Thus, forum shopping cannot be found to be the sole basis for Capitol's choice of New York.
However, this articulated exception to the first-filed rule is not the only exception that may be considered. Gluckin, 407 F.2d at 178. The presumption in favor of the forum of the first filed suit is a general rule. Brierwood Shoe Corp. v. Sears, Roebuck & Co., 479 F. Supp. 563, 568 (S.D.N.Y. 1979). "Issues should be tried in the district where suit is first brought unless there are other factors of substance which support the exercise of the court's discretion . . . in favor of proceeding first in another district." Mattel, Inc. v. Louis Marx & Co., 353 F.2d 421, 424 (2d Cir. 1965), petition for cert. dismissed, 348 U.S. 948 (1966). "Wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation, does not counsel rigid mechanical solution of such problems." Kerotest Mfg. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 183 (1951).
In Columbia Pictures Industries, Inc. v. Schneider, 435 F. Supp. 742 (S.D.N.Y. 1977), aff'd 573 F.2d 1288 (2d Cir. 1978), plaintiffs brought a defensive declaratory judgment action in New York in response to a "threatening letter" from defendants. Six days later, defendants filed an action in California for antitrust violations, breach of contract, violation of fiduciary duty, and conspiracy to defraud. The New York court stayed the declaratory judgment action pending disposition of the California action. The "factors of substance" relied upon by the court included the defendant's good faith attempts at settlement, judicial economy, the minimal difference in time between the filing of the two complaints, and the fact that litigation had not proceeded in either district. The court held that these constituted factors of substance which warranted departure from the first-filed rule in favor of proceeding first in California.
Judicial economy is a factor of substance that weighs heavily in favor of departing from the first-filed rule. There will be a significant conservation of judicial resources if this action is transferred to Delaware. The Delaware action has been assigned to United States District Judge Farnan. Judge Farnan recently conducted the Time Warner trial; a five week jury trial regarding the validity of the same patents in suit. Patent litigation, particularly involving high-technology patents, is notoriously difficult. To conduct such a trial the court must be educated on both the technology in general and the particular patents in suit. Judge Farnan's knowledge gained in the earlier Time Warner suit will allow a significant conservation of scarce judicial resources. In addition, his experience and familiarity with the patents reduces the possibility of a mistake at trial, and the consequent use of additional judicial resources to correct the problem.
The policy of promoting the amicable settlement of disputes also weighs in favor of proceeding in Delaware. "Potential plaintiffs should be encouraged to attempt settlement discussions (in good faith and with dispatch) prior to filing lawsuits without fear that the defendant will be permitted to take advantage of the opportunity to institute litigation in a district of its own choosing" before the plaintiff files a complaint. Columbia Pictures, 435 F. Supp. at 747 (S.D.N.Y. 1977). ORC's letter informing Capitol of the Time Warner decision proposed further discussions to negotiate a settlement and avoid litigation. In response, Capitol filed this action the day it received the letter. Allowing Capitol to proceed in the forum of its choosing based solely on the first-filed rule would undermine the policy of promoting good faith efforts to achieve a settlement.
Another factor that weighs against application of the first-filed rule is that this action was essentially a victory in a race to the courthouse triggered by ORC's letter. ORC's letter served the dual purpose of proposing further settlement discussion and putting Capitol on notice that failure of the negotiations would lead to legal action. "When a declaratory judgment action has been triggered by a notice letter, this equitable consideration may be a factor in the decision to allow the later filed action to proceed to judgment." Factors Etc., Inc. v. Pro Arts, Inc., 579 F.2d 215, 219 (2d Cir. 1978), cert. denied, 440 U.S. 908 (1979).
The Delaware action has also proceeded further than this action. The Delaware court has already permitted Capitol to commence discovery and a trial date has been set for January 24, 1993.
Finally, the date of filing is less important when the competing actions are filed within a short period of time. Gibbs & Hill, Inc. v. Harbert International, Inc., 745 F. Supp. 993, 996 (S.D.N.Y. 1990). Only twenty days elapsed between the filing of the two complaints and no discovery or other pretrial proceedings had occurred in either forum at that time. Therefore, "no judicial inefficiency or duplication of efforts will result from requiring the parties to litigate their dispute" in Delaware. Columbia, 435 F. Supp. at 748.
Together, these factors of substance support the exercise of the court's discretion in rejecting the application of the first-filed rule. Thus, this court denies ORC's motion to dismiss. Although ORC has only moved for a dismissal or stay, this court has the jurisdiction to transfer this case to Delaware. 28 U.S.C. § 1404(a) provides for the transfer of any civil action "for the convenience of the parties, in the interest of justice . . . to any other district or division where it might have been brought." 28 U.S.C. § 1404(a) (1976). Such a transfer is committed to the sound discretion of the trial court. Leif Hoegh & Co., v. Alpha Motor Ways, Inc., 534 F. Supp. 624, 626 (S.D.N.Y. 1982). In exercising this discretion, the district court will consider the convenience to the parties and witnesses, and whether the administration of justice will be advanced by a transfer. Schneider v. Sears, 265 F. Supp. 257, 263 (S.D.N.Y. 1967). The court must also weigh all the circumstances surrounding the case to determine where the trial should most appropriately proceed. Contractors Supply Corp. v. Kelly Klosure, Inc., No. 80-4327, slip op. at 8 (S.D.N.Y. Feb. 20, 1981).
The court has already stated why this action is more efficiently managed in Delaware. For the same reasons, the court is persuaded that transfer, rather than a stay of this matter is more appropriate under § 1404(a). As a threshold matter, it cannot be disputed that this action could have been brought in Delaware where Capitol is incorporated. The relevant fact witnesses and documents are located outside of New York. Thus, the convenience of the parties is evenly balanced between New York and Delaware. However, the interests of justice strongly favor a transfer to Delaware. Judge Farnan who presided over the Time-Warner trial is also presiding over the Delaware action which involves the same parties and the same patents in suit. Judge Farnan has developed a familiarity with the relevant technology and the patents in suit as stated in his opinion denying Capitol's motion to dismiss, stay, or transfer the Delaware action. The preservation of judicial resources and the prevention of duplicative litigation mandate that this case be transferred to the District of Delaware in the interest of the administration of justice.
Thus, the significant savings in judicial resources that will result from allowing the action to proceed before Judge Farnan, the policy of promoting amicable dispute resolution, and the nature and timing of this action convince this court to exercise its discretion and transfer this proceeding. Therefore, ORC's motion to dismiss for lack of personal jurisdiction is denied, and this action is transferred to the U.S. District Court for the District of Delaware.
Dated: White Plains, New York
October 28, 1992
GERARD L. GOETTEL
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