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THIRD COURT OF APPEALS

AUSTIN, TEXAS

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Texas A&M Law Scholarship AUSTIN, TEXAS

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1999

Parallel Litigation

James P. George

Texas A&M University School of Law, pgeorge@law.tamu.edu

Follow this and additional works at: http://scholarship.law.tamu.edu/facscholar

Part of the Law Commons

Recommended Citation

James P. George, Parallel Litigation, 51 Baylor L. Rev. 769 (1999).

Available at: http://scholarship.law.tamu.edu/facscholar/427

This Article is brought to you for free and open access by Texas A&M Law Scholarship. It has been accepted for inclusion in Faculty Scholarship by an

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PARALLEL LITIGATION'

James P. George-

TABLE OF CONTENTS

I. PARALLEL LAWSUITS--AN OVERVIEW ............................................... 773

A. ParallelLitigation Defined and Distinguished............................ 773

B. The Milieu--FourDistinct Settings for ParallelLitigation.......... 776

C. The Remedies: Five Responses to ParallelLitigation................. 777

1. Do Nothing ............................................................................. 777

2. Transfer and Consolidation .................................................... 777

3. Dismissals and Stays (and Abatements) ............................... 778

4. Antisuit Injunctions ................................................................ 780

D. The Common Doctrines: Six Themes in ParallelLitigation ....... 782

1. The First-Filed Case ............................................................... 782

2. In Rem Cases .......................................................................... 782

3. Declaratory Actions ............................................................... 782

4. Degree of Similarity ................................................................ 783

5. Discretionary Standard ........................................................... 783

6. Com ity .................................................................................... 783

E. The Slow Development ofPrecedent and FederalCourt

Prom inence................................................................................... 784

F. Unitary Discussions...................................................................... 785

*G. Terminology.................................................................................. 785

II. INTRAJURISDICTIONAL LITIGATION ................................................... 785

A. Intra-FederalParallelLitigation................................................. 785

1. Who filed first? .......................................... . . .. . .. . . .. . . .. . . .. . . .. . . .. . 788

2. In rem cases ............................................................................ 788

3. Statutory Preemption ............................................................ 788

4. Which court decides? .................................... . . . .. . .. . . .. . . .. . . .. . . . .. 789

B. Transfer and Consolidation.......................................................... 789

1. Consolidation Within the Same Division .............................. 789

2. Move to Another Division Within the District ...................... 789

3. Move to Another Division or District to Correct Venue ....... 790

4. Transfers Based on Forum Selection Agreement .................. 791

*The author is grateful to Professors Anna Teller and Susan Phillips, and law librarian

Wendy Law, for significant help in researching and rewriting this article, and to attorneys Brian

Stagner, Lu Pham, Albon Head, and Jeff Bragalone for valuable editorial suggestions.

-Professor of Law, Texas Wesleyan University School of Law.

770 BA YLOR LA WREVIEW [Vol. 51:4

5. Inconvenient Forum Transfers ............................................... 792

6. Multidistrict Transfer of Multiple Cases for Consolidated

Pretrial Proceedings .............................................................. 795

C. Dismissal...................................................................................... 796

1. Voluntary Dismissals and The "Two Dismissal Rule" ......... 796

2. Involuntary Dismissals ........................................................... 797

D. Stays in Favor of OtherFederalCourt Litigation........................ 799

1. The Landis Case ..................................................................... 799

2. Various Tests in the Circuits .................................................. 801

3. Stay of Derivative Suits ......................................................... 807

.4. Enjoining Other Federal Litigation ........................................ 808

III. INTRASTATE PARALLEL LITIGATION ................................................... 813

A. Consolidationand TransfersIn Texas ......................................... 813

1. Consolidation W ithin One Court ........................................... 813

2. Transfers within a Judicial District ........................................ 813

3. Transfers Between Different Judicial Districts in the Same

State ........................................................................................ 814

a. Improper Venue .............................................................. 814

b. Impartiality................................... 814

c. Consent ...................................... 814

d. Inconvenient Forum........................................................ 815

e. Multidistrict Transfer..................................................... 815

B. Stays, Dismissals and Injunctions: Texas and Other States ..... 816

1. General Principles .................................................................. 816

2. Statutory Dismissal ................................................................ 819

IV. INTERSTATE PARALLEL LITIGATION ................................................... 820

A. "Transfers" to a Sister State ........................................................ 820

B. Dismissing or Staying the Local Action ....................................... 821

1. Dismissal Under the First-Filed Rule .................................... 822

2. Dismissal of the Second-Filed Declaratory Action ............... 825

3. Dismissals Based on Forum Selection Agreements ............... 826

4. Interstate Forum Non Conveniens ......................................... 832

5. Staying the Local Action ........................................................ 837

C. Antisuit Injunctions Against Sister State Litigation ..................... 840

1. General Principles in Texas ................................................... 841

2. Other States ............................................................................ 848

3. Refusal to Recognize Another State's Injunction .................. 849

V. FEDERAL COURTS AND PENDING STATE LITIGATION ......................... 849

A. Transferringthe FederalCase to State Court............. 850

B. Dismissingthe FederalAction Based on a Forum Selection

Agreement ..................................................................................... 851

1999] PARALLEL LITIGATION

854

C. Stays and DismissalsBased on the Abstention Doctrines............

1. Colorado River Abstention: Economy, Convenience and

"Wise Judicial Administration" ........................855

a. Moses Cone and Wilton Refine the Test .................

860

b. OtherFederal Tests for State-FederalParallels...........

863

2. Dismissals or Stays Based on Federalism-The Other

Abstention Doctrines ................................ 864

a. Pullman Abstention-- Unclear State Law with

ConstitutionalImplications.........................864

b. BurfordAbstention--Avoiding Conflict With Complex

State Regulatory Systems ...........................

870

c. Thibodaux Abstention: Difficult Questions of State

Law ........................................ 872

3. Abstention Procedure: Reserving Rights to a Federal

F orum .......................................... 874

D. Enjoining the State Action ............................... 875

1. The Younger/Pennzoil Doctrine and Equitable Abstention... 876

a. The Younger and Pennzoil Cases..................... 876

b. Younger's Application in Civil Cases...................

879

c. Perfecting a Younger Objection...................... 881

2. Statutory Abstention: The Anti-Injunction Act ...............

881

a. "ExpresslyAuthorized" Injunctions................... 882

b. Injunctions "In Aid of Its Jurisdiction"..................

885

c. Injunctions to Prevent Relitigation... * ...... 888

E. Summary of Limits on FederalCourtsEnjoining State Court

L itigation .......................................... 896

VI. 897

STATE COURTS AND PENDING FEDERAL LITIGATION ...................

A. "Transfers "from State to FederalCourt: FederalRemoval.....

897

B. Dismissing or Staying the State Case........................

898

1. Forum Selection Clauses ..............................898

2. O ther Grounds................................... 898

3. Enjoining the Federal Litigation .........................

901

VII. FEDERAL COURTS AND FOREIGN LITIGATION ........................

904

A. Dismissingor Staying the FederalAction .....................

904

1. The General In Personam Tests: Landis and

Colorado R iver .................................... 905

a. The First-to-JudgmentRule, the Laissez-Faire

Approach .................................... 909

b. Comity as a stand-alone test........................

910

2. Dismissals Based on Forum Selection Agreements .............

912

BA YLOR LAW REVIEW [Vol. 51:4

a.

Five FoundationalCases................................................ 913

i. The Bremen v. Zapata Off-Shore Company .............. 913

ii. Scherk v. Alberto-Culver Co ..................................... 916

iii. MitsubishiMotors Corp. v. Soler Chrysler-

Plymouth, Inc............................................................ 918

iv. Stewart Organization,Inc. v. Ricoh Corp................. 920

v. Carnival CruiseLines, Inc. v. Shute ......................... 921

b. Divergence as to Governing Law ................................... 923

c. IntrajurisdictionalCases................................................ 925

d. Interstate Cases.............................................................. 926

e. State-FederalCases........................................................ 926

f InternationalCases ........................................................ 928

i. Federal Question Cases ............................................. 929

ii. Diversity Cases Applying Federal Law to the

Forum Clause ............................................................ 931

iii. Diversity Cases Applying State Law to the Forum

Clause ........................................................................ 935

iv. Undecided as to Which Law Governs in Diversity

Cases ......................................................................... 936

g. What Law Governs Interpretation?................................ 937

h. The ProrogationDistinction........................................... 938

i. Form ofMotion and Standardof Review .............. 941

j. Ensuringthe Case's Survival ......................................... 941

3. Forum non conveniens dismissals ......................................... 942

a. Generally........................................................................ 942

b. Removal to FederalCourt to Obtain Different Forum

Non Conveniens Law ...................................................... 946

c. EnjoiningRepetitive Litigation of ForeignClaims

PreviouslyDismissed on Forum Non Conveniens

Grounds.......................................................................... 949

4. Dismissal or Stay of In Rem Cases ........................................ 950

B. FederalInjunctionsAgainst ForeignLitigation .......................... 953

1. Historical Development ......................................................... 953

2. Current Law ........................................................................... 955

3. M iscellaneous Points .............................................................. 966

VIII. STATE COURTS AND FOREIGN LITIGATION ......................................... 969

A. Transferringthe Case................................................................... 970

B. Dismissing or Staying the Local Case.......................................... 970

1. Comity .................................................................................... 971

2. Forum Selection Agreements ................................................. 974

3. Forum Non Conveniens ......................................................... 975

1999] PARALLEL LITIGATION 773

4. Another Dismissal Ground: Due Process and the Fair

Play and Substantial Justice Test ........................................... 979

C. Enjoiningthe ForeignLitigation.................................................. 981

1. The B asic Standard ................................................................ 981

2. Anti-Antisuit Injunctions ....................................................... 986

I. PARALLEL LAWSUITS--AN OVERVIEW

The keynote speaker at Fort Worth's 1999 bar awards banquet, Dee

Kelly, has stories about people and places in a career that began on

Speaker Sam Rayburn's congressional staff. Some of the audience no

doubt would have preferred his recollections to the intense address he

delivered. His choice--"What To Do When Your State Court Action is

Collaterally Attacked in Federal Court"--arose from the four lawsuits

generated by the airport dispute in Dallas and Fort Worth. This dispute is

not the first to generate duplicative litigation,, and the airport fight is not

Texas's most sensational example. That distinction may belong, at least

for the moment, to the Dallas Cowboys' decision to promote Pepsi and

Nike alongside the NFL's promotion of Coca Cola and Adidas, leading to

mirror-image lawsuits in New York. Outside of Texas, the Beatles did

their version in a management dispute that led to twin billings in New

York and England.2 So have Elvis,, Disney 4 and Caruso,5 to name only a

few. Although the tactics involved may be as old as litigation itself, their-

increasing high-stakes use have made parallel litigation a timely topic.

A. ParallelLitigationDefined and Distinguished

Parallel litigation-a dispute generating multiple lawsuits-is not a new

phenomenon and is not limited to celebrities or sensational controversies.

Besides the publicity-generating lawsuits noted above, divorce actions

have a long history of parallel lawsuits and conflicting judgments. Recent

years have seen an expansion both in the incidence and the subject matter

of parallel lawsuits, perhaps fueled by the traditional motivations of home-

'See Southwest Airlines Co. v. Texas Int'l Airlines, 546 F.2d 84, 87-89 (5th Cir. 1977)

(involving suits between Southwest Airlines and Dallas, filed in both federal and state courts).

2

See Abkco Indus., Inc. v. Lennon, 377 N.Y.S.2d 362 (N.Y. App. Div. 1975)

3

See Factors Etc., Inc. v. Pro Arts, Inc., 579 F.2d 215, 217 (2d Cir. 1978).

4

See Muller v. Walt Disney Prod., 822 F. Supp. 1033, 1034 (S.D.N.Y. 1993).

5

See Caruso v. Caruso, 143 A. 771, 772 (N.J. Ch. 1928), rev'd 148 A. 882 (N.J. 1930).

BAYLOR LAWREVIEW [Vol. 51:4

court advantage and differing laws, along with the expansion of personal

jurisdiction rules in the past fifty years.6

In spite of this increase, the vocabulary remains imprecise and

ambiguous. Parallel litigation would seem to mean identical or mirror

image lawsuits between identical parties, but is often used when the

lawsuits are not identical. Duplicative litigation has been defined as the

"simultaneous prosecution of two or more suits in which some of the

parties or issues are so closely related that the judgment in one will

necessarily have a res judicata effect on the other.", Earlier discussion

have noted three categories of parallel litigation: (1) repetitive actions:

multiple suits on the same claim by the same plaintiff against the same

defendant; (2) reactive suits: a separate suit filed by a defendant in the first

action against the plaintiff in the first action, seeking a declaratory

judgment that he is not liable under the conditions of the first action or

asserting an affirmative claim that arises out of the same transaction or

occurrence as the first suit; and (3) separate actions by class members on

the same cause of action raised in the class action, seeking to represent the

same or a similar class. These categories are perfectly parallel and clearly

subject to claim and issue preclusion, along with arguments that

simultaneous prosecution is inefficient and wasteful., A distinct fourth

category is "related litigation": separate suits involving similar parties or

issues to which claim preclusion may not apply, but eligible for issue

preclusion and to a lesser extent, subject to the same arguments as to

wasteful litigation. Treatment here includes all four categories, with

distinctions drawn as to their differing treatment in varying jurisdictions.

In discussing these cases and their remedies, this Article will use the

terms "parallel" and "duplicative" interchangeably, in reference both to

identical and mirror image lawsuits, as well as substantially similar

lawsuits with common questions of law or fact between substantially-but

not always perfectly-identical parties. This Article discusses (1)

repetitive suits by the same plaintiff against the same or similar

defendants, 9 (2) reactive suits filed by the defendant in the first action

6

See G. BORN, INTERNATIONAL CIVIL LITIGATION IN UNITED STATES COURTS 459 (3d ed.

1996) (hereinafter BORN, INTERNATIONAL CIVIL LITIGATION).

7

R. MARCUS & E. SHERMAN, COMPLEX LITIGATION 104 (3d ed. 1998).

sSee id. at 147-48 (citing Vestal, Repetitive Litigation, 45 IOWA L. REV. 525 (1960), and

Vestal, Reactive Litigation, 47 IOWA L. REV. 11 (1961)).

9

See Semmes Motors, Inc. v. Ford Motor Co., 429 F.2d 1197, 1200-01 (2d Cir. 1970); Foyt

v. Championship Auto Racing Teams, Inc., 947 F. Supp. 290, 291-92 (S.D. Tex. 1996).

1999] PARALLEL LITIGATION

against the plaintiff in the first action,' 0 (3) declaratory judgment suits filed

by a current or potential defendant lacking any real affirmative claim," and

(4) separate actions by class members on the same cause of action raised in

the class action.,,

Most of the cases discussed are reactive and anticipatory suits where the

defendant in the first case becomes the plaintiff in the second suit in a

different court, perhaps in a different state or country. In the two lawsuits,

both plaintiffs may believe their respective choice of forum to be more

appropriate, or even essential to success. Both plaintiffs may be reluctant

to forego their choice of forum, even though the entire lawsuit may be

litigable in one court.

Some of the cases are repetitive suits, and there are many reasons for a

party to file two lawsuits in the same matter. Three reasons are that (1)

the plaintiff anticipates a real or imagined jurisdictional flaw in the first

lawsuit, and files the second to beat the limitations period, (2) the first

forum makes a preliminary ruling that displeases the plaintiff, or (3)

without any ruling or action by the first forum, the plaintiff experiences

"post-filing dissonance" from discomfort with the judge, the type of court,

the locale, or some other aspect of the first lawsuit. Plaintiffs who file a

second lawsuit in the same matter often file a voluntary dismissal or

nonsuit in the first case. Some do not nonsuit, and that leads to repetitive

parallel litigation, and possibly reactive litigation. For example, assume

that P sues D in Forum A, and D then counterclaims against P. P now

decides that Forum A is undesirable because of the judge, locale, type of

court, a bad preliminary ruling, or P's intuition and files a second lawsuit

in Forum B that provides what P perceives as a better setting. Now the

lawsuit has two affirmative claimants, each desiring a distinct forum, in

what are now reactive suits that may both be aggressively pursued."

Yet another example is duplicative (but not quite parallel) litigation in

which a dispute is being litigated in two or more forums with somewhat

different parties and/or slightly different claims, but with significantly

overlapping parties, issues and claims. This example is not to suggest that

every time different lawsuits have overlapping issues or parties that they

"See Manufacturers Hanover Trust Co. v. Kingston Investors Corp., 819 S.W.2d 607, 609

(Tex. App--Houston [lst Dist.] 1991, no writ).

"See William Gluckin & Co., v. International Playtex Corp., 407 F.2d 177, 177-78 (2d Cir.

1969); Texas Liquor Control Bd. v. Canyon Creek Land Corp., 456 S.W.2d 891, 895 (Tex.

