Pagano v. Johnson Controls, Inc.

Filing 28

ORDER: For the foregoing reasons, the Clerk of Court is respectfully directed to transfer the three above-captioned actions to the Eastern District of Wisconsin and to terminate the actions in this Court. SO ORDERED. (Signed by Judge Margaret M. Garnett on 3/12/2025) (mml) Transmission to Office of the Clerk of Court for processing.

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
3/12/2025

FRANCESCO P. PAGANO,
Plaintiff,
24-CV-01020 (MMG)

-againstJOHNSON CONTROLS, INC.,
Defendant.
JEFFREY S. HALFTER,
Plaintiff,

24-CV-01047 (MMG)

-againstJOHNSON CONTROLS, INC.,
Defendant.
LINDA RICCITELLI, Individually and on Behalf of
All Others Similarly Situated,
Plaintiff,
-against-

24-CV-03243 (MMG)

ORDER

JOHNSON CONTROLS, INC.,
Defendant.

MARGARET M. GARNETT, United States District Judge:
The three actions before the Court—Pagano, Halfter, and Riccitelli—are against Johnson
Controls, Inc. (“Johnson Controls”), a Wisconsin corporation that sells HVAC, security, and fire
and equipment systems to commercial buildings. 1 Plaintiffs are commissioned salespersons who
sold equipment and projects on behalf of Johnson Controls. Johnson Controls pays Plaintiffs
commissions under a written incentive plan, which Plaintiffs received each Fiscal Year. The
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The following facts are drawn from the complaints in each action. See Pagano v. Johnson
Controls, Inc., No. 24-cv-01020 (the “Pagano Action”), Dkt. No. 1 (“Pagano Compl.”); Halfter v.
Johnson Controls, Inc., No. 24-cv-01047 (the “Halfter Action”), Dkt. No. 1 (“Halfter Compl.”); Riccitelli
v. Johnson Controls, Inc., No. 24-cv-03243 (the “Riccitelli Action”), Dkt. No. 1-1 (“Riccitelli Compl.”).
The Court expresses no view as to the truth of the facts asserted herein.
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incentive plans at issue in each action are the FY 2023 plan, which was effective October 1,
2022, through September 31, 2023, and FY 2024 plan, which was introduced in November 2023.
Plaintiffs allege that, under the FY 2023 plan, they are due certain amounts of “earned
commissions” for projects that were booked prior to, but not completed by, the conclusion of the
FY 2023, i.e., September 31, 2023. However, after implementing the FY 2024 plan, Johnson
Controls “retroactively” withheld their FY 2023 “earned commissions” because the FY 2024
plan changed the terms of Plaintiffs’ compensation.
Pagano filed his action in this Court on February 12, 2024; Halfter filed his action in this
Court on February 13, 2024; and Riccitelli filed his action in New York Supreme Court for New
York County on March 26, 2024, which was later timely removed to this Court on April 29,
2024. See Pagano Compl.; Halfter Compl.; Riccitelli Compl; Riccitelli Action, Dkt. No. 1
(“Riccitelli Notice of Removal”). There are pending motions to dismiss by Johnson Controls in
each action. See Pagano Action, Dkt. No. 19; Halfter Action, Dkt. No. 17; Riccitelli Action,
Dkt. No. 9.
The Court subsequently became aware of an earlier-filed action in the Eastern District of
Wisconsin, Novin et al. v. Johnson Controls, Inc., Case No. 2:24-cv-00046-PP (“Novin”), filed
on January 12, 2024, which purports to be a class action on behalf of all Johnson Controls
employees subject to the incentive compensation plans. On February 25, 2025, the Court
ordered the parties in all three actions before it to meet and confer regarding the effect of Novin
on each action, and to file a joint letter setting forth their views on this question. See Pagano
Action, Dkt. No. 15. 2 The parties filed their joint letter on March 11, 2025. See Pagano Action,
Dkt. No. 27 (“Joint Ltr.”).
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For the reasons stated herein, the Court shall transfer all three actions to the Eastern
District of Wisconsin, pursuant to the First-to-File rule.
DISCUSSION
The First-to-File rule is a well-settled “presumption favoring the forum wherein suits are
