Chateau School, Inc. vs. Green Mountain Associates Inc.
Filing
55
ORDER Granting Plaintiff's Motion To Stay Case Pending Outcome Of Lawsuit In Japan re 37 .On the basis of the foregoing, Plaintiff's Motion to Stay Case Pending Outcome of Lawsuit in Japan, filed December 2, 2018, is HEREBY GRANTED. The Court directs the Clerk's Office to administratively close this case fifteen days from the entry of this Order, unless Defendants file a timely motion for reconsideration of this Order. Upon the conclusion of the Japan Action, Plaintiff is DIRECTED to contact the magistrate judge assigned to this case to schedule a status conference to discuss whether it is necessary to restore the instant case to its active docket.Signed on 2/19/2019 by JUDGE LESLIE E. KOBAYASHI. (cib)
UNITED STATES DISTRICT COURT
DISTRICT OF HAWAII
CHATEAU SCHOOL, INC., A JAPAN
CORPORATION;
CIV. NO. 18-00030 LEK-KSC
Plaintiff,
vs.
GREEN MOUNTAIN ASSOCIATES INC.,
A HAWAI'I CORPORATION; HEIMA
YAMAZAKI, JOHN DOES 1-10, JANE
DOES 1-10, DOE PARTNERSHIPS 110, DOE CORPORATIONS 1-10,
Defendants.
ORDER GRANTING PLAINTIFF’S MOTION
TO STAY CASE PENDING OUTCOME OF LAWSUIT IN JAPAN
On December 2, 2018, Plaintiff Chateau School, Inc., a
Japan corporation (“Plaintiff”), filed its Motion to Stay Case
Pending Outcome of Lawsuit in Japan (“Motion”).
[Dkt. no. 37.]
Defendants Green Mountain Associates Inc. (“GMA”) and Heima
Yamazaki (“Yamazaki” and collectively “Defendants”) did not file
a memorandum in opposition, and Plaintiff filed its reply on
January 4, 2018.
[Dkt. no. 49.]
The Court finds this matter
suitable for disposition without a hearing pursuant to Rule
LR7.2(d) of the Local Rules of Practice of the United States
District Court for the District of Hawaii (“Local Rules”).
Plaintiff’s Motion is hereby granted for the reasons set forth
below.
BACKGROUND
Plaintiff is a stock corporation organized and
existing under the laws of Japan.
(dkt. no. 1), at ¶ 2.]
[Complaint, filed 1/19/18
GMA is a Hawai`i corporation, formerly
doing business as “Voyage School” and later as “Thinker School.”
[Id. at ¶ 3; Defs.’ Answer to Pltf.’s Complaint, filed 5/7/18
(dkt. no. 21) (“Answer”), at ¶ 4.1]
Yamazaki is a resident of
the State of Hawai`i and a Japanese citizen, and is the
President, Director, and shareholder of GMA.
[Answer at ¶ 5.]
Plaintiff runs and operates a preschool known as the
Chateau School, which is located in Japan, in Nishi-Azabu,
Minato-Ku, Tokyo (“Chateau School”).
[Complaint at ¶ 11.]
According to the Complaint, the Chateau School is a globallyfocused preschool with an advanced education program.
The
Chateau School employs a specialized curriculum and teaching
methodology.
[Id. at ¶¶ 12-13.]
School is well known in Tokyo.
Plaintiff alleges the Chateau
[Id. at ¶ 15.]
On or about
December 2016 and into early 2017, Plaintiff and Yamazaki
discussed developing a school in Hawai`i using the same concepts
and curriculum employed at the Chateau School (“Chateau
Information”).
[Id. at ¶ 16.]
To commemorate their development
1
Defendants also submit that GMA “registered, owns and may
operate under the trade names Voyage School and Thinker’s
School.” [Answer at ¶ 4.]
2
plans, Plaintiff and Yamazaki, through his company, GMA, entered
into the Advisory Agreement on February 3, 2017 (“Advisory
Agreement”).
[Id. at ¶¶ 20-21.]
Plaintiff alleges the Advisory
Agreement provided Defendants limited use of the Chateau
Information, and did not permit Defendants to, inter alia,
operate its own school under any circumstances.