1970).

'2Katz v. Realty Equities Corp. of New York, 521 F.2d 1354, 1357 (2d Cir. 1975).

"See Semmes Motors, Inc., 429 F.2d at 1202-03.

776 BAYLOR LAWREVIEW [Vol. 51:4

are necessarily duplicative. To the contrary, many lawsuits in modem

litigation are repetitive and overlapping, but not duplicative. When the

lawsuits have a sufficient degree of overlap, or are identical, concerns may

arise as to the efficient use of the parties' and taxpayers' resources. This

Article explores the remedies for duplicative lawsuits and highlight a few

special problems in using those remedies.

One category of overlapping lawsuit that is not primarily featured in

this Article is the derivative suit. Some disputes involving multiple

litigation are not truly parallel or duplicative, but instead involve an

underlying suit with a later derivative. Two examples are (1) an

underlying action for liability where the defendant's insurer files a

derivative declaratory action to assert nonliability,1 and (2) an underlying

action in which a plaintiff's attorney has allegedly committed malpractice,

and the plaintiffs immediate derivative action for malpractice is filed

before the underlying action is final.' 5 These multiple disputes are neither

reactive nor repetitive. They often do not lend themselves to resolution

under the standard remedies for parallel litigation and instead may have

distinct tests. This category of multiple lawsuits is generally not addressed

here and when discussed is noted separately.

B. The Milieu--FourDistinct Settingsfor ParallelLitigation

The problems and tactical opportunities of parallel or related litigation

occur in four settings: (1) within the same jurisdiction, (2) between states

in the United States, (3) between the state and federal systems, and (4)

internationally. This discussion is organized under those headings. The

state and federal court approaches to these conflicts are similar in many

instances and identical in some. In spite of this similarity, this study

avoids consolidating different jurisdictions' approaches because of a

danger of quickly concluding that the law is homologous when it is not. In

many jurisdictions, there have been too few cases to permit development of

a well-considered policy for dealing with jurisdictional conflicts.

Moreover, the emergence of a more cohesive international community may

cause changes in the law.

The court's authority and willingness to remedy duplicative litigation

draws on a number of conflicting doctrines and policies. These include

honoring the plaintiffs choice of forum, favoring the first-filed lawsuit,

reluctance to dismiss an action that has proper jurisdiction and venue,

4

See Montrose Chem. Corp. v. Superior Court, 861 P.2d 1153, 1555-56 (Cal. 1993).

"See Adams v. Paul, 904 P.2d 1205, 1207 (Cal. 1995).

1999] PARALLEL LITIGATION 777

avoidance of waste, convenience to parties, respect paid to coordinate

courts and governments, and federalism concerns in state-federal conflicts.

C. The Remedies: Five Responses to ParallelLitigation

Litigants who find themselves in parallel litigation may choose from

five responses: (1) do nothing and continue to litigate both cases, (2)

transfer and consolidation, (3) dismissal, (4) stay, and (5) antisuit

injunctions. The Article discusses the latter four generally in that sequence

within each category, varying where the law combines two remedies, such

as dismissals and stays. The definitions immediately below provide a

common entry point for their application in the various jurisdictional

conflicts.

1. Do Nothing

Except for actions concerning real property, an outright bar to parallel

or related lawsuits does not exist in state and federal courts in the United

States. 6 There are, however, discretionary legal doctrines which may

cause the excessive suits to be dismissed, abated, enjoined, or transferred.

Parties to duplicative litigation may find relief in one or more of the four

remedies discussed below. On the other hand, if an attorney wishes to use

duplicate litigation, and the strategy is under attack by one of the motions

discussed below, these cases also provide the best defenses.

2. Transfer and Consolidation

Transfers and consolidations are distinct procedural functions, available

only within the same jurisdiction. This may be changing. Currently, there

are inter-jurisdictional means of moving disputes. Forum non conveniens

and enforcement of a forum selection agreement are examples, but these

methods are accomplished by dismissing in one forum and refiling in the

other. There are also proposals for inter-jurisdictional transfers in the form

of uniform acts and treaties, but few jurisdictions have adopted this

option.'" Within the jurisdiction, transferring a case for consolidation with

a parallel case is often unnecessary. Instead, parties merely amend one of

the lawsuits to add the necessary claims and parties from the other lawsuit.

Transfer and consolidation, may be necessary, however, to preserve claims

that for any reason may not be added by amendment. An example involves

"6See Princess Lida of Thum & Taxis v. Thompson, 305 U.S. 456, 466 (1939); Laker

Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 926-27 (D.C. Cir. 1984).

"7See infra Part IV.A.

BAYLOR LAWREVIEW [Vol. 51:4

a claim where a limitations period has run. Other reasons include using

discovery gathered in the transferred case and taking advantage of the

transferor court's preliminary rulings, which would be lost if the court

dismissed the case.

3. Dismissals and Stays (and Abatements)

The third and fourth responses to parallel litigation are dismissal and

stay, discussed together because of the confusion arising from the

ambiguous use of the term "abatement," which can mean both dismissal

and stay. A dismissal ends the case, usually without prejudice.", Dismissal

may not be the preferred option because it (1) terminates a lawsuit with

proper jurisdiction and venue, (2) upends the timetable in that case, and (3)

assumes a perfect identity with the parallel case, or at least sufficient

similarity that no claims are lost or other prejudice results. Nonetheless,

dismissal is available in several forms as discussed below. In both state

and federal courts, these forms include voluntary dismissals (either

unilaterally by the plaintiff or by stipulation), involuntary dismissal

pursuant to comity, and forum non conveniens dismissals.

A stay is a court's temporary suspension of the prosecution of its own

case. "Stay" sometimes describes a temporary suspension imposed by

another court, either on a party or the court.' 9 One example is a bankruptcy

court's automatic "stay" of related civil proceedings, and another is the

editor's title choice for the federal Anti-Injunction Act, which is termed a

"Stay of State court proceedings."20 This use may be a legitimate meaning

for stay, but it is less confusing to limit the term to a court's self-imposed

suspension of proceedings. Upon request, a court may suspend

prosecution of its own action, pending resolution of the other case. If the

other case becomes final (that is, it is decided on the merits by a competent

court, and becomes final under the law of the rendering state or country), it

should have a preclusive effect as to the stayed action which can then be

dismissed. On the other hand, if the parallel case does not result in a valid

and final judgment on the merits, then the stayed case may be revived and

litigated. If circumstances change during the stay, it may be lifted for good

cause. Case law, however, does not offer examples of this procedure in

stays imposed based on parallel litigation.

"But see the "two dismissal" rule, infra at Part II.C.1.

9See 28 U.S.C. § 2283 (1994).

2 See id.

1999] PARALLEL LITIGATION

Abatement is a more difficult term to understand because it can mean

both stay and dismissal. The Seventh Circuit has defined "abatement" as

"the overthrow or destruction of a pending action ... which defeats the

action for the present, but does not debar the plaintiff from commencing it

in a better way."2 Black's Law Dictionary echoes that definition, defining

"Abatement of Action" as "an entire overthrow or destruction of the suit so

that it is quashed and ended."2 2 On the other hand, "Plea in Abatement" is

defined as something that "merely suspends or postpones" the action's

prosecution.? Texas case law usage reflects this meaning, without

referring to Black's Law Dictionary.24 One Texas statute uses the term

"abatement" to describe a sixty-day suspension of prosecution arising from

the plaintiffs failure to provide written notice of the complaint prior to

filing suit.2 5 The first two meanings are consistent with dismissal, the last

three with a stay. An 1870 South Carolina case may explain. this

inconsistency:

The effect of an abatement at law and in equity is

materially different. "In the sense of Courts of Equity, an

abatement signifies only a preserit suspension of all

proceedings in the suit from the want of proper parties

capable of proceeding therein. At the common law, a suit,

26

when abated, is absolutely dead."

This distinction may have been lost with the merger of law and equity

in federal and most state courts. Whatever the reason for the conflicting

usage, this Article will avoid the term "abatement" where possible, using

dismissal or stay as indicated in the specific case. Where the case refers to

"abatement," this Article will note such usage and attempt to describe

whether the effect was a stay or dismissal.

One other distinction must be made between stays and dismissals.

Logically, dismissals are preferred over stays for duplicative litigation

within the same jurisdiction, while stays are preferred over dismissals (if a

remedy is available at all) for parallel cases in multiple jurisdictions. The

2

Bowles v. Wilke, 175 F.2d 35, 37-38 (7th Cir. 1949).

2BLACK'S LAW DICTIONARY 4 (6th ed. 1990).(quoting Carver v. State, 398 S.W.2d 719

(1966)).

3ld. at 1151 (citing United States v. Brodson, 234 F.2d 97, 99 (7th Cir. 1956)).

2

See Miles v. Ford Motor Co., 914 S.W.2d 135, 139 (Tex. 1995).

25

See TEx. Bus. & COM. CODE ANN., § 17.505(d)(Vemon Supp. 1999).

26

Pringle v. Sizer, 2 S.C. 59, 68 (1870) (quoting JOSEPH STORY, COMMENTARIES ON EQUITY

PLEADING § 354 (C.C. Little & J. Brown 1848)).

780 BAYLOR LAWREVIEW [Vol. 51:4

use of dismissals for local duplication is more economical, while the use of

stays for interjurisdictional conflicts reflects courts' greater reluctance to

extinguish a case and expose the local plaintiff to the mercy of a distant

forum. Stays provide the protection of reviving the case in the event of

problems in the other forum. Where dismissals are available in

interjurisdictional conflicts the test is a heightened one, often linked to

forum non conveniens analysis.17 The test for stays, on the other hand, may

be as simple as the "first-filed rule."2 One exception to the no-dismissal

rule involves in rem cases, where courts will generally dismiss in deference

to the court first assuming control over the property.2 9

4. Antisuit Injunctions

A fourth option is to ask the court to enjoin the opposing party from

pursuing the other case. 0 This option is especially appropriate when the

other court may not grant a motion to stay its own action." The injunction

applies only to the party being enjoined; it does not apply to the court or

judge presiding over the parallel case.,2 In other words, courts of original

jurisdiction may not enjoin each other." However, an appellate court with

jurisdiction over a trial court may freeze the litigation in the lower court

34

where a court improperly denied a motion for stay.

One treatise describes four applications for antisuit injunctions: (1)

stopping litigation of the same dispute in another forum; (2) consolidating

related-but-not-identical claims in the moving party's preferred forum, (3)

stopping the relitigation of a completed case in another forum, and (4) a

counter-injunction, or anti-antisuit injunction to prevent the opponent from

seeking an antisuit injunction in another forum.3 Stays and dismissals may

achieve the same objectives, however, antisuit injunctions may be most

effective when the "other" forum is unlikely to grant the stay or dismissal.

The antisuit injunction remedy began as an intrajurisdictional device in

fifteenth century England, where common law courts issued writs of

"See, e.g., White Light Prods., Inc. v. On The Scene Prods., Inc., 660 N.Y.S.2d 568 (1997);

RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 84 cmt. e (1971).

28

See infra text accompanying notes 63-85.

29

See id.

3°See 16 WRIGHT & MILLER, FEDERAL PRACTICE AND PROCEDURE § 3923 (2d. ed. 1996).

3

'See id.

32See id.

33See id.

34

See id.

3'BORN, INTERNATIONAL CIVIL LITIGATION, supra note 6, at 475.

1999] PARALLEL LITIGATION

prohibition to undermine the expansion of ecclesiastical courts'

jurisdiction.36 The chancery courts adopted the remedy, using their

equitable power to restrain parties from bringing related suits in common

law courts. Antisuit injunctions were eventually used to enjoin foreign

proceedings, which Professor Bermann cites as its most common use in

English courts today.,8

Today, state courts have the power to enjoin litigation (1) within the

same state, pursuant to that state's law, with no constitutional or

international law hurdles to clear;19 (2) in sister state courts under the

common law doctrine of comity;40 and (3) in foreign countries.41 State

courts may not enjoin federal litigation absent extraordinary circumstances

such as maintaining the court's in rem jurisdiction.42 A federal court's

power is similar. A federal court may restrain federal litigation,'4 state

litigation where the effect would be to defeat or impair the jurisdiction of

the federal court,"4 and foreign litigation under the doctrine of comity and

4

the limits discussed in Gau Shan Co., Ltd. v. Bankers Trust Co. 1

Injunction is the most controversial of the remedies for parallel

litigation because it interferes with another court's power, often in another

state or country. As noted above, the injunction is against the party, not

against the other court.46 Some courts and commentators, however, suggest

that this is a meaningless distinction and that the other forum may perceive

7

that its powers are being challenged or compromised.4

36

See George A. Bermann, The Use of Anti-Suit Injunctions in InternationalLitigation, 28

COLUM. J. TRANSNAT'L L. 589, 593 (1990) (hereinafter Bermann, Anti-Suit Injunctions).

3"See id. at 593-94.

38

See id.; see also Hartley, Comity and the Use of Antisuit Injunctions in International

Litigation, 35 AM. J. COMP. L. 487, 489 (1987).

39

See Gannon v. Payne, 706 S.W.2d 304, 305-06 (Tex. 1986).

4°See Christensen v. Integrity Ins. Co., 719 S.W.2d 161, 163 (Tex. 1986).

41

See Gannon, 706 S.W.2d at 305-06 (noting that this power is accompanied by a "caveat of

limited use").

42

See Donovan v. City of Dallas, 377 U.S. 408,412 (1964); cf University of Tex. v. Morris,

344 S.W.2d 426, 428 (Tex. 1961).

4

3See Municipal Energy Agency of Miss. v. Big Rivers Elec. Corp., 804 F.2d 338, 343 (5th

Cir. 1986).

44See Kline v. Burke Constr. Co., 260 U.S. 226, 229 (1922).

4

1See Gau Shan Co. v. Bankers Trust Co., 956 F.2d 1349, 1354-55 (6th Cir. 1992).

"'See Gannon, 706 S.W.2d at 306.

47

1d. at 306-07(citing Laker Airways v. Sabena, Belgian World Airlines, 731 F.2d 909, 937

(D.C. Cir. 1984)); see also Total Minatome Corp. v. Santa Fe Minerals, Inc., 851 S.W.2d 336,

339 n.5 (Tex. App--Dallas 1993, no writ); BORN, INTERNATIONAL CIVIL LITIGATION, supra note

6 at 476 nn. 39-40; Trevor C. Hartley, Comity and the Use of Antisuit Injunctions in

782 BAYLOR LAWREVIEW [Vol. 51:4

D. The Common Doctrines: Six Themes in ParallelLitigation

Six points transcend these remedies, some with consistent applications

and some varied according to the setting and the law of a specific

jurisdiction.

1. The First-Filed Case

In intrajurisdictional conflicts, there is a heavy presumption favoring

the first-filed case, but it may be overcome by a party's misconduct (such

as forum shopping) or important state interests. The first-filed rule appears

irregularly in other settings, varying from a mere element of a larger test to

the same presumptive strength it has in intrajurisdictional settings.

2. In Rem Cases

The first-filed presumption is stronger for in rem cases, which almost

invariably defer to the first-filed action as noted in PrincessLida of Thurn

and Taxis v. Thompson . In many jurisdictions, the presumption is weaker

to non-existent for parallel case conflicts involving another jurisdiction,

including state-federal conflicts within the same territory. Because of the

dominance of the first-filed rule for in rem cases, readers should assume

that cases discussed herein are in personam unless stated otherwise.

3. Declaratory Actions

Declaratory actions are suspect when they are mirror images of the

other suit, but that alone will not cause one to be dismissed. In many

jurisdictions, a second-filed declaratory action is dismissed as a matter of

law if it seeks no greater relief than the first-filed action. In some

jurisdictions, this applies to first-filed declaratory actions under certain

circumstances, such as a perception that the first plaintiff was merely

forum shopping.

InternationalLitigation, 35 AM. J. COMP. L. 487, 506 (1987); William L. Reynolds, The Proper

Forumfor a Suit: TransnationalForum Non Conveniens and Counter-suit Injunctions in the

FederalCourts, 70 TEx. L. R V. 1663, 1713 (1992) (citing George A. Bermann, The Use of

Anti-Suit Injunctions in International Litigation, 28 COLUM. J. TRANSNAT'L L., 589, 629

(1990)).

41305 U.S. 456, 466 (1939). See infra Part VII.A.4.

1999] PARALLEL LITIGATION

4. Degree of Similarity

To the extent that identity of parties and claims is an issue, the meaning

of identity varies broadly among jurisdictions, and sometimes among

courts within a jurisdiction

5. Discretionary Standard

The legal issues that resolve conflicts in parallel litigation are generally

discretionary.

