Riley v. Dozier Internet Law, PC , 371 F. App'x 399 ( 2010 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 09-1044
RONALD J. RILEY,
Plaintiff – Appellant,
v.
DOZIER INTERNET LAW, PC; JOHN DOZIER,
Defendants – Appellees.
Appeal from the United States District Court for the Eastern
District of Virginia, at Richmond. Henry E. Hudson, District
Judge. (3:08-cv-00642-HEH)
Argued: January 27, 2010 Decided: March 24, 2010
Before WILKINSON, DUNCAN, and DAVIS, Circuit Judges.
Affirmed by unpublished opinion. Judge Wilkinson wrote the
majority opinion, in which Judge Duncan joined. Judge Davis
wrote a dissenting opinion.
ARGUED: Paul Alan Levy, PUBLIC CITIZEN LITIGATION GROUP,
Washington, D.C., for Appellant. John W. Dozier, Jr., DOZIER
INTERNET LAW, PC, Glen Allen, Virginia, for Appellees. ON
BRIEF: Gregory Beck, PUBLIC CITIZEN LITIGATION GROUP,
Washington, D.C., for Appellant. Donald E. Morris, Nicholas T.
Moraites, DOZIER INTERNET LAW, PC, Glen Allen, Virginia, for
Appellees.
Unpublished opinions are not binding precedent in this circuit.
WILKINSON, Circuit Judge:
Plaintiff-appellant Ronald J. Riley (“Riley”) commenced
this action to obtain a declaratory judgment that he was not
liable to defendants-appellees John W. Dozier, Jr. (“Dozier”)
and Dozier Internet Law, P.C. (“DIL”) for defamation or
trademark infringement. The district court abstained from
exercising jurisdiction and consequently dismissed the action so
that the dispute could be resolved in a pending state court
proceeding in which DIL had sued Riley for trademark
infringement. Reviewing for abuse of discretion, we hold that
the district court’s decision to abstain was within its
discretion under Wilton v. Seven Falls Co., 515 U.S. 277 (1995)
and Brillhart v. Excess Ins. Co., 316 U.S. 491 (1942).
Accordingly, we affirm the judgment.
I.
Defendant Dozier is a Virginia lawyer and founder of
defendant DIL, a Virginia law firm that specializes in
intellectual property law. Dozier maintains a website for his
law firm at cybertriallawyer.com. The underlying dispute in
this case arose when plaintiff Riley, a Michigan resident and
head of a nonprofit corporation, created the website
cybertriallawyer-sucks.com. As the name of the website
2
suggests, cybertriallawyer-sucks.com was critical of Dozier and
his law firm.
The first lawsuit was initiated in Virginia state court on
September 4, 2008. In that suit, DIL sued Riley for trademark
infringement, alleging that Riley’s website infringed on the
name “Dozier Internet Law, P.C.,” a registered trademark with
the Commonwealth of Virginia. In response to the state action,
on October 2, 2008, Riley filed his own lawsuit in the United
States District Court for the Eastern District of Virginia.
Riley brought the action against both Dozier personally and DIL.
In his complaint, Riley sought a declaratory judgment that his
website neither defamed Dozier nor infringed on DIL’s trademark.
Riley also sought an injunction against any future claims of
defamation or trademark infringement and damages caused by the
attempted suppression of his website, including “nominal
damages,” “punitive damages . . . in the amount of $1000,” and
“reasonable attorney’s fees and costs.” Simultaneously with the
filing of his complaint, Riley also attempted to remove the
state court action to federal court.
Upon motions by the defendants, the district court remanded
the case back to state court and dismissed the case. In
dismissing, the district court explained that even if it had
subject matter jurisdiction over the case, it “decline[d] to
adjudicate this case under the abstention doctrine established
3
in Burford v. Sun Oil Co., 309 U.S. 315 (1943).” It found that
the state court action would afford the parties “timely and
adequate state court review,” and that federal adjudication
would “be disruptive of state efforts to establish a coherent
policy with respect to a matter of substantial public concern.”
Riley promptly filed a motion to reconsider, which the
district court denied. In doing so, the district court
reiterated that even if it had jurisdiction, it “must abstain
from exercising jurisdiction,” this time citing Employers
Resource Management Co. v. Shannon, 65 F.3d 1126, 1134-35 (4th
Cir. 1995), a case based on the abstention doctrine of Younger
v. Harris, 401 U.S. 37 (1971). The district court noted that
“Virginia’s interest in adjudicating claims involving a state-
registered trademark is both clear and compelling, and the
state-court proceeding affords Plaintiff an adequate opportunity
to present his claims.”
II.
Riley now appeals the district court’s dismissal order,
claiming that the court abused its discretion in abstaining.
A.
