Opinion
Civil No. 03-6105 ADM/AJB
December 31, 2003
David P. Pearson, Esq., and Elizabeth De Courcy, Esq., Winthrop Weinstine, P.A., Minneapolis, MN, for Plaintiffs
John F. Morrow, Jr., Esq., Womble Carlyle Sandridge Rice, PLLC, Winston-Salem, NC and Brian W. Hayes, Esq., Carlson, Caspers, Vandenburgh Lindquist P.C., Minneapolis, MN, for Defendants
MEMORANDUM OPINION AND ORDER
I. INTRODUCTION
On December 5, 2003, Plaintiffs Federal Cartridge Company and Alliant Techsystems, Inc.'s (collectively, "Plaintiffs" or "Federal Cartridge") Motion to Enjoin [Docket Nos. 2, 6] was argued before the undersigned United States District Judge. Prior to this hearing, Defendants Remington Arms Company, Inc. and RA Brands LLC (collectively, "Defendants" or "Remington") filed a Motion to Transfer or Stay this action [Docket No. 8], raising essentially the same issues as those in Plaintiffs' Motion. Plaintiffs seek to prevent Defendants from going forward with a parallel declaratory judgment action filed against Plaintiffs in North Carolina, while Defendants ask the Court to defer to the North Carolina District Court for further proceedings. For the reasons set forth below, Plaintiffs' Motion is denied and Defendants' Motion is granted in part and denied in part.
II. BACKGROUND
The present Motions relate to an underlying trademark infringement dispute between the parties, both of which manufacture ammunition and related firearms products. On October 30, 2003, Plaintiffs sent Defendants a cease and desist letter accusing Defendants of infringing Plaintiffs' five registered trademarks. The letter threatened potential litigation if Defendants failed to respond promptly to Plaintiffs' requests, stating in relevant part:
Plaintiffs claim ownership of five federally registered trademarks: 1) GOLD DOT®; 2) GOLD MEDAL®; 3) KNOCKDOWN POWER®; 4) PREMIUM®; and 5) FEDERAL PREMIUM®. Compl. ¶¶ 9-21.
In an effort to resolve this dispute amicably, our clients would be willing to consider forgoing their damages claims provided that Remington agrees to promptly cease its infringing and diluting advertising, agree to expressly abandon the pending application to register the GOLD BOX mark, and agree not to seek to register any similar or related mark. We understand that Remington intends to promote its ammunition products under the GOLD BOX mark to distributors at the up-coming NASGW [trade show] next month. This continued promotion of the GOLD BOX mark in connection with the ammunition will cause out clients to suffer further irreparable harm. Thus, we respectfully request that you respond to this letter no later than a week from today, i.e. by November 6, 2003. In the event that we do not receive a timely and favorable response from you, our client has authorized us to pursue all of its legal remedies, including an injunction and damages.
Baird Aff. Ex. A p. 2.
On November 5, the day before expiration of the reply period specified in Plaintiffs' letter, Defendants filed a declaratory judgment action in North Carolina, the state of their principal place of business, seeking a declaration that the asserted trademarks are invalid or alternatively that Remington is not infringing the marks. Defendants alerted opposing counsel of the suit the following day, but did not effect service until November 11, 2003. Meanwhile, on November 7, 2003, Plaintiffs filed and served the Complaint in the instant action, alleging federal trademark infringement and dilution, as well as various state law claims. See Compl.
¶¶ 28-57 [Docket No. 1]. Plaintiffs now move this Court to enjoin the North Carolina case, asserting the it was filed as an improper attempt by Defendants to deprive Federal Cartridge of its choice of forum. Defendants counter that their action was an appropriate response to Plaintiffs' threat of litigation and, as the first-filed suit, controls the forum, at least for purposes of determining which case should proceed.
III. DISCUSSION
The "first-filed" rule of judicial economy and comity provides that in cases of concurrent jurisdiction, "the first court in which jurisdiction attaches has priority to consider the case." Orthmann v. Apple River Campground, 765 F.2d 119, 121 (8th Cir. 1985). While establishing a bright-line test, this principle "is not intended to be rigid, mechanical, or inflexible," but rather "to be applied in a manner best serving the interests of justice." Id.; Northwest Airlines. Inc. v. American Airlines. Inc., 989 F.2d 1002, 1005 (8th Cir. 1993) (internal citation omitted). Typically, absent compelling circumstances the first-filed action should take precedence. Northwest, 989 F.2d at 1005.
Plaintiffs argue their Minnesota suit is in fact the primary litigation because they were first to perfect service and therefore first to establish jurisdiction, as "[a] court does not have jurisdiction over a party that has not been served with process." Pls.' Mem. in Supp. at 5 (citing Sieg v. Karnes, 693 F.2d 803, 807 (8th Cir. 1982); Red Wing Shoe Co. v. B-JAYS USA. Inc., No. Civ. 02-257, 2002 WL 1398538, at *2 (D. Minn. June 26, 2002)). Alternatively, they argue the circumstances of Defendants' action warrant departure from the general rule. Defendants contend this Court must defer to the North Carolina court for application of the first-filed rule.
