Martin v. Akers Biosciences, Inc.

Filing 20

ORDER: Defendant Akers Bioscience, Inc.'s Amended Motion to Stay Pending Venue and Jurisdiction Rulings by the Southern District of New York 14 is GRANTED. The Clerk is directed to STAY and ADMINISTRATIVELY CLOSE this action until the U.S. Dis trict Court for the Southern District of New York has made a determination regarding venue and jurisdiction as detailed herein. The parties are directed to file a status report regarding the U.S. District Court for the Southern District of New York&# 039;s determination as to venue and jurisdiction by January 15, 2015, and every 30 days thereafter until the U.S. District Court for the Southern District of New York makes the relevant determination. Signed by Judge Virginia M. Hernandez Covington on 12/17/2014. (KNC)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
LAWRENCE MARTIN,
Plaintiff,
v.

Case No. 8:14-cv-2835-T-33TGW

AKERS BIOSCIENCE, INC.,
Defendant.
______________________________/
ORDER
This cause is before the Court pursuant to Defendant
Akers

Bioscience,

Pending

Venue

and

Inc.’s

(Akers)

Jurisdiction

Amended
Rulings

Motion
by

the

to

Stay

Southern

District of New York (Doc. # 14), and accompanying Memorandum
of Law (Doc. # 15), both filed on November 26, 2014. Plaintiff
Lawrence Martin filed a response in opposition to the Motion
on December 10, 2014. (Doc. # 19). For the reasons that
follow, the Court grants the Motion.
I.

Background
On August 19, 2003, Martin filed a Patent Application -

number

10/604,810

-

with

the

United

States

Patent

and

Trademark Office (USPTO) pertaining to a “disposable device
for detecting the presence of alcohol and other substances in
breath for a variety of medical purposes by employing chemical
indicators that react in a prescribed manner to the presence

of a particular substance.” (Doc. # 2 at ¶ 8). “The patent
claims

covered

said

device

along

with

various

attached

labels, imprintations, streamers, bags, instructions, and
containers, including containers in the form of a key fob.”
(Id.).
On January 23, 2007, Akers entered into a Purchase
Agreement with Martin, among others, for assignment of the
Patent Application. (Id. at ¶ 9). Thereafter, on October 23,
2007, the USPTO approved Application 10/604,810 and issued
patent number 7,285,246 B1, “which does not expire until 20
years after the date on which the Patent Application was
filed.”

(Id. at ¶ 10). On November 23, 2010, the USPTO

approved

and

issued

a

second,

related

patent

-

number

7,837,936 B1. (Id. at ¶ 11).
On April 18, 2012, the Purchase Agreement was amended by
the Stipulation for Settlement with Judgment Upon Default in
Lawrence Martin v. Akers Biosciences, Inc., ET AL., Case No.
11-12562-CI-21 (2012 Settlement). (Id.; see Doc. # 2-4).
Specifically, Section 9.9 of the Purchase Agreement, was
amended to provide:
The rights and obligations under this Purchase
Agreement are assignable on the condition that the
7% royalty to which Larry Martin is entitled also
applies to any cash or equivalent, including stock,

2

received by [Akers] . . . or any affiliate for the
sale, assignment and/or transfer of US Patent
#7285246B1 or 7837936B1.
(Doc. # 2 at ¶ 13).
As consideration for the purchase and assignment of
the Patent Application by . . . Martin, the Purchase
Agreement provided that on the first day of each
calendar month beginning on March 1, 2007, until
the date of expiration of the valid patent issued
from Application 10/604,810, . . . Martin would be
entitled to a cash payment from [Akers] equal to 7%
of the previous month’s Royalty Sales. The Purchase
Agreement also stated that within forty-five (45)
days of each monthly royalty determination date,
[Akers] would deliver to [Martin] a statement
setting forth the royalty sales and the calculation
used to determine the monthly royalty, as well as
payment of the monthly royalty.
(Id. at ¶ 16)(internal citation omitted).
According to Martin, since the dismissal of Case No. 1112562-CI-21, “[Akers] has pursued and continues to pursue
various schemes and artifices to defraud . . . Martin of the
full measure of the royalties due to him under the Purchase
Agreement

and

Furthermore,

the
Martin

2012

Settlement.”

alleges

that

(Id.
“[Akers]

at

¶

18).

and

its

[a]ffiliates have engaged in sales of [d]evices as to which
[Martin] is entitled to a royalty, but [Akers has] concealed
material information and [has] not paid to [Martin] the
appropriate 7% royalty.” (Id. at ¶ 19). To that end, Martin

3

suggests that Akers “has failed on an ongoing basis to
properly account for royalty sales and to pay royalties due
and owing to [Martin].” (Id. at ¶ 25). As a result, “[Martin]
has suffered and is continuing to suffer losses and money
damages for which [Akers] is liable.” (Id. at ¶ 26).
A. Present Action (Florida Action)
Martin initiated this action on October 15, 2014, in the
Circuit Court of the Sixth Judicial Circuit in and for
Pinellas County, Florida, setting forth claims against Akers
for (1) Accounting and (2) Breach of Contract. (See Doc. #
2).