The Supreme Court held in Brillhart v. Excess Ins. Co.,
316 U.S. 491 (1942) and reaffirmed in Wilton v. Seven Falls Co.,
515 U.S. 277 (1995) that when a plaintiff brings a declaratory
4
judgment action, the district court enjoys discretion in
deciding whether to assert jurisdiction over the action or
abstain from hearing it. This discretion stems from the federal
Declaratory Judgment Act, which expressly provides that district
courts “may declare the rights and other legal relations of any
interested party seeking a declaration.” 28 U.S.C. § 2201(a)
(emphasis added). Given this “nonobligatory” language, the
Supreme Court has explained that “[i]n the declaratory judgment
context, the normal principle that federal courts should
adjudicate claims within their jurisdiction yields to
considerations of practicality and wise judicial
administration.” Wilton, 515 U.S. at 288.
Thus, even when a court has jurisdiction, it “is
authorized, in the sound exercise of its discretion, to stay or
to dismiss an action seeking a declaratory judgment.” Id. This
court has likewise recognized that “district courts have great
latitude in determining whether to assert jurisdiction over
declaratory judgment actions.” United Capitol Ins. Co. v.
Kapiloff, 155 F.3d 488, 493 (4th Cir. 1998) (citations and
internal quotations omitted).
Although of course not unbounded, see Volvo Const. Equip.
N. Am., Inc. v. CLM Equip. Co., 386 F.3d 581, 594 (4th Cir.
2004), a district court’s discretion “is especially crucial
when, as here, a parallel or related proceeding is pending in
5
state court.” New Wellington Fin. Corp. v. Flagship Resort
Develop. Corp., 416 F.3d 290, 297 (4th Cir. 2005). In such
cases, district courts have “wide discretion” to decline
jurisdiction. See Centennial Life Ins. Co. v. Poston, 88 F.3d
255, 257 (4th Cir. 1996).
The Supreme Court and this court have provided district
courts with general guidelines to aid their exercise of
discretion. Broadly speaking, when deciding whether or not to
stay or dismiss a declaratory judgment action when there is a
related proceeding underway in state court, a district court
should determine whether the controversy “can better be settled
in the proceeding pending in the state court.” Wilton v. Seven
Falls Co., 515 U.S. 277, 282 (1995) (citation and internal
quotations omitted). This requires the district court to weigh
principles of “federalism, efficiency, and comity that
traditionally inform a federal court’s discretionary decision
whether to abstain from exercising jurisdiction over state-law
claims in the face of parallel litigation in the state courts.”
Nautilis Ins. Co. v. Winchester Homes, Inc., 15 F.3d 371, 376
(4th Cir. 1994). In making these determinations, a district
court must strive to avoid “indulging in ‘[g]ratuitous
interference,’ [by] permitt[ing] the federal declaratory
judgment action to proceed.” Wilton, 515 U.S. at 283 (citation
omitted).
6
To further assist a district court in balancing the state
and federal interests at stake in such a decision, this court
has articulated four factors (the “Kapiloff factors”) for
consideration. United Capitol Ins. Co. v. Kapiloff, 155 F.3d
488, 493-94 (4th Cir. 1998) (citing Nautilis, 15 F.3d at 377).
A district court should consider:
(1) whether the state has a strong interest in having
the issues decided in its courts; (2) whether the
state courts could resolve the issues more efficiently
than the federal courts; (3) whether the presence of
“overlapping issues of fact or law” might create
unnecessary “entanglement” between the state and
federal courts; and (4) whether the federal action is
mere “procedural fencing,” in the sense that the
action is merely the product of forum-shopping.
Kapiloff, 155 F.3d at 493-94.
B.
When a district court abstains from hearing a declaratory
judgment action in favor of a parallel state court proceeding,
we must be careful on appeal to apply the Kapiloff factors
deferentially, “because facts bearing on the usefulness of the
declaratory judgment remedy, and the fitness of the case for
resolution, are peculiarly within [the district court’s] grasp.”
Wilton, 515 U.S. at 289; see also S.C. Dep’t of Health & Envtl.
Control v. Commerce & Indus. Ins. Co., 372 F.3d 245, 260 (4th
Cir. 2004).
In this case, we cannot say that the district court abused
its discretion when it abstained from entertaining Riley’s
7
request for declaratory relief and instead allowed the dispute
to proceed in the related suit already underway in Virginia
state court. The district court’s ruling was well within the
discretion recognized by the Supreme Court in Brillhart and
Wilton. 1
It was likewise consistent with an application of the four
Kapiloff factors to the facts of this case. First, Virginia
“has a strong interest in having the issues decided in its
courts.” See Kapiloff, 155 F.3d at 493-94. This case requires
a determination of the liability of a Virginia resident and a
Virginia law firm, involves intellectual property registered in
Virginia, and demands an application of Virginia trademark law.
Cf. New Wellington Fin. Corp. v. Flagship Resort Develop. Corp.,
416 F.3d 290, 297 (4th Cir. 2005). Depending on how the legal
claims unfold, the questions of state law at issue may well be
“difficult, complex, or unsettled,” see Great Am. Ins. Co. v.
