Custom Polymers PET LLC v. Gamma Meccanica SPA et al

Filing 48

ORDER granting 8 Motion for Permanent Injunction; denying 26 Motion to Stay. Gamma is to abort prosecution of the parallel Italian litigation initiated on December 1, 2015, in the Court of Reggio Emilia, Italy, pending this Court's resolution of the parties dispute, and Gamma shall file a certification with this Court affirming that it has done so not later than Friday, May 6, 2016. Signed by Honorable Mary Geiger Lewis on 5/3/2016.(abuc)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF SOUTH CAROLINA
GREENVILLE DIVISION
CUSTOM POLYMERS PET, LLC,
Plaintiff,

§
§
§
vs.
§ CIVIL ACTION NO. 6:15-04882-MGL
§
GAMMA MECCANICA SPA; INNOVATIVE §
RECYCLING SOLUTIONS LLC; and
§
GAMMA MECCANICA NORTH AMERICA, §
Defendants.
§
MEMORANDUM OPINION AND ORDER
DENYING DEFENDANT GAMMA MECCANICA SPA’S MOTION TO STAY
AND GRANTING PLAINTIFF’S MOTION FOR AN ANTI-SUIT INJUNCTION
I.

INTRODUCTION
This is a breach of contract action. The Court has jurisdiction over the matter under 28

U.S.C. § 1332. Pending before the Court are Defendant Gamma Meccanica SpA (Gamma)’s
motion to stay, ECF No. 26, and Plaintiff Custom Polymers PET, LLC (Custom)’s motion for an
anti-suit injunction, ECF No. 8. Having carefully considered the motions, the responses, the replies,
the supplemental briefs, the sur replies, the record, and the applicable law, it is the judgment of the
Court that Gamma’s motion will be denied, whereas Custom’s motion will be granted.

II.

FACTUAL AND PROCEDURAL HISTORY
Custom is a plastic recycling company incorporated in North Carolina with its principal place

of business in Alabama. ECF No. 33 at 2. Gamma is an Italian company that manufactures plastics

reprocessing equipment. ECF No. 8-1 at 2. Meanwhile, Defendant Innovative Recycling Solutions,
LLC (Innovative) is a South Carolina company that serves as Gamma’s sales agent in the United
States pursuant to a sales representative agreement, and, as such, Innovative sometimes does
business as Gamma Meccanica North America when promoting Gamma. ECF No. 25 at 3.
Although the sales representative agreement establishes that Innovative is not Gamma’s officer,
managing agent, or general agent, ECF No. 27 at 2, during the time relevant to this action, the
owners of Innovative and Gamma indicated that the two companies were participating in a joint
venture, ECF No. 39 at 2.
On January 14, 2014, Custom entered into a contract with Innovative—doing business as
Gamma Meccanica North America—and Gamma for the purchase, design, delivery, installation, and
servicing of custom equipment for the reprocessing of plastic waste material. ECF No. 33 at 3; ECF
No. 25 at 2; ECF No. 1-1. The total price for the equipment under the contract was $4,200,000.00.
ECF No. 8-1 at 4. The contract provides in relevant part that South Carolina law will govern any
dispute under the contract, but, notably, the contract does not exclude application of the United
Nations Convention on Contracts for the International Sale of Goods (CISG). ECF No. 26-1 at 3.
Further, the contract contains Custom’s consent to the “jurisdiction of the courts of the State of
South Carolina.” ECF No. 1-1 at 4.
Upon entering into the contract, Gamma worked with IRV Systems, s.r.l. (IRV), an Italian
company, to manufacture the equipment for Custom. ECF No. 26-1 at 2. The equipment was
installed at Custom’s facility in Athens, Alabama, in late 2014 and early 2015. ECF No. 33 at 3.
During the installation and start-up process, Custom worked directly with Innovative’s agent, Heath

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Sellers, on a daily basis, with Sellers providing technical support to Custom and coordinating the
servicing of the equipment. Id.
According to Custom, the equipment delivered by Gamma failed to work properly from the
beginning. Id. Custom notified Gamma of the deficiencies in the equipment’s performance in
March 2015, and Gamma and Innovative worked to correct the problems with the equipment to no
avail until August 2015. Id.; ECF No. 28 at 3. In August 2015, counsel for Custom sent a notice
of default to Gamma, demanding that Gamma bring the equipment up to the minimum requirements
under the contract by September 30, 2015. ECF No. 8-1 at 6. Counsel for Gamma responded to the
notice of default in September 2015, and the parties began working toward a possible resolution of
the dispute. ECF No. 33 at 4. Ultimately, Gamma sent a settlement proposal to Custom on
November 6, 2015, which Custom rejected on November 12, 2015, with a counter-proposal
demanding removal of the equipment from Custom’s Alabama facility. ECF No. 25 at 4.
At this point, Gamma hired Italian counsel, who began preparing an Italian lawsuit to recover
the balance of $681,782.18, which remained under the contract. ECF No. 26-1 at 3-4; ECF No. 8-7
at 3. During this same time period, Gamma responded to Custom on November 18, 2015, indicating
that it was working on a response to Custom’s November 12, 2015, letter and would have a response
to Custom by November 23, 2015. ECF No. 33 at 4. Upon prompting from Custom, on November
30, 2015, Gamma submitted a response to Custom’s settlement proposal, in which it invited
Custom’s representatives to come to Italy for discussion. Id.
Unbeknownst to Custom, on December 1, 2015, Gamma’s Italian counsel delivered the
original Italian complaint and two service copies to the Judicial Officer for the Court of Reggio
Emilia, Italy. ECF No. 38 at 2. The Judicial Officer then signed and stamped the notice of service

