Smart Communications Holding, Inc. v. VendEngine, Inc.

CourtDistrict Court, M.D. Tennessee
DecidedJanuary 30, 2023
Docket3:21-cv-00053
StatusUnknown

This text of Smart Communications Holding, Inc. v. VendEngine, Inc. (Smart Communications Holding, Inc. v. VendEngine, Inc.) is published on Counsel Stack Legal Research, covering District Court, M.D. Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Smart Communications Holding, Inc. v. VendEngine, Inc., (M.D. Tenn. 2023).

Opinion

IN THE UNITED STATES DISTRICT COURT FOR THE MIDDLE DISTRICT OF TENNESSEE NASHVILLE DIVISION

SMART COMMUNICATIONS ) HOLDING, INC., ) ) NO. 3:21-cv-00053 Plaintiff, ) ) JUDGE RICHARDSON v. ) ) VENDENGINE, INC., ) ) Defendant. )

MEMORANDUM OPINION AND ORDER REMANDING TO STATE COURT Pending before the Court is Plaintiff’s Motion to Remand (Doc. No. 14, “Motion”).1 Plaintiff filed a memorandum in support of the Motion (Doc. No. 15). Defendant filed a response (Doc. No. 20, “Response), whereafter Plaintiff filed a reply (Doc. No. 21, “Reply”). For the reasons discussed herein, the Court will grant Plaintiff’s motion. BACKGROUND A. Factual Background2 Plaintiff, Smart Communications Holding, Inc. (“Smart Communications”), is a Florida corporation. (Doc. No. 1-1 at ¶ 2). Defendant, VendEngine is a Tennessee corporation. Id. at ¶ 3. Smart Communications created a postal-mail-elimination system called MailGuard, which allows for efficient mail screening and distribution in detention facilities. Id. at ¶¶ 7-15. Smart

1 Also pending before the Court is Defendant’s Motion to Dismiss (Doc. No. 8). Briefing on the Motion to Dismiss was stayed pending the Court’s resolution of the Motion to Remand. (Doc. No. 17).

2 The Court takes these background facts from the Complaint and, as indicated below, accepts them as true for purposes of the Motion. Communications met with Rutherford County to discuss Rutherford County using MailGuard in its detention center. Id. at 17. Rutherford County instructed its commissary vendor, VendEngine, to work with Smart Communications to effectuate this move. Id. at 18. VendEngine and Rutherford County entered into an agreement, but VendEngine and Rutherford County abruptly ceased communications with Smart Communications after they had received Smart Communications’ s

trade secrets. Id. at 20-23. VendEngine then launched an application called MailRoom that Rutherford County subsequently implemented in its detention facility. Id. at 24. This application has many of the same functions as does Smart Communications’s MailGuard. Id. at 27-29. HLFIP had patented MailGuard (United States Patent No. 10,291,617) and sued Rutherford County in this Court for patent infringement in HLFIP Holdings, Inc. d/b/a Smart Commc’ns IP Holdings v. Rutherford Cty., TN, et al., No. 3:19-cv-00714. B. Procedural Posture Smart Communications instituted this action by filing a complaint (Doc. No. 1-1) against Defendants in Tennessee state court, namely, the Chancery Court of Davidson County. In the

complaint, Smart Communications asserted claims (all under state law) for breach of contract, violation of the Tennessee Uniform Trade Secrets Act, promissory fraud, unfair competition, and to recover attorney’s fees in a related patent infringement case, HLFIP Holdings, Inc. d/b/a Smart Commc’ns IP Holdings v. Rutherford Cty., TN, et al., No. 3:19-cv-00714, (M.D. Tenn. Oct. 21, 2019.). (Doc. No. 1-1 at ¶ 30-73). The last of these claims is of a type (hereinafter, “Pullman claim”) authorized under Pullman Standard, Inc. v. Abex Corp., 693 S.W.2d 336 (Tenn. 1985).3

3 Pullman establishes two kinds of claims, one called “indemnity” and the other called “independent-tort of another.” Engstrom v. Mayfield, 195 Fed. App’x 444, 451 (6th Cir. 2006). The former kind of Pullman claim is available to those who seek indemnification from being forced to defend themselves in litigation. Although the Complaint captions Plaintiff’s Pullman claim as one for “[i]ndemnity,” this claim is actually undeniably of the “independent-tort-of-another” kind because it clearly seeks attorney’s fees allegedly