[Id. at ¶¶ 22-
23.]
In June 2017, Plaintiff sent a licensing agreement to
Defendants that would have permitted GMA to continue to use the
Chateau Information in exchange for payment.
[Id. at ¶ 35.]
Meanwhile, Natalia Koltunovskaya, manager of the Chateau School
operations in Japan, traveled to Hawai`i at the direction of
Plaintiff to assist Yamazaki in opening the Voyage School.
at ¶ 36.]
[Id.
Here, Plaintiff alleges the preparations took a turn
for the worst when Yamazaki failed to meet the promises he had
made to Plaintiff.
[Id. at ¶¶ 38-39.]
Yamazaki had secured a location in the Waikiki
Shopping Plaza for the Voyage School, but ultimately did not
sign the licensing agreement on behalf of GMA.
40.]
[Id. at ¶¶ 39-
Additionally, Yamazaki neither paid Plaintiff for the use
of the Chateau Information nor provided housing for
Ms. Koltunovskaya while she was in Hawai`i to assist with the
Voyage School opening.
[Id. at ¶¶ 40-41.]
Yamazaki failed to
obtain the proper permits to open the Voyage School, and failed
3
to make timely payments to his teachers and staff.
Ms. Koltunovskaya observed that Yamazaki would arrive at the
school site intoxicated during the day, act inappropriately in
front of children and staff, and was overall unfit and
unprepared to operate the Voyage School.
[Id. at ¶¶ 41-42.]
Further, Plaintiff alleges GMA breached the Advisory Agreement
by registering the Voyage School name in the State of Hawai`i
under GMA, without Plaintiff’s consent.
[Id. at ¶ 44.]
Shortly thereafter, Plaintiff decided to end its
relations with Defendants, and on September 14, 2017, sent a
demand letter to Defendants (“Demand Letter”) terminating any
rights GMA may have had under the Advisory Agreement, and
demanding that Defendants cease their use of the Chateau
Information.
[Id. at ¶¶ 46-47.]
Notwithstanding Plaintiff’s
Demand Letter, Defendants continued to run and operate the
Voyage School.
Plaintiff believes Defendants attempted to
establish similar operations using the Chateau Information in
parts of Asia, including Hong Kong, Shanghai, and Beijing.
[Id.
at ¶¶ 50-52.]
Plaintiff alleges the following claims:
misappropriation of trade secrets based on Defendants’ improper
use of the Chateau Information (“Count I”); false designation of
origin pursuant to the Lanham Act (“Count II”); unfair
competition pursuant to Haw. Rev. Stat. Chapter 480
4
(“Count III”); interference with business advantage
(“Count IV”); deceptive trade practices pursuant to Haw. Rev.
Stat. Chapter 481A (“Count V”); common law injury to business
reputation (“Count VI”); and breach of contract (“Count VII”).
Plaintiff seeks general and special damages; recovery of
Defendants’ gains as a result of the alleged infringement;
exemplary and/or punitive damages; and statutory damages.
at pgs. 21-22.]
[Id.
In addition, Plaintiff seeks a preliminary and
permanent injunction barring Defendants from continuing to
violate Plaintiff’s rights, and seeks reimbursement of its
attorneys’ fees, costs, pre-judgment interest, and such other
relief as the Court deems just.
[Id. at pg. 22.]
After the Complaint was filed, between March and May
of 2018, Plaintiff attempted to serve discovery requests upon
Defendants and communicate with Defendants’ counsel.
[Motion,
Decl. of Glenn T. Melchinger (“Melchinger Decl.”), at ¶¶ 4-7.]
Plaintiff asserts Defendants’ counsel would only sporadically
respond, and Defendants’ document production and responses to
Plaintiff’s discovery requests were extremely late and
insufficient.
[Id.]
Although Plaintiff’s representative, Rina
Bovrisse, flew in from Japan to personally attend the settlement
conference in Honolulu, Hawai`i in June of 2018, Yamazaki did
not, apparently due to issues with his visa.
5
[Id. at ¶ 13.]
Plaintiff asserts Yamazaki’s ability to visit the United States
is now limited.
[Id. at ¶ 14.]
