MEMORANDUM OPINION AND ORDER
This trademark action is before the Court on motions concerning the appropriate forum for the litigation. Plaintiff Everest Capital (“Everest Capital” or “Plaintiff’) is a Bermuda corporation that provides investment management services and has its principal place of business in Bermuda. Defendants Everest Funds Management (“EFM”) and Everest Funds (“EF”), both Delaware corporations, offer investment management services and operate principally out of the state of Nebraska. Vinod Gupta (“Gupta” and, with EFM and EF, “Defendants”) is president and sole shareholder of EFM and also serves EF as its president and in other leadership positions. On May 18, 2001, following several months of correspondence between the parties’ representatives concerning Plaintiffs assertion that Defendants’ use of the term “Everest” violates Plaintiffs trademark rights, EFM filed in the United States District Court for the District of Nebraska, but did not serve, a complaint, in an action against Everest Capital, seeking a declaratory judgment on the issue of EFM’s use of the term “Everest.” 1 On May 23, 2001, Plaintiff Everest Capital commenced this action, seeking damages and injunctive relief, and Plaintiff served its complaint on Defendants on May 25, 2001.
Defendants seek to dismiss this action pursuant to Federal Rule of Civil Procedure 12(b)(2), for lack of personal jurisdiction over the parties, or Rule 12(b)(3), for improper venue in this District, or on the grounds that EFM’s action was the first filed. Alternatively, Defendants seek to have this action transferred to the United States Court for the District of Nebraska pursuant to 28 U.S.C. § 1404, or to stay the proceedings in this Court to allow the Nebraska action to go forward. Also pending before the Court is Plaintiffs cross-motion to preliminarily enjoin Defendants from further prosecuting the action commenced in the District of Nebraska. The parties do not dispute that the subject matter of the two actions is largely identical.
The Court has considered thoroughly all arguments made in support of and in opposition to the pending motions. For the reasons that follow, the instant action will be transferred to the United States District Court for the District of Nebraska.
The “Firsfc-Filed” Rule
It is a “well-settled principle in this Circuit that where there are two competing lawsuits, the first suit should have priority, absent the showing of balance of convenience or special circumstances giving priority to the second.”
First City Nat'l Bank and Trust Co. v. Simmons,
Ample discretion is left to the lower courts in administering multifaceted litigation; courts are not to apply rules rigidly or mechanically.
See Kerotest Mfg. Co. v. C-O-Two Fire Equipment Co.,
In the ... situation where each side, after a breakdown in settlement negotiations, engages in a race to the courthouse to achieve “first filed” status, the courts should be concerned with what the interests of justice require and not with who won the race.
Nat’l Patent,
At a pre-trial conference that was held in this matter on November 9, 2001, counsel for Defendants further represented that EFM had requested the Nebraska court to authorize service on Plaintiff in Bermuda pursuant to the Hague Convention, which request was granted on October 22, 2001, that EFM is continuing in its efforts to serve Everest Capital, and that the Nebraska district court has granted an extension of time to that end. (Tr. at 5.) It would be unjust to permit Everest Capital to benefit from the first-filed rule where, but for its success in resisting the effectuation of service, Defendants might have effected service in the Nebraska suit some time ago.
Accordingly, the Nebraska suit is properly regarded as the first filed. Absent any exception to the rule that would apply here, the Nebraska suit should be allowed to proceed.
2
The Court thus turns to the question of whether the litigation in this District should nonetheless take precedence, either because the balance of convenience favors litigation here or because special circumstances justify deviation from the first-filed rule.
See, e.g., 800-Flowers, Inc. v. Intercontinental Florist, Inc.,
Exceptions to the First-Filed Rule: Balance of Convenience and Venue Concerns
“The general rule in this Circuit is that, as a principle of sound judicial admin
The factors relevant to the balance of convenience analysis are essentially the same as those considered in connection with motions to transfer venue pursuant to 28 U.S.C. § 1404(a).
See Nat'l Patent,
The balance of convenience tips in favor of this action proceeding in Nebraska, as opposed to New York.
Convenience of the Witnesses
The most significant factor to be decided on a motion to transfer venue is the convenience of party and non-party witnesses.
See TM Claims Service v. KLM Royal Dutch Airlines,
Location of Relevant Documents and Ease of Access to Sources of Proof
The availability of documentary evidence weighs in favor of allowing the action to proceed in Nebraska. Everest Capital has not identified any documentary evidence it would need to retrieve from New York to defend the action in Nebraska. Despite the presence of a significant number of Plaintiffs brokers in New York (Stott Aff. ¶ 14), Plaintiff has not asserted that either the brokers or any documents in their possession would be necessary to prosecute the action. Defendants have indicated that all of their relevant documents, primarily relating to the formation of the Defendant entities and the use of the word “Everest” in connection with their services, are located in Omaha, Nebraska (Larson Decl. ¶ 8). Availability of documentary evidence thus weighs in favor of prosecution of the litigation in Nebraska.