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attached to the complaint on December 2, 2015, signifying the commencement of service of the
complaint on Custom by registered mail. Id. Meanwhile, on December 9, 2015, Custom, who
remained unaware of the Italian lawsuit, filed this action with the Court. ECF No. 33 at 4-5. On
December 10, 2015, Custom sent a courtesy copy of Custom’s Complaint to Gamma. Id. at 5.
Gamma likewise sent a courtesy copy of the Italian complaint to Custom on December 11, 2015.
Id. Gamma filed the Italian summons with the Italian clerk of court on that same date. ECF No. 34
at 3.
Following these events, Custom delivered its Summons and Complaint to Innovative on
December 17, 2015, seeking to serve both Gamma and Innovative with process. ECF No. 33 at 5.
Upon inquiry from this Court, the parties informed the Court that the first hearing in the Italian
action is set for June 9, 2016, and at least twenty days prior to the hearing, Custom must file its
defense brief in which it will argue its jurisdictional defenses and any other defenses to the Italian
action. ECF No. 36 at 2.
On December 22, 2015, Custom filed its motion for an anti-suit injunction requesting the
Court enjoin Gamma from prosecuting the Italian action, ECF No. 8, to which Gamma responded
in opposition and contemporaneously filed its motion to stay the proceedings in this Court until the
Italian lawsuit has ended, ECF Nos. 25, 26. Innovative likewise filed a response in opposition to
Custom’s motion, ECF No. 27, and Custom filed replies to the responses and a response in
opposition to Gamma’s motion to stay, ECF Nos. 28, 29, 33, to which Gamma filed a reply, ECF
No. 34. The Court subsequently directed the parties to answer several interrogatories to clarify
outstanding matters. The parties filed responses to all of these interrogatories through supplemental
briefings and sur replies. Additionally, Custom amended its Complaint in this action, in which it

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requests in part that the Court issue an anti-suit injunction. ECF No. 37. The Court, having been
fully briefed on the relevant issues, is now prepared to discuss the merits of the motions.

III.

CONTENTIONS OF THE PARTIES
In its motion to stay, Gamma alleges that a stay of the instant action is proper under

principles of international comity. ECF No. 26-1 at 1. Utilizing the analysis set forth by Al-Abood
ex rel. Al-Abood v. El-Shamari, 217 F.3d 225 (4th Cir. 2000), Gamma asserts, as does Custom, that
the parties and issues raised in the two lawsuits are substantially similar. ECF No. 26-1 at 5-6.
Gamma also declares that the Italian action was initiated prior to this action and insists that South
Carolina has little connection to the lawsuit. Id. at 6-8. Moreover, Gamma posits that this Court and
the Italian court are equally able to apply the substantive law and avers that the Italian court is an
adequate forum that can award complete relief. Id. at 8-9. Finally, Gamma stresses that neither suit
has substantially progressed, judicial efficiency favors a stay, and a stay properly respects
international comity. Id. at 9-11.
On the other hand, in its motion for an anti-suit injunction, Custom contends that the Court
should enjoin Gamma from prosecuting the Italian action under any of the three standards
established to evaluate motions for anti-suit injunctions. ECF No. 8-1 at 9-10. First, Custom argues
that the Court should grant its motion for an anti-suit injunction under the liberal approach adopted
by the Fifth, Seventh, and Ninth Circuit Courts of Appeals. Id. at 10-17. Using this approach,
Custom propounds that the parties and issues are duplicative in both this action and the Italian
action. Id. at 10. Further, Custom maintains that the Italian lawsuit threatens the following
important public policies of this forum: (1) the parties’ contractual agreement that South Carolina

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law governs the dispute and that South Carolina is an appropriate forum; (2) the public policy that
disfavors forum shopping and races to the courthouse; and (3) judicial economy. Id. at 11-14.
Additionally, Custom proclaims that the Italian lawsuit is vexatious and oppressive, threatens this
Court’s jurisdiction, and prejudices Custom. Id. at 14-16. Custom also states that the balance of the
equities warrants an anti-suit injunction. Id. at 16-17.
Second, Custom advances that the Court should grant its motion for an anti-suit injunction
under the restrictive approach adopted by the First, Second, Third, Sixth, Eighth, and D.C. Circuit
Courts of Appeals, claiming that the Italian action threatens the jurisdiction of this Court and the
important public policies of this forum as noted above. Id. at 17-18.
Third, Custom urges that its motion for an anti-suit injunction should be granted because it
is necessary to avoid a miscarriage of justice. Id. at 18-19.
Gamma disputes each of the arguments advanced by Custom, initially stating that it has not
been properly served because Innovative is not its officer, managing or general agent, or agent
authorized to receive service of process. ECF No. 25 at 6. For its part, Innovative likewise opposes
Custom’s motion for an anti-suit injunction but supports Gamma’s motion to stay. ECF Nos. 27,
31. In particular, Innovative proclaims that the provisional injunctive relief sought by Custom must
be pled in the Complaint and match the ultimate relief sought. ECF No. 27 at 2. Custom,
meanwhile, disputes each of Gamma’s and Innovative’s assertions and avouches that the Court
should grant its motion for an anti-suit injunction. The Court will now consider each of the parties’
claims.

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IV.

DISCUSSION AND ANALYSIS
A.

Whether Gamma Was Properly Served

As an initial matter, Gamma and Innovative contend that Gamma is not properly before this
Court because it has not yet been served with process. ECF No. 25 at 6. Service of process is a
prerequisite for the issuance of an enforceable injunction such as the anti-suit injunction Custom
requests in this case. See R.M.S. Titanic, Inc. v. Haver, 171 F.3d 943, 958 (4th Cir. 1999). The
Federal Rules of Civil Procedure provide that a corporation such as Gamma may be served either
(1) “by delivering a copy of the summons and of the complaint to an officer, a managing or general
agent, or any other agent authorized by appointment or by law to receive service of process,” or (2)
by following the state law rules for effecting service. Fed. R. Civ. P. 4(h)(1).
Using this standard, Gamma and Innovative assert that service of process on Innovative
failed to constitute service of process on Gamma because of the terms of Gamma and Innovative’s
sales representative agreement. ECF No. 25 at 7. As previously noted, the sales representative
agreement states that Innovative is not Gamma’s officer, managing agent, or general agent. ECF
No. 27 at 2. Accordingly, Gamma and Innovative contend that service must be made on an actual
agent, and because Innovative is not Gamma’s actual agent, Gamma has not been properly served
with process. ECF No. 39 at 2.
Gamma’s and Innovative’s arguments are fundamentally flawed. In South Carolina, “[a]n
agent’s high level of actual or apparent responsibility suffices to permit service to be effective as
against the principal.” Graham Law Firm, P.A. v. Makawi, 721 S.E.2d 430, 433 (S.C. 2012).
“[A]pparent authority is when the principal knowingly permits the agent to exercise authority, or