On January 22, 2021, VendEngine removed the case to this Court under 28 U.S.C. §§ 1441, 1446, and 1454, asserting primarily that this Court has so-called federal-question jurisdiction over this action under 28 U.S.C. § 1331 because Plaintiff’s Pullman claim requires resolution of a question of (federal) patent law. (Doc. No. 1 at ¶¶ 6, 12-15).4 On February 10, 2021, Plaintiff filed the Motion, which seeks to remand this entire action

to state court (and not just all claims other than the Pullman claim, which, as noted in a footnote below, theoretically could be a possibility here). According to Plaintiff, remand pursuant to 28 U.S.C. § 1447 is appropriate because (again according to Plaintiff): (a) the so-called forum- defendant rule bars removal based on diversity jurisdiction when the defendant is a citizen of the forum state, and VendEngine is a citizen of Tennessee; and (b) federal-question jurisdiction is lacking because Plaintiff’s claims all were state-law claims, and the Pullman claim does not “arise under” federal law. (Doc. No. 14 at 1-13). Thereafter, the Response and Reply were filed.

incurred not in defensive litigation, but rather in offensive litigation Plaintiff took against a purported tortfeasor that supposedly injured Plaintiff.

4 Defendant also asserted that Plaintiff’s other claims “are removable pursuant to 28 U.S.C. § 1441(c) as they would be joined with a separate and independent cause of action [i.e., the Pullman claim] with[in] the jurisdiction of the district courts of the United States as conferred by 28 U.S.C. § 1331.” (Doc. No. 1 at ¶ 16). Defendant then undertook to explain why the other causes of action fell within this Court’s supplemental jurisdiction and diversity jurisdiction. (Id. at ¶ 17, 18); this attempted explanation was necessary in furtherance of Defendant’s attempt to keep all claims (and not just the Pullman claim) in federal court, because if one claim in a removed action arises under federal law, but other claims either are not within the original or supplemental jurisdiction of the district court or have been made nonremovable by statute, the entire action may be removed but then the district court must sever those other claims and remand them to state court. See 28 U.S.C. §§ 1441(c). This means that if the Pullman claim in fact arises under federal law, the entire action is removable, but then the Court would be required to determine whether some or all of the other claims must be severed and remanded while the Pullman claim remains in this Court. For this reason, when the Court refers to removability (or lack thereof) based on the Pullman claim, it is referring to removability (or lack thereof) of the entire case (and not just the Pullman claim) based on the Pullman claim—with the understanding that if the Court were to find that the entire case indeed was removable (and thus properly removed by Defendant), the practical effect of that finding potentially could be largely eviscerated by the subsequent remand of one or more of the claims other than the Pullman claim. LEGAL PRINCIPLES CONCERNING REMOVAL In Gentek Bldg. Prod., Inc. v. Sherwin-Williams Co., 491 F.3d 320 (6th Cir.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Caterpillar Inc. v. Williams
482 U.S. 386 (Supreme Court, 1987)
John T. Eastman v. Marine Mechanical Corporation
438 F.3d 544 (Sixth Circuit, 2006)
Gunn v. Minton
133 S. Ct. 1059 (Supreme Court, 2013)
Mikulski v. Centerior Energy Corp.
501 F.3d 555 (Sixth Circuit, 2007)
Pullman Standard, Inc. v. Abex Corp.
693 S.W.2d 336 (Tennessee Supreme Court, 1985)
Neurorepair, Inc. v. Nath Law Group
781 F.3d 1340 (Federal Circuit, 2015)
Engstrom v. Mayfield
195 F. App'x 444 (Sixth Circuit, 2006)
Intellisoft, Ltd. v. Acer America Corp.
955 F.3d 927 (Federal Circuit, 2020)

Cite This Page — Counsel Stack

Bluebook (online)
Smart Communications Holding, Inc. v. VendEngine, Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/smart-communications-holding-inc-v-vendengine-inc-tnmd-2023.