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applying New York law and declining to apply preclusive effect to a state court's "denial of a motion to dismiss at the pleading stage"
Summary of this case from Makhnevich v. MTGLQ Inv'rs, L.P.Opinion
No. 02 Civ. 5066 (LTS)
December 12, 2002
OPINION AND ORDER
Plaintiff Allen Tannenbaum ("Plaintiff") moves to remand this action to the New York State Supreme Court. This action was removed by defendants Corbis Sygma f/k/a Sygma Photo News, Inc. (hereinafter "Sygma New York") and Sygma S.A.R.L. f/k/a Sygma Paris (hereinafter "Sygma Paris") (collectively, "Defendants"), which are the New York and Paris offices of a stock photography agency in the business of licensing images to third parties for use in magazines and other publications. Defendants assert that this Court has original jurisdiction of this action under the provisions of 28 U.S.C. § 1331 and 1338, and that this action is one which may be removed to this Court by Defendants pursuant to 28 U.S.C. § 1441, in that it is a civil action containing a claim which is preempted by the Copyright Act, 17 U.S.C. § 301(a). Specifically, Defendants allege that Plaintiff's Fourth and Eleventh causes of action come within the scope of the Copyright Act.
The Fourth Cause of Action asserted in Plaintiff's complaint incorporates by reference all of the preceding allegations of the Complaint and further alleges:
111. That the defendants' ongoing licensing of the plaintiffs work is unauthorized and in direct contravention of the terms of the parties agreement, and the plaintiffs expressed and specific instructions and demands for return of all images, as well as the defendants' own termination of the parties' relationship. 112. That knowledge of the full nature and extent of such ongoing unauthorized licensing is in the sole custody and possession of the defendants, has not been revealed to plaintiff heretofore and can be determined with certitude only after pretrial discovery has been conducted by plaintiff. 113. That said ongoing licensing constitutes interference with the plaintiffs business relationship with its current stock agency.
(Compl.)
The Eleventh Cause of Action likewise incorporates by reference all of the preceding factual allegations. It further asserts:
148. That plaintiff is entitled to an injunction permanently prohibiting any and all future sales, transfers, assignments or licensing by the defendants, or any one of them, including, but not limited to sub-agents and/or wholly owned subsidiaries, of plaintiffs work.
(Id.)
The Court has considered thoroughly all submissions and arguments related to this motion. For the following reasons, Plaintiff's motion to remand is denied.
BACKGROUND
The Complaint sets forth the following relevant allegations. Plaintiff is an award winning internationally known professional photographer and photojournalist. (Compl. ¶ 2). On or about November 1980, Plaintiff, at the special instance and request of Sygma New York, commenced submitting his photographic work for the purpose of procuring licensing agreements with third parties. (Id. ¶ 17a). On or about March 15, 1982, Sygma became Plaintiff's exclusive agent for the licensing of his images. (Id. ¶ 17b). Pursuant to an oral agreement, by and between Defendants and Plaintiff, Defendants assumed the role of Plaintiff's agent and stood in a fiduciary capacity with respect to the Plaintiff. (Id. ¶ 19). Defendants terminated their relationship with Plaintiff on January 11, 2001. (Id. ¶ 71). Plaintiff asserts that notwithstanding the termination, Defendants continue to procure licensing agreements for Plaintiff's work, in derogation of Plaintiff's legal rights. (Id. ¶ 72).
DISCUSSION
Section 301(a) of the Copyright Act provides in pertinent part that
all legal or equitable rights that are equivalent to any of the exclusive rights within the general scope of copyright as specified by section 106 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, whether created before or after that date and whether published or unpublished, are governed exclusively by this title. Thereafter, no person is entitled to any such right or equivalent right in any such work under the common law or statutes of any State.17 U.S.C.A. § 301(a) (West 1996). Here, Defendants have served a notice of removal pursuant to 28 U.S.C. § 1441, which permits removal "[w]henever a separate and independent claim or cause of action, which would be removable if sued upon alone, is joined with one or more otherwise non-removable claims or causes of action." 28 U.S.C.A. § 1441(c) (West 2002). "[T]he party asserting jurisdiction bears the burden of proving that the case is properly in federal court. . . . United Food Commercial Workers Union v. Centermark Properties Meriden Square. Inc. 30 F.3d 298, 301 (2d Cir. 1994) (citation omitted).
Assessment of the propriety of removal typically turns on application of the "`well-pleaded complaint rule,'" which "provides that federal jurisdiction exists only when a federal question is presented on the face of the plaintiffs properly pleaded complaint." Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987). While a case may not be ordinarily removed on the basis of a federal defense, including the defense of preemption, as to certain state laws the preemptive force of the federal law is so "extraordinary" that removal of the state law claim is proper. Although there is no Second Circuit Court of Appeals authority directly on point, other courts that have considered the issue have found the Copyright Act to have such extraordinary preemptive force. See Rosciszewski v. Mete Assocs., Inc., 1 F.3d 225, 232-33 (4th Cir. 1993);Patrick v. Francis, 887 F. Supp. 481, 484 (W.D.N.Y. 1995).
