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Bennett v. ITOCHU International

August 17, 2009


The opinion of the court was delivered by: Joyner, J.


Presently before the Court is Defendants' Motion to Transfer Venue to the United States District Court for the Southern District of New York (Doc. No. 6) and Plaintiffs' Response in Opposition thereto (Doc. No. 14) and Defendants' Reply (Doc. No. 16). For the reasons set forth below, the Court will deny the Motion.


Plaintiffs, John A. Bennett, M.D. ("Bennett"), Devon Robotics, LLC, and Devon Health Services, Inc. ("DHS"), brought this Complaint against Defendants ITOCHU International, Inc. ("ITOCHU"), MedSurg Specialty Devices, Inc. ("MedSurg"), Thomas N. Apple ("Apple"), Mounir Rabbat ("Rabbat") and Yoshihisa Suzuki ("Suzuki"). Bennett is a Pennsylvania citizen and the Chief Executive Officer of Devon Robotics and Devon Health Services ("DHS"), both Pennsylvania corporations. Defendant ITOCHU is a Delaware Corporation with its principle place of business in New York. Defendant Thomas Apple, a New York citizen, acted as Vice President, Corporate Counsel and Senior Advisor to the general manager of human resources in the Legal Division of ITOCHU. MedSurg is a subsidiary of ITOCHU, organized under the laws of Delaware with its principle place of business in Louisiana. Defendant Rabbat, a citizen of New York, acted as the Senior Vice President, COO, Enterprise Division, General Manager of Business Development Division of ITOCHU, and/or officer and Director of MedSurg. Defendant Suzuki, a New York citizen, acted as Chief Executive Officer and President of ITOCHU.

Prior to the Plaintiffs' filing of this action, Defendant ITOCHU initiated an action against Devon Robotics in the U.S. District Court for the Southern District of New York on April 10, 2009 ("New York" case). The New York Complaint is based on the same negotiations and agreements underlying the instant case. Additionally, a related case ("Pennsylvania" case) was filed in this court on February 13, 2009, between, inter alia, Health Robotics and ITOCHU in which parties dispute similar issues both to the New York case and instant case, i.e., negotiations, financing and agreements pertaining to CytoCare*fn1 and the IV Station.

We will lay out the claims and arguments in the instant case in order to align them with the New York and Pennsylvania cases. The Plaintiffs have alleged seven counts: Count I asserts a claim by Bennett for Defamation*fn2 against Apple and ITOCHU. In Count II, Devon Robotics alleges a claim for Breach of Contract*fn3 against ITOCHU and

MedSurg surrounding a Distribution Agreement. In Counts III and IV, Devon Robotics, Bennett and Devon Health allege claims for Fraudulent or Negligent Misrepresentation against Rabbat, Suzuki and ITOCHU based on representations made to Bennett that ITOCHU would become a fifty percent partner and investor in Devon Robotics ("Partnership Transaction").*fn4 In Count V, Bennett, Devon Robotics and Devon Health allege that Rabbat, Suzuki and ITOCHU breached their duty to negotiate in good faith surrounding the Partnership Transaction and the terms and assurances relating to the Distribution Agreement. Bennett and Devon Health bring Count VI for Breach of Oral Contract against ITOCHU for statements made by Rabbat and Suzuki concerning ITOCHU's interest in purchasing shares in Devon Health from Bennett. Finally, in Count VII, Bennett and Devon Robotics allege Breach of an Oral Contract or Promissory Estoppel against ITOCHU for an oral contract that ITOCHU allegedly entered concerning shares of CytoCare and the IV Station.

The Defendants move for transfer of venue to the Southern District of New York based the "first-filed" rule or pursuant to 28 U.S.C. § 1404.


1. "First-Filed" Rule

Defendants first argue that pursuant to the first-filed rule, the instant case should be transferred to the Southern District of New York where Defendant ITOCHU has filed a Complaint against Plaintiff Devon Robotics.*fn5 Defendants posit that the Complaint warrants transfer under the first-filed rule because both the New York Complaint and the instant Complaint substantially overlap as to the parties and the negotiations and agreements in dispute. Plaintiffs argue that transfer is inappropriate under the guidelines of the first-filed rule because the instant action and the New York action are not truly duplicative proceedings and because the New York action resulted from a "race to the courthouse" and represents only "the tip of the iceberg of the legal dispute" that exists between the parties' business relationship. (Pl's Br. Opp. Mot. Transfer Venue, 4-5.) Finally, Plaintiffs contend that the Pennsylvania action*fn6 pending before this Court is actually the first-filed Complaint, making transfer of the instant case to New York more costly and inefficient.

Under the "first-filed rule," in cases where federal concurrent jurisdiction exists, the court which first has possession of the subject must decide it. IMS Health, Inc. v. Vality Tech., Inc., 59 F.Supp.2d 454, 463 (E.D. Pa. 1999). The "first-filed rule" encourages sound judicial administration and promotes comity among federal courts of equal rank. E.E.O.C. v. University of Pennsylvania, 850 F.2d 969, 971 (3d Cir. 1988). It gives a court the power to enjoin the subsequent prosecution of proceedings involving the same parties and the same issues already before another district court. Id.; Saudi v. Acomarit Maritimes Services, S.A., 245 F.Supp.2d 662, 666-67 n. 3 (E.D. Pa. 2003); Wise Investments, Inc. v. Bracy Contracting, Inc., No. 01-3458, 2001 U.S. Dist. LEXIS 24052, at *4-5 (E.D. Pa. Nov. 1, 2001).

The Court finds that transfer under the first-filed rule is inapplicable in this case due to the timeline of actions relating to CytoCare. The Pennsylvania action was filed February 13, 2009 and amended April 14, 2009, to include ITOCHU as a defendant. The New York Action was filed later, on April 10, 2009. Thus, the Pennsylvania action is the first-filed case relating to the contracts and agreements surrounding CytoCare and as such, Defendants' reliance on the first-filed rule is no longer applicable to the resolution of venue in this case. See Villari Brandes & Kline v. Plainfield Specialty Holdings II, Inc., No. 09-2552, 2009 WL 1845236, at *6 (E.D. Pa. June 26, 2009)(citing Shire U.S., Inc. v. Johnson Mattney, Inc., 543 F. Supp. 2d 404, 409 (E.D. Pa. 2008)(finding the first-filed rule is not limited to mirror image cases where the parties and the issues perfectly align; rather the rule should apply where the subject matter of the later filed case substantially overlaps with that of the earlier one). 2. Transfer Under 28 U.S.C. § 1404(A)

Defendants next argue that transfer is appropriate due to the convenience of the parties and witnesses. Under 28 U.S.C. ยง 1404(a), a district court may transfer a civil action to any other district court where the action might have originally been brought "[f]or the convenience of the parties and witnesses, [or] in the interest of justice." Analysis of any motion to transfer venue must begin with acknowledgment of the well-settled principles that a plaintiff's choice of forum is not to be lightly disturbed and that the burden of establishing the need for transfer rests ...

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