Citigroup Inc. v. City Holding Co., No. 99 Civ. 10115(RWS).
| Court | United States Courts of Appeals. United States Court of Appeals (5th Circuit) |
| Writing for the Court | Sweet |
| Citation | 97 F.Supp.2d 549 |
| Parties | CITIGROUP INC. and Citicorp., Plaintiffs, v. CITY HOLDING COMPANY and City National Bank of West Virginia, Defendants. |
| Docket Number | No. 99 Civ. 10115(RWS). |
| Decision Date | 31 May 2000 |
v.
CITY HOLDING COMPANY and City National Bank of West Virginia, Defendants.
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Skadden, Arps, Slate, Meagher & Flom, New York, NY (Kenneth A. Plevan, Stephanie J. Kamerow, Bruce J. Goldner, Of Counsel), for Plaintiffs.
Fitzpatrick, Cella, Harper & Scinto, New York, NY (Pasquale A. Razzano, James M. Gibson, Of Counsel), for Defendants.
SWEET, District Judge.
Defendants City Holding Company ("City Holding") and City National Bank of West Virginia ("City National") have moved to dismiss for lack of personal jurisdiction pursuant to Federal Rule of Civil Procedure 12(b)(6) or to transfer venue of this trademark infringement action to the Southern District of West Virginia. Plaintiffs Citigroup Inc. and Citicorp (collectively, "Citigroup") have opposed these motions and have moved to enjoin prosecution of a duplicative lawsuit filed in that district by one of the defendants. For the reasons that follow, the motions by City Holding and City National to dismiss or transfer will be denied, and the motion by Citigroup to enjoin prosecution of the West Virginia action will be granted.
The Parties
Plaintiff Citigroup is a Delaware corporation with its principal office in New York, New York.
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Defendant City Holding is a West Virginia corporation with its principal office in Cross Lanes, West Virginia.
Defendant City National is a wholly-owned subsidiary of City Holding and is a West Virginia corporation with its principal office in Charleston, West Virginia.
Prior Proceedings
On September 29, 1999, Citigroup filed the instant complaint against City Holding1, alleging claims including trademark infringement, dilution, unfair competition and false designation of origin under the Lanham Act, 15 U.S.C. §§ 1114(1), 1125(a) and (c), to which New York State and common law claims are appended. The complaint alleges that City Holding's use of the "CITY" and "CITY"-prefixed marks along with a particular logo for the provision of banking and financial services infringes Citigroup's protected trademark rights in a family of "CITI" service marks and the "Blue Wave" trade dress. Citigroup seeks an injunction against City Holding's use of the CITY mark alone and in combination with a family of CITY marks, cancellation of City Holding's federal registrations for such marks, and an award of monetary damages.2
On November 5, 1999, five weeks after this lawsuit was filed and before City Holding responded to it, City Holding filed a parallel lawsuit against Citigroup and Citicorp in the federal district court for the Southern District of West Virginia (the "West Virginia action"). In that suit, City Holding seeks a declaratory judgment that its family of CITY marks does not infringe Citigroup's intellectual property rights and that Citigroup's use of the "CitiFinancial" mark it recently adopted for one of its subsidiaries infringes City Holding's "City Financial Corp" mark under the Lanham Act and West Virginia law.
Ten days after filing the West Virginia action, City Holding moved before this Court to dismiss the instant complaint for lack of personal jurisdiction or, alternatively, to transfer this case to the Southern District of West Virginia pursuant to 28 U.S.C. § 1404(a).
On January 10, 2000, Citigroup moved before the District Court of West Virginia to dismiss or, alternatively, to stay or transfer the West Virginia action to this district.
On January 25, 2000, CitiGroup moved before this Court to enjoin prosecution of the later-filed, duplicative West Virginia action. City Holding cross-moved to stay proceedings in this Court pending decision on the motion to dismiss or transfer.
On April 14, 2000, the Honorable Joseph R. Goodwin of the Southern District of West Virginia denied Citigroup's motion to dismiss or, alternatively, to stay or transfer the West Virginia Action.
This case was originally assigned to the Honorable Charles E. Haight, but was reassigned to this Court on March 28, 2000, after Judge Haight recused himself.3
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Oral argument was heard before this Court on May 3, 2000, at which time the motions decided herein were deemed fully submitted.
Discussion
As fully discussed below, because departure from the well-settled "first-filed" rule is justified by neither special circumstances nor the balance of convenience, this decision adheres to the presumption that the first-filed parallel federal action alone should proceed. Consequently, City Holding is enjoined from further prosecuting the West Virginia action pending resolution of its motion to dismiss for lack of personal jurisdiction. In view of the conclusion that the balance of convenience does not favor City Holding's choice, the motion to transfer venue is also denied. In addition, this Court concludes that it may exercise personal jurisdiction over City Holding and City National and therefore denies the motion to dismiss under Rule 12(b)(6).
