LANCE M. AFRICK, District Judge.
Before the Court is a motion
Plaintiff filed a lawsuit in the Civil District Court for the Parish of Orleans against Asbestos Corporation Limited ("ACL"), alleging that she developed malignant mesothelioma as a result of her prolonged exposure to asbestos manufactured by ACL.
In the meantime, on December 19, 2013, because plaintiff could not collect her judgment from ACL,
Defendants filed a motion
Plaintiff argues this Court should not stay the federal proceeding as the state and federal lawsuits are not parallel because the lawsuits involve different parties and will adjudicate different "discrete" issues—ACL's liability to plaintiff and ACL's insurance coverage, respectively.
Abstention is the relinquishment of a federal court's jurisdiction "when necessary to avoid needless conflict with a state's administration of its own affairs." Black's Law Dictionary (9th ed. 2009). "Abstention from the exercise of federal jurisdiction is the exception, not the rule." Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 813 (1976). "`The doctrine of abstention . . . is an extraordinary and narrow exception to the duty of a District Court to adjudicate a controversy properly before it.'" Id. (quoting County of Allegheny v. Frank Mashuda Co., 360 U.S. 185, 188-89 (1959)). "`Abdication of the obligation to decide cases can be justified under [the abstention doctrine] only in the exceptional circumstances where the order to the parties to repair to the state court would clearly serve an important countervailing interest.'" Id. (quoting Allegheny, 360 U.S. at 188-89).
In Colorado River, the U.S. Supreme Court noted that, generally, "`the pendency of an action in the state court is no bar to proceedings concerning the same matter in the Federal court having jurisdiction'" Id. at 817 (quoting McClellan v. Carland, 217 U.S. 268, 282 (1910)). This is because of the "virtually unflagging obligation of the federal courts to exercise the jurisdiction given them." Id. at 817-18 (citing England v. La. State Bd. of Med. Exam'rs, 375 U.S. 411, 415 (1964)). The U.S. Supreme Court has explained that "a stay [of the proceedings] is as much a refusal to exercise federal jurisdiction as a dismissal." Moses H. Cone, 460 U.S. at 28. Accordingly, a court may abstain from a case because of parallel litigation in state court only under "exceptional" circumstances. Colo. River, 424 U.S. at 818.
In order to determine if the Colorado River abstention doctrine applies, courts must first inquire into whether the federal and the state actions are parallel. An action is parallel when it has "the same parties and the same issues" as a case in a different forum. Stewart v. W. Heritage Ins. Co., 438 F.3d 488, 491 (5th Cir. 2006). However, the U.S. Court of Appeals for the Fifth Circuit has noted that "[i]t might not be necessary that the parties and issues are absolutely identical in every instance for Colorado River abstention to be appropriate." Am. Family Life Assurance Co. of Columbus v. Biles, 714 F.3d 887, 892 (5th Cir. 2013) (citing Brown v. Pac. Life Ins. Co., 462 F.3d 384, 394 n.7 (5th Cir. 2006)). For example, the Fifth Circuit has recognized that there need not always be a "mincing insistence on precise identity" of parties and issues. See Brown, 462 F.3d at 394 n.7 (quotation omitted).
Second, to determine whether "exceptional" circumstances exist in a given case, courts consider six factors: (1) the assumption by either court of jurisdiction over a res, (2) the relative inconvenience of the forums, (3) the avoidance of piecemeal litigation, (4) the order in which jurisdiction was obtained by the concurrent forums, (5) the extent to which federal law provides the rules of decision on the merits, and (6) the adequacy of the state proceedings in protecting the rights of the party invoking federal jurisdiction. Colo. River, 424 U.S. at 818-19; see also Moses H. Cone, 460 U.S. at 18-26. No one factor is determinative, and all applicable factors must be carefully balanced in a given case, "with the balance heavily weighted in favor of the exercise of jurisdiction." Moses H. Cone, 460 U.S. at 16.
The parties disagree as to whether the state liability proceeding and the instant indemnity proceeding are parallel.
Plaintiff argues that the lawsuits are not parallel because the parties in both lawsuits are not substantially the same and because this Court must decide discrete issues of policy coverage and judgment collection not before the state court.
Defendants do not cite, and this Court is not familiar with, any Fifth Circuit authority holding that lawsuits brought under the Louisiana Direct Action Statute are automatically considered parallel.