After filing the instant Motion, Plaintiff filed a
complaint in the Tokyo District Court on December 26, 2018
(“Japan Action”).
[Pltf.’s Amended Suppl. Submission of Exhibit
“D-1” (English Translation of Exhibit “D”) in Supp. of Motion,
filed 1/3/19 (dkt. no. 47), Decl. of Youko Smith (“Smith
Decl.”), Exh. D-1 at 1-4 (English translation of complaint filed
on 12/26/18 in Tokyo District Court (“Japan Complaint”)).2]
The
Japan Complaint appears to name Heima Yamazaki as the sole
Defendant in the Japan Action, although the factual allegations
are largely the same as the Complaint.
The Japan Complaint
alleges, inter alia, that: Plaintiff entered into the Advisory
Agreement with GMA on February 3, 2017; Plaintiff provided
trade-secret information concerning operating and managing an
international preschool; Plaintiff supplied advice and business
2
Plaintiff did not seek leave to file supplemental
materials containing declarations or exhibits. See Local Rule
LR7.4 (“No further supplemental briefing shall be submitted
without leave of court.”). However, because Defendants have not
objected, and because the contents of the Smith Declaration and
Exhibit D-1 are critical to the instant Motion, this Court will
consider them with the Motion. Exhibit D-1 does not contain
page numbers, and the Court therefore cites to the page numbers
assigned by this district court’s electronic case filing system.
The English translation of the Japan Complaint is located at
pages 1-4, while the original Japan Complaint - written in
Japanese - is located at pages 5-9.
6
connections related to the opening of a Voyage School in
Hawai`i; and Yamazaki breached the Advisory Agreement by
refusing to pay for Plaintiff’s services, and by applying for a
trademark registration of the Voyage School in Hawai`i.
pg. 2.]
[Id. at
Plaintiff alleges Yamazaki’s actions constitute an “act
of infringement under Torts (Article 709, Civil Code)” and seeks
damages in the amount of 25,453,412 yen, with an additional rate
taxed at five percent per day after the Japan Complaint is
served upon Yamazaki.
[Id. at pgs. 1, 3.]
Plaintiff also
appears to allege a claim for unjust enrichment.
[Id. at
pg. 3.]
In the instant Motion, Plaintiff seeks a stay pending
the resolution of the Japan Action, or in the alternative, an
amendment of the Rule 16 Scheduling Order, [filed 9/18/18 (dkt.
no. 34),] to continue the June 3, 2019 trial date and all
related deadlines for at least six months.
Plaintiff asserts
that the Japan Action should proceed first because: the primary
witnesses and evidence are located in Japan – including
Yamazaki, who now has difficulty returning to the United States;
the Japan Action is based on the same nucleus of operative facts
as the instant matter; and staying the instant action and
proceeding before a Japan court would promote judicial economy
since the evidence in this case is primarily in Japanese.
7
STANDARD
Plaintiff moves to stay these proceedings in light of
the Japan Action based on the doctrine of international
abstention.
Plaintiff cites to Colorado River Water
Conservation District v. United States, 424 U.S. 800 (1976), and
argues that all factors weigh in favor of granting a stay.
[Mem. in Supp. of Motion at 5.]
Where there is a parallel
proceeding pending in a foreign country, the international
abstention doctrine permits federal district courts to decline
exercising jurisdiction over a proceeding under “exceptional
circumstances.”
See Neuchatel Swiss Gen. Ins. Co. v. Lufthansa
Airlines, 925 F.2d 1193, 1194-95 (9th Cir. 1991) (citing
Colorado River, 424 U.S. at 818, 96 S. Ct. at 1246); see also
Mujica v. Occidental Petroleum Corp., 381 F. Supp. 2d 1134, 1157
(C.D. Cal. 2005) (“The international abstention doctrine ‘allows
a court to abstain from hearing an action if there is a firstfiled foreign proceeding elsewhere.’” (quoting Supermicro
Computer, Inc. v. Digitechnic, S.A., 145 F. Supp. 2d 1147, 1149
(N.D. Cal. 2001))).
“Abstention is rooted in concerns of
international comity, judicial efficiency and fairness to
litigants.”
