HAIGHT, Senior District Judge:
Plaintiff Teri Tucker ("plaintiff" or "Tucker") seeks to recover damages from her former employer's insurers, defendants American International Group, Inc. ("AIG") and National Union Fire Insurance Company of Pittsburgh, PA ("National Union"), arising from her unlawful discharge in 2003. Specifically, she seeks to collect from defendants a $4 million judgment in plaintiff's favor entered against her employer, Journal Register East, by District Judge Stefan R. Underhill following a jury trial in the Bridgeport Division of this Court. Tucker v. Journal Register East, Doc. # 3:06-CV-307 (SRU) (herein "Tucker I").
On March 1, 2006, plaintiff commenced an action against her former employer, The New Haven Register,
Plaintiff's case in Tucker I proceeded to a jury trial in July 2008. On July 23, 2008, the jury returned a verdict in her favor on all counts in the total amount of $4 million: $1 million in compensatory damages and $3 million in punitive damages. Tucker I, Doc. # 69. The jury also found that Tucker was entitled to economic damages in an amount to be determined by the court. Id. On July 29, 2008, Judge Underhill entered judgment on the verdict in the amount of $4 million. Id., Doc. # 73.
Post-trial, Tucker sought a prejudgment remedy ("PJR") to secure recovery of the judgment. Id., Doc. # 75-77. She also filed motions for preliminary injunction, disclosure of assets, and prejudgment and post judgment interest. Id., Doc. # 77 & 107. In Tucker's memorandum in support
Defendant Journal Register East opposed plaintiff's post-trial motions and also filed, inter alia, motions to stay execution of the judgment and for a new trial.
On February 20, 2009, Judge Underhill issued a ruling, granting Tucker's motion for a PJR in the amount of $500,000 and her motion for disclosure of assets to satisfy the PJR. Id., Doc. # 129. He specifically found that probable cause existed that a judgment of $500,000 would ultimately be entered for Tucker and that the defendant was not adequately secured by insurance. Judge Underhill, however, denied Tucker's motion to preliminarily enjoin the defendant from disposing of its assets, finding that Tucker had failed to show the existence of "irreparable harm" if the injunction were not granted. Id.
On February 21, 2009, Journal Register East, along with its parent company, the Journal Register Company, filed a voluntary petition for bankruptcy protection under Chapter 11 of the Bankruptcy Code in the Southern District of New York. In re Journal Register Co., et al., No. 09-10769(ALG) (Bankr.S.D.N.Y.2009). An automatic stay pursuant to § 362 of the Bankruptcy Code went into effect.
Since March 24, 2009, Tucker I has remained stayed. Judge Underhill denied all pending post-trial motions without prejudice to their renewal "if and when the bankruptcy stay is lifted." Id., Doc. # 129. Defendant's motions for summary judgment or a new trial were thus never decided on their merits. Judge Underhill closed the case, subject to being reopened
On March 17, 2009, Tucker made a motion in bankruptcy court for relief from the automatic stay for the purpose of pursuing recovery of the $4 million judgment in Tucker I from Journal Register East's insurer, National Union, up to the limits of Journal Register East's employment practices liability insurance policy ("EPL Policy").
Bankruptcy Judge Allan L. Gropper approved the Stipulation on June 22, 2009. In his Memorandum, he noted that "[t]he only question [in lifting the stay] is whether there should also be leave, at this time, [for the insurer] to proceed with the motion for a new trial and judgment n.o.v. [in Tucker I]. Id., Memorandum of Judge Allan Gropper (June 22, 2009), pp. 2-3. He concluded as follows:
Id., p. 3 (emphasis added).