Gross, 468 F.3d 199, 211 (4th Cir. 2006), and a federal court
“should not elbow its way into this controversy to render what
may be an ‘uncertain and ephemeral’ interpretation of state
law.” Mitcheson v. Harris, 955 F.2d 235, 238 (4th Cir. 1992)
1
The fact that the district court varied in its abstention
rationales is of no moment, because its ultimate decision was a
sound one which we may affirm on alternate grounds. See Skipper
v. French, 130 F.3d 603, 610 (4th Cir. 1997).
8
(citation omitted). Indeed, as the district court in this case
found, “Virginia’s interest in adjudicating claims involving a
state-registered trademark is both clear and compelling,” and
federal adjudication would “be disruptive of state efforts to
establish a coherent policy with respect to a matter of
substantial public concern.”
Second, the Virginia state court could likely “resolve the
issues more efficiently” than this court. See Kapiloff, 155
F.3d at 493-94. As a general rule, “the first suit should have
priority, absent the showing of balance of convenience in favor
of the second action.” Ellicott Mach. Corp. v. Modern Welding
Co., 502 F.2d 178, 180 n.2 (4th Cir. 1974) (citation and
internal quotations omitted). Here, the state suit was filed
before the federal suit. The state proceeding is also further
along than the federal action. This court’s interference with
the pending state court proceeding would therefore produce
inefficiencies by needlessly duplicating efforts, generating
piecemeal litigation, and expending limited judicial resources.
Third, the Virginia state court proceeding and this federal
court proceeding involve “overlapping issues of fact [and] law,”
see Kapiloff, 155 F.3d at 493-94, because both cases center on
an identical core question: Does Riley’s website infringe on
DIL’s trademark under Virginia trademark law? If the state
court and this court were to simultaneously find facts related
9
to alleged trademark infringement and make pronouncements on
Virginia trademark law, the common issues involved here could
easily result in an “unnecessary ‘entanglement’” between the two
tribunals. See id.Entanglement is all the more likely where, as here, common
issues “are already being litigated by the same parties in the
related stat court action[].” Nautilis Ins. Co. v. Winchester
Homes, Inc., 15 F.3d 371, 379 (4th Cir. 1994). In such cases,
there is a real risk that the state court’s prior resolution of
overlapping issues would entitle those issues to preclusive
effect, thereby “frustrat[ing] the orderly progress of the []
proceedings by leaving . . . some parts of [the] case foreclosed
from further examination but still other parts in need of full
scale resolution.” Id. at 377 (citation and internal quotations
omitted).
Fourth, the final Kapiloff factor weighs in favor of
abstention insofar as Riley’s federal suit appears to be “mere
‘procedural fencing.’” See Kapiloff, 155 F.3d at 493-94.
Procedural fencing occurs when, as in this case, “a party has
raced to federal court in an effort to get certain issues that
are already pending before the state courts resolved first in a
more favorable forum.” Great Am. Ins. Co. v. Gross, 468 F.3d
199, 212 (4th Cir. 2006). Here, DIL sued Riley in state court,
but he did not want to be in state court. So Riley brought his
10
own suit in federal court, requesting a declaration that he was
not liable to DIL in state court. Such conduct is the sort of
forum-shopping against which abstention seeks to guard.
Of course, a defendant is not powerless to influence the
forum that will determine his liability, and in this case, Riley
had the right to remove the state court action to federal court.
However, removal is the appropriate avenue into federal court,
and a declaratory judgment action may not be used “to achiev[e]
a federal hearing in a case otherwise not removable.” Nautilus,
15 F.3d at 377 (citation and internal quotations omitted). That
is precisely what happened here. The declaratory plaintiff did
try -- unsuccessfully -- to remove the case, and the district
court remanded the case back to state court. Because the
federal removal statute forecloses Riley from appealing the
district court’s remand order, see 28 U.S.C. § 1447(d), he is
now attempting to get into federal court through a side
entrance, by contesting and appealing the district court’s
dismissal of his declaratory judgment action. This attempted
end-run around the removal statutes is strong evidence of
“procedural fencing” and further weighs in favor of abstention. 2
2
Riley contends that the discretionary standard of
Brillhart/Wilton is inapplicable to his requests for an
injunction and for monetary damages. However, the perfunctory
inclusion of nondeclaratory requests for relief does not suffice
to remove a plaintiff from the ambit of the Brillhart/Wilton
(Continued)
11
C.
With all respect to our fine colleague in this case, we
cannot endorse the dissent’s approach or accept the effects that
would flow from it. First, the dissent’s view would lead to
sprawling litigation in multiple forums and contravene the
Declaratory Judgment Act. The dissent does not even believe
Riley was sued in state court for a violation of the Lanham Act.
