The question before us is whether a federal court in a pending suit may await the outcome of a state court action between the same parties in which all but one of the issues are identical, that one issue being a claim for damages over which the federal court has exclusive jurisdiction. The question forms the basis for a petition for a writ of mandamus against United States District Judge Hubert L. Will of the Northern District of Illinois. We grant the writ.
Plaintiff-petitioner Calvert Fire Insurance Company writes property and casualty insurance. Calvert’s antagonist, American Mutual Reinsurance Company, engages in the business of rеinsurance. For many years American Mutual has operated a reinsurance pool known as the “Multiple Line Pool.” Fire and casualty policies underwritten by primary insurance companies are reinsured by American Mutual which in turn lessens its reinsurance risks by enlisting other insurance companies to еnter into a pool arrangement. These companies earn a pro rata share of the excess of American Mutual’s premiums over the sum of losses paid primary insurers and a management fee. If losses exceed premiums the pool members are obligated to indemnify American Mutuаl.
Calvert is a member of the pool. Prior to its entrance in early 1974, there were discussions between Calvert and American Mutual officials during which Calvert asserts it sought financial data from American Mutual. Although apparently available, the data was not furnished. In March 1974 Calvert received from American Mutual its first statement which reflected extremely high reserves for incurred but not reported losses for the months of January and February 1974. In April American Mutual’s 1973 annual report showed an inordinately high loss and expense ratio. Calvert, having found itself pro rata accountable for the pool’s substantial losses, concluded that it had been fraudulently induced to participate in the pool because of American Mutual’s withholding of material information during the negotiation of the agreement. Calvert notified American Mutual that it intended to rescind its agreement to participate in the pool. Simultaneous litigation soon followed in both state court and federal court. A summary of the state and federal actions is set forth in parallel columns.
On February 5, 1975 American Mutual moved to abate or, in the alternative, to dismiss the federal court action. The abatement motion was based on the fact that six mоnths previously American Mutual had initiated its declaratory judgment action in the Circuit Court of Cook County. The motion to dismiss was based on American Mutual’s contention that the reinsurance contract executed by the parties did not constitute a sale by American Mutual of a security under either the Securitiеs Act of 1933 or the Securities Exchange Act of 1934.
On May 6,1975 Judge Will issued a memorandum opinion and order on American Mutual’s motion to abate. The order stayed all claims alleged in Calvert’s complaint, except its claim for money damages under Rule 10b-5 of the Securities Exchange Act of 1934. The district court’s jurisdiсtion over the latter claim was specifically retained by the terms of the order. On May 9,1975 Judge Will heard oral argument on the primary issue underlying the claim for damages: whether a participatory interest in the reinsurance pool is a security. The judge has not ruled on this issue.
On June 16, 1975 the judge in the state court dеclaratory judgment action ruled that participatory interests in the reinsurance pool are not securities and that application of the federal securities laws was barred by the McCarren-Ferguson Act, 15 U.S.C. §§ 1011-15. Calvert appealed from this ruling to the Illinois Appellate Court, which affirmed the trial court’s decision.
On two occasions subsequent to the abatement order Calvert requested the district judge to reconsider his order. He refused the requests, and also refused to rule on the claim for damages under Rule 10b-5 over which he retained jurisdiction. He has declined to permit interlocutory reviеw of his order.
Calvert recognizes that the district court’s order staying proceedings on most of Calvert’s federal complaint is not appeal-able because it is not a final order. See Cotler v. Inter-County Orthopaedic Ass’n, P.A., 526 F.2d 537, 540 (3d Cir. 1975). It therefore seeks review of the district court’s action by petitioning for a writ of mandamus. In its petition it asks us to requirе Judge Will to adjudicate its entire claim — both for equitable relief and for damages — under the Securities Exchange Act of 1934.
I
A writ of mandamus is an extraordinary remedy which we will not easily grant. In
II
The district court relied principally upon this court’s decision in Aetna State Bank v. Altheimer,
The district court’s reliance on Aetna was not misplaced. Although Calvert struggles to distinguish the case at bar from Aetna, the factual parallelism between the two cases is overwhelming. Thus, the district court’s order was correct at the time it was entered.