6. Comity

Some remedies rely on comity in various forms and to various degrees,

with some states' remedies based entirely on comity. As a legal doctrine,

comity is weak, imprecise and unreliable. Nonetheless, it has given many

courts a nail on which to hang a ruling. Comity's weakness derives from

its nonbinding nature-it is designed to promote friendly relations between

sovereigns and not to protect private rights. Its disfavor is reflected in its

omission from the Restatement (Second) of Conflict of Laws, although that

may be the result of the drafters' wish to compensate for the over-emphasis

on comity in earlier choice of law theories.49 Comity does receive'

somewhat greater mention in the Restatement (Third) of Foreign Relations

Law of the United States,so discussing (1) its role in international law;' (2)

extraterritorial application of antitrust law;12 (3) enforcement of foreign

judgments;"3 (4) "reasonableness";14 and (5) in the introductory note to Part

IV discussing prescriptive jurisdiction. Even so, these five references are

seemingly minimal treatment for a concept that is pervasive in American

courts, reflecting the dim view that scholarly texts have of the doctrine."

On the other hand, sufficient prolonged use of a nonbinding, nonlegal

doctrine can result in its ripening into a legal doctrine capable of

predictable application. It is difficult to determine whether this is the case

with regard to comity, in spite of the increased application of comity in

interstate and international procedural matters. In light of this uncertainty,

49RESTATEMENT (SECOND) OF CONFLICT OF LAWS (1971).

"°RESTATEMENT (THIRD) OF FOREIGN RELATIONS LAW OF THE UNITED STATES (1987).

1

" See id. § 101, cmt. e.

2

See id. § 415, note 4.

3

See id. § 481, note 1.

"'See id. § 402, cmt. a.

55

See EUGENE F. SCOLES & PETER HAY, CONFLICT OF LAWS 11-15 (2d ed. 1992)

(discussing comity and its critics); see also James Paul George & Fred C. Pedersen, Conflict of

Law, 41 SW. L.J. 383, 409-10 nn.217-21 (1987)

BAYLOR LAWREVIEW [Vol. 51:4

a lawyer should be aware of comity's arguably suspect status as a legal

norm and be prepared either to challenge or defend its application.

E. The Slow Development of Precedentand Federal Court

Prominence

Precedent developed slowly for the doctrines and remedies discussed

here. The reasons are speculative, but most prominent may be the

distance that inhibited all but local parallel litigation until the most recent

decades. To the extent that remedies were available, parties in parallel

lawsuits may not have raised them as often, instead preferring races to

judgment to gain a preclusion and execution advantage. Another reason

may be the interlocutory nature of these remedies and a possible non-

appealability that inhibited the development of stare decisis.

In examining this doctrinal development, this Article's earlier drafts

placed state courts first in each setting because of their status as courts of

general jurisdiction. It was the author's initial belief that these remedies

were largely based on common law that originated some time ago in state

courts. However, to the contrary, some of these doctrines developed

almost exclusively in federal courts.

The reasons for federal prominence are also speculative. First, orders

that were appealed may have been less likely to be reported in state courts.

Second, until the last fifty years American jurisprudence subscribed to a

strong concept of state sovereignty, which may have discouraged remedies

against parallel litigation except in intrajurisdictional conflicts. Federal

courts, as components of a single judiciary, had a greater opportunity to

develop rules and precedents for parallel litigation that spanned any

significant distance. Third, international disputes may have been more

likely to be filed in federal court or removed there for a dismissal motion.

Whatever the reason, federal law provides a somewhat better history of

these issues and is discussed first in each of the parallel settings.

State law discussions are nonetheless important for an accurate survey

of current law. This Article focuses on Texas because of the author's

familiarity with that law, but has examples from other states. Primary

attention is given to states whose decisions appeared in digests more often

and whose law was therefore presumably better developed, as well as to

states whose law provides a contrast. A brief foreign law section provides

general cites on these topics 'without attempting the same analysis.

1999] PARALLEL LITIGATION

F. UnitaryDiscussions

In spite of the individual treatment given each remedy in each

jurisdictional setting, some topics required a unitary discussion to fully

illustrate the doctrine and its development. These unitary discussions

which cover forum selection clauses, forum non conveniens, and antisuit

injunctions, appear in Section VII (addressing international parallel

litigation in federal courts), and are cross referenced to other specific

sections.

G. Terminology

The paucity of writing in this area has left the terminology imprecise.

As noted above, the term "parallel litigation" is itself ambiguous and is

used here as a generic reference to pending related lawsuits.16 The term

"abatement" also has conflicting definitions. This article opts for the more

precise terms "stay" and "dismissal," and attempts to identify the correct

meaning for each use of "abatement" from case law or statutes." For

inconvenient forum remedies, this article uses two terms. The first,

"inconvenient forum" means statutory transfers within the same

jurisdiction, while the second, "forum non conveniens" refers to the

common law doctrine that provides for dismissal and re-filing in a

geographically distinct jurisdiction. References to the federal practice

treatise by Professors Wright, Miller, and others are made simply to

"Professor Wright" or "Wright."

II. INTRAJURISDICTIONAL LITIGATION

A. Intra-FederalParallelLitigation

Federal law disfavors simultaneous federal litigation and distinguishes

it from state-federal duplication.

Generally, as between state and federal courts, the rule is

that "the pendency of an action in the state court is no bar

to proceedings concerning the same matter in the Federal

court having jurisdiction .... ." As betweenfederal district

56

See discussion supra at Part I.A.

"'See discussion supra at Part I.C.3.

BAYLOR LAW REVIEW [Vol. 51:4

courts, however, though no precise rule has evolved, the

generalprinciple is to avoid duplicative litigation."

In the earlier Kerotest case, the Court had observed that solving the

problem of duplicative federal litigation must involve "giving regard to

conservation of judicial resources and comprehensive disposition of

litigation, [and did] not counsel [a] rigid mechanical solution." 9 Instead,

an evaluation of matters of equity should be made and "an ample degree of

discretion" should be afforded the lower court.60

When faced with duplicate federal litigation, most courts use all four

remedies: transfer and consolidation, dismissal, stay, and injunction,6

although some have observed only three, omitting dismissal.62 The

common thread in exercising these remedies is the "first-to-file" rule, and

its application is fairly uniform throughout the remedies. West Gulf

Maritime Ass 'n v. ILA Deep Sea Local 24 offers perhaps the best Fifth

Circuit statement, holding that the Texas federal court should have heeded

the first-filed rule and "stayed, dismissed, or transferred" its second-filed

action in deference to the New York federal court that had jurisdiction over

a broader range of issues in the dispute.63 West Gulf further noted the

policies underlying the first-filed rule were "comity and orderly

administration ofjustice," both of which stress the importance of deference

to prior exercised power and the efficiency and convenience of letting one

court adjudicate substantially-related issues.6

The following brief synthesis of the first-filed rule is generally

applicable to the discussion of remedies that follows. Application of the

rule dictates that the first action filed takes priority unless (1) the balance

of convenience strongly favors the other forum, or (2) there are special

(sometimes "compelling") circumstances that justify an alternative such as

SColorado River Water Conservation Dist. No. 7 v. United States, 424 U.S. 800, 817 (1976)

(emphasis added)(citations omitted).

59

Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180, 183 (1952).

'Id. at 183-84. See also Sutter Corp. v. P & P Indus., Inc., 125 F.3d 914, 917 (5th Cir. 1997)

(discussing the "first-to-file rule" of parallel federal litigation).

"' See West Gulf Maritime Ass'n. V,.ILA Deep Sea Local 24, 751 F.2d 721, 728-32 (5th Cir.

1985) (vacating a preliminary injunction and remanding for an order of stay, transfer, or

dismissal).

62

See Smith v. SEC, 129 F.3d 356, 361 (6th Cir. 1997).

63751 F.2d 721, 730 (5th Cir. 1985).

"Id. at 729 (quoting Washington Metro. Area Transit Auth. V. Ragonese, 617 F.2d 828, 830

(D.C. Cir. 1980)).

1999] PARALLEL LITIGATION 787

dismissing, enjoining or transferring the first action, or allowing both to be

litigated.

The balance of convenience test resembles an inconvenient forum

contest under 28 U.S.C. § 1404(a).65 The special factors are more vague,

but may include the following:

(1) the similarity of the claims, though perfect identity is not required;"

67

(2) the relative progress of the two cases;

(3) the existence of a forum selection clause;0

(4) a plaintiff's need to litigate that claim individually rather than join a

class;69

(5) the need to consolidate related actions; °

7

(6) multidistrict litigation transfer for pretrial purposes; '

(7) lack of notice of the first-filed claim;72

(8) having jurisdiction over necessary or desirable parties;71

61See 800-Flowers, Inc. v. Intercontinental Florists, Inc., 860 F. Supp. 128, 133 (S.D.N.Y.

1994); Igloo Prods. Corp. v. Mounties, Inc., 735 F. Supp. 214, 218 (S.D. Tex. 1990).

"See Save Power Ltd. v. Syntek Fin. Corp., 121 F.3d 947, 950-51 (5th Cir. 1997)

(transferring first suit to second forum). But see Congress Credit Corp. v. AJC Int'l, Inc., 42 F.3d

686, 689-90 (1st Cir. 1994) (quoting Thermal Dynamics Corp v. Union Carbide Corp., 214 F.

Supp. 773, 776 (S.D.N.Y. 1963) for the proposition that suits "must be materially on all fours

with the other," and "must have such an identity that a determination in one action leaves little or

nothing to be determined in the other"); Computer Assocs. Int'l v. Altai, Inc., 893 F.2d 26, 29

(2d Cir. 1990) (stating that it is improper to enjoin related proceedings where the claim therein

would not have been a compulsory counterclaim).

"See Cooperative Centrale Raiffeisen-Boerenleen Bank B.A. v. Northwestern Nat'l Ins. Co.,

778 F. Supp. 1274, 1279 (S.D.N.Y. 1991) (denying stay of second suit).

SSee International Software Sys., Inc. v. Amplicon, Inc., 77 F.3d 112 (5th Cir. 1996); In re

Fireman's Fund Ins. Co., 588 F.2d 93 (5th Cir. 1979); Texas Source Group, Inc. v. CCH, Inc.,

967 F. Supp. 234 (S.D. Tex. 1997) (holding that the forum selection clause was valid in spite of

allegations of breach of underlying contract); American Airlines, Inc. v. Rogerson ATS, 952 F.

Supp. 377 (N.D. Tex. 1996); Wellons v. Numerica Say. Bank, FSB, 749 F. Supp. 336 (D. Mass.

1990).

"See Savidge v. Fincannon, 784 F.2d 186 (5th Cir. 1986) (denying transfer of individual suit

for consolidation with class).

70

See Factors Etc., Inc. v. Pro Arts, Inc., 579 F.2d 215, 219 (2d Cir. 1978) (denying transfer

to first forum because of later filing in second forum of related actions against other defendants

for the same tort of misappropriation of Elvis Presley's likeness); Davidson v. Exxon Corp., 778

F. Supp. 909, 912 (E.D. La. 1991) (transferring later-filed class action to district with more than

100 actions already on file).

"See In re Antibiotic Drugs Antitrust Litig., 355 F. Supp. 1400, 1402 (J.P.M.L. 1973).

72

See Employers Ins. of Wausau v. Prudential Ins. Co. of America, 763 F. Supp. 46, 49-50

(S.D.N.Y. 1991) (denying dismissal and transfer of second suit).

BAYLOR LAWREVIEW [Vol. 51:4

(9) discouragement of forum shopping;74

(10) the bad faith filing of a declaratory judgment action;" and

6

(11) "state interest" of the second forum.7

The burden of proving special circumstances is, of course, on the party

challenging the first-to-file rule."

1. Who filed first?

Closely filed actions may be deemed filed simultaneously. The most

extreme example of this was simultaneous electronic filing that was

alleged to be four-tenths of a second apart; the two courts selected the

forum by a coin toss. 8 In removed cases, the state court filing date

controls.7

2. In rem cases

While the "special factors" exceptions make the first-to-file rule

flexible, the rule is rigid for in rem cases. That is, the first court to acquire

jurisdiction of the res has priority to the exclusion of other courts. 0

3. Statutory Preemption

The "first-filed" presumption yields to statutory overrides such as

mandatory venue,8' exclusive jurisdiction statutes such as 28 U.S.C. §

1346(b) giving federal district courts exclusive jurisdiction over claims

1

73See Span-Eng. Assoc. v. Weidner, 771 F.2d 464, 470 (10th Cir. 1985) (addressing the

opportunity to add defendants); see also Chiron Corp. v. Advanced Chemtech, Inc., 869 F. Supp.

800, 802 (N.D. Cal. 1994).

7"See Amerada Petroleum Corp. v. Marshall, 381 F.2d 661, 663 (5th Cir. 1967) (staying first-

filed action); S-Fer Int'l, Inc. v. Paladion Partners, Ltd., 906 F. Supp. 211, 217 (S.D.N.Y. 1995)

(denying transfer of first suit, and granting injunction against second suit); Johnson Bros. Corp.

v. Int'l Bhd. of Painters, 861 F. Supp. 28, 30 (M.D. La. 1994) (dismissing first suit).

71See Commercial Union Ins. Cos. v. Torbaty, 955 F. Supp. 1162, 1163-64 (E.D. Mo. 1997)

(dismissing first suit).

7'See Muller v. Walt Disney Prods., 822 F. Supp. 1033, 1034-40 (S.D.N.Y. 1993) (denying

defendant's motions to stay or transfer based on balance of convenience and the second forum's

greater interest in the litigation).

'See Hanson PLC v. Metro-Goldwyn-Mayer, Inc. 932 F. Supp. 104, 106-08 (S.D.N.Y.

1996) (holding that burden was met and first suit was dismissed).

71See Mobil Oil Exploration Co. v. Federal Energy Regulatory Comm'n, 814 F.2d

998,

1001(5th Cir. 1987).

'gSee Igloo Prods. Corp. v. Mounties, Inc., 735 F. Supp. 214, 217 (S.D. Tex. 1990).

8

See Dailey v. National Hockey League, 987 F.2d 172, 175 (3d Cir. 1993).

"1See Sutter Corp. v. P & P Indus., Inc., 125 F.3d 914, 917 (5th Cir. 1997).

1999] PARALLEL LITIGATION

under the Federal Torts Claims Act," or statutes divesting a court's

jurisdiction, such as 28 U.S.C. § 1500, which divests jurisdiction in the

Court of Federal Claims for a litigant involved in a parallel action."

4. Which court decides?

Dillard v. Merrill Lynch, Pierce, Fenner & Smith, Inc., was a patent

dispute with the first suit filed in the Eastern District of New York and the

second in the Western District of Texas, with the New York court

enjoining that defendant from pursuing the Texas case, and the Texas

federal court enjoining the New York plaintiff from adding a related patent

claim in that action. + The Fifth Circuit reversed the Texas injunction and

held that the court first having jurisdiction in a patent case should be the

one to determine where the case should be tried, thus deferring the decision

to the New York federal court. 5

B. Transfer and Consolidation

1. Consolidation Within the Same Division

Federal Rule of Civil Procedure 42(a) permits the consolidation of

actions having a common question of law or fact, and provides for "joint

trial of any or all the matters at issue."6 It does not, however, address case

transfer. Case transfer is achieved within the division in which a court sits

by 28 U.S.C. § 1404(c), which permits a district court to order that a case

be tried at any court within the division. However, Rule 42(a) is directed

to convenience and economy, and (unlike Texas Rule 41) does not merge

the suits into a single cause of action.?1

2. Move to Another Division Within the District

28 U.S.C. § 1404(b) provides the court with discretion to transfer the

case from one division to another in the same district." Professor Wright

2

See Calhoun v. United States, 32 Fed. Cl. 400,407 (Fed. C1. 1994), aff'd 61 F.3d 918 (Fed.

Cir. 1995).

3

See Keene Corp. v. United States, 508 U.S. 200 (1993).

"961 F.2d 1148, 1161 (5thCir. 1992).

"See id. at 1161; see also, Smith v. SEC, 129 F.3d 356, 361 (6th Cir. 1997); Kentucky

Fried Chicken Corp. v. Diversified Packaging Corp., 552 F.2d 601, 603 (5th Cir. 1977); Mann

Mfg., Inc. v. Hortex, Inc., 439 F.2d 403, 407 (5th Cir. 1971).

86FED. R. Civ. P. 42(a).

"7See Johnson v. Manhattan Ry. Co., 289 U.S. 479, 497 (1933).

"See e.g.. Country Maid, Inc. v. Haseotes, 312 F. Supp. 1116, 1117 (E.D. Pa. 1970).

790 BAYLOR LAWREVIEW [Vol. 51:4

argues that section 1404(b) is limited to transfers in which all parties

consent, pointing out that the second sentence of section 1404(b), which

permits transfer of in rem actions brought by the United States without its

consent, is meaningless unless consent of all parties is required for other

transfers. Wright concludes that section 1404(a), which addresses transfers

"to any other district or division," governs motions for transfer within the

district lacking consent of all parties8 9

3. Move to Another Division or District to Correct Venue

Two federal statutes provide for venue transfers to correct improper

filing, both of which may be used in limited cases to transfer and combine

parallel actions. The first is a venue statute, 28 U.S.C. § 1406(a), which

provides for the dismissal of cases filed in the wrong venue, but permits

the court "in the interests of justice" to transfer the case to any district or

division with proper venue. 9° The court may transfer even if it lacks

subject matter jurisdiction, 9' or personal jurisdiction.92 Section 1406(a) has

been used to transfer improperly filed cases to districts where a properly

filed parallel case was pending. 91 Venue must be improper to trigger the

94

statute.

