Reach Global Inc. v. Ridenhour

Background

Reach Global, Inc., Reach Music Publishing, Inc., and Terrordome Music Publishing, LLC sued Carlton Ridenhour and Bring the Noize Music, Inc. in New York Supreme Court. The plaintiffs sought declarations that agreements concerning copyrights in musical compositions were valid, that they had rights under those agreements, and that the defendants could not rescind those rights. They also sought indemnification, including attorneys’ fees and other expenses.

The defendants answered, asserted counterclaims, and filed a third-party complaint against Michael Closter. They sought, on common-law grounds, to have the agreements declared void and to have the rights in the songs confirmed as belonging to the defendants. Plaintiffs and Closter removed the case to federal court under 28 U.S.C. §§ 1441 and 1454, arguing that the counterclaims arose under the Copyright Act or were preempted by it. The matter before the court included the plaintiffs’ motion to dismiss part of the counterclaims and third-party causes of action.

Subject-Matter Jurisdiction

The court applied the rule that federal jurisdiction under 28 U.S.C. § 1338(a) exists when a civil action arises under a federal copyright law. Relying on the test discussed in Bassett v. Mashantucket and T.B. Harms Co. v. Eliscu, the court explained that a case generally arises under the Copyright Act if it seeks a remedy expressly granted by that Act or requires construction of the Act.

The court found that neither requirement was met. The plaintiffs’ claims were contract claims seeking declarations about the parties’ agreements. The defendants’ counterclaims involved conversion, fraud, and an accounting under an underlying contract, and did not assert causes of action under the Copyright Act.

The court also rejected the argument that the conversion claim required interpretation of the Copyright Act. The court said the dispute turned on whether the plaintiffs had obtained the copyrights through agreements allegedly procured by fraud, making the issue one of contract and state common law. The parties did not dispute the enforceability of the copyrights or ask the court to decide the scope of copyright protection or the meaning of the Act.

The court further held that complete preemption did not create jurisdiction. The alleged conversion involved wrongfully assuming control over intellectual property, not reproduction, adaptation, performance, distribution, or display—the types of conduct covered by the exclusive rights protected by copyright law.

Other Jurisdictional Grounds

The court found no diversity jurisdiction under 28 U.S.C. § 1332. Because there was no federal cause of action, the court also held that it could not exercise supplemental jurisdiction over the state-law claims under 28 U.S.C. § 1367.

Disposition

The court concluded that it lacked subject-matter jurisdiction over the dispute. It remanded the case to the Supreme Court of New York, Index No. 656288/2019, and directed the Clerk to terminate the open motion, ECF No. 4. The opinion did not decide which party owned the copyrights or whether the defendants’ state-law claims would succeed.