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holding that a requested declaration of non-liability for fraud that allegedly occurred in the past was an improper use of the DJA
Summary of this case from Tower Prods. Inc. v. Laird Enters.Opinion
No. 11-CV-5453-CM
11-02-2011
JOHN WILEY & SONS, INC., Plaintiff, v. VISUALS UNLIMITED, INC., Defendant.
DECISION AND ORDER GRANTING DEFENDANT'S MOTION TO DISMISS :
In this action, Plaintiff John Wiley & Sons, Inc. ("Wiley") seeks a declaratory judgment that it is not liable to Defendant Visuals Unlimited, Inc. ("VUI") for fraud, and for copyright infringement for Wiley's use of photographs (1) "for which VUI lacks copyright ownership or a valid copyright registration"; (2) "that occurred more than three years ago"; or (3) "which is simply a reuse of the same photograph in a later edition or a revised version of the work for which VUI originally licensed the photograph." (Compl. ¶ 24.)
VUI now moves this Court to dismiss Wiley's complaint under Federal Rules of Civil Procedure 12(b)(6) and 9 and pursuant to the exceptions to the "first-filed rule."
For the reasons set forth below, VUI's motion to dismiss is GRANTED because I decline to exercise jurisdiction over Wiley's action under the Declaratory Judgment Act.
BACKGROUND
Wiley, a New York corporation with its principal place of business in Hoboken, New Jersey, and an office in New York (id. ¶ 2), is a global publisher of textbooks and other educational materials (id. ¶ 8). VUI, a New Hampshire corporation with its principal place of business in Hollis, New Hampshire (id. ¶ 3), is a stock photography agency that licenses photographs to publishers like Wiley (id. ¶ 10; Mot. to Dismiss at 6).
Beginning in 1994, VUI granted Wiley non-exclusive rights and licenses to include VUI's photographs in Wiley's publications in exchange for fees. (Compl. ¶ 11.) Until 2002, Wiley and VUI entered into these transactions in New York, which was Wiley's principal place of business during this time. (Opp'n at 3; Compl. ¶ 2.) After 2002, Wiley conducted its business primarily from Hoboken, New Jersey. (Folz Decl. ¶ 5.) VUI conducted its licensing business from New Hampshire at all times relevant to this litigation. (Id. ¶ 4.)
For each transaction, Wiley identified photographs it desired from VUI's stock collection, and provided the names of the publications in which VUI's photo would be included, as well as the estimated print-run for those publications. (Id. ¶ 11.) VUI determined its fee according to the number of copies, distribution area, language, time duration, and/or media (print or electronic) for each publication. (Mot. to Dismiss ¶ 6.) VUI then issued an invoice, and Wiley included the photographs in its publications. (Id.) In this manner, VUI "licensed hundreds of photographs to Wiley for inclusion in approximately seventy-nine separate Wiley publications." (Id. ¶ 11-12.) Wiley's estimates have not always been accurate, however, and demand for its publications has sometimes exceeded the estimated print-runs Wiley furnished to VUI. (Compl. ¶13.)
Wiley and VUI have recently discussed Wiley's sometimes inaccurate print-run estimates. (Id. ¶ 14; Folz Decl. ¶ 13.) In these discussions, VUI contended that Wiley's use of VUI's photos in excess of Wiley's print-run estimates, dating back to 1994, infringes VUI's copyrights. (Id. ¶¶ 14, 19, 24.) VUI also claimed that Wiley is liable to VUI for common law fraud for understating its print-run estimates. (Id. ¶¶ 14, 26.) VUI made Wiley aware that it retained litigation counsel and threatened to file claims against Wiley for copyright infringement and fraud, but never set "any deadlines or issued any specific warnings with respect to the timing of actually doing so." (Cf. id. ¶ 14; Opp'n at 3.) The parties were unable to resolve their dispute during these discussions. (See Compl. ¶ 14; Opp'n at 3.)
The last communication between the parties took place on July 20, 2011. (Folz Decl. ¶ 14.) The parties are not clear whether the settlement negotiations were at a terminal impasse, or whether the talks were ongoing. VUI implies that the settlement talks were not at a terminal impasse (see id.), but Wiley implies the opposite (see Opp'n at 13). There is no definitive statement before the Court either way.
