Duncan v. Stuetzle, 94-55598

CourtUnited States Courts of Appeals. United States Court of Appeals (9th Circuit)
Citation76 F.3d 1480
Docket NumberNo. 94-55598,94-55598
Parties, 96 Cal. Daily Op. Serv. 1125, 96 Daily Journal D.A.R. 1921 Nancy DUNCAN, individually and d/b/a "Footsie Wootsie Machine Rentals"; Just Vibrations International, Inc., a California corporation, Plaintiffs-Appellants, v. Al STUETZLE; Lexington Scenery & Props, a California corporation; Ken Acton; Amuze, Inc., Defendants-Appellees.
Decision Date21 February 1996

Andrew N. Chang, Kelly, Herlihy & Bane, San Francisco, California, for plaintiffs-appellants.

Steven J. Adamski, Esner, Higa & Chang, San Francisco, California, for defendants-appellees.

On Appeal from the United States District Court for the Central District of California, Manuel L. Real, Chief Judge, Presiding.

Before: POOLE, BOOCHEVER, and O'SCANNLAIN, Circuit Judges.

O'SCANNLAIN, Circuit Judge:

In this fifth round of litigation over rights to a foot massage device, we explore the boundaries of state and federal jurisdiction over trademark infringement.


Nancy Duncan, and her company, Just Vibrations International, Inc., produce and distribute "Footsie Wootsie" foot massage machines designed in the shape of a chair. In early 1990, Al Stuetzle met with Duncan, allegedly to discuss his interest in either purchasing Duncan's business, becoming her exclusive distributor, or leasing one or all of the "Footsie Wootsie" units. Duncan alleges that, during the course of the discussions, she turned over proprietary information on both the existing "Footsie Wootsie," and on a future model to be shaped like a "log" or "barrel," to Stuetzle. Both parties agree that she also asked him to sign a nondisclosure agreement. Stuetzle refused to sign the agreement, apparently because it included a non-competition clause.

On March 5, 1990, allegedly because of Stuetzle's refusal to sign the agreement, Duncan broke off the discussions. She also threatened litigation in federal court if Stuetzle used the proprietary information for his own benefit. Duncan alleges that in September 1990 she discovered that Alston Attractions, Inc., a corporation in which Stuetzle was a principal, had begun leasing foot massage chairs similar in design to her existing "Footsie Wootsie" and her planned "barrel" model.

On November 9, 1990, Duncan filed a complaint against Stuetzle in California state court. The complaint, not a model pleading, generally outlined three causes of action: (1) misappropriation of proprietary information, (2) unfair competition, and (3) civil conspiracy (later dropped after discovery). 1 The relief

Duncan requested included a temporary restraining order, preliminary and permanent injunctions, and compensatory and punitive damages. Although the face page of the complaint cited several California statutes, the complaint did not specify whether the claims were based on federal or state law, nor statutory or common law

On November 29, 1990, Stuetzle timely removed the action, on the grounds that Duncan had alleged "patent infringement" claims over which the district court had original jurisdiction under 28 U.S.C. §§ 1331 and 1338. Duncan did not initially object to the exercise of federal jurisdiction. On June 11, 1991, however, one week before trial, she moved to remand the case to state court, arguing that the complaint did not allege patent infringement and that the district court lacked subject matter jurisdiction. Although Stuetzle argues otherwise, Duncan's motion to remand the case was timely (see infra ).

The district court denied the motion to remand and entered summary judgment for Stuetzle. The court also found that Duncan's claim for misappropriation was made in bad faith and awarded more than $72,000 in attorneys' fees and costs to Stuetzle. Duncan timely and separately appealed each of the court's rulings to this court, which consolidated the appeals and transferred the case, under 28 U.S.C. § 1631, to the U.S. Court of Appeals for the Federal Circuit for a determination of whether the district court properly exercised jurisdiction under federal patent law.

The Federal Circuit reversed the district court's jurisdictional finding. Duncan v. Stuetzle, 16 F.3d 420, 1993 WL 514462 (Fed.Cir. Dec. 13, 1993) (unpublished disposition). The court applied the well-pleaded complaint rule and determined that Duncan had not alleged a claim for patent infringement. Rather than dismissing the case, however, the court remanded to the district court for a determination of whether the complaint alleged trademark infringement under the Lanham Act, 15 U.S.C. §§ 1051-1127. 2

On remand, the district court found that Duncan's complaint did state a claim arising under the Lanham Act. 3 The court thus reaffirmed its previous denial of Duncan's motion to remand, and reinstated its prior orders granting summary judgment, attorneys' fees and costs to Stuetzle. Duncan timely appealed to this court. 4


The removal statute on which Stuetzle relies, 28 U.S.C. § 1441(b), states in relevant part that

[a]ny civil action of which the district courts have original jurisdiction founded on a claim or right arising under the Constitution, treaties or laws of the United States shall be removable without regard to the citizenship or residence of the parties.

