Nuway Paper v. York Paper Company

Full title: Nuway Paper, L.L.C., Plaintiff, v. York Paper Company, a Pennsylvania…

Court: United States District Court, W.D. Michigan

Date published: Feb 6, 2001

4:99-CV-156 (W.D. Mich. Feb. 6, 2001)

Opinion

4:99-CV-156

February 6, 2001

OPINION

RICHARD ALAN ENSLEN, Chief United States District Judge

This matter is before the Court on Third-Party Defendant Kohler Coating Machinery Corporation's ("Kohler's") Motion to Strike Third-Party Complaint and Third-Party Defendant Parkinson Manufacturing and Machinery Corporation's ("Parkinson's") Motion to Strike Third Party Complaint. The Third-Party Complaint at issue was filed, and subsequently amended, by Third-Party Plaintiff Nuway Paper, L.L.C. ("Nuway") and seeks indemnity for any liability that

Nuway has to York Paper Company because of breach of contract to produce paper. The Third Party Complaint alleges that any faulty paper production was caused by the faulty machines supplied by Kohler to Nuway

As to Parkinson's Motion, the Motion was made moot by Nuway's amendment to the Third-Party Complaint, which eliminated reference to Parkinson. As such, the Motion will be denied as moot.

As to Kohler's Motion, Kohler cites various reasons for dismissal of the Third-Party Complaint, such of which are premised on the nature of indemnity claims. Third-Party Plaintiff Nuway has responded to many of these arguments. One argument left unanswered by Nuway is whether the Third-Party Complaint should be dismissed because it is a duplicate federal suit. This is an important argument in light of the Sixth Circuit Court of Appeals' decision in In re American Medical Systems, Inc., 75 F.3d 1069, 1088 (6th Cir. 1996), which held as follows:

Although there is no precise rule that, as between federal district courts, one court should defer to the other, "the general principle is to avoid duplicative litigation." Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817, 96 S.Ct. 1236, 1246, 47 L.Ed.2d 483 (1976); Kerotest Mfg. Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 72 S.Ct. 219, 96 L.Ed. 200 (1952); New York State Conf Pension Retirement Fund v. Hoh, 554 F. Supp. 519, 529 (N.D.N.Y. 1982). Seegenerally Charles A. Wright, Arthur R Miller Edward H. Cooper, 17A Federal Practice and Procedure § 4247 n. 7 (2d ed. 1988) (and cases cited therein). The orders in this case threaten to throw preexisting cases into disarray. The waste of judicial resources due to duplicative proceedings is plain and is not correctable on appeal Additionally, it would have been wise to consider AMS' motion to dismiss or transfer venue, because either ground could potentially obviate the need to expend judicial time deciding the class certification question

Id.at 1088. See also Barber-Greene Co. v. Blaw-Knox Co., 239 F.2d 774, 778 (6th Cir. 1957); Parker-Hannifin Corp. v. Samuel Moore Co., 436 F. Supp. 498, 501 (N.D.Ohio. 1977).

Because of the so-called "first-to-file rule" discussed in American Medical Systems, other federal courts have insisted that the filing of duplicate litigation in multiple federal districts should result in the dismissal or transfer of the later filed suits absent exceptional circumstances. See E.E.O.C, v. University of Pennsylvania, 850 F.2d 969 (3d Cir. 1988) ("`[i]n all cases of federal concurrent jurisdiction, the court which first has possession of the subject must decide it.'") (quoting Crosley Corp. v. Hazeltine Corp., 122 F.2d 925, 929 (3d Cir. 1 941)); In re Burley, 738 F.2d 981, 988 (9th Cir. 1984) ("when identical suits are pending in two courts, the court in which the first suit was filed should generally proceed to judgment"); Church of Scientology v. United States Dept of the Army, 611 F.2d 738, 750 (9th Cir. 1979) (stating that first-to-file rule "should not be disregarded lightly").

This case was filed in Michigan state court on November 22, 1999 It was removed to federal court on December 20, 1999. The instant Third-Party Complaint against Kohler alleges that if Nuway is liable to York for breach of contract or warranty relating to their contract for paper products then Kohler should indemnify Nuway for such losses because the liability is caused by the equipment negligently and wrongfully supplied by Kohler.

On April 23, 1999, in the Western District of Michigan, Nuway sued Kohler for breach of warranty and contract (and other related claims) relating to the same paper manufacturing equipment that is the subject of the instant Third-Party Complaint. That suit, Western District Case No. 4:99CV-53, is part of a multi-district suit involving suits transferred from other districts (MDL #1306) The nature of the claims in that suit are similar, though not identical, to the claims involved in this Third-Party Complaint for indemnity. See Plating Resources, Inc. v. UTI Corp., 47 F. Supp. d 899, 903 (N.D.Ohio. 1999) (stating that precise identity of claims and parties is not required).

In applying the first-to-file rule, federal courts have examined factors such as:

(1) the adequacy of the relief available in the alternative forum;

(2) promotion of judicial efficiency;

(3) the identity of the parties and the issues in the two actions;

(4) the likelihood of prompt resolution in the alternative forum;

(5) the convenience of the parties, counsel and witnesses; and

(6) the possibility of prejudice to any party. Unilease v. Major Computer, Inc., 126 F.R.D. 490, 493 (S.D.N.Y. 1989); see also Continental Time Corp. v. Swiss Credit Bank, 543 F. Supp. 408, 410 (S.D.N Y 1982)

This Court's analysis of these factors strongly favors application of the first-to-file rule. The "other forum" appears to offer Nuway the opportunity of adequate relief. Judicial efficiency strongly favors resolution in one lawsuit so as to avoid conflicting verdicts. The parties at issue are identical and the claims are substantially similar. The previously filed suit is much further along and is likely to result in a quicker resolution of the claims. The convenience to parties and witnesses and counsel is the same since the other case is pending in this district. There is also no reason to believe that prejudice will result from dismissal of the instant Third-Party Complaint.

Therefore, Third-Party Defendant Kohler's Motion to Strike will be granted and the instant Third-Party Complaint dismissed without prejudice in accordance with the first-to-file rule. An Order granting said dismissal shall enter consistent with this Opinion.

ORDER

In accordance with the Opinion of this date;

IT IS HEREBY ORDERED that Third-Party Defendant Parkinson Manufacturing and Machinery Corporation's Motion to Strike (Dkt. No. 31) is DENIED as moot.

IT IS FURTHER ORDERED that Third-Party Defendant Kohler Coating Machinery Corporation's Motion to Strike (Dkt. No. 32) is GRANTED and the Third-Party Complaint is DISMISSED without prejudice to avoid multiple, substantially identical federal suits.