On August 5, 2011, Wiley filed suit in this Court, seeking a declaratory judgment that it is not liable to VUI for copyright infringement or fraud relating to "all of the photographs licensed by VUI to Wiley over the entire course of the parties' dealings." (Compl. ¶ 24.) Wiley seeks this relief through an order declaring that
any use by Wiley of VUI photographs (i) that relates to photographs for which VUI lacks copyright ownership or a valid copyright registration, (ii) that occurred more than three years ago, or (iii) which is simply a reuse of the same photograph in a later edition or revised version of the work for which VUI originally licensed the photograph is non-actionable as copyright infringement.(Id. at 7 ¶ A) Wiley also seeks an order declaring that "Wiley is not liable to VUI for any claim sounding in fraud." (Id. at 7 ¶ B.)
On August 26, 2011, three weeks after Wiley's filing, VUI filed a complaint against Wiley in the District of New Hampshire in a substantially identical — albeit mirror-image — lawsuit arising out of the same operative facts. Visuals Unlimited Inc. v. John Wiley & Sons, Inc., No. 11-cv-00415-LM (D.N.H. Aug. 26, 2011) (Docket No. 1). In its lawsuit, VUI asserts claims for copyright infringement and fraud against Wiley, as well as copyright infringement against John Doe Printers 1-10. The events described are essentially the same as those described here, except that VUI's complaint: (1) provides substantially more detail regarding VUI's claim for fraud, and (2) specifically identifies thirteen copyrighted photos included in five Wiley publications that form the basis of VUI's infringement claim. Id. at Ex. 1.
DISCUSSION
A. The First-Filed Rule
"The propriety of a forum is a threshold matter that the Court must consider before addressing the merits of an action." 800-Flowers, Inc. v. Intercontinental Florist, Inc., 860 F. Supp. 128, 131 (S.D.N.Y. 1994) (citing Adam v. Jacobs, 950 F.2d 89, 92 (2d Cir. 1991)). Therefore, before reaching the substance of VUI's motion to dismiss Wiley's complaint, I must consider whether this action is properly before the Court in light of the first-filed rule.
Under the first-filed rule, the court in which the first of two overlapping cases was filed must determine which forum will hear the case. MSK Ins., Ltd. v. Emp'rs Reinsurance Corp., 212 F. Supp. 2d 266, 267 (S.D.N.Y. 2002) (collecting cases). Since this case was filed in the Southern District of New York before VUI filed a similar action arising out of the same dispute in the District of New Hampshire, this Court must decide which court will hear the case. Schnabel v. Ramsey Quantitative Sys., Inc., 322 F. Supp. 2d 505, 510-11 (S.D.N.Y. 2004) (Peck, M.J.). In accordance with this rule, the District of New Hampshire stayed VUI's pending suit until this Court decides the instant motion, and determines the proper forum for this action. Visuals Unlimited Inc. v. John Wiley & Sons, Inc., No. 11-cv-00415-LM (D.N.H. Aug. 26, 2011) (Docket No. 12).
The Second Circuit abides by the "first-filed rule," i.e., "Where there are two competing lawsuits, the first suit should have priority." Emp'rs Ins. of Wausau v. Fox Entm't Grp., Inc., 522 F.3d 271, 274-75 (2d Cir. 2008) (quoting First City Nat'l Bank & Trust Co. v. Simmons, 878 F.2d 76, 79 (2d Cir. 1989)). The first-filed rule "applies when identical or substantially similar parties and claims are present in both courts," In re Cuyahoga Equip. Corp., 980 F.2d 110, 116-17 (2d Cir. 1992), and "avoids duplicative litigation by adhering to the inherently fair concept that the party who commenced the first suit should generally be the party to attain its choice of venue," Ontel Prods., Inc. v. Project Strategies Corp., 899 F. Supp. 1144, 1150 (S.D.N.Y. 1995). The rule also "embodies considerations of judicial administration and conservation of resources." Emp'rs Ins. of Wausau, 522 F.3d at 275 (quoting First City Nat'l Bank & Trust Co., 878 F.2d at 80). Here, the two suits arise out of the same facts, involve the same parties, and concern the same legal claims (although viewed through the lens of declaratory judgment in this case).