Cummins-Allison Corp. v. SBM Co., CIVIL NO. 12-
00207 HG-KSC, 2013 WL 12198836, at *4 (D. Hawai`i Aug. 5, 2013)
(citation and internal quotation marks omitted).
The
international abstention doctrine has been adopted by the
8
Eleventh and Seventh Circuits, and the Ninth Circuit has
employed a Colorado River analysis to determine whether a stay
is appropriate where there is a parallel judicial proceeding
pending.
See Mujica, 381 F. Supp. 2d at 1157 (citing Finova
Capital Corp. v. Ryan Helicopters, U.S.A. Inc., 180 F.3d 896
(7th Cir. 1999); Turner Entm’t Co. v. Degeto Film GmbH, 25 F.3d
1512 (11th Cir. 1994); Neuchatel, 925 F.2d at 1194).
In Neuchatel, the Ninth Circuit reviewed a district
court’s decision to stay the case before it based on the factors
in Colorado River, where there was a parallel judicial
proceeding pending in Geneva, Switzerland.
at 1194.
Neuchatel, 925 F.2d
The Ninth Circuit held that the district court erred
since there were no “exceptional circumstances” present to
warrant a stay.
Id. at 1195.
Applying the guidance in
Neuchatel, this Court looks to the following eight factors in
Colorado River to address the instant Motion:
(1) which court first assumed jurisdiction over
any property at stake; (2) the inconvenience of
the federal forum; (3) the desire to avoid
piecemeal litigation; (4) the order in which the
forums obtained jurisdiction; (5) whether federal
law or state law provides the rule of decision on
the merits; (6) whether the state court
proceedings can adequately protect the rights of
the federal litigants; (7) the desire to avoid
forum shopping; and (8) whether the state court
proceedings will resolve all issues before the
federal court.
9
R.R. Street & Co. v. Transport Inc. Co., 656 F.3d 966, 978-79
(9th Cir. 2011) (citing Holder v. Holder, 305 F.3d 854, 870 (9th
Cir. 2002) (citing Moses H. Cone Mem’l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 15–16, 23, 26, 103 S. Ct. 927 (1983);
Travelers Indem. Corp. v. Madonna, 914 F.2d 1364, 1367–68 (9th
Cir. 1990); Colorado River, 424 U.S. at 818–19, 96 S. Ct.
1236)).
The United States Supreme Court has made it abundantly
clear that abstention is the narrow exception to a federal
district court’s “virtually unflagging” obligation to hear
jurisdictionally sufficient claims.
U.S. at 817.
See Colorado River, 424
Only in exceptional circumstances where the
“clearest of justifications” support either a stay or dismissal,
is it appropriate for a court to abstain from exercising its
jurisdiction.
Id. at 818-19.
Moreover, “[a]ny doubt as to
whether a factor exists should be resolved against a stay, not
in favor of one.”
Travelers, 914 F.2d at 1369.
DISCUSSION
I.
Colorado River Factors
A.
Jurisdiction over the Property
Plaintiff asserts this Court has not assumed
jurisdiction over any res, but in the event a judgment is
obtained in the current forum, Plaintiff would likely have to
file a separate proceeding in Japan to enforce the judgment
against Yamazaki.
[Mem. in Supp. of Motion at 7.]
10
As a result,
the Japan court would take jurisdiction over any res or assets
belonging to Yamazaki in Japan.
[Id.]
This Court agrees
insofar as there is no property currently at issue, but declines
to consider the hypothetical circumstance Plaintiff has
suggested.
Money is not the type of tangible physical property
contemplated in Colorado River.
1368.
See Travelers, 914 F.2d at
For the purposes of the Motion and the facts presently
before the Court, this factor is neutral, and therefore weighs
against abstention.
See id. at 1369 (noting that “‘[o]nly the
clearest of justifications will warrant dismissal’” (quoting
Colorado River, 424 U.S. at 819, 96 S. Ct. at 1247)).
B.
Inconvenience of the Federal Forum
Plaintiff’s strongest arguments rest in the
inconvenience of this forum, where there are overwhelming
factors in favor of litigating this case in Japan before the
Tokyo District Court.
