th Cir.1999) (quoting Caterpillar, Inc., 482 U.S. at 393, 107 S.Ct. 2425). Thus, state law claims that are completely preempted and are "recast" as federal claims may be removed to federal court on the grounds of "federal question" jurisdiction. Blab T.V. of Mobile, Inc. v. Comcast Cable, 182 F.3d 851, 854 (11th Cir.1999).

The Copyright Act is not one of the three statutes identified by the Supreme Court as completely preempting state law claims.

³

See Dunlap v. G & L Holding Group, Inc., 381 F.3d 1285, 1291 (11th Cir.2004). Therefore, the intent of Congress must be examined.

Section 301(a) of the Copyright Act mandates that:

[A]ll legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103 ... are governed exclusively by this title. Therefore, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.

17 U.S.C. § 301(a). See also Id.; United States ex rel. Berge v. Board of Trustees of the Univ. of Ala., 104 F.3d 1453, 1463 (4th Cir.1997) (Board of Trustees). "`The declaration of this principle in section 301 is intended to be stated in the clearest and most unequivocal language possible, so as to foreclose any conceivable misinterpretation of its unqualified intention that Congress shall act preemptively, and to avoid the development of any vague borderline areas between State and Federal protection.'" Daboub v. Gibbons, 42 F.3d 285, 290 n. 8 (5th Cir.1995) (quoting H.R.Rep. No. 1476, 94th Cong.2d Sess. 130 (1976), U.S.Code Cong. & Admin.News 1976, 5659, 5746) (emphasis in citing source).

Courts have employed a two-part test when determining whether an apparent state-law claim is preempted by the Copyright Act. See National Car Rental Sys., Inc. v. Computer Assocs. Int'l, 991 F.2d 426, 428 (8th Cir.1993); Lipscher v. LRP Publications, Inc., 266 F.3d 1305, 1311 (11th Cir.2001); Board of Trustees, 104 F.3d at 1463. The first part is whether the work is within the subject matter of copyright as specified in 17 U.S.C. §§ 102, 103. Lipscher, 266 F.3d at 1311. The parties agree that the Software is within that scope. See National Car Rental Sys., Inc., 991 F.2d at 431 (finding computer software to be within the subject matter of copyright); ProCD, Inc. v. Zeidenberg, 86 F.3d 1447, 1453 (7th Cir.1996) (holding that computer software program is "tangible medium of expression" and protected by Copyright Act).

The second part is whether the rights at issue are equivalent to those delineated in section 106. Briarpatch Ltd. v. Phoenix Pictures, Inc., 373 F.3d 296, 305 (2nd Cir.2004); Lipscher, 266 F.3d at 1311. Section 106 protects the right of reproduction, preparation of derivative work, and distribution of copies to the general public. 17 U.S.C. § 106. "The second prong of the preemption test is satisfied unless there is an `extra element' that changes the nature of the state law action so that it is `qualitatively different from a copyright infringement claim.'" Board of Trustees, 104 F.3d at 1463 (quoting Rosciszewski v. Arete Assocs., Inc., 1 F.3d 225, 229-30 (4th Cir.1993)). See also Briarpatch Ltd., 373 F.3d at 306 (same); Lipscher, 266 F.3d at 1311-12 (same). Thus, an extra element results in preemption when it changes the nature of the action and not the scope. Stromback v. New Line Cinema, 384 F.3d 283, 301 (6th Cir.2004). To determine whether an extra element is present, the elements of the state cause of action must be examined, not the facts alleged in support of the claims. Rosciszewski, 1 F.3d at 229; Trandes Corp. v. Guy F. Atkinson Co., 996 F.2d 655, 659 (4th Cir.1993). See also Firoozye v. Earthlink Network, 153 F.Supp.2d 1115, 1122-23 (N.D.Cal.2001) ("[T]here are[, however,] circumstances where a state-law claim does involve the general subject matter of the Act but creates rights that are not equivalent to those protected by the Act, and those claims are not preempted." (alterations added)).

Breach of Contract. Plaintiff first alleges that HSSL breached its agreement by permitting Miller to copy the Software. His agreement with HSSL provided, inter alia, that HSSL "not sell, give, assign, sublicense, or otherwise transfer in whole or in part, the software or related material without in each instance obtaining prior written consent from Plaintiff." (Compl.¶ 8.)

To succeed on this claim, Plaintiff must establish "(1) the existence of an enforceable contract between the parties, (2) mutual obligations under the terms of the contract, (3) one party's failure to perform the obligations imposed by the...