Multi Holsters, LLC v. Tac Pro Incorporated et al
ORDER granting 4 defendants' Motion to Abstain and Administratively Closing Case. Signed by District Judge George Caram Steeh. (MBea)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
MULTI HOLSTERS, LLC,
CASE NO. 17-10438
HON. GEORGE CARAM STEEH
TAC PRO INC. and
OPINION AND ORDER GRANTING DEFENDANTS’ MOTION
TO ABSTAIN (Doc. 4) AND ADMINISTRATIVELY CLOSING CASE
Plaintiff Multi Holsters, LCC (Multi Holsters) alleges various fraud and
trade secret violations under Michigan statutory and common law, as well
as federal law, against defendant Tac Pro Inc. and its president, Steven
Minuskin (collectively “Defendants”), arising out of a failed joint venture
between the parties. Currently, related litigation between these same
parties and others is pending in Ontario Superior Court of Justice, Canada.
For this reason, Defendants move to dismiss this action under the Colorado
River abstention doctrine. Because all of Multi Holsters claims in this
federal lawsuit arise out of the same alleged material facts as those pled in
the ongoing Ontario litigation, the court will stay this case pending
resolution of the Ontario action. Oral argument was held on September 14,
2017, and informs the court’s decision.
I. Factual Background
The facts as summarized below are garnered from the Statement of
Claim and Counterclaim filed in the related litigation pending in the Ontario
Superior Court and from the federal Complaint pending here.
Plaintiff Multi Holsters is a Michigan company which designs,
manufactures, and distributes holsters for handguns using a product known
as Kydex. Multi Holsters is located in Plymouth, Michigan. Multi Holsters
is owned by Judy Catner. Judy and her husband, Anthony Catner, are the
directors and shareholders of Multi Holsters. Mr. Catner started the
business from his basement in 2010. Multi Molds was incorporated in
February, 2014 and is associated with Multi Holsters. Both operate out of
the same facility in Plymouth, Michigan. Multi Molds manufactures and
sells molds for the manufacture of plastic holsters for pistols.
Defendant Tac Pro is a Canadian company that manufactures and
sells plastic pistol holsters. Defendant Steven Minuskin is the president of
Tac Pro. Because of strict gun laws in Canada, the American market is
much more favorable for pistol holsters and gun related products.
Beginning in August, 2013, Minuskin contacted Mr. Catner to discuss
the possibility of a joint venture by which Multi Holsters would use Tac
Pro’s confidential process to manufacture plastic pistol holders. Tac Pro
and Multi Holsters entered into a Confidentiality and Non-Disclosure
Agreement on September 26, 2013 prohibiting the disclosure of confidential
information. The Non-Disclosure Agreement also contains a choice-of-law
9. Governing Law: This agreement shall be governed by
and enforced in accordance with the laws of the Province
of Ontario and shall be binding upon the Recipient in
Canada, The United States and worldwide.
(Doc. 4-3 at PgID 69). From September 26, 2013 until July 24, 2014,
Minuskin claims he communicated most of the confidential processes to the
Catners, orally and in writing, culminating in a visit by the Catners to the
Tac Pro facility in Canada on March 1, 2014. Multi Holsters, on the other
hand, claims that the visit to Tac Pro’s facility on March 1, 2014 was a bust
as they were forced to remain seated on two stools far from the
manufacturing process, and that the machinery was covered by tarps,
shielding them from viewing anything that would inform them about Tac
Pro’s confidential processes. Multi Holsters claims it never learned any of
Tac Pro’s purported confidential processes.
Negotiations between Tac Pro and Multi Holsters broke down in July,
2014. On October 16, 2014, Tac Pro filed suit in the Superior Court of
Justice in Ontario, Canada against Multi Holsters, Multi Molds, and Anthony
and July Catner. In the Ontario lawsuit, Tac Pro alleges that Multi Holsters
and the related company, Multi Molds, have been using Tac Pro’s secret
processing information to make plastic holsters, molds for making guns,
and other plastic related products. Tac Pro further alleges that Multi
Holsters has been using pictures of Tac Pro’s holsters on the internet and
in other promotional materials representing that the products are its own.