In evaluating this factor, the Court
considers whether “‘the inconvenience of the forum is so great
that this factor points toward abstention.’”
Id. at 1368
(quoting Evanston Ins. Co. v. Jimco, Inc., 844 F.2d 1185, 1192
(5th Cir. 1998)).
Here, it appears there are ample reasons why
the federal forum will be “greatly inconvenient.”
See id.
First, Plaintiff points out that Yamazaki has returned
to Japan and is no longer able to freely travel to the United
States, including Hawai`i, due to issues with his visa.
11
[Melchinger Decl. at ¶¶ 13-14.]
Rina Bovrisse, the
Representative Director and Chief Executive Officer of the
Chateau School, Inc., represented that, based on Yamazaki’s
Facebook page and information conveyed to her and her attorney
at the settlement conference with the magistrate judge, Yamazaki
has moved back to Tokyo, Japan.
[Submission of Decl. of Rina
Bovrisse in Supp. of Motion, filed 12/10/18 (dkt. no. 39), Decl.
of Rina Bovrisse (“Bovirsse Decl.”) at ¶ 6.3]
According to
Plaintiff, Yamazaki’s counsel has also failed to respond to
whether Yamazaki would be able to attend a Fed. R. Civ. P.
30(b)(6) deposition, if noticed.
[Melchinger Decl. at ¶ 15.]
Second, most of the documents and evidence – including
“witnesses, parties, and principals” – are located in Japan, and
will need to be both transported and translated into English if
this proceeding were to continue in the current forum.
Supp. of Motion at 8.]
[Mem. in
If the Japan Action were to proceed,
Ms. Bovrisse stated that “[s]ome translations into Japanese may
be required for the Japan litigation, but more English
translations and interpretation will be required to present the
3
Attached to Plaintiff’s Motion as Exhibit C was the
unsigned Declaration of Rina Bovrisse. [Motion, Melchinger
Decl., Exh. C.] Because the only difference between Exhibit C
and the Bovrisse Declaration is the date and location, as well
as Ms. Bovrisse’s signature which were all later added, the
Court will consider it with the Motion.
12
Japanese documents and testimony in English” in the instant
matter.
[Bovrisse Decl. at ¶ 11.]
Third, costs for translators and interpreters, as well
as costs for transporting evidence to this forum is unduly
burdensome, and will require air travel.
Fourth, the length of
trial would increase substantially with the use of duplicated
exhibits translated from Japanese to English, and increased time
due to translated testimony.4
Combined with the fact that
Defendants have not filed a memorandum in opposition to the
Motion, the Court is inclined to agree that the federal forum is
greatly inconvenient to the parties.
The Court therefore finds
the foregoing issues would present marked delays and/or
4
Other courts have held translation of trial materials and
evidence to be a valid basis for choosing one forum over
another. See, e.g., Moreta v. First Transit of PR, Inc., 39 F.
Supp. 3d 169, 183 (D.P.R. 2014) (finding that the interest of
judicial economy and fairness weighed in favor of the federal
district court retaining supplemental jurisdiction since, inter
alia, Puerto Rico courts operate in Spanish, and documents and
filings would need to be translated); Avianca, Inc. v. Corriea,
Civ. A. No. 85–3277 (RCL), 1991 WL 496132, at *3 (D.D.C. May 31,
1991) (holding that judicial economy weighed in favor of federal
district court retaining jurisdiction because transfer based on
forum non conveniens to Columbia would “require testimony and
depositions already taken in English . . . to be translated into
Spanish” (citing Friends for All Children Inc. v. Lockheed
Aircraft Corp., 717 F.2d 602, 608 (D.C. Cir. 1983))); Archangel
Diamond Corp. Liquidating Trust v. OAO Lukoil, 75 F. Supp. 3d
1343, 1381 (D. Col. 2014) (holding that Russian court was more
appropriate where evidence, and the parties’ contacts were
closer to Russia, and translation of materials into English
would be administrative burden on parties and court).
13
difficulties with proceeding in this forum, as opposed to
proceeding in the Japan Action.
Accordingly, this factor weighs
in favor of abstention.
C.
