Camsoft Data Sys., Inc. v. S. Elecs. Supply, Inc.

• Citation: 756 F.3d 327
• Decision Date: 19 June 2014
• Docket Number: No. 12–31013.,12–31013.
• Parties: CAMSOFT DATA SYSTEMS, INC., Plaintiff–Appellee–Cross–Appellant v. SOUTHERN ELECTRONICS SUPPLY, INCORPORATED; Active Solutions, L.L.C.; Brian Fitzpatrick; Henry J. Burkhardt; Ignace Perrin, Defendants–Third Party Plaintiffs–Appellants–Cross–Appellees Dell, Incorporated; Ciber, Incorporated; Dell Marketing, L.P.; Mark Kurt, Defendants–Appellants–Cross–Appellees Steve Renecker; Billy Ridge; Heather Smith; Bill Tolpegin; Donald Berryman; Earthlink, Incorporated; Motorola, Incorporated; MMR Constructors, Incorporated, doing business as MMR Communications, Defendants–Cross–Appellees v. Zurich American Insurance Company; American Zurich Insurance Company; Continental Casualty Company, Third Party Defendants–Appellants–Cross–Appellees.
• Court: United States Courts of Appeals. United States Court of Appeals (5th Circuit)

756 F.3d 327

CAMSOFT DATA SYSTEMS, INC., Plaintiff–Appellee–Cross–Appellant

v.SOUTHERN ELECTRONICS SUPPLY, INCORPORATED; Active Solutions, L.L.C.; Brian Fitzpatrick; Henry J. Burkhardt; Ignace Perrin, Defendants–Third Party Plaintiffs–Appellants–Cross–Appellees

Dell, Incorporated; Ciber, Incorporated; Dell Marketing, L.P.; Mark Kurt, Defendants–Appellants–Cross–Appellees

Steve Renecker; Billy Ridge; Heather Smith; Bill Tolpegin; Donald Berryman; Earthlink, Incorporated; Motorola, Incorporated; MMR Constructors, Incorporated, doing business as MMR Communications, Defendants–Cross–Appellees

v.Zurich American Insurance Company; American Zurich Insurance Company; Continental Casualty Company, Third Party Defendants–Appellants–Cross–Appellees.

No. 12–31013.

United States Court of Appeals, Fifth Circuit.

June 19, 2014.

Jason Luke Melancon, Melancon Rimes, Baton Rouge, LA, David H. Schwartz, Law Offices of David H. Schwartz, San Francisco, CA, Marx David Sterbcow, Sterbcow Law Group, L.L.C., New Orleans, LA, for Plaintiff–Appellee–Cross–Appellant.

Mark Aaron Cunningham, Jones Walker LLP, New Orleans, LA, James Connor Percy, Esq., Jones Walker LLP, Baton Rouge, LA, for Defendant–Appellant Cross–Appellee.

Karli Glascock Johnson, Kean Miller, L.L.P., Christine Lipsey, Juston Michael O'Brien, Brook Landry Thibodeaux, McGlinchey Stafford, P.L.L.C., Baton Rouge, LA, Christopher Allen Riley, Andrew Jacob Tuck, Alston & Bird, L.L.P., Atlanta, GA, Thomas P. Anzelmo, Sr., McCranie, Sistrunk, Anzelmo, Hardy, McDaniel & Welch, L.L.C., Metairie, LA, Kyle Paul Kirsch, Esq., Kevin Paul Kress, Attorney, McCranie, Sistrunk, Anzelmo, Hardy, McDaniel & Welch, L.L.C., New Orleans, LA, for Defendants–Appellants–Cross–Appellees.

Lawrence A. Slovensky, King & Spalding, L.L.P. Atlanta, GA, John Michael Parker, I, Esq., Taylor, Porter, Brooks & Phillips, L.L.P., Michael Reese Davis, Sr., Hymel Davis & Petersen, L.L.C., Tiffany Thornton Kopfinger, Esq., Baton Rouge, LA, for Defendant–Cross–Appellees.

Michael P. Kenny, Alston & Bird, L.L.P., Kacy McCaffrey, Alston & Bird, L.L.P., Atlanta, GA, Tara Montgomery Madison, Kean Miller, L.L.P., Baton Rouge, LA, for Defendants-Appellants-Cross-Appellees/Defendants-Cross-Appellees.

Michael Don Peytavin, Gaudry, Ranson, Higgins & Gremillion, L.L.C., Gretna, LA, Kristin V. Gallagher, Carroll, McNulty & Kull, L.L.C., Basking Ridge, NJ, Gustave A. Fritchie, III, Esq., Irwin Fritchie Urquhart & Moore, L.L.C., New Orleans, LA, for Third Party Defendants–Appellants–Cross–Appellees.

Appeals from the United States District Court for the Middle District of Louisiana.

Before BENAVIDES, CLEMENT, and GRAVES, Circuit Judges.

FORTUNATO P. BENAVIDES, Circuit Judge:

Before the court is the appeal of a district court's decision not to exercise supplemental jurisdiction over the case. Defendants–Appellants argue that the court erred in remanding the case to state court. Plaintiff–Appellee moves to dismiss the case, arguing that removal was improper and that we lack jurisdiction to review the remand order. An untimely cross-appeal raises various issues regarding several court orders.