Since that time, however, the Supreme Court has decided Colorado River Water Conservation District v. United States,
In Colorado River the Supreme Court stated that, in cases of contemporaneous exercise of cоncurrent jurisdiction by a state court and a federal court, the federal court generally has an obligation to exercise its jurisdiction. The Court reaffirmed the rule of McClellan v. Carland,
After making it clear that only exceptional circumstanсes would ever warrant deference to a state court in cases of concurrent state and federal jurisdiction, the Court found such circumstances in Colorado River. In that ease the United States brought an action in federal court asserting water right claims. One of the defendants attempted to make the United States a party to a state action in order to adjudicate all of the Government’s claims. The most important factor warranting dismissal of the federal action was the existence of the McCarran Amendment, 43 U.S.C. § 666, providing for consent to join the United States in a state suit for adjudication or administratiоn of water rights. The federal policy evinced by that amendment was one of avoiding piecemeal litigation and the disruption of a complicated and extensive system of state allocation and adjudication of water rights, such as the one employed by the State of Colorado.
The instant case differs from Colorado River in that the district court did not dismiss Calvert’s federal action. Instead, it stayed
We do not find any exceptional circumstances in the instant case. The federal forum was not inconvenient for the parties, and the state court did not obtain conсurrent jurisdiction before the federal court since the counterclaim and the federal action were filed on the same day. Piecemeal litigation can best be avoided by the federal court, which has exclusive jurisdiction over the Rule 10b-5 claim. Finally, the strong federal interest in the regulation of securities and the grant of exclusive jurisdiction in the federal courts to adjudicate claims under the Securities Exchange Act of 1934 are compelling factors which weigh heavily against deference to state proceedings.
The rationale developed in Aetna can no longer stand in light of the Supreme Court’s decision in Colorado River. Aetna therefore is overruled as the law of this circuit.
The petition for a writ of mandamus is granted and the writ shall issue forthwith.
Notes
. The petition does not mention the claims for ■equitable and monetary relief under the Securities Act of 1933 or state law contained in Calvert’s federal complaint.
. Calvert’s position is that: “Although Judge Will’s Opinion states that Calvert’s Rule 10b-5 claim is ‘viable,’ his subsequent rulings have, in effect, stayed that claim as well.”
. The district court granted American Mutual’s motion to “abate,” but stated specifically that it was “staying” all but the Rule 10b-5 damages claim. In Aetna, we defined abatement
. This opinion has been circulated among all judges in regular active service. A majority of the judges did not favor rehearing en banc on the question of overruling Aetna.
Circuit Judge Pеll, however, filed the following statement in which Chief Judge Fairchild and Circuit Judges Tone and Bauer joined:
The panel’s opinion in this case was circulated to all judges of the court in regular active service. Four of the eight judges voted to rehear the case en banc insofar as it overruled Aetna State Bank v. Altheimer,
These principles announced in Aetna were not particularly new. The foregoing extracts from Aetna relied upon Landis v. North American Co.,
It would seem that the judicial demise of the rationale of Aetna, a salutary rationale in the context of the overburdened federal courts, would warrant en banc reconsideration at the very least, bearing in mind that during the seven years of Aetna’s viability it has been followed and relied upon here and elsewherе and that its application would at most assume the form of a discretionary stay and not a dismissal as in Colorado River. In that case, of course, the Court upheld the dismissal of the federal action.
It is difficult to think that the Colorado River language that “[ojnly the clearest of justification will warrant dismissal,”
Unfortunately for the continued availability to district court judges of the Aetna concept
. As we have alreаdy noted, Calvert’s petition did not refer to its claim under the Securities Act of 1933 which the district court had stayed. See note 2 supra. The logic behind our holding in this case supports the conclusion that the stay of 1933 Act claims, as well as the 1934 Act claims, was improper. Although we will not order the district court to immediately decide the 1933 Act claims because the issue is not before us, the district court should consider revoking the stay of the 1933 Act claims if Calvert moves for such relief.