Koni B.V. v. Tenneco Inc. et al

Filing 64

MEMORANDUM OPINION AND ORDER signed by the Honorable Matthew F. Kennelly on 12/14/2017: For the reasons stated in the accompanying Memorandum Opinion and Order, the Court denies defendants' motion to stay [dkt. no. 49]. At this morning's status hearing, counsel should be prepared to set a discovery and pretrial schedule. (mk)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
KONI B.V.,
Plaintiff,
vs.
TENNECO INC. and TENNECO
AUTOMOTIVE OPERATING CO.,
Defendants.

)
)
)
)
)
)
)
)
)
)

Case No. 17 C 5369

MEMORANDUM OPINION AND ORDER
MATTHEW F. KENNELLY, District Judge:
Koni B.V., a Dutch company, has sued Tenneco Inc. and its subsidiary Tenneco
Automotive Operating Co. (collectively Tenneco), alleging that they took and used for
their own gain confidential information that Koni had provided to them under an
information-sharing arrangement designed to further joint development efforts. Koni
previously filed a lawsuit in Belgium against a Belgian subsidiary of Tenneco, asserting
patent infringement and trade secret misappropriation claims arising from the same
events. Tenneco has moved to stay the present case pending resolution of the litigation
in Belgium. It relies on Colorado River Water Conservation District v. United States,
424 U.S. 800 (1976).
Under Colorado River, "[a]bstention from the exercise of federal jurisdiction is the
exception, not the rule," id. at 813, and it may be invoked only in those "exceptional
circumstances" in which abstention "would clearly serve an important countervailing
interest." Int'l Coll. of Surgeons v. City of Chicago, 153 F.3d 356, 360 (7th Cir. 1996)

(quoting Cty. of Allegheny v. Frank Mashuda Co., 360 U.S. 185, 188–89 (1959)). A
court conducts a two-part inquiry to determine if abstention is appropriate under
Colorado River. First, the court determines whether the state and federal suits are
parallel. If they are, the court then considers several factors to determine if there are
exceptional circumstances that justify abstention. Tyrer v. City of S. Beloit, 456 F.3d
744, 751 (7th Cir. 2006).
The fact that the other case is pending in another country does not preclude
Colorado River abstention. Though most abstention motions arise in the context of
parallel state court litigation, the same principles apply when the other case is a foreign
lawsuit. See Finova Capital Corp. v. Ryan Helicopters U.S.A., Inc., 180 F.3d 896, 898
(7th Cir. 1999).
This case and the Belgian lawsuit qualify as parallel. Formal symmetry is not
required; "a suit is parallel when substantially the same parties are contemporaneously
litigating substantially the same issues in another forum." Tyrer, 456 F.3d at 752. First,
the parties are substantially the same. Koni is the plaintiff in both cases, and the
defendants, though not identical, are part of the same corporate family: Tenneco
(Belgium), the defendant in the Belgian case, is a subsidiary of Tenneco Automotive
Operating Co., one of the defendants here. Second, the cases arise from a common
set of facts, specifically, the various defendants' allegedly improper use of trade secrets
received from Koni regarding shock absorber valves. And third, the cases raise similar
legal issues. It is true, as Koni notes, the Belgian lawsuit contains a patent infringement
claim that has no parallel in the present case. But the Belgian lawsuit also includes
claims for misappropriation of trade secrets under Belgian law, albeit with a different

2

member of the Tenneco corporate family as a defendant. There are also similar factual
issues likely implicated in both cases, including whether a confidentiality agreement was
breached.
The fact that the cases are parallel, however, is not enough to warrant a stay.
Even when there is a parallel suit pending elsewhere, a federal court may abstain under
Colorado River only where "exceptional circumstances" exist. Based on the Supreme
Court's guidance in Colorado River and in Moses H. Cone Memorial Hospital v. Mercury
Construction Corp., 460 U.S. 1, 23-27 (1983), the Seventh Circuit has identified ten
factors to consider in this analysis. These are:
1) whether the [other court] has assumed jurisdiction over property; 2) the
inconvenience of the federal forum; 3) the desirability of avoiding
piecemeal litigation; 4) the order in which jurisdiction was obtained by the
current forums; 5) the source of governing law, state or federal; 6) the
adequacy of [other] action to protect the federal plaintiff's rights; 7) the
relative progress of state and federal proceedings; 8) the presence or
absence of concurrent jurisdiction; 9) the availability of removal; and 10)
the vexatious or contrived nature of the federal claim.
Tyrer, 456 F.3d at 755. In determining whether exceptional circumstances exist, there
remains a "general presumption against abstention." AXA Corporate Solutions v.
Underwriters Reins. Corp., 347 F.3d 272, 278 (7th Cir. 2003). A federal court has a
"virtually unflagging obligation" to exercise its jurisdiction. Colorado River, 424 U.S. at
817.
The following factors point in favor of abstention:
•

(4) The Belgian case was filed first.

•

(7) The Belgian case is a good deal further along. A decision may be reached
within the next several months.

•

(3) There is a legitimate concern regarding piecemeal litigation, that is, parallel
3

cases proceeding in two separate court systems at the same time. As indicated
earlier, similar factual issues are involved in both cases, and the legal issues,
though not the same given differences between federal and Illinois law on the
one hand and Belgian law on the other, are parallel.
The following factors point against abstention:
•

(1) Tenneco does not argue in its motion that the Belgian court has assumed
jurisdiction over any property relevant to the present dispute.

•

(2) The federal forum in the present case is convenient; Tenneco is
headquartered in this district.

•

(9) The Belgian case, of course, cannot be removed to a U.S. federal court.

•

(10) There does not appear to be anything contrived about Koni's federal claim.

•

(5) The law governing the present case is federal law (with regard to Koni's
federal claims). As the Supreme Court has stated, the presence of federal-law
issues is a major consideration weighing against abstention. See Moses H.
Cone, 460 U.S. at 26.

•

(8) There is no concurrent jurisdiction; specifically, there is no basis to believe
that the Belgian court can or will deal with Koni's U.S.-based claims against the
U.S.-based defendants sued in the present case.

•

(6) The Belgian lawsuit will be decided under foreign law, and it is not at all clear
that the lawsuit, or application of Belgian law, will adequately protect Koni's
federal-law (or Illinois-law) rights. See Pl.'s Mem. in Opp. to Defs.' Mot. to Stay,
Ex. 1 (Decl. of Kristof Roox) ¶¶ 6, 7, 9.
Although the parallel nature of the two cases and the fact that the Belgian case is

4

a good deal further along give the Court pause, the Court concludes that on balance,
Tenneco has failed to establish the requisite exceptional circumstances. In particular,
when there is "any substantial doubt" that the parallel suit will be adequate to
completely resolve the issues between the parties—which there is in this case—then a
court should decline to abstain. AAR Int'l, Inc. v. Nimelias Enters. S.A., 250 F.3d 510,
520 (7th Cir. 2001). Tenneco has not overcome the presumption against abstention.
Conclusion
For the reasons stated above, the Court denies defendants' motion to stay [dkt.
no. 49]. At this morning's status hearing, counsel should be prepared to set a discovery
and pretrial schedule.
Date: December 14, 2017
________________________________
MATTHEW F. KENNELLY
United States District Judge

5