But it nonetheless believes that this court should reverse the
trial court’s discretionary dismissal and essentially require
the district court to declare Riley’s rights under that statute.
Such a claim is troublesome. As the Supreme Court has only
recently held in MedImmune, Inc. v. Genentech, Inc., 549 U.S.
118, 136 (2007), a district court’s jurisdiction under the
Declaratory Judgment Act is unquestionably discretionary. In
case there were any doubt about the continuing vitality of
Wilton and Brillhart, the Supreme Court has put that doubt to
rest, reiterating what we ourselves have emphasized: that the
Declaratory Judgment Act “confer[s] on federal courts unique and
substantial discretion in deciding whether to declare the rights
rule. A declaratory judgment plaintiff may not convert a
district court’s discretionary jurisdiction under
Brillhart/Wilton into nearly mandatory jurisdiction under
Colorado River Water Conservation District v. United States, 424
U.S. 800, 813, 817 (1976), simply by tossing in dependent or
boilerplate nondeclaratory requests.
12
of litigants.” Id. (citations and internal quotations omitted).
Moreover, the Court noted that district courts play a critical
role in this regard, emphasizing, yet again, that the act
“vest[s] district courts with discretion in the first instance,
because facts bearing on the usefulness of the declaratory
judgment remedy, and the fitness of the case for resolution, are
peculiarly within their grasp.” Id. (citation and internal
citations omitted).
The dissent in fact declines to allow district courts to do
what the Supreme Court has said they are uniquely positioned to
do: evaluate “the equitable, prudential, and policy arguments
in favor of such a discretionary dismissal.” Id. The Supreme
Court made these statements, no less, in a declaratory judgment
action concerning intellectual property rights. See id. at 120.
By clearing the way for litigants to subvert pending state court
proceedings by doing little more than positing a federal law
under which they would like to be declared non-liable, we risk
“turn[ing] into the federal courts a vast current of
litigation.” See Skelly Oil Co. v. Phillips Petroleum Co., 339
U.S. 667, 673 (1950).
The proper route into federal court is under the removal
statutes -- not by a collateral attack on state proceedings
under the Declaratory Judgment Act. When a federal court has
subject matter jurisdiction over a suit brought in state court,
13
a state court defendant may remove the case, guided by the
comprehensive scheme Congress set out in the removal statutes.
When, however, a state court defendant bypasses the removal
mechanism and instead uses the Declaratory Judgment Act as his
ticket into federal court, a district court is entitled to take
that very fact into account in deciding whether or not to
abstain.
We cannot agree with our colleague that the existence of
federal jurisdiction somehow nullifies or diminishes a district
court’s discretion in a declaratory action to abstain. To the
contrary, the question of jurisdiction is analytically distinct
from that of abstention, and indeed, is always a prerequisite to
an abstention analysis. Thus, even in cases involving federal
law, “[t]he Declaratory Judgment Act [i]s an authorization, not
a command. It g[ives] the federal courts competence to make a
declaration of rights; it d[oes] not impose a duty to do so.”
Pub. Affairs Assocs., Inc. v. Rickover, 369 U.S. 111, 112
(1962). Whether or not appellant is correct to suggest that the
district court in this case would not have been prohibited from
asserting jurisdiction, we cannot conclude that the trial
14
court’s discretion was so constrained in these circumstances
that it was required to exercise jurisdiction. 3
As a final matter, we cannot subscribe to our good
colleague’s conception of the proper relationship between state
and federal courts. Whatever discretion a district court has to
abstain in a declaratory judgment action, that discretion can
only be enhanced when there is a related proceeding pending in
state court. See New Wellington Fin. Corp. v. Flagship Resort
Develop. Corp., 416 F.3d 290, 297 (4th Cir. 2005); Centennial
Life Ins. Co. v. Poston, 88 F.3d 255, 257 (4th Cir. 1996). The
mere presence of a federal question in a declaratory suit does
not somehow extinguish Virginia’s interest in deciding a matter
that was first filed in the state system. Such a view would be
damaging to state courts, which, of course, are perfectly
competent to decide issues of federal law. As the Eighth and
3
The circuit court cases cited by the dissent are relevant
only to the separate issue of jurisdiction and not to the issue
of abstention. In fact, two of those cases found that the
district court was entitled to exercise its discretion to
dismiss the declaratory judgment action. See Surefoot, LC v.
Sure Foot Corp., 531 F.3d 1236, 1248 (10th Cir. 2008); McGraw-
Edison Co. v. Preformed Line Prods. Co., 362 F.2d 339, 344-45
(9th Cir. 1966). And in other cases, the courts disallowed
discretionary dismissal under very different circumstances. See
Rhoades v. Avon Prods., Inc., 504 F.3d 1151, 1162, 1165 n.14
(9th Cir. 2007) (reversing dismissal order made on primary
jurisdiction grounds); PHC, Inc. v. Pioneer Healthcare, Inc., 75
F.3d 75, 81 (1st Cir. 1996) (reversing dismissal order made on
primary jurisdiction grounds as to Count I but allowing
discretionary dismissal as to Count II).
