Point Conversions, LLC. v. Lopane

• Decision Date: 08 January 2021
• Docket Number: Case No: 20-CV-61549-RUIZ/STRAUSS
• Parties: POINT CONVERSIONS, LLC, Plaintiff, v. JUDGE NICHOLAS LOPANE, in his official capacity as judge in the state of Florida, Defendant.
• Court: U.S. District Court — Southern District of Florida

POINT CONVERSIONS, LLC, Plaintiff, v. JUDGE NICHOLAS LOPANE,in his official capacity as judge in the state of Florida, Defendant.

Case No: 20-CV-61549-RUIZ/STRAUSS

UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF FLORIDA

January 8, 2021

REPORT AND RECOMMENDATION ON DEFENDANTS' MOTION TO DISMISS

THIS CAUSE is before me upon Defendant's Motion to Dismiss ("Motion to Dismiss"). (DE 8). The Honorable Rodolfo A. Ruiz, II, United States District Judge, referred this case to me to take all action as required by law on Defendant's Motion to Dismiss pursuant to 28 U.S.C. § 636(b)(1)(A) and the Magistrate Judge Rules of the Local Rules of the Southern District of Florida. Having carefully reviewed the motion, the Response (DE 13; DE 14), Plaintiff Point Conversion, LLC's ("PC's" or "Plaintiff's") Notice of Supplemental Authority¹ (DE 16), theReply (DE 15) and being otherwise duly advised, I respectfully RECOMMEND that the Motion to Dismiss be GRANTED for the reasons stated herein.

I. BACKGROUND

Plaintiff brought this action alleging that it has been denied access to courts in violation of its Constitutional rights. (DE 1). Specifically, Plaintiff's Complaint Seeking Declaratory, Injunctive, and Other Relief ("Complaint") filed on July 31, 2020 alleges that Defendant² and the Florida Courts³ have wrongfully dismissed cases for lack of subject matter jurisdiction ("SMJ").(DE 1 at ¶¶ 5, 11.C.-G., 27-47, and n.6). Plaintiff's Complaint brings two claims: Count I asserts violations of 42 U.S.C. § 1983 for deprivation of rights secured by "Articles I and IV" of the Fourteenth Amendment⁴; and Count II seeks Declaratory, Injunctive and Other Relief under 28 U.S.C. §§ 2201 and 2202, and Fed. R. Civ. P. 57. (DE 1).

Plaintiff is a software development and implementation company that paid JBSHBM, LLC for an exclusive license to a portfolio of patents that relate to the exchange of loyalty reward points ("Points") across program boundaries ("License").⁵ (DE 1 at ¶ 13). Plaintiff used the License to develop its own product to transfer Points. Id. at 14. After bringing its product to market and determining that hotel-franchisees were already using software that allegedly violated Plaintiff's exclusive License, Plaintiff filed its Test Case to enforce its License. (DE 1 at 15-16; DE 1-7 at 2-10). Thus, Plaintiff's Test Case, and the Other Broward Cases, involve claims that hotel-franchisees unlawfully exchange Points in violation of Plaintiff's exclusive License to do so. (DE 1 at 12-16). See also Point Conversion, LLC v. Tropical Paradise Resorts, LLC, 339 F. Supp. 3d 1350, 1353 (S.D. Fla. 2018) (noting that Plaintiff asserted in its Test Case that the hotel-franchisee defendant "encouraged the use of customer points across program boundaries by using software other than Plaintiff's").

The Test Case defendant, Tropical, attempted to remove the Test Case to the United States District Court of the Southern District of Florida on April 12, 2018, alleging that Plaintiff's causes of action required a determination of patent issues for which the federal courts had exclusive jurisdiction under 28 U.S.C. § 1338(a). (DE 1 at ¶ 17). The Honorable Judge Cecilia M. Altonaga,United States District Court Judge in the Southern District of Florida, determined that Plaintiff's state-law claims comprising the Test Case could not be removed to federal court because Tropical had not shown that the issue of patent infringement raised a substantial question of federal law. (DE 1 at 17-18; Point Conversion, LLC, 339 F. Supp. 3d at 1354-57 (relying upon Gunn v. Minton, 568 U.S. 251, 258 (2013) and finding also that the doctrine of conflict preemption could not serve as basis for removal because it "is an anticipated defense that may be used to defeat a plaintiff's state-law claims" and does not give rise to federal SMJ)). Thus, Judge Altonaga remanded Plaintiff's Test Case on June 13, 2018. (DE 1 at ¶ 18). After remand, Plaintiff amended its Initial Complaint to eliminate a claim for civil theft and to add allegations and exhibits. (DE 1-11 at 19-20; see also https://www.browardclerk.org/Web2 for case number COCE18-06299 reflecting that Plaintiff filed its First Amended Complaint on September 30, 2018).