Further, Tac Pro claims that its holsters have appeared in YouTube videos
and gun magazine articles under the Multi Holster name, and alleges that
Multi Holsters has sent Tac Pro holsters to gun accessory reviewers
claiming the products as its own.
On January 13, 2015, Multi Holsters filed a counterclaim in the
pending Ontario lawsuit against Tac Pro and Minuskin. Multi Holsters
alleges that it shared confidential communications with Minuskin for several
months before he attended its business premises and observed firsthand
its confidential manufacturing processes, designs, and potential future
products. Multi Holsters claims Minuskin was able to visually inspect all of
its machinery and equipment and spoke with all of its employees on the
floor. Multi Holsters claims Tac Pro and Minuskin violated their
Confidentiality and Non-Competition Agreement, executed in the summer
of 2013,1 by using its confidential processes to manufacture and market
Kydex holsters. Specifically, Multi Holsters claims that Tac Pro and
Minuskin are using Multi Holster’s confidential information, design
processes, and manufacturing and marketing processes to sell Kydex
holsters in America.
Multi Holster’s counterclaim against Tac Pro and Minuskin alleges
breach of confidence, breach of fiduciary duty, and arguably
misappropriation of trade secrets. It also seeks injunctive relief to enjoin
Tac Pro from manufacturing or marketing Kydex holsters and using Multi
Holster’s proprietary and confidential processes.
On February 10, 2017, Multi Holsters filed the instant lawsuit against
Tac Pro and Minuskin in this court. The underlying factual allegations are
essentially identical to those in the pending Ontario counterclaim, although
the theories of recovery differ slightly. Multi Holsters has not sued for
breach of contract or breach of fiduciary duty here, but asserts nine
separate counts including five common law fraud claims under Michigan
Multi Holster’s Statement of Claim in the Ontario litigation states that the Confidentiality
and Non-Competition Agreement was executed in the summer of 2012 (Doc. 4-4 at
PgID 86, ¶ 41); however, Multi Holster’s papers filed in the federal suit state that the
Agreement was signed in the summer of 2013. (Doc. 6 at PgID 100).
law, as well as statutory claims for violations of trade secrets under
Michigan and federal law, unfair competition under Michigan common law,
and tortious interference with business relationships. Specifically, the
counts are as follows: (1) fraudulent misrepresentation, (2) fraudulent
inducement, (3) silent fraud, (4) innocent misrepresentation, (5) negligent
misrepresentation, (6) tortious interference with business relationships, (7)
misappropriation of trade secrets in violation of Michigan’s Uniform Trade
Secret Act (“MUTSA”), MCL § 445.1902 et seq., (8) violations of the
Defend Trade Secret Act in violation of 18 U.S.C. § 1836(b)(3)(C), and (9)
II. Standard of Law
A federal court has a “virtually unflagging obligation” to exercise the
jurisdiction bestowed upon it. Colorado River Water Conservation Dist. v.
United States, 424 U.S. 800, 817–18 (1976). This obligation should be
avoided in only a few “extraordinary and narrow” circumstances. Id. Under
the Colorado River doctrine, the federal court may decline to exercise
jurisdiction where a parallel state matter is pending. Id. Federal courts
have expanded the Colorado River abstention doctrine to apply when
parallel proceedings are ongoing in a foreign court. Grammar, Inc. v.
Custom Foam Sys., Ltd., 482 F. Supp. 2d 853, 856–57 (E.D. Mich. 2007)
(citing Finova Capital Corp. v. Ryan Helicopters USA, Inc., 180 F.3d 896,
898 (7th Cir.1999)).
The threshold inquiry in deciding whether to abstain in deference to
ongoing proceedings in a foreign court is whether the actions are truly
parallel. Romine v. Compuserve Corp., 160 F.3d 337, 340 (6th Cir. 1998).