15
Eleventh Circuits have noted, state courts have concurrent
jurisdiction under the Lanham Act, see Alpharma, Inc. v.
Pennfield Oil Co., 411 F.3d 934, 938 (8th Cir. 2005); Aquatherm
Indus., Inc. v. Fla. Power & Light Co., 84 F.3d 1388, 1394 (11th
Cir. 1996), and, indeed, there are literally hundreds of state
court cases adjudicating Lanham Act claims. Thus, Riley’s
request for a declaration of non-liability under federal law,
made alongside a request for a declaration of non-liability
under Virginia law, does not render Wilton and Kapiloff
inapplicable: Virginia continues to have a strong interest in
resolving the state law issues; the Virginia court’s head-start
still gives it an efficiency advantage; overlapping issues
continue to present a likelihood of “entanglement”; and evidence
of “procedural fencing” remains.
Rather than vest the district court with the discretion to
which it is entitled, the dissent would offer, as a consolation
prize, the opportunity for it to exercise its discretion whether
to stay proceedings in this case pending the resolution of the
state action under Front Royal & Warren County Indus. Park Corp.
v. Town of Front Royal, 945 F.2d 760 (4th Cir. 1991). Front
Royal, however, is inapplicable here. It did not address a
district court’s authority to dismiss a case either in the
context of a declaratory judgment action or in the context of
16
state court proceedings already initiated and underway. Id. at
765.
III.
We hold only that the district court had discretion to
abstain here and did not in these circumstances abuse its
discretion in doing so. A peremptory reversal of the district
court on these facts would entail serious risks, which we think
it inadvisable to incur. Among other things, such a reversal
would rob Brillhart and Wilton of any meaningful effect;
encourage collateral attacks upon state court proceedings under
the Declaratory Judgment Act, even where the state proceedings
presented only questions of state law; circumvent the removal
statutes; undermine the purpose of federal non-appealability
provisions with respect to remands; encourage gamesmanship by
litigants in multiple forums, preliminary to any merits
resolution of their cases; and deny district courts the ability
to assess the variable facts and circumstances that arise in
these cases and that guide the sound exercise of trial court
discretion. For all of the foregoing reasons, the judgment of
the district court is hereby
AFFIRMED.
17
DAVIS, Circuit Judge, dissenting:
The majority states, “The dissent does not even believe
Riley was sued in state court for a violation of the Lanham
Act.” Maj. Op. at 13. To the contrary, I absolutely do believe,
despite Dozier’s best efforts to disguise it, that Dozier
asserted a Lanham Act claim in his state court complaint. 1 Dozier
will be surprised to learn that the entire panel rejects his
contention that he did not assert a Lanham Act claim in his
state court complaint. See Maj. Op. at 17 (“[T]here are
literally hundreds of state court cases adjudicating Lanham Act
claims.”). 2 This is because Dozier has unremittingly insisted
that he did not assert a federal law claim in his state court
complaint. See Mem. in Supp. Mot. to Remand (Docket No. 13),
1
The complaint Dozier filed in state court in Virginia did
not expressly invoke the Lanham Act and Dozier purported to
assert only claims for “statutory and common law” trademark
infringement, citing no specific statutory basis —- federal or
state -- for the “statutory” claim. As the majority’s allusion
to “hundreds of state court cases adjudicating Lanham Act
claims” shows, however, he in fact alleged all the elements of a
federal claim in his state court complaint, and his failure to
cite to the federal statute is not dispositive. See Albert v.
Carovano, 851 F.2d 561, 571 n.3 (2d Cir. 1988) (“The failure in
a complaint to cite a statute, or to cite the correct one, in no
way affects the merits of a claim. Factual allegations alone are
what matters.”). Riley properly removed the state case on the
basis of federal question jurisdiction.
2
Of course, this statement confirms that we are in
agreement that Dozier stated a federal claim in his state court
complaint. And, Congress knows how to preclude removal of a
federal claim when it wishes to do so. See 28 U.S.C. § 1445(a).
18
Dozier Internet Law, P.C. v. Riley, Civil No. 3:08cv0643
(HEH)(E.D.Va.) (“[Dozier] has asserted only a state trademark
claim and does not possess any federally registered trademark.
As such, this Court would lack jurisdiction.”); see also
Appellee’s Br. at 1-2 (“Despite Riley’s repeated contentions
that [Dozier] had stated claims [in the state court action]
under ‘federal law,’ [he] has not.”) (alterations added).
Similarly, Dozier asserts here, quite remarkably, that
Riley did not allege a federal claim under the Lanham Act in
this case. See Appellee’s Br. at 1 (“The Trial Court Correctly
Held That There Was No Federal Question At Issue”); id. at 2
(“Riley refers to one letter [written by Dozier] and alleges
that the language implicitly invokes federal law because it
mentions the words “contributory trademark infringement. . . .