The second statute is 28 U.S.C. § 1631, which provides for transfer of

an action filed in a federal court lacking subject matter jurisdiction to

any other such [federal] court in which the action or appeal

could have been brought at the time it was filed or noticed,

and the action or appeal shall proceed as if it had been

filed in or noticed for the court to which it is transferred on

the date upon which it was actually filed in or noticed for

the court from which it is transferred.95

$915 WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE, §§ 3809 n.29, 3842 n.3; see

also Williams v. Hoyt, 556 F.2d 1336 (5th Cir. 1977).

9028 U.S.C. § 1406(a) (West 1993).

9

See United States ex reL Ayala v. Tubman, 366 F. Supp. 1268, 1270 (E.D.N.Y. 1973).

"See Goldlawr, Inc., v. Heiman, 369 U.S. 463, 465-66 (1962); Dubin v. United States, 380

F.2d 813, 815 (5th Cir. 1967).

"See Papercraft Corp. v. Procter & Gamble Co., 439 F. Supp. 1060, 1063 (W.D. Pa. 1977);

Scaramucci v. FMC Corp., 258 F. Supp. 598, 602 (W.D. Okla. 1966).

94

But see Manley v. Engram, 755 F.2d 1463, 1467 (11 th Cir. 1985) (holding that where

venue is proper and personal jurisdiction is lacking, § 1406 authorizes transfer); Dubin, 380 F.2d

at 815.

9028 U.S.C. § 1631 (1994).

1999] PARALLEL LITIGATION

This statute is aimed at several matters, but is principally a safety net

for parties who mistakenly file in a federal court lacking some aspect of

subject matter jurisdiction. This can be especially useful in cases where

the limitations period may expire before correct filing occurs. By the

statute's express terms, it applies where the transferor court lacks subject

matter jurisdiction.96 If the transferor court lacks subject matter

jurisdiction, it is no impediment to transfer that it also lacks personal

jurisdiction. 97 Although there are no cases using section 1631 in parallel

cases, two decisions implicate its use to transfer from a court lacking

jurisdiction to one having jurisdiction."s

4. Transfers Based on Forum Selection Agreement

The law of forum selection agreements is problematic, requiring a

unitary discussion which appears in the International Section." This

section will briefly discuss the issue in intra-federal conflicts. Forum

selection agreements have been enforceable in federal courts since Bremen

v. Zapata Off-Shore Corporation.' Bremen, an admiralty case with an

English forum-selection clause, was not controlling for a federal court

faced with a forum-selection clause naming another federal court.'0 '

Clauses that created an intra-federal conflict were first considered in

Stewart Organization,Inc. v. Ricoh Corporation.1 02 At the court of appeals

level, the Eleventh Circuit had conducted an Erie analysis and determined

that federal common law (Bremen) governed because the issue was not

contract, but venue, an issue controlled by federal law.' 3 The Supreme

Court affirmed on different grounds-that the role of section 1404(a) as a

federal statute precluded Erie analysis.,, The Supreme Court further held

that under section 1404(a), the forum clause was not per se enforceable,

"See In re Exclusive Indus., 751 F.2d 806, 808-09 (5th Cir. 1985).

97

See O'Neal v. Hatfield, 921 F. Supp. 574, 575-76 (S.D. Ind. 1996). Lack of venue is also

no impediment to a transfer under 28 U.S.C. § 1631. See Dornbusch v. Commissioner, 860 F.2d

611, 612 (5th Cir. 1988).

"See Hill v. U.S. Air Force, 795 F.2d 1067, 1070 (D.C. Cir. 1986) (holding court did not

abuse its discretion in failing to transfer a case sua sponte where neither party raised the issue);

York Assocs., Inc. v. Secretary of H.U.D., 815 F. Supp. 16, ,22 (D.D.C. 1993) (holding no

transfer where claims were "completely duplicative").

"See infra Part VII.A.2.

1'407 U.S. 1, 15 (1972).

"'"Id. at 8-9.

102487 U.S. 22, 28-29 (1988).

'0 3See Stewart Org., Inc. v. Ricoh Corp., 810 F.2d 1066, 1068-69 (11 th Cir. 1987) (en banc).

"See Stewart, 487 U.S. at 28-29.

792 BAYLOR LAWREVIEW [Vol. 51:4

but would instead trigger an inconvenient forum analysis in which the

forum agreement would be a factor to be balanced against other factors

such as convenience and economy.0 5

There are at least three instances where forum selection clauses are not

governed by section 1404(a). The first is where a plaintiff files suit in a

federal court in the designated location, but the defendant challenges

personal jurisdiction, and federal law differs from that state's law on

whether a forum selection clause waives personal jurisdiction objections."1)

In this situation, the Eleventh Circuit has held that state law governs. 0

The second instance is where the forum selection clause specifies a state

court, which of course makes a section 1404(a) venue transfer irrelevant.108

The third instance is where the designated forum is a foreign country.'1

5. Inconvenient Forum Transfers

In 28 U.S.C. § 1404(a),'"' Congress provided an inconvenient forum

statute resembling the common law forum non conveniens standards of

Gulf Oil"' and PiperAircraft*'-. The statute's test is simpler, providing for

transfer "to any other district or division where [the action] might have

been brought" when it is justified "[flor the convenience of parties and

witnesses" and "in the interest ofjustice."",

Section 1404(a) transfers have choice of law implications missing in

other venue transfer statutes. Following a section 1404(a) transfer, the

"°SSeeid. at 29. For examples of 28 U.S.C. § 1404(a) transfers to enforce a forum selection

agreement, see In re Fireman's Fund Ins. Cos., 588 F.2d 93, 94-95 (5th Cir. 1979) (upholding a

transfer to federal court in New Jersey, honoring a forum selection clause, in spite of venue rule

appearing to fix venue at the place of the contract's performance in Louisiana); Texas Source

Group, Inc. v. CCH Inc., 967 F. Supp. 234, 238 (S.D. Tex. 1997) (holding forum selection clause

was valid in spite of allegations of breach of underlying contract, resulting in transfer to Illinois);

Wellons v. Numerica Savings Bank, FSB, 749 F. Supp. 336, 337-38 (D. Mass. 1990)

(transferring first-filed action from Massachusetts to New Hampshire for consolidation with

second-filed action, consistent with forum selection clause).

"See Alexander Proudfoot Co. World Headquarters v. Thayer, 877 F.2d 912, 916 (11 th Cir.

1989) (distinguishing the jurisdictional challenge from the venue issue in Stewart). But see

Northwestern Nat. Ins. Co. v. Donovan, 916 F.2d 372, 376 (7th Cir. 1990) (holding that federal

law (Bremen) governs defendant's challenge to jurisdiction in the contractually-chosen forum).

'°"See id. at 919.

O'See infra Part V.B. for a discussion of what law governs these transfers.

'"gSee infra Part VII.A.3.

"28 U.S.C. § 1404(a) (1993).

"'Gulf Oil v. Gilbert, 330 U.S. 501 (1947).

"'Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981).

11328 U.S.C. § 1404(a).

1999] PARALLEL LITIGATION 793

transferee court must apply the transferor court's choice of law rule.' The

transferor court's choice of law rule is that of the state in which the court is

located.1"

Ginsey Industries,Inc. v. I TK Plastics,Inc. illustrates several aspects

of a section 1404(a) transfer involving a parallel action."'l Plaintiff Ginsey,

a Pennsylvania corporation with its principal place of business in New

Jersey, purchased vinyl plastic sheeting from defendant manufacturer,

I.T.K., based in Massachusetts.",7 Then, alleging the plastic was not fit for

its intended purpose, Ginsey sued in feaeral court to recover his payment

and consequential damages.'- Ginsey brought the action in a Pennsylvania

federal court, even though the pertinent facts occurred in Massachusetts

and New Jersey.' 9 ITK objected on personal jurisdiction grounds, but

alternatively sought transfer to the District of Massachusetts. 0

Ginsey failed to come forward with evidence on the personal

jurisdiction challenge, but instead asked for transfer to its home base in

New Jersey.2 ' The court noted both New Jersey and Massachusetts

satisfied section 1404(a)'s requirement that a case be transferred only to a

district where the action might have been brought (under requirements of

jurisdiction and venue)., The more difficult question was "whether the

balance of convenience weighs decisively in favor of one of the proposed

districts.",-3

Although the law strongly favors a plaintiff's choice of forum,114 that

presumption was overcome here by the presence of a pending related case

in a Massachusetts federal court. 5 The actions were not identical-they

involved distinct but related purchases of plastic that were both rejected.'

""See Piper Aircraft Co., 454 U.S. at 243 n.8 (1981) (citing Van Dusen v. Barrack, 376 U.S.

612, 613 (1946)).

'See Klaxon v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941).

16545 F. Supp. 78, 79-80 (E.D. Pa. 1982).

7

- See id. at 79.

1"See id.

"-Seeid. at 79-80

"'Seeid. at 79.

1'See id.

'2 2See id. at 80.

13Id.

24See id. "It is well-settled that 'unless the balance is strongly in favor of the defendant, the

plaintiff's choice of forum should rarely be disturbed."' Id. (quoting Gulf Oil Corp. v. Gilbert,

330 U.S. 501, 508 (1947)).

'See id. at 80-81.

12See id.

794 BAYLOR LAWREVIEW [Vol. 51:4

Relying on judicial efficiency and economy, the court chose

Massachusetts:

[I]t would appear that significant economies of time and

effort can be achieved if these actions were consolidated in

a single district. The essential questions of liability in both

actions concern the fitness of I.T.K.'s vinyl products for

the commercial purposes Ginsey sought to pursue. The

witnesses who will testify about I.T.K.'s product and about

Ginsey's reasons for purchasing that product are likely to

be the same in both cases. To be sure, consolidation of

these actions in the District of Massachusetts imposes a

burden on Ginsey. But transfer to that district would, in

my judgment, promote efficient judicial administration to

such an extent that plaintiff's preference for New Jersey is

outweighed. And consolidation ultimately benefits both

parties since it is clearly more convenient to conduct

related litigation in a single district rather than in two

27

separate forums.

As Ginsey noted, section 1404(a) limits transfer to "a district where the

action might have been brought," requiring that the transferee court must

have personal jurisdiction over all parties.128 In ContinentalAirlines, Inc. v.

American Airlines, Inc., a Galveston federal court denied defendant's

motion to transfer venue to Dallas, where much of the witnesses and

documents were, or failing that, to Houston on the grounds that Galveston

lacked direct air service and Houston was more accessible.29 The court

soundly rejected the notion that its location fifty miles from Houston

amounted to the level of inconvenience contemplated by section 1404(a).130

The court denied a section 1404(a) transfer in Muller v. Walt Disney

Productions,where the executor of Leopold Stokowski's estate sued Walt

Disney Productions regarding royalties on the video cassette of Fantasia.-

Disney had already sued in Pennsylvania, and moved to stay or transfer

12'Id. at 80-81.

"I1d. at 80 (citing Hoffman v. Blaski, 363 U.S. 335, 342-43 (1960)); see also Liaw Su Teng

v. Skaarup Shipping Corp., 743 F.2d 1140, 1148 (5th Cir. 1984) (applying the Hoffman standard,

overruled on othergrounds, In re Air Crash Disaster Near New Orleans, LA, 821 F.2d 1147 (5th

Cir. 1987)).

.29805 F. Supp. 1392, 1394 (S.D. Tex. 1992).

"OSee id. at 1400-01.

822 F. Supp. 1033, 1040 (S.D.N.Y. 1993).

1999] PARALLEL LITIGATION

this action there.- The court denied the motions, finding that the balance

of convenience and New York interest favored the New York forum. 1"

First-filed actions do not always prevail on choice of forum. Factors

Etc., Inc. v. Pro Arts, Inc., was part of a two-case dispute in federal courts

in Ohio and New York regarding exclusive ownership of Elvis Presley's

likeness. ' The Second Circuit upheld the trial court's refusal to transfer

the second-filed case to the Ohio federal court, where convenience favored

35

the second district.

When both venue and personal jurisdiction are improper, section 1406136

is the authority for transfer.'7 But where venue is proper and personal

jurisdiction is lacking, some courts still use section 1406, in spite of its

application only in cases where venue is improper. 8 Other courts-and

sometimes other appellate panels-have held that section 1404(a) is

appropriate here."19

6. Multidistrict Transfer of Multiple Cases for Consolidated

Pretrial Proceedings

The multidistrict litigation statute, 28 U.S.C. § 1407, provides for the

transfer of multiple civil actions from different districts with "one or more

common questions of fact" to be transferred to a common forum for

pretrial proceedings only.140 Unlike transfers under sections 1404(a),

1404(b) or 1406, which may be consolidated with a parallel action under

Federal Rule of Civil Procedure 42(a) ("Rule 42"), this may not be done

1'2See id. at 1034-35.

3

1' See id. at 1039.

134579 F.2d 215, 217 (2d Cir. 1978), overruled on other grounds, Pirone v. McMillan, Inc.

894 F.2d 579 (2d Cir. 1990).

'See id. at 218-19. Other cases using 28 U.S.C. § 1404(a) (1994) to transfer and

consolidate a second-filed parallel federal case include Jarvis Christian College v. Exxon Corp.,

845 F.2d 523, 528 (5th Cir. 1988); Sundance Leasing Co. v. Bingham, 503 F. Supp. 139, 141

(N.D. Tex. 1980) (holding that pending related action is a factor under 28 U.S.C. § 1404(a));

Santa Fe Int'l Corp. v. Transcontinental Gas Pipe Line Corp., 728 F. Supp. 435, 437 (E.D. Tex.

1989).

' See 28 U.S.C. § 1406 (1993).

See Goldlawr, Inc. v. Heiman, 369 U.S. 463, 466 (1962); Aguacate Consolidated Mines,

Inc. v. Deeprock, Inc., 566 F.2d 523, 524 (5th Cir. 1978).

'See Dubin v. U.S., 380 F.2d 813, 815-16 (5th Cir. 1967).

'"See Sargent v. Genesco, Inc., 492 F.2d 750, 758-59 (5th Cir. 1974); 15 Wright Miller &

Cooper, FEDERAL PRACTICE AND PROCEDURE § 3827 (2d ed. 1986).

14028 U.S.C. § 1407 (1993).

BAYLOR LAW REVIEW [Vol. 51:4

with a multidistrict transfer under section 1407.' But Rule 42 does have

limited use in a section 1407 transfer, as illustrated in Katz v. Realty

Equities Corporation.14 The court made a creative use of Rule 42 to order

a consolidated complaint in a section 1407 transfer of cases (including

class actions) from four districts in three states.1 43 The consolidated

complaint allowed the judge to assess how best to conduct the pretrial

discovery before returning the cases to their original forums for trial.'"

However, while cases transferred under section 1407 may not be

consolidated for trial, if the multidistrict pretrial proceeding resolves the

case, by summary judgment for example, the case will not be remanded to

45

the transferor district court.

In re Aviation Products Liability Litigation is an early case

distinguishing between cases that should be transferred for pretrial

proceedings and those that should not.146 The panel considered twenty

related lawsuits in various federal districts, for defective design,

manufacture and installation of helicopter engines.'' 7 Another instructive

example is In re the Upjohn Co. Antibiotic "Cleocin" Products Liability

Litigation, holding that discovery orders made prior to the multidistrict

transfer may be modified by the transferee judge. 148

C. Dismissal

1. Voluntary Dismissals and The "Two Dismissal Rule"

Federal Rule of Civil Procedure 41(a) ("Rule 41(a)") provides for

plaintiffs unilateral dismissal, or nonsuit, by notice if filed before

defendant answers or files a motion for summary judgment.'"4 If defendant

has answered or filed a dispositive motion, voluntary dismissal is still

'4 'See Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26, 38 (1998)

(holding that a court may not use section 1404 to retain a case for trial after obtaining the case

under section 1407).

142521 F.2d 1354, 1355 (2d Cir. 1975).

"14 See id. at 1356.

'"See id. at 1359.

1028 U.S.C. § 1407 (1993).

146347 F. Supp. 1401, 1404-06 (J.P.M.L. 1972).

' 47See id. at 1402.

148450 F. Supp. 1168, 1170 (J.M.P.L. 1978), affld 664 F.2d 114 (6th Cir. 1981). For other

examples, see In re Asbestos Litigation, 963 F. Supp. 247, 251 (S.D.N.Y. 1997); In re Air Crash

Disaster at Lockerbie, Scotland, 709 F. Supp. 231, 232 (J.P.M.L. 1989), aff'd, In re Pan Am

Corp., 16 F.3d 513, 517 (2d Cir. 1994).

