The opinion of the court was delivered by: Jensen, District Judge.
On February 3, 1999, the Court heard argument on plaintiffs'
motion to remand this case to the state courts. David M. Given
and Paul Karl Lukacs appeared on behalf of plaintiffs; Paul
Raynor Keating appeared for defendant Jello Biafra. Having
considered the arguments of counsel, the papers submitted, the
and the record in this case, the Court hereby GRANTS the motion.
A. Factual Background and Procedural History
Plaintiffs are Decay Music, a general partnership, and three of
its four partners. The four partners in Decay Music once
comprised the rock music band called the Dead Kennedys. The three
individual plaintiffs are three of the former members of the Dead
Kennedys and three of the partners in Decay Music: East Bay Ray,
Klaus Flouride, and D.H. Peligro. Defendant is the fourth member
and partner, Jello Biafra. All of the parties are California
domicilaries. In 1986, the band ended its recording and touring
activities because of differences among the band members.
Decay Music was formed as a California general partnership in
1981 by the four members of the Dead Kennedys. The four band
members are equal partners, each having a one-quarter voting and
ownership interest. Plaintiffs describe Decay Music as the
"exclusive business and administrative entity for all Dead
Kennedys business endeavors." Complaint ¶ 12. Plaintiffs claim
Decay Music has exclusive rights over the Dead Kennedys' musical
compositions and sound recordings ("the Catalog").
In 1979, the Dead Kennedys formed Alternative Tentacles to act
as their own record label. An oral agreement in 1986 among the
band members transferred ownership of Alternative Tentacles from
Decay Music to Biafra individually. On September 30, 1998,
plaintiffs met during a Decay Music partnership meeting and on a
3-0 vote terminated Alternative Tentacles' right to administer
and exploit the Catalog, effective October 1, 1998. Biafra claims
that he offered to send a proxy to the meeting, which he was
unable to attend, but that his offer was refused. Around October
23, 1998, Biafra paid a sum of royalties into a trust account. He
conditioned release of that money to the partnership and the
individual partners on his approval or the existence of a court
order requiring him to release the funds.
On October 29, 1998, plaintiffs brought an action in San
Francisco Superior Court against Mordam Records and against
Biafra, both in his status as an individual and as the owner of
the sole proprietorship Alternative Tentacles Records.*fn1 The
complaint alleges seven state law causes of action: (1) a
declaratory judgment that Decay Music validly terminated
Alternative Tentacles' right to exploit the Catalog; (2) breach
of Biafra's fiduciary duties to his partners through
self-dealing; (3) conversion by Biafra of income that rightfully
belongs to the partnership; (4) breach of the oral agreement that
transferred ownership of Alternative Tentacles to Biafra from
Decay Music; (5) unjust enrichment of Biafra at the expense of
his partners; (6) engagement in unfair business practices by
Biafra and Mordam Records; and (7) injunctive relief to preserve
Decay Music's exclusive rights to exploit the Catalog against
Biafra and Mordam.
Defendant Mordam counter-claimed in interpleader for resolution
of to whom it should pay royalties: Decay Music or Alternative
Tentacles. Mordam distributes records at wholesale for
Alternative Tentacles pursuant to an oral agreement with Biafra.
Mordam has filed a notice of non-opposition to the motion to
Defendant Biafra removed the case to federal court on the basis
that the complaint, in particular counts one and seven, pled a
claim arising under the Copyright Act. As one of his affirmative
defenses, Biafra contends that plaintiffs' claims are barred in
whole or in part by Biafra's rights as an author in the sound and
video recordings and in the underlying musical compositions.
According to Biafra, he retained individual title to his rights
in the works and licensed his rights to Alternative Tentacles.
Biafra claims that Decay Music merely acts as an administrator
for the purposes of distributing royalties and that the
partnership has no rights in the underlying works.
Biafra has counterclaimed with ten causes of action: (1)
declaratory judgment that he is an author with rights in the
works that have not been assigned or licensed and which he is
free to exercise; (2) breach of fiduciary duty; (3) breach of
contract; (4) conversion; (5) defamation; (6) intentional
inducement of breach of contract; (7) intentional interference
with prospective economic advantage; (8) conspiracy; (9) unfair
competition under California Business and Professions Code §
17200; and (10) injunctive relief under the Copyright Act.
Plaintiffs now move to have the case remanded to state court
for lack of federal subject matter jurisdiction.
"Only state-court actions that originally could have been filed
in federal court may be removed to federal court by the
defendant. Absent diversity of citizenship, federal-question
jurisdiction is required." Caterpillar Inc. v. Williams,
482 U.S. 386, 392, 107 S.Ct. 2425, 96 ...