Desire to Avoid Piecemeal Litigation
“Piecemeal litigation occurs when different tribunals
consider the same issue, thereby duplicating efforts and
possibly reaching different results.”
Travelers, 914 F.2d at
1369 (citation and internal quotation marks omitted).
Avoiding
piecemeal litigation is considered one of the most important
factors in the Colorado River analysis.
See Moses H. Cone, 460
U.S. at 16 (“By far the most important factor in our decision to
approve dismissal [in Colorado River] was the ‘clear federal
policy . . . [of] avoidance of piecemeal adjudication[.]’” (some
alterations in Moses H. Cone) (quoting Colorado River, 424 U.S.
at 819)).
There must be a “special concern about piecemeal
litigation”; the “mere possibility” of it does not meet the
exceptional circumstances contemplated under Colorado River.
See R.R. Street, 656 F.3d at 979 (citations and internal
quotation marks omitted).
Here, as with nearly all motions brought under
Colorado River, there is a real concern that proceeding in both
the instant action and the Japan Action will lead to piecemeal
litigation.
The Japan Action involves both the same Advisory
Agreement at issue in the instant matter, and the same dispute
14
concerning the failed attempt to develop the Voyage School, as
well as Yamazaki’s alleged infringement of Plaintiff’s tradesecret information.
Although there are certain claims and
damages absent from the Japan Action, Plaintiff asserts it has
accepted its pared down version of the Japan Complaint and “will
invoke the Japan courts’ jurisdiction.”
[Mem. in Supp. of
Motion at 8.]
Still, Colorado River requires an additional factor
before abstention is warranted.
Colorado River does not say that every time it is
possible for a state court to obviate the need
for federal review by deciding factual issues in
a particular way, the federal court should
abstain. . . . Colorado River stands for the
proposition that when Congress has passed a law
expressing a preference for unified state
adjudication, courts should respect that
preference.
United States v. Morros, 268 F.3d 695, 706 (9th Cir. 2001)
(emphasis in Morros).
In other words, there must be a strong
policy at stake that urges the Court to give up its obligation
to exercise jurisdiction over a claim rightfully filed with this
district court.
See id.
While Plaintiff points to no such
Congressional intent directing the parties to bring their
dispute before a Japan court, the Court finds exceptional
circumstances exist where both parties are located in Japan, the
evidence - including documents and testimony - will primarily be
in the Japanese language, and having the matter proceed in the
15
Japan Action will serve the interests of judicial economy and
international comity.
The Court considers the additional
complexity that most of the evidence must first be translated
into English, and that any differentiating terms could
potentially alter an interpretation of the evidence.
For these
reasons, the Court finds that this factor weighs in favor of a
stay pending the resolution of the Japan Action.
D.
Order in Which the Forums Obtained Jurisdiction
The Supreme Court has cautioned against a mechanical
application of this factor, and encouraged courts to approach it
“in a pragmatic, flexible manner with a view to the realities of
the case at hand.”
See Moses H. Cone, 460 U.S. at 21.
The
relative progress of the separate matters, such as whether any
dispositive motions have been filed and ruled on, is more
relevant than the dates on which the federal and foreign
complaints were filed.
See id. (noting that “the federal suit
was running well ahead of the state suit at the very time that
the District Court decided to refuse to adjudicate the case”).
Here, prior to the instant Motion, little advancement has been
made toward the resolution of this action.
There has been an
attempt at a settlement conference, some discovery production,
but otherwise, no other substantial progress.
In contrast,
Plaintiff only recently filed the Japan Complaint on
December 26, 2018.
Because the instant matter is only slightly
16
more developed than the Japan Action, the Court finds this
factor to be neutral, if only somewhat against abstention.
E.
Rule of Decision
Plaintiff asserts neither the laws of Japan nor the
laws of the United States control because the trademarks and
tradenames are registered in both Japan and the United States,
therefore this factor is neutral.
[Mem. in Supp. of Motion at
Count II, and possibly Count I,5 of the Complaint assert
11.]
claims arising under federal law, while Counts III through VII
appear to arise under either the Hawai`i Revised Statutes or
state common law claims.
