Russian School of Mathematics, Inc. v. Sinyavin

Background

Russian School of Mathematics, Inc. began the action in the Supreme Court of the State of New York, County of Westchester, against Irene Sinyavin and Logicus, LLC. The complaint alleged that Sinyavin, a former employee, violated restrictive provisions in an employment agreement and a separation agreement. Those provisions included non-disclosure, non-competition, non-solicitation, and non-disparagement obligations. The complaint also asserted claims for tortious interference with contract, misappropriation of trade secrets, and unfair competition.

The defendants removed the action to federal court. Their original notice relied on diversity jurisdiction, which is federal jurisdiction based on the parties’ citizenship. Their amended notice abandoned that basis and instead relied on federal-question jurisdiction, including the federal courts’ jurisdiction over copyright claims. The plaintiff moved to remand, meaning to return the case to state court, and also asked the court to hold the defendants in contempt.

Federal Jurisdiction and Copyright Preemption

Federal courts have limited subject-matter jurisdiction, meaning authority to hear only cases authorized by the Constitution and federal law. The removing party bears the burden of showing that federal jurisdiction exists, and doubts about removal are resolved in favor of remand.

The defendants argued that the plaintiff’s claims arose under the Copyright Act because the employment agreement’s definition of “Confidential Information” included “copyrightable works.” The court rejected that argument. The complaint asserted no Copyright Act claims, did not refer to copyrights, and did not identify any particular copyrightable works. The plaintiff also confirmed that it was not alleging that the defendants reproduced, adapted, performed, distributed, or displayed confidential information.

The court explained that copyright preemption can sometimes convert a state-law claim into a federal claim. But the court concluded that the claims here were not preempted. The contract claims sought to enforce promises created by the agreements, rather than rights equivalent to copyright rights. The tortious-interference claim concerned alleged inducement of a contractual breach. The trade-secret and unfair-competition claims involved alleged breaches of confidential or fiduciary duties and misuse of trade secrets. Those additional duties made the claims different from copyright-infringement claims.

Counterclaims

The defendants also relied on counterclaims seeking injunctive and declaratory relief, including declarations that Sinyavin had not violated the employment agreement and that the defendants had not violated the Copyright Act. The court held that the counterclaims were not properly before it because the defendants had filed them as standalone documents rather than as part of an allowed pleading such as an answer.

The court further held that, even if the counterclaims had been properly filed, they would not establish federal copyright jurisdiction. A request for a declaration does not itself create federal jurisdiction. The court considered the nature of the threatened underlying action and concluded that the counterclaims concerned alleged breaches of the employment agreement, confidential relationships, and trade-secret duties, not interpretation of the Copyright Act.

Disposition

The court held that it lacked subject-matter jurisdiction over the action. It therefore granted the branch of the plaintiff’s motion seeking remand and remanded the case to the Supreme Court of the State of New York, County of Westchester. The court did not rule on the plaintiff’s contempt request or the defendants’ pre-motion request for a preliminary injunction. The Clerk was directed to terminate the pending motions and close the federal case.