United States District Court, S.D. New York
MICHAEL J. NOBLE, Petitioner,
US FOODS, INC., Respondent.
OPINION AND ORDER
RONNIE ABRAMS, District Judge.
In this action, Petitioner Michael J. Noble moves to partially vacate, modify, or correct an arbitration award (the "Motion to Vacate"). Respondent U.S. Foods, Inc. cross-moves to transfer Noble's action to the United States District Court for the Northern District of Illinois (the "Illinois Court"), or, in the alternative, to dismiss Noble's action ("Motion to Transfer"). Concurrently, before the Illinois Court, U.S. Foods has petitioned to confirm and enforce the same arbitration award (the "Petition to Confirm") and Noble has moved to dismiss, transfer (to this Court), or stay U.S. Foods' petition.
US Foods' Motion to Transfer presents a threshold issue: whether Noble's motion is properly heard before this Court or the Illinois Court. For the reasons that follow, this Court holds, without deciding the merits of the motions before it, that under the "first-to-file" rule, the Illinois Court should decide which forum will hear the Motion to Vacate and Petition to Confirm. The Court therefore stays all proceedings before it pending a decision by the Illinois Court.
The dispute between Noble and U.S. Foods encompasses a detailed history. Only the facts relevant to this Opinion and Order are recounted here.
US Foods is a foodservice distributor with its principal place of business in Rosemont, Illinois. (Respondent's Mem. in Support of Motion to Transfer ("Resp.'s Br.") at 4.) In the immediate period leading to this dispute, Noble was U.S. Foods' Senior Vice President of Shared Services in Phoenix, Arizona. (Farren Deel. Tab A at ¶ 3.) On November 16, 2007, U.S. Foods and Noble entered into a Management Stockholder's Agreement ("MSA"). (Resp.'s Br. at 4.) The MSA includes an arbitration clause which provides that "any controversy among the parties hereto arising out of, or relating to, this Agreement which cannot be settled amicably by the parties... shall be finally, exclusively and conclusively settled by mandatory arbitration...." (Farren Deel. Tab Bat MSA § 17(b).)
On December 11, 2012, U.S. Foods terminated Noble's employment. (Resp.'s Br. at 4.) Pursuant to the MSA, on May 15, 2013, U.S. Foods filed a demand for arbitration against Noble, asserting various claims, including breach of contract and breach of fiduciary duty. (Resp.'s Br. at 10.) Noble asserted counterclaims in the arbitration against U.S. Foods, including whistleblower claims and claims for breach of contract, conversion, and securities fraud. (Farren Deel. Tab H.)
Also on May 15, 2013, U.S. Foods filed a complaint in the Illinois Court against Noble asserting claims arising from the same facts leading to the arbitration and seeking preliminary and permanent injunctive relief. (See Bertram Deel. Ex. F.) U.S. Foods then moved the Illinois Court to expedite discovery and Noble moved to dismiss the complaint or, in the alternative, to stay the action pending the mandatory arbitration. (Bertram Deel. ¶ 4.) On November 4, 2013, the court denied the motion to expedite discovery because the arbitrator had "allowed fulsome discovery" and kept Noble's motion to dismiss or stay open. Order, U.S. Foods, Inc. v. Noble, No. 13-cv-3640 (N.D. Ill. Nov. 4, 2013), Dkt. 45.
At a status hearing on December 16, 2013, the Illinois Court ordered the parties to inform the court of the status of the arbitration at the next status hearing and held Noble's pending motion in abeyance. Minute Entry, U.S. Foods, Inc. v. Noble, No. 13-cv-3640 (N.D. Ill.Dec. 16, 2013), Dkt. 50. On January 30, 2014, the parties reported that they expected an arbitration ruling in April. Minute Entry, U.S. Foods, Inc. v. Noble, No. 13-cv-3640 (N.D. Ill. Jan. 30, 2014), Dkt. 51.
At the next status hearing, on April 22, counsel for U.S. Foods stated that "we do anticipate the arbitration being resolved... and hopefully that will obviate the need for the injunctive relief sought through the Northern District of Illinois proceeding." (Bertram Deel. Ex. G at 6.) When asked by Judge Wood if he agreed, counsel for Noble responded, "I agree with all of what she said as to the status. I don't know whether it obviates the need for your Honor's participation, because I envision two areas where your Honor may be called upon to participate. One would be to enter judgment on the arbitration award...." (Id.) At the end of the status hearing, Judge Wood stated that she would "continue to hold the pending motions in abeyance. If I need to issue rulings on them after the arbitration is completed, I will do that." (Id. at 8.)
On July 24, 2014, the parties reported that the arbitrator had issued an award in favor of U.S. Foods. (Bertram Deel. Ex. Hat 8.) Judge Wood then denied Noble's motion to dismiss or stay as moot, (Id. at 10), and asked the parties if there were "any matters that you feel are left to be resolved by this Court[.]" (Id. at 8.) Counsel for U.S. Foods stated her intention to "seek confirmation of the award in this court" and requested that "the matter be kept open for the confirmation proceeding." (Id.) When asked by Judge Wood if he had any objections, counsel for Noble stated that "my lack of objection doesn't mean we in any way agree to whatever is filed, but I don't have any objection to keeping the matter open." (Id. at 9.) Judge Wood then set another hearing for October 23, 2014, at which point she would "hear what the parties' thoughts are on what, if anything, they intend to do with respect to the award." (Id. at 14.) The minute entry for this status hearing reads as follows: "This case shall remain open to permit enforcement, modification or vacation of the arbitration award." Minute Entry, U.S. Foods, Inc. v. Noble, No. 13-cv-3640 (N.D. Ill. July 24, 2014), Dkt. 57.
On September 24, 2014, Noble filed the present action, moving to partially vacate, modify, or correct the arbitration award in this Court. One day later, U.S. Foods filed its Petition to Confirm in the Illinois Court. (Bertram Deel. ¶ 7.) On October 9, 2014, Noble moved the Illinois Court to dismiss, transfer to this Court, or stay U.S. Foods' petition. (Response and Motion to Dismiss, Transfer or Stay Petition to Confirm and Supporting Mem. of Law, U.S. Foods, Inc. v. Noble, No. 13-cv-03640 (N.D. Ill. Oct. 9, 2014), Dkt. 64.) Also on October 9, 2014, U.S. Foods filed its Motion to Transfer Noble's Motion to Vacate in this Court.
US Foods argues that Noble's Motion to Vacate should be transferred pursuant to the first-to-file rule. (Resp.'s Br. at 13-16.) The first-to-file rule provides that "[a]s a general rule, where there are two competing lawsuits, the first suit should have priority" absent a showing that the "balance of convenience" or "special circumstances warrant giving priority to the second suit." Emp'rs Ins. of Wausau v. Fox Entm't Grp., Inc., 522 F.3d 271, 274-75 (2d Cir. 2008) (internal quotation marks omitted). The rule "embodies considerations of judicial administration and conservation of resources by avoiding duplicative litigation and honoring the plaintiffs choice of forum." Id. at 275 (internal quotation marks omitted). It is "based on principles of judicial economy and comity, " Citigroup Inc. v. City Holding Co., 97 F.Supp.2d 549, 555 (S.D.N.Y. 2000). The first-filed rule "requires a substantial overlap between the cases, in that they have identical or substantially similar parties and claims." ...