On

November

predicating

this

13,

2014,

Akers

Court’s

removed

jurisdiction

this

action

on

diversity

instant

lawsuit,

jurisdiction. (See Doc. # 1).
B. New York Action
Hours

before

Martin

commenced

the

however, Akers filed an action against Martin in the U.S.
District Court for the Southern District of New York, styled
Akers Biosciences, Inc. v. Lawrence Martin, No. 14-cv-8241
(New York Action). (See Doc. # 14-3). In the New York Action,
“Akers has requested the New York Court to resolve the
[p]arties’ dispute by issuing a declaratory judgment that
Martin is not owed a royalty payment based [on events noted

4

in the Florida Action Complaint,] and further that Martin is
not owed any royalty payments unless and until Akers or its
[a]ffiliates actually ‘receives cash’ for the ‘sale of a
particular product.’” (Doc. # 15 at 6).
On November 26, 2014, Akers filed the present Motion
stating that:
[p]ursuant to the “first filed rule,” Akers is
moving to stay this action pending a ruling on the
venue and jurisdiction issues by the U.[S].
District Court for the Southern District of New
York, where Akers filed an action for a declaratory
judgment before Martin filed his claims in Florida.
Thus, Akers requests this Court to stay this action
so that the court where the first action was filed
– the Southern District of New York – can decide
what venue the parties[’] dispute should be decided
in accordance with the “first filed” rule.
(Id. at 2). The Motion is ripe for this Court’s review.
II.

Analysis
By way of the present Motion, Akers requests that this

Court “proceed no further and allow the first-filed New York
action to decide the venue and jurisdiction rules.” (Id. at
3)(citing Collegiate Licensing Co. v. Am. Cas. Co. of Reading,
Pa., 713 F.3d 71, 78 (11th Cir. 2013)).
The “first to file” rule states that “where two actions
involving overlapping issues and parties are pending in two
federal courts, there is a strong presumption across the

5

federal circuits that favors the forum of the first-filed
suit under the first-filed rule.” Manuel v. Convergys Corp.,
430 F.3d 1132, 1135 (11th Cir. 2005); see, e.g., United States
Fire Ins. Co. v. Goodyear Tire & Rubber Co., 920 F.2d 487,
488 (8th Cir. 1990)(describing the first-filed rule as “wellestablished”).
“[T]he ‘first to file rule’ not only determines which
court may decide the merits of substantially similar issues,
but also establishes which court may decide whether the second
suit filed must be dismissed, stayed or transferred and
consolidated.” Cadle Co. v. Whataburger of Alice, Inc., 174
F.3d 599, 606 (5th Cir. 1999)(quoting Sutter Corp. v. P & P
Indus., Inc., 125 F.3d 914, 920 (5th Cir. 1997)). Courts
applying this rule generally agree “that the court in which
an action is first filed is the appropriate court to determine
whether

subsequently

filed

cases

involving

substantially

similar issues should proceed.” (Id.) (quotations omitted);
e.g., Perkins v. Am. Nat. Ins. Co., 446 F. Supp. 2d 1350,
1353 (M.D. Ga. 2006) (“[U]nder the ‘first-filed rule,’ the
court where the subsequently filed action has been filed
should defer to the court where the first action was filed to
allow

that

court

to

decide

whether

it

should

exercise

jurisdiction over both cases in a consolidated action.”).

6

This Court notes that the application of the first-filed
rule is not mandatory, but rather committed soundly to the
district court’s discretion. Allstate Ins. Co. v. Clohessy,
9 F. Supp. 2d 1314, 1316 (M.D. Fla. 1998); see White v.
Microsoft Corp., No. 1:05-CV-00731, 2006 U.S. Dist. LEXIS
77010, * 9, (“The most basic aspect of the first-to-file rule
is that it is discretionary; an ample degree of discretion,
appropriate for disciplined and experienced judges, must be
left to the lower courts.”).
The case pending before the Southern District of New
York, styled Akers Biosciences, Inc. v. Lawrence Martin, No.
14-cv-8241, was filed on October 15, 2014, at 2:02 PM (Doc.
# 14-3), hours before the Florida Action was filed on October
15, 2014, at 6:02 PM (Doc. # 2).
It is undisputed that there is a substantial overlap
between the Florida and New York Actions. (See Doc. # 15 at
8).1 To begin, both actions involve the exact same parties.
Furthermore,

both

actions

concern

the

conflicting

interpretations of the same Purchase Agreement. Namely, the
parties’ respective rights and obligations relating to the

1

The Court notes that on December 11, 2014, in the New
York Action, Martin filed a Motion to Transfer Venue to the
Middle District of Florida. (Case No. 14-cv-8241, Doc. # 9).

