Morningstar et al v. Jianping et al

Filing 103

ORDER RE: TRANSFER TO DISTRICT OF NEVADA by Judge Dean D. Pregerson. Defendant's Motion is, for all intents and purposes, GRANTED. Rather than stay this case, however, the court transfers this matter to the District of Nevada. (MD JS-6. Case Terminated.) (bp) [Transferred from California Central on 3/13/2013.]

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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M. AILEEN MORNINGSTAR and
ALICE SLETTEDAHL,
Derivatively on Behalf of
Nominal Defendant RINO
INTERNATIONAL CORPORATION,

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Plaintiffs,

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v.
ZOU DEJUN, KENNITH C.
JOHNSON, QUAN XIE, BEN WANG,
LI YU, BRUCE RICHARDSON, YI
LIU, ZHANG WEIGUO and RINO
INTERNATIONAL CORPORATION,
Defendants.
___________________________

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Case No. CV 11-00655 DDP (VBKx)

ORDER RE: TRANSFER TO DISTRICT OF
NEVADA

[Dkt. No. 90]

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Presently before the court is Nominal Defendant RINO

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International Corportation’s Motion to Stay this shareholder

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derivative action.

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This case is one of four shareholder derivative suits filed on

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behalf of RINO.

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court.

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This is the second such action filed in federal

The first (the “Nevada Action”) was filed in the District

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of Nevada on December 20, 2010, approximately one month before this

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case was initiated.1

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Defendants Zou Dejun and Qiu Jianping recently sold two

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California houses to help fund the settlement of a related

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shareholder class action in this court.

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Winchester ¶ 36.)

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sales yielded an excess of approximately $2.4 million.

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Plaintiffs have sought discovery regarding these assets, and intend

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to seek to establish a constructive trust over the $2.4 million.

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(Declaration of Robin

Plaintiffs in this case believe that the home
(Id. ¶ 37.)

(Id. ¶ 49.)
In the meantime, the Nevada Action has proceeded, and may soon

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settle.

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settlement approval in November 2012.

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agree that final approval of the proposed settlement in the Nevada

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Action will extinguish Plaintiffs’ claims in this case.

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The parties to the Nevada Action moved for preliminary
The parties here appear to

The court in the Nevada Action has yet to rule on the pending

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motion for preliminary approval.

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preliminarily approve the settlement, Plaintiffs here intend to

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object to the settlement in the Nevada Action at the final approval

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stage.

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Even if the court does

The “first-to-file” rule “permits this court to decline

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jurisdiction when a complaint involving the same parties and issues

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has already been filed in another district.”

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Psystar, 658 F.3d 1150, 1161 (9th Cir. 2011) (quotation and

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citation omitted).

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discretion, stay, transfer, or dismiss the later-filed suit.

Apple Inc. v.

In such cases, this court may, in its

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The Nevada suit is In re RINO International Derivative
Litigation, No. 10-cv-2209-MMD-GWF.
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Cedars-Sinai Med. Center v. Shalala, 125 F.3d 765, 769 (9th Cir.

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1997).

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of inconsistent decisions.

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946 F.2d 622, 625 (9th Cir. 1991); Meru Networks, Inc. v. Extricom

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Ltd., No. C-10-2021 RMW, 2010 WL 346315 at *3 (N.D. Cal. Aug. 31,

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2010).

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2) the similarity of the parties, and 3) the similarity of the

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issues.

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The rule promotes judicial efficiency and reduces the risk
Alltrade, Inc. v. Uniweld Prods., Inc.,

Threshold factors include 1) the chronology of the actions,

Alltrade, 946 F.2d at 625.

All three factors here weigh in favor of transfer to the

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District of Nevada.

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not in dispute.

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defendant in this case who is not named in the Nevada Action, the

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parties in the two actions need only be substantially similar for

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the first-to-file rule to apply.

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Pittsburgh v. Payless Shoesource, Inc., No. C-11-1892 EMC, 2012 WL

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3277222 at *3 (N.D. Cal. Aug. 9, 2012).

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The chronology and similarity of issues are

Though Plaintiffs argue that there is one

Nat’l Union Fire Ins. Co. of

Accordingly, Defendant’s motion is, for all intents and

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purposes, GRANTED.

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transfers this matter to the District of Nevada.2

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IT IS SO ORDERED.

Rather than stay this case, however, the court

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Dated: March 12, 2013
DEAN D. PREGERSON
United States District Judge

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Whether this case should be consolidated, the role of
Plaintiffs’ present counsel, and whether to establish a
constructive trust over any Defendant’s assets are issues best left
to the Nevada court.
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