File First, Ask Questions Later: The First-File Rule

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File First, Ask Questions Later: A Look At The First-Filed Rule In The Second Circuit

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In some cases, the speed with which a party arrives at the courthouse can determine where that party’s case will ultimately be litigated and decided.  This is particularly true when opposing parties are in diverse jurisdictions/venues and they have not (and cannot) agree on a particular jurisdiction/venue to resolve their disputes.

The First-Filed Rule

The first-filed rule is the principle that “‘where an action is brought in one federal district court and a later action embracing the same issue is brought in another federal court, the first court has jurisdiction to enjoin prosecution of the second action’… unless ‘there are special circumstances which justify giving priority to the second’ action.”  City of New York v. Exxon Corp., 932 F.2d 1020, 1025 (2d Cir. 1991) (quoting Meeropol v. Nizer, 505 F.2d 232, 235 (2d Cir. 1974) and William Gluckin & Co. v. Int’l Playtex Corp., 407 F.2d 177, 178 (2d Cir. 1969)).  Where essentially the same lawsuit involving the same parties and the same issues is pending in two different federal courts, the presumption is that the case filed earlier will take priority.  See, e.g., Employers Ins. of Wausau v. Fox Entertainment Group, Inc., 522 F.3d 271, 274 (2d Cir. 2008).

Under the “first-filed” rule, “[w]here there are two competing lawsuits, the first suit should have priority.”  New York Marine and General Ins. Co. v. LaFarge North America, Inc., 599 F.3d 102, 112 (2d Cir. 2010) (quoting D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95, 106 (2d Cir. 2006).  See also Ontel Products, Inc. v. Project Strategies Corp., 899 F. Supp. 1144, 1150 (S.D.N.Y. 1995) (“Where lawsuits concerning the same parties and issues are pending in two federal districts, the first-filed rule of the Second Circuit generally affords priority to the first-filed suit when courts choose which suit to permit to go forward.” [citing] First City Nat’l Bank & Trust v. Simmons, 878 F.2d 76, 79 (2d Cir. 1989); Meeropol v. Nizer, 505 F.2d 232, 235 (2d Cir. 1974)); Employers Ins. of Wausau v. Fox Entertainment Group, Inc., 522 F.3d 271, 274-75 (2d Cir. 2008).  The operative date in applying this rule is the date of filing, and not service.  See, e.g., Schnabel v. Ramsey Quantitative Systems, Inc., 322 F. Supp.2d 505, 511 (S.D.N.Y. 2004).

The first-filed court decides the question of whether the first-filed rule applies.  Ontel Products, Inc., 899 F. Supp. at 1150, n. 9; Donaldson, Lufkin & Jenrette, Inc. v. Los Angeles County, 542 F. Supp. 1317, 1321 (S.D.N.Y. 1982).

A Strong Presumption In Favor Of The Forum Of The First-Filed Suit

“There is a strong presumption in favor of the forum of the first-filed suit.”  Schnabel, 322 F. Supp.2d at 510 [quoting Reliance Ins. Co. v. Six Star, Inc., 155 F.Supp.2d 49, 54 (S.D.N.Y. 2001)].  The rule “avoids duplicative litigation by adhering to the inherently fair concept that the party who commenced the first suit should generally be the party to attain its choice of venue.”  Ontel Products, Inc., 899 F. Supp. at 1150; see also Commer v. American Federation of State, County and Municipal Employees, 272 F. Supp.2d 332, 339 (S.D.N.Y. 2003, aff’d, 390 F.3d 203 (2d Cir. 2004) (“‘The first-filed rule … is designed to prevent inconsistent rulings between courts of coordinate jurisdiction and equal power, wasteful duplicative legislation and piecemeal resolution of disputes that require uniform rules.’” [quoting Merle Norman Cosmetics v. Martin, 705 F. Supp. 296, 298 (E.D. La. 1988)].  The rule was developed to “serve the purpose of promoting efficiency and should not be disregarded lightly.”  800-Flowers, Inc. v. Intercontinental Florist, Inc., 860 F. Supp. 128, 132 (S.D.N.Y. 1994) (internal quotations omitted) (dismissing second action in favor of the first-filed trademark infringement/declaratory judgment action).