The first-filed rule raises a rebuttable presumption, not an invariable mandate, and the Second Circuit recognizes only two exceptions: "(1) where the 'balance of convenience' favors the second-filed action, and (2) where 'special circumstances' warrant giving priority to the second suit." Id. (internal citations omitted). "These improper filings, by necessity, often take the form of declaratory judgments," Ontel Prods., Inc., 899 F. Supp. at 1150, and the underlying purpose of the exceptions is thus to prevent federal declaratory judgment from becoming "a prize to the winner of a race to the courthouses." Factors Etc., Inc. v. Pro Arts, Inc., 579 F.2d 215, 219 (2d Cir. 1978) (quoting Perez v. Ledesma, 401 U.S. 82, 119 n.12 (1971) (Brennan, J. dissenting)), abrogated on other grounds by Pirone v. MacMillian, Inc., 894 F.2d 579 (2d Cir. 1990).
Because, for the reasons discussed below, I decline to exercise jurisdiction to hear Wiley's complaint under the Declaratory Judgment Act, there is no need to analyze whether any exception to the first-filed rule otherwise applies. Regardless of how the Court would rule on that issue, the complaint is going to be dismissed.
B. The Standard of Review for Declaratory Judgment
Under the Declaratory Judgment Act, 28 U.S.C. § 2201(a) (the "DJA"), a court "may declare the rights and other legal relations of any interested party seeking such a declaration" in "a case of actual controversy." An "actual controversy" exists if there is a "substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment." Duane Reade, Inc. v. St. Paul Fire & Marine Ins. Co., 411 F.3d 384, 388 (2d Cir. 2005) (quoting Md. Cas. Co. v. Pac. Coal & Oil Co., 312 U.S. 270, 273 (1941)). The disagreement must "have taken on a fixed and final shape so that a court can see what legal issues it is deciding." Jenkins v. United States, 386 F.3d 415, 418 (2d Cir. 2004) (quoting Public Serv. Comm'n of Utah v. Wycoff Co., 344 U.S. 237, 244 (1952).
The DJA "confers a discretion on the courts rather than an absolute right upon the litigant." Wilton v. Seven Falls Co., 515 U.S. 277, 287 (1995). In deciding whether to exercise its permissive jurisdiction, district courts may consider "equitable, prudential, and policy arguments." MedImmune, Inc. v. Genentech, Inc., 549 U.S. 118, 136 (2007). In determining whether to exercise jurisdiction over a declaratory judgment action, courts should examine the situation in its entirety. Great Am. Ins. Co., 735 F. Supp. at 585.
i. Wiley's Claim for Declaratory Judgment for Non-liability for Fraud is Dismissed
The main purpose of the DJA is to "avoid accrual of avoidable damages to one not certain of his rights and to afford him an early adjudication without waiting until his adversary should see fit to begin suit, after damage has accrued." Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. Int'l Wire Grp., Inc., No. 02 Civ. 10338, 2003 WL 21277114, at *4 (S.D.N.Y. June 2, 2003) (quoting Luckenbach Steamship Co. v. United States, 312 F.2d 545, 548 (2d Cir. 1963)). It is designed to "settle legal rights and remove uncertainty and insecurity from legal relationships without awaiting a violation of the rights or a disturbance of the relationships." Dow Jones & Co., Inc. v. Harrods, Ltd., 237 F. Supp. 2d 394, 405 (S.D.N.Y. 2002) (quoting Beacon Const. Co. Inc. v. Matco Elec. Co., Inc., 521 F.2d 392, 397 (2d Cir. 1975)). Accordingly, the DJA is not intended to be used by parties who seek a declaration of non-liability to preemptively defeat tort claims already accrued by past wrongful conduct. Int'l Wire Grp., Inc., 2003 WL 21277114, at *5. "The reason for this rule is clear: declaratory relief is intended to operate prospectively. There is no basis for declaratory relief where only past acts are involved," including claims for fraud. Id.
