Opinion
4:23-cv-00110-DN-PK
02-15-2024
TYLER OLSEN, and BRONCS & DONKS, Plaintiffs, v. SETH LARSEN and CANVAS CUTTER, LLC, Defendants.
MEMORANDUM DECISION AND ORDER FINDING THE COURT HAS SUBJECT MATTER JURISDICTION
DAVID NUFFER DISTRICT JUDGE.
Defendants removed this case under 28 U.S.C. §§ 1331 and 1338 alleging federal question subject matter jurisdiction. Plaintiffs' Complaint contains five state law claims.Defendants' Notice of Removal argued federal question jurisdiction under 28 U.S.C. § 1331 is satisfied because they filed “compulsory counterclaims of Copyright Infringement claims pursuant to 17 U.S.C. § 501 et seq. over which federal district courts hold exclusive jurisdiction.”
Notice of Removal at 2, docket no. 1, filed November 24, 2023.
Complaint, docket no.1-1, filed November 24, 2023.
Notice of Removal, docket no. 1, at 2; see also Answer and Counterclaim, docket no. 4, filed November 24, 2023.
An Order to Show Cause entered on January 24, 2024, directed Defendants to explain why this case should not be dismissed for lack of subject matter jurisdiction. The Order to Show Cause, citing Holmes Grp., Inc. v. Vornado Air Circulation Sys., Inc. and Topeka Housing Authority v. Johnson, erroneously stated that a Defendant may not remove a case solely because of a defense or counterclaim arising under federal law. On January 26, 2024, Defendants filed a Response that stated removal was proper because Congress passed the Leah-Smith America Invents Act (“LSAI Act”) in 2011 that abrogated the United States Supreme Court's decision in Holmes and thus overruled the United States Court of Appeals for the Tenth Circuit's decision in Topeka Housing Authority.
Order to Show Cause, docket no. 13, filed January 24, 2024.
35 U.S. 826 (2002).
404 F.3d 1245 (10th Cir. 2005).
Order to Show Cause, docket no. 13, at 2.
Defendants' Response to the Order to Show Cause, docket no. 14, at 3-6, filed January 26, 2024 (citing 28 U.S.C. §1454 (2011)).
In 2002, the Supreme Court held in Holmes that a counterclaim “which appears as part of the defendant's answer, not as part of the plaintiff's complaint-cannot serve as the basis for [federal question] jurisdiction.” In 2005, the United States Court of Appeals for the Tenth Circuit held in Topeka Housing Authority that: “[A] case may not be removed to federal court solely because of a defense or counterclaim arising under federal law.”
Holmes at 831.
Topeka Hous. Auth. v. Johnson,.
But in 2011, Congress passed the LSAI Act, which permits the removal of a case to federal court because a counterclaim was asserted under federal patent law or federal copyright law. Specifically, the LSAI Act states:
A civil action in which any party asserts a claim for relief arising under any Act of Congress relating to patents, plant variety protection, or copyrights may be removed to the district court of the United States for the district and division embracing the place where the action is pending.
28 U.S.C. §1454(a) (2011) (emphasis added).
The District of Utah recently analyzed the LSAI Act in Big Squid, Inc. v. Domo, Inc. In that case, the plaintiff asserted state law claims, and Defendant asserted counterclaims for copyright infringement and removed the case to the District of Utah. In assessing jurisdiction, the Court reasoned:
Big Squid, Inc. v. Domo, Inc., No. 2:19-CV-193, 2019 WL 3555509, at *2 (D. Utah Aug. 5, 2019).
[Plaintiff] did not move to remand, and because [defendant] asserts a claim for copyright infringement, this court is satisfied that removal is proper under 28 U.S.C. § 1454(a).
Id.
Additionally, the opinion noted 28 U.S.C. § 1454(a) permits “removal in civil actions in which any part asserts a claim for relief arising under any Act of Congress relating to . . . copyrights.”
Big Squid, Inc. v. Domo, Inc., No. 2:19-CV-193, 2019 WL 3555509, at *2 n.41 (D. Utah Aug. 5, 2019) (internal quotation marks omitted).
Also in 2019, Home Depot U.S.A., Inc., v. Jackson, the Supreme Court stated: “§§ 1454(a) and (b) allow ‘any party' to remove [a] civil action in which any party asserts a claim for relief arising under any Act of Congress relating to patents, plant variety protection, or copyrights.”
Home Depot U.S.A., Inc. v. Jackson, 139 S.Ct. 1743, 1749, 204 L.Ed.2d 34 (2019).
While no Tenth Circuit case expressly overrules Topeka Housing Authority, it is clear the case has been abrogated by 28 U.S.C. § 1454(a) and Home Depot U.S.A. Based on the text of the LSAI Act, Big Squid, Inc., and Home Depot U.S.A., it is clear the District of Utah has subject matter jurisdiction to hear this case.
ORDER
Defendants established that the District of Utah has subject matter jurisdiction to hear this case; that the Defendants properly removed this matter; and that the Order to Show Cause was issued in reliance on outdated case law. Therefore, the Order to Show Cause is satisfied, and this case will remain in this court.