In these circumstances, in December 2009 plaintiff filed the captioned action,
In her Complaint, Tucker has included the following claims: breach of contract; breach of the implied covenant of good faith and fair dealing; a claim to recover as a subrogee of the Journal Register Company under Connecticut's Direct Action Statute, Conn. Gen.Stat. § 38a-321;
The defendants base their current motion to transfer and/or reassign the case to Judge Underhill on two legal theories: (1) Tucker II is "related" to Tucker I for purposes of the first-to-file rule, as set
Defendants first contend that a transfer of the case at bar to Judge Underhill is proper under Local R. Civ. P. 40(b), which states that if there is a related case pending in the District when a new case is filed, the new case should "normally be assigned to the Judge having the earliest filed case."
In support of their motion, defendants note that, when filing the present action, "Plaintiff correctly identified the Underlying Lawsuit as a related proceeding in her Civil Cover Sheet." Id., p. 2, para. 2.
Defendants are correct in stating that, as a general rule, the Second Circuit follows the first-to-file rule. See Employers Ins. of Wausau v. Fox Entm't Group, Inc., 522 F.3d 271, 274-75 (2d Cir.2008) ("[w]here there are two competing lawsuits, the first suit should have priority").
In order to decide whether to apply the first-to-file rule, the court must ask the threshold question of "are the actions duplicative." Alden Corp. v. Eazypower Corp., 294 F.Supp.2d 233, 236 (D.Conn. 2003). Claims are considered duplicative if they arise from the same nucleus of facts.
The case at bar does not fit squarely within the first-to-file rule as stated in Local Rule 40(b) or as described in the common law of this Circuit. First of all, Tucker I, the allegedly related case, is not technically pending at this time. It is in fact closed. Granted, Judge Underhill closed it subject to reopening upon the termination of the bankruptcy proceedings. Where, however, Journal Register East's pre-bankruptcy debts have been discharged under the Confirmation Order, it is unlikely that it would—or even could—move to reopen the case and renew its motions.
Furthermore, Bankruptcy Judge Gropper made it very clear that he did not lift the stay to allow the insurers to attack the jury verdict in Tucker I at this time. He left that possibility open in the future upon a motion to further lift the stay, but narrowly lifted the stay "for the sole purpose of permitting Tucker to pursue the Claims against National Union and the EPL Policy to the limits of the EPL Policy." In re Journal Register Company, et al., Memorandum of Judge Allan Gropper (June 22, 2009), pp. 2-3. Judge Gropper thus approved the Stipulation to lift the stay
In the event that the insurers do go back to bankruptcy court and specifically request to reopen the bankruptcy proceedings to seek permission to step into the insured's shoes and challenge the verdict in Tucker I, the case may be reopened. At that point, there would arguably be related cases
When determining whether to apply the first-filed rule, "[t]he first inquiry is whether virtually the same issue or issues are being decided by the same parties in the respective actions." American Steamship Owners Mut. Protection and Indem. Ass'n, Inc. v. Lafarge North America, Inc., 474 F.Supp.2d 474, 486 (S.D.N.Y. 2007), aff'd on that ground sub nom. New York Marine and General Ins. Co. v. Lafarge North America, Inc., 599 F.3d 102, 112-13 (2d Cir.2010). Where the issues are clearly different, the rule does not apply.
As Judge Nevas of this District noted in Halo Tech Holdings, Inc. v. Cooper, No. 3:07-CV-489 (AHN), 2008 WL 877156, at *16 (D.Conn. Mar. 26, 2008), the first-filed rule "has no application" where "the issues involved in the two lawsuits are unrelated." In that case, the first-filed suit was brought by Halo shareholders, alleging fraud by Halo in failing to register shares it received when it purchased a subsidiary, Old Empagio. In the second-filed action, however, Halo's fraud alleged in the first suit was merely a "backstory" to the current action in which Halo was suing its shareholders for breach of their fiduciary duties and unfair trade and business practices in the sale of a different corporation. Because the "two lawsuits involve[d] different factual issues and claims," the court found that a transfer of the second action would not further judicial economy. See also Pitney Bowes, Inc. v. Ricoh Corp., No. 3:03-CV-1985 (RNC), 2004 WL 243351, at *1 (D.Conn. Feb. 7, 2004) (holding actions not duplicative and first-filed rule inapplicable where first lawsuit alleged patent infringement through manufacturing postage metering machines and second lawsuit alleged patent infringement by manufacturing multifunction printers).
