GoPro Hong Kong Ltd. v. 2B Trading, Inc. et al

Filing 30

ORDER denying 12 Motion to Dismiss. Signed by Judge James Donato on 11/14/2016. (jdlc1S, COURT STAFF) (Filed on 11/14/2016)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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GOPRO HONG KONG LTD.,
Plaintiff,

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United States District Court
Northern District of California

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Case No.16-cv-05113-JD
ORDER RE MOTION TO DISMISS

v.
2B TRADING, INC., et al.,
Defendants.

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On September 6, 2016, plaintiff GoPro Hong Kong Ltd. (“GoPro”) filed a petition to

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enforce a foreign arbitration judgment against defendants 2B Trading, Inc. and United World

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Brands. Dkt. No. 1. On September 30, 2016, 2B Trading filed a motion to dismiss the petition

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based on the first-to-file rule of federal comity. Dkt. Nos. 12, 13. 2B Trading asserts that because

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it filed a petition to vacate the arbitration award in Miami-Dade County, Florida before GoPro

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filed its petition, the Court should dismiss the duplicative action. Id. at 6-8. The motion is denied.

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BACKGROUND

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GoPro is a Hong Kong organization that distributes action sports cameras and accessories.

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Dkt. No. 1 ¶ 1. 2B Trading is a Florida corporation that distributes action sports equipment and

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United World Brands is a Colombian corporation that imports and markets extreme sports

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products; they are under common management. Id. ¶¶ 2-4. In 2012, the parties entered into a

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two-year international distribution agreement in which defendants would distribute GoPro

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products in Colombia. Id. ¶¶ 8-9. In 2013, GoPro terminated the agreement when it found out

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that defendants were allegedly selling their products on the “gray” market. Dkt. No. 18 at 1-3. In

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2014, 2B Trading brought a breach of contract action against GoPro in Florida state court in

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response, but it was dismissed with prejudice in light of the agreement’s arbitration clause. Id. at

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1-2.

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Following the dismissal, 2B Trading submitted a request for arbitration to the International

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Court of Arbitration (“ICC”) on January 12, 2015. Id. at 2. GoPro sought joinder of United

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World Brands, which was not opposed. Id. The arbitration proceeded according to ICC rules and

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culminated with a four-day hearing in San Francisco in March 2016. Id. The arbitrator found in

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favor of GoPro, awarding $745,172.74 plus fees, costs, and post-judgment interest. Id. at 3. After

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asking for the status of compliance with this award, counsel for defendants told GoPro on June 10,

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2016 that they are “judgment proof. No payment will be made.” Id. On September 2, 2016, 2B
Trading e-filed a “Petition to Vacate Arbitration Award” in the closed 2014 action in Miami-Dade

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United States District Court
Northern District of California

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state court. Id. at 4. On September 6, 2016, GoPro filed the petition to affirm judgment against

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defendants in this Court. Dkt. No. 1.
DISCUSSION

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Before getting into the substance of the motion, the Court notes that 2B Trading filed a

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reply brief 15 days late and after the Court advised the parties that it found the matter appropriate

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for resolution without oral argument. Dkt. No. 26. That is far too late to file a reply, and 2B

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Trading offered an insufficient explanation for this untoward delay. The Court on its own

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discretion declines to consider the reply. See Airbnb, Inc. v. City and County of San Francisco,

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No. 3:16-cv-03615-JD, 2016 WL 6599821, at *5 (N.D. Cal. Nov. 8, 2016). GoPro’s motion to

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strike is denied as moot. Dkt. No. 26.

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2B Trading contends that because the petition to vacate the arbitration award was first filed

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in Miami-Dade County, Florida state court -- four days before GoPro filed the petition to confirm

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the arbitration award -- the Court should dismiss the second filed action here. Dkt. No. 13 at 7.

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This is a misunderstanding of the first-to-file doctrine. Under that rule, a court may dismiss an

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action when a similar complaint has already been filed in another federal court. See Alltrade, Inc.

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v. Uniweld Products, Inc., 946 F.2d 622, 623 (9th Cir. 1991) (emphasis added). There is not

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another federal court at issue here. Rather, between state and federal courts, “the rule is that the

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pendency of an action in the state court is no bar to proceedings concerning the same matter in the
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Federal court having jurisdiction.” Colorado River Water Cons. Dist. v. U.S., 424 U.S. 800, 817

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(1976) (internal quotation omitted). Dismissal of a federal action in favor of the state forum is

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reserved only for “exceptional circumstances” and after carefully weighing complex factors. See

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Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 13-19 (1983).

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If there is a parallel state action, the court must consider (1) whether the state court first

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assumed jurisdiction over property; (2) inconvenience of the federal form; (3) the desirability of

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avoiding piecemeal litigation; (4) the order in which jurisdiction was obtained by the concurrent

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forums; (5) whether federal law or state law provides the rule of decision on the merits; (6)

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whether the state court proceedings are inadequate to protect the federal litigant’s rights;
(7) whether exercising jurisdiction would promote forum shopping. See Holder v. Holder, 305

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United States District Court
Northern District of California

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F.3d 854, 867, 870 (9th Cir. 2002). The Ninth Circuit cautions that a federal action should not be

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dismissed where there is “substantial doubt” whether the state court action will be an “adequate

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vehicle for the complete and prompt resolution of the issues between the parties.” Intel Corp. v.

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Advanced Micro Devices, Inc., 12 F.3d 908, 913 (9th Cir. 1993) (internal quotation omitted).

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As a preliminary matter, it is unclear whether the Florida action is actually “pending.” But

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because courts must “generally rely on the state of affairs at the time of the Colorado River

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analysis,” the e-filed state court petition will be considered. R.R. Street & Co. Inc. v. Transport

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Ins. Co., 656 F.3d 966, 982 (9th Cir. 2011). As plaintiff points out, 2B Trading first filed a

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petition to vacate the arbitration award in a case that was previously dismissed with prejudice.

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Dkt. No. 18 at 5, Exh. B. It is unclear if or whether the action will be reopened and whether

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United World Brands will join, but the Florida state court does have discretion to proceed with the

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parallel petition. See id.; Dkt. No. 12, Exh. A.

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The other relevant Colorado River factors cut against dismissal and demonstrate the

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absence of exceptional circumstances. As a “major consideration,” there is a clear presence of

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federal-law issues related to foreign arbitration. See Moses H. Cone, 460 U.S. at 25. This Court

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will not be an inconvenient forum because the parties have already enjoyed a multi-day arbitration

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in San Francisco and witnesses’ testimony will almost certainly not be required here. There is no

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risk of piecemeal litigation or risk of inconsistent disposition of property. The state court action
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does not yet include United World Brands as a party, and neither court has addressed the motion

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to vacate or motion to confirm. See Merrill Lynch, Pierce, Fenner & Smith v. Moore, Inc., 171

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Fed. Appx. 545, 546 (9th Cir. 2006).

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Consequently, the motion to dismiss is denied.

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IT IS SO ORDERED.

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Dated: November 14, 2016

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JAMES DONATO
United States District Judge

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United States District Court
Northern District of California

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