Convenience of the Parties
The parties would likely be significantly more inconvenienced by litigating this action in New York, as opposed to Nebraska. Defendant EFM has no offices or real property holdings in New York. (Larson Decl. ¶ 3.) The Defendants operate their business in Nebraska and, to a limited extent, Milwaukee, Wisconsin. (Larson Decl. ¶ 8.) Plaintiff Everest Capital, a Bermuda corporation with its principal place of business in Bermuda, has not asserted that it has facilities for operation of its business in New York. Everest Capital asserts, rather, that it would be inconvenient for Stott to travel to Nebraska and that, if the action proceeds in this District, Stott would be able to attend to other business on his trips to this District. (Stott Aff. ¶ 16.) This is, simply, insufficient to tip the balance in favor of Everest Capital on the factor of convenience to the parties.
Locus of Operative Facts
The locus of operative facts centers in Nebraska, rather than New York. Everest Capital argues that this District is the locus of operative facts based on the likelihood of confusion of the public in this District. Specifically, Plaintiff argues that: potential future investors or current investors in this District could be misled by reading about Defendants in popular New York publications, such as
The Wall Street Journal,
and then, seeking to learn more about Defendants’ funds, may conduct a key word search on an internet search engine that would lead them to Defendants’ web site, causing such potential and present investors to conclude that such web site is affiliated with, or endorsed by, Plaintiff (Stott Aff. ¶ 13), and that Defendants may thereby capitalize unfairly on Plaintiffs reputation; that Plaintiffs relationships with brokers of Everest Capital Funds portfolios could be soured if
Availability of Process to Compel Attendance of Unwilling Witnesses
Everest Capital asserts that critical witnesses are “members of the relevant public,” Pl.’s Mem. in Opp. to Mot. to Dismiss, Transfer or Stay and in Supp. of Pl.’s Cross-Mot. to Preliminarily Enjoin Defts. from Further Prosecuting a Related Action (“Pl.’s Memo”) at 16-17, and its investors, who are likely to be located in this District, “the financial center of the nation.” (PL’s Memo at 13.) Plaintiff also asserts, however, that this is not a case in which live testimony will be necessary to the infringement analysis in light of the documentary evidence available. (PL’s Memo at 19.) Defendants, on the other hand, assert that EFM’s only customer is the fund that it manages, The Everest3 Fund, and that neither entity has an investor who is a resident of New York. (Larson Decl. ¶ 3.) The anticipated witnesses Defendants identify are all likely to be located in Nebraska or in the Upper Midwest, according to Defendants. (Id.)
Neither party has shown persuasively that compulsory service of process for third party witnesses is likely to be more problematic in either forum. This factor therefore carries little weight in the balance of convenience, tipping slightly, if at all, in favor of Defendants because they have identified witnesses in the proposed transferee forum.
Relative Means of the Parties
“Where a disparity exists between the means of the parties, a court may consider the relative means of the parties in determining venue.”
Aerotel,
The Court declines to join Plaintiff in speculating about Defendants’ possible use of personal or third party resources. The Court notes that the “assets under management” information provided by both sides is less than helpful — this rubric refers to funds of others held for management by the various investment entities and does not inform the reader as to the income, capital or expenses of the parties. Nonetheless, to the extent that a larger amount of assets under management suggests greater income by way.of management fees, it appears that Plaintiffs resources are significantly greater than those of Defendants and that litigation in this District would likely pose a much greater burden on Defendants, given the extensive travel likely to be involved, than the burden posed on Plaintiff to litigate in Nebraska. This factor therefore weighs in favor of Defendants.
Familiarity with the Governing Law
The forum’s familiarity with governing law favors neither party. Although Everest Capital asserts state law claims, such claims are corollary to their federal trademark claims and do not present complex questions of law.
See Merkur v. Wyndham Int'l;
No. 00 Civ. 5843,
Weight Accorded Plaintiff’s Choice of Forum
The weight accorded plaintiffs choice of forum favors Defendants. Defendants are entitled to the benefit of choosing their own forum because, although they are named as defendants in this action, for purposes of this analysis they are the true plaintiffs in interest because, as explained below, the suit commenced in Nebraska was not initiated by an improper anticipatory filing.
