Firoozye v. Earthlink Network
| Decision Date | 31 July 2001 |
| Docket Number | No. C 01-02122 CRB.,C 01-02122 CRB. |
| Citation | 153 F.Supp.2d 1115 |
| Court | U.S. District Court — Northern District of California |
| Parties | Ramin FIROOZYE, Plaintiff, v. EARTHLINK NETWORK, Defendant. |
Rod Firoozye, Palo Alto, CA, pro se.
Albert P. Bedecarre, Quinn, Emanuel, Urquhart, Oliver & Hedges, San Francisco, CA, Warrington S. Parker, III, Quinn, Emanuel, Urquhart, Oliver & Hedges, Los Angeles, CA, for Defendant.
ORDER GRANTING IN PART AND DENYING IN PART DEFENDANTS' MOTION TO DISMISS AND GRANTING PLAINTIFF'S CROSS-MOTION TO REMAND
Now before the Court are the defendants' motion to dismiss and the plaintiff's cross-motion to remand. Having carefully considered the parties' papers, and with the benefit of oral argument on July 27, 2001, the defendants' motion to dismiss is hereby GRANTED IN PART and DENIED IN PART, and the plaintiff's cross-motion to remand is hereby GRANTED.
Beginning in April 1998, the plaintiff Ramin Firoozye, operating his own business known as Wizen Software ("Wizen"),1 performed contract work for the defendant EarthLink Network, Inc., operating in California as EarthLink-Mindspring, Inc. (collectively, "EarthLink"). Prior to his association with EarthLink, Firoozye had developed a computer software program known as WebStash, which was designed to increase the speed with which an Internet user could browse a company's web site by storing frequently used media such as images or program snippets from the web site on the user's hand drive, thereby eliminating the need to download the image every time the user visits the web site. The program stores the media in the user's hard drive inside a secure browser cache area called a "stash."
As part of his work for EarthLink, Firoozye regularly submitted "crippled" versions of WebStash to EarthLink that only permitted a small number of entries inside the cache so that EarthLink could evaluate the program and decide whether to include it in a software package known as the EarthLink 5.0 CD that EarthLink was planning to distribute. In September 1999, the defendant Ranbir Chawla, EarthLink's director of web development, allegedly told the plaintiff that EarthLink had completed its evaluation of WebStash and had decided that it wanted to include the program on the EarthLink 5.0 CD. Chawla then asked the plaintiff to send an enabled version of WebStash to EarthLink right away so that the company could fully test the program and include it in the EarthLink 5.0 CD, which was scheduled for distribution shortly.
Firoozye claims that he told Chawla that he was uncomfortable sending a complete version of WebStash since EarthLink had not yet executed a formal licensing agreement with him. However, Firoozye alleges, Chawla indicated that EarthLink needed the program as soon as possible so as not to delay the production of the EarthLink 5.0 CD and expressly assured him that EarthLink would sign a license agreement before it incorporated WebStash into its software package. As a result, on September 23, 1999, the plaintiff e-mailed a fully operational version of WebStash to EarthLink. In an e-mail Firoozye sent on the same day, the plaintiff requested that EarthLink not include WebStash in the EarthLink 5.0 CD until the licensing agreement could be executed:
Ranbir also asked me to send down the non-eval *full* version of WebStash this time, meaning the one that doesn't have the 30-item limit per stash. EarthLink doesn't have a license for distributing WebStash yet, but in order to make sure you get your work done I am sending down the full version. Please make sure it doesn't make it into the final build until all licensing issues have been finalized.
Compl., Apr. 23, 2001, Ex. D. Firoozye also submitted a price list and a proposed license agreement along with the e-mail and the software. See id., Ex. B (containing the price list); id. Ex. C (containing the proposed license agreement).
EarthLink did not distribute the EarthLink 5.0 CD for several months. The plaintiff alleges that Chawla repeatedly assured him that EarthLink's software package had fallen behind schedule and that EarthLink would formalize a license agreement with him before it used WebStash in the EarthLink 5.0 CD. In June 2000, however, Firoozye received a copy of the EarthLink 5.0 CD in the mail and observed that it contained the fully enabled version of WebStash, even though EarthLink had not paid the plaintiff or entered into any license agreement with him. Moreover, EarthLink's software package did not mention the plaintiff's company or include any documentation regarding EarthLink's use of WebStash.