Here, Wiley seeks a declaration of non-liability for allegedly intentional acts that occurred in the past, i.e., fraud. (Compl. at 7 ¶ B.) Wiley "does not seek a prospective determination of its rights and responsibilities . . . but rather a finding that it is not liable for damages alleged to have already accrued." Int'l Wire Grp., Inc., 2003 WL 21277114, at *5. Thus, the relief Wiley seeks is not an appropriate use of the DJA.
Moreover, to "allow a declaratory judgment action under the facts before us would be to allow a substitute for the traditional procedures for adjudicating" fraud cases. See Cunningham Bros., Inc. v. Bail, 407 F.2d 1165, 1168 (7th Cir. 1969), cert. denied, 395 U.S. 959 (1969). "When the traditional remedy provides the parties with the procedural safeguards required by the law to insure the availability of a proper remedy, the courts, in exercising their discretion, may properly dismiss the declaratory judgment action." Id. at 1169.
It is unclear what role the heightened pleading standards of Rule 9 of the Federal Rules of Civil Procedure would play in a declaratory judgment action for non-liability of fraud. See United Ins. Co. of Am. v. Harris, 939 F. Supp. 1527, 1534 (M.D. Ala. 1996). Wiley has made nothing more than vague allegations of their claim for declaratory judgment seeking non-liability for fraud. It does not identify a single statement that VUI may allege is a misrepresentation, nor does it provide any other information that would allow the court to know what this claim is about. A declaratory judgment here, far from serving a "useful purpose in clarifying and settling the legal relations in issue," Int'l Wire Grp., Inc., 2003 WL 21277114, at *4, would muddy the water from both a procedural and substantive perspective. The more traditional remedy of a coercive action would provide both the procedural protections of Rule 9 of the Federal Rules of Civil Procedure, and the clarity of a well-defined cause of action for fraud. Ultimately, both parties — and certainly this Court — would benefit from such a complaint.
Therefore, I dismiss Wiley's second claim for declaratory relief seeking an order declaring that "Wiley is not liable to VUI for any claim sounding in fraud" (Compl. at 7 ¶ B.) without leave to amend and DENY VUI's Rule 9 motion to dismiss as moot.
ii. I Decline to Exercise Jurisdiction Over Wiley's Claim for Declaratory Judgment for Non-liability for Copyright Infringement.
While the parties did not brief whether or not this Court should exercise its discretion under the DJA to hear this claim, I find it appropriate to consider the issue at this juncture.
The Second Circuit has provided two factors to help district courts properly exercise the broad discretion conferred by the DJA: "(1) when the judgment will serve a useful purpose in clarifying and settling the legal relations in issue; and (2) when it will terminate and afford relief from the uncertainty, insecurity, and controversy giving rise to the proceeding." Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. Int'l Wire Grp., Inc., No. 02 Civ. 10338, 2003 WL 21277114, at *4 (S.D.N.Y. June 2, 2003) (quoting Continental Cas. Co. v. Coastal Sav. Bank, 977 F.2d 734, 737 (2d Cir. 1992)); Broadview Chem. Corp. v. Loctite Corp., 417 F.2d 998, 1001 (2d Cir. 1969). Other circuits have built on this test, and looked at factors such as: (1) "whether the proposed remedy is being used merely for 'procedural fencing,'" Dow Jones & Co., Inc. v. Harrods Ltd., 346 F.3d 357, 360 (2d Cir. 2003) (per curiam) (citing NUCOR Corp. v. Aceros Y Maquilas de Occidente, S.A., 28 F.3d 572, 577 (7th Cir. 1994); Grand Trunk R.R. Co. v. Consol. Rail Corp., 746 F.2d 323, 326 (6th Cir. 1984)), (2) "whether there is a better or more effective remedy," id. at 361, (3) whether there are other proceedings pending, Hanes Corp. v. Millard, 531 F.2d 585, 591 n.4 (D.C. Cir. 1976), superseded by statute on other grounds, and (4) whether the declaratory judgment action anticipates defenses, id. at 592-93. See Dow Jones & Co., Inc., 346 F.3d at 359 (affirming district court's refusal to hear a case under the DJA, noting with approval that "the district court looked to a set of factors that this and other circuits have developed to guide the exercise of discretion in [DJA] cases" (emphasis added)).
