question jurisdiction exists only when a federal question is presented
within the four corners of plaintiff's properly pleaded complaint. See
id. at 392.
For a federal court to assert jurisdiction over a case based on federal
question, the Constitution, laws or treaties of the United States must
supply an essential element of the plaintiff's cause of action. See Gully
v. First Nat. Bank in Meridian, 299 U.S. 109, 112 (1936); see also
28 U.S.C. § 1331. Additionally, a case is not removable on the basis
of a federal defense, including the defense of preemption. See
Caterpillar, Inc., 482 U.S. at 393. This is so even if the defense is
anticipated in the plaintiff's complaint and "both parties concede that
the federal defense is the only question at issue." Id.; see Lazorko v.
Pennsylvania Hosp., 237 F.3d 242, 248 (3d Cir. 2000). Moreover, the Third
Circuit has adopted the majority rule that counterclaims may not be
considered in the removal context to establish federal jurisdiction. See
Spectator Mgmt. Group v. Brown, 131 F.3d 120, 125 (3d Cir. 1997).
There are, however, two exceptions to the well-pleaded complaint rule
discussed above, the "artful pleading doctrine" and the doctrine of
"complete preemption." The artful pleading doctrine permits a court to
look beyond the plaintiff's allegations to the substance of the
plaintiff's complaint. This approach prevents a plaintiff from
"defeat[ing] removal by failing to plead necessary federal questions."
Franchise Tax Bd. v. Constr. Laborers Vacation Trust, 463 U.S. 1, 22
(1983); Meier v. Hamilton Standard Elec. Sys., Inc., 748 F. Supp. 296,
299 (E.D. Pa. 1990).
The doctrine of complete preemption concerns "matters that Congress has
so completely preempted that any civil complaint that falls within this
category is necessarily federal in character." Lazorko, 237 F.3d at 248.
Complete preemption creates removal jurisdiction even though no federal
question appears on the face of plaintiff's complaint*fn7 See id. The
Supreme Court has concluded that the pre-emptive force of some statutes
is so extraordinary that it "converts an ordinary state common-law
complaint into one stating a federal claim for purposes of the
well-pleaded complaint rule." Caterpillar, Inc., 482 U.S. at 393 (citing
Metropolitan Life Insurance Co. v. Taylor, 481 U.S. 58, 65 (1987)). The
Court further explained that "[o]nce an area of state law has been
completely pre-empted, any claim purportedly based on that pre-empted
state law is considered, from its inception, a federal claim, and
therefore arises under federal law." Id. To date, the United States
Supreme Court has addressed, and applied, the complete preemption
doctrine in the context of only the Labor Management Relations Act
("LMRA"), 29 U.S.C. § 141 et seq., and the Employee Retirement Income
Security Act ("ERISA"), 29 U.S.C. § 1001 et seq. See Avco Corp. v.
Aero Lodge, No. 735, 390 U.S. 557, 560 (1968) (applying the complete
preemption doctrine in the context of the LMRA); Franchise Tax Bd., 463
U.S. at 23-24
(applying the complete preemption doctrine in the context of ERISA).
Even when a statute completely preempts an area of state law, however,
no preemption occurs if the state law claim requires proof of an extra
element in addition to, or instead of, those elements that make up the
preemptive federal claim. See Gates Rubber Co. v. Bando Chem. Indus.,
Ltd., 9 F.3d 823, 847 (10th Cir. 1993); Rosciszewski v. Arete Assocs.,
Inc., 1 F.3d 225, 229-30 (4th Cir. 1993); Kregos v. Associated Press,
3 F.3d 656, 666 (2d Cir. 1993); Computer Assocs. Int'l v. Atlai, Inc.,
982 F.2d 693, 716 (2d Cir. 1992); Steven B. Golden Assocs., Inc. v. Blitz
Art Prod., Inc., 1998 WL 288330 at *2 (E.D. Pa. 1998); Expediters Int'l
of Washington, Inc. v. Direct Line Cargo Mgmt. Serv., Inc.,
995 F. Supp. 468, 479-80 (D.N.J. 1998). Specifically, "[a] state cause of
action is preempted by federal copyright laws if the subject matter of
the state-law right falls within the subject matter of the copyright laws
and the state-law right asserted is equivalent to the exclusive rights
protected by federal copyright law."*fn8 Kregos, 3 F.3d at 666. If,
however, a state cause of action requires an "extra element," in addition
to or instead of an act of reproduction, performance, distribution or
display that would be prohibited under the Copyright Act, there is no
preemption of the state cause of action, provided that "extra element"
changes the nature of the action so that it is qualitatively different
from a copyright infringement claim. See Rosciszewski, 1 F.3d at 229-30;
Gates Rubber Co., 9 F.3d at 847; Kregos, 3 F.3d at 666; Computer Assocs.
Int'l, 982 F.2d at 716.
B. The County's Claim for Breach of Contract Provides No Basis for
Federal Court Jurisdiction.
In Count I of the complaint, the County alleges that GSI breached the
Agreements with the County by: 1) failing to provide a software system in
conformance with the Agreements; 2) threatening to terminate the license
agreement; 3) removing source code to the TAG-HRS program from the
County, which under the Agreements, GSI is required to provide; and 4)
accessing the County's computer system for purposes not permitted under
the Agreements. The County seeks among its items of damages to be
recompensed for hiring outside consultants who attempted to remedy GSI's
The County's assertions sound in state contract law. Via this claim,
the County is attempting to enforce its rights, and in turn, hold GSI to
its obligations, under the Agreements.