Because of the "Congressional purpose to restrict the jurisdiction of the federal courts on removal," Shamrock Oil & Gas Corp. v. Sheets, 313 U.S. 100, 108, 61 S.Ct. 868, 872, 85 L.Ed. 1214 (1941), the statute is strictly construed, id. at 108-09, 61 S.Ct. at 872, and federal jurisdiction "must be rejected if there is any doubt as to the right of removal in the first instance." Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir.1992) (citation omitted). Stuetzle, as one of the original defendants, has the burden of establishing that removal was proper. Harris v. Provident Life and Accident Ins. Co., 26 F.3d 930, 932 (9th Cir.1994) (quotations and citations omitted).

An action filed in state court may be removed only if the district court could have exercised jurisdiction over the action if originally filed there. Caterpillar Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 2429, 96 L.Ed.2d 318 (1987). Stuetzle argues on appeal that Duncan's complaint alleged trademark infringement claims over which the district court had jurisdiction under 28 U.S.C. § 1338 5 and 15 U.S.C. § 1121. 6 In order for either of these statutes to be applicable, and for the district court's exercise of jurisdiction to have been proper, Stuetzle must prove that Duncan's complaint alleged at least one claim "arising under" the Lanham Act (i.e. under federal trademark law).

Most of the seminal cases which have addressed the issue of whether a claim is one "arising under" federal law have done so while interpreting 28 U.S.C. § 1331, the general federal question statute ("The district courts shall have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States."). See, e.g., Merrell Dow Pharmaceuticals Inc. v. Thompson, 478 U.S. 804, 106 S.Ct. 3229, 92 L.Ed.2d 650 (1986); Franchise Tax Board of the State of California v. Construction Laborers Vacation Trust for Southern California, 463 U.S. 1, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983). These cases have held that in order for a complaint to state a claim "arising under" federal law, it must be clear from the face of the plaintiff's well-pleaded complaint that there is a federal question. Oklahoma Tax Comm'n v. Graham, 489 U.S. 838, 840-41, 109 S.Ct. 1519, 1520-21, 103 L.Ed.2d 924 (1989) (per curiam); Franchise Tax Board, 463 U.S. at 9-14, 103 S.Ct. at 2846-49; Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 152, 29 S.Ct. 42, 43, 53 L.Ed. 126 (1908); Redwood Theatres, Inc. v. Festival Enterprises, Inc., 908 F.2d 477, 479 (9th Cir.1990). In addition, the plaintiff is the "master" of her case, and if she can maintain her claims on both state and federal grounds, she may ignore the federal question, assert only state claims, and defeat removal. Id. (citation, quotation omitted); Ultramar America, Ltd. v. Dwelle, 900 F.2d 1412, 1412-14 (9th Cir.1990).

Because section 1338 contains the same "arising under" language as appears in section 1331, the Supreme Court has held that the principles outlined in the section 1331 cases are equally applicable to section 1338. Christianson v. Colt Industries Operating Corp., 486 U.S. 800, 808, 108 S.Ct. 2166, 2173-74, 100 L.Ed.2d 811 (1988) ("linguistic consistency" demands interpreting identical language in different statutes similarly). The Court's logic mandates application

of these same standards to 15 U.S.C. § 1121 (cases "arising under" the Lanham Act)

Christianson also distilled these basic principles into a single two-pronged test. Under that test (as applied to this case), federal jurisdiction extends

only to those cases in which a well-pleaded complaint establishes either that federal [trademark] law creates the cause of action or that the plaintiff's right to relief necessarily depends on resolution of a substantial question of federal [trademark] law, in that [federal trademark] law is a necessary element of one of the well-pleaded claims.

Christianson, 486 U.S. at 808-09, 108 S.Ct. at 2174 (1988) (citations omitted). In addition, in order to satisfy the second prong of this test it is

[not] necessarily sufficient that a well-pleaded claim alleges a single theory under which resolution of a [federal trademark] law question is essential.... [A] claim supported by alternative theories in the complaint may not form the basis for § 1338(a) jurisdiction unless [federal trademark] law is essential to each of those theories.

Id. at 810, 108 S.Ct. at 2174.


Applying the Christianson test to Duncan's complaint, we conclude that it does not state a claim arising under the Lanham Act.


Because the face of Duncan's complaint does not clearly establish that the ...

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