Opinion ID: 786707
Heading Depth: 2
Heading Rank: 3

Heading: Preemption Doctrine Applied to Present Claims

Text: 27 The Copyright Act exclusively governs a claim when: (1) the particular work to which the claim is being applied falls within the type of works protected by the Copyright Act under 17 U.S.C. §§ 102 and 103, and (2) the claim seeks to vindicate legal or equitable rights that are equivalent to one of the bundle of exclusive rights already protected by copyright law under 17 U.S.C. § 106. See 17 U.S.C. § 301(a); Nat'l Basketball Ass'n v. Motorola, Inc., 105 F.3d 841, 848 (2d Cir.1997). The first prong of this test is called the subject matter requirement, and the second prong is called the general scope requirement. See Nat'l Basketball Ass'n, 105 F.3d at 848. 28 The subject matter requirement is satisfied if the claim applies to a work of authorship fixed in a tangible medium of expression and falling within the ambit of one of the categories of copyrightable works. Id. at 848-49. These categories encompass literary works and motion pictures, 17 U.S.C. § 102(a), including those based on preexisting works, 17 U.S.C. §§ 101, 103. A work need not consist entirely of copyrightable material in order to meet the subject matter requirement, but instead need only fit into one of the copyrightable categories in a broad sense. See Nat'l Basketball Ass'n, 105 F.3d at 848-50. 29 The general scope requirement is satisfied only when the state-created right may be abridged by an act that would, by itself, infringe one of the exclusive rights provided by federal copyright law. Computer Assocs. Int'l, Inc. v. Altai, Inc., 982 F.2d 693, 716 (2d Cir.1992). In other words, the state law claim must involve acts of reproduction, adaptation, performance, distribution or display. See 17 U.S.C. § 106; Computer Assocs., 982 F.2d at 716. 30 Further, the state law claim must not include any extra elements that make it qualitatively different from a copyright infringement claim. See Nat'l Basketball Ass'n, 105 F.3d at 851; Computer Assocs., 982 F.2d at 716. To determine whether a claim is qualitatively different, we look at what [the] plaintiff seeks to protect, the theories in which the matter is thought to be protected and the rights sought to be enforced. Computer Assocs., 982 F.2d at 716. Moreover, we take a restrictive view of what extra elements transform an otherwise equivalent claim into one that is qualitatively different from a copyright infringement claim. See Nat'l Basketball Ass'n, 105 F.3d at 851. Awareness or intent, for instance, are not extra elements that make a state law claim qualitatively different. Id.; Computer Assocs., 982 F.2d at 717. On the other hand, a state law claim is qualitatively different if it requires such elements as breach of fiduciary duty, see id., or possession and control of chattels, see Harper & Row, Publishers, Inc. v. Nation Enters., 723 F.2d 195, 201 (2d Cir.1983), rev'd on other grounds, 471 U.S. 539, 105 S.Ct. 2218, 85 L.Ed.2d 588 (1985).
