Opinion
Case No. C08-1146 MJP.
February 12, 2009
ORDER GRANTING DEFENDANTS' MOTION TO DISMISS
This matter comes before the Court on Defendants' motion to dismiss or stay. (Dkt. No. 7.) After reviewing the motion, Plaintiffs' response (Dkt. No. 19), Defendants' reply (Dkt. No. 26), and all papers submitted in support thereof, the Court GRANTS the motion and hereby dismisses this action without prejudice.
Background
In 2005, Washington company Elee LLC ("Elee") entered a franchise agreement with Vino 100 LLC ("Vino 100"), a Delaware company with its principal place of business in Pennsylvania. (Dkt. No. 17.) In June 2008, Vino 100 filed an action in the Eastern District of Pennsylvania alleging Lanham Act violations and breach of contract. Vino 100, LLC v. Elee, LLC, No. 08 Civ. 2749 (E.D. Pa. filed Jun. 12, 2008). The Pennsylvania court has since denied Elee's motion to dismiss and transfer that action to this District; a motion for reconsideration of that order is still pending. (Id. at Dkt. No. 33, Dkt. No. 35.) In August 2008, Plaintiffs initiated an action in this District, alleging violations of the Washington Franchise Investment Protection Act ("FIPA"), fraudulent misrepresentation, and breach of contract. (Dkt. No. 1.)
Analysis
The first-to-file rule "permits a district court to decline jurisdiction over an action when a complaint involving the same parties and issues has already been filed in another district."Pacesetter Sys., Inc. v. Medtronics, Inc., 678 F.2d 93, 94-95 (9th Cir. 1982). The rule "should not be disregarded lightly" because it is designed to promote efficiency. Church of Scientology of Cal. v. U.S. Dep't of Defense, 611 F.2d 738, 750 (9th Cir. 1979).
This case meets the prerequisites of the first-to-file rule because (1) the Pennsylvania action was initiated before the present action; (2) the same parties are involved in both actions; and (3) the claims in both actions arise out of the franchise relationship between the parties. See Alltrade, Inc. v. Uniweld Prods., Inc., 946 F.2d 622, 625 (9th Cir. 1991).
The first-to-file rule is not rigid and need not be applied in exceptional circumstances such as bad faith and forum shopping.Id. at 628. This case does not fall within those exceptions. Washington's interest in interpreting and enforcing its own laws does not create an exception to the first-to-file rule. See Knedlik v. Lincoln Inst. of Land Policy, No. 88-3574, 1989 WL 96434, at *3-*4 (9th Cir. Aug. 17, 1989) (holding that Washington's interest in protecting its citizens from employment discrimination as expressed in RCW 49.60 was not an exceptional circumstance).
The Pennsylvania court denied Plaintiffs' motion to dismiss and transfer that action to this District, Vino 100, LLC v. Elee, LLC, No. 08 Civ. 2749 at Dkt. No. 33 (E.D. Pa. filed Jun. 12, 2008), and "the forum non conveniens argument should be addressed to the court in the first-filed action." Pacesetter, 678 F.2d at 96. The Pennsylvania court will apply Washington law when necessary and honor the contract provisions to the extent they are enforceable. See Palcko v. Airborne Express, Inc., 372 F.3d 588, 594-96 (3d Cir. 2004) (determining that a Pennsylvania district court should enforce the parties' agreement under Washington state law).
Conclusion
Because the Pennsylvania action was first-filed and this case involves no exceptional circumstances, the Court hereby GRANTS Defendants' motion to dismiss without prejudice.
The Clerk is directed to send a copy of this order to all counsel of record.