"9Fed. R. Civ. P. 4 1(a).

1999] PARALLEL LITIGATION

available by stipulation signed by all parties.'1° A crucial feature of Rule

41(a) is the "two dismissal rule:" the first voluntary dismissal is without

prejudice, that is, it is not an adjudication on the merits unless otherwise

stated in the dismissal order.," The second dismissal is with prejudice, that

is, when a voluntary dismissal is filed "by a plaintiff who has once

dismissed in any court of the United States or of any state an action based

on or including the same claim."'" The rule's rigidity is illustrated in Lake

at Las Vegas Investors Group, Inc., v. PacificMalibu Development Corp.,

where the first dismissal, in state court, was not a dismissal as to all

defendants, and was required because the plaintiff was an unregistered

foreign corporation.'

2. Involuntary dismissals

If the plaintiff will not file a notice of dismissal or agree to a stipulated

dismissal, the court may involuntarily dismiss the case. This is not

authorized by Rule 41, in spite of Rule 41(b)'s provisions for involuntary

dismissals, they are expressly directed to the plaintiff's failure to prosecute

or comply with a court order or the Federal Rules of Civil Procedure.11 No

cases were found dismissing a duplicate lawsuit under Rule 41.

Federal Rule of Civil Procedure 12 ("Rule 12"), which authorizes

dismissals on seven grounds, also does not apply to parallel litigation

although it has been applied to motions to enforce a forum selection

clause.' 5 No other statute or rule authorizes dismissal for grounds other

than those in Rules 12 and 41. Federal law no longer provides for pleas in

abatement,S6 and as just stated, nothing in the federal rules or statutes

authorizes its equivalent. However, federal common law and the doctrine

of comity do provide for dismissal on other grounds. 157

'See id.

l5 11d.

15'Id. (emphasis added); see also Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 394-95

(1990).

11933 F.2d 724, 726-28 (9th Cir. 1991).

'"4Fed. R. Civ. P. 41(b).

'See infra Part VII.A.2.i.

'-See Fed. R. Civ. P. 7(a),(c).

'See Ulmet v. United States, 888 F.2d 1028, 1031 (4th Cir. 1989); 800-Flowers, Inc. v.

Intercontinental Florists, Inc., 860 F. Supp. 128, 135-36 (S.D.N.Y. 1994); Johnson Bros. Corp.

v. Int'l Bhd. of Painters, 861 F. Supp. 28, 29 (M.D. La. 1994); Commercial Union Ins. Cos. v.

Torbaty, 955 F. Supp. 1162, 1163 (E.D. Mo. 1997); Brower v. Flint Ink Corp., 865 F. Supp. 564,

567 (N.D. Iowa 1994); see also Michael Wells, The Role of Comity in the Law of Federal

Courts, 60 N.C. L. REv. 59, 61 n.5 (1981).

798 BAYLOR LA WREVIEW [Vol. 51:4

One federal rule that may impact, parallel cases is the compulsory

counterclaim rule stated in Federal Rule of Civil Procedure 13(a). In Adam

v. Jacobs, the court reversed the lower court's denial of Jacobs' motion to

dismiss the second-filed New York federal case in deference to his first-

filed Michigan federal case.158 The Second Circuit held that although

Adam had not technically violated Rule 13(a) by filing the second federal

action instead of a counterclaim in the first action in Michigan, the district

court abused its discretion in not dismissing or transferring Adam's

second-filed claim for consolidation with Jacobs' first action. 59 Although

the court recognized that filing a second lawsuit instead of a compulsory

counterclaim in the first did not violate Rule 13(a), Adam was taking a

chance.16° If Jacobs' first-filed action came to final judgment first, Adam's

compulsory counterclaim would then be precluded.'6 '

Courts are often reluctant to dismiss lawsuits for which there is valid

personal and subject matter jurisdiction. 162 In addressing duplicate

litigation, trial courts are more inclined to use the other remedies: stay of

the immediate case in that court; enjoining a party from pursuing the

parallel case; or, where appropriate, moving the immediate action to be

consolidated with the parallel case.163 Forum selection clauses are one area

providing for dismissals. The motion is raised under Federal Rule of Civil

Procedure 12(b)(6), failure to state a claim, rather than Rule 12(b)(3),

improper venue. '6

The problem of parallel federal adjudication also arises between federal

courts and federal administrative agencies. 165 Congress may assign certain

matters, for example, the granting of a federal permit to operate a

hazardous waste processor, to' a federal agency along with adjudicatory

authority as to parties who challenge the agency's decision.'" In these

cases, the agency may continue the litigation even when a party files suit in

an Article III court; that is, the lawsuit does not divest the agency of

158950 F.2d 89, 90 (2d Cir. 1991).

59

' See id. at 94.

'"See id. at 93.

16'See id.

" 2 See EEOC v. Univ. of Pa., 850 F.2d 969, 972 (3d Cir. 1988) (affirming the trial court's

refusal to dismiss the EEOC's second-filed lawsuit seeking enforcement of a subpoena against

the University of Pennsylvania for peer review records).

' 63See id. at 976 n.4.

'"See, e.g., Lambert v. Kysar, 983 F.2d 1 110, 1112 n.l (lst Cir. 1993).

16'See, e.g., Marine Shale Processors, Inc. v. EPA, 81 F.3d 1371, 1376 (5th Cir. 1996).

6See id.

1999] PARALLEL LITIGATION 799

jurisdiction.167 This was the result when Marine Shale Processors, Inc.,

applied to the Environmental Protection Agency ("EPA") for a permit to

dispose of hazardous waste."68 The EPA denied the permit, and Marine

Shale appealed within the agency's administrative review structure. 169 In

the meantime, the United States sued Marine Shale in federal district court

for burning waste without a permit.'7" In the federal lawsuit, Marine Shale

immediately challenged the EPA's continuing jurisdiction over the permit

application, arguing that by invoking the power of an Article III court, the

United States ended the EPA's adjudicatory authority.'-' The Fifth Circuit

disagreed, observing by comparison that,

State courts are not Article III courts, yet nothing in

Article III prevents a state court from litigating the same

controversy pending before a district court. In such cases,

if the state court reaches final judgment first, its

disposition may preclude further litigation in the [federal]

district court without violating Article III.'"7

D. Stays in Favor of Other FederalCourt Litigation

1. The Landis Case

In Landis v. North American Co., Justice Cardozo described a court's

inherent power to stay its own case. 17 Landis is not often cited by courts

addressing intrafederal parallels, apparently because its formulation of a

first-impression test has been superseded by later, more definitive cases. 74

It nonetheless established an important point.

The Landis opinion arises from two cases. 17 In understanding

Cardozo's ruling, it is important to note that the plaintiffs in the two cases

are distinct, although the issues were apparently identical.' 76 The plaintiff

in each of the two actions was a holding company described in the opinion

"67See id. at 1377.

68See id. at 1374.

169See id. at 1374-75.

'70See id.

'See id. at 1376-77.

at 1377 (citation omitted).

172ld.

'17299 U.S. 248, 254 (1936).

174See SEC v. Downe, 1993 WL 22126, at "12 (S.D.N.Y. Jan. 26, 1993).

See Landis, 299 U.S. at 249 (consolidating Landis v. North Amercan Co. and Landis v.

American Water Works & Elec. Co.)

"76See id. at 249.

800 BAYLOR LAW REVIEW [Vol. 51:4

as "the apex of a pyramid which includes subsidiary holding companies as

well as subsidiary operating companies, these last being engaged as public

' 77

utilities in supplying gas and electricity to consumers in different states.'

In addition to these two primary actions, other plaintiffs had filed forty-

seven similar suits in thirteen federal districts.17 Defendants filed motions

to stay in each of the two cases, hoping to use only one forum to resolve

the central issue of the constitutionality of the registration requirement. 7 9

The district court granted the stay, but the D.C. Circuit reversed.1SO On

review, the Supreme Court limited the question to a court's right to stay

cases pending the resolution of a related case.-1 This focus led to

Cardozo's often quoted statement:

Viewing the problem as one of power, and of power only,

we find ourselves unable to assent to the suggestion that

before proceedings in one suit may be stayed to abide the

proceedings in another, the parties to the two causes must

be shown to be the same and the issues identical ...

Apart, however, from any concession, the power to stay

proceedings is incidental to the power inherent in every

court to control the disposition of the causes on its docket

with economy of time and effort for itself, for counsel, and

for litigants. How this can best be done calls for the

exercise of judgment, which must weigh competing

interests and maintain an even balance. True, the suppliant

for a stay must make out a clear case of hardship or

inequity in being required to go forward, if there is even a

fair possibility that the stay for which he prays will work

damage to some one else. Only in rare circumstances will

a litigant in one cause be compelled to stand aside while a

litigant in another settles the rule of law that will define the

rights of both. Considerations such as these, however, are

counsels of moderation rather than limitations upon

82

power. 1

at

177Id. 249-50.

17'See id. at 252.

' 79See id. at 250-51.

'8 See id. at 253-54.

'8'See id. at 254.

'8 Ild. at 254 (citation omitted).

1999] PARALLEL LITIGATION

Thus, the Court ruled that a federal court may stay, at least temporarily,

an action that is less than a perfect parallel to a similar action that may

resolve common issues. 83 The test is a balancing test which requires the

movant to "make out a clear case of hardship or inequity in being required

to go forward, if there is even a fair possibility that the stay for which he

prays will work damage to some one else."114 Cardozo also clarified that

(1) the burden is on the party seeking the stay; and (2) the decision was

discretionary but must be kept "within the bounds of moderation."'' s

2. Various Tests in the Circuits

While Landis establishes the source of the power to stay a parallel case,

it did little to clarify when a stay should be granted, contrary to Cardozo's

opening paragraph: "The controversy hinges upon the power of a court to

stay proceedings in one suit until the decision of another, and upon the

propriety of using such a power in a given situation."186 To the extent that

the emphasized phrase promises a legal test, Landis offers only oblique

.phrases such as: (1) "the exercise of judgment, which must weigh

competing interests and maintain an even balance;"'- s (2) "clear case of

hardship or inequity;"",s (3) "fair possibility that the stay ...will work

damage to someone else;"'1 9 (4) "scandal to the administration of

justice;"'' 0 and (5) "discretion was abused if the stay was not kept within

the bounds of moderation."'' The absence of a usable legal standard may

explain why Landis is often ignored in legal opinions and scholarship

tracing the heritage of stays to remedy parallel cases in federal courts. 9

"83See id. at 254-55. Landis noted several lower court opinions that limited stays to cases

with identical parties. The Court observed that these cases could have been resolved on the

grounds that the stays, all of indefinite duration, were an abuse of discretion. The other view,that

courts simply lacked the power to stay a case whose parallel had different parties, was

unacceptable.

4

'I 1d. at 255.

8

' I1d. at 256.

86

" 1d. at 249 (emphasis added).

8

Id. at 254-55.

'Id. at 255.

1891d.

9

"' Id. (quoting Amos v. Chadwick, L.R. 9 Ch. Div. 459, 462).

1911d. at 256.

92

' In spite of these shortcomings, the Fifth Circuit has applied Landis, explaining that: "A

stay can be justified only if, based on a balancing of the parties' interests, there is a clear inequity

to the suppliant who is required to defend while another action remains unresolved and if the

order granting a stay can be framed to contain reasonable limits on its duration." GATX Aircraft

Corp. v. M/V Courtney Leigh, 768 F.2d 711,716 (5th Cir. 1985) (citing Landis, 299 U.S. at 254-

BAYLOR LAWREVIEW [Vol. 51:4

With no solid guidance from Landis, federal courts have found other

authorities for staying local cases in deference to other federal litigation.

One often cited case is Kerotest Manufacturing Co. v. C-O-Two Fire

Equipment Co., a parallel patent dispute in which the Supreme Court

affirmed a stay of the second-filed declaratory judgment action.19 Kerotest

fails to add anything substantive to Landis:

Wise judicial administration, giving regard to conservation

of judicial resources and comprehensive disposition of

litigation, does not counsel rigid mechanical solution of

such problems. The factors relevant to wise administration

here are equitable in nature. Necessarily, an ample degree

of discretion, appropriate for disciplined and experienced

judges, must be left to the lower courts.... Even if we

had more doubts than we do about the analysis made by

the Court of Appeals, we would not feel justified in

displacing its judgment with ours.94

In other words, standards with identifiable elements are inappropriate

here because the management of parallel litigation within the federal

system requires a case-by-case analysis in which pertinent factors will vary

from case to case. Of course, this approach may have contemplated that

guidelines would develop over time, and they did.

In spite of being somewhat ignored in domestic parallel settings, Landis

is cited with some regularity by federal courts considering stays of the

immediate action in deference to foreign actions.19 These cases,

fortunately, have developed the legal test missing in Landis. One case

considering a stay in deference to a first-filed Canadian case identified the

following factors:

[1] principles of comity, [2] the adequacy of relief

available in the alternative forum, [3] promotion of judicial

efficiency, [4] the identity of the parties and issues in the

two actions, [5] the likelihood of prompt disposition in the

alternative forum, [6] the convenience of the parties,

55). GATX upheld the federal trial court's denial of a stay pending the resolution of a non-

parties' bankruptcy. See GATX, 768 F.2d at 717.

193342 U.S. 180, 186 (1952).

1941d. at 183-84.

195See infra Part VII.A. 1.

1999] PARALLEL LITIGATION

counsel and witnesses, and [7] the possibility of prejudice

if the stay is granted.196

When these factors are considered in a purely federal context,

presumably comity would decline or disappear, but the others are no doubt

appropriate. 197

The Seventh Circuit has stated a clear test based on Kerotest.19 In

Serlin v. Arthur Andersen & Co., the court upheld the trial court's

dismissal of a duplicate federal action.'" For authority, it drew from a

local federal district court opinion which paraphrased Kerotest's language

authorizing dismissal of a parallel action "for reasons of wise judicial

administration ... whenever it is duplicative of a parallel action already

pending in another federal court." 200 Interestingly, Kerotest's "wise

judicial administration" concept was also the basis for the ColoradoRiver

doctrine, which determines the appropriateness of stays and dismissals in

state-federal parallel litigation.2ol This has led to confusion for courts that

might be tempted to apply the multi-factored Colorado River test in an

intrafederal setting. Serlin's citation to Colorado River for the "wise

judicial administration" test, quoted above, is an example. The Seventh

Circuit corrected this in Chrysler Credit Corp. v. Marino, by rejecting

movant's reliance on Colorado River as a basis for a stay of a parallel

action:

Colorado River and its progeny, however, address the stay

of federal proceedings pending the conclusion of parallel

state actions and that is how we have applied it. Here,

both the guaranty and replevin actions were filed in federal

court in the Northern District of Illinois. Consequently,

abstention from the guaranty action under ColoradoRiver

is inapplicable.02

Of course there is no legal error in this if the court merely applies

Colorado River's elements without the federalism twist, and perhaps

without the heavy presumption of allowing the actions to continue. The

"I.J.A., Inc. v. Marine Holdings, Ltd., Inc., 524 F. Supp. 197, 198 (E.D. Pa. 1981).

97

1 See id.

198

See Serlin v. Arthur Anderson & Co., 3 F.3d 221, 223 (7th Cir. 1993).

99

1 d. at 222.

2

"Id. at 223 (quoting Ridge Gold Standard Liquors v. Joseph E. Seagram, 572 F. Supp. 1210,

1213 (N.D. III.1983) (citation omitted).

201

See infra Part V.C.

20263 F.3d 574, 578 (7th Cir. 1995) (citations omitted).

BAYLOR LA WREVIEW [Vol. 51:4

Seventh Circuit also has a narrower definition of "parallel:" "A suit is only

duplicative if it involves the 'same claims, parties, and available relief.' '23

This is contrary to the Supreme Court's approach in Landis, which held

that "we find ourselves unable to assent to the suggestion that before

proceedings in one suit may be stayed to abide the proceedings in another,

the parties to the two causes must be shown to be the same and the issues

identical."20

In other cases, the Fifth Circuit appears also to base its test on Kerotest,

in spite of its earlier reliance on Landis in GA TX, discussed above.25 The

best example of this Kerotest reliance is West Gulf Maritime Ass 'n v. ILA

Deep Sea Local 24.2- Like the Seventh Circuit, the Fifth Circuit cites the

inappropriate Colorado River precedent along with Kerotest.0? However,

the Court also identifies several useful considerations, including the degree

of identity of the actions, the courts' respective ability to resolve all the

issues in the dispute, and the likelihood of piecemeal litigation.208

West Gulf also draws from Mann ManufacturingInc. v. Hortex, Inc.,1 9

which provides the Fifth Circuit's position on stays in duplicate patent

litigation. For its own authority, Mann ignored Landis and Kerotest and

instead relied on two questionable cases and one appropriate precedent.210

The two questionable cases are Rickey Land & Cattle Co. v. Miller &

Lux,211 a state-federal conflict, enforcing the first-filed rule in an in rem

case, and In re Georgia Power Co.,212 holding the first-filed rule to be

axiomatic in both intrafederal conflicts and state-federal conflicts. The

appropriate authority is Tivoli Realty, Inc. v. Interstate Circuit, Inc.,

enforcing the first-filed rule by reversing an antisuit injunction from the

second court.213 In Mann, the court split its remedy, staying the first-filed

action in regard to claims related to the second action, and staying specific

claims pending plaintiffs motion for leave to add those claims in the

second action.114 Readers should not assume that legal tests and remedies

23

° Id. (quoting Serlin, 3 F.3d at 223).