To answer that question, the court must find that the two proceedings are
“substantially similar.” Id. The parties need not be identical as long as they
are substantially similar, and the two suits involve the same allegations as
to the same material facts. Id. at 340. Although the cases need not be
identical, the resolution of the foreign court action must provide complete
relief for the federal action. See Baskin v. Bath Twp. Bd. of Zoning
Appeals, 15 F.3d 569, 572 (6th Cir. 1994); Heitmanis v. Austin, 899 F.2d
521, 528 (6th Cir. 1990); Healthcare Capital, LLC v. Healthmed, Inc., 213
F. Supp. 2d 850, 856-57 (S.D. Ohio 2002). “Broadly, the relevant inquiry is
whether resolution on the state case will resolve the contested issues in the
federal action.” Cass River Farms, LLC. v. Hausbeck Pickle Co., No. 16cv-12269, 2016 WL 5930493, at *2 (E.D. Mich. Oct. 12, 2016).
Once the court determines that the two actions are indeed parallel,
the court considers the eight combined factors, the first five identified by the
Court in Colorado River, and the last three added by the Court in Moses H.
Cone Memorial Hospital v. Mercury Construction Corp., 460 U.S. 1, 23-26
(1983). These include:
(1) whether the state court has assumed jurisdiction over
any res or property; (2) whether the federal forum is less
convenient to the parties; (3) avoidance of piecemeal
litigation; ... (4) the order in which jurisdiction was
obtained[;] ... (5) whether the source of governing law is
state or federal; (6) the adequacy of the state court action
to protect the federal plaintiff's rights; (7) the relative
progress of the state and federal proceedings; and (8) the
presence or absence of concurrent jurisdiction.
PaineWebber, Inc. v. Cohen, 276 F.3d 197, 206–07 (6th Cir. 2001) (quoting
Romine, 160 F.3d at 340–41). These factors, however, are not to be
applied mechanically, and no one factor is determinative. “Rather, they
require ‘a careful balancing of the important factors as they apply in a given
case, with the balance heavily weighed in favor of the exercise of
jurisdiction.’” Baskin, 15 F.3d at 571 (quoting Moses H. Cone, 460 U.S. at
While some courts considering Colorado River abstention in the
international context have applied a slightly different analysis, those factors
are essentially the same: “the similarity of the parties, ‘the similarity of the
issues, the order in which the actions were filed, the adequacy of the
alternate forum, the potential prejudice to either party, the convenience of
the parties, the connection between the litigation and the United States,
and the connection between the litigation and the foreign jurisdiction.’”
Detroit Int'l Bridge Co. v. Gov't of Canada, 78 F. Supp. 3d 117, 120 (D.D.C.
2015) (quoting Royal & Sun Alliance Ins. Co. of Can. v. Century Intern.
Arms, Inc., 466 F.3d 88, 94 (2d Cir. 2006)). “In the context of parallel
proceedings in a foreign court, a district court should be guided by the
principles upon which international comity is based: the proper respect for
litigation in and the courts of a sovereign nation, fairness to litigants, and
judicial efficiency.” Id. (quoting Royal & Sun Alliance, 466 F.3d at 94). All of
these interests are vindicated by entry of a stay in this matter.
Because the parties have relied upon the factors outlined by the Sixth
Circuit in Romine as used in the context of abstention in favor of state court
proceedings, the court does so as well. The court notes that its conclusion
would be the same if the court applied the multi-factor test used in
international abstention cases outlined above as the parties are
substantially similar, the issues are substantially similar, the Canadian
action was filed over two years before the federal lawsuit, Multi Holsters
has shown no prejudice to litigating this matter in Ontario, and given that
the parties agreed Ontario law would govern their Confidentiality and NonDisclosure Agreement, Ontario has a greater connection to the lawsuit than
either Michigan or the United States.