I. The First-Filed Rule
It is a "well-settled principle" in this circuit that where proceedings involving the same parties and issues are pending simultaneously in different federal courts the first-filed of the two takes priority absent "special circumstances" or a balance of convenience in favor of the second. See First City Nat. Bank and Trust Co. v. Simmons, 878 F.2d 76, 79 (2d Cir.1989); see also William Gluckin & Co. v. Int'l. Playtex Corp., 407 F.2d 177, 178 (2d Cir. 1969). In other words, the presumption is that "the court which first has possession of the action decides it." 800-Flowers, Inc. v. Intercontinental Florist, Inc., 860 F.Supp. 128, 131 (S.D.N.Y.1994); see also Simmons, 878 F.2d at 80.
The "first-filed rule" is based on principles of judicial economy and comity. See Simmons, 878 F.2d at 79. In applying the rule and in furtherance of its underlying principles, the court of first-filing may enjoin the parties from proceeding in the later-filed action. See City of New York v. Exxon Corp., 932 F.2d 1020, 1025-26 (2d Cir.1991); National Equip. Rental, Ltd. v. Fowler, 287 F.2d 43, 45 (2d Cir.1961). Staying the later-filed action serves to prevent the inefficiency and wastefulness of allowing duplicative litigation to proceed in two different fora. See National Equip., 287 F.2d at 46 n. 1 (affirming decision to enjoin later-filed proceedings and noting that choice was not only proper but "a wise one indeed" in view of wastefulness of duplicative proceedings).
The first-filed rule is not be applied mechanically, but the party that seeks to deviate from the rule has the burden of demonstrating that circumstances justifying
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an exception exist. See Hanson PLC v. Metro-Goldwyn-Mayer Inc., 932 F.Supp. 104, 106 (S.D.N.Y.1996); 800-Flowers, 860 F.Supp. at 132. The determination as to whether there are circumstances warranting a departure from the first-filed rule is committed to the sound discretion of the district court. See Simmons, 878 F.2d at 77; Gluckin, 407 F.2d at 179.
"Special circumstances" justifying an exception have been held to be present when the first suit constitutes an "improper anticipatory filing" or was motivated solely by forum shopping. Toy Biz, Inc. v. Centuri Corp., 990 F.Supp. 328, 332 (S.D.N.Y.1998); Ontel Prod., Inc. v. Project Strategies Corp., 899 F.Supp. 1144, 1150 (S.D.N.Y.1995). Indeed, the Second Circuit has noted that "the chief `special circumstance' ... is our interest in discouraging forum shopping." Motion Picture Lab. Technicians Local 780 v. McGregor & Werner, Inc., 804 F.2d 16, 19 (2d Cir.1986); see also Kellen Co., Inc. v. Calphalon Corp., 54 F.Supp.2d 218, 223 (S.D.N.Y.1999) ("Most commonly, courts have recognized an exception to the first-filed rule where the first-filed action was instituted by the defendant in the second action, and the defendant won the race to the courthouse under questionable circumstances.").
It is not a matter of dispute that the first-filed rule has threshold application to this case. City Holding agrees with Citigroup that the lawsuits at issue here are parallel. The overarching issue in both is whether City Holding's use of the CITY marks and trade dress infringes Citigroup's rights in the CITI family of marks and trade dress. Both parties also agree that simultaneous prosecution of both suits would advance neither the interests of efficiency for the parties nor for the courts. Thus, like Citigroup, City Holding believes that only one case should go forward, but they prefer the Southern District of West Virginia.
There is also no doubt that the present suit qualifies as the first instituted. The complaint in this case was filed more than five weeks prior to City Holding's initiation of the West Virginia action. Straightforward application of the first-filed rule would afford priority to this lawsuit.
II. The West Virginia Decision
The question presented by the motions pending here and the motion decided by the West Virginia court is one and the same: whether making an exception to the first-filed rule is justified by special circumstances or the balance of convenience. It is unfortunate that judicial resources have now been expended twice over in consideration of this question. However, this Court necessarily reaches its own determination.4 Nor does the decision by the District Court for West Virginia not to dismiss the West Virginia action obviate this Court's power to now
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enjoin City Holding from proceeding in that action. See National Equip. Rental, Ltd. v. Fowler, 287 F.2d 43, 46 n. 1 (2d Cir.1961) (decision by court of first-filing to enjoin proceedings in court of second-filing despite second court's decision not to dismiss not only proper but "wise" under the circumstances). That said, the issue of whether...
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