As a result, on April 23, 2001, the plaintiff filed the present complaint in state court, alleging that EarthLink and Chawla had effectively entered into an oral contract with Firoozye to pay him in exchange for the right to incorporate WebStash into the EarthLink 5.0 CD and that the defendants had breached that contract by including the program without paying Firoozye or obtaining a formal license. The complaint contains thirteen causes of action, including: (1) breach of contract; (2) breach of implied contract and promissory estoppel; (3) breach of contract under California Civil Code 1584; (4) a request for an accounting; (5) intentional misrepresentation and fraud; (6) negligent misrepresentation and failure to disclose; (7) misappropriation of trade secrets; (8) conversion; (9) involuntary trust of wrongful gain; (10) unjust enrichment; (11) unfair competition and unfair practices in violation of California Business & Professions Code §§ 17000 et seq.; (12) a request for declaratory relief; and (13) a request for an injunction. On May 31, 2001, the defendants removed the complaint to this Court.
The defendants have now moved to dismiss the plaintiff's complaint, asserting that all of the plaintiff's causes of action are preempted under the federal Copyright Act of 1976 ("the Copyright Act" or simply "the Act"), 17 U.S.C. §§ 101 et seq. The plaintiff has cross-moved to remand, arguing that his claims are not preempted and that this Court consequently lacks subject matter jurisdiction over his complaint. Because the plaintiff's motion implicates this Court's subject matter jurisdiction, the Court will consider the propriety of removal before evaluating the defendants' preemption arguments.
Under 28 U.S.C. section 1441(a), a civil action brought in state court over which the federal district courts have original jurisdiction may be removed to the federal district court for the district embracing the place where the action is pending. See 28 U.S.C. § 1441(a). The federal district courts have original jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. "If at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c).
A Rule 12(b)(6) motion to dismiss for failure to state a claim is viewed with disfavor and is rarely granted. See Gilligan v. Jamco Dev. Corp., 108 F.3d 246, 249 (9th Cir.1997). Under Rule 12(b)(6), a complaint should not be dismissed unless a plaintiff can prove "no set of facts in support of his claim that would entitle him to relief." Parks Sch. of Bus., Inc. v. Symington, 51 F.3d 1480, 1484 (9th Cir.1995). The court must take the non-moving party's factual allegations as true and must construe those allegations in the light most favorable to the non-moving party. See id. The court must also draw all reasonable inferences in favor of the non-moving party. See Usher v. City of Los Angeles, 828 F.2d 556, 561 (9th Cir.1987).
In the absence of diversity jurisdiction, a defendant may only remove a complaint filed in state court when "a federal question is presented on the face of the plaintiff's properly pleaded complaint." Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987); see Harris v. Provident Life & Accident Ins. Co., 26 F.3d 930, 933-34 (9th Cir.1994) (quoting Caterpillar). That rule, known as the "well-pleaded complaint rule," precludes a defendant from removing a complaint to federal court purely based on a federal defense to the plaintiff's state-law claims, "even if the defense is anticipated in the plaintiff's complaint, and even if both parties concede that the federal defense is the only question truly at issue." Caterpillar, 482 U.S. at 393, 107 S.Ct. 2425 (). Thus, where a defendant raises federal preemption as a defense to a state-law claim, that defense itself ordinarily does not raise a federal question and must be adjudicated in state court since the district court does not possess original jurisdiction.
However, there exists "an `independent corollary' to the well-pleaded complaint rule ... known as the `complete preemption' doctrine." Id. (). Under the complete preemption doctrine, where a statute enjoys "extraordinary" or "unique pre-emptive force," the presence of a preemption defense under that statute converts "an ordinary state common law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule." Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 65, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987).2 "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." Caterpillar, 482 U.S. at 393, 107 S.Ct. 2425.
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