Reviewing all of the circumstances on the record before it, this Court is not inclined to exercise its discretion to render the declaratory judgment Wiley requests, and thus grants VUI's motion to dismiss.
a. Resolution of the Controversy
Courts are mindful that "it would not be prudent . . . to expend limited judicial resources to resolve issues which would not fully resolve the plaintiffs' claims." Roth v. D.C. Courts, 160 F. Supp. 2d 104, 110 (D.D.C. 2001). Therefore, "One of the most important considerations that may induce a court to deny declaratory relief is that the judgment sought would not settle the controversy between the parties." 10B Wright & Miller § 2759.
On its face, Wiley's complaint does not seek declaratory relief that would fully settle the controversy between the parties. Rather, Wiley's complaint seeks a much more limited declaration that
Any use by Wiley of VUI photographs is non-actionable as copyright infringement when it: (i) relates to photographs for which VUI lacks copyright ownership or a valid copyright registration, or (ii) occurred more than three years ago, or (iii) is simply a reuse of the same photograph in a later edition or revised version of the work for which VUI originally licensed the photograph.(Compl. at 7 § B; § 24.) Even if this Court issues Wiley's desired declaration in full, the parties would still need to litigate VUI's fraud claim, which is already filed in the District of New Hampshire, and the merits of VUI's copyright infringement claim, i.e., whether Wiley has actually infringed VUI's copyrights. This would result in substantial inefficiencies for both the judicial system and the parties.
Because Wiley's requested remedy would not fully settle this litigation, and the controversy between the parties would thus continue, I find that this important factor cuts against the exercise of jurisdiction. Swish Marketing, Inc. v. Federal Trade Commission, 669 F. Supp. 2d 72, 77-78 (D.D.C. 2009) (finding that this factor not in favor of exercising jurisdiction where the requested declaratory relief would not fully resolve the controversy between the parties).
b. Useful Purpose
For much the same reasons as above, granting the remedy that Wiley seeks would not serve a useful purpose in clarifying the legal relations between the parties. The declaratory relief that Wiley seeks is merely a small part of a much larger set of issues that would need to be litigated, regardless of whether this Court issues the requested order.
Additionally, Wiley's complaint does not allege which photographs are subject to which of the three types of declaratory relief it seeks and thus does not clarify the legal relations at issue. In addressing a virtually identical complaint filed by Wiley against DRK Photo, a "stock photo agency" like VUI, Judge Daniels of the Southern District of New York dismissed Wiley's copyright infringement claims pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, with leave to amend. John Wiley & Sons, Inc. v. DRK Photo, No. 11-cv-5454-GBD (S.D.N.Y. Oct. 14, 2011) (Docket No. 16). Judge Daniels set forth his reasoning in an October 13, 2011 hearing, finding that Wiley's claim for declaratory relief "is not sufficiently alleged" and that Wiley is "required to give greater notice of what is at issue" to DRK Photo. Transcript of Oral Argument at 101, John Wiley & Sons, Inc. v. DRK Photo (S.D.N.Y. Oct. 13, 2011) (No. 11-cv-5454 (GBD)). Judge Daniels advised that it is Wiley's burden to identify the photos for which Wiley alleges
[1] [VUI does not] own the copyright, or [has] an invalid copyright registration which gives [Wiley] a good faith basis to make that allegation, [2] which ones [Wiley] claim[s] uses occurred more than three years ago, and [3] which ones [Wiley] contend[s] the repeated use of a photograph was simply a later edition or revised version that was within the license . . . .Id. at 104. These three categories are the same as the three types of declaratory relief Wiley seeks in its complaint in this Court.
