INTER CITY TIRE AND AUTO CENTER, INC. et al v. MICHELIN NORTH AMERICA, INC. et al

Filing 56

OPINION AND ORDER transferring case to the USDC for District of South Carolina, Greenville Division. Signed by Judge Jose L. Linares on 10/8/13. (sr, ) [Transferred from New Jersey on 10/10/2013.]

NOT FOR PUBLICATION

CLOSED

UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
111%JTER CITY TIRE AND AUTO CENTER,
INC., et al.

Civil Action No. 13-2590 (JLL) (MAH)

Plaintiffs,
OPINION AND ORDER

MICHELiN NORTH AMERICA, INC., et al.
Defendants.
LINARES, District Judge.
THIS MATTER comes before the Court by way of the parties’ respective status reports

and related submissions concerning the proper direction for this action given its
current
procedural posture, and it appearing that:
I.

Michelin North America, Inc. and Michelin Retread Technologies, Inc.

(collectively “Michelin”) instituted a declaratory judgment action against Inter City Tire
and
Auto Center, Inc. and Inter City Retread, Inc. (collectively “Inter City”) on April 19,
2013, in the
South Carolina District Court under Civil Action No. 13-1067 (hereinafter referre
d to as the
“South Carolina action”). Michelin’s Complaint seeks, inter alia, a declaration that
Michelin
properly terminated various dealer agreements with Inter City because of purported
breaches by
Inter City and because each agreement allows Michelin to terminate it with or withou
t case.
Michelin also seeks damages for Inter City’s alleged breaches of said agreem
ents.
2.

Inter City instituted this action on April 23, 2013 by filing a Complaint agains
t

Michelin and four additional Defendants. Inter City filed an Amended Compl
aint on May 1,
2013 which seeks, inter alia, a declaratory judgment that Michelin’s termin
ation of the

Commercial Customer Agreement and Passenger Tire Agreement constitutes an attempt by
Michelin to terminate Inter City’s franchise without good cause, and to enjoin Michelin from
terminating said agreements.
3.

On May 17, 2013, this Court issued an Order staying this case for a period of

forty-five days pending determination by the South Carolina District Court of whether South
Carolina or New Jersey is the proper forum for this action, pursuant to the first-filed rule. This
Court subsequently extended the stay for another forty-five days on June 17, 2013.
4.

On August 20, 2013, the South Carolina District Court issued an Opinion and

Order denying Inter City’s motion to transfer venue to the District of New Jersey pursua
nt to
exceptions to the first-filed rule or, in the alternative, pursuant to 28 U.S.C.
denying Inter City’s motion to transfer venue pursuant to 28 U.S.C.

§ 1404(a). In

§ 1404(a), the South

Carolina District Court thoroughly assessed the factors that courts weigh under that statute and
concluded that “the
5.

§ 1404(a) factors weigh heavily in favor of South Carolina.”

In light of the South Carolina District Court’s decision, Michelin urges this Court

to dismiss this case without prejudice (so as to allow Inter City to re-file it in the South
Carolina
District Court). In the alternative, Michelin urges this Court to transfer this case
to the South
Carolina District Court. Michelin contends that efficiency and comity favor a transfe
r for at least
three reasons. First, the South Carolina District Court has already concluded that it
is the proper
forum for this matter under the first-filed rule. Second, the South Carolina Distric
t Court has the
power to enjoin Inter City from further prosecution of this case under the first-fi
led rule. And,
third, the South Carolina action is moving forward—the South Carolina Distric Court
t
issued a
Conference and Scheduling Order on September 5, 2013.

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6.

On the other hand, Inter City urges this Court to either continue to stay this case

indefinitely or to direct Michelin to file a formal motion to dismiss and/or transfe Inter
r.
City
contends that four considerations favor a continued stay of this matter. First, Inter City
has filed
a motion to certify an interlocutory appeal from the South Carolina District Court’
s denial of its
motion to transfer venue, pursuant to 28 U.S.C.

§ 1292(b). Second, Inter City has filed a motion

to dismiss the South Carolina action pursuant to Federal Rules of Civil Procedure 12(b)(6
) and
12(b)(l). Third, Inter City notes that “even if the motion to dismiss is not granted and
the South
Carolina Venue Decision is not reversed on appeal, dismissal of this case in its entirety would
.
remain inappropriate because.

.

.

the South Carolina Venue Decision affects only two of the six

named defendants in this case.”

Finally, Inter City maintains that Michelin will not be

prejudiced should this Court continue to stay this matter while Inter City’s motions are decide
d
by the South Carolina District Court (and/or by the Court of Appeals for the Fourth Circuit).
7.

Generally, the first-filed rule provides that “where there are parallel proceedings

in different federal courts, the first court in which jurisdiction attaches has priority to consid
er
the case.” FMC Corp. v. AMVAC Chem. Corp., 379 F. Supp. 2d 733, 737 (E. D. Pa. 2005). This
approach “encourages sound judicial administration and promotes comity among federal
courts
of equal rank.” E.E.O.C. v. Univ. of Pa., 850 F.2d 969, 971 (3d Cir. 1988) (citation omitte
d).
The first-filed rule’s “letter and spirit.

.