Though there is some authority for Plaintiffs' assertion that service rather than filing establishes priority under the first-filed rule, most courts consider the act of filing to be the determinative event. See e.g., Hospah Coal Co. v. Chaco Energy Co., 673 F.2d 1161, 1163 (10th Cir. 1982) (use of date of filing of the complaint gives effect to Rule 3 of Federal Rules of Civil Procedure); Slidell. Inc. v. Archer Daniels Midland Co., No. Civ. 02-4841, 2003 WL 22050776, at *5 (D. Minn. Sept. 2, 2003) (same). But see Red Wing, 2002 WL 1398538, at *2 (using service date as priority criterion). The Eighth Circuit has not directly addressed this issue, but despite its repeated statement that "the court in which jurisdiction first attached should proceed," it has referenced dates of filing instead of dates of service in discussing the first-filed rule. Northwest, 989 F.2d at 1003, 1004; see Anheuser-Busch. Inc. v. Supreme Int'l Corp., 167 F.3d 417, 418-19. Based on the dates of filing, the North Carolina action takes priority under the first-filed rule even though the Minnesota complaint was served before the North Carolina complaint. Temporal precedence, however, is not necessarily determinative of the inquiry. The first-filed rule "yields to the interests of justice and will not be applied where a court finds `compelling circumstances' supporting its abrogation." Northwest, 989 F.2d at 1006. Two "red flags" identified by the Eighth Circuit as indicating possible compelling circumstances are prior notice to the first-filer that the other party was considering legal action, and the filing of a declaratory judgment action. When the first-filed suit bears indicia of bad faith or a pre-emptive strike, the court may disregard the first-filed rule and preserve the true plaintiffs choice of forum even though that party technically lost the race to the courthouse. Red Wing, 2002 WL 1398538, at *2-3; Eli's Chicago's Finest. Inc. v. The Cheesecake Factory. Inc., 23 F. Supp.2d 906, 908-09 (N.D. Ill. 1998). Such a flexible approach is desirable to discourage "Pearl Harbor tactics," as well as to encourage settlement negotiations and well planned litigation. Red Wing, 2002 WL 1398538, at *2 (internal quotation omitted).
The majority rule provides that it is the first-filed forum that should assess whether or not compelling circumstances exist and which lawsuit should proceed. See, e.g., Nutrition Fitness. Inc. v. Blue Stuff. Inc., 264 F. Supp.2d 357, 359 (W.D.N.C. 2003). However, in the interests of justice, second-filed courts have declined to apply the first-filed rule rigidly and have maintained jurisdiction over the later-filed actions. Red Wing, 2002 WL 1398538, at *2-3 (denying defendant's motion to dismiss or transfer); Schumacher Elec. Corp. v. Vector Prods., Inc., No. 03 C 4410, 2003 WL 22078351, at* 1-3 (same).
Here, Defendants were on notice of likely litigation by Federal Cartridge if they did not respond to the cease and desist letter by the specified date. Although the letter did not explicitly name a forum or date for the suit, inclusion of a precise deadline coupled with the notification that Plaintiffs' counsel were authorized to pursue all legal remedies unless Defendants responded favorably by such date, provided sufficient notice of imminent legal action. See Anheuser Busch, 167 F.3d at 418-19. Additionally, the "red flag" of filing a declaratory judgment lawsuit within days of receipt of the cease and desist letter is also present. See id. at 419; Northwest, 989 F.2d at 1007. These factors are reasons to depart from the first-filed rule and find that Minnesota is the proper forum. However, the procedural posture presented by Plaintiffs' Motion is unusual in that it asks this Court to enjoin litigation proceeding in another jurisdiction. The precedent relied on by Plaintiffs involves second-filed jurisdictions refusing to dismiss or stay the lawsuits before them, or first-filed courts granting the "natural plaintiffs" motion to transfer to the second-filed, more appropriate forum. Neither party has cited a case in which the second-filed court enjoined the proceedings in the first-filed court.
Defendants' immediate filing of the declaratory judgment suit undercuts their argument that they did not believe Plaintiffs were serious about instituting litigation.
Rather than ordering the cessation of another suit, the Court believes the "compelling circumstances" determination in the instant parallel cases is best left to the North Carolina court, as the first-filed tribunal. See Nutrition Fitness, 264 F. Supp.2d 357, 359; see also Anheuser Busch, 167 F.3d at 419; Northwest, 989 F.2d at 1004. Accordingly, the Court will stay this matter pending a ruling in Remington's declaratory judgment action on the proper location for resolution of this dispute.
IV. CONCLUSION
Based upon the foregoing, and all of the files, records and proceedings herein, IT IS HEREBY ORDERED that:
1. Plaintiffs' Motion to Enjoin Pocket [Nos. 2, 6] is DENIED,
2. Defendants' Motion to Transfer or Stay [Docket No. 8] is DENIED as to the Motion to Transfer and GRANTED as to the Motion to Stay, and
3. This case is STAYED pending an order in the declaratory judgment action filed on November 5, 2003 in U.S. District Court, Middle District of North Carolina, on Remington's November 25, 2003 motion to enjoin, or on a potential motion to dismiss or transfer by Federal Cartridge.