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Eclipse Aerospace, Inc. v. Vne Jet, Inc.

United States District Court, D. Nevada

July 31, 2014

ECLIPSE AEROSPACE, INC., Plaintiff,
v.
VNE JET, INC.; APEX AVIATION, LLC; SCOTT BULLOCK; RAY KINNEY; and FINLEY LEDBETTER, Defendants.

ORDER

GLORIA M. NAVARRO, Chief District Judge.

Pending before the Court is the Motion to Remand (ECF No. 7) filed by Plaintiff Eclipse Aerospace, Inc. ("Plaintiff"). Defendants VNE Jet, Inc. ("VNE"); Apex Aviation, LLC; Scott Bullock; Ray Kinney; and Finley Ledbetter (collectively "Defendants") filed a Response (ECF No. 17) and Plaintiff filed a Reply (ECF No. 20). Because the Court lacks subject matter jurisdiction over this action, the case is remanded to the Eighth Judicial District Court.

I. BACKGROUND

On July 2, 2012, Plaintiff, an aircraft manufacturer, entered into a License Agreement ("Agreement") with Defendant VNE, an aircraft servicing company. (Notice of Removal Ex. A ("Compl."), ¶¶ 8-9, ECF No. 1.) Per the Agreement, Defendants used Plaintiff's intellectual property ("IP") to create five "rig boards" for use in inspecting Plaintiff's aircraft. ( Id. ¶¶ 10, 17.)

Concerned that Defendants were not properly licensed to perform inspections, Plaintiff revoked the Agreement in April 2013. ( Id. ¶¶ 10, 22.) In March 2014, Defendants notified Plaintiff that they planned to sell their assets in a private sale the following month. ( Id. ¶¶ 25-26.) Believing that Defendants planned to sell the rig boards, Plaintiff commenced the action in Nevada state court and filed a motion seeking a temporary restraining order to delay or cancel the sale and regain possession of the boards, which was granted. (Compl. ¶ 16; Notice of Removal Ex. B, at 2, ECF No. 1.) In its Complaint, Plaintiff alleges that Defendants never acknowledged the termination of the Agreement, failed to destroy or return the rig boards in accordance with the Agreement, and continued to use the boards to service Plaintiff's aircraft. (Compl. ¶¶ 11, 27, ECF No. 1.) The Complaint raises the following claims: (1) breach of contract, as Defendants violated the Agreement by failing to discontinue use of the IP and return the rig boards and any other tangible forms of the IP; and (2) conversion, as Defendants "intentionally took possession of the rig boards and have used them to wrongfully service [Plaintiff's] aircraft" after Plaintiff revoked the Agreement. ( Id. ¶¶ 29-38.)

Defendants removed the action, alleging that this Court has subject matter jurisdiction under 28 U.S.C. § 1331 because the case arises under federal copyright laws. (Notice of Removal ¶ 8, ECF No. 1.) Subsequently, Defendants filed an Answer and Counterclaim. (ECF No. 5.) Plaintiff then filed the instant Motion to Remand to state court in which Plaintiff argues that its Complaint seeks recovery from Defendants "based solely on state law contract rights, " and not under the federal copyright statutes. (Mot. to Remand ¶¶ 1-2, 6, ECF No. 7.)

II. LEGAL STANDARD

"Federal courts are courts of limited jurisdiction. They possess only that power authorized by Constitution and statute." Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). For this reason, "[i]f at any time before final judgment it appears that the district court lacks subject matter jurisdiction, the case shall be remanded." 28 U.S.C. § 1447(c).

A defendant may remove an action to federal court only if the district court has original jurisdiction over the matter. 28 U.S.C. § 1441(a). "Removal statutes are to be strictly construed' against removal jurisdiction." Nevada v. Bank of America Corp., 672 F.3d 661, 667 (9th Cir. 2012) (quoting Syngenta Crop Prot., Inc. v. Henson, 537 U.S. 28, 32 (2002)). Specifically, federal courts must reject federal jurisdiction "if there is any doubt as to the right of removal in the first instance." Gaus v. Miles, 980 F.2d 564, 566 (9th Cir. 1992) (quoting Libhart v. Santa Monica Dairy Co., 592 F.2d 1062, 1064 (9th Cir. 1979)). The defendant always has the burden of establishing that removal is proper. Gaus, 980 F.2d at 566.

District courts have subject matter jurisdiction over "all civil actions arising under the Constitution, laws, or treaties of the United States." 28 U.S.C. § 1331. Per the "well-pleaded complaint rule, " which governs federal question jurisdiction, district courts have subject matter jurisdiction "only when a federal question is presented on the face of the [plaintiff's] properly pleaded complaint." Caterpillar, Inc. v. Williams, 482 U.S. 386 (1987); see also Louisville & Nashville R.R. Co. v. Mottley, 211 U.S. 149, 152 (1908). The Ninth Circuit articulated the following test for determining when a complaint invokes federal jurisdiction under the Copyright Act:

[A]n action arises under the federal copyright laws if and only if the complaint is for a remedy expressly granted by the Act, ... or asserts a claim requiring construction of the Act, ... or, at the very least and perhaps more doubtfully, presents a case where a distinctive policy of the Act requires that federal principles control the disposition of the claim.

Vestron, Inc. v. Home Box Office, Inc., 839 F.2d 1380, 1381 (9th Cir. 1988) (quoting Effects Assocs., Inc. v. Cohen, 817 F.2d 72, 73 (9th Cir. 1987) (internal quotation marks omitted)).

III. DISCUSSION

Here, Defendants base their removal of this action on federal question jurisdiction pursuant to 28 U.S.C. § 1331. However, Defendants have failed to carry their burden of establishing that this Court has subject matter jurisdiction over this case because they have not demonstrated that Plaintiff ...


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