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stating that departures from the first-filed rule are rare
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CIVIL ACTION NO. 03-3185
September 10, 2003
ORDER MEMORANDUM ORDER
AND NOW, this 10th day of September, 2003, upon consideration of Defendant's Motion to Dismiss or Transfer (Document No. 4, filed June 2, 2003), and the related submissions of the parties, for the reasons set forth in the following Memorandum, IT IS ORDERED that Defendant's Motion to Transfer is GRANTED. The Clerk of the United States District Court for the Eastern District of Pennsylvania shall TRANSFER the case to the United States District Court for the District of Connecticut.
IT IS FURTHER ORDERED that Defendant's Motion to Dismiss is DENIED.
MEMORANDUM
This action arises out of allegations of, inter alia, breach of contract in connection with baseball and softball pitching systems manufactured by defendant, ProBatter Sports, LLC ("ProBatter") and purchased by plaintiff, The Southampton Sports Zone, Inc. ("Southampton Sports").
Presently before the Court is ProBatter's Motion to Dismiss or Transfer. In that Motion
ProBatter seeks to dismiss the instant suit, or, in the alternative, transfer the instant suit to the District of Connecticut pursuant to 28 U.S.C. § 1404(a). For the reasons set forth below, the Court grants the Motion to Transfer and transfers the case to the United States District Court for the District of Connecticut. The Motion to Dismiss is denied.
I. BACKGROUND
A. The Parties
Southampton Sports is a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, with its principal place of business in Southampton, Pennsylvania. It provides "training in athletic/sports skills, specifically related to baseball and softball, at its training facility" located in Southampton, Pennsylvania and offers such services "to baseball and softball teams, individuals, and the general public." Complaint ¶ 3. As part of its business, Southampton Sports uses "batting cages to facilitate the training of baseball and softball batters, wherein balls are pitched to a batter by a machine."Id. ¶ 4.
ProBatter is a Connecticut limited liability company located in Milford, Connecticut. ProBatter designs, manufactures, and sells baseball and softball pitching systems combining "computer and interactive video technology." Id. ¶ 5.
In June 2001, negotiations began between the parties for the purchase and installation of ProBatter pitching systems at Southampton Sports' training facility. Those negotiations involved visits by representatives from Southampton Sports to ProBatter' s offices in Milford, Connecticut and to a customer of ProBatter located in Norwalk, Connecticut. On August 29, 2001, Southampton Sports placed an order with ProBatter for six baseball and softball pitching systems and other related equipment. On December 19, 2001, the first pitching system was installed by ProBatter at Southampton Sports' training facility and the remaining systems were installed by early 2002.
According to Southampton Sports, the ProBatter pitching systems have "continually broken down and ceased operation," resulting in a "significant loss of revenue and profitability." Id. ¶ 16. Southampton Sports further claims that ProBatter has "failed and/or refused to properly repair or render said [pitching] systems operational, without significant breakdown." Id. ¶ 19. As a result, Southampton Sports withheld its final payment for the pitching systems, "requesting adequate assurance of performance by ProBatter." Pl.'s Resp. to Def.'s Mtn. to Dismiss or Transfer at 2. According to Southampton Sports, ProBatter "refused further performance unless it received final payment" for its pitching systems. Id. at 2-3.
ProBatter, on the other hand, claims that "certain of Southampton [Sports'] existing pitching machines were not the types which are compatible with the standard [ProBatter pitching] system [which is designed to add a video component to a customer's existing pitching machines]." Def.'s Mtn. to Dismiss or Transfer at 6. As a result, in January 2003, ProBatter "retrofitted" its standard pitching systems at its Milford, Connecticut facility — by designing a new configuration, ordering new parts, building two prototypes, and testing them — to be compatible with Southampton Sports' existing pitching machines. ProBatter asserts that Southampton Sports continues to use those systems but has refused to pay the full purchase price.