7

the principal holds the agent out as possessing such authority.” Roberson v. S. Fin. of S.C., Inc., 615
S.E.2d 112, 115 (S.C. 2005).
Here, Innovative serves as Gamma’s sales agent in the United States pursuant to the sales
representative agreement, and, as such, Innovative sometimes does business as Gamma Meccanica
North America when promoting Gamma. ECF No. 25 at 3. Moreover, during the time relevant to
this action, the owners of Innovative and Gamma indicated that the two companies were
participating in a “joint venture,” ECF No. 39 at 2, and Gamma told Custom in multiple written
communications that Innovative was its “agent,” ECF No. 29 at 2. See ECF No. 28-4.
Additionally, Innovative—doing business as Gamma Meccanica North America—and
Gamma both entered into the contract with Custom. ECF No. 1-1. Under these facts, Gamma
unquestionably held out Innovative as its agent possessing authority to act on its behalf, and as such,
Innovative had the apparent authority to act on Gamma’s behalf in spite of the terms of the sales
representative agreement, including having the authority to accept service of process. Gamma’s and
Innovative’s arguments to the contrary overlook established South Carolina law recognizing that
apparent agency is sufficient for service of process on the principal. Therefore, when Custom served
Innovative with the Summons and Complaint for Gamma on December 17, 2015, ECF No. 33 at 5,
that service constituted service of process on Gamma pursuant to its apparent agency relationship
with Innovative.
B.

Requesting Injunctive Relief in the Complaint

Before reaching the substantive motions, the Court must also address Gamma’s and
Innovative’s arguments regarding Custom’s failure to request an anti-suit injunction in its initial
Complaint. Innovative first raised the issue in its response in opposition to Custom’s motion for an

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anti-suit injunction, proclaiming that the provisional injunctive relief sought by Custom must be pled
in the Complaint and match the ultimate relief sought. ECF No. 27 at 2. In response to this
argument, Custom states that it amended its Complaint as of right on March 22, 2016, and the
Amended Complaint specifically requests an anti-suit injunction against Gamma. ECF No. 37 at
19. But, Gamma now contends that Custom’s Amended Complaint is defective because Custom
filed its Amended Complaint without leave from this Court, and Custom is not entitled to injunctive
relief. ECF No. 42 at 4.
However, Gamma’s argument is incomplete at best. Under Rule 15 of the Federal Rules of
Civil Procedure, “[a] party may amend its pleading once as a matter of course within: (A) 21 days
after serving it, or (B) if the pleading is one to which a responsive pleading is required, 21 days after
service of a responsive pleading or 21 days after service of a motion under Rule 12(b), (e), or (f),
whichever is earlier.” Fed. R. Civ. P. 15(a)(1). First, subsection (A) is inapplicable as twenty-one
days had long passed when Custom filed its Amended Complaint. As to subsection (B), neither
Gamma nor Innovative had filed their answers. Nor had they filed any motions under Rule 12, as
this Court’s January 19, 2016, Order allows the parties twenty-one days after the Court rules on
Custom’s motion for an anti-suit injunction to file those motions. ECF No. 22 at 1. Therefore,
Custom properly filed its Amended Complaint as a matter of right without leave from this Court
under Rule 15(a)(1)(B). Consequently, Custom’s failure to request an anti-suit injunction in its
original Complaint is moot.
C.

Gamma’s Motion to Stay

The Court now turns to Gamma’s motion to stay this proceeding. See ECF No. 26. Gamma
requests this Court exercise its discretion to stay this litigation under principles of international

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comity. ECF No. 26-1 at 1; see Landis v. N. Am. Co., 299 U.S. 248, 254-55 (1936) (noting that a
court must exercise its discretionary judgment when considering whether to stay proceedings
pending before it). “International comity is ‘the recognition which one nation allows within its
territory to the legislative, executive or judicial acts of another nation, having due regard both to
international duty and convenience, and to the rights of its own citizens or of other persons who are
under the protection of its laws.’” In re French, 440 F.3d 145, 152 (4th Cir. 2006) (quoting Hilton
v. Guyot, 159 U.S. 113, 164 (1895)). Notably, “in some private international disputes the prudent
and just action for a federal court is to abstain from the exercise of jurisdiction.” Turner Entm’t Co.
v. Degeto Film GmbH, 25 F.3d 1512, 1518 (11th Cir. 1994).
However, “[a]bstention from the exercise of federal jurisdiction is the exception, not the
rule.” Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 813 (1976). Moreover,
“[a]s has been reiterated time and again, the federal courts have a ‘virtually unflagging obligation
. . . to exercise the jurisdiction given them.’” Gannett Co. v. Clark Constr. Grp., Inc., 286 F.3d 737,
741 (4th Cir. 2002) (quoting Colo. River, 424 U.S. at 817). Further, abstention is rarely invoked and
only under exceptional circumstances may a federal court order a stay or dismissal of an action to
avoid duplicative litigation in a foreign country. See Moses H. Cone Mem’l Hosp. v. Mercury
Constr. Corp., 460 U.S. 1, 25-26 (1983); Amsley v. W. Va. Racing Comm’n, 378 F.2d 815, 818 (4th
Cir. 1967) (“[T]he doctrine of abstention is to be imposed sparingly, in rare circumstances . . . .”).
The Fourth Circuit follows the Colorado River abstention doctrine when addressing whether
to stay a case under principles of international comity. Al-Abood, 217 F.3d at 232. Under this
approach, the “threshold” inquiry “is whether there are parallel suits.” Id. “If parallel suits exist,
then a district court must carefully balance several factors, ‘with the balance heavily weighted in

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favor of the exercise of jurisdiction.’” Id. (quoting Moses H. Cone, 460 U.S. at 16). These factors
include (1) “the relative order of the two suits,” (2) “the relative inconvenience of the federal
forum,” (3) “the source of law in the case,” and (4) “the relative progress of the two proceedings.”
Id. The Court may also weigh policies regarding international comity concerns, fairness to the
litigants, and the efficient utilization of judicial resources. Turner Entm’t Co., 25 F.3d at 1519-22.
The Court is now ready to apply the facts of this case to the factors listed above.
1.

