D&L Distribution, LLC v. Agxplore Int'l, LLC

• Decision Date: 26 March 2013
• Docket Number: Civil Action No. 12–cv–00810.
• Parties: D & L DISTRIBUTION, LLC and Melvin R. Weaver & Sons, LLC, Plaintiffs v. AGXPLORE INTERNATIONAL, LLC, Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

959 F.Supp.2d 757

D & L DISTRIBUTION, LLC and Melvin R. Weaver & Sons, LLC, Plaintiffs

v.AGXPLORE INTERNATIONAL, LLC, Defendant.

Civil Action No. 12–cv–00810.

United States District Court, E.D. Pennsylvania.

March 26, 2013.

George C. Werner, Esquire, for Plaintiffs.

Jeffery H. Kass, Esq., Charlotte E. Thomas, Esq., Myles A. Seidenfrau, Esq., for Defendant.

OPINION

JAMES KNOLL GARDNER, District Judge.

This matter is before the court on Defendant's Motion to Dismiss or, in the Alternative, Transfer and Consolidate, which motion was filed on March 27, 2012.¹ On April 17, 2012 the Response of D & L Distribution, LLC and Melvin R. Weaver & Sons, LLC to Agxplore's Motion to Dismiss or Transfer and Consolidate was filed.²

SUMMARY OF DECISION

Defendant in the within action, Agxplore International, LLC (“Agxplore”) filed a complaint in the United States District Court for the Eastern District of Missouri, Southeastern Division alleging trademark infringement, unfair competition, and related claims, against Mark Shelley, a former Agxplore employee and an alleged current employee of plaintiffs in the within action, D & L Distribution, LLC and Melvin R. Weaver & Sons, LLC. Two weeks later, D & L Distribution, LLC and Melvin R. Weaver & Sons, LLC filed the within action in this court seeking a declaratory judgment that its use of trademarks identical to those at issue in Agxplore's Missouri complaint does not infringe any common law, state, or federal law protections available to Agxplore's trademarks.

Defendant Agxplore filed its within motion to dismiss the within action in the Eastern District of Pennsylvania, or in the alternative to transfer it to, and consolidate it with, the action in the Eastern District of Missouri. Defendant's motion requests dismissal “for lack of subject matter jurisdiction and/or improper venue under the first-filed rule.”

For the reasons expressed below, I grant defendant's alternative motion to transfer plaintiff's declaratory judgment action pursuant to 28 U.S.C. §§ 1404(a) and 1406 and the first-filed rule. Because I am transferring this action to the Eastern District of Missouri, I dismiss as moot defendant's motion to dismiss based upon an allegation of improper venue. To the contrary, I conclude that venue is proper in Missouri. I deny defendant's motion to consolidate this proceeding with the proceeding pending in Missouri because I leave the procedural question of how best to proceed with this declaratory judgment action post-transfer to the assigned judge in the United States District Court for the Eastern District of Missouri, Southeastern Division.

I also deny defendant's motion to dismiss for lack of subject matter jurisdiction because I conclude that both this court and the United States District Court for the Eastern District of Missouri have concurrent subject matter jurisdiction over this matter. Jurisdiction is proper pursuant to both diversity jurisdiction because the parties are citizens of different states, and federal question jurisdiction because the declaratory judgment is based on the Lanham Act, 15 U.S.C. § 1125(a).

Specifically, I exercise the discretion afforded me through the first-filed rule and the statutes governing transfer of venue to transfer plaintiffs' declaratory judgment action to the United States District Court for the Eastern District of Missouri, Southeast Division, based on the existence of a previously filed related suit which is currently pending before that court.

More specifically, I find that the defendant in the within action, Agxplore International, LLC, and the plaintiff in the Missouri action are the identical entities. I further find that plaintiffs in the present action, D & L Distribution, LLC and Melvin R. Weaver & Sons, LLC, share a sufficient identity with the defendant in the Missouri action, their alleged employee Mark Shelly, and that the subject matter of the two suits are similarly identical.

Transfer will allow the Eastern District of Missouri to adjudicate both claims, which will promote judicial economy and foreclose the danger of conflicting rulings. Further, I conclude that plaintiffs have not sustained their burden of showing that compelling circumstances exist to allow divergence from the first-filed rule.

JURISDICTION

Jurisdiction in this action is based upon diversity of citizenship. Plaintiffs D & L Distribution, LLC and Melvin R. Weaver & Sons, LLC are Pennsylvania limited liability companies with all members having Pennsylvania citizenship. Defendant Agxplore International, LLC is a Missouri limited liability company with all members having Missouri citizenship. The amount in controversy is in excess of $75,000. See28 U.S.C. § 1332.

Alternatively, jurisdiction is proper pursuant to federal question jurisdiction because the declaratory judgment action is based on the Lanham Act, 15 U.S.C. § 1125(a). Plaintiffs seek a declaration that they are not infringing upon Agxplore's federally registered trademarks. See28 U.S.C. § 1331.