As plaintiff points out in her Memorandum in Opposition, the issues to be decided in Tucker I and Tucker II are not the same, but rather "substantially different."
In Tucker II, the central issue is whether defendants' EPL Policy with the Journal Register Company covers the damages resulting from plaintiff's allegedly wrongful termination in Tucker I. The Court will thus be required to determine whether there was an effective EPL Policy with the Journal Register Company; what the terms of that policy were; whether that policy covers damages to Journal Register East's employees, as described in the Complaint in Tucker I; and if so, to what extent plaintiff's damages were covered.
If one examines and compares the claims set forth in the two Complaints, one notes that the causes of action in Tucker I and II are not duplicative. As stated supra, in Tucker I plaintiff brought actions for unlawful termination in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e, et seq.; violation of the Connecticut Fair Employment Practices Act, Conn. Gen.Stat. § 46a-60, et seq.; and violation of Connecticut's "Free Speech Law," Conn. Gen.Stat. § 31-51q. In contrast, in Tucker II, plaintiff now sues her former employer's alleged insurers for breach of contract; breach of the implied covenant of good faith and fair dealing; damages as a subrogee of the Journal Register Company under Connecticut's Direct Action Statute, Conn. Gen.Stat. § 38a-321; violation of the Connecticut Unfair Trade Practices Act ("CUTPA"), Conn. Gen.Stat. § 42-110a, et seq.; bad faith; and equitable estoppel. Therefore the cases are not duplicative.
Pointing to precedent within the Fifth Circuit, defendants argue that the "first to file" rule should apply even where the cases are not identical provided that the same "facts, transactions or issues . . . are central to both cases." Tucker II, Doc. # 17, p. 5, para. 1. See Save Power Ltd. v. Syntek Finance Corp., 121 F.3d 947, 950 (5th Cir.1997) (holding that "regardless of whether or not the suits here are identical, if they overlap on the substantive issues, the cases would be required to be consolidated in . . . the jurisdiction first seized of the issues."). The Second Circuit has not enunciated a standard of "substantial overlap" in "first to file" cases; however, were this Court to assume without deciding that "substantial overlap" is the proper standard,
Furthermore, even in jurisdictions that apply "substantial overlap" to discretionary transfers, "[w]here the overlap between the suits is less than complete, the judgment is made case by case, based on such factors as the extent of the overlap, the likelihood of conflict, the comparative advantage and the interest of each forum in resolving the dispute." Id. (quoting TPM Holdings, Inc. v. Intra-Gold Indus., Inc., 91 F.3d 1, 4 (1st Cir.1996)).
In the case at bar, there is no likelihood of a conflict with rulings to be rendered by Judge Underhill. He is barred from proceeding further in Tucker I unless or until the bankruptcy court permits such an action. Moreover, the New Haven and Bridgeport Divisions of this District have no competing interests in resolving the parties' disputes. Thus, any alleged overlap between the cases is insufficient to merit transfer.
Just as the issues in Tucker I and II are not identical, neither are the parties the same. The plaintiff is Teri Tucker in both proceedings. However, the defendants in the two actions are different: in Tucker I, the defendant was Journal Register East d/b/a The New Haven Register, Tucker's former employer. In Tucker II, the defendants are insurers, National Union and AIG, who allegedly entered into the EPL Policy with the Journal Register Company, the parent company of Journal Register East.
