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UNIVERSAL GYPSUM OF GEORGIA, INC. v. AMERICAN CYAN

February 25, 1975

UNIVERSAL GYPSUM OF GEORGIA, INC., Plaintiff,
v.
AMERICAN CYANAMID COMPANY, Defendant


Cannella, District Judge.


The opinion of the court was delivered by: CANNELLA

MEMORANDUM DECISION AND ORDER

CANNELLA, District Judge.

 The defendant, American Cyanamid Company, seeks the entry of a stay of this action, which arises under our diversity of citizenship jurisdiction, pending the presentation and determination of a "simultaneously" commenced action involving the same facts and state law issues in the New York Supreme Court, New York County. As the Court finds that the interests of judicial economy, comity and federalism are best advanced by the entry of such a stay, the motion is hereby granted.

 The power of the district court to enter a stay of its proceedings in favor of litigation pending in other forums has been settled beyond peradventure ever since Mr. Justice Cardozo declared in Landis v. North American Co., 299 U.S. 248, 254-55, 57 S. Ct. 163, 166, 81 L. Ed. 153 (1936), that

 
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 someone else. . . . Considerations such as these, however, are counsels of moderation rather than limitations upon power.

 The existence of this authority notwithstanding, the entry of the requested stay requires this Court to refrain from exercising its otherwise valid in personam jurisdiction and to defer to another court the resolution of a controversy which is otherwise properly within the ambit of its adjudicative powers. Thus, our deferral of the resolution of the instant controversy to the New York state court requires the invocation of one of the abstention doctrines -- one which is not uniformly recognized, namely, that of "abstaining" in a run-of-the-mill diversity action where a state court action raising the same issues is simultaneously pending. *fn1" As was recently stated by one appellate court:

 
Some courts of appeals allow a federal district court the discretion to stay its proceedings in deference to a pending state court action. See Aetna State Bank v. Altheimer, 430 F.2d 750, 755-56 (7th Cir. 1970); Amdur v. Lizars, 372 F.2d 103, 106-07 (4th Cir. 1967). Other federal appellate courts, however, express the view that a federal district court should not stay its hand in deference to a pending state court action except in exceptional circumstances where resort to state court serves an important interest in the orderly administration of justice. See Mach-Tronics, Inc. v. Zirpoli, 316 F.2d 820, 826-28 (9th Cir. 1963); Ermentrout v. Common-wealth Oil Co., 220 F.2d 527, 530 (5th Cir. 1955). See generally 7A C. Wright & A. Miller, Federal Practice & Procedure § 1838 (1972).

 Applegate v. Devitt, 509 F.2d 106, 108-09 (8 Cir. 1975). See also PPG Industries, Inc. v. Continental Oil Co., 478 F.2d 674 (5 Cir. 1973) (recognizing the propriety of a stay of the nature here sought); Nigro v. Blumberg, 373 F. Supp. 1206 (E.D. Pa. 1974) (granting stay); Crawford v. Seaboard Coast Line R.R. Co., 286 F. Supp. 556, 557-58 (S.D. Ga.1968); *fn2" but see, England v. Board of Medical Examiners, 375 U.S. 411, 430 n. 2, 84 S. Ct. 461, 11 L. Ed. 2d 440 (1964) (Douglas, J. concurring); *fn3" C. Wright, Law of Federal Courts § 52 at 205 (2d ed. 1970); *fn4" Note, 51 Tex.L.Rev. 1252 (1973). See generally, H.M. Hart & H. Wechsler, The Federal Courts and The Federal System 1257-61 (2 ed. P. Bator, P. Mishkin, D. Shapiro and H. Wechsler 1973); Annot., 5 ALR Fed. 10 (1970); Note, Stays of Federal Proceedings in Deference to Concurrently Pending State Court Suits, 60 Colum.L.Rev. 684 (1960); Note, Power to Decline the Exercise of Federal Jurisdiction, 37 Minn.L.Rev. 46 (1952); Note, Power to Stay Federal Proceedings Pending Termination of Concurrent State Litigation, 59 Yale L.J. 978 (1950).

 In this Circuit, at least since 1949, the law has been clear. In Mottolese v. Kaufman, 176 F.2d 301, 302 (2 Cir. 1949), Judge Learned Hand declared:

 
It is probably true that originally the statutory privilege of access to a federal court was regarded as absolute and indefeasible, no matter whether its exercise resulted in inconvenience, delay and expense to the defendant. There can be no doubt, however, that this is no longer true.

 Hence, the district court is possessed of the power to stay its proceedings when there exists a simultaneously pending state court action in which the same dispute is being litigated by the same parties -- a power which may be exercised in the court's sound discretion. See, e.g., Simmons v. Wetherell, 472 F.2d 509, 512 (2 Cir.), cert. denied, 412 U.S. 940, 93 S. Ct. 2777, 37 L. Ed. 2d 399 (1973); Nederlandse Erts-Tankersmaatschappij N.V. v. Isbrandtsen Co., 339 F.2d 440, 441 (2 Cir. 1964); Milk Drivers & Dairy Employees Union Local No. 338 v. Dairymen's League Cooperative Association, Inc., 304 F.2d 913, 915 (2 Cir. 1962); P. Beiersdorf & Co. v. McGohey, 187 F.2d 14 (2 Cir. 1951); Loeb v. Whittaker Corp., 333 F. Supp. 484, 489 (S.D.N.Y.1971); Assmann v. Treglia, 318 F. Supp. 1040 (D.Conn.1970); Witmar Salvage Corp. v. C. W. Blakeslee & Sons, Inc., 308 F. Supp. 395 (S.D.N.Y.1969); Rosenfeld v. Schwitzer Corp., 251 F. Supp. 758, 763-64 (S.D.N.Y.1966); Mitter v. Massa, 237 F. Supp. 915, 918 (S.D.N.Y.1965); Weiss v. Doyle, 178 F. Supp. 566, 569-70 (S.D.N.Y.1959); Kamen Soap Products Co. v. Struthers Wells Corp., 159 F. Supp. 706, 712 (S.D.N.Y.1959); Weisfeld v. Spartans Industries, Inc., 58 F.R.D. 570, 575-77 (S.D.N.Y.1972); cf., Finkelstein v. Wolf, 73 Civ. 5150 (MEF) (S.D.N.Y. Nov. 27, 1974) (noted in [Current] CCH Fed.Sec.L.Rep. P 94,885).

 In his recent, well-reasoned decision in Nigro v. Blumberg, 373 F. Supp. 1206, 1212-13 (E.D.Pa.1974), Judge Fogel listed seven factors pertaining to the determination of an application for a stay in a case such as this.

 
[We] believe . . . that the following factors are pertinent to a district court's decision to exercise its discretion in favor of staying proceedings before it: (1) considerations of comity; (2) promotion of judicial efficiency; (3) adequacy and extent of relief available in the alternative forum; (4) identity of parties and issues in both actions; (5) likelihood of prompt disposition in the alternative forum; (6) convenience of parties, counsel and witnesses; and (7) possibility of prejudice to a party as a result of the stay.

 We find such criteria to present an appropriate standard of analysis and, keeping them in mind, we turn to ...


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