This is not so.”); id. at 4 (“Under any interpretation of the
facts and applicable law, the Court below correctly held that no
federal question was present and as such prudently declined
jurisdiction on this ground.”). This alleged lack of a federal
claim was the very basis upon which Dozier prevailed in the
district court in persuading the district court to remand the
state court action and to dismiss this action. Yet, the majority
rummages through its treasure chest of abstention doctrines to
find a basis on which to affirm the district court.
Respectfully, I dissent.
19
I.
This case presents a dust-up over the operation of on-line
“gripe sites” aimed at Dozier, a Virginia lawyer, by Riley, a
self-professed Michigan entrepreneur. Dozier delivered somewhat
over-heated complaint letters to Riley’s Internet Service
Providers (“ISPs”) threatening legal action against them for
alleged libelous material and trademark infringement appearing
on these “gripe sites.” Accompanying the letters was the
Virginia state court complaint that Dozier had filed against
Riley for trademark infringement, seeking damages and injunctive
relief. Dozier pointedly limited his damages claim to less than
the $75,000 jurisdictional amount for diversity of citizenship
jurisdiction. He also sought to allege his “statutory” trademark
infringement claim in a sufficiently vague manner so as to
defeat removal on the basis of federal question jurisdiction,
i.e., as if the claim arose solely under Virginia law. See supra
note 1.
Notably, Dozier delayed serving process in the state court
action, no doubt in an effort to impede removal of the case to
federal court by Riley. Nevertheless, when Riley obtained a copy
of the unserved state court complaint from one of his ISPs, he
filed a timely notice of removal and removed the case to the
United States District Court for the Eastern District of
Virginia. Given Dozier’s transparent attempt to disguise his
20
Lanham Act claim, Dozier filed this contemporaneous original
action as a protective step to respond to Dozier’s apparent
cunning. With respect, in its criticism of Riley for both
removing the state case and filing this protective action, the
majority mistakes good lawyering for “procedural fencing.”
Both actions were assigned to the same district judge.
Dozier moved to (1) remand the removed action for lack of
subject matter jurisdiction and (2) dismiss this action for lack
of subject matter jurisdiction or, in the alternative, abstain.
Riley argued in the removed case that federal jurisdiction
existed on the basis of diversity of jurisdiction, insisting
that the facile limitation in Dozier’s ad damnum clause should
not obscure the fact that the amount in controversy, including,
inter alia, the value of the injunction sought by Dozier,
clearly exceeded the jurisdictional minimum. Riley also argued
that federal question jurisdiction existed based on the Lanham
Act claim. In this case, Riley similarly argued that there
clearly existed federal question jurisdiction as well as
diversity of citizenship jurisdiction.
Beguiled by Dozier, the district court stumbled into three
legally erroneous conclusions: (1) the state case was non-
removable under 28 U.S.C. § 1441 for lack of the requisite
amount in controversy and for lack of a federal claim; (2) the
instant case likewise did not satisfy the amount in controversy
21
requirement and did not present a federal question; and finally,
as a seeming afterthought, mentioned only in a footnote, (3)
under Burford v. Sun Oil Co., 319 U.S. 315 (1943), abstention
was appropriate even “assuming” there is federal subject matter
jurisdiction. 3 Thus, in brief orders, the district court remanded
the state case, dismissed this case, and denied a motion for
reconsideration. 4
Of course, the district court’s erroneous remand of the
removed case is unreviewable in this court. See 28 U.S.C. §
1447(d) (“An order remanding a case to the State court from
which it was removed is not reviewable on appeal or otherwise”).
3
In “assuming” the existence of subject matter
jurisdiction, the district court seems clearly to have assumed
diversity of citizenship subject matter jurisdiction rather than
federal question subject matter jurisdiction. See J.A. 261
(“Even assuming that the amount in controversy in this case
exceeds $75,000, the Court must abstain from exercising
jurisdiction over Plaintiff’s claims.”) (emphasis added). See
also infra n. 5.
4
Strikingly, in keeping with its view that it lacked
subject matter jurisdiction, the district court stated that it
“must . . . decline to adjudicate this case” under Burford.
J.A. 208 (emphasis added). Thus, it is highly questionable
whether the district court engaged in an actual exercise of
discretion. A failure to exercise discretion may be treated as
an error of law and reviewed de novo. E.g., Garrett v. City and
County of San Francisco, 818 F.2d 1515, 1518 n.3 (9th Cir. 1987)
(“Because the district court did not exercise its discretion,
the issue of whether or not it should have presents a legal
question which is subject to de novo review.”); Iglesias v.
