Long v. Cordain, Court of Appeals No. 13CA1502

• Citation: 343 P.3d 1061, 2014 COA 177
• Case Date: December 31, 2014
• Court: Court of Appeals of Colorado

343 P.3d 1061

2014 COA 177

Wiley LONG, Plaintiff–Appellant

v.Loren CORDAIN;

Paleo Diet Enterprises, LLC ;

and The Paleo Diet, LLC, Defendants–Appellees.

and

Wiley Long, Plaintiff–Appellee

v.Loren Cordain and The Paleo Diet, LLC, Defendants–Appellants.

Court of Appeals No. 13CA1502

Court of Appeals No. 14CA0054

Colorado Court of Appeals, Div. VI.

Announced December 31, 2014

Coan, Payton & Payne, LLC, Walter A. Winslow, Fort Collins, Colorado, for Plaintiff–Appellee

Ringenberg & Beller, P.C., Richard D. Beller, Fort Collins, Colorado; Armstrong Teasdale, LLP, Charles W. Steese, Denver, Colorado, for Defendants–Appellants

Opinion

Opinion by JUDGE FOX

¶ 1 In this consolidated appeal, plaintiff, Wiley Long, challenges the district court's order dismissing his lawsuit against defendants, Loren Cordain, Paleo Diet Enterprises, LLC, and The Paleo Diet, LLC (collectively Cordain) for lack of subject matter jurisdiction (court of appeals case number 13CA1502). Cordain challenges the district court's order denying his request for attorney fees and costs incurred in defending the action (court of appeals case number 14CA0054). We now reverse the district court's order dismissing the case, reinstate the action, and remand the case for additional proceedings. We vacate the district court's order concerning attorney fees.

I. Factual Background

¶ 2 Long and Cordain met at Colorado State University, where Long was a graduate student and Cordain was a professor. Cordain, a leading proponent of the Paleo Diet, was teaching a course called Evolutionary Basis for Health and Fitness, in which Long enrolled. Long and Cordain bonded over their shared interest in the Paleo Diet.

¶ 3 By the time he and Long met, Cordain had already published two books and several articles on the Paleo Diet. He also owned and operated a website, www.thepaleodiet.com, dedicated to the diet. But Long persuaded Cordain that he could do more to commercially market the Paleo Diet, and the two men eventually decided to form a company, Paleo Diet Enterprises, LLC (PDE), dedicated to that purpose. They entered into a Limited Liability Company Agreement (Agreement), which provided:

The business of [PDE] shall be to develop a full range of products and services, including without limitation, books, newsletters, consulting services, [and] food products, based upon the Paleo Diet ... and to engage in any and all lawful business activities and other lawful actions in furtherance of said Business.

To help the company achieve its stated purpose, Cordain granted PDE “[a]n exclusive worldwide license to develop, market and sell products and services based upon the research and prior written work of Loren Cordain relating to all of the nutritional and dietary information and know-how generally described as the ‘Paleo Diet’ ” (License).

¶ 4 A few years later, Long and Cordain had a falling out. Cordain dissolved PDE and formed a new company, The Paleo Diet, LLC (TPD), without Long.

II. Procedural History

A. Case Number 13CA1502

¶ 5 Shortly after Cordain formed TPD, Long sued Cordain. Long's complaint stated several state-law causes of action: breach of contract, breach of fiduciary duty, civil theft, and a request for an accounting.

¶ 6 Cordain moved to dismiss the complaint, arguing that the district court could not decide Long's claims without resolving complex issues of copyright law. Therefore, Cordain asserted, the case arose under federal copyright law, over which federal courts have exclusive jurisdiction. See 28 U.S.C. § 1338(a) (2012). The district court agreed and granted Cordain's motion. Long filed an appeal.

B. Case Number 14CA0054

¶ 7 After the case was dismissed, Cordain requested attorney fees and court costs incurred in defending the action. The district court initially granted Cordain's request, but reversed its attorney fee order after Long moved for reconsideration. Cordain appealed.

C. Concurrent Federal Action

¶ 8 While these appeals were pending, Long filed a separate action in federal court raising several claims that were substantially similar to the claims asserted in this action (case number 1:13–cv–03475–RM–BNB). We ordered the parties to provide supplemental briefing concerning the status of the federal case. Specifically, we asked the parties (1) whether the claims asserted in the federal case overlap with the claims asserted in this case; (2) whether the federal court hearing the case had issued any decision affecting the claims asserted in the state case and related appeals; and (3) why this appeal should not be stayed pending resolution of the federal case. Having reviewed the parties' supplemental briefs, we conclude that a stay is not appropriate. We therefore address each appeal in turn.

III. Motion to Dismiss

¶ 9 We first address the district court's order dismissing Long's claims against Cordain for lack of subject matter jurisdiction.

