80 F. Supp. 3d 553
M.D. Penn.2015Background
- SCC operates a Black Angus cattle farming business with operations in Pennsylvania, Wyoming, Virginia, West Virginia, Montana, and Nebraska.
- Ward, formerly SCC president/CEO, managed day-to-day operations and finances; Rebecca Ward also worked at SCC in office management.
- In September 2013, following an internal investigation, SCC terminated the Wards for alleged misappropriation of funds and property.
- In March 2014, settlement discussions occurred; the Wards submitted offers on March 20 and 25, 2014, and SCC indicated it would respond with a counterproposal by a few days later.
- SCC filed the instant action in June 2014 alleging fiduciary breaches and fraud; the Wards filed a separate action in Wyoming on July 3, 2014.
- The Wards moved to dismiss for improper venue or, alternatively, to transfer or stay under 28 U.S.C. § 1404(a); the court denied the motion.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the first-filed rule bars the instant action | SCC argues Pennsylvania action should proceed as first-filed matter. | Ward contends the first-filed rule should not apply due to bad faith/anticipatory filing and forum shopping. | First-filed rule applies; no exception warranted. |
| Whether any exception to the first-filed rule applies | SCC asserts no exceptional circumstances negate the rule. | Ward asserts bad faith/anticipatory filing and inequitable conduct justify departing from the rule. | No exceptional circumstances proven; no departure from first-filed rule; order denies dismissal/transfer. |
| Whether a transfer under § 1404(a) to Wyoming is appropriate | SCC argues Pennsylvania is proper; transfer is unnecessary. | Ward claims Wyoming is the proper forum; argues private/public factors support transfer. | Transfer not appropriate; factors favor retention in Pennsylvania. |
Key Cases Cited
- EEOC v. Univ. of Pa., 850 F.2d 969 (3d Cir. 1988) (first-filed rule promotes comity among courts)
- Synthes, Inc. v. Knapp, 978 F. Supp. 2d 450 (E.D. Pa. 2013) (flexible application of first-filed rule; overlap of subject matter)
- Koresko v. Nationwide Life Ins. Co., 403 F. Supp. 2d 394 (E.D. Pa. 2005) (bad faith, anticipatory filing, and forum-shopping considerations)
- FMC Corp. v. AMVAC Chem. Corp., 379 F. Supp. 2d 733 (E.D. Pa. 2005) (bad faith/anticipatory action considerations in first-filed analysis)
- IMS Health, Inc. v. Vality Tech. Inc., 59 F. Supp. 2d 454 (E.D. Pa. 1999) (settlement negotiations and timing of filings relevant to first-filed analysis)
- Pittsburgh Logistics Sys., Inc. v. C.R. Eng., Inc., 669 F. Supp. 2d 613 (W.D. Pa. 2009) (bad faith/anticipatory filing and timely settlement signals as exceptional circumstances)
- Shire U.S., Inc. v. Johnson Matthey, Inc., 543 F. Supp. 2d 404 (E.D. Pa. 2008) (subject-matter overlap governs first-to-file inquiry)