VENUE

Venue is contested in this case. Venue is proper in the Eastern District of Missouri pursuant to 28 U.S.C. § 1391(b)(2) because defendant is a limited liability company which is subject to the personal jurisdiction of the United States District Court for the Eastern District of Missouri.³

PROCEDURAL HISTORY

The Missouri Action

On January 30, 2012 plaintiff Agxplore International, LLC filed suit against defendant Mark Shelley ⁴ in the United States District Court for the Eastern District of Missouri, Southeast Division, alleging trademark infringement and unfair competition under 15 U.S.C. §§ 1125(a) and 1114, unfair competition under Missouri state and common law, Missouri state-law breach of contract, declaratory relief and tortious interference with business expectancy (“Missouri case”).⁵

In the Missouri case, Agxplore alleges that Mr. Shelley “helped others adopt product lines (and now sells competing product lines) using names confusingly similar” to trademarked products registered to Agxplore.⁶ Specifically, the Complaint alleges that Mr. Shelley helped name, and currently sells, the following products: N–ERGIZE, NUTRIPOWER, SULPOWER, BORPOWER, CALPOWER, CHARGE CSOC, AND SPREADER 910. Agxplore contends that the marketing and sale of these products infringe on its registered trademarks ENERGIZE, NUTRIPAK, SULPAK, BORPAK, CALPAK, CHARGE, AND SPREAD 90.⁷

On July 9, 2012 Keith Snider, Mr. Shelley's partner in the unnamed LLC, was deposed in the Missouri action. His deposition testimony indicated that Mr. Shelley began selling products as a member of the unnamed LLC to D & L and Weaver following his departure from Agxplore in December 2010.

Mr. Snider refused to answer many specific questions regarding the LLC by asserting that the name of the LLC and the LLC's state of incorporation are “confidential, proprietary and competitive commercial information.” ⁸ A motion to compel Mr. Snider to answer the challenged questions is currently pending before the United States District Court for the Eastern District of Missouri.⁹

Although not specifically stated in the Missouri Complaint, the essence of Agxplore's claim appears to allege that Mr. Shelley is infringing upon Agxplore trademarks through Mr. Shelley's relationship with PowerAG, a fictitious name used by plaintiff D & L, which exclusively sells plaintiff Weaver's ¹⁰ products.¹¹

The Pennsylvania Action

On February 15, 2012 D & L and Weaver, collectively (“plaintiffs”) in the present action, filed suit in this court seeking declaratory judgment to determine whether plaintiffs' trademarks infringe upon Agxplore's trademarks (“Pennsylvania action”).

Specifically, in the Pennsylvania action, plaintiffs seek declaratory judgment declaringthat plaintiffs' trademarks, the very same trademarks Agxplore alleges Mr. Shelley is infringing upon in the Missouri case, infringe upon Agxplore's trademarks.

On March 27, 2012 Agxplore filed the within motion requesting this court to dismiss plaintiffs' Pennsylvania action for lack of subject matter jurisdiction and improper venue, or in the alternative, to transfer the Pennsylvania action to the Eastern District of Missouri for consolidation.¹²

Specifically, Agxplore contends that the “first-filed” rule compels this court to dismiss or transfer plaintiffs' declaratory judgment action because Agxplore's Missouri case contains the exact same subject matter as the Pennsylvania action. Furthermore, Agxplore contends that Mr. Shelley, D & L and Weaver have a sufficient connection to each other to allow this court to exercise its discretion and transfer the declaratory judgment action.

So as not to waste judicial resources, I grant Agxplore's motion to the extent that it seeks transfer of the Pennsylvania action to the Eastern District of Missouri and deny Agxplore's motion to dismiss.

DISCUSSION

Defendant Agxplore contends that the Pennsylvania action should be transferred to the Eastern District of Missouri under the “first-filed rule” and 28 U.S.C. § 1404(a) and should be consolidated with the Missouri case. Plaintiffs D & L and Weaver contend that transfer is not proper under the “first-filed rule” because D & L's and Weaver's connection to Mr. Shelley is too attenuated to support the use of the first-filed rule.

In addition, D & L and Weaver argue that Agxplore acted in bad faith by bringing the Missouri case preemptively in an effort to force plaintiffs to “litigate the trademark issue in a distant and inconvenient forum.” ¹³ Plaintiffs assert that in the event I decided to transfer this case to Missouri, the Eastern District of Missouri lacks personal jurisdiction over them and venue there would be improper.

Because I find it more appropriate to transfer the Pennsylvania action, as opposed to dismissing it, and in the interests of justice, I look to the rules for transfer of venue under 28 U.S.C. § 1404(a). Furthermore, because of the existence of a related pending action in the Eastern...