Courts have declined to apply the firstto-file rule where the parties to the two actions are not identical. See, e.g., Van Zwinnen v. S.S. "EVER GRAND," Nos. 92 Civ. 7142(JFK), 92 Civ. 7609(JFK), 1994 WL 465918, at *3-4 (S.D.N.Y. Aug. 24, 1994) (court rejected "first-to-file" argument to transfer where parties to the actions were "not identical"); United States v. International Broth. of Teamsters, 708 F.Supp. 1388, 1403 (S.D.N.Y.1989) (first to file rule held inapposite where "parties in the two cases are different"). See also In re Cuyahoga Equipment Corp., 980 F.2d 110, 116-17 (2d Cir.1992) (first to file rule usually applies when "identical or substantially similar parties" are present in both courts).
For the foregoing reasons, this case does not fit squarely within the parameters of the first-filed rule. However, were this a proper case for the rule's application, "the court in which the first-filed case was brought [is the one that] decides the question of whether . . . the first-filed rule, or alternatively, an exception to the firstfiled rule, applies." Ontel Products, Inc. v. Project Strategies Corp., 899 F.Supp. 1144, 1150 n. 9 (S.D.N.Y.1995); see also Veritas-Scalable Investment Products Fund, LLC, 2006 WL 2520262, at *4. Thus, had Tucker I truly been a firstfiled case, and were that case still pending, Judge Underhill would be the one to determine the rule's application. Here, both cases were brought in
Defendants' second stated basis for seeking transfer is 28 U.S.C. § 1404(b), under which they seek an intra-district transfer. Section 1404(b) states in relevant part:
28 U.S.C. § 1404(b). Although they are indeed seeking transfer within the same district, defendants' reliance on subsection (b) is misplaced in that it applies only where "all parties" move, consent or stipulate to the transfer. In the present case, plaintiff adamantly objects to defendants' motion to transfer. There is thus no joint motion, agreement or stipulation to transfer the case to Judge Underhill.
This Court may, however, choose to construe defendants' motion as one for discretionary transfer under section 1404(a). In so doing, a district court may even choose to transfer sua sponte in the interest of justice. See, e.g., Lead Industries Ass'n, Inc. v. Occupational Safety and Health Administration, 610 F.2d 70, 79 n. 17 (2d Cir.1979) (distinguishing subsection 1404(a) from subsection 1404(b) in that (b) contains a "proviso" and thus "limitation" that there must be a motion, consent or stipulation of all parties for transfer to be proper whereas (a) even permits a court to transfer a case sua sponte in the interest of justice); accord I-T-E Circuit Breaker Co. v. Becker, 343 F.2d 361, 363 (8th Cir. 1965).
Section 1404(a), entitled "[c]hange of venue," provides that "[f]or the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought." See also Filmline (Cross-Country) Prods., Inc. v. United Artists Corp., 865 F.2d 513, 520 (2d Cir.1989); Carson Optical, Inc. v. Telebrands Corp., No. 3:06 CV 821(CFD), 2007 WL 2460672 (D.Conn. Aug. 27, 2007). In the case at bar, defendants seek a transfer to a different court within the same district, the District of Connecticut. Venue would thus remain proper for purposes of diversity of citizenship, and, in accordance with plaintiff's Complaint, would remain in the "judicial district in which a substantial part of the events or omissions giving rise to the claim occurred." 28 U.S.C. § 1391(a)(2); Tucker II, Doc. # 1, p. 3 (¶ 3).
