IP Law Daily, COPYRIGHT—11th Cir.: Statutory preemption does not necessarily allow removal in copyright actions, (May 16, 2023)

By Matthew Hersh, J.D.

An unusual split emerges among circuit courts.

The fact that a common law unjust enrichment claim may have been preempted by the Copyright Act was not a free license for the defendant to remove that claim to a federal court, the U.S. Court of Appeals for the 11th Circuit has held. The court, in squarely rejecting the views of all four courts of appeals to have weighed in on the same question, took the unusual step of declining to publish an opinion that might otherwise have created a cert-worthy split on an important jurisdictional issue. (Poet Theatricals Marine, LLC v. Celebrity Cruises, Inc., May 15, 2023, per curiam).

The lawsuit arises out of an arrangement for live entertainment on cruise ships. Cruise line Celebrity Cruises (a sister company of Royal Caribbean) hired Poet Theatricals, a live entertainment company, to put on live shows for its passenger. The relationship between the companies ended in 2016, but the shows went on anyway. That was in any event the contention of the entertainment company, which came to believe that the cruise line was continuing to use videos and still photographs of the shows in its promotional materials.

The entertainment company sued the cruise line in a Florida state court, asserting claims for conversion and unjust enrichment. The cruise line removed the case to the Miami federal court on grounds that the claims were preempted by Section 301 of the Copyright Act. The federal court agreed that the conversion claim was preempted, but found that the unjust enrichment claim was not. The latter claim was not preempted, the court reasoned, because it was based not only on the cruise line’s alleged unauthorized exploitation of the shows but also its failure to remit the royalties and licensing fees due under its agreement with the entertainment company. That alleged failure, the Miami court reasoned, constituted the “extra element” needed to avoid preemption under Section 301. Thus, the federal court concluded, remand to the state court was appropriate.

The cruise line appealed, leading to this decision.

Complete preemption doctrine. The court of appeals affirmed, but on different grounds from the district court. Unlike the district court, the court of appeals found it unnecessary to decide whether the unjust enrichment claim was preempted by the Copyright Act. Even if the claim was preempted, the court of appeals reasoned, it did not matter because the claim did not fall within the exclusive jurisdiction of the federal courts—and therefore could not be the basis for removal.

The court’s conclusion rested on a subtle but important difference between the statutory preemption provision of the Copyright Act and the “complete preemption” doctrine necessary to support removal. Where a state law claim is preempted by a federal statute, as under Section 301 of the Copyright Act, that provides grounds for dismissal of the state law claim. But that does not necessarily mean, the court of appeals emphasized, that a federal court must decide the preemption issue. If a state law claim is originally brought in a state court, the court of appeals noted, the right to removal depends not only on whether Congress intended to preempt those claims but whether Congress intended those claims to be so preempted that they in effect arise under federal law—“completely” preempted, that is. Did that doctrine apply here? The court of appeals found that it did not.

The court of appeals’ reasoning followed two steps. First, the court of appeals assumed—albeit without expressly deciding—that as a general matter, the Copyright Act “provides an exclusive federal cause of action and thus is completely preemptive.” Thus, to the extent the claim could have been brought as a copyright action, then it would be completely preempted and removal would be proper here. But that could not be the case here, the court found, because the entertainment company had not registered its work with the Copyright Office—a precondition for any lawsuit under the Copyright Act. “This isn’t a case, then,” the court of appeals noted, “where [the entertainment company] could have brought a federal claim but didn’t to avoid federal court.” Rather, the court noted, the entertainment company couldn’t have brought a copyright claim at all. Thus, the court reasoned, “its unjust enrichment claim doesn’t fall within the Copyright Act’s exclusive cause of action” and the claim was not completely preempted.

Nor did it matter, the court of appeals noted, that other courts had come out the other way. To be sure, the court noted, the Second, Fourth, Fifth and Sixth Circuits had all held that to the extent that a state law claim falls within the scope of the statutury preemption of Section 301 of the Copyright Act, it was the subject of “complete preemption” as well. But these other circuits were simply wrong, the court of appeals found. This approach, in the court’s view “conflates complete and ordinary preemption.” Complete preemption arises, the court reasoned, not where a state claim falls within a statute’s preemption provision, but where the state-law claim “comes within the scope of the exclusive federal cause of action.” Because the unjust enrichment claim in this case could not have been brought as a federal cause of action, it was not subject to complete preemption.

Commentary. The court of appeal’s decision might be seen by commentators as unusual on several grounds. For one thing, the Supreme Court has held, in Reed Elsevier, Inc. v. Muchnick, 559 U.S. 154 (2010), that the Copyright Act’s registration requirement is not jurisdictional. Thus, a federal court can still hear a claim based on an unregistered work, even though the claim is destined to lose on the merits. Second, to the extent that the court of appeals took such a different view from its companion circuits of the complete preemption doctrine as applied to copyright actions, it is unusual for it to have created such a split in an unpublished decision.

The Case is No. 21-10410.

Attorneys: Timothy H. Crutchfield (Mintz Truppman, PA) for Poet Theatricals Marine, LLC. John C. Carey (Milian Legal Group) for Celebrity Cruises, Inc.

Companies: Poet Theatricals Marine, LLC; Celebrity Cruises, Inc.

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