A. Standard of Review

¶ 10 A court may decide only those cases over which it has subject matter jurisdiction. See Horton v. Suthers, 43 P.3d 611, 615 (Colo.2002) (as modified on denial of rehearing March 4, 2002). Subject matter jurisdiction cannot be conferred by waiver or consent of the parties; lack of subject matter jurisdiction requires dismissal. See People ex rel. Strodtman, 293 P.3d 123, 126–27 (Colo.App.2011) ; Herr v. People, 198 P.3d 108, 111 (Colo.2008). A plaintiff bears the burden of establishing the court's subject matter jurisdiction. Medina v. State , 35 P.3d 443, 452 (Colo.2001).

¶ 11 “In reviewing the district court's order of dismissal for lack of subject matter jurisdiction ... we apply a mixed standard of review.” Bd. of Cnty. Comm'rs v. City of Black Hawk, 2012 COA 172, ¶ 10, 292 P.3d 1172. We review the court's factual findings for clear error and its legal conclusions de novo. Id .

B. Applicable Law

¶ 12 The Copyright Act, 17 U.S.C. §§ 101 to 122 (2012), broadly precludes states from adjudicating copyright disputes or legislating in the area of copyright law. The federal courts have exclusive jurisdiction over “any claim for relief arising under any Act of Congress relating to ... copyrights.” 28 U.S.C. § 1338(a). The purpose of this broad preemption is to establish a uniform national system for protecting and enforcing intellectual property rights. See Daboub v. Gibbons, 42 F.3d 285, 288 (5th Cir.1995) (“[Seventeen U.S.C. s]ection 301(a) accomplishes the general federal policy of creating a uniform method for protecting and enforcing certain rights in intellectual property by preempting other claims.”); see also Peckarsky v. Am. Broad. Co., Inc., 603 F.Supp. 688, 695 (D.D.C.1984) (“The purpose of this broad statutory pre-emption scheme is to further the Copyright Act's goal of encouraging contributions to recorded knowledge by precluding the use of state law to prevent the copying of material that Congress has determined should be left in the public domain.”); Klekas v. EMI Films, Inc., 150 Cal.App.3d 1102, 198 Cal.Rptr. 296, 300 (1984) (“Congress, by passing the [Copyright] Act, intended ... to adopt a single system of federal statutory copyright.”).

¶ 13 A case “arises under” federal copyright law, for purposes of subject matter jurisdiction, “if and only if the complaint is for a remedy expressly granted by the [Copyright] Act ... or asserts a claim requiring construction of the [Copyright] Act.” T.B. Harms Co. v. Eliscu, 339 F.2d 823, 828 (2d Cir.1964) ; 1mage Software, Inc. v. Reynolds & Reynolds Co., 459 F.3d 1044, 1049 (10th Cir.2006) (adopting the Second Circuit's approach to determining whether a case arises under copyright law). Suits for copyright infringement, for example, arise under the Copyright Act. T.B Harms Co., 339 F.2d at 828. The mere fact that a case involves a copyright, however, does not necessarily mean that a state court lacks jurisdiction to hear it. Jasper v. Bovina Music, Inc., 314 F.3d 42, 46 (2d Cir.2002).

¶ 14 State courts “can determine matters of state law, the subject of which is a copyright.” Siegel v. Time Warner, Inc., 496 F.Supp.2d 1111, 1130 (C.D.Cal.2007). For example, a state court may resolve a dispute over copyright ownership if the issue turns on the interpretation of a contract. Jasper, 314 F.3d at 46. Moreover, state courts “may pass on the validity of a copyright if it is necessary to do so in the course of deciding a case over which they do have jurisdiction.” Knickerbocker Toy Co., Inc. v. Faultless Starch Co., 467 F.2d 501, 509 (C.C.P.A.1972).

The possibility that a case may, at some point, raise some question under the copyright laws does not divest the state court of subject matter jurisdiction over the case. Cresci v. Music Publishers Holding Corp., 210 F.Supp. 253, 260 (S.D.N.Y.1962).

¶ 15 To determine whether a case arises under federal copyright law, courts generally examine the allegations in the plaintiff's complaint. Basset t v. Mashantucket Pequot Tribe, 204 F.3d 343, 347 (2d Cir.2000) ; accord 1mage Software, 459 F.3d at 1049–51. This approach is known as the “well-pleaded complaint” rule. Ultraflo Corp. v. Pelican Tank Parts, Inc., 823 F.Supp.2d 578, 584 (S.D.Tex.2011). Under the rule, if the complaint asserts only state-law causes of action, the claims do not arise under federal copyright law, and state courts have jurisdiction over the action. Id . An answer or counterclaim that raises an issue of federal copyright law cannot deprive the state of jurisdiction. Id .

¶ 16 But even a complaint that makes only state-law claims on its face may be preempted by the Copyright Act. See id . Section 301 of the Act broadly provides that legal rights “within the general scope of” copyright law or “equivalent to” copyrights are governed by the Act. 17 U.S.C. § 301(a) (2012). Thus, where a complaint raises only state-law causes of action, but the language of federal copyright law demonstrates clear congressional intent to preempt those particular state-law claims, the claims may be treated as copyright claims for jurisdiction purposes. See Palkow v....