The central issue in this case is whether a district court has jurisdiction over an inventorship dispute where the contested patent has not yet issued. The case was removed from Louisiana court pursuant to 28 U.S.C. §§ 1331, 1338(a), 1441(a) (2006). The parties stipulate that the only possible basis for removal was an inventorship assertion implicit in the plaintiff's ownership claim under articles 513 and 514 of the Louisiana Civil Code. After reviewing the case, we conclude that the controversy must be remanded to the state. Regardless of whether the removed complaint included an inventorship dispute, that dispute was inadequate to establish the district court's jurisdiction because the allegations indicated that no patent had issued. And by raising a timely objection to removal, the plaintiff properly preserved its jurisdictional argument. Therefore, because removal was improper and the case has not yet been tried on the merits, binding precedent dictates that we remand the case to state court. We thus affirm the district court's remand order as amended. Plaintiff's motion and cross-appeal are dismissed for the reasons stated herein.

I. Background

The present case relates to an ongoing controversy regarding a wireless urban surveillance system installed in New Orleans beginning in 2005. Prior to the implementation of that system, Camsoft Data Systems, Inc., had worked with two defendants ¹—Active Solutions, L.L.C., and Southern Electronics Supply, Inc.—on a pilot project involving wireless surveillance cameras. Southern Electronics then entered into a contract with the City of New Orleans to install the system at issue here. Camsoft was not party to that contract, nor did it have a written agreement with Active Solutions or Southern Electronics. There was, however, allegedly an understanding that Camsoft technology and labor would be used in conjunction with the project. Ultimately, Camsoft did not participate in the implementation of the system, which was mired in political scandal after reports revealed that certain officials may have accepted kickbacks during the municipal bidding process.

Extensive civil and criminal litigation resulted, with Active Solutions and Southern Electronics winning a $12 million dollar jury award from technology vendors and the city's chief technology officer.² After unsuccessfully attempting to intervene in that suit, Camsoft filed the present action against Active Solutions and Southern Electronics in Louisiana court in September of 2009, alleging various claims afforded by state statutory and common law. Camsoft claimed, inter alia, to have “invented” and “developed” the disputed system, which it alleged was the subject of a pending patent application. Pursuant to articles 513 and 514 of the Louisiana Civil Code, Camsoft sought judgment declaring its rightful ownership of the surveillance system and any “intellectual property” arising out of work performed in conjunction with Active Solutions and Southern Electronics. Camsoft then amended the complaint, pleading additional claims and naming seventeen more defendants.

On December 14, 2009, the case was removed on the basis of federal question jurisdiction under 28 U.S.C. §§ 1331 and 1338(a) (2006). Camsoft vigorously opposed removal and moved to remand, but the district court found that the allegations of inventorship necessarily invoked patent law and gave rise to jurisdiction.³ After unsuccessfully challenging the removal, Camsoft further amended the complaint, adding over a dozen additional defendants and emphasizing a joint ventureship—rather than inventorship—as the basis for ownership. Camsoft also added federal anti-trust and racketeering claims. See, respectively, Sherman Act, 15 U.S.C. § 1 et seq.; Racketeer Influenced and Corrupt Organizations Act (RICO), 18 U.S.C. §§ 1961– 1968. Camsoft later elaborated on these federal claims in a third amended complaint.

The district court presided over the case for over three years, adjudicating various dispositive motions and ultimately dismissing several claims with prejudice. The court found that Camsoft had failed to adequately plead several of its state claims, resulting in dismissal under Rule 12(b)(6). In addition, the court dismissed the federal anti-trust and racketeering claims, finding that Camsoft had no standing under the governing statutes. The court also granted a defendant's motion for summary judgment on the issue of joint ventureship, which served as the foundation for most of Camsoft's remaining state claims. The court later denied Camsoft's motion to certify these dismissal orders as final judgments for interlocutory appeal.

Most recently, after Camsoft moved to file a fourth amended complaint and to recuse the judge, the district court remanded the case by sua sponte declining to exercise supplemental jurisdiction over remaining claims.⁴ When some of the defendants appealed the remand to the Federal Circuit, Camsoft cross-appealed, seeking review of every adverse decision. Camsoft later filed a motion to dismiss, arguing that jurisdiction never existed, or, in the alternative, that the court lacked jurisdiction to review the remand. After requesting briefs on the question of jurisdiction, the Federal Circuit transferred the appeal to this court.⁵ We now consider the parties' arguments.

II. Appellate Jurisdiction

Camsoft moves to dismiss this case for lack of appellate jurisdiction, arguing that this court has no authority to review the remand order. This court has jurisdiction to review a remand order unless the case was remanded for lack of subject matter jurisdiction or a defect in removal procedure. 28 U.S.C. §§ 1447(c), (d); Carlsbad Tech., Inc. v. HIF Bio, Inc., 556 U.S. 635, 637, 129 S.Ct. 1862, 173 L.Ed.2d 843 (2009). Where a district court simply declines to exercise supplemental jurisdiction over a case, the court's decision is not jurisdictional. Carlsbad, 556 U.S. at 637, 129 S.Ct. 1862. A district court may decline supplemental jurisdiction where: (1) a state claim raises a novel or complex issue of state law; (2) the state claims substantially predominate over any remaining federal claims; (3) the district court has dismissed all claims over which it has original jurisdiction; or (4) there are other compelling reasons for declining jurisdiction. 28 U.S.C. § 1367(c). In the present case, after dismissing Camsoft's RICO and anti-trust claims, the district court ordered briefs outlining the parties and claims that remained at bar. When the briefs revealed that the patent issue had apparently been abandoned and that the federal claims had been dismissed, the court carefully weighed each statutory factor and then decided not to exercise supplemental jurisdiction over remaining claims. There is no indication that the court was remanding for lack of jurisdiction. Accordi...