In February 2019, Tropical filed a petition for a writ of prohibition to the Fourth District Court of Appeal seeking to prevent the Circuit Court from continuing to exercise SMJ over Plaintiff's amended complaint in the Test Case on the basis that 28 U.S.C. § 1338(a) divests the state courts of SMJ to hear state-law claims arising under federal patent law. (DE 1 at ¶ 23; DE 1-11 at 8). Tropical argued that the amended complaint brought "federal patent infringement claims disguised as state-law claims."⁶ (DE 1-11 at 8). On April 24, 2019, the Fourth District Court of Appeal dismissed Tropical's petition noting that Tropical "may raise its conflict preemption defense though a proper motion in the trial court and appeal from a final judgment if necessary." (DE 1 at ¶¶ 23-24; DE 1-12 at 2).

The defendants in the Other Broward Cases then moved to dismiss those cases for lack of SMJ contending that those cases required a determination of patent issues, such as scope, validity, and infringement, and could therefore not be adjudicated by state courts according to Florida law.⁷ (DE 1 at ¶¶ 35-36). From November 2019 through January 2020, Defendant dismissed eight of the nine Other Broward Cases for lack of SMJ citing Schachel, 405 So.2d at 487 and 28 U.S.C. § 1338(a). (DE 1 at ¶ 35 and n.3; DE 1-22). In the International case, Defendant also stated that "[e]ven if the Court had [SMJ] to hear Plaintiff's claims, the Court finds that Plaintiff has failed to state a cause of action for unjust enrichment or conversion for the reasons stated in Defendant's Motion." (DE 1-22 at 2-3).

On December 16, 2019, Tropical moved to dismiss Plaintiff's Test Case asserting that Plaintiff's complaint is in substance an action for patent infringement disguised as a state-law claim and, because all of Plaintiff's claims "presuppose patent infringement" and "necessarily depend[] on a determination of the scope, validity or infringement of a patent," the state court lacked SMJ under Schachel and Solar Dynamics. (DE 1 at ¶ 26; DE 1-13). On February 6, 2020, Defendant deferred ruling on Tropical's motion to dismiss and stayed proceedings in Plaintiff's Test Case pending: (1) the Eleventh Circuit's Mandate in Plaintiff's appeal in a case that Tropical filed in federal court where Plaintiff filed counterclaims that the United States District Courtdismissed⁸ and (2) the Fourth District Court of Appeal's determination as to whether Florida's state courts have subject matter jurisdiction over a case identical to Plaintiff's Test Case.⁹ (DE 1 at ¶¶ 31 and n.11; DE 1-18).

On April 14, 2020, Plaintiff filed a Petition for Writ of Mandamus with the Fourth District Court of Appeal seeking "the Court to require Judge Lopane to exercise jurisdiction and perform the ministerial duties required of a circuit court judge to adjudicate this matter including ruling on Tropical's motion to dismiss, adhering to the doctrine of the law of the case, and otherwise quash the February 06, 2020 order." (DE 1 at ¶ 32; DE 1-19 at 9). Plaintiff argued that the federal District Court and the Fourth District Court of Appeal had already determined that SMJ existed in state court because Judge Altonaga found that the Test Case did not "arise under" patent law pursuant to the Gunn factors and the Fourth District Court of Appeal had denied Tropical's petition for writ of prohibition. (DE 1-19 at ¶¶ 4-10 and pp. 9-10). The Fourth District Court of Appeal denied Plaintiff's petition for writ of mandamus on April 14, 2020 without explanation. (DE 1 at 32; DE 1-20).

Plaintiff also filed petitions for writs of mandamus with the First, Second, Third and Fourth District Courts of Appeal where other cases that Plaintiff filed alleging similar claims were dismissed for lack of SMJ, and the District Courts of Appeal "dismissed or denied the petitions without ever addressing the underlying jurisdiction issue." (DE 1 at ¶¶ 37-39 and n.19-21). Plaintiff petitioned the Florida Supreme Court relative to the Fourth District Court of Appeal's dismissals to no avail. (DE 1 at ¶ 43). Plaintiff attached to its Complaint the Florida Supreme Court opinions denying its petitions. (DE 1-28). In each case, the Florida Supreme Court stated that: "[t]o the extent the Petitioner seeks mandamus relief the petition is hereby denied because the Petitioner has failed to show a clear legal right to the relief requested" and "[t]o the extent the Petitioner seeks to invoke this Court's all writs jurisdiction, the petition is dismissed for lack of jurisdiction because the Petitioner has failed to cite an independent basis that would allow theCourt to exercise its all writs authority and no such basis is apparent on the face of the petition." (DE 1-28 at 2, 4).

Plaintiff now seeks the following:

(1) a Declaration that Judge Lopane has subject matter jurisdiction of Plaintiff's Test Case and an Order requiring that Judge Lopane adjudicate the case on the merits;

(2) a Declaration that Judge Lopane has subject matter jurisdiction over the Other Broward Cases and an Order requiring that Judge Lopane adjudicate the cases on the merits;

(3) that this Court declare, enjoin, and/or require that Judge Lopane be prohibited from staying Plaintiff's Test Case or further prevent Plaintiff from proceeding with discovery in the Test Case in order to effectuate Judge Altonaga's remand order;

(4) that this Court declare, enjoin, and/or require that Judge Lopane and the Florida Courts must assert jurisdiction before finding that a claim does not state a cause of action;

(5) that this Court declare, enjoin, and/or require that Judge Lopane and the Florida Courts cannot ignore, disregard, or strip away patent issues housed in state-law causes of action and must adjudicate the

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