A district court's transfer of a case under 28 U.S.C. § 1404(a) is subject to an abuse of discretion standard of review. Codex Corp. v. Milgo Elect. Corp., 553 F.2d 735, 737 (1st Cir.1977) (district court's decision to transfer "will not be overturned except on a very strong showing that the court abused its discretion"), cert. denied, 434 U.S. 860, 98 S.Ct. 185, 54 L.Ed.2d 133 (1977). See also New York Marine, 599 F.3d at 112 ("We review a district court's denial of a motion to transfer venue for abuse of discretion."); In re Cuyahoga Equip. Corp., 980 F.2d 110, 117 (2d Cir. 1992) ("[M]otions for transfer lie within the broad discretion of the district court."); Golconda Mining Corp. v. Herlands, 365 F.2d 856, 857 (2d Cir.1966) (motion to transfer pursuant to section 1404(a) subject only to review for "abuse of discretion"); Levitt v. State of Maryland Deposit
In assessing a motion to transfer pursuant to section 1404(a), the court must make a two-step inquiry. First it must establish that the case could have been brought in the prospective transferee district;
Thus, once the district court decides that venue is proper, it exercises its broad discretion "to adjudicate motions for transfer according to an individualized, case-by-case consideration of convenience and fairness." Stewart Organization, Inc. v. Ricoh Corp., 487 U.S. 22, 29, 108 S.Ct. 2239, 101 L.Ed.2d 22 (1988) (internal quotations and citation omitted); In re Cuyahoga Equip. Corp., 980 F.2d at 117. "The analysis is a flexible one, because wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation, does not counsel rigid mechanical solution of such problems." American Steamship Owners, 474 F.Supp.2d at 480 (internal quotations and citations omitted), aff'd, New York Marine, 599 F.3d at 112.
Factors to be considered in determining whether a section 1404(a) transfer is warranted include "convenience of the parties and witnesses, availability of process to compel unwilling witnesses to testify, location of the relevant documents, locus of the operative facts, relative means of the parties, the forum's familiarity with governing law, plaintiffs choice of forum, and the interests of justice." A Slice of Pie Productions, LLC v. Wayans Bros. Entertainment, 392 F.Supp.2d 297, 305 (D.Conn.2005) (citing U.S. Surgical Corp. v. Imagyn Medical Techs., Inc., 25 F.Supp.2d 40, 46 (D.Conn.1998)); see also New York Marine, 599 F.3d at 112 (enumerating factors used to determine whether to grant a motion to transfer venue);
"Absent a clear and convincing showing that the balance of convenience strongly favors the alternate forum . . . discretionary transfers are not favored." Li v. Hock, 371 Fed.Appx. 171, 175 (2d Cir.2010) (quoting Ayers v. Arabian American Oil Co., 571 F.Supp. 707, 709 (S.D.N.Y.1983)). See also Super Hoof, Inc. v. Blancato, No. 85 Civ. 1371(RLC), 1985 WL 3393, at *1 (S.D.N.Y. Oct. 23, 1985) ("absent convincing indications establishing the alternate forum as the more convenient one, discretionary transfers are not favored").
In the case at bar, as a preliminary matter, the parties do not dispute the propriety of venue in either the Bridgeport or New Haven Divisions of this District. See, e.g., Tucker II, Doc. # 1, p. 3 (¶ 2)("Jurisdiction"). Specifically, Tucker II could have been brought in the Bridgeport Division because the District of Connecticut is comprised of three separate divisions and venue is proper in all if proper in any one.
Similarly, the factors in this case regarding convenience (e.g., convenience of the parties, location of documents, availability of witnesses, familiarity with the law) favor neither side and are thus nondeterminative.
The main factor upon which defendants argue for transfer is judicial economy in the "interest of justice." Specifically, they claim that both this Court and Judge Underhill will have to decide "the [same] issue of the amount of damages justified by the evidence and enforceable against National Union's insured, Journal Register." Tucker II, Doc. # 17, p. 5, para. 2. They further contend that this could result in "either redundant or inconsistent rulings." Id. That argument, however, is flawed.
There will be no inconsistent or conflicting rulings in Tucker I and II. Judge Underhill may not decide the issue of damages in Tucker I at this time because the permanent injunction following the entry of Bankruptcy Judge Gropper's Confirmation Order remains in effect. Thus, unless or until that injunction is lifted, all proceedings in Tucker I are barred.
Were Tucker II to be transferred to Judge Underhill at this time, he might have a slight advantage in already possessing familiarity with the backstory in Tucker I (i.e., the underlying facts regarding the employment discharge). That knowledge would not, however, assist him in determining the key issues in Tucker II— the existence and extent of insurance coverage under the EPL Policy. There would thus be a minimal at best gain in judicial efficiency if Judge Underhill received Tucker II.