Mukasey, 540 F.3d 528, 531 (7th Cir. 2008); Richmond v. Brooks,
227 F.2d 490, 492 (2d Cir. 1955).
22
Rather than accepting defeat quietly and fighting things out
with Dozier in state court (where, as of the time of oral
argument in this case, there had been no progress whatsoever,
and where there will likely be extensive proceedings regarding
personal jurisdiction over Riley, a Michigan citizen), Riley has
invited our appellate review of the machinations described
above.
Clearly, it is only because Dozier acted so strenuously to
defeat the removal of what was clearly a removable case within
the subject matter jurisdiction of the federal courts, as the
majority now attests, that Riley has found it necessary to jump
through so many hoops. Nevertheless, I accept (as I must) the
non-reviewability of the district court’s remand of the state
court action. But, unlike the majority, I would not give Dozier
a windfall by affirming on an “alternative ground” the erroneous
dismissal of this case on the ground of lack of subject matter
jurisdiction. In its cursory afterthought, the district court
purported to dismiss the case, in the alternative, on the ground
of “abstention” under an abstention doctrine, see Burford, that
the majority correctly abjures. Still, the majority rescues the
district court’s erroneous ruling by substituting its own
version of “discretion” for the district court’s erroneous legal
determination.
23
II.
Tellingly, the majority’s opinion does not forthrightly
address the district court’s primary reason for dismissing this
case – lack of subject matter jurisdiction. The district court
erred in dismissing the case because the complaint sufficiently
pled a federal question. Moreover, the district court did not
commit a mere “abuse of discretion” in declining to assert
jurisdiction over Riley’s request for declaratory relief on
Burford abstention; it committed legal error. See supra nn. 4 &
5.
A.
As grudgingly as the majority quietly concedes the point,
let it be clear that there is federal question jurisdiction in
this case based on the Lanham Act, just as there was federal
question removal jurisdiction in the remanded case. Gully v.
First Nat'l Bank, 299 U.S. 109, 112-13 (1936) (“[A] right or
immunity created by the Constitution or laws of the United
States must be an element, and an essential one, of the
plaintiff's cause of action.”); Louisville & Nashville R.R. Co.
v. Mottley, 211 U.S. 149, 152 (1908); King v. Marriott Int’l,
Inc., 337 F.3d 421, 424 (4th Cir. 2003) (quoting Taylor v.
Anderson, 234 U.S. 74, 75-76 (1914)). As we have previously
stated, “[i]njunctive relief is available under the Lanham Act
in proper circumstances, 15 U.S.C. § 1116, and declaratory
24
relief is available under the Declaratory Judgment Act, 28
U.S.C. § 2201.” Gibraltar, P.R., Inc. v. Otoki Group, 104 F.3d
616, 618 (4th Cir. 1997) (Wilkinson, J.). A declaratory judgment
plaintiff need only show a “reasonable apprehension” of being
sued for infringement under the Lanham Act in order to invoke
federal jurisdiction. J. Thomas McCarthy, McCarthy on Trademarks
and Unfair Competition § 32:51 (4th ed. 2010) (hereinafter
McCarthy).
Here, Riley’s complaint has sufficiently pled a cause of
action under the Lanham Act. Paragraph 2 of the complaint, which
includes the statement of jurisdiction, invokes the Lanham Act,
15 U.S.C. § 1121. J.A. 4. In fact, during oral argument, Dozier
admitted that he had registered the name “Dozier Internet Law,
P.C.” with the United States Patent and Trademark Office (“the
USPTO”). This name is trademarked under Registration No.
3575012. Dozier filed the application on January 28, 2008, and
the mark was registered on February 17, 2009. Although Riley
filed the present suit before Dozier’s mark was officially
registered (but after Dozier filed the application), Dozier’s
current ownership of a federal trademark sufficiently creates a
threat of a federal suit, thereby satisfying the requirements of
25
the Declaratory Judgment Act. 5 Even if it were true that Dozier
has not sued Riley under federal law,
The purpose of declaratory judgment is to afford an
added remedy to one who is uncertain of his rights and
who desires an early adjudication thereof without
having to wait until his adversary should decide to
bring suit, and to act at his peril in the interim.
The purpose of federal declaratory judgment in
trademark cases is almost identical to that in patent
cases, where declaratory judgment litigation is quite
common.
McCarthy § 32:50 (citing McGraw-Edison Co. v. Preformed Line
Products Co., 362 F.2d 339 (9th Cir. 1966), cert. denied, 385
U.S. 919 (1966) (patent case)). With this in mind, the Second
Circuit has found an actual controversy even though the
defendant’s CFO testified that his company had no present
intentions to file a federal trademark infringement suit against
the declaratory judgment plaintiff. Starter Corp. v. Converse,
Inc., 84 F.3d 592 (2d Cir. 1996).