GSI counters that by seeking damages for hiring outside consultants to
remedy GSI's alleged deficiencies who were given access to GSI's
intellectual property, the County is implicitly seeking a declaratory
judgment that it was authorized or licensed to allow the outside
consultants access to GSI's intellectual property. If this is so,
according to GSI, authorization is an essential element of the county's
claim for damages for hiring outside consultants, which raises issues
under the federal copyright laws and which needed to be pleaded in the
complaint. Had it been properly pleaded, GSI contends, the federal
question would have been apparent from the face of the complaint.
The court disagrees. The County's claim of authorization or license for
hiring outside consultants is predicated upon the Agreements and made
pursuant to state law. Viewed in this light, the County has stated a prima
facie case of breach of contract under state law. To the extent that GSI
is correct that federal copyright law preempts state law in this case and
that under federal copyright law, the County was not authorized to afford
the outside consultants access to GSI's intellectual property, this
argument is not an attack on the County's prima facie case, but rather it
states a defense. Therefore, the court finds that the issues raised by
GSI concerning federal copyright law are preemption defenses that do not
provide a basis for federal jurisdiction. See Caterpillar, Inc., 482 U.S.
GSI also argues that the court should follow the Fourth Circuit in
extending the doctrine of complete preemption to the Copyright Act. See
Rosciszewski v. Arete Assocs., Inc., 1 F.3d 225, 232 (4th Cir. 1993). As
the court previously noted, thus far, the United States Supreme Court has
extended the doctrine of complete preemption only to cases involving
claims arising under the LMRA and ERISA. See Avco Corp., 390 U.S. at
560; Franchise Tax Bd., 463 U.S. at 23-24. In Rosciszewski, however, the
Fourth Circuit held that section 301(a) of the Copyright Act may also
serve to completely preempt state law claims. See Rosciszewski, 1 F.3d at
232; see also 17 U.S.C. § 301(a).
Assuming, without deciding, that the Fourth Circuit was correct in
including the Copyright Act within the lineage of statutes with the power
to completely preempt an area of state law, GSI's arguments fail
nonetheless*fn9. The County's breach of contract claim cannot be
converted, by the Copyright Act, to a federal claim under the doctrine of
complete preemption because this claim satisfies the extra element test.
Simply stated, the rights and obligations created by the express terms of
the Agreements provide the extra element which changes the nature of the
action so that it is qualitatively different from a federal copyright
infringement claim. See Rosciszewski, 1 F.3d at 229-30; Gates Rubber
Co., 9 F.3d at 847; Kregos, 3 F.3d at 666; Computer Assocs. Int'l, 982
F.2d at 716.
The County's complaint does not claim any protections afforded under
the federal copyright laws. Specifically, the County does not allege that
GSI unlawfully reproduced, displayed or distributed the TAG-HRS program.
Rather, the County is alleging that GSI has failed to provide an
operational TAG-HRS program as required under the Agreements. Thus, the
County is attempting, under the express terms of the Agreements, to
assert its right to an operational TAG-HRS system, and to enforce GSI's
obligation to provide them with such program, as opposed to enforcing any
right granted to it under the federal copyright laws.*fn10 Because, the
County's breach of contract claim is qualitatively different from any
claim arising under federal copyright law, the doctrine of complete
preemption does not federalize this claim.*fn11 See Rosciszewski, 1 F.3d
229-30; Gates Rubber Co., 9 F.3d at 847; Kregos, 3 F.3d at 666;
Computer Assocs. Int'l, 982 F.2d at 716.
C. The County's Claim for Tortious Interference with a Contract
Provides No Basis for Federal Court Jurisdiction.
In Count II of the complaint, the County alleges that GSI tortiously
interfered with the County's contract with another vendor of human
resource and payroll software and services. GSI did so, according to the
County, when it accused the County of violating the license agreement and
communicated these accusations to the computer vendor with which the
County planned to replace GSI.
Under Pennsylvania law, the elements of a claim for tortious
interference with existing or prospective contractual relations are:
(1) the existence of a contractual, or prospective
contractual relation between the complainant and a
third party, (2) purposeful action on the part of
the defendant, specifically intended to harm the
existing relation, or to prevent a prospective
relation from occurring, (3) the absence of
privilege or justification on the part of the
defendant, and (4) the occasioning of actual legal
damage as a result of the defendant's conduct.
Strickland v. University of Scranton, 700 A.2d 979, 985 (Pa. Super. 1997)
(citations omitted). GSI argues that the third element, the absence of
privilege or justification on the part of the defendant, is an issue of
federal law because in determining whether its actions were justified,
issues of federal copyright law must be decided. Under this view, the
complaint would raise a federal question if it were properly pleaded.
Pennsylvania courts have not definitively addressed the issue of who
bears the burden of proof with regard to the issue of justification. As
noted in the Second Restatement of Torts, "there is little consensus on
who has the burden of raising the issue of whether the interference was
improper or not and subsequently of proving that issue; and it can not be
predicted with accuracy what rule will ultimately develop." Restatement
(Second) of Torts § 767 cmt. K. The Restatement advises that:
the question of whether the actor was competing
with the other for the prospective business of a
third person might be treated as a matter of
culpability, for which the burden of pleading
and proving would be on the plaintiff, while the
question of whether there was a special relation
existing between the actor and the third party
making it appropriate for the actor to advise
freely with the third party might be treated as
a matter of justification for which the burden
would be on the defendant.
Id. (emphasis added).