IBC Manufacturing Company v. Berkshire Hathaway Specialty Insurance Company, 3:16-cv-00908

Background

Chapman Chemical (later IBC) operated a Portland, OR facility and purchased various liability and umbrella policies from defendants (Berkshire, Hartford, First State, American) covering operations at the Chapman Property.
Joslyn and the Oregon DEQ asserted contamination claims related to the Chapman Property; IBC repeatedly sought defense and indemnity from insurers between Aug 2015 and May 2016.
Berkshire reserved rights and denied coverage based on a Pollution Exclusion; Hartford/First State/American either refused coverage or defended under reservation of rights.
Berkshire filed a declaratory-judgment action in the Western District of Tennessee on May 10, 2016 seeking declaration of the insurers’ coverage obligations; IBC filed a substantially similar declaratory and breach-of-contract action in the District of Oregon on May 24, 2016.
Defendants moved to dismiss the Oregon action under the first-to-file rule; the Oregon court found the Tennessee action first-filed, the parties and issues identical, and no equitable exception applied.
The Oregon court dismissed IBC’s complaint without prejudice in favor of the Tennessee action (statute-of-limitations considerations weighed against staying the case).

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether the first-to-file rule requires dismissal of the Oregon action	IBC argued the Tennessee suit was an anticipatory, improper forum-shopping declaratory action and that Oregon is the natural forum	Defendants argued Berkshire filed first in IBC’s home forum and the suits involve identical parties and issues, justifying deference to the first-filed action	Court held Tennessee action was first-filed, parties and issues were identical, and no equitable exception applied; dismissed Oregon action without prejudice
Whether anticipatory-suit/forum-shopping exception applies	IBC: Berkshire filed to preempt IBC given alleged substantive connections to Oregon and choice-of-law advantages	Defendants: Berkshire had a legitimate preexisting motive to obtain a timely judicial declaration and filed in an appropriate forum (IBC’s home)	Court held no specific, concrete indications that IBC was deprived of its forum; anticipate/forum-shopping exception did not apply
Whether court should consider relative convenience/factual complexity (e.g., site-specific pollution facts)	IBC: Oregon is more convenient and fact-intensive pollution issues favor Oregon forum	Defendants: Convenience should be addressed by the first-filed court; not a reason to deny first-to-file deference	Court declined to weigh convenience; left such considerations to the Tennessee court
Appropriate remedy under first-to-file rule (dismiss, stay, or transfer)	IBC: dismissal would prejudice plaintiff	Defendants: dismissal preferred given statute-of-limitations safety and judicial economy	Court dismissed without prejudice (not a stay) because Oregon’s six-year statute of limitations meant IBC could refile if necessary

Key Cases Cited

Cedars-Sinai Medical Center v. Shalala, 125 F.3d 765 (9th Cir.) (first-to-file rule permits transfer, stay, or dismissal)
Alltrade, Inc. v. Uniweld Products, Inc., 946 F.2d 622 (9th Cir.) (first-to-file rule should not be disregarded lightly; lists equitable exceptions)
Pacesetter Systems, Inc. v. Medtronic, Inc., 678 F.2d 93 (9th Cir.) (first-to-file rule applied flexibly for judicial administration)
Kohn Law Group, Inc. v. Auto Parts Mfg. Miss., Inc., 787 F.3d 1237 (9th Cir.) (framework: chronology, parties, issues)
Gov’t Employees Ins. Co. v. Dizol, 133 F.3d 1220 (9th Cir.) (insurers may bring declaratory actions against insureds in federal court)
Mission Ins. Co. v. Puritan Fashions Corp., 706 F.2d 599 (5th Cir.) (forum-shopping/anticipatory-suit analysis)
Inherent.com v. Martindale-Hubbell, 420 F. Supp. 2d 1093 (N.D. Cal.) (anticipatory-suit exception when clear, imminent suit was thwarted by first filer)