The Fifth Circuit has generally required that parallel actions involve "the same parties and the same issues." RepublicBank Dallas, Nat'l Ass'n v. McIntosh, 828 F.2d 1120, 1121 (5th Cir. 1987) (quoting PPG Indus., Inc. v. Cont'l Oil Co., 478 F.2d 674, 682 (5th Cir. 1973)). Several district courts have adopted the U.S. Court of Appeals for the Seventh Circuit's conclusion that "[t]he question is not whether the suits are formally symmetrical, but whether there is a substantial likelihood that the state court litigation will dispose of all claims presented in the federal case." TruServ Corp. v. Flegles, Inc., 419 F.3d 584, 592 (7th Cir. 2005) (quotations and modifications omitted); see, e.g., Kenner Acquisitions, LLC v. Bellsouth Telecomms., Inc., No. 06-3927, 2007 WL 625833, at *2 (E.D. La. Feb. 26, 2007) (Vance, C.J.); see also Storyville Dist. New Orleans, LLC v. Canal St. Dev. Corp., 785 F.Supp.2d 579, 591 n.22 (E.D. La. 2011) (Feldman, J.). Ultimately, abstention is not appropriate where "the disparity between the parties and the issues in [the federal case] and that in the state court is simply too great to deem the suits parallel." Entergy Thermal, LLC v. Martin, No. 10-2728, 2010 WL 5055878, at *2 (E.D. La. Dec. 1, 2010) (Duval, J.).
In RepublicBank, the Fifth Circuit considered state and federal actions involving the same general subject matter and sharing a common issue, the validity of a promissory note. 828 F.2d at 1121. The court held that the cases were not sufficiently parallel to warrant the district court's abstention. Id. The Fifth Circuit reasoned that the state and federal cases were not parallel because the appellants, the guarantors of promissory notes, were not parties in the appellee/note holder's state lawsuit and the cases involved different issues—specifically, the state lawsuit addressed the enforceability of the note and the federal lawsuit addressed the guarantee agreement. Id. Similarly, in the instant case, the defendant insurers were not parties in the state lawsuit between the injured plaintiff and the insured, ACL.
In asserting that these lawsuits are parallel, defendants rely on Polu Kai Services, LLC v. Insurance Co. of State of Pennsylvania, No. 06-10708, 2007 WL 716115 (E.D. La. Mar. 6, 2007) (Fallon, J.). In Polu Kai Services, the same facts being litigated in the state proceeding would also determine the federal indemnity action. Id. at *1-2. The court held that the actions were sufficiently parallel although the defendant in the federal lawsuit was not involved in the state proceeding. Id. at *2. However, the instant case is distinguishable because it does not "revolve around the same factual and legal issue" being litigated in state court. Id.
Furthermore, the state court litigation will not dispose of all the issues presented in this federal case. See Kenner Acquisitions, 2007 WL 625833, at *2. The state lawsuit will not resolve ACL's policy coverage or plaintiff's ability to collect from defendants. Finally, "[a]ny doubt regarding the parallel nature of the [state-court] suit should be resolved in favor of exercising jurisdiction." Rimkus Consulting Grp., Inc. v. Cammarata, No. 07-0405, 2007 WL 4223434, at *4 (S.D. Tex. Nov. 29, 2007) (Rosenthal, J.) (second alteration in original) (quoting TruServ Corp., 419 F.3d at 592). The disparity between the parties and the issues in these lawsuits is too great to deem them parallel. See Entergy Thermal, 2010 WL 5055878, at *2.
For the foregoing reasons, the Court concludes that the lawsuits are not sufficiently parallel; the lawsuits do not "consist of substantially the same parties litigating substantially the same issues." Kenner Acquisitions, 2007 WL 625833, at *2; see also Rowley v. Wilson, 200 F. App'x 274, 275 (5th Cir. 2006) (reversing district court decision that lawsuits were parallel where the federal lawsuit included claims against additional defendants not involved in the state lawsuit); Am. Guarantee Liab. Ins. Co. v. Anco Insulations, Inc., 408 F.3d 248, 252 (5th Cir. 2005) (reversing district court decision that lawsuits were parallel where only one of the defendants was a party in the state lawsuit and the federal lawsuit involved additional claims). Accordingly, abstention is unwarranted.
In the alternative, even if the Court were to find that the lawsuits are parallel, the Court concludes that abstention is inappropriate in light of the Colorado River factors, only one of which weighs in favor of abstention.
When a court has not taken control over property or any res, the first factor weighs against abstention. Evanston Ins. Co. v. Jimco, Inc., 844 F.2d 1185, 1191 (5th Cir. 1988). Plaintiff notes that neither court has assumed jurisdiction over a res, and defendants do not dispute this.
"When courts are in the same geographic location, the inconvenience factor weighs against abstention." Id. This factor "primarily involves the physical proximity of the federal forum to the evidence and witnesses." Evanston, 844 F.2d at 1191. Because the state and federal forums are both located in New Orleans, the relative inconvenience of the forum weighs against abstention. See Stewart, 438 F.3d at 492.
