Hearst Corporation v. Shopping Center Network, Inc.

• Decision Date: 24 October 1969
• Docket Number: No. 69 Civ. 2092.,69 Civ. 2092.
• Citation: 307 F. Supp. 551
• Parties: The HEARST CORPORATION, Plaintiff, v. SHOPPING CENTER NETWORK, INC., Thomas C. Devine, Outlet Book Co., and Crown Publishers, Inc., Defendants. SHOPPING CENTER NETWORK, INC., and Thomas C. Devine, Defendants and Third-Party Plaintiffs, v. UNITED ARTISTS CORPORATION, Third-Party Defendant.
• Court: U.S. District Court — Southern District of New York

307 F. Supp. 551

The HEARST CORPORATION, Plaintiff, v. SHOPPING CENTER NETWORK, INC., Thomas C. Devine, Outlet Book Co., and Crown Publishers, Inc., Defendants.

SHOPPING CENTER NETWORK, INC., and Thomas C. Devine, Defendants and Third-Party Plaintiffs, v. UNITED ARTISTS CORPORATION, Third-Party Defendant.

No. 69 Civ. 2092.

United States District Court S. D. New York, Civil Division.

October 24, 1969.

COPYRIGHT MATERIAL OMITTED

Lipton, Brennan & Wasserstrom, New York City, for plaintiff.

Leonard I. Ackerman, New York City, for defendants Shopping Center Network, Inc., and Thomas C. Devine, Goldfarb & Chalson, New York City, of counsel.

OPINION

LASKER, District Judge.

In this action plaintiff claims, inter alia, invasion of its rights of literary property in certain original artwork used in the production of the animated motion picture "Yellow Submarine," of which it was the producer. Plaintiff moves to remand this action to the state court, pursuant to 28 U.S.C.A. § 1447(c), on the ground that "the case was removed improvidently and without jurisdiction" to this court. The case was commenced in New York State Supreme Court by service of a summons and complaint on defendants Shopping Center Network, Inc. ("Shopping Center"), Thomas C. Devine ("Devine"), Outlet Book Co. ("Outlet") and Crown Publishers, Inc. ("Crown") on February 13, 1969. That complaint contained six causes of action. Issue was joined by all the defendants. Subsequently, defendants Shopping Center and Devine served a third party summons and complaint against United Artists Corporation ("United"). An amended complaint was thereafter served on April 24, 1969.

On the basis of this amended complaint and pursuant to 28 U.S.C.A. § 1441(b), defendants Shopping Center and Devine removed the action to this court on May 14, 1969, asserting that the amended complaint contained a new cause of action founded upon a claim or right arising under the federal copyright laws and that this court therefore had original and exclusive jurisdiction thereof. On May 22, 1969, defendants Outlet and Crown formally joined in and consented to the removal of the action to this court. Subsequently, plaintiff made the instant motion to remand the case to state court.

The amended complaint sets forth seven causes of action. The first cause of action substantially alleges that plaintiff is a producer of the animated motion picture "Yellow Submarine," currently in theatrical distribution in this country and abroad, said motion picture being promoted and distributed by United pursuant to agreement with plaintiff; that in producing this film, plaintiff commissioned the creation of and used a large number of original animation cells and other artwork; that at all times pertinent, plaintiff was and is the owner of said original cells and artwork; that in connection with the promotion and distribution of the film, United, for plaintiff's benefit, entered into an agreement with defendant Shopping Center dated July 16, 1968, for the use of the animation cells and artwork in a December 1968 promotion of the motion picture; that approximately 65,000 pieces of said cells and artwork were conditionally delivered by plaintiff to defendant Shopping Center pursuant to a letter dated September 19, 1968; that defendant Shopping Center, instead of providing the promotional services agreed to and for which purpose the original animation cells and artwork were conditionally delivered to it, breached in this and other ways the terms and conditions of its agreement and unlawfully sold the cells and artwork to or through defendants Outlet and Crown and other retail establishments, which retailers offered and sold said cells and artwork to the public; and that plaintiff at no time consented to said sales or received any royalties or other compensation for defendants' use of the cells and artwork.

The second and third causes of action essentially repeat the allegations of the first cause of action and charge defendants with unlawful conversion and fraud and deceit.

