Integrative Nutrition v. Academy of Healing Nutr.
| Decision Date | 30 January 2007 |
| Docket Number | No. 06 Civ. 4920(JGK).,06 Civ. 4920(JGK). |
| Parties | INTEGRATIVE NUTRITION, INC. d/b/a Institute for Integrative Nutrition, Plaintiff, v. ACADEMY OF HEALING NUTRITION; Holistic Health and Healing Nutrition, L.L.C. d/b/a the Academy of Healing Nutrition; Roger Green; Marise Hamm; William Tara, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Arnold M. Weiss, Michael Steven Hiller, Weiss & Hiller, PC, New York, NY, for plaintiff.
Al J. Daniel, Jr., Nancy Evelyn Wolff, Cowan, DeBaets, Abrahams & Sheppard LLP, New York, NY, for defendants.
The defendants move pursuant to Federal Rule of Civil Procedure 12(b)(6) to dismiss the plaintiffs complaint on the grounds that the claims are preempted by Section 301(a) of the Copyright Act, 17 U.S.C. § 301(a), or other federal law. The plaintiff, Integrative Nutrition, Inc., initially brought this action in state court claiming that the defendants had fraudulently obtained and illegally used the plaintiffs "intellectual property," which the plaintiff allegedly owned in aspects of its holistic nutrition education program. In the complaint, the plaintiff asserts state law causes of action for unfair competition, fraud and misrepresentation, and trespass. The defendants1 removed the action to federal court, asserting that the Court has original jurisdiction of the action pursuant to 28 U.S.C. §§ 1331 and 1338 because the state law claims are preempted by the Copyright Act. Shortly thereafter, the defendants filed the present motion to dismiss, also on preemption grounds.
The plaintiff has filed a cross-motion to remand the action to state court for lack of subject matter jurisdiction and, in the alternative, for leave to amend the complaint. The plaintiff argues that its state law claims are not preempted, and therefore this Court lacks subject matter jurisdiction.
Both motions thus turn on the pivotal question of whether any or all of the plaintiffs claims are preempted by Section 301(a) of the Copyright Act or other federal law. For the reasons set forth below, the Court finds that only the plaintiffs first cause of action for unfair competition is preempted and must be dismissed.
For the purposes of the pending motions, the following facts alleged in the complaint are accepted as true. The plaintiff Integrative Nutrition is a New York corporation with its principal place of business in New York. (Compl. ¶¶ 1-2.) The plaintiff, among other things, operates an institute with a program dedicated to educating and enlightening students and improving health and wellness on physical, emotional, sexual, and spiritual levels. (Id. ¶ 4.) The plaintiff teaches dietary perspectives ranging from ancient traditions of macrobiotics, ayurveda, and traditional Chinese medicines to the current trend toward raw foods, live foods, juicing, and fasting. (Id. ¶ 5.) This teaching emphasizes the multicultural, political, and ecological dimensions of diet and the world food supply. (Id.)
As part of its business, the plaintiff has devised and used a "business formula" designed to increase enrollment, reduce administrative costs and inconvenience, work with alumni, and streamline the institute's operations. (Compl. ¶ 8.) Part of this business formula includes original marketing and promotional materials, such as a website and promotional brochure; retention of visiting lecturers; and a flexible tuition payment program, which provides tuition discounts based on factors such as travel distance and enrollment of friends and family members. (Id.) These aspects of the plaintiffs business, among other things, constitute what the plaintiff has deemed its "protectible intellectual property." (See id. ¶¶ 22-27.)
The defendants, all allegedly citizens of New York, consist of a sole proprietorship, the Academy of Healing Nutrition ("AHN"), a limited liability company, Holistic Health and Healing Nutrition, LLC, and individuals alleged to be the owners and founders of these companies. (See Compl. ¶¶ 9-21.) In June 2005, the individual defendants, Roger Green and Marise Hamm, attended an orientation for prospective students of Integrative Nutrition. (Id. ¶ 28.) Green and Hamm represented themselves as prospective students and did not identify themselves as competitors. (Id. ¶ 29.) However, according to the plaintiff, these defendants used the June orientation to gain access to Integrative Nutrition's intellectual property. (Id. ¶¶ 30-32.) Green, Hamm, and the third named individual defendant, William Tara, then allegedly decided to exploit the plaintiff's intellectual property "for the purpose of creating and operating AHN and Holistic Health as a competitive business, based, not upon their original thinking" but upon Integrative Nutrition's intellectual property. (Id. ¶ 34.) The individual defendants created AHN shortly thereafter. (Id. ¶ 35.) The defendant Holistic Health and Healing was formed as a limited liability company on January 11, 2006. (Id. ¶ 41.)
