On March 6, Judge A. Richard Caputo of the federal district court in Scranton, Pennsylvania issued a decision that addressed complete preemption (which is different than the preemption set forth in 17 U.S.C. 301). The Scranton Times and the Times Partner published newspapers in Scranton, Pennsylvania. Wilkes-Barre Publishing Company published a daily newspaper in Wilkes-Barre, Pennsylvania.
Wilkes-Barre began publication of a “Scranton Edition” of it’s daily newspaper which contained obituaries. The Scranton Times and Times Partner alleged that, for a period of five days, Wilkes-Barre copied obituaries from their newspapers and/or websites.
The Scranton Times and the Times Partner filed a complaint in the Court of Common Pleas of Lackawanna County stating claims for misappropriation, unfair competition, conversion, fraud, breach of contract, tortious interference with existing business relations, and unjust enrichment. Wilkes-Barre removed the case to the federal district court in Scranton.
Complete preemption
The Scranton Times and the Times Partner filed a motion to remand the case to the Pennsylvania Court of Common Pleas on the grounds that the federal court didn’t have jurisdiction because the Plaintiffs didn’t bring any federal claims. The Court rejected this argument on the doctrine of complete preemption:
“A state claim which is ‘really one of federal law’ may be removed to federal court because ‘it is an independent corollary of the well-pleaded complaint rule that a plaintiff may not defeat removal by omitting to plead necessary federal questions in a complaint.’ ” “The Supreme Court has held that a state cause of action is ‘really’ a federal cause of action which may be removed to federal court if the “federal cause of action completely preempts … the state cause of action.” Goepel v. National Postal Mail Handlers Union, 36 F.3d 306, 310 (3d Cir.1994) (quoting Franchise Tax Board v. Construction Laborers Vacation Trust, 463 U.S. 1, 24 (1983)). [some citation omitted]
The Court found that while the Plaintiffs’ claims made no mention of federal copyright law, they “may not defeat removal by omitting to plead necessary federal questions” in their complaint. The Court then determined that the state law claims for misappropriation, unfair competition, tortuous interference with business relations and unjust enrichment were completely preempted by the Copyright Act. Thus, the Court found that it had subject matter jurisdiction over the four claims.
The Court further found that it had supplemental jurisdiction over the state law claims of conversion, fraud and breach of contract that weren’t completely preempted.
Misappropriation
The Scranton Times and the Times Partner brought a claim for misappropriation under INS v. AP. Judge Caputo “agree[d] with” the Second Circuit’s holding in National Basketball Association v. Motorola, Inc.,105 F.3d 841 (2d Cir.1997) that “only a narrow ‘hot news’ misappropriation claim survives preemption for actions concerning material within the realm of copyright.” Thus, the Court turned to the extra elements that allow a misappropriation claim “styled on” AP v. INS to survive preemption:
(i) the time-sensitive value of factual information,
(ii) the free-riding by a defendant, and
(iii) the threat to the very existence of the product or service provided by the plaintiff.”
The Court found that Scranton Times and the Times Partner satisfied the (i) time sensitive element because the time and place of funeral services are time sensitive. The Court further found that the allegations made in the complaint that the Wilkes-Barr Publishing Company copied the death notices found in Plaintiffs’ publications into its own newspaper-satisfied the (ii) “free-riding” element.
In regards to the (iii) threat to the very existence of the product or service, the Court found that Plaintiffs’ hadn’t alleged that the use of their obituaries for five days threatened the existence of their publications:
The Court acknowledges that these statements certainly allege that the Defendant caused Plaintiffs some actual loss during the five (5) day period of alleged plagiarism activity, along with speculative future losses in terms of goodwill, customer loyalty, and business relationships. The Court does not, however, find that Plaintiffs have alleged that Defendant’s activities have threatened the existence of their publications or has compromised or provided reduced incentive for Plaintiffs to continue collecting obituaries and printing them for public distribution.
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