The parties disagree as to the significance of the third factor, avoidance of piecemeal litigation. Defendants contend that proceeding in this case could lead to inconsistent judgments and "an enormous waste of judicial resources."
Defendants' arguments are misplaced.
Black Sea Inv., Ltd. v. United Heritage Corp., 204 F.3d 647, 650-51 (5th Cir. 2000) (quoting Evanston, 844 F.2d at 1192) (emphasis added) (footnotes omitted). Because the federal and state lawsuits concern insurance coverage and liability, which do not involve jurisdiction over a res, the risk of piecemeal litigation and danger of inconsistent rulings with respect to a piece of property does not support abstention. See id. Furthermore, conservation of judicial resources is not a factor in the Colorado River abstention doctrine. See Colo. River, 424 U.S. at 818-19; see also Moses H. Cone, 460 U.S. at 18-26. The Fifth Circuit has also acknowledged that the application of res judicata can eliminate the danger of inconsistent rulings in a case with the potential for piecemeal litigation. Stewart, 438 F.3d at 492; see also Kelly Inv., Inc. v. Cont'l Common Corp., 315 F.3d 494, 498-99 (5th Cir. 2002). Where there is not a risk of irreconcilable rulings, "[s]hould one court render judgment before the other, res judicata will ensure proper order." Kelly, 315 F.3d at 499. The Court concludes that the third factor weighs against abstention in this matter.
The fourth factor is measured by the amount of progress made in each action. Moses H. Cone, 460 U.S. at 21. Defendants argue that because the state proceeding was filed more than one year before the instant case and has progressed to a jury trial, judgment, and appeal, this Court should stay the federal proceeding.
The Fifth Circuit has suggested that the fourth factor "only favors abstention when the federal case has not proceeded past the filing of the complaint." Stewart, 438 F.3d at 492-93 (citing Murphy, 168 F.3d at 738). Similarly, another section of this Court has noted that the fourth factor "favor[s] abstention" when the state action is currently on appeal, the federal lawsuit was filed after the state trial court issued its judgment, and the federal case has not progressed beyond motion practice. Storyville, 785 F. Supp. 2d at 592. Because this federal lawsuit was filed after the state court issued a judgment, which is currently on appeal, and this lawsuit has not significantly progressed,
With respect to the fifth factor, defendants and plaintiff acknowledge that the case involves only issues of state law.
With respect to the sixth factor, defendants argue that the plaintiff will not be prejudiced by a temporary stay of this proceeding because plaintiff has already received a judgment against ACL that will stand as long as it is not overturned or reduced on appeal.
The Fifth Circuit has held that the sixth factor "can only be a neutral factor or one that weighs against, not for, abstention." Id. Furthermore, in Moses H. Cone, the Supreme Court explained:
460 U.S. at 28 (citation omitted). Because this Court would still have to determine the issues of policy coverage and plaintiff's ability to collect from defendants, unless the jury's verdict is vacated, it would be a "serious abuse of discretion" for this Court to grant the stay.
In sum, only one of the factors weighs in favor of abstention, and defendants have not shown that exceptional circumstances warrant abstention.
The Court briefly notes an alternative argument raised by defendants, who urge that "the Court has the inherent power to stay proceedings."
"Although district courts have inherent authority to control their dockets, `only in rare circumstances will a litigant in one cause be compelled to stand aside while a litigant in another settles the rule of law that will define the rights of both.'" D&S Marine Servs., L.L.C. v. Lyle Properties, L.L.C., No. 12-31263, 2013 WL 6054358, at *4 (5th Cir. Nov. 18, 2013) (quoting Landis v. N. Am. Co., 299 U.S. 248, 255 (1936)). The sole case on which defendants rely for the proposition that a stay is appropriate is Rizk v. DePuy Orthopaedics, Inc., No. 11-2272, 2011 WL 4965498, at *2 (E.D. La. Oct. 19, 2011), which addressed the entirely distinguishable circumstance of imposing a brief stay pending a decision on the transfer of a case to an MDL court. After balancing "the harm of moving forward and the harm of holding back," the Court declines to exercise its inherent power to stay the above-captioned matter. See D&S Marine Servs., 2013 WL 6054358, at *4.
The Court has determined that the Colorado River abstention doctrine does not apply because the state and federal cases are not parallel. Furthermore, even if the cases were parallel, only the amount of progress in the state court proceeding weighs in favor of abstention. The remaining factors are neutral or weigh against abstention. This case does not present an exceptional circumstance which would warrant abstention. Finally, the Court rejects defendant's alternative argument that the Court should nonetheless stay the above-captioned matter pursuant to its inherent authority to control its docket. Accordingly,