first filed.” See First City Nat. Bank and Tr. Co. v. Simmons, 878 F.2d 76, 77 (2d Cir. 1989).
“The first to file rule embodies considerations of judicial administration and conservation of
resources” by avoiding duplicative litigation. See id at 80. Accordingly, “[w]here there are two
competing lawsuits, the first suit should have priority, absent the showing of balance of
convenience . . . or . . . special circumstances . . . giving priority to the second.” Motion Picture
Lab. Technicians Loc. 780 v. McGregor & Werner, Inc. (“Motion Picture”), 804 F.2d 16, 19 (2d
Cir. 1986) (quoting Fort Howard Paper Co. v. William D. Witter, Inc., 787 F.2d 784, 790 (2d
Cir. 1986)).
As to the first exception, i.e., balance of convenience, “an even or inconclusively titled
‘balance of convenience’ would ordinarily support application of the first-filed rule.” Columbia
Pictures Indus., Inc. v. Schneider, 435 F. Supp. 742, 751 (S.D.N.Y. 1977). Courts in this Circuit
consider the ties between the litigation and the forum of the first-filed action. See Employers Ins.
For filings and orders entered in all three actions, the Court shall refer only to the specific filing
or order as docketed in the Pagano Action.
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of Wausau v. Fox Ent. Grp., Inc., 522 F.3d 271, 275 (2d Cir. 2008); Motion Picture, 804 F.2d at
19. The “factors relevant to the balance of convenience analysis are essentially the same as those
considered in connection with motions to transfer venue pursuant to 28 U.S.C. § 1404(a),” which
include the following:
(1) the plaintiff’s choice of forum, (2) the convenience of witnesses, (3) the
location of relevant documents and relative ease of access to sources of proof, (4)
the convenience of the parties, (5) the locus of operative facts, (6) the availability
of process to compel the attendance of unwilling witnesses, [and] (7) the relative
means of the parties.
See Everest Cap. Ltd. v. Everest Funds Mgmt., L.L.C., 178 F. Supp. 2d 459, 465 (S.D.N.Y.
2002); D.H. Blair & Co. v. Gottdiener, 462 F.3d 95, 106–07 (2d Cir. 2006) (quoting Albert
Fadem Tr. v. Duke Energy Corp., 214 F. Supp. 2d 341, 343 (S.D.N.Y. 2002) (alteration in
original)). “The convenience of the witnesses and the locus of the operative facts of the
case are typically regarded as primary factors in the balance-of-convenience inquiry.” See
Liberty Mut. Ins. Co. v. Fairbanks Co., 17 F. Supp. 3d 385, 396 (S.D.N.Y. 2014).
As to the second exception, i.e., special circumstances, “[g]iven the centrality of the
balance of convenience, the ‘special circumstances’ in which a district court may dismiss the
first-filed case without th[e] analysis [of balance of convenience] [is] quite rare.” Employers Ins.
of Wausau, 522 F.3d at 275. For example, special circumstances exist “where the first-filed
lawsuit is an improper anticipatory declaratory judgment action” or “where forum shopping
alone motivated the choice of the situs for the first suit.” See id. at 275–76 (second quoting
William Gluckin & Co. v. Int’l Playtex Corp., 407 F.2d 177, 178 (2d Cir. 1969) (emphasis in
original)).
The Court finds that the balance of convenience weighs in favor of applying the First-toFile rule here and transferring the above-captioned cases to the Eastern District of Wisconsin.
As Johnson Controls argues in the parties’ joint letter, Johnson Controls is a Wisconsin
corporation, with its executive offices in Milwaukee. The compensation policy changes that
underlie the Plaintiffs’ claims were implemented there, and the decision-makers responsible are
located there; in other words, most of the relevant evidence and witnesses necessary to the
disposition of these actions, should they proceed to discovery, are located in Wisconsin. See
Joint Ltr. at 5. Plaintiffs, who are residents of New York, would certainly find it more
convenient to litigate their actions here, and, of course, could expect to be deposed or called as
witnesses should their actions proceed to the merits. See id. at 2–3. But Plaintiffs’ preferences