B. The Pending Connecticut Litigation and The Instant Complaint
To recover the remaining balance for the six pitching systems, ProBatter filed suit against Southampton Sports in Connecticut Superior Court on September 17, 2002 claiming, inter alia. breach of contract and conversion. On October 7, 2002, Southampton Sports removed that case to the United States District Court for the District of Connecticut.
1. Southampton Sports' First Motion to Dismiss or Transfer Venue in the Connecticut Litigation
Southampton Sports filed a motion to dismiss the Connecticut case or transfer it to the Eastern District of Pennsylvania on January 6, 2003; the motion was denied on March 31, 2003. In that motion, Southampton Sports argued that the district court in Connecticut lacked personal jurisdiction. That court disagreed and, after reviewing Connecticut contract law and the state's long-arm statute, concluded that the contract for the six ProBatter pitching systems was made in Connecticut "subsequent to [ProBatter's] acceptance of the Agreement." ProBatter v. The Southampton Sports Zone. Civil No. 3:02CV1776 (PCD), slip op. at 4 (D. Conn. Mar. 31, 2003) ("ProBatter I"). The Connecticut district court also held that the contract required performance in Connecticut:
[ProBatter] spent considerable time and effort retrofitting the [pitching systems] at its Connecticut facility to make it compatible with [Southampton Sports'] existing equipment. This was a contract of sale for a product that required further modification by the manufacturer according to the needs of the purchaser. As such, the contract here clearly contemplates and requires performance in [Connecticut].Id. In addition, that court found that Southampton Sports' contacts with Connecticut were "sufficient for the exercise of personal jurisdiction" and therefore Southampton Sports "could have reasonably anticipated being haled into court in Connecticut. Id. at 5.
The district court in Connecticut noted that Southampton Sports entered into a $250,000 contract for goods with a Connecticut company, "traveled to Connecticut twice to negotiate the Agreement in controversy, [and] made multiple phone calls and mailed several payments in connection with the purchased [pitching systems]. Id. at 5.
In its motion to dismiss or transfer venue, Southampton Sports also argued that the Connecticut action be transferred to the Eastern District of Pennsylvania on the ground that, as a small Pennsylvania business, "having to defend an action in Connecticut would be both expensive and inconvenient." Id. at 6. Because ProBatter, in its response to Southampton Sports' motion, identified seven Connecticut witnesses and Southampton Sports did not "identify by name any witnesses residing in Pennsylvania," the Connecticut court concluded that Southampton Sports failed to "demonstrate by clear and convincing evidence" that the action should be transferred and denied the motion to transfer venue to the Eastern District of Pennsylvania. Id. at 6-7.
2. The Instant Complaint
Southampton Sports filed the instant Complaint on April 28, 2003 in the Court of Common Pleas, Bucks County, Pennsylvania, alleging, inter alia, breach of contract and breach of warranty due to ProBatter's allegedly defective pitching systems failing to "substantially conform to the [August 29, 2001] contract." Complaint Tf 30. In that Complaint, Southampton Sports seeks the return of "all sums paid on account of the purchase prices for the [six pitching systems] purchased under the [August 29, 2001 contract]," damages, and declaratory relief, claiming it is entitled to "revocation of acceptance of the [six pitching systems] and rescission of the [August 29, 2001 contract]." Id. ¶ 27. ProBatter removed that Complaint to this Court on May 20, 2003 and filed the pending Motion to Dismiss or Transfer on June 2, 2003.
3. Southampton Sports' Renewed Motion to Change Venue in the Connecticut Litigation
On June 13, 2003, Southampton Sports filed a renewed motion to change venue in the District of Connecticut, again seeking transfer of the Connecticut action to the Eastern District of Pennsylvania. In that motion, Southampton Sports "resuscitate [d] its attempt to" transfer the action "on the basis that it ha[d] identified sixteen witnesses who reside in Pennsylvania, many to whom compulsory process [did] not apply." ProBatter v. The Southampton Sports Zone. Civil No. 3:02cvl776 (PCD), slip op. at 1 (D. Conn. Aug. 27, 2003) ("ProBatter II"). In light of Southampton Sports' renewed motion, this Court, on July 18, 2003, ordered that a decision on ProBatter's pending Motion to Dismiss or Transfer would be deferred until the Connecticut court ruled on the renewed motion.
