USDC E.D. Pennsylvania, February 11, 2008
In an action emphasizing the importance of the “first-filed rule,” the district court followed the rule and transferred a Pennsylvania action to the Southern District of New York, where the defendant in the Pennsylvania action had previously filed a related action against the plaintiff in the Pennsylvania action for claims arising under the Copyright Act, the Lanham Act and state law. As the court explained, “[t]he first-filed rule declares that a first filing party should be free from subsequent litigation over the same subject in courts of concurrent jurisdiction, except in cases involving extraordinary circumstances, inequitable conduct, bad faith, or forum shopping.”
Significantly, both parties’ principal places of business were in Pennsylvania, only about 2% of the business of the plaintiff in the Pennsylvania action was in New York, and the first filed action in New York had never been served. The plaintiff in the Pennsylvania action argued that the forum-shopping exception to the rule should apply because the defendant had chosen the New York forum solely in search of favorable state law. To justify the forum-shopping exception to the first-filed rule, the court held, it must be established that forum shopping was the “sole reason” for the choice of the original forum. The court found, however, that the Southern District of New York was a logical forum, given that both parties do business in New York (without specifying the extent of the business done in New York by the plaintiff in the New York action), and thus held that the plaintiff in the Pennsylvania action had failed to establish that forum shopping was the sole reason for the defendant’s original choice of the New York forum.
Noting that “[i]n applying the first-filed rule, courts have the option to dismiss, stay or transfer the later filed action,” the court transferred the action under 28 U.S.C. § 1404(a) because consideration of the private and public interests favored transfer in light of the purposes of the first-filed rule. The court further held that transfer was appropriate because New York is in close proximity to Pennsylvania, so that the parties and witnesses would not be inconvenienced by the transfer.