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Einiger v. Citigroup, Inc.

United States District Court, S.D. New York

September 12, 2014

CITIGROUP, INC., Defendant.


GREGORY H. WOODS, District Judge.

Plaintiff Scott Einiger moves to remand this case to the New York State Supreme Court pursuant to 28 U.S.C. § 1447(c) and requests an award of attorneys' fees and costs incurred as a result of the removal of this case by Defendant Citigroup, Inc. ("Citigroup"). The Court holds that Einiger's unjust enrichment and quantum meruit claims are preempted by the Copyright Act, and that, as a result, they must be dismissed. The Court further holds that Einiger's remaining claims are not preempted by the Copyright Act and are properly raised under state law. Because the Court declines to exercise supplemental jurisdiction over those claims, Einiger's motion to remand is granted in part and all of his claims except for his unjust enrichment and quantum meruit claims are remanded to state court. Einiger's request for an award of attorneys' fees and costs is denied.

I. Background

According to the allegations in Einiger's complaint, Einiger is an attorney with extensive experience representing physicians in a variety of transactional matters. See Dkt. No. 1, Ex. A ("Compl.") ¶ 5. In September 2011, Einiger was introduced to Citigroup by one of its employees for the purpose of proposing a niche marketing program for physicians and other health care providers. Id. ¶ 7. Einiger met with Citigroup Senior Vice President David Sheehan, who indicated that he was interested in Einiger's proposed marketing program, but also concerned that the cost of developing it could be in the millions of dollars with no guarantee of success. Id. ¶ 9. Einiger responded to Sheehan's concerns by suggesting that the program be developed on a fixed budget; provided, however, that "at the end of the development stage Citigroup could either license the program and pay a royalty fee[, ]... purchase the program and materials outright[, ] or discontinue the program if Citigroup felt Einiger's contributions were not valuable." Id. Sheehan informed Einiger that "if the program was expanded from the beta or developmental stage to one of general adoption his function and payment would be expanded so that he would be fully and fairly compensated...." Id. ¶ 11.

Relying on Sheehan's representation, in January 2012, Einiger entered into an agreement with APC Workforce Solutions, LLC a/k/a ZeroChaos (the "ZeroChaos Agreement"), a third-party that temporarily employed Einiger to provide services to Citigroup. Id. ¶¶ 10-11. The Agreement provided, in relevant part, as follows:

[Einiger] has agreed to develop certain unique intellectual capital over the course of [his] assignment at [Citigroup]. Upon completion of the agreed upon term of assignment, [Einiger] will still own all Intellectual Property [that he] created..., no matter its form, at which time [Einiger] and [Citigroup] may mutually agree to license such Intellectual Property, transact a sales/purchase agreement of the Intellectual Property, or take no action as between [Einiger] and [Citigroup]. If a sales transaction does not occur between [Einiger] and [Citigroup], [Einiger] will retain all rights and ownership of the Intellectual Property in all its forms.

See Dkt. No. 12, Declaration of Kenneth L. Kutner in Support of Motion to Remand ("Kutner Decl."), Ex. B (Agreement) at 10. The Agreement further provided that "ZeroChaos and [Citigroup] shall agree on a billing and payment structure under which [Citigroup] will pay ZeroChaos." Id. at 1. Einiger "agreed to accept a steeply discounted [pay] rate and limited his billing submissions with the understanding that if the program was successful he would receive a long term commitment or buyout" and that "Citigroup could simply walk away from the program if its growth and development was not successful." Compl. ¶¶ 14, 19.

In furtherance of developing a marketing program for Citigroup, Einiger subsequently (1) "[a]ttended meetings and made presentations to Citigroup employees and shared his concepts, notes, ideas, and written materials which were packaged by Citigroup's internal and external marketing teams"; (2) "[o]riginated the concept on how Citigroup could target its marketing to physicians in life cycle segments from those first starting out [to] those who were already established and those who were retired"; (3) "[p]rovided articles and marketing materials which were incorporated into medical associations' electronic and published newsletters thereby expanding the potential client base for the program into the thousands"; (4) "[e]dited and revised materials for the program that were prepared by internal Citigroup employees"; and (5) "[d]eveloped a medical association channel program for Citigroup to coordinate through medical societies in an organized fashion." Id. ¶ 25. Over the course of the next year and a half, Citigroup "documented all of Einiger's ideas, concepts and information, wrote up training materials, made presentations, revised and redrafted materials provided by Citibank employees and created a tracking protocol." Id. ¶ 21.

