Sywula v. Dacosta

• Decision Date: 29 March 2022
• Docket Number: 21-cv-01456-BAS-AGS
• Parties: KRZYSZTOF SYWULA, Plaintiff, v. ALEXIS DACOSTA, et al., Defendants.
• Court: U.S. District Court — Southern District of California

KRZYSZTOF SYWULA, Plaintiff,
v.
ALEXIS DACOSTA, et al., Defendants.

No. 21-cv-01456-BAS-AGS

United States District Court, S.D. California

March 29, 2022

ORDER:

(1) GRANTING MOTION TO REMAND (ECF No. 11); AND

(2) TERMINATING AS MOOT MOTION TO CHANGE VENUE (ECF No. 8)

HON. CYNTHIA BASHANT UNITED STATES DISTRICT JUDGE

I. Introduction

This case is one of three actions stemming from a business venture to develop a software application for aggregating ride-sharing services. The first two cases started in federal court, but this one started in state court. Two Defendants removed the action based on federal jurisdiction, alleging one of Plaintiff Krzysztof Sywula's seventeen state law claims presents a federal issue. Sywula, however, filed an amended complaint transforming that claim. Sywula now challenges removal and also asks the Court to send the case back to state court in light of his amended pleading.

The Court considers a sequence of procedural issues to resolve Sywula's motion. First, was removal proper? Second, if so, does original jurisdiction still exist after Sywula

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filed an amended complaint? Finally, if removal was proper but there is no longer original jurisdiction, should the Court decline to exercise supplemental jurisdiction over the remaining state law claims and remand them?

The Court finds removal was proper because federal patent law completely preempted one of Sywula's claims. Yet, original jurisdiction no longer exists after Sywula eliminated the federal issue. Defendants may have a preemption defense to one or more of Sywula's remaining state law claims, but a federal defense to Sywula's claims does not create original jurisdiction. And because the basis for original jurisdiction has been eliminated long before trial, the Court declines to exercise supplemental jurisdiction over Sywula's state law claims. Hence, the Court grants the motion to remand and terminates as moot Defendants' request to change venue.

II. Background^[1]

A. The Software Venture

Sywula is a software developer. (First Am. Compl. (“FAC”) ¶ 15, ECF No. 10.) In April 2016, Defendant Alexis DaCosta and another individual contacted Sywula to pitch a business venture. (Id. ¶ 16.) They hoped to develop a mobile software application that aggregates ride-sharing services like popular services do for airfare and hotel offerings. (Id. ¶¶ 15-16.) Over the next year and a half, Sywula “fully designed and built the software, related source code, and interfaces.” (Id. ¶¶ 17-19.) He also wrote twenty-five domestic and international patent applications based on the application's design, architecture, and algorithms. (Id. ¶ 20.)

Sywula and DaCosta later formed Defendant Teleport Mobility, Inc. to own and develop the mobile application and related intellectual property. (FAC ¶ 22.) Sywula became Chief Technology Officer and owns a large minority stake in Teleport. (Id.) DaCosta is a director on Teleport's board. (Id. ¶ 23.) The remaining individual defendants

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have positions of authority at Teleport. (Id. ¶¶ 5-7, 23.) The venture also formed a related entity—Defendant Northern Lights, LLC. (See Id. ¶¶ 4, 32, 37.)

B. The Invention Agreement

As Teleport's CTO, Sywula was “primarily responsible for the creation, development, building, and implementation (and continuation of the same) of the software, source code, algorithms, architecture and related technologies and functionality for the ride-sharing application, including the related patents.” (FAC ¶ 24.) As part of his employment, Sywula entered into Teleport's Employee Proprietary Information and Inventions Agreement (“Invention Agreement”). (Id. ¶ 25, Ex. A.) He did so “[i]n consideration of . . . the compensation now and hereafter paid to [him]” from Teleport. (Id.)

Teleport's Invention Agreement covers “Inventions, ” which are broadly defined to include trade secrets, discoveries, designs, software, and other items. (Invention Agreement § 1.2.) Then, in a nutshell, the Invention Agreement: (1) excludes from its scope “Inventions . . . patented or unpatented, which [Sywula] made prior to the commencement of [his] employment with [Teleport]”; and (2) requires Sywula to assign to Teleport future Inventions “made or conceived or reduced to practice or learned by [him], either alone or jointly with others, during the period of [his] employment with [Teleport], ” with limited exceptions. (Id. §§ 2.2-2.3.) Sywula did not list any past Inventions that should be excluded from the Invention Agreement. (Invention Agreement Ex. B.) So, Sywula promised to assign practically everything he developed with Teleport to the entity. (See Invention Agreement § 2.3; FAC ¶ 20.)