The Federal and Foreign Lawsuit are Parallel
In order for the two actions to be considered parallel, they must be
substantially similar, not identical. Romine, 160 F.3d at 340. In the instant
matter, the two cases arise out of the same material facts, although the
theories of recovery are slightly different. There is a modest difference in
the named parties between the two actions. Multi Molds and the Catners
are named defendants in the Ontario litigation, but none of those persons
are parties in the federal lawsuit. But all of the parties named in the federal
lawsuit are named in the Ontario litigation. Thus, the Ontario lawsuit is
broader than the federal lawsuit. As such, any decision in the Ontario
lawsuit would be binding on all of the parties in this action.
More importantly here, the court evaluates the underlying factual
allegations of the two suits. For the reasons discussed below, Multi
Holster’s claims are parallel to the claims pending in Ontario.
In the Ontario litigation, both the claim and counterclaim allege
breach of confidence and breach of fiduciary duty claims arising out of the
parties’ Confidentiality and Non-Disclosure Agreement. In Multi Holster’s
counterclaim in the foreign proceedings, Multi Holsters alleges
misappropriation by Tac Pro and Minuskin of trade secrets and proprietary
and confidential information of Multi Holsters. In this federal lawsuit, Multi
Holster’s fraud claims, breach of MUTSA and the federal Defend Trade
Secret Act, unfair competition claim, and tortious interference with business
relationships claim arise out of the same material factual allegations as the
Plaintiff alleges its tortious interference with business relationships
claim arises out of conduct taking place after the Ontario lawsuit was filed,
and thus is not parallel. The tortious interference with business
relationships claim in the federal lawsuit alleges that Defendants have been
defaming Multi Holsters in the firearms market since the Ontario lawsuit
was filed by spreading false statements about Multi Holsters to potential
customers, industry professionals, and journalists; and by falsely accusing
Multi Holsters on public and private forums of participating in ‘bait and
switch’ scams whereby it passes off Tac Pro holsters as its own.
(Complaint, ¶¶ 40, 75).
To establish tortious interference with business relations, defendant
must show: “(1) the existence of a valid business relationship or
expectancy that is not necessarily predicated on an enforceable contract,
(2) knowledge of the relationship or expectancy on the part of the
defendant interferer, (3) an intentional interference by the defendant
inducing or causing a breach or termination of the relationship or
expectancy, and (4) resulting damage to the party whose relationship or
expectancy was disrupted.” Crestmark Bank v. Electrolux Home Prod.,
Inc., 155 F. Supp. 3d 723, 746 (E.D. Mich. 2016) (quoting Health Call of
Detroit v. Atrium Home & Health Care Serv., 268 Mich. App. 83, 89–90
(2005)); Wausau Underwriters Ins. Co. v. Vulcan Dev., Inc., 323 F.3d 396,
404 (6th Cir. 2003)). The third element requires “that the interference was
either (1) a per se wrongful act or (2) a lawful act done ‘with malice and
unjustified in law for the purpose of invading the contractual rights or
business relationship of another.’” Id. (quoting Wausau Underwriters Ins.,
323 F.3d at 404). Courts will not find tortious interference with business
relationships “[w]here the defendant's actions were motivated by legitimate
business reasons.” Id. (quoting BPS Clinical Labs. v. Blue Cross and Blue
Shield of Mich., 217 Mich. App. 687, 699 (1996)).
In this case, plaintiff’s tortious interference with business relationships
claim is also inextricably linked to the claims pending in Ontario. Should
defendants prove that plaintiff breached its confidentiality agreement and
engaged in misappropriation of trade secrets, then defendants would have
a defense to plaintiff’s claim that defendants are defaming plaintiff in the
marketplace in the context of its relationships with its customers.
Principles of collateral estoppel and res judicata support the conclusion that
the two matters are parallel. In support of its motion to dismiss based on
abstention, Defendants rely upon a letter drafted by the Canadian attorney
who represents Tac Pro and Minuskin in the Ontario litigation. (Doc. 4-5 at
PgID 90-91). According to his letter, there is a doctrine of res judicata in
Ontario, much like the doctrine under federal and state law. Res Judicata
in Ontario consists of action estoppel and issue estoppel. Cause of action
estoppel bars litigation of any claim a plaintiff could have or should have
raised against the defendant arising from events that were the subject of an
earlier claim, whether or not those claims were raised. Id. If the claim
advanced was not asserted in the prior proceeding but reasonably should
or could have been raised, the claim will be barred.