cannot defeat application of the First-to-File rule—Johnson Controls, not Plaintiffs, controls the
key materials and testimonial evidence related to the FY 2023 and FY 2024 incentive plans, so
the “locus of the operative facts” is based in Wisconsin. See Indian Harbor Ins. Co. v. Factory
Mut. Ins. Co., 419 F. Supp. 2d 395, 404 (S.D.N.Y. 2005) (“When weighing the convenience of
the witnesses, courts must consider the materiality, nature, and quality of each witness, not
merely the number of witnesses in each district.”).
Further, the Court finds that there are no special circumstances which counsel against
applying the well-established First-to-File rule in these cases. First, Pagano and Halfter’s
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argument that the individual claims filed against Johnson Controls in other jurisdictions “are
rapidly outpacing Novin” is of no moment, and they cite to no legal authority that such
circumstances constitute special circumstances barring the application of the First-to-File rule.
See Joint Ltr. at 1–2. This Court cannot control the actions of other courts and the question
before it is what would best serve the purposes of the First-to-File rule with respect to these three
cases. Second, Riccitelli is incorrect that the First-to-File rule only applies when both actions are
initiated in federal court—“[w]here a state action is subsequently removed to federal court, for
the purposes of the First-to-File Rule, ‘the state court filing date is the relevant benchmark.’”
See 800-Flowers, Inc. v. Intercontinental Florist, Inc., 860 F. Supp. 128, 131 n.1 (S.D.N.Y.
1994) (quoting Mfrs. Hanover Tr. Co. v. Palmer Corp., 798 F. Supp. 161, 166 (S.D.N.Y. 1992)).
Third, Riccitelli’s arguments regarding the propriety of removal and contesting diversity
jurisdiction under CAFA are belated and inapposite. See Riccitelli Notice of Removal ¶¶ 7–11
(removing on the basis of diversity jurisdiction under 28 U.S.C. § 1332(a), given Riccitelli has
alleged damages in excess of $75,000).
Plaintiffs’ other arguments are unavailing and do not compel the Court to reach a
different conclusion. Pagano and Halfter cite to no legal authority or basis for their argument
that the First-to-File rule does not apply to their actions “because they filed their claims on an
individual basis.” See Joint Ltr. at 1. While Pagano and Halfter are certainly free to opt out of
Novin, or to object to any consolidation proceedings once the cases are docketed in the Eastern
District of Wisconsin, they are not entitled to adjudicate simultaneous proceedings in this Court
where doing so would cause duplicative litigation and waste resources both for the parties and
the Court. See 800-Flowers, Inc., 860 F. Supp. at 132 (“The first filed rule was developed to
‘serve[] the purposes of promoting efficiency [] and should not be disregarded lightly.” (citing
Alltrade, Inc. v. Uniweld Prods., Inc., 946 F.2d 622 (9th Cir. 1991)). Moreover, the First-to-File
rule does not require identical parties, only that the parties and claims be “substantially similar.”
In re Cuyahoga Equip. Corp., 980 F.2d 110, 116 (2d Cir. 1992). Here, the legal claims and
underlying facts are essentially identical and the only real “individualization” involved in Pagano
and Halfter’s claims is, essentially, damages—their individual amounts of “earned” but unpaid
commissions they allege that they are entitled to under the FY 2023 plan. These are not the
“special circumstances” envisioned by the Second Circuit, and cannot overcome all of the other
factors of judicial efficiency and economy that counsel in favor of transfer.
CONCLUSION
For the foregoing reasons, the Clerk of Court is respectfully directed to transfer the three
above-captioned actions to the Eastern District of Wisconsin and to terminate the actions in this
Court.
Dated: March 12, 2025
New York, New York

SO ORDERED.

MARGARET M. GARNETT
United States District Judge
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