Without reaching whether the complaint should be dismissed on these grounds, I find that Wiley's barren complaint does not serve a useful purpose in clarifying the legal relations between the parties. This factor counsels against exercising jurisdiction here.
c. Anticipating Defenses
"The anticipation of defenses is not ordinarily a proper use of the declaratory judgment procedure," as "It deprives the plaintiff of his traditional choice of forum and timing, and it provokes a disorderly race to the courthouse." Hanes, 531 F.2d at 592-93; BASF Corp. v. Symington, 50 F.3d 555, 559 (8th Cir. 1995) ("It is our view that where a declaratory plaintiff raises chiefly an affirmative defense, and it appears that granting relief could effectively deny an allegedly injured party its otherwise legitimate choice of the forum and time for suit, no declaratory judgment should issue.") As such, "numerous courts have refused to grant declaratory relief to a party who has come to court only to assert an anticipatory defense." Veoh Networks, Inc. v. UMG Recordings, Inc., 522 F. Supp. 2d 1265, 1271 (S.D. Cal. 2007) (citing cases).
This is the case here. A defense is "a reason why the plaintiff should not recover or establish that which he seeks by his complaint." Black's Law Dictionary (9th ed. 2009) (quotation omitted). In its complaint, Wiley effectively seeks a declaratory judgment as to the defenses that it would assert in a coercive action brought by VUI. These defenses include the statute of limitations and lack of copyright ownership, for example. Wiley does not seek a declaration that it has not infringed on VUI's copyrights. Furthermore, by filing this suit, Wiley deprived VUI of its desired forum (see below discussion on procedural fencing).
Therefore, because the complaint Wiley brings before the Court merely anticipates the defenses it would raise in a coercive action, this factor militates against exercising jurisdiction. Swish Marketing, Inc. v. Federal Trade Commission, 669 F. Supp. 2d 72, 79-80 (D.D.C. 2009) (finding that this factor was in favor of not exercising jurisdiction where the requested declaratory relief would not fully resolve the controversy between the parties).
d. Procedural Fencing
"The federal declaratory judgment is not a prize to the winner of a race to the courthouses." Perez v. Ledesma, 401 U.S. 82, 119 n.12 (1971) (Brennan, J., dissenting). "A rush to file first in anticipation of litigation in another tribunal, thereby enabling a potential defendant to choose the forum and governing law by which to adjudicate the dispute, and otherwise to interfere with or frustrate the other party's pursuit of claims elsewhere, is one of the equitable considerations a court may weigh in ruling on a request for declaratory relief." Dow Jones & Co., Inc., 237 F. Supp. 2d at 440; see also AmSouth Bank v. Dale, 386 F.3d 763, 788 (6th Cir. 2006) ("Courts take a dim view of declaratory plaintiffs who file their suits mere days or weeks before the coercive suits filed by a "natural plaintiff" and who seem to have done so for the purpose of acquiring a favorable forum."); 10B Wright & Miller § 2706.
VUI contends that Wiley filed this action in New York to, in part, "forum shop for more favorable law on the statute of limitations for copyright infringement claims." (Mot. to Dismiss at 16.) That the law governing the timing of when a copyright infringement claim accrues in the Second Circuit is more favorable to Wiley than that of the First or Third Circuits certainly provides support for this point. Compare Auscape Int'l v. Nat'l Geographic Soc'y, 409 F. Supp. 2d 235, 247 (S.D.N.Y. 2004) (adopting the "injury rule" for copyright infringement claims, by which a claim for copyright infringement accrues on the date of the infringement), with Warren Freedenfeld Assocs., Inc. v. McTigue, 531 F.3d 38, 44-46 (1st Cir. 2008) (claims for copyright infringement begin to accrue when the plaintiff knows or should have discovered the putative infringement — the "discovery rule"), and Wm. A. Graham Co. v. Haughey, 568 F.3d 425, 437 (3d Cir. 2009) (adopting the "discovery rule" for copyright infringement claims). VUI also filed its coercive suit in the District of New Hampshire about three weeks after Wiley filed the instant action.
Wiley argues that VUI fails to demonstrate that forum shopping was the sole basis for the lawsuit, and that it effectively filed in its home forum. Additionally, Wiley points out that VUI threatened to file claims against Wiley for copyright infringement and fraud, but never set "any deadlines or issued any specific warnings with respect to the timing of actually doing so." (Cf. Compl. ¶ 14; Opp'n at 3.)