Whether this lawsuit and the Italian lawsuit are parallel

First, the Court must consider whether this lawsuit and the Italian lawsuit are parallel. “Suits
are considered parallel if substantially the same parties litigate substantially the same issues in
different forums.” Al-Abood, 217 F.3d at 232 (internal quotation marks omitted). In this action,
Custom sues Gamma, Innovative, and Gamma Meccanica North America for breach of the
underlying contract. ECF No. 37. Meanwhile, in the Italian action, Gamma alleges that Custom
breached the same contract, seeking to recover the payment that remains outstanding. ECF No. 8-7
at 3. As already noted, Custom and Gamma agree that the claims raised in the two lawsuits are
substantially similar. ECF No. 26-1 at 5-6. Thus, the Court holds that the issues in these two suits
are substantially similar.
Moreover, the parties are substantially similar. As already noted, Custom admits that the
parties and issues in both actions are the same in its motion for anti-suit injunction, although it
argues that this case is more comprehensive because it includes Innovative as a defendant. ECF No.
8-1 at 10-11. Similarly, as stated above, Gamma stipulates that the parties and issues raised in the
two lawsuits are substantially similar. ECF No. 26-1 at 6. Gamma’s failure to include Innovative
as a party in the Italian action does not affect the analysis because the absence of a party alone does

11

not defeat the parallel nature of the lawsuits. See Sto Corp. v. Lancaster Homes, Inc., 11 F. App’x
182, 187 (4th Cir. 2001). Based on all the foregoing, this Court holds that this lawsuit and the
Italian lawsuit are parallel.
2.

Whether the Italian action was initiated prior to this action

Having established that this action and the Italian action are parallel suits, the Court must
now “carefully balance several factors, ‘with the balance heavily weighted in favor of the exercise
of jurisdiction.’” Al-Abood, 217 F.3d at 232 (quoting Moses H. Cone, 460 U.S. at 16). The first
factor to consider is “the relative order of the two suits.” Id.
As previously explained, Gamma’s Italian counsel delivered the original Italian complaint
and two service copies to the Judicial Officer for the Court of Reggio Emilia, Italy, on December
1, 2015. ECF No. 38 at 2. The Judicial Officer then signed and stamped the notice of service
attached to the complaint on December 2, 2015, signifying the commencement of service of the
complaint on Custom by registered mail. Id. Meanwhile, Custom filed the instant action in this
Court on December 9, 2015, with no knowledge of the Italian action initiated by Gamma. ECF No.
33 at 4-5. On December 11, 2015, Gamma filed the Italian summons with the Italian clerk of court.
ECF No. 34 at 3.
Through support from its Italian counsel, Custom claims that the instant action precedes the
Italian action because Gamma neglected to file the Italian action until December 11, 2015, whereas
Custom filed this case on December 9, 2015. ECF No. 33 at 7. Custom further cites two Italian
cases that purportedly establish that the Italian action will not commence for purposes of
determining priority until it has been served on Custom, which had not occurred as of April 8, 2016,
the date Custom filed its sur reply. ECF No. 45 at 2; ECF No. 41-1 at 7, 11.

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All parties agree that the first step in commencing a legal proceeding in Italy occurs when
the party delivers the complaint to the Judicial Officer under Article 163 of the Italian Code of Civil
Procedure. Art. 163 Codice di procedura civile [C.p.c] (It.). Under Article 149 of the same code,
the second step takes place when the Judicial Officer signs and stamps the notice of service attached
to the complaint, signifying the commencement of service of the complaint on the defendant. Art.
149 C.p.c. (It.). Further, Article 165 provides that the plaintiff in an Italian action must file the
complaint with the Italian clerk of court within ten days after commencement of service upon the
defendant. Art. 165 C.p.c. (It.). Custom points out that none of these civil code provisions state
when a lawsuit is “initiated” or “commenced” in Italy, and, as a result, contends that the Italian
action commenced after the instant action. ECF No. 41 at 2.
Nevertheless, Custom’s argument fails because the Court is persuaded that the Brussels
Regulation promulgated by the European Union, of which Italy is a Member State, directly
addresses the priority issue. ECF No. 44 at 3; ECF No. 46 at 3; see Regulation (EU) No. 1215/2012
of the European Parliament and of the Council of 12 December 2012 on Jurisdiction and the
Recognition and Enforcement of Judgments in Civil and Commercial Matters (recast), arts. 29, 32,
2012 O.J. (L 351) 1, 12, 13. Section 9, article 29 of the Brussels Regulation states that in cases
involving parallel lawsuits brought in courts of different Member States, the action in the court that
is “first seised” of the action is granted priority. Reg. 1215/2012 § 9 art. 29, 2012 O.J. at 12. Article
32 of the same section explains that a court is “seised” of an action:
(a) at the time when the document instituting the proceedings or an equivalent
document is lodged with the court, provided that the claimant has not subsequently
failed to take the steps he was required to take to have service effected on the
defendant; or
(b) if the document has to be served before being lodged with the court, at the time
when it is received by the authority responsible for service, provided that the
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claimant has not subsequently failed to take the steps he was required to take to have
the document lodged with the court.
Id. § 9 art. 32, 2012 O.J. at 12.
Consequently, the European Union priority rules require the courts of the Member States to
recognize the relevant date for purposes of priority among competing Member States, of which Italy
is one of them, as the date on which the complaint was “received by the authority responsible for
service.” Id. Subsection (b) applies to Italian cases pursuant to Articles 149 and 163 of the Italian
Code of Civil Procedure. In this case, the date the complaint was received by the authority
responsible for service was December 1, 2015, when Gamma delivered its complaint to the Italian
Judicial Officer, who then commenced service on December 2, 2015. ECF No. 38 at 2.
Assuming without deciding that the Brussels Regulation is applicable to the issue of priority
before this Court, the Court concludes, for purposes of this case only, that December 1, 2015, the
date that Gamma’s Italian counsel delivered the original Italian complaint and two service copies
to the Judicial Officer for the Court of Reggio Emilia, Italy, is the relevant date for determining
priority of the Italian action. Therefore, the Italian action was initiated prior to this one.
3.

