United States District Court, E.D. Pennsylvania
STEVEN LANDAU, on behalf of himself and all others similarly situated, Plaintiff,
VIRIDIAN ENERGY PA LLC, Defendant.
Austin McHugh United States District Judge
a putative class action brought by a Pennsylvania consumer
who alleges that Viridian Energy PA LLC (Viridian) enticed
him to shift his electric service with promises of meaningful
savings that never materialized. Viridian now moves on the
basis of the “first-filed rule” to transfer this
case to the District of Connecticut where it is defending
four similar cases. Alternatively, Viridian asks that I stay
this case pending resolution in the Connecticut cases. For
the reasons below, Viridian's Motion to Transfer is
denied, but its Motion to Stay is granted.
AND PROCEDURAL HISTORY
Viridian is an energy services company that markets
electricity to retail customers in Pennsylvania. Plaintiff
Steven Landau claims that, in July 2013, Viridian lured him
from his local utility with promises of low, stable
electricity rates. Six months after he signed up with
Viridian, Landau's account was transferred to a Variable
Rate Plan and his rates more than doubled. On these facts,
Landau alleges that Viridian breached the terms of its
contract and violated Pennsylvania's Unfair Trade
Practices and Consumer Protection Law (UTPCPL). Landau
asserts these claims on behalf of himself and current and
former Viridian customers in Pennsylvania.
November 30, 2016, I granted in part and denied in part
Viridian's Motion to Dismiss Landau's claims and
denied its Motion to Strike Class Allegations. --- F.Supp.3d
---, 2016 WL 6995038 (E.D. Pa. Nov. 30, 2016). The surviving
claims include breach of contract and violation of the
is defending four similar actions in the District of
Connecticut: Sanborn v. Viridian Energy, Inc., No.
14-cv-1731 (D. Conn. filed Nov. 19, 2014); Steketee v.
Viridian Energy, Inc., No. 15-cv-585 (D. Conn. filed
Apr. 22, 2015); Mirkin v. Viridian Energy, Inc., No.
15-cv-1057 (D. Conn. filed July 10, 2015); and Hembling
v. Viridian Energy, LLC, No. 15-cv-1258 (D. Conn. filed
Aug. 21, 2015). The plaintiffs' counsel in
Sanborn, Steketee, and Mirkin
recently filed a five-count consolidated complaint in which
they seek relief for breach of contract, breach of the
covenant of good faith and fair dealing, and violations of
the Connecticut Unfair Trade Practices Act, the Massachusetts
Unfair Trade Practices Act, the New Jersey Consumer Fraud
Act, and the New York General Business Law. Hembling
is currently stayed pending motions for class certification
in the other three Connecticut cases.
putative classes in Sanborn, Steketee, and
Mirkin-current and former Viridian customers in
Massachusetts, Connecticut, New York, and New Jersey-do not
overlap with Landau's putative class of current
and former Pennsylvania consumers. Hembling, by
contrast, purports to bring claims on behalf of a broader
class of Viridian customers in 13 states, including
Sanborn, Steketee, and Mirkin
concern different parties and legal claims, the underlying
allegations in the consolidated complaint bear a meaningful
resemblance to the allegations in Landau's Complaint. As
in Landau, the plaintiffs in Sanborn,
Steketee, and Mirkin argue that Viridian
breached its contractual obligation to base fluctuations in
variable rates on wholesale market conditions. The
Mirkin plaintiffs have also amended their complaint
to assert a breach of contract claim identical to the one
that I recognized in Landau, namely, that
Viridian's “Welcome Letter” to new customers
included promises of affordable rates, that this Welcome
Letter was incorporated into the contract by an integration
clause, and that Viridian failed to deliver cost savings as
promised. Finally, all plaintiffs allege that Viridian's
marketing promises were deceptive or misleading.
effort to streamline litigation, Judge Underhill has imposed
a common pretrial schedule on Sanborn,
Steketee, and Mirkin. Counsel in those
cases have also agreed to share with counsel in
Hembling and Landau any documents produced
in discovery without the need for document requests. Viridian
now asks that I further consolidate these cases by
transferring Landau to Judge Underhill's docket,
or, alternatively, that I stay Landau pending
resolution of the Connecticut cases.
Applicability of the “First-Filed Rule”
moves for transfer under the first-filed rule and 28 U.S.C.