The fourth cause of action alleges that commencing in December 1968, defendant Shopping Center, at the direction of defendant Devine, caused the cells and artwork to be offered for sale and sold in New York City and other areas of the United States without the consent of plaintiff; that the unauthorized distribution of the cells and artwork for the purpose of sale was effected by defendants Outlet and Crown; that the cells and artwork have been sold in large numbers and defendants have received substantial sums of money therefor, no royalties or other compensation having ever been paid to plaintiff; and that prior to defendants' unauthorized publication, plaintiff's cells and artwork had never been published and thus remain the exclusive property of plaintiff.

The fifth cause of action basically repeats the allegations of the first and fourth causes of action and charges defendants with the unauthorized publication of compilations, adaptations and arrangements of plaintiff's original animation cells, thereby infringing plaintiff's right to so compile, adapt and arrange such cells. The sixth cause of action alleges, in the alternative, that if defendant Shopping Center were authorized to sell plaintiff's animation cells and artwork, it was under a duty to safeguard plaintiff's rights in that literary property by causing "proper copyright notice to be applied thereto" as required by 17 U.S.C.A. § 10 of the federal copyright law.

The seventh cause of action, after essentially repeating the allegations of the first, second and fifth causes of action, charges that prior to November 12, 1968, plaintiff adopted the title "Yellow Submarine" for its animated motion picture, said motion picture having premiered in the United States on that date and having been exhibited continuously and extensively since then; that plaintiff expended substantial sums of money in advertising and publicizing both the motion picture and the fact that the motion picture was produced by plaintiff; that as a result of such advertising and publicizing, the title "Yellow Submarine" is familiarly and favorably known in the trade and in the mind of the purchasing public as indicating the origin of the motion picture in plaintiff; that defendants adopted and used the designation "Yellow Submarine" on and to denominate the source of the unauthorized arrangements, adaptations and compilations of animation cells which defendants have sold to the general public; that said animation cells never appeared so arranged, compiled and adapted in the motion picture "Yellow Submarine"; and that said use by defendants has caused "confusion and deception of the trade and the public and has led them to erroneously rely upon and associate the title YELLOW SUBMARINE as used by defendants with the plaintiff and erroneously to believe that the unauthorized compilations, adaptations and arrangements of said original animation cells are either manufactured or sponsored by the plaintiff or are being placed on the market with the consent and authority of the plaintiff, and as a result the public has been induced to purchase said unauthorized adaptations, arrangements and compilations of the said original animation cells and to associate plaintiff therewith."

Plaintiff prays for preliminary and permanent injunctive relief, damages in the sum of $3,500,000 and equal punitive damages, an accounting of defendants' profits, the return of all remaining artwork and cells or combinations, adaptations or arrangements thereof to plaintiff, and the delivery up for destruction of all covers, labels, signs, prints, packages and wrappers bearing the title "Yellow Submarine" thereon.

Preliminarily, it should be noted that, in general, under 28 U.S.C.A. § 1446(b), as amended, removability of an action is to be determined as of the time the removal petition is filed as it relates to plaintiff's initial pleading. This subsection also provides, however, that:

"If the case stated by the initial pleading is not removable, a petition for 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."

Therefore, that "a case not removable when commenced may afterwards become removable is settled" law. Great Northern Ry. Co. v. Alexander (Hall's Adm'r), 246 U.S. 276, 280, 38 S.Ct. 237, 239, 62 L.Ed. 713 (1918). As the Fifth Circuit has stated, "the authorities are overwhelming that, though a defendant has submitted himself to state court jurisdiction on one cause of action, this does not prevent his removing the cause when an entirely new and different cause of action is filed." Cliett v. Scott, 233 F.2d 269, 271 (5th Cir. 1956). Thus, while the defendants in the instant case apparently consented to the jurisdiction of the state court over the six causes of action included in the original complaint, when plaintiff voluntarily amended its complaint to include an entirely new seventh cause of action the defendants' right to remove revived.

The single question here is whether this court has jurisdiction of this suit as one arising under the Constitution and laws of the United States. Plaintiff contends and defendants nowhere deny that the first six causes of action in the amended complaint constitute traditional common law actions for breach of contract, conversion, fraud and deceit, infringement of common law copyright by unauthorized publication, infringement of common law copyright by unauthorized arrangement, adaptation and compilation, and subsequent publication of plaintiff's literary property, and, alternatively, breach of implied contract, respectively, and as such fall clearly within the jurisdiction of the state court. The jurisdictional dispute, however, derives from the seventh cause of action. Plaintiff...