.

are grounded on equitable principles,” and its “primary

purpose is to avoid burdening the federal judiciary and to prevent the judicial embarrassmen
t of
conflicting judgments.” Id. at 977 (citations omitted). Accordingly, when applyin the
g
firstfiled rule, “a court must act ‘with regard to what is right and equitable under the circum
stances
and the law, and directed by the reason and conscience of the judge to a just result.” Id. (citing
Langes v. Green, 282 U.S. 531, 541, 51 S. Ct. 243, 75 L. Ed. 520 (1931)). Under the first-fi
led

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rule, “when cases involving the same parties and issues have been filed in two different districts,
the second district court has discretion to transfer, stay, or dismiss the second case in the interest
of efficiency and judicial economy.” Cedars-Sinai Med.Ctr. v. Shalala, 125 F.3d 765, 769 (9th
Cir. 1997).

On the other hand, the first district court has the “the power’ to enjoin the

subsequent” action. E.E.O.C., 850 F.2d at 97 1-972.
8.

This Court has carefully considered the parties’ positions as to the proper

direction for this action given the decision by the South Carolina District Court.
In the interests
of justice, comity and judicial economy, and based on the Court’s inherent author
ity to manage
its docket, this Court declines to dismiss this action and likewise declines to stay
this action,
indefinitely.

Rather, the Court finds that the more prudent and practical approach is to transfer

this action, sua sponte, to the South Carolina District Court, under the first-to
-file rule. See
Merial Ltd. v. Cipla Ltd., 681 F.3d 1283, 1299 (Fed. Cir. 2012) (“Under the
first-to-file rule, a
district court may choose to stay, transfer, or dismiss a duplicative later-filed
action, although
there are exceptions and the rule is not rigidly or mechanically applied—’an
ample degree of
discretion, appropriate for disciplined and experienced judges, must be left to
the lower courts.”)
(quoting Kerotest Mfg. Co. v. C—U—Two Fire Equip. Co., 342 U.S. 180,
183—84 (1952)); Kytel

Int’l Group, Inc. v. Rent a Center, Inc., 43 Fed. Appx. 420, 422 (2d Cir. 2002)
(citation omitted)
(“The first filed rule.

.

.

permits the transfer or dismissal of subsequently commenced litigation

involving the same parties and the same issues when both suits are pendin
g in federal courts.”);
Burger v. Am. Maritime Officers Union, 170 F.3d 184 (5th Cir. 1999)
(“Under the first-to-file

rule, a district court may dismiss, stay, or transfer an action where the
issues presented can be
resolved in an earlier-filed action pending in another federal court.”); Alitrad
e, Inc. v. Uniweld
Prods., Inc., 946 F.2d 622, 623 (9th Cir. 1991) (“[T]he well-established
‘first to file rule’

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.

.

allows a district court to transfer, stay, or dismiss an action when a similar complaint has
already
been filed in another federal court.”); see generally Cadle Co. v. Whataburger ofAlic
e, Inc., 174
F.3d 599, 606 (5th Cir. 1999) (finding that second-filed court erred by dismissing
action under
first-to-file rule after determining that issues in case might substantially overlap with
previously
filed case and concluding that proper course of action was for second-filed court
to transfer case
to first-filed court to determine which case should proceed); Buzas Baseball,
Inc. v. Bd. of
Regents of the Univ. of Ga., 189 F.3d 477 (table), 1999 WL 682883, at *2
(10th Cir. Sept. 2,
1999) (“[Tjhe ‘first-to-file’ rule permits a district court to decline jurisdiction where
a complaint
raising the same issues against the same parties has previously been filed
in another district
court.”); Midwest Motor Exp., Inc. v. Central States Southeast, 70 F.3d 1014,
1017 (8th Cir.
1995) (“We affirm the district court and its decision to transfer this case based
upon the ‘first
filed’ rule. This rule ‘gives priority, for purposes of choosing among possib
le venues when
parallel litigation has been instituted in separate courts, to the party who first
establishes
jurisdiction.’
9.

“).

As stated above, it is clear that this case raises claims that are substantially similar

to, and in fact overlap with, those asserted in the South Carolina Action. The
South Carolina
District Court has already decided—in the context of the South Carolina Action
—that the proper
forum for the adjudication of the central dispute at issue in both cases is South
Carolina—not
New Jersey.

In doing so, the South Carolina District Court engaged in a detailed and

comprehensive analysis of the

§ 1404(a) factors, noted a “substantial overlap” between the two

cases, and ultimately concluded that the

§ 1404(a) factors “weigh heavily in favor of South

Carolina.” Moreover, although there are four additional named defendants
in the New Jersey
action, the South Carolina Court expressly considered the issue of whether these
four additional

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named defendants would be subject to personal jurisdiction in South Carolina and found that
they would.
10.

In light of the foregoing, and under principles of comity, this Court hereby

exercises its discretion and transfers this matter to the South Carolina District Court, pursuant to
the file-filed rule, for all further proceedings. See generally E.E. 0. C., 850 F.2d at 977 (noting
that the “primary purpose” of the first-filed rule “is to avoid burdening the federal judiciary and
to prevent the judicial embarrassment of conflicting judgments.”).

Accordingly, IT IS on this

th
8

day of October, 2013,

ORDERED that this matter is hereby transferred, pursuant to the first-filed rule, to the
United States District Court for the District of South Carolina—Greenville Division.
IT IS SO ORDERED.

JQ$’E L. LINARES
W’S. DISTRICT JUDGE

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