Also, issue estoppel may be invoked when three conditions are met:
(1) the issue must be the same as the one decided in the prior decision, (2)
the prior judicial decision must have been final, and (3) the parties to both
proceedings must be the same or their privies. Id. Under the doctrine of
res judicata, upon a final decision in the Ontario action, Multi Holsters
would be barred from litigating all of their claims filed in the federal lawsuit,
as all of those claims arise from the same events that were the subject of
their counterclaim, and could and should have been raised in the foreign
In Grammar, defendant sued plaintiff in Ontario for breach of contract
and for negligent and intentional misrepresentations. 482 F. Supp. 2d at
855. Plaintiff did not file a counterclaim but instead brought a new suit in
federal court seeking a declaratory judgment that it had not breached any
obligations to the defendant, and in the alternative, if there was a contract,
that defendant breached it. Id. at 856. Plaintiff argued that the actions
were not parallel because he sought damages in the federal lawsuit, but
not in the Canadian suit. Id. The court rejected the argument, finding that
plaintiff could have sought damages in the Canadian court by filing a
counterclaim, and the fact that plaintiff did not do so did not give plaintiff the
right to bring the entire proceeding into the United States court. Id.
The situation here is analogous. Multi Holsters brought a
counterclaim in the Canadian suit arising out of the same facts surrounding
the breakdown of the parties’ efforts to form a joint venture that are pled in
the federal lawsuit. Although Multi Holsters seeks to recover under
Michigan and federal law, the claims arise out of the same material facts as
the Ontario litigation, and thus, once the Canadian claims are resolved,
principles of res judicata would bar Multi Holsters from relitigating those
claims here. Given the duplicity of the federal and foreign claims, the
interests of international comity favor abstention. Unless this matter is
stayed, the two cases will be proceeding on two tracks to resolve claims
arising out of substantially similar, if not identical, facts. Under that
scenario, whichever matter is resolved first would require enforcement by
the foreign court under principles of res judicata. This is exactly the
situation Colorado River abstention is designed to prevent. In sum, all of
the claims of the federal Complaint are parallel to the Ontario case.
The federal lawsuit also alleges statutory trade secret claims under
Michigan and federal law which Multi Holsters alleges involve different
remedies than those available under Ontario law. Defendants dispute this
claim. Multi Holsters has failed to cite any authority in support of this claim
and thus, the court does not give the argument much consideration.
Having found that the two actions are parallel, the court turns now to
an analysis of the factors to be evaluated when determining whether
abstention is warranted in the face of parallel proceedings.
Evaluation of the Colorado River Factors Supports a Stay
Having found that Multi Holster’s Michigan and federal claims pled
here are parallel to the claims pending in Ontario, the court’s evaluation of
the Colorado River factors leads to the conclusion that this court should
enter a stay. The court discusses the eight factors below.
Jurisdiction over any Res or Property
The foreign court has not assumed any jurisdiction over any res or
property; thus, this factor is neutral.
Convenience of the Forum
Tac Pro is an Ontario company and its owner Minuskin resides in
Ontario. Multi Holsters’ principal place of business is in Plymouth,
Michigan. The parties agree that the difference in location is just a few
hours’ drive from one location to the other. Although Multi Holsters argues
that much of the discovery will take place in the United States as that is
where most of Multi Holster’s sales take place, Defendants direct the court
to Ontario’s rules of civil discovery for the proposition that the Ontario court
is equally suited to allow for necessary discovery, whether taken in Canada
or the United States. This factor also appears to be neutral.
Piecemeal Litigation, Source of Law, and Protection of Plaintiff’s
The court considers factors three, five and six together. There is no
doubt that allowing these two lawsuits to proceed on two tracks, one in
federal court and one in a foreign court, is not an optimal use of scarce
judicial resources, especially where the two suits involve substantially the
same parties and claims.
