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KELLEN CO., INC. v. CALPHALON CORP.

June 14, 1999

KELLEN COMPANY, INC., PLAINTIFF,
v.
CALPHALON CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Barrington D. Parker, Jr., District Judge.

MEMORANDUM DECISION AND ORDER

Plaintiff Kellen Company, Inc. ("Kellen"), brought this action against defendant Calphalon Corporation ("Calphalon"), seeking to recover unpaid commissions and other damages pursuant to the New York Sales Representative Act, New York Labor Law, §§ 191-a — 191-c. Before the Court is defendant's motion pursuant to Fed.R.Civ.P. 12(b)(6) to dismiss without prejudice due to a pending, previously filed suit in the United States District Court for the Northern District of Ohio involving the same parties and issues. In the alternative, defendant moves to stay further proceedings in this case pending the final resolution of the Ohio action. Finally, if this action is neither dismissed nor stayed, defendant moves to transfer the case to the Northern District of Ohio, Western Division, pursuant to 28 U.S.C. § 1404 (a). For the reasons set forth below, judgment is entered in favor of defendant Calphalon Corporation dismissing this case without prejudice, leaving the parties to resolve thier differences in the United States District Court for the Northern District of Ohio.

BACKGROUND

Kellen, a New York corporation, served as a sales representative for Calphalon, an Ohio corporation for twenty years. Over the years, Calphalon regularly paid Kellen commissions for the sale of its cookware products. On February 1, 1997, the two companies entered into a written Manufacturers' Representative Agreement ("MRA") under which Kellen continued as a Manufacturer's Representative for Calphalon and Calphalon continued to pay Kellen for its services. The parties signed an MRA for the period February 1, 1997 through January 31, 1998 with an option to renew. The MRA also provided that it was to be interpreted under the laws of the state of Ohio. On December 18, 1997, Calphalon notified Kellen and its other sales representatives that it would not renew their MRAs in 1998.

On May 6, 1998, Kellen and seven other former Calphalon sales representatives filed a lawsuit in the United States District Court for the Northern District of Ohio, seeking to recover unpaid commissions and other damages that allegedly resulted because Calphalon did not renew the MRAs. Plaintiffs asserted eight claims in that action: (1) breach of contract for termination of the MRAs; (2) breach of contract for failure to pay commissions earned; (3) promissory estoppel/breach of implied contract; (4) tortious interference with contract; (5) breach of the implied covenants of good faith and fair dealing; (6) negligent misrepresentation; (7) breach of fiduciary duty, and (8) a demand for an accounting.

Five months later, on October 5, 1998, Kellen filed this lawsuit in New York Supreme Court, County of Westchester, asserting claims under the New York Sales Representative Act, New York Labor Law, §§ 191-a — 191-c, for failure to pay sales commissions and for late payment of sales commissions. Calphalon timely removed the action to this court,*fn1 pursuant to 28 U.S.C. § 1441(a). Calphalon now moves alternatively to dismiss, stay or transfer this action.

DISCUSSION

Calphalon's principal argument in favor of dismissal without prejudice is that, because the Ohio lawsuit was filed first and involves the same parties and issues, it alone should proceed to avoid duplicative litigation. This Court agrees.

1. First-Filed Rule

The Second Circuit has long adhered to the first-filed doctrine in deciding which case to dismiss where there are competing litigations. See Fort Howard Paper Co. v. William D. Witter, Inc., 787 F.2d 784, 790 (2d Cir. 1986); Semmes Motors, 429 F.2d at 1202; William Gluckin & Co., Inc. v. International Playtex Corp., 407 F.2d 177, 178 (2d Cir. 1969). "`[W]here there are two competing lawsuits, the first suit should have priority, absent the showing of balance of convenience . . . or . . . special circumstances . . . giving priority to the second.'" Adam v. Jacobs, 950 F.2d 89, 91 (2d Cir. 1991) (quoting First City Nat'l Bank and Trust Co. v. Simmons, 878 F.2d 76, 79 (2d Cir. 1989)). The first-filed rule seeks to advance judicial economy, protect the plaintiff's choice of forum and to avoid duplicative litigation. First City Nat'l Bank & Trust, 878 F.2d at 79-80; Comedy Partners v. Street Players Holding Corp., 34 F. Supp.2d 194, 196 (S.D.N.Y. 1999). It also protects parties from the considerable expense and potential for inconsistent judgments that duplicate litigation entails. Comedy Partners, 34 F. Supp.2d at 196-97.

It is well-established that the balancing of convenience "should be left to the sound discretion of the district courts." William Gluckin, 407 F.2d at 178. The interests analysis under the first-filed rule requires consideration of the same factors relevant to stay a "second filed" action on a motion to transfer under 28 U.S.C. § 1404(a). 800-Flowers, Inc. v. Intercontinental Florist, Inc., 860 F. Supp. 128, 133 (S.D.N Y 1994); Ivy-Mar Co., Inc. v. Weber-Stephen Products Co., No. 93 Civ. 5973, 1993 WL 535166, at *2 (S.D.N.Y. Dec.22, 1993). These factors include (1) the convenience of witnesses, (2) the location of relevant documents and the relative ease of access to sources of proof, (3) the convenience of the parties, (4) the locus of the operative facts, (5) the availability of process to compel attendance of unwilling witnesses; (6) the relative means of the parties; (7) a forum's familiarity with the governing law; (8) the weight accorded a plaintiff's choice of forum, (9) trial efficiency and the interests of justice based on the totality of the circumstances. 800-Flowers at 133; Ivy-Mar, 1993 WL 535166, at *4.

The first-filed rule is not to be applied mechanically, but is intended to aid judicial administration by acting "as a `presumption' that may be rebutted by proof of the desirability of proceeding in the forum of the second-filed action." Hanson, 932 F. Supp. at 106. The party opposing application of the first-filed doctrine has the burden to show that special circumstances exist to justify an exception. Id.; 800 Flowers, 860 F. Supp. at 132.

Most cases in which the first-filed rule is applicable present scenarios in which the plaintiff in the first action is the defendant in the second action. See, e.g., Isogon Corp. v. Amdahl Corp., No. 97 Civ. 6219, 1997 WL 759435 (S.D.N.Y. Dec.10, 1997); 800-Flowers, Inc. v. Intercontinental Florist, Inc., 860 F. Supp. 128 (S.D.N.Y. 1994). By contrast in this case, the plaintiff is the same in both the New York and Ohio ...


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