Whether South Carolina is a more convenient forum than Italy

The second factor to consider when evaluating the motion to stay is “the relative
inconvenience of the federal forum,” Al-Abood, 217 F.3d at 232, which, in this case, is the district
of South Carolina. Gamma contends that South Carolina is an inconvenient forum for this dispute,
stating that only Innovative and its agent, Heath Sellers, reside in South Carolina. ECF No. 34 at
5. Additionally, Gamma avers that the “vast majority” of its relevant documents are in Italian, and
most of its witnesses are not fluent in English. Id. at 6. Gamma also claims that IRV is a potentially
responsible party and likely a key witness, who can be more easily dealt with in Italy. Id. Lastly,
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Gamma asseverates that Custom engaged in forum shopping by filing suit outside its home state of
Alabama and infers that South Carolina is merely convenient for Custom’s counsel. Id. at 5.
Custom counters by asserting that most of the parties are located in the United States, almost
all the witnesses are located in the United States, and the equipment that is the subject matter of this
dispute is located in the United States. ECF No. 33 at 8-9. As noted by Custom, Custom is a North
Carolina company with its headquarters in Alabama, and all of its witnesses are located in North
Carolina and Alabama. ECF No. 33 at 8. Moreover, Innovative is a South Carolina company, and
its agent, Heath Sellers, resides in South Carolina. Id. Based on Custom’s interactions with Sellers
during contractual negotiations and later servicing of the equipment, Custom believes Sellers to be
one of the most crucial witnesses in this dispute. Id. at 9. Further, several subcontractors and
potential witnesses who participated in the installation and servicing of the equipment are located
in the United States. Id. Additionally, the equipment is located at Custom’s facility in Alabama.
Id. Finally, much of the written evidence is in English and would have to be translated into Italian
if the Italian action were allowed to proceed. Id.
Although Gamma alleges that Custom engaged in forum shopping by filing suit in South
Carolina, Gamma ignores the plain language in the contract that contains Custom’s consent to the
“jurisdiction of the courts of the State of South Carolina.” ECF No. 1-1 at 4. Further contractual
language establishes that South Carolina law governs disputes under the contract. Id.
It is for these reasons that the Court thinks that Custom was justified in bringing suit in this
forum. Under the contract, Gamma retained its right to sue in alternate jurisdictions, but Custom
submitted to this Court’s jurisdiction, and Gamma’s misleading argument that Custom engaged in
forum shopping by suing in South Carolina rather than in Alabama strains the bounds of credulity.

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With the majority of the parties, witnesses, documentary evidence, and physical evidence being
located in either South Carolina, Alabama, or North Carolina, and the latter two locations being
much closer to South Carolina than Italy, it is readily evident to this Court that South Carolina is a
more convenient forum than Italy, notwithstanding Gamma’s speculative arguments regarding the
importance of IRV, a non-party to the contract at issue. Thus, this factor weighs against granting
Gamma’s motion to stay.
4.

Whether (1) the CISG is the proper source of law, and (2) South Carolina
choice of law rules apply to fill in any gaps left by the CISG

Another factor the Court should consider is “the source of law in the case.” Al-Abood, 217
F.3d at 232. Gamma propounds that the CISG governs this dispute and the Court should stay this
action on that ground. ECF No. 26-1 at 8. Custom, however, advances that South Carolina law
governs this dispute under the terms of the contract, but even if the CISG applies, South Carolina
choice of law rules should fill in the gap where the CISG is silent on a legal issue. ECF No. 33 at
11. Importantly, both Custom and Gamma agree that this Court is equally able to apply the CISG
as the Italian court. Id.; ECF No. 26-1 at 8.
As previously noted, South Carolina law is applicable to disputes under the contract at issue,
ECF No. 1-1 at 4, and as an international treaty signed by both the United States and Italy, the CISG
is the law of South Carolina to be applied to this dispute. See BP Oil Int’l, Ltd. v. Empresa Estatal
Petroleos de Ecuador, 332 F.3d 333, 337 (5th Cir. 2003) (“A signatory’s assent to the CISG
necessarily incorporates the treaty as part of that nation’s domestic law.”); see also Delchi Carrier
SpA v. Rotorex Corp., 71 F.3d 1024, 1027 (2d Cir. 1995) (noting that the United States and Italy are
both signatories to the CISG); William S. Dodge, Teaching the CISG in Contracts, 50 J. Legal Educ.
72, 72 (2000) (“As a treaty the CISG is federal law, which preempts state common law and the
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UCC.”). Moreover, contrary to Custom’s argument that the CISG does not apply, “[w]here parties
seek to apply a signatory’s domestic law in lieu of the CISG, they must affirmatively opt-out of the
CISG.” BP Oil Int’l, 332 F.3d at 337. Here, no provision of the contract expressly excludes the
application of the CISG, and the CISG, which preempts South Carolina law, thus applies to this
contractual dispute.
However, even though the CISG governs this dispute, where the CISG is silent on a legal
issue, a court should apply the choice of law rules of the forum where it sits to fill in the gap.
Forestal Guarani S.A. v. Daros Int’l, Inc., 613 F.3d 395, 400 (3d Cir. 2010) (“The CISG says that
‘[q]uestions concerning matters governed by this Convention which are not expressly settled in it
are to be settled in conformity with the general principles on which it is based or, in the absence of
such principles, in conformity with the law applicable by virtue of the rules of private international
law [i.e. choice of law].’” (quoting 15 U.S.C. App., Art. 7(2))). Therefore, here, under South
Carolina law, the choice of law clause in the contract providing that South Carolina law governs will
be enforced and South Carolina law will apply where the CISG is silent.
In the Italian action, Gamma has requested that the Italian court apply the Italian Civil Code
where the CISG is silent, ECF No. 8-7, in direct contravention of the contract between the parties.
Because the parties contractually agreed that South Carolina law is applicable to any dispute under
the contract, it is disingenuous for Gamma now to make that argument.
Therefore, in sum, this Court holds that although the CISG is the proper source of law to
cover any contractual dispute between the parties, South Carolina choice of law rules apply to fill
in the gaps left by the CISG. This forum is thus more appropriate than Italy, and this factor weighs
against granting a stay as well.