2

"4See Landis v. North America Co., 299 U.S. 248, 254 (1936).

2 5

" See supra note 105.

206751 F.2d 721, 728-29 (5th Cir. 1985).

207

2 8

See id. at 728-29.

° See id. at 730-3 1.

209439 F.2d 403, 405 (5th Cir. 1971).

2

'°See id. at 407 n.2.

211218 U.S. 258, 262-63 (1910).

21289 F.2d 218, 221 (5th Cir. 1937).

213167 F.2d 155, 158 (5th Cir. 1948).

2 14

See Mann, 439 F.2d at 408.

1999] PARALLEL LITIGATION 805

applied in parallel patent cases are readily applicable to non-patent cases.

Caution is appropriate here. Although there is no authority on point--

neither judicial or academic--patent cases appear to make up a greatly

disproportionate number of federal parallel cases and have developed

21

somewhat distinct rules. 1

The Second Circuit uses a heavy presumption favoring the first-filed

case, with Semmes Motors, Inc. v. Ford Motor Co., as a leading

example.216 That presumption is qualified by the fact that Semmes was a

repetitive parallel case, that is, both cases were filed by the same party. 27

It might not be as strong in reactive cases in which each party has made a

bona fide choice of forum. The two cases arose from Ford's audit of

Semmes's Ford dealership in New York, which included the investigation

of warranty repairs and led to claims that the auditors randomly contacted

customers.21 1 In the audit, Ford found several instances of warranty refunds

charged to Ford where no work was done, and recommended remedial

measures to Semmes.219 In response, Semmes sued Ford in New Jersey

state court; Ford removed that claim to federal court, where the judge

denied Semmes's request for a temporary injunction against Ford's actions

and possible franchise termination.220 Semmes then sued Ford in a New

York federal court, still seeking the temporary injunction to stop Ford from

terminating the franchise.221 The New York federal court denied Ford's

motion to stay the New York action and granted Semmes's injunction

against Ford.m On appeal, the Second Circuit held the New Jersey action

had priority as the first filed, that the New Jersey federal court would have

been justified in enjoining Semmes from prosecuting the New York federal

action, and that the result should not differ where Ford chose instead to

seek a stay from the New York federal court. 23 The Second Circuit thus

stayed the New York action, but did leave in effect the New York Court's

injunction against Ford (that is, enjoining Ford from terminating Semmes's

2

'See, e.g., William Gluckin & Co. v. International Playtex Corp., 407 F.2d 177, 178 (2d

Cir. 1969) (discussing the "customer action" factor).

216429 F.2d 1197, 1202 (2d Cir. 1970)..

21

See id. at 1198-99, 1202.

"'See id. at 1200.

219

See id.

220

See id. at 1200 n.5.

221

See id.

2

USee id. at 1201.

2

2See id. at 1202.

806 BAYLOR LAW REVIEW [Vol. 51:4

dealership), even though the injunction had been denied by the New Jersey

22

federal court which would subsequently try the case. '

The D.C. Circuit has significantly altered its rule for parallel federal

actions. As recently as 1980, it had applied a "discretionary" rule that was

phrased in dispositive terms in Washington Metropolitan Transit Authority

v. Ragonese: "Where two cases between the same parties on the same

cause of action are commenced in two different Federal courts, the one

which is commenced first is to be allowed to proceed to its conclusion

first." ' Further underscoring the rule, the court stated that

"[c]onsiderations of comity and orderly administration of justice dictate

that two courts of equal authority should not hear the same case

simultaneously." ' In applying

226 the seemingly rigid first-filed rule, the D.C.

Circuit's approach was, by 1997, that "in strictly limited circumstances, we

have sometimes held that comity may warrant dismissal of [a pending]

action."227

The Ninth Circuit has a more discretionary approach, observing "a

generally recognized doctrine of federal comity which permits a district

court to decline jurisdiction over an action when a complaint involving the

same parties and issues has already been filed in another district." 228 The

court added that "this 'first to file' rule is not a rigid or inflexible rule to be

mechanically applied, but rather is to be applied with a view to the dictates

'

of sound judicial administration."229

The Tenth Circuit offers a case that illustrates the need for a stay

pending appeal of a possibly dispositive second case. 230 In O'Hare

International Bank v. Lambert, the bank originally sued Lambert in the

Northern District of Illinois on a guarantee agreement.23 When the federal

trial court initially ruled that it lacked personal jurisdiction, the bank sued

again in the Western District of Oklahoma (and in federal courts in Texas

and Arkansas) to protect its claim before the limitations period ran. 232 The

2 4

See id. at 1204.

225617 F.2d 828, 830 (D.C. Cir. 1980) (quoting Speed Products Co. v. Tinnerman, 171 F.2d

727, 729 (D.C. Cir. 1948) (upholding a dismissal in deference to a Virginia federal case)).

226

1d. [emphasis added](citing Hilton Hotels Corp. v. Weaver, 325 F.2d 1010, 1010 (D.C.

Cir. 22

1963)

7 (per curiam)).

Northwest Forest Resource Council v. Dombeck, 107 F.3d 897, 901 (D.C. Cir. 1997).

22

Pacesetter Sys., Inc. v. Medtronic, Inc., 678 F.2d 93, 94-95 (9th Cir. 1982) (citing Church

of Scientology of Cal. v. United States Dep't of the Army, 611 F.2d 738, 749 (9th Cir. 1979)).

229

Pacesetter,678 F.2d at 95.

23

°See O'Hare Int'l Bank v. Lambert, 459 F.2d 328, 329 (10th Cir. 1972).

2

Id. at 329.

232

See id. at 329-30.

1999] PARALLEL LITIGATION

bank then moved to stay the second action while appealing its first action;

however, the Oklahoma federal court rejected the stay and granted

summary judgment for the defendant on grounds unstated in the opinion.23

Meanwhile, the Seventh Circuit reversed the Illinois federal court decision

on personal jurisdiction, and remanded the case for litigation on the

merits.234 The bank now faced its loss in the Oklahoma federal court. 23s On

appeal, the Tenth Circuit held that the Oklahoma federal court abused its

discretion when it failed to stay the second-filed action while awaiting the

appeal in the Seventh Circuit.23 The Tenth Circuit's test included both a

strong first-filed presumption, countered by "the general rule . . . that

where the judgment sought is strictly in personam, courts having

concurrent jurisdiction may proceed with the litigation at least until

judgment is obtained in one of them which may be set up as res judicata in

the other."27

3. Stay of Derivative Suits

As noted in the introduction, this discussion focuses on "true" parallel

cases to the possible exclusion of derivative cases that arise out of the

original dispute but involve subsequent issues that may be determined in

the underlying lawsuit. A California federal case provides an example of

how the test for staying derivative suits can differ from that for ordinary

parallel actions.ns MD. Sass Investors Services, Inc. v. Reliance Insurance

Co. was a diversity case regarding an insurance bad faith claim, filed by

Sass, an investment advisor who was being sued in five other federal

actions by pension fund clients for losses on bond investments

recommended by Sassy 9 These actions were consolidated by the

Multidistrict Panel on Litigation for pretrial proceedings in the Eastern

District of Louisiana. 240 Sass then sued Reliance in this case for a

declaration of coverage and bad faith for Reliance's denial of coverage.2 4 '

Subsequently, Sass moved for a stay pending the resolution of the five

233See id. at 330

234See id.

23

'see id.

236

See id. at 331.

23

1Id. (citing Princess Lida v. Thompson, 305 U.S. 456 (1939)).

239

See M.D. Sass Investors Servs., Inc. v. Reliance Ins. Co., 810 F. Supp. 1082, 1086 (N.D.

Cal. 1992)

2 9Id. at 1083-84.

24°See id. at 1084.

24

'See id.

808 BAYLOR LAWREVIEW [Vol. 51:4

underlying lawsuits.12 The court noted the Ninth Circuit had no law on

point displaying the criteria for staying a derivative case regarding

insurance coverage pending a decision in the primary case.2 43 The court

then borrowed the following list of five factors from the Third Circuit:

(1) the likelihood that the declaration will resolve the

uncertainty of obligation which gave rise to the

controversy; (2) the covenience of the parties; (3) the

public interest in the settlement of the uncertainty of

obligation; (4) the availabililty and convenience of other

remedies; and (5) whether the same factual question lies at

the heart of both the insurance coverage dispute and the

underlying action.244

The court granted the stay after precisely evaluating these factors,

which differ somewhat from the Ninth Circuit's test for routine intra-

25

federal parallel cases. 1

4. Enjoining Other Federal Litigation

The standard for intra-federal antisuit injunctions is almost

identical to that of dismissals of duplicative litigation, with a strong first-

filed presumption. That is, federal law favors dismissal of all but first-filed

suits, unless there are special circumstances or the balance of convenience

favors the latter suit.46 The enjoining court need not be of coordinate

jurisdiction with the court where the action is enjoined. For example,

24 7

bankruptcy courts may enjoin actions in federal district courts.

William Gluckin & Co. v. International Playtex Corp., is a good

example of rejecting the presumption favoring the first-filed case, based on

the balance of convenience of the second forum.241 Playtex is a Delaware

corporation with its principal place of business in New York and three of

its five manufacturing plants in Georgia.249 F. W. Woolworth & Company

242

See id. at 1085.

243

See id. at 1089.

244

1d. (citing Terra Nova Ins. Co. v. 900 Bar, Inc., 887 F.2d 1213, 1224-25 (3d Cir. 1989)).

245

See Pacesetter Sys., Inc. v. Medtronic, Inc., 678 F.2d 93, 94-95 (9th Cir. 1982); see also

supra text accompanying notes 228-29.

246

See Semmes Motors, Inc. v. Ford Motor Co., 429 F.2d 1197, 1202 (2d Cir. 1970); see

also Municipal Energy Agency v. Big Rivers Elec. Corp., 804 F.2d 338, 343 (5th Cir. 1986).

247

See Steelman v. All Continent Corp., 301 U.S. 278, 288-91 (1937); In re North Am. Oil &

Gas Co. v. Fidelity & Deposit Co., 130 B.R. 482, 489 (W.D. Tex. 1991).

248407 F.2d 177, 180 (2d Cir. 1969).

249

See id. at 178.

1999] PARALLEL LITIGATION 809

("Woolworth") is a New York corporation with its principal place of

business in New York, though it operates retail stores throughout the

nation.250 Gluckin is a New York corporation with its principal place of

business in New York City.2 51 Even though these were federal question

cases, these facts are pertinent to the "balance of convenience" calculation.

On April 25, 1968, Playtex sued Woolworth in federal court in the

Northern District of Georgia for selling a brassiere manufactured by the

Gluckin Company, which Playtex alleged infringed on a Playtex patent.2 12

Gluckin was not registered to do business in Georgia, and according to the

court in this case, not amenable there."3 On May 28, 1968, Gluckin sued

Playtex in the Southern District of New York for a declaratory judgment of

non-infringement or patent invalidity.254 On Gluckin's motion, the New

York federal court enjoined Playtex from proceeding in the Georgia suit.55

Playtex then appealed the injunction.256

The Second Circuit began its analysis by noting its parallel case rule

that "as a principle of sound judicial administration, the first suit should

have priority, 'absent the showing of balance of convenience in favor of

the second action,' . . . or unless there are special circumstances which

justify giving priority to the second."257 The court then noted two special

circumstances: (1) the "customer action" exception, "where the first-filed

suit is against a customer of the alleged [patent] infringer while the second

involves the infringer himself," and (2) "where forum shopping alone

motivated the choice of the situs for the first suit."258 The second did not

apply; the district court had made no finding of forum shopping, and the

appellate court was unable to inferit.29 The district court, however, did

utilize the first special circumstance, the "customer action" exception, to

6

enjoin the first-filed action.2 0

2

25

"See id.

'See id.

22

S See id. at 177.

23

1' See id. at 178.

24

S See id.

2

1SSee id.

26

S See id. at 177

"'tId.at 178 (quoting Remington Prods. Corp. v. American Aerovap, Inc., 192 F.2d 872, 873

(2d Cir. 1951) (citation omitted).

28

1d. at 178.

9

25

20

See id.

" See id.

810 BAYLOR LAWREVIEW [Vol. 51:4

Playtex urged reversal, arguing the unfairness of the rigid application of

the customer exception.261 Playtex argued that in order to justify unseating

the first-filed case, more than mere customer action was needed, such as

harassment or probable harassment in litigating in the first forum.262 The

court rejected this argument, and instead described the need for a "flexible

approach":

Wise judicial administration, giving regard to conservation

of judicial resources and comprehensive disposition of

litigation, does not counsel rigid mechanical solution of

such problems. The factors relevant to wise administration

here are equitable in nature. Necessarily, an ample degree

of discretion, appropriate for disciplined and experienced

2 63

judges, must be left to the lower courts.

Under this approach, the customer exception would apply only when

the balance of convenience favored the second forum. It did in this case,

with the location of evidence and witnesses and other important factors

6

overwhelmingly pointing to New York and the second-filed action.21

Readers should note that the "customer exception rule" is limited to patent

cases like Gluckin. On the other hand, the special circumstances test

applies generally to parallel cases in federal courts.

The Fifth Circuit has a two-part test for enjoining federal duplicative

litigation: "(1) are the two pending actions so duplicative that one court

should decide the subject matter of both actions; and if so, (2) which of the

two courts should take the case?" 265 In Superior Savings Association v.

Bank of Dallas, the plaintiff was a judgment creditor which had filed

related garnishment actions against various law firms in Dallas, Texas and

Cleveland, Ohio, seeking unused fees held by the garnishee firms.26

Applying the two-part test, the court first observed that in considering

antisuit injunctions, "the customary rules governing the grant of injunctive

26

'See id. at 178-79.

262

See id. at 179.

263

1d. at 179 (quoting Kerotest Mfg. Co. v. C-O Two Fire Equip. Co, 342 U.S. 180, 183-84

(1951)).

2

'See id. at 179-80.

265

Superior Sav. Ass'n v. Bank of Dallas, 705 F. Supp 326, 328-29 (N.D. Tex. 1989) (citing

Coumbia Plaza Corp. v. Security Nat'l Bank, 525 F.2d 620, 628-29 (D.C. Cir. 1975); Mann

Mfg., Inc. v. Hortex, Inc., 439 F.2d 403, 407-08 (5th Cir. 1971)).

266

See id.at 327-28.

.1999] PARALLEL LITIGATION

relief are of 'secondary significance. "'267 The court denied the defendants'

motion to enjoin the Ohio litigation, finding that the two post-judgment

actions were not sufficiently duplicative to require that one be stopped.268

Additionally, special concerns arise when enjoining repetitive litigation

in the United States for claims arising outside the United States that have

been dismissed on forum non conveniens grounds. Injuries and deaths in

foreign countries often end up as claims in state or federal courts in the

United States, if there is a basis for personal jurisdiction. Whether our

courts should provide a forum for such claims is controversial.269 These

claims are sometimes dismissed on forum non conveniens grounds,270 but

claimants are not always deterred by the first or second dismissal.

Plaintiffs in these repetitive suits may be enjoined from refiling the claims

in any state or federal court in the United States, assuming that the United

States as a whole was found inconvenient.21 Compulsory counterclaims

can be another problem. Where a party elects to file a second federal

action rather than bring a compulsory counterclaim, and where the parties

in the two actions are the same, the second action should be enjoined.272

The scope of the antisuit injunction may present special issues as well.

In Wood v. Santa Barbara Chamber of Commerce, Inc., photographer

Wood sued several defendants for copyright infringement under federal

law.273 The district court dismissed Wood's claims for lack of personal

jurisdiction over many of the defendants, and the running of the limitations

periods as to some claims.74 Because Wood had already been litigious on

these issues, the court permanently enjoined Wood from relitigating these

claims, or any claims remotely connected, and the Ninth Circuit

267

1d. at 328 (citing Columbia Plaza Corp.,525 F.2d at 622 n.3 (D.C. Cir. 1975)); see also S-

Fer Int'l, Inc. v. Paladion Partners, Ltd., 906 F. Supp. 211,213-14 (S.D.N.Y. 1995).

268

See id. at 331.