Our sister circuits have also reversed district courts that
have dismissed trademark declaratory judgment actions where the
plaintiffs had reasonable apprehension of being sued. See, e.g.,
Rhoades v. Avon Prods., Inc., 504 F.3d 1151 (9th Cir. 2007)
(finding sufficient apprehension of imminent suit after the
5
The First Circuit has even held that a cease and desist
letter from the owner of an unregistered mark that mentions only
state – not federal – law, sufficiently creates a reasonable
apprehension of suit of infringement under the Lanham Act. PHC,
Inc. v. Pioneer Healthcare, 75 F.3d 75 (1st Cir. 1996).
26
party seeking trademark registration with the USPTO made threats
of litigation on the heels of unsuccessful negotiations);
Surefoot, LC v. Sure Foot Corp., 531 F.3d 1236 (10th Cir. 2008)
(finding sufficient apprehension of imminent suit after owner of
trademark repeatedly accused infringement and occasionally
threatened litigation).
Here, Riley’s situation was more perilous, inasmuch as
Dozier had already (1) threatened Riley’s ISPs with litigation
and (2) Dozier had filed a trademark infringement suit against
Riley for prior versions of the same website. 6 Indisputably,
Riley properly brought suit for declaratory judgment of non-
infringement under the Lanham Act in the Eastern District of
Virginia. Thus, the district court erred in dismissing this case
based on lack of jurisdiction.
B.
The district court also committed legal error in grounding
its dismissal in Burford abstention. The majority does not
dispute this. Contrary to the majority’s elastic application of
the Kapiloff factors, which are particularly relevant in
6
The parties conceded during oral argument that Riley’s
declaratory judgment action asserted here does not deal with the
same websites at issue in the Virginia case, and that Dozier is
a party in his individual capacity in this case but not in the
state case. Manifestly, the similarities between the two cases
are not nearly as overlapping as the majority suggests.
27
diversity cases as “guideposts” for the exercise of a district
court’s discretion, see 155 F.3d at 493-94, this case presents
substantial federal claims. 7 Under the circumstances here, we
should hew to our long-held view that “[a]bstention remains the
exception and the exercise of congressionally mandated
jurisdiction remains the rule.” Johnson v. Collins Entm't Co.,
199 F.3d 710, 722 (4th Cir. 1999) (Wilkinson, J.). The
majority’s rescue mission is undertaken in the face of the
Supreme Court’s clear recognition that a district court’s
exercise of discretion to abstain from adjudicating a
declaratory judgment action in a federal question case may well
involve special considerations not fully captured by Brillhart
and Wilton:
[W]e conclude that Brillhart v. Excess Ins. Co. of
America, 316 U.S. 491, 62 S.Ct. 1173, 86 L.Ed. 1620(1942), governs this declaratory judgment action and
that district courts’ decisions about the propriety of
hearing declaratory judgment actions, which are
necessarily bound up with their decisions about the
propriety of granting declaratory relief, should be
reviewed for abuse of discretion. We do not attempt at
this time to delineate the outer boundaries of that
discretion in other cases, for example, cases raising
issues of federal law or cases in which there are no
parallel state proceedings.
7
The cases cited by the majority in which the Kapiloff
criteria are applied and abstention was sustained are diversity
cases. See, e.g., New Willington, 416 F.3d at 292; Centennial
Life, 88 F.3d at 256.
28
Wilton, 515 U.S. at 289-90 (emphasis and alteration added). I
would not get out ahead of the Supreme Court as the majority
does here.
III.
I recognize that the disposition here is nonprecedential
under our rules. Still, I fear that we provide an incentive to
counsel seeking abstention to cite to the district courts the
full panoply of abstention doctrines in any case. 8 Thereafter,
having been provided with the full menu, a district court can
make a selection, whether or not correct under settled law, and
counsel can defend a ruling to abstain by offering this court
the opportunity to select whatever abstention doctrine fits the
court’s fancy. Kapiloff abstention, in particular, unmoored from
the considerations which animated its creation in the context of
insurance coverage disputes arising in diversity of citizenship
cases, will surely become known as “Catch-all Abstention.”
I would reverse and remand this case to the district court
to afford it an opportunity to exercise an informed discretion,
that is, with an understanding that federal jurisdiction here is
8
See generally Railroad Comm'n v. Pullman Co., 312 U.S. 496(1941); Burford v. Sun Oil Co., 319 U.S. 315 (1943); Colorado
River Water Conser. Dist. v. United States, 424 U.S. 800 (1976);
Younger v. Harris, 401 U.S. 37 (1971); and United Capitol Ins.
Co. v. Kapiloff, 155 F.3d 488, 493 (4th Cir. 1998).
29
not doubtful, and to permit it to apply its discretion whether
to stay rather than dismiss this case pending further
proceedings in the state action. Cf., e.g., Front Royal and
Warren County Indus. Park Corp. v. Town of Front Royal, 945 F.2d
760 (4th Cir. 1991), cert. denied, 503 U.S. 937 (1992).
30