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5.

Whether either action has substantially progressed

Al-Abood further provides that the Court should consider “the relative progress of the two
proceedings.” 217 F.3d at 232. Here, both Custom and Gamma agree that neither this action nor
the Italian action have substantially progressed. ECF No. 26-1 at 9-10; ECF No. 33 at 12. Given
the early procedural posture of both actions, this factor is neutral.
6.

Whether the United States, and, by extension, South Carolina, has a stronger
interest in the litigation than Italy.

Yet another factor the Court may consider involves “[t]he ramifications of international
comity.” Turner Entm’t Co., 25 F.3d at 1519. “[R]elevant to considerations of international comity
are the relative strengths of the American and [Italian] interests.” Id. at 1521. It is axiomatic that
disputes involving corporate citizens are important to United States courts because courts have an
interest in having localized controversies resolved at home. See In re Volkswagen of Am., Inc., 545
F.3d 304, 315 (5th Cir. 2008) (listing as one of the factors the court is to consider in transferring a
case or keeping it is “the local interest in having localized interests decided at home” (internal
quotation marks omitted)).
In this case, Custom is a North Carolina company with its headquarters in Alabama, and
Innovative is a South Carolina company with its headquarters in South Carolina. ECF No. 33 at 12.
Although Gamma is an Italian company, it contracted with Custom and Innovative to provide the
equipment at issue, taking advantage of this forum. Additionally, the equipment is located in
Alabama. Id. at 9. Because this action involves a contractual dispute where two of the three parties
are United States corporate citizens, the United States, and by extension, South Carolina, has a
stronger interest in the litigation than Italy. Therefore, this factor weighs against granting a stay.

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7.

Whether it is fair to require Gamma to litigate the action in this forum

This Court may also weigh considerations of fairness to the litigants when determining
whether to stay this action. Turner Entm’t Co., 25 F.3d at 1521-22. Gamma argues that it is fair to
require Custom to litigate in Italy because the Italian action has priority over this action, and the
Italian court can allegedly provide Custom with the full relief it seeks. ECF No. 26-1 at 10.
Although Custom disputes these assertions for a number of reasons, the fact of the matter remains
that Gamma, Custom, and Innovative all signed the contract that indisputably contains Custom’s
consent to the “jurisdiction of the courts of the State of South Carolina.” ECF No. 1-1 at 4. Through
this provision, Custom submitted to the jurisdiction of this Court, and Gamma thus certainly
anticipated being hailed into this Court in the event of a dispute under the contract. Therefore, it is
fair to require Gamma to litigate the action in this forum, because Gamma reasonably anticipated
being sued in this forum. Thus, this factor also weighs against granting a stay.
8.

Whether considerations of judicial economy dictate that both actions cannot
proceed simultaneously

The final factor the Court may evaluate is the efficient utilization of judicial resources.
Turner Entm’t Co., 25 F.3d at 1522. On this issue, the parties agree that judicial economy would
not be served by allowing both this action and the Italian action to proceed concurrently. ECF No.
33 at 15; ECF No. 34 at 10. Standing alone, judicial economy supports granting a stay, but the Court
is considering Gamma’s motion to stay in conjunction with Custom’s motion for an anti-suit
injunction. As will be further articulated, the Court will grant Custom’s motion for an anti-suit
injunction, thus serving judicial economy by permitting only one of these parallel lawsuits to
proceed, namely this action.

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After carefully balancing the factors set forth by Al-Abood and other relevant cases, the Court
holds that the factors, quantitatively but more importantly qualitatively, weigh against granting
Gamma’s motion to stay, particularly when the Court evaluates the factors “‘with the balance
heavily weighted in favor of the exercise of jurisdiction.’” 217 F.3d at 332 (quoting Moses H. Cone,
460 U.S. at 16). Based on all the foregoing, the Court will deny Gamma’s motion to stay.
D.

Custom’s Motion for an Anti-Suit Injunction

Finally, the Court will address Custom’s motion for an anti-suit injunction. ECF No. 8.
Custom petitions this Court to use its power to enjoin litigants from prosecuting foreign lawsuits by
issuing an anti-suit injunction as to Gamma, thus enjoining Gamma from prosecuting the Italian
action. ECF No. 8-1 at 9-10.
It is well-established that federal district courts have the power to enjoin litigants from
prosecuting foreign lawsuits through issuance of anti-suit injunctions. Kaepa, Inc. v. Achilles Corp.,
76 F.3d 624, 626 (5th Cir. 1996); see also Gau Shan Co. v. Bankers Tr. Co., 956 F.2d 1349, 1352
(6th Cir. 1992); Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 926 (D.C. Cir.
1984). Although such an anti-suit injunction operates merely against the parties, it “effectively
restricts the jurisdiction of the court of a foreign sovereign.” China Trade & Dev. Corp. v. M.V.
Choong Yong, 837 F.2d 33, 35 (2d Cir. 1987). Accordingly, when issuing an anti-suit injunction
against prosecution of a foreign suit, courts must give due regard to principles of international
comity. Seattle Totems Hockey Club, Inc. v. Nat’l Hockey League, 652 F.2d 852, 855 (9th Cir.
1981). To that end, anti-suit injunctions of foreign proceedings should be “used sparingly and
should be granted only with care and great restraint.” China Trade, 837 F.2d at 35 (internal

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quotation marks omitted). A district court’s decision to grant an anti-suit injunction is reviewed for
abuse of discretion. See, e.g., Kaepa, Inc., 76 F.3d at 626; Gau Shan Co., 956 F.2d at 1352.
With that in mind, under certain circumstances, a district court may properly issue an antisuit injunction. The Fourth Circuit Court of Appeals has not addressed the precise legal standard
for the district courts to employ when determining whether the issuance of an anti-suit injunction
is proper, and the remaining circuit courts of appeals are split between two approaches. Kaepa, Inc.,
76 F.3d at 626-27. The two predominant legal standards are: (1) the liberal approach adopted by
the Fifth, Seventh, and Ninth Circuits; and (2) the restrictive approach adopted by the First, Second,
Third, Sixth, Eighth, and D.C. Circuits.