269

See David W. Robertson & Paula K. Speck, Access to State Courts in Transnational

PersonalInjury Cases: Forum Non Conveniens and Antisuit Injunctions, 68 TEX. L. REv. 937,

938-975 (1990) [hereinafter Robertson & Speck, Access to State Courts]; infra Part IV.B.4.; see

also Carl Scherz Comment, Section 71.051 of the Texas Civil Practiceand Remedies Code-The

Texas Legislature'sAnswer to Alfaro: Forum Non Conveniens in Personal Injury and Wrongful

Death Litigation, 46 BAYLOR L. REv. 99 (1994) [hereinafter Legislature's Answer to Alfaro];

see infra Part IV.B.4.

2"See De Melo v. Lederle Lab., 801 F.2d 1058, 1064 (8th Cir. 1986).

"'See Villar v. Crowley Maritime Corp., 990 F.2d 1489, 1498-99 (5th Cir. 1993).

"2 See Columbia Plaza Corp. v. Security Nat'l Bank, 525 F.2d 620, 626 (D.C. Cir. 1975).

273705 F.2d 1515, 1518 (9th Cir. 1983).

274

See id.

812 BAYLOR LAWREVIEW [Vol. 5 1:4

affirmed. 5 As might be expected, this ruling does not reflect the norm as

to injunctions against future litigation. Albeit in a somewhat different

setting, federal antisuit injunctions against state litigation, the Supreme

Court has held that injunctions against future litigation must be narrowly

drawn and limited to matters actually decided in the federal action.216

Honoring the injunction may also be problematic since the court in

which the action has been enjoined is not always inclined to agree. In at

least one noteworthy case, Schauss v. Metals Depository Corp., the Fifth

Circuit did honor a New York federal injunction despite sufficient

justification to ignore it.277 In Schauss, defendant Metals Depository

Corporation ("MDC") was sued in two Texas federal courts and several

Texas state courts. 278 MDC was also a defendant in a New York federal

action brought by the Commodity Futures Trading Commission, in which a

receiver was appointed and all creditors were joined.279 The New York

federal court then enjoined the creditors from prosecuting any further

actions against MDC.8 0 One of the two Texas federal courts stayed its

action temporarily, in accordance with the New York injunction, to learn

what effect the New York injunction had on the Texas proceeding.2-1 The

New York receiver, however, failed to correspond with the Texas action,

even though he was a party and aware of the proceedings.28 2 The two

Texas actions were consolidated, and the Texas parties agreed on a

settlement and final judgment was entered.213 The New York receiver, a

non-participating party, appealed.214 The Fifth Circuit set aside the Texas

federal court's judgment, which was in violation of the New York

injunction, even though the New York receiver's inaction was a significant

25

cause. 1

27

See id. at 1526.

276

See Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 151 (1988); see also Deus v. Allstate

Ins. Co., 15 F.3d 506, 524 (5th Cir. 1994).

277757 F.2d 649, 653 (5th Cir. 1985).

278

1d. at 651-52.

279

See id. at 651.

2

'°See id.

281

2 2

See id. at 652.

1 See id.

23

" See id.

2 4

See id. at 653.

285

See id. at 655.

1.999] PARALLEL LITIGATION 813

III. INTRASTATE PARALLEL LITIGATION

Texas courts will defer to the plaintiffs choice of forum,86 but this

factor is nullified in reactive suits with two plaintiffs in different courts,

especially in declaratory judgment actions where the court determines that

the declaratory judgment plaintiff was forum shopping.287 Even with

deference to the plaintiffs choice, courts are inclined to economize

excessive litigation with a presumption favoring the first-filed case, unless

special factors compel a different decision.

A. Consolidationand TransfersIn Texas~

1. Consolidation Within One Court

Based on concerns of economy, convenience, and the avoidance of

inconsistent judgments and jurisdictional conflicts, Texas law

presumptively disfavors duplicative litigation among its state courts.288 A

primary remedy for multiple cases having a common question of law or

fact is transfer to the same court, and either (1) ordering of a joint trial, or

(2) consolidating them for all purposes, both pursuant to rule 174(a) of the

Texas Rules of Civil Procedure (based substantially on Rule 42 of the

Federal Rules of Civil Procedure).289 In addition, Rule 41 of the Texas

Rules of Civil Procedure (based on Rule 21 of the Federal Rules of Civil

Procedure), provides in part that actions may be jointly tried or

consolidated at any time before submission to the jury, on motion by any

party or by the court.2 90 Neither the parties nor the claims need to be

identical, and the decision is discretionary.29

2. Transfers within a Judicial District

Duplicative cases pending in the same court require only consolidation,

not transfer. Transfer is required to consolidate duplicative cases pending

in different courts in the same judicial district. Transfers between district

courts in the same judicial district are governed by section 24.303 of the

Texas Government Code92 and Rule 330(e) of the Texas Rules of Civil

26

See McIntosh v. Copeland, 894 S.W.2d 60, 65 (Tex. App.-Austin 1995, writ denied).

2

.See infra Part I11.B.1.

288

See Cleveland v. Ward, 116 Tex. 1,285 S.W. 1063, 1071 (1926).

289

Tex. R. Civ. P. 174(2).

2

9Tex. R. Civ. P. 41.

291

See Owens-Coming Fiberglas Corp. v. Martin, 942 S.W.2d 712, 716 (Tex. App.-Dallas

1997, no writ).

292

TEX. GOV'T CODE ANN. § 24.303 (Vernon 1988).

BAYLOR LAWREVIEW [Vol. 51:4

Procedure. 29 . Transfers between other courts in the same district use

section 74.121 of the Texas Government Code.294

3. Transfers Between Different Judicial Districts in the Same

State

Texas venue laws offer five grounds for moving cases to another

district or county that might be used to transfer and consolidate related

actions; none of the following cases are examples of parallel litigation.

a. Improper Venue

Section 15.063(1) of the Texas Civil Practice and Remedies Code

provides for transfer from an incorrect venue to a correct one.2 95 Upon

defendant's motion and plaintiffs failure to establish venue, the

presumption favoring plaintiffs choice is defeated and defendant may

choose, limited of course to appropriate venues.219 Plaintiffs may not use

this section to correct mistaken filings, thus permitting defendants a

presumptive choice after one filing mistake by plaintiffs.2 97

b. Impartiality

Section 15.063(2) of the Texas Civil Practice and Remedies Code

permits a change of venue if the moving party shows an inability to obtain

an impartial civil trial in the transferee district'.298

c. Consent

Section 15.063(3) of the Texas Civil Practice and Remedies Code

permits a transfer if the parties previously agreed to venue in another

county,299 for example by designating a contract's place of performance;1°°

by attorney stipulation during the lawsuit; °' or presumably by a choice of

forum agreement.

293

TEx. R. Civ. P. 330(e)

294TEx.Gov'T CODE ANN. § 74.121 (Vernon 1998).

295

TEx.Civ. PRAC. & REM. CODE ANN. § 15.063(1) (Vernon 1986).

29 6

See WTFO, Inc. v. Braithwaite, 899 S.W.2d 709, 714 (Tex. App.-Dallas 1995, no writ).

29

f See Tenneco, Inc. v. Salyer, 739 S.W.2d 448, 449 (Tex. App.-Corpus Christi 1987, no

writ).298

TEX. CIv. PRAC. & REM. CODE ANN. § 15.063(2) (Vernon 1986); see also Wilson v.

Texas Parks & Wildlife Dep't, 853 S.W.2d 825, 829 (Tex. App.-Austin 1993), rev'd, 886

S.W.2d 259 (Tex. 1994).

299

Tex. Civ. Prac. & Rem. Code Ann. § 15.063(3) (Vernon 1986).

3

°°See WTFO, 899 S.W.2d at 716.

3

'See Farris v. Ray, 895 S.W.2d 351, 352 (Tex. 1995).

1999] PARALLEL LITIGATION 815

d. Incbnvenient Forum

Prior to September 1, 1995, the three grounds listed above were the

only means in Texas of transferring a case between districts for

consolidation purposes. In 1995, the Texas legislature substantially

rewrote Texas venue law and added an "inconvenient forum" transfer

provision-section 15.002(b) of the Texas Civil Practice and Remedies

Code02 that resembles the federal venue transfer provision, 28 U.S.C. §

1404(a). 3 The motion must be filed prior to or with the answer. Thus,

duplicative litigation in different districts within Texas may be resolved by

a successful motion to transfer under section 15.002(b), followed by a

motion to consolidate under Rule 174(a) of the Texas Rules of Civil

Procedure. There are no transfer cases on point nor will there be, because

decisions to or not to transfer are not appealable and are not grounds for

3

reversible error. '

e. MultidistrictTransfer

Rule 11 of the Texas Rules of Judicial Administration provides a

multidistrict litigation procedure similar to the federal one, authorizing the

transfer of cases with "material questions of fact and law in common with

another case pending in another court in another county .... ,"3o Like the

federal version, the transfer is limited to pretrial proceedings including

summary judgment. The Rule has no provisions for consolidation, and

provides to the contrary that the assignment "under this rule terminates

302

TEx. Civ. PRAC. & REM. CODE ANN. § 15.002(b) (Vernon Supp. 2000).

For the convenience of the parties and witnesses and in the interest of justice, a

court may transfer an action from a county of proper venue under this subchapter or

Subchapter C to any other county of proper venue on motion of a defendant filed and

served concurrently with or before the filing of the answer, where the court finds:

(1) maintenance of the action in the county of suit would work an injustice to the

movant considering the movant's economic and personal hardship;

(2) the balance of interests of all the parties predominates in favor of the action

being brought in the other county; and

(3) the transfer of the action would not work an injustice to any other party.

Id.

30328 U.S.C. § 1404(a) (1993).

304

S TEX. Civ. PRAC. & REM. CODE ANN. § 15.002(c) (Vernon Supp. 2000).

305TEX. R. JUD. ADMIN. 11.1, reprinted in TEX. GoV'T CODE ANN., tit. 2, subtit. F app.

(Vernon 1998).

816 BA YLOR LAW REVIEW [Vol. 51:4

when ... all pretrial proceedings are completed . . . ."06 Whether a party

could then use Texas Civil Practice and Remedies Code section 15.002(b)

as the basis for an inconvenient forum transfer to the common forum for

consolidation for trial is unclear. That result is not permitted in the

equivalent federal practice under 28 U.S.C. § 1407.307

B. Stays, Dismissals and Injunctions: Texas and Other States

1. General Principles

Where transfer is unavailable, Texas follows the common law

presumption against duplicative litigation in the same jurisdiction, that is,

in other Texas state courts, and in favor of the first-filed suit °s The

second-filed case is either dismissed,09 or stayed, which is an "abatement"

in Texas.l 0 In Miles, the Texas Supreme Court discussed the options of

dismissal or abatement without providing guidelines as to which action is

preferable, other than to state that abatement offers certain benefits, such as

protecting a party's right to proceed in the second-filed forum if the first-

filing party has filed as a sham with no intent to proceed."

Consistent with federal practice, and no doubt with common law, Texas

recognizes an exception to the favoring of the first-filed suit when a party

is guilty of such inequitable conduct that he is estopped from using the

first-filed suit to abate the second.312 Inappropriate conduct includes

misrepresentations regarding the status of negotiations and intentions to

file suit.-' Failing to file a timely objection or motion waives the

presumption of the first-filed forum's dominant jurisdiction, allowing both

actions to proceed until one reaches final judgment and possibly precludes

the other.14

3

Id. at 11.3(f).

307

See infra Part II.B.6.

3

.SeeCleveland v. Ward, 116 Tex. 1, 285 S.W. 1063, 1071 (1926).

3

"See, e.g., id.; Mower v. Boyer, 811 S.W.2d 560, 563 n.2 (Tex. 1991); Curtis v. Gibbs,

511 S.W.2d 263, 267 (Tex. 1974).

3

"See Miles v. Ford Motor Co., 914 S.W.2d 135, 139 (Tex. 1995); Wyatt v. Shaw Plumbing

Co., 760 S.W.2d 245, 248 (Tex. 1988).

31 1914 S.W.2d at 139.

312

See Johnson v. Avery, 414 S.W.2d 441,443 (Tex. 1966).

3 13

See id.; see also Curtis, 511 S.W.2d at 267; V.D. Anderson Co. v. Young, 128 Tex. 631,

101 S.W.2d 798, 800-01 (1937); Russell v. Taylor, 121 Tex. 450, S.W.2d 733, 736 (1932).

3 14

See Mower, 811 S.W.2d at 563 n.2 (citing Estate of Maxey, 559 S.W.2d 458, 460-61 (Tex.

Civ. App.-Texarkana 1977, writ refrd n.r.e.)).

1999] PARALLEL LITIGATION 817

The degree of similarity in the two lawsuits is a matter of interpretation.

Cases approaching exact duplication require, as a matter of law, dismissal

of the second action.'" Similar, but not identical, cases may be

discretionarily stayed with the inquiry being "the practical results to be

obtained, dictated by a consideration of the inherent interrelation of the

subject matter of the two suits," that is, whether a determination of the

issues in one case will resolve all the issues in the other.36

Texas has a distinct rule for a declaratory judgment action that mirrors a

first-filed lawsuit.,17 "As a general rule, an action for declaratory judgment

will not be entertained if there is pending, at the time it is filed, another

action or proceeding between the same parties and in which may be

adjudicated the issues involved in the declaratory action."',

Texas law also allows for injunctions against parallel litigation. 319

Because the typical procedure is for the objecting party to file a plea in

abatement, or stay, in the second suit, unless there is a reason to stay the

first-filed suit2o few reported instances of in-state injunctive relief being

granted exist.

Texas practice is indicative of that in other states. California has a "rule

of exclusive concurrent jurisdiction" giving presumptive priority to the

first-filed case, provided that the first court has jurisdiction over the subject

matter and the parties.321 The rule resembles the statutory plea in

abatement but is more expansive in application, not requiring absolute

identity of the parties or remedies.322 Like the plea in abatement, the rule of

exclusive concurrent jurisdiction is mandatory.323 California has a similar

3

"See Wyatt, 760 S.W.2d at 248; see also TEx. R. Civ. P. 39, 97(a).

316

Dolenz v. Continental Nat'l Bank, 620 S.W.2d 572, 575 (Tex. 1981) (quoting North Texas

Coach Co. v. Morten, 92 S.W.2d 263, 266 (Tex. Civ. App.-Austin 1935, no writ).

3

"See Texas Liquor Control Bd. v. Canyon Creek Land Corp., 456 S.W.2d 891, 895 (Tex.

1970).

3 18

1d.

319

See Cleveland v. Ward, 116 Tex. 1, 285 S.W. 1063, 1073 (1926); Galveston, Harrisburg

& San Antonio Ry. Co. v. Dowe, 70 Tex. 5, 7 S.W. 368, 371 (1888); Gulf, Colorado & Santa Fe

Ry. Co. v. Pearlstone Mill & Elevator Co., 53 S.W.2d 1001, 1003 (Tex. Comm'n App. 1932,

holding approved) (enjoining Pearlstone's attempt to file ninety-seven separate small claims

suits, "from which no appeal will lie and in which the court costs and attorney's fees will be out

of proportion to the amounts involved").

"2See, e.g., McCurdy v. Gage, 123 Tex. 558, 69 S.W.2d 56, 59 (Tex. Comm'n App. 1934,

judgm't adopted).

2

People ex rel. Garamendi v. American Autoplan, Inc., 25 Cal. Rptr. 2d 192, 197 (Ct. App.

1993).

32

See id. at 198.

32

See id.

818 BAYLOR LAW REVIEW [Vol. 51:4

rule for derivative actions that grow out of other lawsuits. In Adams v.

Paul, the California Supreme Court stayed an attorney malpractice claim

pending the outcome of the underlying action which was being dismissed

on limitations grounds. 2 Although the court would seemingly stay the

derivative lawsuit, the legal grounds may differ from routine stays of

parallel actions. Thus, while California has developed a "rule of

conclusive concurrent jurisdiction" related to the plea in abatement for true

parallel actions, it stays derivative suits under the court's inherent

authority.

New York statutorily authorizes discretionary stays "in a proper case,

upon such terms as may be just."325 Stays apply to local parallel actions

and to other settings as well26 In spite of the statute's vague language,

case law has imposed a requirement of "complete identity of parties, cause

of action and judgment sought."321' Further, case law disregards judicial

economy by noting that the "possibility or actuality of two trials is not of

'

importance."328 Two New York cases refer to a "special circumstances"

exception that would permit litigation of the second-filed action, but the

cases involved probate matters first raised in the surrogate court's that

were also raised in the Supreme Court, which has concurrent jurisdiction

32 9

over such matters.

