Andrews v. Daughtry

• Decision Date: 15 January 2014
• Docket Number: No. 1:13cv408.,1:13cv408.
• Citation: 994 F.Supp.2d 728
• Court: U.S. District Court — Middle District of North Carolina
• Parties: Ryan ANDREWS, Scott Crawford, and Mark Perry, Plaintiffs, v. Christopher Adam DAUGHTRY, Defendant.

994 F.Supp.2d 728

Ryan ANDREWS, Scott Crawford, and Mark Perry, Plaintiffs,

v.Christopher Adam DAUGHTRY, Defendant.

No. 1:13cv408.

United States District Court, M.D. North Carolina.

Jan. 15, 2014.

Coe W. Ramsey, Charles E. Coble, Brooks Pierce McLendon Humphrey & Leonard, LLP, Raleigh, NC, for Plaintiffs.

Leon Gladstone, Owen J. Sloane, Ronald A. Dipietra, Gladstone Michel Weisberg

Willner & Sloane, ACL, Marina Del Rey, CA, David Leonard Brown, Nelson Levine De Luca & Hamilton, Greensboro, NC, for Defendant.

MEMORANDUM OPINION AND ORDER

THOMAS D. SCHROEDER, District Judge.

One of the more popular and prolific songwriters of the twentieth century, Sammy Cahn, once wrote that love was “lovelier the second time around.” Bing Crosby, The Second Time Around, lyrics by Sammy Cahn, music by Jimmy Van Heusen, inHigh Time (Bing Crosby Prod. 1960). This case puts the lyric to the test in the context of a contemporary songwriter's second attempt at federal removal jurisdiction.

Plaintiffs Ryan Andrews, Scott Crawford, and Mark Perry (collectively, “Plaintiffs”) are suing their former bandmate, Defendant Christopher Adam Daughtry (“Daughtry”), to recover profits derived from certain musical works. The action originated in state court, was timely removed to this court, and then remanded for lack of subject matter jurisdiction. (Doc. 24 in case 1:12cv441.) ¹ After some discovery and motion practice in state court, Daughtry filed an answer that asserted counterclaims under the Copyright Act, 17 U.S.C. § 101 et seq. (“Copyright Act”). He removed the action a second time to this court, premising jurisdiction on 28 U.S.C. § 1454 and the presence of a federal question in the counterclaims. (Doc. 1.)

Plaintiffs move to remand the action on the grounds that jurisdiction is lacking under section 1454 and Daughtry's removal was nevertheless untimely. (Doc. 19.) Daughtry opposes the motion on both grounds (Doc. 23) and moves to dismiss Plaintiffs' claims for failure to state a claim upon which relief can be granted pursuant to Federal Rule of Civil Procedure 12(b)(6) (Doc. 12). The court has stayed all briefing on the dismissal motion pending resolution of Plaintiffs' motion to remand. (Doc. 22.)

For the reasons set forth below, Plaintiffs' motion to remand will be granted, rendering the court without jurisdiction to consider Daughtry's motion to dismiss.

I. BACKGROUNDA. Factual Background

The facts leading to this dispute are set forth in detail in this court's earlier opinion. Andrews v. Daughtry, No. 1:12–cv–00411, 2013 WL 664564, at *1–3 (M.D.N.C. Feb. 22, 2013). Pertinent here, Plaintiffs allege the following:

Sometime in 2004, Andrews, Crawford, Perry, and Daughtry formed a band called “Absent Element.” All four bandmates were musicians and began collaborating on songwriting, recording, and performing. Together they also marketed the band and sold band-related merchandise. All four shared equally in the band's costs and profits and considered themselves a partnership.

In late December 2004, the bandmates had a disagreement over how to split the songwriting authorship and credit for Absent Element's songs. Before the release of their album “Uprooted” in March 2005, however, they resolved their differences by “agree[ing] to equally share in the profits from any songs written by any of the partners as members of and in furtherance of Absent Element, irrespective of the extent of any one band member's contribution to a particular song.” (Doc. 2 ¶ 20.) Furthermore, they “agreed that each song written by any of the partners as members of and in furtherance of Absent Element would be owned equally by the four parties, irrespective of the extent of any one band member's contribution to a particular song.” ( Id. ¶ 22.) This agreement was reduced to writing. Shortly after Absent Element released its first album, “Uprooted,” in March 2005, the band registered a copyright for all seven songs on it with the U.S. Copyright Office; all four bandmates were listed as co-authors.

In the summer of 2005, the bandmates agreed that Daughtry should audition for and participate in the nationally-televised singing competition “American Idol” in order to gain the band exposure. Daughtry successfully entered the competition in the fall of 2005, appeared on the show in the winter and spring of 2006, and made it to the final four before being cut in May 2006. During Daughtry's time on the show, he repeatedly introduced Plaintiffs as his bandmates to other contestants, judges, and producers; the Plaintiffs were shown on camera during one show and were identified as “Chris' Band.” Plaintiffs believed that Daughtry appeared on the show in order to promote Absent Element.