§ 1404(a). Under the first-filed rule, when two courts
possess the same case at the same time, “the court
which first has possession of the subject must decide
it.” Crosley Corp. v. Hazeltine Corp., 122
F.2d 925, 929 (3d Cir. 1941) (quoting Smith v.
McIver, 22 U.S. 532, 535 (1824) (Marshall, C. J.)).
“The rationale for the rule is the desire for sound
judicial administration and comity among federal courts of
equal stature. It is also designed to relieve a party who
first brings a controversy into a court of competent
jurisdiction from vexation of multiple litigations covering
the same subject matter.” Synthes, Inc. v.
Knapp, 978 F.Supp.2d 450, 455 (E.D. Pa. 2013).
application, the first-filed rule easily encompasses cases
involving the same parties and the same transaction. Many
such cases involve intellectual property disputes, where a
suit for infringement of a patent in one district is met by a
declaratory judgment action brought by the alleged infringer
against the holder of the patent in another district.
See, e.g., Crosley Corp. v. Westinghouse Elec.
& Mfg. Co., 130 F.2d 474, 475-76 (3d Cir.),
cert. denied, 317 U.S. 681 (1942). Except in such
archetypal cases, the contours of the first-filed rule are
harder to discern and courts in this District disagree over
its scope. Some courts take a narrow view of the first-filed
rule and apply it only when the parties and claims in the
later-filed suit are a “mirror image” of the
first. Palagano v. NVIDIA Corp., No. CV 15-1248,
2015 WL 5025469, at *2 (E.D. Pa. Aug. 25, 2015) (listing
cases). Others have embraced a broader,
close-enough-for-government-work approach to the rule and
applied it to “disputes involving similar,
concurrent actions.” Shire U.S., Inc. v. Johnson
Matthey, Inc., 543 F.Supp.2d 404, 407 (E.D. Pa. 2008)
(emphasis added). According to proponents of the broader
approach, the “substantive touchstone of the
first-to-file inquiry is subject matter, ” rather than
identity of legal claims or parties. Id. at 409;
see also Palagano, 2015 WL 5025469, at *2 (listing
cases that apply the broader approach).
Third Circuit has not definitively ruled on the scope of the
first-filed rule. Proponents of the mirror-image approach
point to a footnote in Grider v. Keystone Health
Plan Center, Inc., 500 F.3d 322, 333 n.6 (3d
Cir. 2007), where the Third Circuit said that the first-filed
rule applied only when “the later filed case [is] . . .
on all fours with the other” and “the issues . .
. have such an identity that a determination in one action
leaves little or nothing to be determined in the
other.” Courts favoring a broader interpretation of the
first-filed rule dismiss the language in Grider as
mere dicta. See Synthes, 978 F.Supp. at 456
appears to be consensus that if the first-filed rule
applies, there is a presumption that the later-filed action
should be dismissed, transferred, or stayed. Koresko v.
Nationwide Life Ins. Co., 403 F.Supp.2d 394, 403 (E.D.
Pa. 2005). But even this presumption gives way when
“fundamental fairness dictates” a departure from
the ordinary course. Univ. of Pa., 850 F.2d at 977.
the picture still further, many district courts have held
that even when the rule applies, a party seeking transfer of
a later-filed case must nonetheless show that the conditions
of 28 U.S.C. § 1404 are satisfied. See Thompson v.
Glob. Mktg. Research Servs., Inc., No. CV 15-3576, 2016
WL 233702, at *3 (E.D. Pa. Jan. 20, 2016) (listing cases that
apply § 1404 after finding that the first-filed rule
persuaded that much of the disagreement in the reported cases
can be reconciled by recognizing that there are two distinct
scenarios where the rule has been applied. The first-filed
rule started with cases like Crosley, where earlier-
and later-filed actions involved the same parties and arose
out of the same transaction, agreement, or encounter. Only
later was it extended to cases that were not truly related
but raised similar issues. In cases where two actions arise
out of an integrated dispute, transfer, stay, or dismissal of
the later-filed action should be required in the absence of
exceptional circumstances. The Third Circuit's statement
in Grider, even if dicta, supports that
view. Such cases are genuinely related, in the technical
sense, making transfer (where it is sought) an obvious
remedy. As a matter of simple logic, however, the rule does
not carry the same force when (1) different parties are
involved, (2) the underlying dispute involves similar but not
identical issues, and ...