Contrary to VUI's strained arguments, the Court acknowledges that Hoboken, New Jersey, is right across the river from the federal courthouse in Manhattan, and is closer to Wiley as the crow flies than the federal courthouse in Newark, New Jersey. Wiley can hardly be accused of forum shopping by filing in this court when it is a New York corporation, has an office in New York, and has headquarters located "less than five miles from this Court." (Opp'n at 16; Compl. ¶ 2.) --------
However, "whether the forum chosen by the declaratory plaintiff is 'logical' can have only a minimal value in determining whether procedural fencing has occurred. The question is not which party has chosen the better forum, but whether the declaratory plaintiff has filed in an attempt to get her choice of forum by filing first." AmSouth, 386 F.3d at 763 (footnote omitted).
Here, the evidence suggests that Wiley filed its complaint in an attempt to get its choice of forum by filing first. While VUI did not issue specific warnings as to when it would file suit, Wiley was clearly operating under the direct threat of litigation. (Compl. § 14 ("VUI has retained litigation counsel who is threatening to file claims against Wiley for copyright infringement and fraud.").) In fact, Wiley filed its complaint a mere two and a half weeks after the parties last corresponded on July 20, 2011 (Folz Decl. ¶ 14), leading this Court to believe that Wiley was trying to get the jump on VUI, which filed its suit three weeks later. By bringing this suit in the Second Circuit, Wiley avoided the less favorable law of the First Circuit, where VUI would prefer to litigate. Moreover, the fact that the complaint (1) is so sparse as to require dismissal with leave to amend (discussed above) and appears to the Court to have been quickly assembled, (2) seeks to bring the exact mirror image of the claims that VUI threatened, i.e., fraud and copyright infringement, and (3) even then only requests declaratory judgment on Wiley's defenses, militates in favor of the conclusion that Wiley is engaged in "procedural fencing," or forum shopping. I find that this factor counsels the Court to decline jurisdiction.
e. Other Proceedings Pending
Federal Rule of Civil Procedure 57 provides that the "existence of another adequate remedy does not preclude a judgment for declaratory relief in cases where appropriate." A court "properly may refuse declaratory relief if the alternative remedy is better or more effective." 10B Wright & Miller § 2758.
"One consideration in determining whether another adequate remedy exists is the pendency of another action between the same parties in a forum in which some or all of the same issues raised in the declaratory judgment action are also in dispute." Dow Jones & Co., Inc., 237 F. Supp. 2d at 442. Where this is the case, the court may weigh "whether the issues before it could be fully resolved in the other action, and where the issues are likely to be most comprehensively adjudicated." Id. (citing 10B Wright & Miller § 2758). However, this factor effectively requires an analysis of the first-filed rule. Id. at 443 (existence of an alternative forum requires the assessment of "the relevance and weight assigned to which action came first, factors of forum shopping and the race to courthouse").
It is worth noting here that Wiley will be able to raise in the District of New Hampshire the same arguments that it has pursued in this action. See Swish Marketing, Inc., 669 F. Supp. 2d. at 80. VUI's coercive action also has the ability to fully resolve and sharpen the issues in dispute between the parties, and the Court has no doubt that that action would yield a more useful and efficient outcome for the parties. While I do not rely on this factor heavily in making my decision, I find that it cuts in favor of declining jurisdiction.
***
Viewed collectively, the various considerations that guide the Court's exercise of its DJA discretion weigh in favor of denying relief in this case. Accordingly, the Court grants VUI's motion to dismiss.
CONCLUSION
For the foregoing reasons, VUI's motion to dismiss is GRANTED because the Court declines to exercise its discretionary declaratory judgment jurisdiction in this case. This case should proceed in VUI's coercive suit pending before the District of New Hampshire.
The Clerk of the Court is directed to remove the instant motion (ECF No. 5) from the Court's list of pending motions and close this case.
Tomorrow's conference is cancelled. Dated: November 2, 2011
/s/_________
U.S.D.J. BY ECF TO ALL PARTIES