See Ontel Prods., Inc. v. Project Strategies Corp.,
Trial Efficiency and Interests of Justice
This factor is based on the totality of the circumstances and may be determi
In sum, the balance of convenience and interests of justice weigh in favor of transfer of this action to Nebraska.
Special Circumstances
The final issue to be addressed in connection with the first-filed rule is whether special circumstances justify deviation from the general application of that rule. Special circumstances justifying an exception to the rule exist where the first suit is prompted by an “improper anticipatory filing” or was solely the result of forum shopping.
Reliance Ins. Co.,
Plaintiff asserts that it pursued settlement discussions in an attempt to avoid wasting judicial resources and that Defendants “lured Everest Capital into believing settlement discussions were still ongoing in order to exploit the FirsF-Filed Principle.” (Pl.’s Memo at 9.) Plaintiffs assertion of concern for the conservation of judicial resources is belied by the filing in this district of its suit, which mirrors the Nebraska action, and Everest Capital’s resistance to receipt of process of service in the Nebraska action, which resistance appears itself to have wasted limited judicial resources by requiring the intervention of the Nebraska district court.
In determining whether there was an improper anticipatory filing, courts look to the nature of the first filed action (whether it was a declaratory judgment action), and whether it was filed after sufficient notice of a planned lawsuit by the other party.
See Abovepeer, Inc. v. Recording Ind. Ass’n of America, Inc.,
The fact that an action is one seeking a declaratory judgment does not, however, necessarily mean that it is an improper anticipatory filing.
See id.,
There is, furthermore, no indication that Defendants were engaging in improper forum shopping when they initiated suit in Nebraska. “Forum shopping occurs when a litigant selects a forum with only a slight connection to the factual circumstances of his action, or where forum shopping alone motivated the choice.”
Riviera Trading Corp. v. Oakley, Inc.,
The Court finds, under the circumstances of the case, that EFM’s commencement of the Nebraska action did not constitute an improper anticipatory filing or impermissible forum shopping.
The balance of convenience weighing in favor of allowing the Nebraska action to proceed, and there being no other special circumstances to overcome the presumption that the forum in which an action is first filed is where such action should proceed, the litigation will be permitted to go forward in Nebraska.
Dismissal or Transfer
Defendants’ motion seeks dismissal of the instant action or, in the alternative, transfer of this action to the Nebraska forum. In light of the difficulties that EFM has encountered in effectuating service of process in the Nebraska action and given that all parties have thus far participated in litigation of the instant action, the Court will grant Defendants’ motion insofar as it seeks to transfer this case to the United States District Court for the District of Nebraska. As explained above, the factors relevant to the determination of whether to transfer an action pursuant to 28 U.S.C. § 1404(a) favor the Nebraska forum. The Nebraska court will be in a better position to determine whether this action should be consolidated with the pending action or dismissed, and to address any remaining personal jurisdiction issues.
Conclusion
For the reasons stated above, Defendants’ pending motion is granted insofar as it seeks transfer of this action to the United States District Court for the District of Nebraska. The motion is denied insofar as it seeks dismissal of the action or a stay of proceedings in this Court. In light of the Court’s determination that the parties’ litigation should proceed in Nebraska, Plaintiffs cross-motion to enjoin preliminarily the Nebraska litigation is denied.
SO ORDERED.
Notes
. Although it was EFM that filed the complaint in Nebraska, in the submissions filed in this action, the parties refer to EFM and the Everest Defendants interchangeably as the plaintiffs in that action, as does the Court in this opinion. The parties do not dispute that this and the Nebraska action involve the same parties and issues.
. Everest Capital argues that, even if this Court finds that the filing of the Nebraska action takes precedence over the service of the complaint in the action in this Court for purposes of the first-filed rule, the Nebraska district court would take the opposite approach and is thus likely to defer to pending litigation in this Court. Everest cites for this proposition language in a 1993 Eighth Circuit decision referring to the attachment of jurisdiction as the operative event for purposes of the first-filed rule.
See Northwest Airlines v. American Airlines,
. These questions would ordinarily be addressed by the court in which the "first-filed’' case is pending.
See Citigroup, Inc.
v.
City Holding Co., 91
F.Supp.2d 549, 556 n. 4. However, because of the service issues outlined above, this Court is currently the only one with all of the relevant parties before it. At the core of the first-filed rule is the principle of sound judicial administration.
See First City Nat'l Bank & Trust Co. v. Simmons,
. Plaintiff contends that Defendants fail to meet their burden as to this factor because they have not provided the Court with a list of key witnesses and a general statement as to why the witnesses’ testimony would be material to the dispute. Defendants have provided
. See infra.