31 Given this two-pronged test, we are satisfied that plaintiffs' unjust enrichment claim against Phoenix is preempted by the Copyright Act. This claim applies to The Thin Red Line project, the heart of which is a motion picture based on a screenplay, which was derived from a novel. Both the motion picture and the screenplay are derivative works protected under 17 U.S.C. § 103. The novel is a literary work protected under 17 U.S.C. § 102. To the extent that the project includes non-copyrightable material, such as ideas, these are not sufficient to remove it from the broad ambit of the subject matter categories. See Nat'l Basketball Ass'n, 105 F.3d at 848-50. 32 Plaintiffs seek to protect their alleged interests in The Thin Red Line under the theory that Phoenix was unjustly enriched by turning Jones' novel and Malick's screenplay into a motion picture without compensating Briarpatch or obtaining Briarpatch's permission. From this, it is clear that the specific right they are trying to enforce is the right of adaptation — i.e., the right to prepare or authorize preparation of a derivative work based on a novel or screenplay. See 17 U.S.C. § 106(2). 33 The basic elements of an unjust enrichment claim in New York require proof that (1) defendant was enriched, (2) at plaintiff's expense, and (3) equity and good conscience militate against permitting defendant to retain what plaintiff is seeking to recover. See, e.g., Clark v. Daby, 300 A.D.2d 732, 751 N.Y.S.2d 622, 623 (2002). Under plaintiffs' theory of the case, the act that allegedly satisfies the second and third elements of unjust enrichment is the act of turning Jones' novel and Malick's screenplay into a motion picture. This act would, in and of itself, infringe the adaptation rights protected by § 106(2) (assuming these rights belong to plaintiffs). 34 To satisfy the first element of unjust enrichment, plaintiffs also allege that Phoenix was enriched by its act. While enrichment is not required for copyright infringement, we do not believe that it goes far enough to make the unjust enrichment claim qualitatively different from a copyright infringement claim. Like the elements of awareness or intent, the enrichment element here limits the scope of the claim but leaves its fundamental nature unaltered. Cf. Murray Hill Publ'ns, Inc. v. ABC Communications, Inc., 264 F.3d 622, 637-38 (6th Cir.2001) (holding that an unjust enrichment claim met the general scope requirement); Ehat v. Tanner, 780 F.2d 876, 878 (10th Cir.1985) (same); 1 Melville B. Nimmer & David Nimmer, Nimmer on Copyright § 1.01[B][1][g] (2003) ([A] state law cause of action for unjust enrichment or quasi contract should be regarded as an `equivalent right' and hence, pre-empted insofar as it applies to copyright subject matter.).
35 We are also satisfied that plaintiffs' declaratory judgment claim against Phoenix is preempted. The analysis here is even more straightforward, since that cause of action simply seeks a declaration that Phoenix has no rights in The Thin Red Line project. As discussed above, this project fits within the broad subject matter categories protected by the Copyright Act. Further, plaintiffs' theory appears to be that Briarpatch owned the rights to turn the novel and the screenplay into a motion picture, and Phoenix never lawfully acquired these rights. In other words the claim focuses solely on the adaptation rights protected under § 106(2).
36 With respect to plaintiffs' claims involving breach of fiduciary duty (the conspiracy and aiding and abetting claims that make up counts one and two of the complaint), we are equally certain that there is no copyright preemption. While these claims focus on The Thin Red Line project, the underlying right they seek to vindicate is the right to redress violations of the duty owed to a partnership by those who control it. In other words, the fact that these claims require a finding that there was a breach of fiduciary duty to begin with adds an extra element that makes the claims qualitatively different from a claim of copyright infringement. See Computer Assocs., 982 F.2d at 717.
37 Plaintiffs asserted a number of claims against Geisler Roberdeau, Inc.: the two claims discussed above dealing with breach of fiduciary duty, as well as a cause of action for trover and conversion and one for unjust enrichment. The district court dismissed these claims based on the doctrine of fraudulent joinder, and since we vacate that ruling, these claims are now back in play. A question will therefore arise as to whether these claims are subject to copyright preemption. With respect to the breach of fiduciary duty claims, it is clear from the above discussion that, no matter how these claims are presented, they will not be preempted. 38 Regarding the other causes of action, the answer is less obvious. Cf. Harper & Row, 723 F.2d at 200-01 (concluding that a conversion claim may or may not be preempted depending on the theories under which it is asserted). Because these causes of action were dismissed at the start of litigation, we lack briefing on precisely how plaintiffs intend to develop their theories. Cf. id. (relying on plaintiff's briefs, in addition to the complaint, in ascertaining theory for preemption purposes). We therefore decline to rule on the issue and instead leave it for the district court to address in the first instance on remand.