In sum, weighing all of the factors in light of the totality of the circumstances, transfer is not favored. The majority of relevant factors are neutral. The defendants have failed to make the requisite showing, by clear and convincing evidence, to justify transfer.
The Second Circuit's decision in New York Marine, 599 F.3d 102, is instructive on both issues discussed supra. The case arose out of Hurricane Katrina. A cement company operating a wharfing facility on the Mississippi River was sued in the Eastern District of Louisiana by New Orleans residents who alleged that a barge which broke loose from the wharf during the storm breached a levee and flooded part of the city. Insurers who issued policies of marine insurance to the company brought an action in the Southern District of New York for a declaration that the policy did not indemnify the insured against such claims. The insured made a motion in the New York court to transfer the insurer's action to Louisiana, relying upon both the first-filed rule and 28 U.S.C. § 1404(a). The district court rejected both grounds and denied a transfer. The Second Circuit affirmed, stating that "the first-filed rule is only a presumption that may be rebutted by proof of desirability of proceeding in the forum of the second-filed action," and "[w]ith respect to Lafarge's claim of duplicative litigation, the district court reasonably determined that the liability and coverage issues in the Louisiana and New York actions, respectively, are
After carefully reviewing defendant's arguments to transfer in light of New York Marine, the Court hereby denies defendants' motion to transfer Tucker II to Judge Underhill.
Second, weighing the requisite factors to determine "the interest of justice" in this case, the scale does not tip in favor of discretionary transfer under 28 U.S.C. § 1404. Transfer within the district is not appropriate under subsection (b) because all parties have not moved, consented or stipulated to the transfer. Furthermore, a discretionary transfer under subsection (a) is not justified because the case would still remain within the District of Connecticut, rendering the normal factors considered on such a transfer motion moot. The convenience of the parties and the witnesses, location of the operative facts, relative ease of access to sources of proof, and the forum's familiarity with the governing law would all remain essentially constant.
Lastly, there is no need to prevent duplication of judicial effort. Tucker I is stayed and closed, subject only to being reopened with the permission of the bankruptcy court. Bankruptcy Judge Gropper made it clear in his Memorandum approving the Stipulation For Relief From Stay that the bankruptcy court is unlikely to grant the insurers leave to reopen Tucker I as long as they continue to disclaim coverage for the plaintiff's damages in that case.
Moreover, even if Tucker I is eventually reopened, it will focus on the issues of whether plaintiff's former employer, Journal Register East, should be granted a new trial and/or whether there should be a remittitur to reduce the jury verdict as excessive. The Court in Tucker II now must focus on the issues regarding insurance coverage under the EPL Policy. Therefore, any advantage Judge Underhill might gain in already knowing the backstory in Tucker I (i.e., the underlying facts regarding employment termination in Tucker I) would not assist him in determining the key issues in Tucker II (i.e., the existence and extent of insurance coverage under the EPL Policy).
Examining the relevant considerations of convenience, fairness, and judicial economy, I conclude that the interest of justice does not require transfer of this case. Defendants have failed to establish by clear and convincing evidence that transfer is warranted. For all of the foregoing reasons,
It is SO ORDERED.
11 U.S.C. § 362(a)(1). Once in effect and absent relief afforded by a court, "the stay survives until the case is closed or dismissed or the debtor is discharged." Norton Creditors' Rights Handbook § 10:2; see also 11 U.S.C. § 362(c)(2)(A)-(C).
In the Second Circuit, as a general rule, any action taken in violation of the automatic stay is void ab initio and thus without effect. See, e.g., Eastern Refractories Co., Inc. v. Forty Eight Insulations Inc., 157 F.3d 169, 172 (2d Cir.1998) (automatic stay is effective immediately upon filing of bankruptcy petition, and any subsequent proceedings against debtor or debtor entities are void).
(Emphasis added).