Conversely, the Japan Action asserts a
primary claim arising under “Torts (Article 709, Civil Code)”
for “infringement” based on Yamazaki’s use of the Chateau
Information, and a secondary claim, which appears similar to a
common law unjust enrichment claim.
pgs. 3-4.
See Japan Complaint at
Plaintiff has not made any argument identifying how
Japan’s laws would control the underlying action.
Even
considering Plaintiff’s argument that this factor is neutral,
“[a]ny doubt as to whether a factor exists should be resolved
5
The Complaint does not expressly state whether Count I is
brought pursuant to 18 U.S.C. § 1836 or Haw. Rev. Stat.
Chapter 482B. See WHIC LLC v. NextGen Labs., Inc., 341 F. Supp.
3d 1147, 1160-62 (D. Hawai`i 2018) (discussing similarity of
analysis under either the federal Defend Trade Secrets Act, 18
U.S.C. § 1832, and Hawaii’s Uniform Trade Secrets Act, Haw. Rev.
Stat. Chapter 482B).
17
against a stay, not in favor of one.”
1369.
Travelers, 914 F.2d at
The Court finds this factor weighs against abstention.
F.
Adequacy of the Japan Court
The Ninth Circuit has stated:
The adequacy factor looks to whether the
state court might be unable to enforce federal
rights. See, e.g., Cone Mem’l Hosp., 460 U.S. at
26–27, 103 S. Ct. 927 (finding state proceedings
might be inadequate because it was unclear
whether state courts would compel arbitration
under the Federal Arbitration Act); [Travelers],
914 F.2d at 1370 (“This factor involves the state
court’s adequacy to protect federal rights, not
the federal court’s adequacy to protect state
rights.” (citing Cone Mem’l Hosp., 460 U.S. at
26, 103 S. Ct. 927)).
Seneca Ins. Co. v. Strange Land, Inc., 862 F.3d 835, 845 (9th
Cir. 2017) (emphases in Seneca).
Ms. Bovrisse states that “certain remedies available
under U.S. or Hawai`i law, such as treble damages, punitive
damages, or equitable relief, may not be available under the
Japan civil law system.”
[Bovrisse Decl. at ¶ 17.]
Plaintiff
seeks a stay of the instant matter rather than dismissal in
order to preserve its claim for punitive damages, which
Plaintiff claims cannot be brought in the Japan Action.
in Supp. of Motion at 11-12.]
[Mem.
Defendants have not filed any
counterclaim in this action, nor have they raised any arguments
as to why the Japan court could not adequately protect their
rights.
The Court finds that in terms of adequacy, the Japan
18
Action does not protect all of the rights of at least Plaintiff
where the Japan Civil Code does not permit some of the remedies
Plaintiff has sought in the instant action.
G.
Forum Shopping
“When evaluating forum shopping under Colorado River,
we consider whether either party improperly sought more
favorable rules in its choice of forum or pursued suit in a new
forum after facing setbacks in the original proceeding.”
Seneca, 862 F.3d at 846 (citing Nakash v. Marciano, 882 F.2d
1411, 1417 (9th Cir. 1989)).
It is not necessarily improper
however where a party acted within its rights to file suit in an
appropriate forum, even where “[t]he chronology of events
suggests that both parties took a somewhat opportunistic
approach to th[e] litigation.”
Id. (alterations in original)
(citations and internal quotation marks omitted).
Here, there
does not appear to be evidence of forum shopping, and neither
party points to the wrongdoing of the other.
Rather, Plaintiff
argues the instant Motion is necessary because Yamazaki no
longer resides in the forum, and has returned to Japan, where
the majority of the witnesses and evidence are located, and
where the Tokyo District Court will have greater ease in
handling evidence presented in the Japanese language.
Plaintiff
was within its right to initially file its claim with this
district court, despite the inconvenience of a language barrier
19
and distance from Japan, and Plaintiff argues no foul play on
the part of Defendants in Yamazaki returning to Japan.
Therefore, the Court finds there is no evidence that either
party sought to manipulate the litigation or engage in vexatious
behavior that would lead to forum shopping.
See Seneca, 862
F.3d at 846.
H.
Parallelism
The “parallelism factor” looks to whether the state
litigation will completely and promptly resolve the issues
between the parties in the federal action.
