Donahue v. Tokyo Electron Am., Inc.

• Citation: 42 F.Supp.3d 829
• Decision Date: 27 August 2014
• Docket Number: Case No. A–14–CA–563–SS.
• Parties: Timothy DONAHUE, Plaintiff, v. TOKYO ELECTRON AMERICA, INC. and Tokyo Electron U.S. Holdings, Inc., Defendants.
• Court: U.S. District Court — Western District of Texas

42 F.Supp.3d 829

Timothy DONAHUE, Plaintiff,

v.TOKYO ELECTRON AMERICA, INC. and Tokyo Electron U.S. Holdings, Inc., Defendants.

Case No. A–14–CA–563–SS.

United States District Court, W.D. Texas, Austin Division.

Signed Aug. 27, 2014

Motions granted in part, and denied in part. John F. Melton, Melton & Kumler, LLP, Austin, TX, for Plaintiff.

Daniel Anthony Verrett, Michael W. Fox, Ogletree Deakins Nash Smoak & Stewart, PC, Austin, TX, for Defendants.

ORDER

SAM SPARKS, District Judge.

BE IT REMEMBERED on this day the Court reviewed the file in the above-styled cause, and specifically Plaintiff Timothy Donahue's Motion to Remand [# 5], Defendants Tokyo Electron America, Inc. and Tokyo Electron U.S. Holdings, Inc.'s Response [# 6], Plaintiff Donahue's Reply [# 9], and Defendants' Sur–Reply [# 12]; Counter Defendant Donahue's Motion for Partial Summary Judgment [# 13]; Counter Defendant Donahue's Motion to Dismiss [# 14], and Counter Plaintiffs Tokyo Electron America, Inc. and Tokyo Electron U.S. Holdings, Inc.'s Response [# 17]; and Counter Plaintiffs Tokyo Electron America, Inc. and Tokyo Electron U.S. Holdings, Inc.'s Rule 56(d) Motion to Deny Counter Defendant Donahue's Motion for Partial Summary Judgment [# 15], and Counter Defendant Donahue's Response [# 16].¹ Having considered the documents, the file as a whole, and the governing law, the Court enters the following opinion and orders GRANTING IN PART and DENYING IN PART the motion to remand, DENYING the motion for partial summary judgment, and DENYING the motion to dismiss.

The timeliness of removal is controlled by 28 U.S.C. § 1446(b), and the Fifth Circuit has summarized this section as follows:

The notice of removal of a civil action or proceeding shall be filed within thirty days after the receipt by the defendant, through service or otherwise, of a copy of the initial pleading setting forth the claim for relief upon which such action or proceeding is based, or within thirty days after the service of summons upon the defendant if such initial pleading has then been filed in court and is not required to be served on the defendant, whatever period is shorter....

If the case stated by the initial pleading is not removable, a notice of removal may be filed within thirty days after receipt by the defendant, through service or otherwise, of a copy of an amended pleading, motion, order or other paper from which it may first be ascertained that the case is one which is or has become removable, except that a case may not be removed ... more than 1 year after commencement of the action.

28 U.S.C. § 1446(b). Restated, if the initial pleading sets forth a claim that triggers the removal clock, the defendant must file notice of removal within thirty days of receiving it. If the initial pleading did not trigger the thirty-day removal clock, a notice of removal must be filed within thirty days of the defendant's receipt of a document from which it may ascertain that the case is, or has become, removable. Id. In any event, removal may not occur more than one year after commencement of the action. Id.

Mumfrey v. CVS Pharmacy, Inc., 719 F.3d 392, 397–98 (5th Cir.2013) (footnotes omitted).

Section 1446 presumes and reenforces a procedural dynamic whereby a plaintiff controls the forum with his pleadings, and a defendant may only remove a case once the plaintiff has introduced into the case some document from which the defendant may ascertain the case is removable. If the plaintiff does so, then the defendant has thirty days in which to timely remove the case. Stated differently, § 1446 is premised on the well-pleaded complaint rule, and accordingly does not contemplate defendants asserting counterclaims as the basis for federal question jurisdiction and removal. But, as described above, § 1454 overruled the well-pleaded complaint rule when it comes to certain counterclaims, and specifically allows a defendant to remove a case based on the assertion of a copyright counterclaim even if the case otherwise is completely devoid of federal jurisdiction. This inherent tension—if not total incompatibility—between § 1446 and § 1454 leaves this Court with the conundrum of trying to figure when the removal period for a § 1454 removal is triggered. Indeed, the facts of this case perfectly illustrate the problem.