The Connecticut court denied Southampton Sports' renewed motion to change venue on August 27, 2003. That court, noting that Southampton Sports failed to provide any reason for the "belated disclosure of its witnesses' identity," stated that the "existence of a potential third party defendant or witness not subject to this Court's jurisdiction is certainly a factor to consider, but is not necessarily dispositive." Id. at 3 (citations omitted). In addition, the court concluded that because the "deadlines for discovery and dispositive motions have passed . . . no efficiency would be gained by transferring the case to Pennsylvania."Id. In addressing Southampton Sports' claims that it would have to travel a long distance to Connecticut if the action was not transferred to Pennsylvania, the Connecticut court stated that "one party will always arguably be disadvantaged by having to travel to another forum, and this is not a proper basis to transfer venue." Id. at 4 (citation omitted).
III. DISCUSSION
In light of the Connecticut court's denial of Southampton Sports' renewed motion to change venue, the pending Motion to Dismiss or Transfer is ripe for consideration. In that Motion ProBatter argues that the action should be dismissed because: a) the Connecticut suit was the first-filed action; b) a forum selection clause in documents sent to Southampton Sports provided for jurisdiction and venue in Connecticut; and c) claims in the instant Complaint should have been asserted by Southampton Sports as compulsory counterclaims in the first-filed action. In the alternative, ProBatter seeks to transfer the case to the District of Connecticut pursuant to 28 U.S.C. § 1404(a).
"Under the first-filed rule, in cases of federal concurrent jurisdiction involving the same parties and same issues, the court of first-filing must proceed to decide the matter." Zelenkofske v. Stevenson, No. 99-3508, 1999 U.S. Dist. LEXIS 12137, at *7 (E.D. Pa. Aug. 5, 1999) (citing EEQC v. University of Pennsylvania. 850 F.2d 969.971 (3d Cir. 1988); Crosley Corp. v. Hazeltine Corp., 122 F.2d 925, 929 (3d Cir. 1941) ("In all cases of federal concurrent jurisdiction, the court which first has possession of the subject must decide it.") (citation omitted). "The first-filed rule encourages sound judicial administration and promotes comity among federal courts of equal rank." EEOC. 850 F.2d at 971. This "policy of comity has served to counsel trial judges to exercise their discretion by enjoining the subsequent prosecution of `similar cases . . . in different federal district courts.'" Id. (quotingCompagnie Des Bauxites De Guinea v. Ins. Co. of North Amer., 651 F.2d 877, 887 n. 10 (3d Cir. 1981)). The first-filed rule "guide[s] . . . courts of equal jurisdiction to exercise forbearance to avert conflicts and to avoid `interference with the process of each other.'" Id. at 974 (quotingKline v. Burke Constr. Co., 260 U.S. 226, 229 (1922))
Departures from the first-filed rule are "rare" and the second action should proceed only in unusual or exceptional circumstances. Id. at 979. Exceptions have been made where a plaintiff in the first-filed action acted in bad faith or was motivated by forum shopping, the second-filed suit had "developed further [than the initial suit] at the time the motion [to dismiss or transfer] is made," and "the first-filing party instituted suit in one forum in anticipation of the opposing party's imminent suit in another, less favorable, forum." Zelenkofske. 1999 U.S. Dist. LEXIS 12137, at *7 (quoting EEOC. 850 F.2d at 976).