Quaak v. Klynveld Peat Marwick Goerdeler

Bedrijfsrevisoren, 361 F.3d 11, 17 (1st Cir. 2004); see, e.g., Goss Int’l Corp. v. Man Roland
Druckmaschinen Aktiengesellschaft, 491 F.3d 355, 359-60 (8th Cir. 2007); Gen. Elec. Co. v. Deutz
AG, 270 F.3d 144, 161 (3d Cir. 2001). Some courts have also held that an anti-suit injunction is
proper to avoid a miscarriage of justice. See Laker Airways Ltd., 731 F.2d at 927 (“The equitable
circumstances surrounding each request for an injunction must be carefully examined to determine
whether . . . the injunction is required to prevent an irreparable miscarriage of justice.”).
The Court now turns to consider each of the three approaches as it applies them here.
1.

Whether an anti-suit injunction is warranted under the liberal approach

The Court will first use the liberal approach to determine whether an anti-suit injunction is
warranted in this case. The initial issue under the liberal approach is whether the two lawsuits
involve parallel parties and issues. Seattle Totems, 652 F.2d at 855-56. If the two lawsuits are
parallel, an anti-suit injunction may be issued where: (1) a policy of the forum issuing the anti-suit
injunction would be frustrated; (2) the foreign litigation would be vexatious or oppressive; (3) the

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issuing court’s jurisdiction is threatened; or (4) other equitable considerations would be prejudiced.
Id. at 855. The satisfaction of any one factor suffices to warrant an anti-suit injunction. See id.
a.

Whether a policy of this forum would be frustrated

As already observed, this action and the Italian action involve substantially similar issues
and parties, and, thus, the lawsuits are parallel. Turning to the first factor, whether a policy of the
forum issuing the anti-suit injunction would be frustrated, Custom asserts that three public policies
of this forum would be frustrated. ECF No. 8-1 at 11-14; ECF No. 28 at 11. First, Custom claims
that Gamma’s Italian suit undermines the parties’ contractual agreement that South Carolina law
controls and that this Court is an appropriate forum for this dispute. ECF No. 8-1 at 11. As noted
above, the Court agrees that Custom properly initiated the action in this forum pursuant to the
contractual language, and, further, South Carolina choice of law rules will apply to fill in any gaps
left by the CISG. As already observed, because Gamma has requested the Italian court to apply the
Italian Civil Code to fill in any gaps where the CISG is silent, in direct contravention of the contract
between the parties, the public policy of enforcing the provisions of a contractual agreement is
threatened by the Italian action.
Second, Custom contends that Gamma’s Italian suit threatens the public policy that disfavors
forum shopping and races to the courthouse. Id. at 12. Gamma, in turn, acknowledges that it filed
a lawsuit while the parties were engaged in settlement negotiations, but astutely points out that
Custom followed the same course of action by filing the instant action during negotiations. ECF No.
25 at 13-14. Given the facts before it, this factor weighs in favor of neither party’s position.
Third, Custom propounds that judicial economy would be frustrated in the absence of an
anti-suit injunction. ECF No. 8-1 at 14. As previously discussed, Gamma also agrees that judicial

22

economy would not be served by allowing both this action and the Italian action to proceed
concurrently. ECF No. 34 at 10. This Court holds that “allowing simultaneous prosecution of the
same action in a foreign forum thousands of miles away would result in inequitable hardship and
tend to frustrate and delay the speedy and efficient determination of the cause.” See In re
Unterweser Reederei, Gmbh, 428 F.2d 888, 896 (5th Cir. 1970), aff’d on reh’g en banc, 446 F.2d
907 (1971), rev’d on other grounds sub nom. M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1
(1972). This Court’s permitting the Italian action and this action to proceed concurrently would be
an affront to the goal of judicial efficiency. Therefore, the Court holds that the public policy of
judicial economy is threatened by the Italian action, and an anti-suit injunction is justified on this
ground.
b.

Whether the foreign litigation would be vexatious or oppressive

Custom proclaims that the second factor under the liberal approach, whether the foreign
litigation would be vexatious or oppressive, weighs in favor of granting an anti-suit injunction as
well. ECF No. 8-1 at 14. If this Court were not to grant an anti-suit injunction, Custom would be
forced to participate in concurrent, competing lawsuits thousands of miles apart. Custom further
attests that the Italian court does not possess jurisdiction sufficient to hail Custom before it. Id. at
14-15. Based on the Court’s analysis of the public policy favoring judicial economy, this Court
holds this factor also weighs in favor of the Court’s issuance of an anti-suit injunction.
c.

Whether this Court’s jurisdiction is threatened

The third factor under the liberal approach, whether the issuing court’s jurisdiction is
threatened by foreign litigation, likewise weighs in favor of an anti-suit injunction. Gamma notes
that in in personam actions like this one, true jurisdictional threats are rare. ECF No. 25 at 9 (citing

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Gau Shan Co., 956 F.2d at 1356). Nevertheless, if the foreign action “was instituted by the foreign
defendant[] for the sole purpose of terminating the United States claim,” then an anti-suit injunction
is necessary to protect the issuing court’s jurisdiction. Laker Airways Ltd., 731 F.2d at 915. Here,
Gamma’s motion to stay the instant action demonstrates its desire to terminate the United States
claim to further its lawsuit in Italy. ECF No. 26. Moreover, were this Court to decline to issue an
anti-suit injunction and allow both cases to proceed concurrently, the Italian court could reach a
decision on the merits prior to this Court rendering a decision. In that event, the Court could either
refuse to act, allowing the Italian court’s ruling govern and in essence abstain from properly
exercising jurisdiction over the dispute. Or, it could act after the Italian court. A subsequent ruling
that resulted in a holding opposite from that of the Italian court would present the parties with the
Hobson’s Choice of trying to act in a singular manner to abide by conflicting rulings. Given these
undesirable alternatives, an anti-suit injunction is warranted here to protect this Court’s jurisdiction.
d.