Multi Holsters also claims the remedies available under MUTSA and
the federal Defend Trade Secrets Act of 2016, 18 U.S.C. § 836 et seq. are
broader than the remedies available under Canadian laws. Defendants
dispute this point. Since neither party has cited to any Canadian law for the
court’s review, the court does not place much emphasis on Multi Holsters’
argument that the remedies available for its Michigan and federal statutory
trade secret claims are distinct from the remedies available for similar
claims in Canada.
The avoidance of piecemeal litigation weighs heavily in favor of
.abstention. The two lawsuits are nearly identical as they relate to the
contractual dealings between the parties and the alleged misuse of
confidential information. As discussed previously, based on the doctrine of
res judicata, resolution of the Ontario case will require a stay of all the
claims here. Because the same parties in the federal suit have been
litigating the same conduct for over two years in Canada, the avoidance of
duplicitous claims is paramount. Also, based on a choice-of-law provision
in the Confidentiality and Non-Disclosure Agreement, the claim for breach
of confidence and breach of fiduciary duty claims pending in Ontario are
governed by Ontario law, suggesting that Ontario is the more logical forum
for adjudicating the parties’ dispute.
Jurisdiction Obtained First and Relative Progress of Federal and
The court considers factors four and seven together. The Ontario
action commenced on October 16, 2014. Multi Holsters filed the instant
suit on February 10, 2017. Despite the over two-year gap between the
filing of the foreign and federal lawsuits, Multi Holsters argues that
discovery is still ongoing in the Ontario suit, no dispositive motions have
been filed, and no trial date has been set. Multi Holsters alleges that civil
litigation in Canada can last as long as five years. Defendants respond that
any delay in the Canadian case has been caused by Multi Holster’s
obstreperous conduct, and that Multi Holsters has failed to present any
authority in support of its claim that Canadian litigation can span five years.
In fact, on August 22, 2017, the Ontario Superior Court of Justice granted
Tac Pro’s motion for discovery and ordered that it be paid $1,000 for the
costs incurred in bringing the motion. Defendants suggest that Multi
Holsters is trying to take a “second bite at the apple” or to force Defendants
to incur unnecessary legal fees. Without second guessing Multi Holster’s
motivations, and whatever the progress of the Canadian suit, it is clear that
the Ontario matter began over two years before the federal lawsuit was
filed. Thus, this factor weighs heavily in favor of abstention.
Multi Holsters alleges that either the federal court or the Ontario court
can exercise jurisdiction over this dispute. Thus, this factor is neutral
As the Supreme Court noted in Colorado River, federal courts have a
“virtually unflagging obligation . . . to exercise the jurisdiction given them.”
424 U.S. at 817. “Only the clearest of justifications will warrant dismissal.”
Id. at 819. Those justifications have been presented here because the
federal and foreign action are parallel, and consideration of the factors
outlined in Colorado River and Moses H. Cone lead to the conclusion that
this court should defer to the Ontario court in the interests of international
Although Defendants seek dismissal, the court finds the better
approach is to stay this matter as “the Supreme Court has taught that when
a federal court abstains in favor of a state court, entering a stay in the
federal action is preferable to dismissing the action because the stay
makes it easier for the federal court to resume its jurisdiction over the case
should the state court to which it is deferring fail to decide the case for
some reason.” Grammar, 482 F. Supp. 2d at 860 (quoting Wilton v. Seven
Falls Co., 515 U.S. 277, 288 n.2 (1995)). As in Grammar, the court finds
the same reasoning applies when the federal court is deferring to the
jurisdiction of a foreign court.
Accordingly, Defendants’ motion to abstain based on Colorado River
abstention (Doc. 4) is GRANTED and this matter is STAYED. The Clerk is
ORDERED to administratively close this matter.
IT IS SO ORDERED.
Dated: September 15, 2017
s/George Caram Steeh
GEORGE CARAM STEEH
UNITED STATES DISTRICT JUDGE
CERTIFICATE OF SERVICE
Copies of this Order were served upon attorneys of record on
September 15, 2017, by electronic and/or ordinary mail.
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