Link Telecommunications, Inc. v. Sapperstein, No. CIV. H-00-2101.

• Decision Date: 08 November 2000
• Docket Number: No. CIV. H-00-2101.
• Citation: 119 F.Supp.2d 536
• Parties: LINK TELECOMMUNICATIONS, INC. Plaintiff v. Mark SAPPERSTEIN, et al. Defendants
• Court: U.S. District Court — District of Maryland

119 F.Supp.2d 536

LINK TELECOMMUNICATIONS, INC. Plaintiff v. Mark SAPPERSTEIN, et al. Defendants

No. CIV. H-00-2101.

United States District Court, D. Maryland.

November 8, 2000.

Patricia Nimmerrichter Drummond, Law Office, Upper Marlboro, MD, William R. Voltz, Washington, DC, for Link Telecommunications, Inc.

Kathleen M. McDonald, Kerr McDonald, LLP, Baltimore, MD, Christina Isabel Flores, Kerr, McDonald, LLP, Baltimore, MD, for Mark Sapperstein, Shore Communications, West Shore Communications, Inc., 28 Walker Associates, LLC.

MEMORANDUM OPINION

ALEXANDER HARVEY, II, District Judge.

Plaintiff Link Telecommunications, Inc. ("Link") is a Maryland corporation which does technical and business consulting work for the wireless communications industry. On August 5, 1999, Link filed a nine count complaint in the Circuit Court for Anne Arundel County ("the State Court"). Link Telecommunications, Inc. v. Sapperstein, et al., Case No. C-1999-56827 (Cir. Ct. for Anne Arundel County). Six defendants were named in the complaint, as follows: Mark Sapperstein, Shore Communications, West Shore Communications, Inc., 28 Walker Associates, LLC, Jay Winer and Communications, Inc.¹

It is alleged in the complaint that Link engaged in a series of transactions and discussions with the defendants regarding Link's business plan for a new microwave communications system to serve an area from Ocean City through Salisbury and into the Baltimore area. According to Link, it was led to believe throughout these discussions that it would enter into a business partnership with the defendants in order to jointly develop and manage the new network. Link claims that instead the defendants misappropriated and wrongly converted and used its business plan for their own benefit without ever compensating Link.

On July 11, 2000, four of the defendants filed in this Court a Notice of Removal, alleging that plaintiff's claims in this case arise under the federal Copyright Act, 17 U.S.C. § 102(a).² Presently pending in the case is a motion to remand and an amended motion to remand filed by plaintiff Link.³ Memoranda in support of and in opposition to plaintiff's amended motion to remand have been filed by the parties.⁴

The Court has now had an opportunity to review the pleadings and memoranda, including pleadings filed by the parties in the State Court. No hearing is deemed necessary. See Local Rule 105.6. For the reasons stated herein, plaintiff's amended motion to remand will be granted.

I State Court Procedural History

On October 13, 1999, defendants filed in the State Court a motion to dismiss plaintiff's complaint primarily on the ground that "the claims in the Complaint are necessarily preempted by either the Federal Copyright Act of 1976, or by the Maryland Uniform Trade Secrets Act." Before the State Court had ruled on that motion, Link filed an amended complaint on January 14, 2000.⁵ On January 27, 2000, the defendants filed a motion to dismiss the amended complaint based on essentially the same grounds asserted in their original motion to dismiss.

On May 1, 2000, oral argument was heard on defendants' motion to dismiss before Judge Michael E. Loney of the Circuit Court for Anne Arundel County. On May 4, 2000, Judge Lonely issued a Memorandum Opinion granting defendants' motion to dismiss Counts VI and VII of the amended complaint, but denying defendants' motion to dismiss the other Counts. The Court specifically denied defendants' motion to dismiss the amended complaint on the ground of preemption, stating:

A justiciable controversy clearly exists between the parties concerning the alleged conversion of plaintiff's proposal and ideas. Moreover, a factual dispute exists as to whether plaintiff's "proposal" was a tangible medium sufficient to bring it under the jurisdiction of the Federal Copyright Act. (Slip op. at 5).

Thereafter, on June 14, 2000, defendants completed the taking of the deposition of Link's President, George Chamberlain.⁶ Defendants' Notice of Removal was filed in this Court on July 11, 2000. According to defendants, the Notice of Removal was timely filed under 28 U.S.C. § 1446(b) because it occurred within thirty days of the date of Chamberlain's deposition.

II

Applicable Principles of Law

(a) Jurisdiction

"At the core of the federal judicial system is the principle that the federal courts are courts of limited jurisdiction." Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir.1979). Federal courts "possess only that power authorized by Constitution and statute, which is not to be expanded by judicial decree. It is to be presumed that a cause lies outside this limited jurisdiction, and the burden of establishing the contrary rests upon the party asserting jurisdiction." Kokkonen v. Guardian Life Ins. Co. of America, 511 U.S. 375, 377, 114 S.Ct. 1673, 128 L.Ed.2d 391 (1994).