In this case, the relevant dates are as follows: (1) April 4, 2014—the date of the letter from Tokyo Electron's counsel indicating they are aware as of this date (in fact, earlier than this date) that they have a potential copyright claim against Donahue for his post-termination use of Tokyo Electron's videos; (2) April 28, 2014—the date Defendants were served with Donahue's state court lawsuit; (3) May 16, 2014—the date Defendants file their Original Answer in state court; (4) June 10, 2014—the date Defendants registered their copyrights, and (5) June 16, 2014—the date Defendants filed their Amended Answer and Counterclaims, including the copyright counterclaim, as well as their Notice of Removal.

In their Notice of Removal, Defendants contend the removal is timely because the triggering date for the 30–day removal period was June 16 when they filed their counterclaims. According to Defendants, the case was not removable until they asserted the copyright counterclaim, so June 16 must be the triggering date. This view is problematic for two main reasons. First, a defendant cannot receive his own counterclaim as required by § 1446, so Defendants' view does not comply with the text of § 1446. Second, this interpretation would effectively read § 1446 out of § 1454. The thirty-day deadlines from § 1446 would mean little if a defendant could decide when to trigger the removal clock by asserting a counterclaim in state court potentially at any point during the litigation.²

Donahue, on the other hand, argues the triggering date was April 28, the date Defendants were served with his lawsuit. Donahue highlights the fact Defendants knew, at least as of April 4, that they had a copyright claim to assert against Donahue, and this knowledge, coupled with service of the lawsuit, was sufficient to trigger the removal clock, starting on April 28. Since Defendants did not remove until June 16, the removal was untimely. The Court sees a few problems with this view as well. As an initial matter, documents exchanged between the parties prior to the initial pleading may not constitute “other paper” from which the defendant first ascertains the case is removable under § 1446. Chapman v. Powermatic, Inc., 969 F.2d 160, 164 (5th Cir.1992). In Chapman, a diversity case, the court considered whether documents received by a defendant prior to the initial pleading which gave notice that the amount in controversy requirement was satisfied were sufficient to trigger the removal clock when the initial pleading itself did not provide notice of the amount in controversy. Id. at 163–64. The court rejected consideration of pre-litigation documents as directly contradicting the text of § 1446. Id. Moreover, the Fifth Circuit was concerned about courts trying to determine what defendants knew at the time they received the initial pleading and what the defendant should have known had it exercised due diligence. Id. For instance, in this case, this Court should not expend resources trying to determine if Tokyo Electron knew Donahue was potentially infringing their copyrights by posting videos on his personal website post-termination, when they knew, when they should have known, and so on.

In addition, using April 28 as the triggering date is inconsistent with the text of § 1446. Under § 1446, as traditionally applied, service of the initial pleading triggers the removal clock if it sets forth a claim from which a defendant can ascertain the case is removable. In this case, Donahue's lawsuit for age discrimination under the Texas Labor Code and liability under the Texas Tax Code gives no indication the case is removable.

If the initial pleading did not indicate the case was removable and if Tokyo Electron never received a document in the course of this litigation from which it could first ascertain this case was removable, then a strict application of § 1446 to this case means the removal clock was never triggered. Yet § 1454 clearly allows a defendant asserting a copyright counterclaim to remove. This discussion only highlights the fundamental inconsistency between § 1446 and § 1454.

Since the AIA is a fledgling statute, very few courts have encountered this same dilemma, but the Court has found three cases confronting this issue. See Mirowski Family Ventures, LLC v. Bos. Scientific Corp., No. WDQ–13–2627, 2014 WL 2574615 (D.Md. June 5, 2014); Andrews v. Daughtry, 994 F.Supp.2d 728 (M.D.N.C.2014); Univ. of Ky. Research Found., Inc. v. Niadyne, Inc., No. 13–16–GFVT, 2013 WL 5943921 (E.D.Ky. Nov. 5, 2013).³ All three of these courts were able to avoid using both the “initial pleading” date and the “counterclaim” date because there were documents exchanged in each case during the litigation, which reflected the defendant's knowledge of its intellectual property counterclaims, which equated to knowledge of the basis for removal under § 1454. In contrast to these three cases, the facts of this case do not include any such documents exchanged during the litigation, which indicate Tokyo Electron's knowledge of its copyright counterclaim. As such, the Court is left to decide between the date of service of the initial pleading and the date of the counterclaim, which, for the reasons described above, present their own unique sets of problems.

Instead of further laboring to make sense of Congress's illogical importation of § 1446 into § 1454, the Court need not actually resolve the issue because, even assuming the triggering date for this case is April 28 and the removal was untimely, the Court finds Tokyo Electron has sufficiently shown cause for extending the deadline until June 16 for the...