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Sign Designs, Inc v. Johnson United

April 21, 2011

SIGN DESIGNS, INC., PLAINTIFF,
v.
JOHNSON UNITED, INC., DBA UNITED SIGN SYSTEMS; CHARLES GAY; ANDREW SOARES; BRIAN CAMPBELL; CALCRAFT CORPORATION, DEFENDANTS.



The opinion of the court was delivered by: Morrison C. England, Jr. United States District Judge

MEMORANDUM AND ORDER

Through this action, Plaintiff Sign Designs ("Plaintiff") seeks redress from Defendants pursuant to state law and the Lanham Act*fn1 for the alleged misappropriation of its trade secrets. Plaintiff originally filed the action in San Joaquin County Superior Court on June 3, 2008. On February 2, 2011, more than two and a half years later, Defendant Calcraft Corporation ("Calcraft"), citing federal question jurisdiction, removed the action to this Court.

Presently before the Court is Plaintiff's Motion to Remand and For Attorney's Fees. (ECF No. 9.) In support of its motion, Plaintiff contends that removal was untimely. For the reasons set forth below, Plaintiff's motion is granted.*fn2

BACKGROUND*fn3

Plaintiff is a California corporation in the business of designing, manufacturing, and selling signs. Plaintiff alleges that, while employed by Plaintiff, Defendants Charles Gay and Andrew Soares acquired design drawings and photographs belonging to Plaintiff. Defendant United Sign Systems ("USS") later hired Mr. Gay and Mr. Soares, thereby gaining access to the design drawings and photographs. According to Plaintiff, USS altered the design drawings and photographs to conceal their origin, and sold them to customers falsely representing them as its own. Calcraft also purportedly used the design drawings and photographs during the course of its business without proper attribution to Plaintiff.

On February 22, 2010, Plaintiff filed the First Amended Complaint ("FAC") in state court. The Third Cause of Action pled in the FAC specifically involves the Lanham Act and is captioned "Lanham Act: False Designation of Origin - 15 U.S.C. § 1125(a)."

Plaintiff's Lanham Act claim alleges so-called "reverse passing off" in claiming that Defendants wrongfully misappropriated Plaintiff's designs, altered them to conceal their true origin, then passed off the designs as their own. On March 23, 2010, Calcraft filed a demurrer to the FAC, specifically responding to the Lanham Act claim.

On May 27, 2010, Plaintiff filed the Second Amended Complaint ("SAC"), again expressly purporting to state a claim for reverse passing off pursuant to the Lanham Act. Like its predecessor, the SAC specifically captions its Third Cause of Action as being made under the Lanham Act. Moreover, the SAC reiterates that Defendants "wrongfully misappropriated ... Plaintiff's design drawings and photographs ... (a) altered them to conceal their true origin, (b) used them to unlawfully solicit Plaintiff's customers ... and (c) sold them to those customers falsely designating their origin."

On January 4, 2011, Plaintiff served Calcraft with an interrogatory response alleging that USS had bid on signage jobs using "design drawings and/or feature of those drawings ... copied with only slight modification from the design drawings prepared and/or photographs taken by [Plaintiff]." (Pl.'s Interrog. Resp. 4.) Despite the Lanham Act claim clearly articulated in both the FAC and the SAC, Calcraft contends that the interrogatory response provides the first notice to Defendants that Plaintiff was pursuing a federal claim: namely, a claim made pursuant to the Federal Copyright Act.

On the basis of the January 4, 2011 interrogatory responses, which Calcraft contends triggered its right to remove this matter, Calcraft asserts that its subsequent February 2, 2011 removal was timely.

ANALYSIS

A. Motion To Remand

It is fundamental that federal courts are courts of limited jurisdiction. Vacek v. United States Postal Serv., 447 F.3d 1141, 1145 (9th Cir. 2006). As a result, there is a "strong presumption" against removal jurisdiction, and the defendant bears the burden of establishing that removal is proper. Gaus v. Miles, Inc., 980 F.2d 564, 566 (9th Cir. 1992). Generally, a notice of removal must be filed within thirty days from the date the Defendant receives the initial complaint. 28 U.S.C. § 1446(b). However, if the case stated by the initial complaint is not removable, the notice of removal must be filed within thirty days of receipt of an amended pleading, notice, or other paper from which it can be ascertained that the case is removable. Id. Federal question jurisdiction is established if a plaintiff pleads a colorable claim arising under the Constitution or laws of the United States. Arbaugh v. Y&H Corp., 546 U.S. 500, 513 (2006).

On February 22, 2010, Plaintiff filed the FAC. As its Third Cause of Action in the FAC, Plaintiff expressly asserts a Lanham Act claim. (Notice of Removal ΒΆ 5.) The SAC, filed May 27, 2010, also ...


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