in the form of affirmative defenses (which assert, for example, that NSS committed the first material breach, that NSS misrepresented material facts, and that Allied is entitled to set-off and/or recoupment based upon NSS's breach of contract and misrepresentation).
The courts have been cautious in finding actions that are merely similar to be duplicative. "The Colorado River doctrine does not give federal courts carte blanche to decline to hear cases within their jurisdiction merely because issues or factual disputes in those case may be addressed in past or pending proceedings before state courts." United States v. SCM Corp., 615 F. Supp. 411, 417 (D.Md. 1985). In particular, courts have found cases not to be duplicative when they involved different parties, see Crawley v. Hamilton County Comm'rs, 744 F.2d 28, 31 (6th Cir. 1984), different legal issues, see New Beckley Mining Corp. v. Int'l Union, United Mine Workers of America, 946 F.2d 1072, 1074 (4th Cir. 1991), cert. denied, 503 U.S. 921 (1992), University of Maryland v. Peat Marwick Main & Co., 923 F.2d 265, 277 (3d Cir. 1991), and different remedies, see New Beckley Mining Corp., 946 F.2d at 1074. However, when a defendant in a state-court action fails to assert a compulsory counterclaim (that is, a counterclaim based upon the same transaction or occurrence as the claim against them), and instead brings that claim in federal court, the two cases are generally not meaningfully different. See Bagdan v. Sony Corp. of America, 767 F. Supp. 81, 83 (D.Vt. 1991); Jackson Hewitt, Inc. v. J2 Financial Services, Inc., 901 F. Supp. 1061 (E.D. Va. 1995).
Allied's claims appear to be based upon the same transaction or occurrence as NSS's claims.
It follows that NSS's claims are compulsory counterclaims in the present action, or would be were this action to go forward. If Michigan's rules of civil procedure operated as do the Federal Rules, Allied's claims would, correspondingly, be compulsory counterclaims in the Michigan action. As it happens, it is not clear whether Michigan's rules of civil procedure in fact have that effect in the present case. The parties have not briefed this question, and its answer appears to involve certain factual uncertainties.
However, I find that the present case is duplicative of the Michigan action irrespective of whether Allied's claims are compulsory counterclaims under Michigan law. In Colorado River, Justice Brennan was reluctant to term the doctrine he applied one of "abstention" because it did not issue from the concerns that underlie the abstention doctrines, considerations of "proper constitutional adjudication and regard for federal-state relations." Rather, he found, the doctrine of Colorado River derives from policies of "'wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.'" 424 U.S. at 817 (quoting Kerotest Mfg. Co. v. C-O-Two Fire Equipment Co., 342 U.S. 180, 183, 96 L. Ed. 200, 72 S. Ct. 219 (1952)); see also Moses H. Cone, 460 U.S. at 14-15 (Brennan, J.) (restating this distinction). Under Colorado River, then, the proper standard for determining whether two actions are duplicative is not whether the jurisdictions involved consider them to be so, as it might be if the underlying doctrine was one of comity, but whether considerations of "wise judicial administration" render it inappropriate for them to proceed separately. When, as is the case here, two actions arise from the same transaction and occurrence, involve the same parties, entail consideration of the same factual and legal issues, and seek essentially the same relief,
there is a sufficient risk that judicial resources will be consumed needlessly to warrant conducting the remainder of the Colorado River analysis. I will now proceed to conduct that analysis.
B. Appropriateness of Deferring to the Michigan Action
In Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 74 L. Ed. 2d 765, 103 S. Ct. 927 (1983), Justice Brennan set forth a six-factor analysis to guide a district court's exercise of discretion under Colorado River. Those factors are: (1) whether one court has first obtained jurisdiction over property; (2) the inconvenience of the federal forum; (3) the desirability of avoiding piecemeal litigation; (4) the order in which the state and federal courts obtained and exercised jurisdiction; (5) the source of the law that will provide the rules of decision; and (6) the adequacy of the state court proceeding to protect the parties' rights. See Moses H. Cone, 460 U.S. at 15-16, 21, 25-26.
1. Jurisdiction over Property. Neither of the actions at issue here involves jurisdiction over property, so the first factor is not applicable here.
2. Inconvenience of the Federal Forum. The second factor weighs neither for nor against abstention. NSS, a Michigan corporation, would prefer to litigate in Michigan; Allied, a Pennsylvania corporation, would prefer to litigate in Pennsylvania. Thus, each of the two candidate fora would appear to be convenient to one party and less convenient to the other.
3. Desirability of Avoiding Piecemeal Litigation. This factor would appear to counsel deference by one of the two courts involved. Assuming that (1) there is no legal bar to Allied raising its claims in the Michigan action (Allied has not indicated that there is any such obstacle), and (2) this federal action were to be stayed or dismissed, Allied could then proceed to assert its claims in Michigan, and what had been two lawsuits would then become one.