Here, Plaintiff purports to plead only state and/or common-law causes of action. The Court turns, accordingly, to the question of whether Plaintiff's state or common law claims are within the scope of the Copyright Act's broad preemption provision.
Res Judicata
As an initial matter Plaintiff, invoking res judicata, asserts that Defendants are precluded from arguing preemption of Plaintiff's claims by the state court decision in the matter of Grecco v. Corbis Sygma, 726 N.Y.S.2d 653 (N.Y.A.D. 1st Dep't 2001). The Grecco court upheld a state trial court's denial of Corbis Sygma's motion to dismiss state claims on Copyright Act preemption grounds, in a case whose facts appear quite similar to those of the instant case. Under the doctrine of res judicata, "`[a] final judgment on the merits of an action precludes the parties or their privies from relitigating issues that were or could have been raised in that action.'" Saud v. Bank of New York, 929 F.2d 916, 918-19 (2d Cir. 1991) (quoting Federated Dep't Stores, Inc. v. Moitie, 452 U.S. 394, 398 (1981)). Thus, res judicata only applies to final judgments. The decision in Grecco was not a final judgment on the merits but, rather, a denial of a motion to dismiss at the pleading stage. Res judicata is therefore inapplicable here.
Copyright Act Preemption
Plaintiff further argues that the Fourth and Eleventh Causes of Action are not preempted by the Copyright Act. The Second Circuit Court of Appeals has established a two-part test for determining whether a claim is subject to copyright preemption under 17 U.S.C. § 301(a). A state cause of action is "preempted by federal copyright laws if the subject matter of the state-law right falls within the subject matter of the copyright laws and the state-law right is equivalent to the exclusive rights protected by federal copyright laws." Kregos v. Associated Press, 3 F.3d 656, 666 (2d Cir. 1993). The first element, known as the "subject matter requirement," ensures that "the particular work to which the state law claim is being applied falls within the type of works protected by the Copyright Act." National Basketball Ass'n v. Motorola, 105 F.3d 841, 848 (2d Cir. 1997). The second predicate for preemption, known as the "general scope requirement," requires that "the state law claim seeks to vindicate `legal or equitable rights that are equivalent' to one of the bundle of exclusive rights already protected by copyright law." Id. If, however,
[A]n "extra element" is "required instead of or in addition to the acts of reproduction, performance, distribution or display, in order to constitute a state-created cause of action," then[,] the right does not lie `within the general scope of copyright.' A state law claim is not preempted if the "extra element" changes the "nature of the action so that it is qualitatively different from a copyright infringement claim."Computer Assocs. Int'l v. Altai, Inc., 982 F.2d 693, 716 (2d Cir. 1992) (citations omitted and emphasis in original).
Here, there is no dispute that Plaintiff's photographs are within the subject matter of copyright and therefore fulfill the first element. The second requirement for copyright preemption is in dispute here.
In the Eleventh Cause of Action, Plaintiff asserts that he "is entitled to an injunction permanently prohibiting any and all future sales, transfers, assignments or licensing by the defendants, or any one of them, including, but not limited to sub-agents and/or wholly owned subsidiaries, of plaintiffs work." (Id.) Under Section 106 of the Copyright Act:
[T]he owner of copyright under this title has the exclusive rights to do and authorize any of the following: (1) to reproduce the copyrighted works in copies or phonerecords; (2) to prepare derivative works based upon the copyrighted work; (3) to distribute copies . . . of the copyrighted work to the public by sale or other transfer of ownership, or by rental, lease or lending . . . .17 U.S.C.A. § 106 (West 1996). The injunction sought in the Eleventh Cause of Action does not refer to the terms of a contract, but, rather, broadly seeks to prohibit Defendants from taking any action in violation of Plaintiff's exclusive rights as outlined in Section 106. The mere act of unauthorized distribution would constitute an infringement of the copyright and no extra element is required. Compare Shamsky v. Garan, 632 N.Y.S.2d 930, 935 (N.Y. Supp. 1995). In seeking an injunction against all sales, transfers, assignments and licensing, Plaintiff is in essence asserting that Defendants have no valid authorization to make any such use of the copyrighted material. Indeed, Plaintiff's claim simply seeks to prevent unauthorized use of his photographs. The exclusion of unauthorized use is at the heart of the protections afforded by the Copyright Act. Plaintiff has not pleaded any special rights, duties or restrictions that apply by reason of the contract following the termination. The "contract" cause of action, thus, in this instance, presents no elements additional to those that are relevant to the Copyright Act. The Eleventh Cause of Action is therefore preempted and supports removal.
Removal of Plaintiff's complaint is proper because Section 301(a) preempts Plaintiff's Eleventh Cause of Action. The preempted claim thus presents a federal question for the purposes of the well-pleaded complaint rule. See Caterpillar, Inc. v. Williams, 482 U.S. 386, 392 (1987). Plaintiff's motion to remand is therefore denied. Plaintiff has pled his other causes of action as predicated upon a copyright interest in his work.
The pre-trial conference currently scheduled for December 13, 2002 is adjourned to January 23, 2003 at 2:00 p.m. The conference and submission requirements of the Preliminary Pretrial Order, dated July 29, 2002, are hereby reinstated, and the required submission shall be made at least five days in advance of the January 23, 2003 conference.