Pursuant to 28 U.S.C. § 1331, "[t]he district courts ... have original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States." Under 28 U.S.C. § 1441(a), "any civil action brought in a State court of which the district courts of the United States have original jurisdiction, may be removed by the defendant or the defendants, to the district court of the United States for the district and division ... where such action is pending." Accordingly, an action filed in a state court that presents a question arising under federal law may be removed to federal district court "without regard to the citizenship or residence of the parties."

In order to determine if an action arises under federal law, a court must apply the well-pleaded complaint rule. Caterpillar, Inc. v. Williams, 482 U.S. 386, 392, 107 S.Ct. 2425, 96 L.Ed.2d 318 (1987). This rule "provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiff's properly pleaded complaint." Id. Since "[t]he well-pleaded complaint rule applies to the original jurisdiction of the district courts as well as to their removal jurisdiction," Franchise Tax Bd. of Cal. v. Construction Laborers Vacation Trust for S. Cal., 463 U.S. 1, 10 n. 9, 103 S.Ct. 2841, 77 L.Ed.2d 420 (1983), a plaintiff "may avoid federal jurisdiction by exclusive reliance on state law" in pleading its case. Caterpillar, Inc., 482 U.S. at 392, 107 S.Ct. 2425.

Federal preemption is generally a defense to a plaintiff's action, and ordinarily does not appear on the face of a well-pleaded complaint. Metropolitan Life Ins. Co. v. Taylor, 481 U.S. 58, 63, 107 S.Ct. 1542, 95 L.Ed.2d 55 (1987). In certain circumstances, however, "the pre-emptive 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.'" Caterpillar, Inc., 482 U.S. at 393, 107 S.Ct. 2425 (quoting Metropolitan Life Ins. Co., 481 U.S. at 65, 107 S.Ct. 1542). This so-called complete preemption occurs when "an area of state law has been [so] completely pre-empted, [that] any claim purportedly based on th[e] pre-empted state law is considered ... a federal claim." Id. When state-law claims are completely preempted by federal law, the plaintiff's complaint arises under federal law and removal is proper. Metropolitan Life Ins. Co., 481 U.S. at 67, 107 S.Ct. 1542.

(b) Copyright Law and Federal Preemption

Section 301(a) of the Copyright Act states in pertinent part:

[A]ll legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 [of the Copyright Act] in works of authorship that are fixed in a tangible medium of expression and come within the subject matter of copyright as specified by sections 102 and 103 ... are governed exclusively by this title.

17 U.S.C. § 301(a).

Thus, § 301(a) preempts state-law claims if "the work is within the scope of the `subject matter of copyright' as specified in 17 U.S.C. §§ 102, 103" and "the rights granted under state law are equivalent to any exclusive rights within the scope of federal copyright as set forth in 17 U.S.C. § 106." Ehat v. Tanner, 780 F.2d 876, 878 (10th Cir.1985).

It is well established that the scope of preemption under § 301 is not the same as the scope of copyright protection, and the former is in fact broader than the latter. United States ex rel Berge v. Board of Trustees of Univ. of Alabama, 104 F.3d 1453, 1463 (4th Cir.1997). Courts have made clear that, although the Copyright Act does not protect mere ideas alone, the scope of § 301 preemption includes state law claims with respect to uncopyrightable as well as copyrightable material, precisely because if the law were otherwise, "states would be free to expand the perimeters of copyright protection to their own liking, on the theory that preemption would be no bar to state protection of material not meeting federal statutory standards." Harper & Row, Publishers, Inc. v. Nation Enterprises, 723 F.2d 195, 200 (2d Cir. 1983).

Section 106 of the Copyright Act provides a copyright owner with the exclusive right to: "(1) reproduce the copyrighted work; (2) prepare derivative works; (3) distribute copies of the work by sale or otherwise; and, with respect to certain artistic works, (4) perform the work publicly; and (5) display the work publicly." Computer Assocs. Int'l v. Altai, Inc., 982 F.2d 693, 716 (2d Cir.1992). In order to ascertain whether a specific state cause of action involves a right equivalent to one of those identified in § 106 of the Copyright Act, reference must be made to the elements of the state cause of action. Trandes Corp. v. Guy F. Atkinson Co., 996 F.2d 655, 659 (4th Cir.1993). State law claims that infringe one of the exclusive rights contained in § 106 are preempted by § 301(a) if the right defined by state law "`may be abridged by an act which, in and of itself, would infringe one of the exclusive rights.'" Computer Assocs. Int'l, ...