4. Order in Which the State and Federal Courts Obtained and Exercised Jurisdiction. The fourth factor, the order in which the two courts obtained and exercised jurisdiction, requires a somewhat more extended analysis. As the Court explained in Moses H. Cone, the principal focus of analysis under this factor should be which of the two actions has proceeded further, not merely which was filed first. See 460 U.S. at 21-22. It appears that the Michigan action has proceeded somewhat further than has the action before this court; discovery has been under way in that action for some time, and an exchange of witness lists is scheduled for December 7, 1995. (It would not seem sensible to place much emphasis on this fact, however, as the principal reason that discovery has not similarly been under way in this action is the pendency of NSS's present motion.)
Allied also argues that the only reason that NSS was able to file its lawsuit first was that, when Allied made reasonable efforts to settle the dispute, NSS responded with a rush to the courthouse. In support of this claim, Allied presents a copy of a letter that it asserts it sent to NSS on May 17, 1995, which described Allied's grievances and stated that "[a] full explanation is in order or more formal action will be taken to address this matter." Plaintiff's Memorandum in Opposition to Defendant's Motion to Dismiss, exh. A.
Allied asserts that it received no response to this letter. NSS says nothing about these events.
It is conceivable that evidence of this sort might suffice to negate the priority of a previously-filed state suit in some circumstances. In Moses H. Cone, the Court stated in dicta that an approach under which "the vexatious or reactive nature of either the federal or state litigation" can influence the decision whether to defer to parallel state litigation "has considerable merit." 460 U.S. at 17 n.20. Allied has presented at least some evidence that the Michigan action was a pre-emptive strike of sorts: NSS apparently did not respond to Allied's efforts to resolve the case without resort to the courts, and instead simply filed suit.
But the race to the courthouse is, after all, a time-honored legal pastime, and such a race cannot be termed "vexatious" or "reactive" in the absence of some extrinsic sign that the state court suit was brought in bad faith. One such sign might be the "contrived" nature of the resulting litigation. Indeed, both of the appellate decisions cited in Moses H. Cone as examples of analyses taking the "vexatious or reactive" nature of an action into account involved actions that the Court characterized as "contrived." Id. There is no indication in the present case, however, that the Michigan proceeding is contrived, and no extrinsic sign that NSS acted other than in good faith. Allied has not, therefore, succeeded in showing that the Michigan proceeding is of a "vexatious or reactive" character.
5. Source of the Law that will Provide the Rules of Decision. The claims of the two parties are state-law claims, but the present record provides such fragmentary information that it is impossible to determine whether the governing substantive law is that of Michigan or Pennsylvania (or - rather less likely - a third state's law; or - conceivably - the law of one state governing certain claims and the law of another state governing others). Without a copy of the contract (assuming there is a written contract) and some recital of the circumstances under which the contract was formed, one can as of now only conjecture what the governing substantive law would be. However, the substantive legal issues are not at all esoteric, so there is every reason to think that a Michigan court could, if occasion arose, readily cope with Pennsylvania (or other) law, and, in the alternative, that this court could cope with Michigan (or other) law. So the fact that we do not now know what substantive law will govern the various claims is not a real impediment to completing the Colorado River analysis.
6. Adequacy of the State Court Proceeding to Protect the Parties' Rights. Allied has not asserted that there is any legal reason that it cannot bring the claims it has brought before this court in the Michigan proceeding, and this court can discern no such reason. Thus, the Michigan proceeding would appear to be adequate to protect Allied's rights.
In Moses H. Cone, the Supreme Court made clear that "the decision whether to dismiss a federal action because of parallel state-court litigation does not rest on a mechanical checklist, but on a careful balancing of the important factors as they apply in a given case, with the balance heavily weighted in favor of the exercise of jurisdiction." 460 U.S. at 16. In the present case, the balance tilts in favor of dismissal. It is true that in terms of certain of the Colorado River factors this case can proceed equally well in either of the two possible fora: the two are equal in their convenience, or lack thereof, to the parties; all of the claims at issue appear to be cognizable in both courts; and, although we do not yet know what substantive law will be applicable, it would appear that the two courts are equally competent to determine the conflict of laws issues and, if need be, to apply another state's substantive law. But the Michigan forum was the first to obtain jurisdiction, and proceedings in that forum are more advanced than those here. Moreover, "wise judicial administration" counsels against piecemeal litigation; thus, I conclude that this is an instance in which Colorado River prompts deference to the other forum.
The Supreme Court noted in Moses H. Cone that it made little difference whether an action was stayed or dismissed, as the plaintiff in a dismissed action would necessarily be granted leave to return to federal court, if required. See 460 U.S. at 27-28. For ease of administration, I will order that this case be dismissed, but, in the (quite unlikely) event that it turns out that the Michigan proceeding is incapable of addressing all of Allied's claims, I will entertain an application by Allied for permission to re-file its complaint in this court.
An appropriate order follows.
For the reasons set forth in the accompanying opinion, it is hereby ORDERED that:
1. The defendant's motion to dismiss is GRANTED, and the complaint shall be dismissed. In the event that the pending Michigan proceeding is incapable of addressing all of the claims set forth in the plaintiffs' complaint, however, this court will entertain an application for leave to re-file that complaint. Any applicable statutes of limitations shall be tolled during the intervening period.
2. The Clerk shall docket the materials transmitted with this order.
Louis H. Pollak, J.
January 17, 1996