7

same singular issue of contract interpretation, (i.e., the
circumstances under which Martin is contractually entitled
and

Akers

is

contractually

obligated

to

pay

royalty

payments).
In his response, Martin contends that “the timing of
[Akers’] declaratory action was the result of gamesmanship.”
(Doc. # 19 at 11). Therefore, Martin requests that this Court
“find

that

conscience

compelling
demand

circumstances

that

the

Middle

and

equity

[District

and

of]

good

Florida

litigation take priority.” (Id. at 13).
The Court recognizes that the filing of a declaratory
judgment action in anticipation of suit in another forum is
an equitable consideration which the Court may take into
account in determining whether compelling circumstances exist
to warrant an exception to the first-filed rule. Manuel, 430
F.3d at 1136. However, whatever merit there may be to Martin’s
argument

that

the

New

York

Action

falls

within

the

“anticipatory suit exception” to the first filed rule — an
issue upon which the Court expresses no opinion — the Court
is of the view that this determination should be made by the
U.S. District Court for the Southern District of New York.
See Kate Aspen, Inc. v. Fashioncraft-Excello, Inc., 370 F.
Supp. 2d 1333, 1338-39 (N.D. Ga. 2005)(“[T]he first-filed

8

rule generally requires the first court to decide whether the
first-filed rule should apply, or whether a narrow exception
to the rule that only applies in ‘compelling circumstances,’
favors transfer of the first-filed case to the second court
for consolidation.”).
As set forth above, “the ‘first to file rule’ not only
determines which court may decide the merits of substantially
similar issues, but also establishes which court may decide
whether the second suit filed must be dismissed, stayed or
transferred

and

consolidated.”

Cadle,

174

F.3d

at

606

(quoting Sutter Corp., 125 F.3d at 920). Courts applying this
rule generally agree “that the court in which an action is
first filed is the appropriate court to determine whether
subsequently

filed

cases

involving

substantially

similar

issues should proceed.” Id. (quotations omitted).
Thus, once the court determines that a likelihood of
substantial overlap exists between the two suits, it is no
longer up to the second filed court to resolve the question
of whether both should be allowed to proceed. Cadle, 174 F.3d
at 606; Mann Mfg. v. Hortex, Inc., 439 F.2d 403, 408 (5th
Cir. 1971). Rather, “the proper course of action [is] for the
court to transfer the case to the [first-filed] court to
determine

which

case

should,

9

in

the

interests

of

sound

judicial

administration

and

judicial

economy,

proceed.”

Cadle, 174 F.3d at 606.
Because, as noted above, it is undisputed that the
Florida Action post-dates the New York Action, and there is
a likelihood of substantial overlap between the two cases,
the U.S. District Court for the Southern District of New York
is the appropriate court to decide whether (1) the Florida
Action should be allowed to proceed, or whether it should be
consolidated with the New York Action, and (2) whether this
Court or the U.S. District Court for the Southern District of
New York is the appropriate venue to resolve this dispute.
See Kate Aspen, Inc., 370 F. Supp. 2d at 1338-39 (staying
action pending decision of the U.S. District Court for the
Southern District of New York’s determination as to whether
or not the “first filed rule” should apply to the case and to
the related litigation in the Southern District of New York).
For
granted.

the

reasons

set

forth

above,

Akers’

Motion

is

Therefore, this case is stayed and administratively

closed until the U.S. District Court for the Southern District
of New York has made a determination regarding the proper
venue and jurisdiction of the Florida and New York Actions as
detailed

above.

The

parties

shall

file

a

status

report

regarding the U.S. District Court for the Southern District

10

of New York’s determination as to venue and jurisdiction by
January 15, 2015, and every 30 days thereafter until the U.S.
District Court for the Southern District of New York makes
the relevant determination.
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
(1)

Defendant Akers Bioscience, Inc.’s Amended Motion to
Stay

Pending

Venue

and

Jurisdiction

Rulings

by

the

Southern District of New York (Doc. # 14) is GRANTED.
(2)

The Clerk is directed to STAY and ADMINISTRATIVELY CLOSE
this

action

until

the

U.S.

District

Court

for

the

Southern District of New York has made a determination
regarding venue and jurisdiction as detailed herein.
(3)

The

parties

regarding

are

the

directed

U.S.

to

District

file
Court

a

status

for

the

report

Southern

District of New York’s determination as to venue and
jurisdiction by January 15, 2015, and every 30 days
thereafter
Southern

until
District

the
of

U.S.
New

determination.

11

District
York

makes

Court
the

for

the

relevant

DONE and ORDERED in Chambers in Tampa, Florida, this
17th day of December, 2014.

Copies: All Counsel of Record

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