Ultimately, the marketing program that Einiger developed became known and registered as Citi on Call. Id. ¶ 22. The Citi on Call program was successful and was expanded beyond the beta or developmental stage regionally and then nationally. Id. ¶ 23. Nonetheless, upon the completion of Einiger's assignment, Citigroup did not license or purchase the intellectual property that Einiger had created in developing the program. Id. ¶ 1.

II. Procedural History

In May 2014, Einiger sued Citigroup in New York Supreme Court, New York County, raising claims for breach of contract and breach of the implied covenant of good faith and fair dealing, or, in the alternative, for promissory estoppel, [1] unjust enrichment, and quantum meruit. Id. ¶¶ 35-87. Einiger also raised a fraudulent misrepresentation claim. Id. ¶¶ 88-99. Einiger's contractual claims are based on his assertion that, by appropriating his intellectual property for use in the Citi on Call marketing program without licensing or purchasing that property, Citigroup breached the express or implied terms of the ZeroChaos Agreement. Id. ¶¶ 35-66. Similarly, Einiger's promissory estoppel claim stems from Citigroup's alleged failure to abide by its "clear and unambiguous promise to compensate Einiger for the intellectual property he created on its behalf after the Citi on Call program went beyond the pilot stage." Id. ¶ 68. Einiger's unjust enrichment claim is based on his assertions that, "by utilizing the intellectual property created by [Einiger], Citigroup has received or stands to receive tens of millions of dollars in income and profit from business generated from the program, " and that "[i]t would be inequitable to allow Citigroup to retain all such income and profit without fully compensating [Einiger] for his work, labor, services, ideas, concepts, notes, training, presentations, and intellectual property." Id. ¶¶ 79-80. Finally, Einiger's quantum meruit claim is based principally on his assertion that he provided valuable services to Citigroup in good faith and with the expectation of compensation. Id. ¶¶ 83-85.

In June 2014, Citigroup timely removed the case to this Court. See Dkt. No. 1. Citigroup relied on 28 U.S.C. § 1441(a), asserting that this Court has original jurisdiction over Einiger's complaint under the Copyright Act, 17 U.S.C. § 101 et seq. Id. ¶ 5. According to Citigroup, Einiger's claims are preempted by the Copyright Act because they "amount to nothing more than allegations that [Einiger] owned certain intellectual property within the subject matter of copyright law, and that Citigroup has made and/or is making unauthorized use of that intellectual property by reproducing, distributing, and/or displaying it." Id. ¶ 11.

Einiger now moves to remand this case to state court. Einiger principally argues that his breach of contract claim is not preempted by the Copyright Act because that claim is "predicated upon Citigroup's express promise to pay for [his intellectual property] if it chose to use [that property], " and the Second Circuit has held that "a claim for a breach of contract including a promise to pay is qualitatively different from a suit to vindicate a right included in the Copyright Act and is not subject to preemption." Dkt. No. 14, Plaintiff's Memorandum of Law in Support of Motion to Remand ("Pl. Mem.") at 5-6 (citing Forest Park Pictures v. Universal Television Network, Inc., 683 F.3d 424 (2d Cir. 2012)). Einiger does not meaningfully address whether his quasi-contractual claims for promissory estoppel, unjust enrichment, and quantum meruit are preempted by the Copyright Act.[2]

In opposition to Einiger's motion, Citigroup contends that Einiger's quasi-contractual claims are preempted by the Copyright Act because they are not qualitatively different from copyright infringement claims, and that, if the Court agrees with this contention, it need not decide whether Einiger's remaining claims are preempted because it may exercise supplemental jurisdiction over those claims. See Dkt. No. 15, Defendant Citigroup, Inc.'s Memorandum of Law in Opposition to Plaintiff's Motion to Remand ("Def. Mem.") at 6-11. Citigroup further argues that, in any event, Einiger's breach of contract clam is preempted by the Copyright Act because the ...

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