39 The only claims that we have not yet discussed are those originally asserted against Malick. While the claims against Malick were dismissed based on a settlement between him and plaintiffs and are no longer contested, the question of whether they were preempted could be relevant to our jurisdictional inquiry, since the existence of one preempted claim could provide supplemental jurisdiction for hearing others. That is not so in this case, however, because we have already held that the unjust enrichment and declaratory judgment claims against Phoenix are preempted, and because we further hold in a moment that these claims on their own can support supplemental jurisdiction over the remaining claims. We therefore decline to rule on whether the claims asserted against Malick also could have supported supplemental jurisdiction. III Supplemental Jurisdiction 40 For those claims that were not within the district court's copyright jurisdiction, one further question remains: Does the fact that some claims were within the court's copyright jurisdiction bring the other ones within its supplemental jurisdiction? As we have already suggested, the answer is yes. 41 Under 28 U.S.C. § 1367(a), federal courts have supplemental jurisdiction to hear state law claims that are so related to federal question claims brought in the same action as to form part of the same case or controversy under Article III of the United States Constitution. A state law claim forms part of the same controversy if it and the federal claim derive from a common nucleus of operative fact. Cicio v. Does, 321 F.3d 83, 97 (2d Cir.2003) (quoting City of Chicago v. Int'l Coll. of Surgeons, 522 U.S. 156, 165, 118 S.Ct. 523, 139 L.Ed.2d 525 (1997)). This is so even if the state law claim is asserted against a party different from the one named in the federal claim. See 28 U.S.C. § 1367(a) (2000); Kirschner v. Klemons, 225 F.3d 227, 239 (2d Cir.2000). 42 All of plaintiffs' claims against Geisler Roberdeau, Inc., Phoenix, and Medavoy unquestionably derive from a common nucleus of operative fact, because they all deal with the purported sale of The Thin Red Line to Phoenix. The district court therefore has power to hear the claims relating to breach of fiduciary duty even though these claims do not fall within the court's copyright jurisdiction. It also has power to hear the trover and conversion and unjust enrichment claims against Geisler Roberdeau, Inc., even if it determines that these claims do not fall within its copyright jurisdiction. 43 The fact that the district court has the power to hear these supplemental claims does not mean, of course, that it must do so. Instead, it may decline to exercise its power based on the factors laid out in 28 U.S.C. § 1367(c). This decision is left to the exercise of the district court's discretion. See Kirschner, 225 F.3d at 239; cf. Motorola Credit Corp. v. Uzan, 322 F.3d 130, 137 (2d Cir.2003) (remanding for district court to consider § 1367(c) because even though it had already done so once, the landscape of the case had since changed). IV Merits 44 Finally, as we turn to the merits we are tempted to salvage what we can of the district court's work. That court has already reached the merits of many of the claims in this case, and while it erred in basing its jurisdiction on diversity of citizenship, we have held that it did possess the power to hear all of plaintiffs' claims. 45 We are nonetheless unable to fully uphold the trial court's decisions on the merits for two reasons. First, with regard to the unjust enrichment and declaratory judgment claims against Phoenix, the court based its dismissal on the wrong rationale. It correctly determined that these claims were preempted by the Copyright Act, but it then went on to analyze whether plaintiffs had come forward with sufficient evidence to make out copyright claims. This might seem like a logical approach given that we evade the well-pleaded complaint rule for jurisdictional purposes by creating the fiction that complete preemption places a federal claim on the face of a plaintiff's well-pleaded complaint. See Williams, 482 U.S. at 393, 107 S.Ct. 2425. But it is incorrect. Instead, once a district court determines that a state law claim has been completely preempted and thereby assumes jurisdiction over it, the court must then dismiss the claim for failing to state a cause of action. See Spielman v. Merrill Lynch, Pierce, Fenner & Smith, Inc., 332 F.3d 116, 132 (2d Cir.2003) (Newman, J., concurring); Romney v. Lin, 94 F.3d 74, 84 (2d Cir.1996). In other words, the complete preemption doctrine ensures that a federal forum will be available to decide that a plaintiff's claim is preempted; but it does not allow a federal court to decide claims that have not actually been pleaded. 46 Second, with regard to the causes of action dealing with breach of fiduciary duty, our holdings thus far change the landscape to such an extent that we feel it prudent to allow the district court to revisit its decision. In particular, our holding that the claims against Geisler Roberdeau, Inc. were erroneously dismissed at the start of litigation leaves us wondering whether plaintiffs would have been able to gather more evidence to withstand summary judgment had that corporation been kept in the action as a party. The district court is in the best position to assess this question.