According to the plaintiff, the defendants launched a website "that plagiarized the Integrative Website, by copying text and language and using similar or the same formats, style, quotes, concepts, fonts, hypertext placement, banner location, and other qualities as those included in Integrative Website and Integrative Brochure."2 (Compl. ¶ 37.) The plagiarized website incorporated in full the plaintiffs flexible tuition program. (Id. ¶ 38.) The defendants also attempted to hire Integrative Nutrition's former managing director, allegedly to obtain additional access to the plaintiff's intellectual property. (Id. ¶ 36.)
Based on these events, the plaintiff asserts three state law causes of action against the defendants. First, the plaintiff claims that the defendants' "unauthorized use of Integrative's Intellectual Property constitutes common law unfair competition." (Compl. ¶ 47.) Specifically, according to the plaintiff, "[t]he similarities between Integrative's Intellectual Property and the Plagiarized Website are so striking that there is a substantial likelihood that Defendants' use of Integrative's Intellectual Property will cause confusion among the public." (Id. ¶ 45.) For the unfair competition claim, the plaintiff seeks compensatory and punitive damages and a permanent injunction against the defendants. (Id. ¶¶ 49-52.) Second, the plaintiff claims that the defendants obtained access to Integrative Nutrition's intellectual property through fraud and misrepresentation and again seeks relief in the form of compensatory and punitive damages and a permanent injunction. (See id. ¶¶ 53-63.) Third, the plaintiff claims that Green and Hamm trespassed on Integrative Nutrition's premises and obtained the plaintiff's intellectual property as a result of the trespass. (Id. ¶ 65.) For this third cause of action, the plaintiff seeks only compensatory and punitive damages. (Id. ¶¶ 69-70.)
The threshold question is whether the Court has subject matter jurisdiction over the plaintiffs claims. This issue turns on whether the plaintiffs claims are preempted by the Copyright Act. Preemption does not necessarily confer federal jurisdiction. Briarpatch Ltd., L.P. v. Phoenix Pictures, Inc., 373 F.3d 296, 304 (2d Cir.2004). This is because preemption is generally raised as a defense to the plaintiffs suit and thus does not appear on the face of a well-pleaded complaint. Id. However, the "complete preemption" doctrine provides an exception to this rule. Complete preemption arises where "the preemptive force of federal law is so `extraordinary' that it converts an ordinary state common-law complaint into one stating a federal claim for purposes of the well-pleaded complaint rule." Id. The complete preemption doctrine applies "to any federal statute that both preempts state law and substitutes a federal remedy for that law, thereby creating an exclusive federal cause of action." Id. at 305. The doctrine applies to state law claims preempted by the Copyright Act. Id. Therefore, based on the complete preemption doctrine, "district courts have jurisdiction over state law claims preempted by the Copyright Act." Id.
If at least one claim falls within the district court's copyright jurisdiction, the district court may, if appropriate, exercise supplemental jurisdiction over any remaining state law claims pursuant to 28 U.S.C. § 1367(a). Id. at 308. However, a district court is not required to exercise supplemental jurisdiction over those claims. Rather, a district court retains the power to decline to exercise supplemental jurisdiction based on the factors explained in 28 U.S.C. § 1367(c). Id.
Once a court determines that a state law claim is preempted by the Copyright Act, the court's role is not to determine whether the plaintiff has produced sufficient evidence to state a copyright claim. Id. "[T]he complete preemption doctrine ensures that a federal forum will be available to decide that a plaintiff's claim is preempted; but it does not allow a federal court to decide claims that have not actually been pleaded." Id. at 309. If the claim is preempted and the court thereby assumes jurisdiction over the claim, the court must simply dismiss the state law claim for failing to state a cause of action. Id. Preemption analysis is thus the key both to determining whether the Court has subject matter jurisdiction over this matter and whether the plaintiff has stated a claim upon which relief can be granted.
The Copyright Act preempts state law if the following requirements are met: (1) the particular work to which the state law claim applies falls within the type of works protected by the Copyright Act in 17 U.S.C. §§ 102 and 103; and (2) the state law claims seeks to vindicate "legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by [17 U.S.C. §] 106." See 17 U.S.C. § 301(a); Briarpatch, 373 F.3d at 305; Nat'l Basketball...
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