Enjoining A Second-Filed Action

Under Federal Rule of Civil Procedure Rule 13(a) the first-filed district court may enjoin a party from pursuing a second-filed action.  See, e.g., MMZ Associates, Inc. v. Gelco Corp., 2006 WL 3531429, *3 (Dec. 8, 2006, S.D.N.Y.) (granting plaintiff’s motion pursuant to Fed.R.Civ.P. 13(a) to enjoin defendant from pursuing second-filed action in the District of Minnesota), and other cases there cited.  The first-filed district court has jurisdiction to enjoin the prosecution of a later-filed action “unless there are special circumstances which justify giving priority to the second action.”  City of New York v. Exxon, 932 F.2d at 1025, quoting William Gluckin & Co., 407 F.2d at 178; Zapways.com, Inc. v. Xerox Corp., 01 Civ. 10123, 2002 WL 193155, *1 (Feb. 6, 2002, S.D.N.Y.) (granting plaintiff’s motion for a preliminary injunction preventing the defendant from prosecuting second-filed action in the Western District of New York); Marshak, supra, 2000 WL 33152076 (granting preliminary injunction enjoining defendant from further prosecution of an action in the District of Massachusetts).

Special Circumstances To Justify An Exception To The First-Filed Rule

“The party opposing application of the first-filed doctrine has the burden to show that special circumstances justify an exception.”  Reliance Ins. Co., 155 F. Supp.2d at 54.  ‘Special circumstances’ include “manipulative or deceptive behavior on the part of the first-filing plaintiff” (New York Marine and General Ins. Co., 599 F.3d at 112), either where “the first-filed suit constitutes an ‘improper anticipatory filing,’ or one made under the apparent threat of a presumed adversary filing the mirror image of that suit in a different federal district” (Ontel Prods., Inc., 899 F. Supp. at 1150 (internal quotations omitted); see also Fandino v. Amalgam Entertainment, LLC, 09 Civ. 8325, 2010 WL 607819, *2 (S.D.N.Y. Feb. 19, 2010) (“Special circumstances exist where a party files a declaratory judgment in anticipation of a coercive suit”), or where forum shopping alone motivated the choice of forum in the filing of the first suit.  Fandino, supra at *2, and cases there cited.

The “Balance Of Convenience”

“If no special circumstances exist, courts should next conduct a balance of convenience test to determine whether a second-filed suit should take priority.”  Fandino v. Amalgam Entertainment, LLC, 2010 WL 607819 at *2.  The factors relevant to such a test “are essentially the same as those considered in connection with motions to transfer venue pursuant to 28 U.S.C. § 1404(a).”  Id., quoting Employers Ins. of Wausau, 522 F.3d at 278.  These factors include:

  1. The plaintiff’s choice of forum;
  2. The convenience of witnesses;
  3. The location of relevant documents and relative ease of access to sources of proof;
  4. The convenience of the parties;
  5. The locus of operative facts;
  6. The availability of process to compel the attendance of unwilling witnesses; and
  7. The relative means of the parties.

Id.; see also Employers Ins. of Wausau, 522 F.3d at 275; D.H. Blair & Co., 462 F.3d at 106-07.

 The First-Filed Rule Is Not Automatically Applied

It is within a first-filed district court’s discretion not to interfere with a second-filed action.  See, e.g., Sharimalia Food Corp. v. Monarch Wine Co., LP, No. 91 Civ. 6691, 1992 WL 58308, at *2 (S.D.N.Y., Mar. 13, 1992); AFA Dispensing Grp. B.V. v. Anheuser Busch, Inc., 740 F.Supp.2d 465, 470 (S.D.N.Y. 2010) (“The first-filed rule is not to be applied mechanically.”).  “Federal courts of coordinate rank … owe each other comity in the sense of … avoiding hindering each other’s proceedings,” such that a federal district court “requires clear justification before [it] may interfere with … another federal [district] court.”  Smith v. SEC, 129 F.3d 356, 361-62 (6th Cir. 1997) (quoting Wright & Miller, Federal Practice and Procedure § 2942); see also Yakin v. Tyler Hill Corp., 566 F.3d 72, 76 (2d Cir. 2009); Rucker v. Oasis Legal Fin., LLC, 632 F.3d 1231, 1236 (11th Cir. 2011); see also Orix Credit Alliance, Inc. v. Mid-S. Materials Corp., 816 F.Supp. 230, 234 (S.D.N.Y. 1993); Vogt-Nem, Inc. v. M/V Tramper, 263 F.Supp.2d 1226, 1233 (N.D. Cal. 2002).

Resort to an injunction pursuant to the first-filed rule may be a disquieting remedy for a district court to impose.  But, it is the relief originally adopted, and over the decades continuously reconfirmed and resorted to, by district courts in the Second Circuit (and many other districts/circuits), as the necessary means to address situations where the same parties raise the same contentions in two separate district court venues.  That being said, the case law makes clear that district courts have substantial discretion concerning the application of the first-filed rule.

Conclusion:  File First To Preserve Your “Home-Court” Advantage

If you find yourself in a situation where litigation between diversely located parties is likely and you do not wish to waive or relinquish your preferred jurisdiction/venue to litigate the dispute then it may be wise to be the first-filed action.  In other words, file first and let your chosen/preferred district court sort it out later.

November 4, 2013