Meanwhile, members of the band continued to write songs. In the summer of 2005, the song “Sinking” was written. Sometime before June 2006, the song “Home” was written. In Plaintiffs' view, regardless of who wrote the songs, they were written in furtherance of the Absent Element partnership and were therefore partnership assets. Plaintiffs believed they would share authorship credit for and profits from those songs.

Absent Element last performed in June 2006. Daughtry entered into a solo recording contract in the summer of 2006, although Plaintiffs were unaware of it and Daughtry assured Plaintiffs they would continue to perform as a band. In November 2006, Daughtry released a solo debut album titled “Daughtry,” recorded with studio musicians instead of Plaintiffs. Daughtry released his second album, “Leave This Town,” in July 2009. In their complaint, Plaintiffs allege that music and lyrics from four Absent Element songs were used in songs on “Daughtry” and “Leave This Town”: “Breakdown” and “Conviction” from the band's “Uprooted” album; “Sinking”; and “Home.” Plaintiffs contend that Daughtry has failed to provide authorship credit and profits from these songs in violation of their partnership agreement.

B. Procedural Background

Plaintiffs filed their complaint in Guilford County (North Carolina) Superior Court on April 5, 2012. The complaint seeks relief on five claims: four arising from the alleged partnership and one for unjust enrichment “to the extent the wrongful conduct of Daughtry ... does not fall within the subject matter of his partnership agreement.” (Doc. 2 ¶ 80.)

Daughtry removed the case to this court on May 3, 2012, premising jurisdiction on the presence of a federal question under the Copyright Act, and shortly thereafter moved to dismiss the complaint. Plaintiffs timely moved to remand the action. After hearing argument on the remand motion, this court determined that Plaintiffs had “carefully pleaded their claims to avoid federal question jurisdiction” and remanded the action to the state court of origin on February 22, 2013. Andrews, 2013 WL 664564, at *6, *15.

According to Plaintiffs, after this court's remand decision “[p]roceedings then began in earnest in state court.” (Doc. 20 at 3.) On March 25, 2013, Daughtry moved the North Carolina Business Court to designate the action as a complex business case. (Doc. 1–2 at 42–47.) The court denied the motion as untimely, and the case was returned to the Guilford County Superior Court on April 1. (Doc. 1–3 at 9–10.) On April 4, Daughtry filed a motion to dismiss the complaint and served his first request for production of documents on Plaintiffs. ( Id. at 1–5.) According to Plaintiffs, they served their first set of written discovery on Daughtry on May 9. (Doc. 20 at 3.) An administrative hearing to appoint a mediator, determine a scheduling order, and set a trial date was set for May 29. (Doc. 1–3 at 11.)

On May 17, while his motion to dismiss was apparently pending, Daughtry filed an answer in state court, asserting two counterclaims, and, on May 20, filed a second notice of removal to this court. ( Id. at 13–37; Doc. 1.) This time, Daughtry premises federal question jurisdiction on 28 U.S.C. § 1454. He counterclaims under the Copyright Act for (1) a declaratory judgment stating, among other things, that while Plaintiffs are equal co-owners of the copyrights in the sound recordings of Absent Element, they do not enjoy authorship or ownership rights in the music and lyrics of all the songs alleged; rather, Daughtry holds sole ownership and authorship rights in the four Absent Element songs at issue (“Home,” “Breakdown,” “Conviction,” and “Sinking”) and co-ownership in others, and (2) an equitable accounting for profits from the “Uprooted” album. (Doc. 1–3 at 31–34.)

Plaintiffs now move again to remand the case to state court on the grounds that federal question jurisdiction is lacking and that Daughtry's removal is untimely. (Doc. 19.)

II. ANALYSISA. Federal Jurisdiction Based on Counterclaims

Traditionally, a plaintiff could not get into federal court simply because an anticipated defense to the plaintiff's state law claim would raise a federal question. See Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 29 S.Ct. 42, 53 L.Ed. 126 (1908). Generally, federal question jurisdiction is present “only when the plaintiff's statement of his own cause of action shows that it is based upon [federal law.]” Id. at 152, 29 S.Ct. 42. In Holmes Group, Inc. v. Vornado Air Circulation Systems, Inc., the Supreme Court expressly applied this rule to counterclaims, holding that “a counterclaim—which appears as part of the defendant's answer, not as part of the plaintiff's complaint—cannot serve as the basis for ‘arising under’ jurisdiction.” 535 U.S. 826, 831, 122 S.Ct. 1889, 153 L.Ed.2d 13 (2002).

Holmes Group involved not just any counterclaim, however. The defendant had asserted a counterclaim arising under federal patent law. After Holmes Group, Congress became concerned about the decision's effects on the uniformity of federal patent law, as well as other areas traditionally reserved for exclusive federal jurisdiction, such as copyright. The rule articulated in Holmes Group meant that state courts could end up...