Similar to New York, Ohio case law provides for dismissal of a second-

filed in personam action, but requires that the claims be identical. 310

Pennsylvania appears to be in this camp, authorizing a stay in one action

that may be resolved or made moot by the resolution of another case."' In

contrast, California's identity rule is much looser, requiring only that the

324904 P.2d 1205, 1211 (Cal. 1995); see also Montrose Chem. Corp. v. Superior Court, 861

P.2d 1153, 1162 (Cal. 1993) (staying a declaratory action on insurance coverage, noting that "a

stay of the declaratory relief action pending resolution of the third party suit is appropriate when

the coverage question turns on facts to be litigated in the underlying action").

121N.Y. C.P.L.R. 2201 (McKinney 1991).

126See, e.g., 660 Riverside Drive Aldo Assoc. L.L.C. v. Marte, 681 N.Y.S.2d 436, 438

(Civ.

Ct. 1998) (granting stay of state case that was related to pending federal administrative action).

327

Pierre Assocs., Inc. v. Citizens Casualty Co., 304 N.Y.S.2d 158, 160 (App. Div. 1969)

(quoting Corporate Investing Co. v. Mt. Vernon Metal Prods. Co., 200 N.Y.S. 372, 374 (App.

Div. 1923)).

3281d

32 9

See Lupoli v. Lupoli, 613 N.Y.S.2d 423,424 (App. Div. 1994); In re Moody's Will, 176

N.Y.S.2d 1, 2 (App. Div. 1958).

33 0

See State ex reL. Judson v. Spahr, 515 N.E.2d 911, 913 (Ohio 1987).

33

'See Gwynedd Properties, Inc. v. Board of Supervisors, 635 A.2d 714, 718 (Pa. Commw.

Ct. 1993).

1999] PARALLEL LITIGATION 819

two actions grow out of the same transaction.32 Illinois cases provide for a

discretionary stay and have drawn authority from the Landis test."3

Louisiana ordinarily dismisses a second-filed case, but will stay it when

class action status is pending in the other suit, thus affecting the plaintiffs

presence in that action."3 Georgia law authorizes discretionary stays but

not mandatory dismissals?

2. Statutory Dismissal

At least two states, Illinois and New Jersey, have statutes providing for

involuntary dismissal of the local action in deference to a parallel action.

For both states, these dismissal remedies are in addition to stay remedies

for parallel actions. The Illinois statute applies when "there is another

action pending between the same parties for the same cause."'16 Dismissal

is available upon defendant's motion and may be supported by affidavit to

establish the existence of the parallel action. Also, dismissal applies to all

parallel actions in or out of Illinois, in state, federal, and foreign courts,

and gives preference, though not absolute, to the first-filed case. The court

has the discretion to stay the action to allow for the possibility of claim and

party joinder in the other action that would then justify dismissal.117 New

York has a more restrictive statute, Which provides for discretionary

dismissal of a parallel action in a New York court and "a court of any state

or the United States."'3 The statute also applies to conflicts between a

New York court and a court in another state or a federal court, but it does

not apply to actions in foreign courts.3 39

" 2See Lord v. Garland, 168 P.2d 5, 10 (Cal. 1946); Lawyers Title Ins. Corp. v. Superior

Court, 199 Cal. Rptr. 1, 2 (Ct. App. 1984).

a3 See Kaden v. Pucinski, 635 N.E.2d 468, 471 (111.App. Ct. 1994) (denying plaintiffs

motion to stay one of many taxpayer claims she had filed against county clerks of courts); First

Nat'l Bank v. Fabbrini, 627 N.E.2d 356, 358 (I11.App. Ct. 1993) (granting stay despite lack of

perfect identity between the two actions involving lender fraud and foreclosure).

4

11 See Perkins v. Mobil Oil Corp., 621 So. 2d 899, 901 (La. Ct. App. 1993).

3

" See International Telecomm. Exch. Corp. v. MCI Telecomm. Corp., 448 S.E.2d 71, 73

(Ga. Ct. App. 1994); accord Graham v. Graham, 648 So. 2d 814, 816 (Fla. Dist. Ct. App. 1995)

(discretionary stay of second-filed divorce action).

336735 ILL. COMP. STAT. 5/2-619(a)(3) (West 1992).

337

See Quantum Chem. Corp. v. Hartford Steam Boiler Inspection and Ins. Co., 616 N.E.2d

686, 690 (Ill. App. Ct. 1993).

a3 iN.Y. C.P.L.R. 321 i(a)(4) (Consol. 1994); see also supra notes 325-29 and accompanying

text (discussing New York's statute governing stays of parallel cases).

319 See Abkco Indus., Inc. v. Lennon, 377 N.Y.S.2d 362, 368 (N.Y. App. Div. 1975) (holding

that parallel actions in New York and England regarding contract dispute between the Beatles

and their management company does not support dismissal).

820 BAYLOR LAWREVIEW [Vol. 51:4

IV. INTERSTATE PARALLEL LITIGATION

Parallel litigation in an interstate setting involves slightly more rigid

rules and less willingness on the part of courts to subordinate a local action

to a foreign one, whether "foreign" means a sister state or another country.

The United States Constitution's strong full faith and credit mandate,

which compels states to recognize the "public Acts, Records, and judicial

Proceedings" of sister states,3 40 does not apply to pending litigation.341

Rather, the "authority" in this setting is the non-binding comity doctrine,

which leaves state courts free to maintain local preferences and prejudices.

Nonetheless, rules have developed that favor judicial economy and fairness

to the parties.

A. "Transfers " to a Sister State

Transfers to a sister state are not yet recognized. The Uniform Law

Commission has proposed a Uniform Transfer of Litigation Act ("Act")

that provides for an interstate transfer "to serve the fair, effective, and

efficient administration of justice and the convenience of the parties and

witnesses" based on "all relevant factors, including the interest of each

plaintiff in selecting a forum and the public interest in securing a single

litigation and disposition of related matters." 342The transferor court does

not have to have personal or subject matter jurisdiction.34 3 A transferee

court with subject matter jurisdiction, but lacking personal jurisdiction

under its own long arm statutes, may accept the case if the transferor court

had both subject matter and personal jurisdiction, although the transferee

court may not exercise personal jurisdiction inconsistent with due

process. 4 4 The proposed Act has choice of law provisions for specific

areas such as limitations, '14 pending proceedings, 3' 6 and attorney-client

agreements.3 7 The Act does not include provisions for selecting the

governing substantive law, but contemplates that this could be resolved in

34 0

U.S. CONST. art. IV, § 1.

341

See Texas Employers' Ins. Ass'n v. Jackson, 820 F.2d 1406, 1421-22 (5th Cir. 1987).

342

UNIF. TRANSFER OF LITIG. ACT § 104, 14 U.L.A. 194 (Supp. 1999).

343

See id.

344

See id. § 102.

34

'See id § 209.

34 6

See id. § 211. Proceedings must be completed after transfer under the procedural rules of

the transferring court. See id.

347

See id. § 213.

1999] PARALLEL LITIGATION

the transfer order. 48 The transfer motion may be made by a party, or on the

court's motion' 4 9 The proposed Transfer of Litigation Act was approved

in 1991 but has not yet been adopted by any state.

Even without the proposed Act, most states have a rough approximation

of an interstate transfer, common law forum non conveniens. Generally

patterned after the Supreme Court's decision in GulfOil Corp. v. Gilbert,"0

forum non conveniens allows a forum to dismiss an action that is

significantly inconvenient for a defendant, balanced against the plaintiffs

and the affected state's interests, conditioned on the defendant's agreement

to waive any objections to the refiling of the case in the convenient

jurisdiction. The dismissing forum typically conditions the dismissal on

successful refiling and an opportunity to litigate on the merits in the second

forum.

The significant difference between this practice and a venue transfer

within a single jurisdiction is that venue transfers are statutory and not

dependent on a vague doctrine like comity, on which forum non

conveniens is based. In spite of comity's vagueness, the movement of

cases from one forum to another by forum non conveniens is now common

and governed by reasonably uniform standards, such as those found in

Gilbert."'

B. Dismissingor Staying the Local Action

Historically, states ignored actions in other states. For example, in

1812, when plaintiffs Bowne and Seymour filed an action in assumpsit in

New York, defendant Joy pleaded the pendency of the same action in

Massachusetts.Y The New York court responded with a borrowed English

rule."' The rules states, "The pendency of a suit in a foreign court, by the

same plaintiff against the same defendant, for the same cause of action, is

no stay or bar to a new suit instituted here."114 The Bowne case did not

necessarily hold that the court lacked the discretion to stay the duplicate

action.'' Rather, the case stated that the defendant's responsive pleading

148See id. § 208.

'49See id. § 105. See generally Thomas D. Rowe, Jr., Jurisdictionaland TransferProposals

for Complex Litigation, 10 REv. LITIG. 325, 354-58 (1991) (covering interstate transfers).

350330 U.S. 501, 508 (1947).

31'See infra Part VII.A.2.

3"See Bowne & Seymour v. Joy, 9 Johns. 221, 221 (N.Y. 1812).

3"3See id.

4

31 1d. (citing Maule v. Murray 101 Eng. Rep. 1081 (K.B.

1798).

355Id.

822 BAYLOR LAWREVIEW [Vol. 51:4

did not set up a defense as a matter of law.356 In any event, neither this

opinion nor any of its contemporaries offer so much as a discretionary

357

stay.

Lynch v. Hartford Fire Insurance Co., provides a review of the early

precedents, from early holdings supporting dismissal to a clearly-

established contrary rule that "a plea of lis alibi pendens is not good when

the litigation is in a court of foreign jurisdiction."' In prescient dictum,

the court added that courts in the future would "hold that they may attain

the same end through their power of postponing actions and suspending

judgments." ' 59 That prediction proved true over time as stays tended to

become available. However, the rule of no dismissal for foreign actions, at

one time "almost an unbroken rule in the courts of the American states,"

remains valid in many states. 360

To the extent that a general rule may be derived from relatively few

cases, stays are discretionarily available today in many jurisdictions under

varying tests and presumptions, with a general preference for first-filed

actions and an almost routine dismissal of a local case in deference to a

first-filed in rem action. A few states, as discussed below, grant dismissals

in deference to in personam actions. Texas courts will dismiss a local

action in deference to an action in another state in three instances: (1)

when a second-filed declaratory action could be resolved in the first-filed

suit; (2) when the parties have a valid forum selection agreement

designating another state; and (3) on forum non conveniens grounds.

1. Dismissal Under the First-Filed Rule

One often cited rule is that, in an interstate setting, mere duplication of

actions is not grounds for dismissal.361 Thus, a court usually will not

dismiss its own action in deference to a parallel action in another state,

based on nothing more than the sequence of filing. A New York case

offers an explanation for the disfavor of dismissals on this ground in an

" 7See id.

11 See Lindsay v. Lamed, 17 Mass. 190, 190 (1821) (denying "abatement," apparently

meaning dismissal); accord Drake v. Brander, 8 Tex. 351, 357 (1852).

35817 F. 627, 628 (D.N.H. 1883) (denying "abatement" or dismissal)

359

1d.

36

Mexican Cent. Ry. Co. v. Charman, 24 S.W. 958, 958 (Tex. Civ. App. 1894, no writ)

(dismissing an action under the term "abatement").

36

See McClellan v. Carland, 217 U.S. 268, 282 (1910). This case was cited in Colorado

River Conservation District v. United States, 424 U.S. 800, 817 (1976).

1999] PARALLEL LITIGATION 823

interstate setting162 In White Light Productions, Inc. v. On The Scene

Productions, Inc., the lower court had dismissed the second-filed New

York action, deferring to a parallel case in California merely because of the

timing in filing.363 The appellate court reversed the dismissal, holding that

the dismissal was inappropriate without an evaluation of all forum non

conveniens factors.3" Thus, courts confronted with a motion to dismiss

because of a parallel action in another state or foreign country may

routinely reject the first-filed rule and instead apply forum non conveniens

analysis.

New York does, however, authorize a discretionary stay or dismissal of

a New York action that parallels one in a sister state. 6 New York is one of

the states that uses a statute for domestic parallel cases, providing:

A party may move for judgment dismissing one or

more causes of action asserted against him on the ground

that: ... there is another action pending between the same

parties for the same cause of action in a court of any state

or the United States; the court need not dismiss upon this

ground, but may make such order as justice requires.?"

New York courts have defined the statute's party identity requirement

as being one plaintiff and one defendant common in each action, thus

avoiding a more rigid complete identity requirement. 67 In spite of White

Light's heightened requirement of a forum non conveniens analysis for

dismissals, New York courts issue both stays3 68 and dismissals.169 Only one

case granting a dismissal for a sister state court can be found.310 In that

case, the trial court had dismissed the suit, but it was reversed with a stay

substituted.3'

362

See White Light Prods., Inc. v. On The Scene Prods., Inc., 660 N.Y.S.2d 568, 570 (App.

Div.363

1997).

Id.

3

64See id. at 574.

36

'See N.Y. C.P.L.R. 321 I(a)(4) (Consol. 1994).

366Id

367

See Morgulas v. J. Yudell Realty, Inc., 554 N.Y.S.2d 597, 599-600 (App. Div. 1990).

36

'See SafeCard Servs. v. American Express Travel Related Servs. Co., 610 N.Y.S.2d 23, 23

(App. Div. 1994) (ordering stay of local action in deference to Florida case).

9

. See Reliance Ins. Co. v. American Elec. Power Co., 637 N.Y.S.2d 710, 711 (App. Div.

1996) (affirming denial of dismissal in deference to Ohio federal action).

" See SafeCard, 610 N.Y.S.2d at 24.

3'See id.

BA YLOR LAW REVIEW [Vol. 51:4

Illinois is another state providing a statutory remedy when "there is

another action pending between the same parties for the same cause."71

The statute applies to al actions, including those in other states in the

73

United States, and gives priority to the first-filed case.

Although Alabama apparently diminishes its deference to sister state

parallel actions, it dismisses claims that should have been filed as

compulsory counterclaims in a first-filed action in another state.3 74 In

Martin v. Robbins, Stephanie Robbins sued her former husband, Howard

Robbins, in regard to a closely held company they owned.375 Apparently in

league with Mrs. Robbins, Jeanette Martin sued Howard Robbins in

Tennessee on a related claim, based on Martin's status as a shareholder in

the Robbins company. 76 Howard Robbins filed a third party claim against

Martin in the Alabama action and obtained a default judgment177 On

appeal, Martin asked the Alabama Supreme Court to dismiss Howard

Robbins's claim against her on the ground that it was a compulsory

counterclaim in the Tennessee action.17, The court disagreed and held that

the comity owed to Tennessee did not require dismissal in Alabama merely

3 79

because the claim could be raised in the Tennessee action.

Although Texas law does provide for the dismissal of a local action that

duplicates another Texas lawsuit,380 it distinguishes between intrastate

conflicts and those with sister states or foreign countries. For example,

Williamson v. Tucker noted that abatement, apparently meaning

"dismissal," of a duplicative case applies only where "[b]oth courts had

been created by the same sovereign," and in some cases was a matter of

right, while staying an action in deference to a foreign action is

discretionary.3 Thus, "[t]he fact that a plaintiff in a Texas case had prior

to filing such case in Texas, filed a suit, that still pends, against the same

372735 ILL. COMP. STAT. 5/2-619(a)(3) (West 1992).

373

See Doutt v. Ford Motor Co., 659 N.E.2d 89, 92 (II1.App. Ct. 1995) (affirming dismissal

of class action in deference to similar cases in several other state and federal courts).

" 4See Martin v. Robbins, 628 So. 2d 614, 617-18 (Ala. 1993).

37

ld. at 616.

376

See id.

377

See id.

17'See id. at 618.

79

3 See id.

3

M°See supra Part III.B.

31615 S.W.2d 881, 885-86 (Tex. Civ. App.-Dallas 1981, writ ref d n.r.e.).

1999] PARALLEL LITIGATION 825

defendant on the same cause of action in a court of a sister state is not

'

ground for abating the Texas suit."382

Although dismissals tend to be unavailable for routine interstate parallel

actions, they are available almost invariably for second-filed in rem actions

in which a first court has already acquired jurisdiction over the property."'

Dismissals may be available to enforce forum selection clauses,3 for

forum non conveniens matters," 5 and in some states, for second-filed

declaratory actions.386

The law is so little developed in most states that the few cases available

tend to rely on law from other states or federal courts. Because of the

differences among the states' laws, each state's law must be scrutinized for

these nuances. For example, Texas uses dismissals only for in-state

conflicts."7 Alabama, by contrast, dismisses not only in-state conflicts, but

also local suits in favor of a first-filed federal action.3- s This distinction

from Texas practice is more than semantic. Alabama does not apply this

rule to parallel actions in sister states8 9 and, thus, distinguishes between

state and federal courts in dismissing a local action. Texas, on the other

hand, generally treats federal courts the same as sister state courts by

making dismissal unavailable but providing for a discretionary stay of the

39

local action. 0

2. Dismissal of the Second-Filed Declaratory Action

Texas law requires the dismissal of a local declaratory judgment action

that is filed after a primary action in another state. In Space Master

International,Inc. v. Porta-KampManufacturingCo., the court

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