(citations omitted).
See id. at 845
“Though ‘exact parallelism . . . is not
required,’ substantial similarity of claims is necessary before
abstention is available.”
Id. (quoting Nakash, 882 F.2d at
1416).
It does not appear from Plaintiff’s Motion that this
issue has been addressed at length since Plaintiff cites to a
case from a California district court that only considered six
factors, see Mem. in Supp. of Motion at 5 (citing J2 Textile
Co., Ltd. v. Samsung C&T Am., Inc., CV-14-07483 SJO (ASx), 2015
WL 13357664, at *1 (C.D. Cal. Feb. 17, 2015)),6 whereas the Ninth
6
In J2, the district court arguably addressed the
“parallelism factor” in its analysis of the adequacy of the
foreign proceedings when comparing plaintiff’s punitive damages
claim in the federal action to its inability to assert it in the
Korean action. See 2015 WL 13357664, at *4-5.
20
Circuit more recently recited eight Colorado River factors.
Seneca, 862 F.3d at 841-42.
See
The Court has compared the
Complaint in the instant matter with the Japan Complaint, and
determined that it is unclear whether Counts II through VII
would be resolved in the Japan Action based on the Japan
Complaint.
Nor has Plaintiff identified how the claims in the
instant matter are substantially the same as the claims in the
Japan Action.
Further, the Japan Complaint does not appear to
name GMA, whereas the instant matter does.
In J2, the district
court briefly appears to address the “parallelism factor,” only
as to punitive damages, which the district court found could not
be brought in a Korean court.
See 2015 WL 13357664, at *4-5.
Because only damages were at issue, the district court held that
a stay, rather than dismissal was appropriate.
Still, it appears the primary thrust of Plaintiff’s
Complaint - infringement of a trademark claim – has been
asserted in the Japan Action, and it is possible that, where the
Japan Action arises out of the same factual allegations, a
determination in the Japan Action may have a res judicata effect
on the claims alleged in the instant matter.
See, e.g.,
ScripsAmerica, Inc. v. Ironridge Global LLC, 56 F. Supp. 3d
1121, 1148-49 (C.D. Cal. 2014) (holding that identity of claims
was not necessary for parallelism where the claims in both the
state action and federal action arose out of the same factual
21
allegations, therefore the actions were substantially similar).
Neither does the fact that GMA is not named in the Japan
Complaint serve as a bar to finding parallelism between the two
Actions.
See, e.g., Freed v. Friedman, 215 F. Supp. 3d 642,
650-51 (N.D. Ill. 2016) (holding that a federal suit and state
suits were not rendered non-parallel where one party to the
federal suit was not present in state suits).
On balance, this Court FINDS that a stay is warranted
under Colorado River because: there is a true danger of
piecemeal litigation that could result in conflicting outcomes
of the same legal issues; the inconvenience of the federal forum
is great to both parties; and there is no evidence of forum
shopping.
Moreover, both the parties and the majority of the
evidence will be in Japanese, which will be better received by
the Tokyo District Court.
Finally, staying the instant matter
and allowing the Japan Action to proceed first will prevent
delayed proceedings before this Court, may narrow or completely
resolve issues in the instant matter, and thus will serve the
interest of judicial economy.
CONCLUSION
On the basis of the foregoing, Plaintiff’s Motion to
Stay Case Pending Outcome of Lawsuit in Japan, filed December 2,
2018, is HEREBY GRANTED.
22
The Court directs the Clerk’s Office to
administratively close this case fifteen days from the entry of
this Order, unless Defendants file a timely motion for
reconsideration of this Order.
Upon the conclusion of the Japan
Action, Plaintiff is DIRECTED to contact the magistrate judge
assigned to this case to schedule a status conference to discuss
whether it is necessary to restore the instant case to its
active docket.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAI`I, February 19, 2019.
CHATEAU SCHOOL, INC. VS. GREEN MOUNTAIN ASSOCIATION, ET AL; CV
18-00030 LEK-RT; ORDER GRANTING PLAINTIFF'S MOTION TO STAY CASE
PENDING OUTCOME OF LAWSUIT IN JAPAN
23
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