Whether other equitable considerations would be prejudiced

Custom also declares that the final factor under the liberal approach, whether other equitable
considerations would be prejudiced, weighs in favor of an anti-suit injunction. ECF No. 8-1 at 1617. As the Court has already held, South Carolina is a more convenient forum than Italy to
adjudicate this dispute because the majority of the parties, witnesses, documentary evidence, and
physical evidence are located in either South Carolina, Alabama, or North Carolina. This Court
holds that “allowing simultaneous prosecution of the same action in a foreign forum thousands of
miles away would result in inequitable hardship and tend to frustrate and delay the speedy and
efficient determination of the cause.”

See Unterweser Reederei, Gmbh, 428 F.2d at 896.

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Consequently, this factor also favors issuance of an anti-suit injunction. For all of these reasons, an
anti-suit injunction is warranted under the liberal approach.
2.

Whether an anti-suit injunction is warranted under the restrictive approach

The Court will next utilize the restrictive approach to determine whether an anti-suit
injunction is warranted in this case. Courts adhering to the restrictive approach place greater
emphasis on principles of international comity, and recognize that an anti-suit injunction is
appropriate where the foreign action threatens (1) the jurisdiction of the district court and (2)
important public policies of the forum. See, e.g., Gau Shan Co., 956 F.2d at 1355. In contrast to
the liberal approach, where a showing of only one of the factors is sufficient to warrant an anti-suit
injunction, both factors must be met under the restrictive approach. See id.
Here, the Court has already examined the factors to be evaluated under the restrictive
approach in its discussion of the liberal approach above and found that both factors weigh in favor
of an anti-suit injunction. Specifically, the Court’s jurisdiction is threatened by the Italian action
because Gamma’s motion to stay demonstrates the interdictory nature of the Italian action.
Furthermore, as noted before, allowing both cases to proceed concurrently could present an
untenable situation wherein this Court would either abstain from properly exercising its jurisdiction
or force the parties to choose to abide by conflicting rulings. These problematic courses of action
convince the Court that its jurisdiction is threatened by the Italian action.
Moreover, the Italian action threatens the public policies of this forum. Particularly, as
detailed more fully above, the Italian case threatens the public policy of enforcing the provisions of
the parties’ contractual agreement providing that South Carolina law governs disputes under the
contract. Additionally, the Italian lawsuit threatens the public policy favoring judicial economy, as

25

permitting the Italian action and this action to proceed concurrently would result in simultaneous
prosecution of the same issues in jurisdictions separated by thousands of miles. The public policy
of having localized controversies resolved at home also would be frustrated by allowing the Italian
suit to proceed. Consequently, under the restrictive approach, an anti-suit injunction is warranted
because both of the factors are satisfied.
Although courts employing the restrictive approach place strong emphasis on principles of
international comity, it simply cannot be said that the grant of the anti-suit injunction in this case
actually threatens relations between the United States and Italy. See Kaepa, Inc., 76 F.3d at 627.
Notably, no public international issue is implicated in this case, as Custom, Gamma, and Innovative
are all private parties engaged in a contractual dispute with each other. See id. Additionally, the
contract at issue stipulates that South Carolina law will be utilized should any dispute arise. See id.
The agreement also contains Custom’s submission to this Court’s jurisdiction, making it self-evident
that South Carolina is the proper forum to hear the dispute. Therefore, issuing an anti-suit injunction
in this case in no way “trample[s] on notions of comity.” See id.
3.

Whether an anti-suit injunction is necessary to avoid a miscarriage of justice

Because the Fourth Circuit has failed to adopt a particular approach toward the propriety of
granting an anti-suit injunction in a given case, the Court will also consider the third approach taken
by a minority of courts. As noted above, these courts have held that “each request for an injunction
must be carefully examined to determine whether . . . the injunction is required to prevent an
irreparable miscarriage of justice.” Laker Airways Ltd., 731 F.2d at 927. “When the availability of
the domestic courts is necessary to a full and fair adjudication of the plaintiff’s claims, a court
should preserve that forum.” Id. at 931-32.

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Using this approach, Custom maintains that the Italian court where the Italian action is
pending fails to provide for jury trials, limits accessibility to attorneys, and prohibits broad
discovery. ECF No. 8-1 at 18; ECF No. 28-5 at 2. For these reasons, this Court holds that an antisuit injunction is necessary to avoid a miscarriage of justice as to Custom in this case, primarily
because the Italian action threatens to deprive Custom of the important right to a jury trial. See
Dimick v. Schiedt, 293 U.S. 474, 486 (1935) (“Maintenance of the jury as a fact-finding body is of
such importance and occupies so firm a place in our history and jurisprudence that any seeming
curtailment of the right to a jury trial should be scrutinized with the utmost care.”). Accordingly,
an anti-suit injunction is warranted under all three approaches taken by courts that have examined
the propriety of granting an anti-suit injunction.

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V.

CONCLUSION
Wherefore, based on the foregoing discussion and analysis, it is the judgment of this Court

that Gamma’s motion to stay is DENIED, whereas Custom’s motion for an anti-suit injunction is
GRANTED.
Further, IT IS HEREBY ORDERED, ADJUDGED, AND DECREED that Gamma is to
abort prosecution of the parallel Italian litigation initiated on December 1, 2015, in the Court of
Reggio Emilia, Italy, pending this Court’s resolution of the parties’ dispute, and Gamma shall file
a certification with this Court affirming that it has done so not later than Friday, May 6, 2016.
IT IS SO ORDERED.
Signed this 3rd day of May, 2016, in Columbia, South Carolina.
s/ Mary Geiger Lewis
MARY GEIGER LEWIS
UNITED STATES DISTRICT JUDGE

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