In this case, the first-filed action was ProBatter's suit against Southampton Sports in the District of Connecticut. That action involves the same parties and the same issues — i.e., the parties' respective obligations pursuant to the August 29, 2001 purchase-and-sale agreement of six ProBatter pitching systems — as in the second-filed action, Southampton Sports' suit against ProBatter in this Court. Thus, absent unusual or exceptional circumstances, the first-filed rule applies.
Southampton Sports argues that the first-filed rule should not apply because ProBatter initiated the Connecticut action in bad faith by "abruptly terminat[ing] settlement discussions," and filing suit in Connecticut "to keep the litigation there despite the fact that no venue existed in that state or district." Pl.'s Resp. to Def.'s Mtn. to Dismiss or Transfer at 7. Southampton Sports also contends that ProBatter filed suit in Connecticut for the purpose of forum-shopping. The Court disagrees and concludes that ProBatter did not act in bad faith and was not motivated by forum shopping in the first-filed suit. The Connecticut court has already determined that jurisdiction and venue with respect to that suit was proper because, inter alia, the contract between the parties for the pitching systems was made in Connecticut when ProBatter accepted the contract, and the agreement required performance in Connecticut. Moreover, Southampton Sports did not file the instant action until April 28, 2003, nearly seven months after the first-filed action.
Given the Court's conclusion that there are no unusual or exceptional circumstances warranting a departure from the application of the first-filed rule, it must now determine how to dispose of the instant Motion to Dismiss or Transfer. "When the first-filed rule applies, a court may dispose of a second-filed action by dismissing it without prejudice to the plaintiff repleading his claims in the district of [the] prior action or, under 28 U.S.C. § 1404(a), transferring the second action to the court of first-filing for consolidation." Stone Creek Mech., Inc. v. Carnes Co., No. 02-CV-1907, 2002 U.S. Dist. LEXIS 20721, at *10 (E.D. Pa. Oct. 25, 2002) (internal footnote and citations omitted). The Court notes that ProBatter does not state a preference for dismissal or transfer in the pending Motion, although Southampton Sports prefers a transfer. Because of the prior pending action in Connecticut, the Court concludes that the "interest of justice" is better served by transfer of the instant suit to the District of Connecticut. 28 U.S.C. § 1404(a).
"The presence of . . . related cases in the transferee forum is a substantial reason to grant a change of venue. The interests of justice and the convenience of the parties and witnesses are ill-served when federal cases arising out of the same circumstances and dealing with the same issues are allowed to proceed separately." Prudential Ins. Co. of Amer. v. Rodano. 493 F. Supp. 954, 955 (E.D. Pa. 1980): see also Weber v. Basic Comfort. Inc., 155 F. Supp.2d283, 286 (E.D. Pa. 2001) (Buckwalter, J.) ("[C]ourts have found that the presence of related cases in the transferee forum is a reason to grant a transfer."); Jontri Transp. Co. v. North Bank Dev. Co., 1990 WL 121511, *2 (E.D. Pa. 1990) ("It is in the interest of justice to transfer this case . . . as a consolidation with the other matter [which involved the same set of agreements between the parties for the lease of trailers] will eliminate any duplication of discovery and testimony."). Indeed, this consideration — of a related case in the transferee forum — is sufficient to tilt the balance in favor of transfer even when the convenience of parties and witnesses would favor a denial of a transfer motion. See Blanning v. Tisch. 378 F. Supp. 1058, 1061 (E.D. Pa. 1974) ("[I]f only the convenience of the parties and witnesses were at issue, I would deny the motion to transfer the action to New York. However, the pendency of what appears to be a related case in New York tilts the balance in the opposite direction.") (emphasis added).
In this case, the prior pending action in Connecticut is related to the instant suit. Both involve the same parties and the same issues arising out of the August 29, 2001 agreement. Accordingly, the Court grants ProBatter's Motion to Transfer and transfers the case to the District of Connecticut. The Motion to Dismiss is denied.
In light of this determination, the Court need not reach ProBatter's arguments regarding a forum selection clause and compulsory counterclaims.