C. The Multi-Action Dispute

As its CTO, Sywula “performed extensive work for Teleport, including thousands of hours of labor.” (FAC ¶ 26.) However, Teleport allegedly has not “paid Plaintiff any compensation or wages for the work Plaintiff did while employed by Teleport and at the direction of Teleport.” (Id.) Sywula thus claims Defendants have not met their obligations under the Invention Agreement. (Id.) He also claims Defendants have not reimbursed him

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for business expenses he incurred, including patent attorney fees and U.S. Patent and Trademark Office expenses. (Id.)

Moreover, despite Sywula performing all the brainwork, DaCosta allegedly insists that he—not Sywula—is the inventor of Teleport's patents. (FAC ¶ 27.) Sywula has tried unsuccessfully to correct this inventorship issue, including by requesting that he be added to the relevant patent filings. (Id. ¶¶ 27-30.) Ultimately, “Sywula resigned his position as a Teleport employee.” (Id. ¶ 31.)

The parties' contentious relationship has since further devolved. (See FAC ¶ 32.) Sywula claims, among other things, that Defendants “have refused to return or allow Plaintiff to access his personal property, which includes: 38 bottles of wine, office furniture (including chairs and desk), computer equipment, computer hardware, a television, and table tennis equipment.” (Id.) Defendants also allegedly hired an investigator who trespassed into private areas of Sywula's property and marked his cars. (Id.) And their dispute has further sprawled into three lawsuits.^[2]

1. Northern District Action

Teleport and Northern Lights sued Sywula in the Northern District of California, alleging he breached several agreements and misappropriated the entities' intellectual property. Teleport Mobility Inc. v. Sywula, 21-cv-00874-SI (N.D. Cal. filed Feb. 3, 2021). Judge Susan Illston entered a preliminary injunction that, among other things, enjoined Sywula from deleting or limiting access to the companies' files and networks and required the parties to preserve certain evidence. Id., ECF No. 30. Sywula then successfully moved to compel arbitration of the Northern District Action. Id., ECF No. 49. In June 2021, Judge Illston left the injunction in place and stayed the case pending arbitration. Id.

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2. Inventorship Action

After the Northern District Action proceeded to arbitration, Sywula filed a new federal case raising a claim for correction of patent inventorship under 35 U.S.C. § 256. Sywula v. DaCosta, 21-cv-01450-BAS-AGS (S.D. Cal. filed Aug. 15, 2021). The Inventorship Action seeks an order requiring the USPTO to add Sywula as a coinventor to several patents issued to Teleport.

Sywula moved in the Inventorship Action for a temporary restraining order that prevented Teleport from transferring the patents pending resolution of the inventorship issues, which this Court denied. Inventorship Action, ECF No. 27. The Court then also denied Sywula's request for a preliminary injunction. Id., ECF No. 35. In considering whether Sywula showed a likelihood of success on his inventorship claim, the Court noted that Sywula had assigned away his rights to the patents. Id. And although he claimed those assignments should be undone, the Court reasoned that Sywula would first have to attempt to invalidate the assignments under state law before he would have standing to bring an inventorship claim based on a financial interest in the patents.^[3] Id.

3. This Action

Around the same time he filed the Inventorship Action, Sywula filed this action in San Diego County Superior Court. (Compl., Notice of Removal Ex. A, ECF No. 1-2.) His initial Complaint raised seventeen claims, including for breach of the Inventorship Agreement, rescission of the Inventorship Agreement, conversion, failure to pay wages, and declaratory relief. (Id. ¶¶ 36-139.) The gist of Sywula's claims is that Defendants have wrongly tried “to run him out of the Teleport business and deny him the benefits of the invention that he created and rightfully owns.” (Id. 2:9-11.) Among other things, Sywula asks for a determination that the Invention Agreement “is rescinded and that

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Plaintiff had and has no obligations under the [agreement] at any time including presently and moving forward.” (Id. 39:17-19.)

Defendants Teleport and Northern Lights removed this case, alleging a federal issue exists because Sywula's initial declaratory relief claim concerned inventorship of patents. (Notice of Removal 2:15-20.) Sywula filed a First Amended Complaint that overhauls the declaratory relief claim to expressly seek relief based on recission of the Inventorship Agreement—a matter governed by state law. (FAC ¶¶ 117-119.) Shortly after this amendment, Sywula moved to remand this case. (Mot. to Remand, ECF No. 11.) Defendants Teleport and Northern Lights oppose. (Opp'n, ECF No. 15.) Defendants also moved to transfer venue to the Northern District of California.^[4] (ECF No. 8.)

III. Analysis

A. Removal Jurisdiction

The Court assesses its jurisdiction before considering Defendants' request to change venue. E.g., Bookout v. Beck, 354 F.2d 823, 825 (9th Cir. 1965). Sywula challenges removal, arguing his initial Complaint did not raise a federal issue. (Mo...