Collegiate Licensing Co. v. Am. Cas. Co. of Reading, Pa.

• Decision Date: 21 March 2013
• Docket Number: No. 12–10673.,12–10673.
• Citation: 713 F.3d 71
• Parties: COLLEGIATE LICENSING COMPANY, Plaintiff–Appellee, v. AMERICAN CASUALTY CO. OF READING, PENNSYLVANIA, Great Divide Insurance Company, Allied World National Assurance Company, Continental Casualty Company, Defendants–Appellants.
• Court: U.S. Court of Appeals — Eleventh Circuit

713 F.3d 71

COLLEGIATE LICENSING COMPANY, Plaintiff–Appellee,

v.AMERICAN CASUALTY CO. OF READING, PENNSYLVANIA, Great Divide Insurance Company, Allied World National Assurance Company, Continental Casualty Company, Defendants–Appellants.

No. 12–10673.

United States Court of Appeals, Eleventh Circuit.

March 21, 2013.

Brent William Brougher, Ellen Parker McCarley, Kilpatrick, Townsend & Stockton, LLP, Atlanta, GA, for Plaintiff–Appellee.

Jack Roy Reiter, Carlton Fields, PA, Miami, FL, Brooke Lewis French, David M. Leonard, Christy L. MacPherson, Carlton Fields, PA, Philip Wade Savrin, Seth Freeman Kirby, Freeman, Mathis & Gary, LLP, Anne M. Landrum, Ruth M. Pawlak, Wayne D. Taylor, Mozley, Finlayson & Loggins, LLP, Atlanta, GA, Eldon S. Edson, Jan L. Pocaterra, Neil H. Selman, Selman Breitman, Los Angeles, CA, Laura Jane Ruettgers, Mary P. McCurdy, McCurdy & Fuller LLP, Menlo Park, CA, for Defendants–Appellants.

Appeals from the United States District Court for the Northern District of Georgia.

Before MARCUS and MARTIN, Circuit Judges, and SCRIVEN,^* District Judge.

SCRIVEN, District Judge:

This appeal arises from the grant of an injunction by the United States District Court for the Northern District of Georgia that enjoined Appellants, pursuant to the first-filed rule, from proceeding with intervention complaints filed in a pending lawsuit in California. For the reasons set forth below, we affirm the Georgia district court's decision.

I. BACKGROUND

Appellee, Collegiate Licensing Company (“CLC”) is a licensing agent for more than 200 colleges and universities, and the National Collegiate Athletic Association (“NCAA”). CLC licenses trademarks and trade dress to its licensees, including Electronic Arts, Inc. (“EA”), a publicly-traded company that sells NCAA football and basketball related video games that utilize licensed trademarks, logos, and college colors. Beginning in May 2009, CLC was named as a defendant in multiple class action lawsuits (the “Underlying Actions”), which allege that CLC, together with EA and the NCAA, wrongfully profited from the unauthorized and uncompensated use of college athletes' names and likenesses in a variety of mediums, including videogames and televised and print advertisements. Most of the Underlying Actions have been filed in California. The plaintiffs in the Underlying Actions reside throughout the country.

CLC is a named insured under numerous insurance policies pursuant to which it seeks coverage for the Underlying Actions. Beginning in 2007, National Union Fire Insurance Company (“National Union”) issued several commercial general liability and umbrella policies to California-based EA. CLC is listed as an additional insured under the National Union policies. CLC is also a named insured under commercial general liability policies issued by American Casualty Co. of Reading, Pennsylvania (“American Casualty”), Great Divide Insurance Company (“Great Divide”), and Allied World National Assurance Company (“Allied World”). Finally, CLC is insured under several umbrella policies issued by various carriers: Continental Casualty Company (“Continental”), Westchester Fire Insurance Company (“Westchester”), and Lexington Insurance Company (“Lexington”)¹. All of the policies provide defense and indemnity coverage or excess coverage arising from lawsuits alleging “personal and advertising injury.” However, the policies also provide that “th[e] insurance [policies] d[o] not apply to personal or advertising injury arising out of the infringement of copyright, patent, trademark, trade secret, or other intellectual property rights.” It is the latter form language that lies at the center of the coverage actions that give rise to this appeal.

Although the National Union policies and the Appellants' policies contain this identical form language, there is no relationship between National Union and the Appellants. Additionally, the Appellants' policies are in no way related to the National Union policies, although certain of the Appellants' policies purport to provide coverage only in excess of other coverage benefits to which CLC might be entitled. Further, the policies are not identical in every way. The Appellants' policies contain different endorsements than are present in the National Union policies. The National Union policies have different policy limits and different premiums than the Appellants' policies. None of the insurance policies at issue has a choice of law provision or a forum selection clause.

CLC sought coverage from American Casualty, Great Divide, and Allied World for the lawsuits filed against it in the Underlying Actions. CLC also sought coverage, as an additional insured, from National Union under the policies issued to EA in California. Coverage issues arose among the parties. CLC contends that American Casualty initially agreed to defend CLC in the Underlying Actions pursuant to a reservation of rights. However, according to CLC, American Casualty imposed significant restrictions that are unreasonable and contrary to Georgia law. CLC objected to the restrictions.

CLC also contends that National Union initially agreed to defend CLC in the Underlying Actions subject to a reservation of rights and certain limitations to which CLC has objected. On October 3, 2011, National Union sued EA and CLC in the Northern District Court of California (“California Action”) to ascertain whether it is obligated to provide insurance coverage under the policies it issued in California to EA with CLC as an additional insured. The Insurance Company of the State of Pennsylvania (“ISOP”), an affiliated company of National Union that insured EA under separate policies not issuedto CLC, is also a plaintiff in the California Action, asserting claims only against EA. In the California Action, National Union seeks a determination regarding its duty to defend or indemnify CLC and EA in the Underlying Actions.

On October 10, 2011, CLC filed suit in the Northern District of Georgia (“Georgia Action”) against the Appellants seeking a declaration that the Appellants are obligated to defend and indemnify CLC in connection with the Underlying Actions. CLC also sued the Appellants for breach of contract.

On October 27, 2011, November 16, 2011, and November 23, 2011, the Appellants filed separate motions to intervene in the California Action. The Appellants also sought leave to file intervention complaints. They argued they should be permitted to intervene in the California Action as a matter of right pursuant to Federal Rule of Civil Procedure 24(a) or, in the alternative, permissively, pursuant to Federal Rule of Civil Procedure 24(b). On November 8, 2011, and November 28, 2011, CLC moved the Georgia district court to enjoin the Appellants' pursuit of intervention in the California Action, arguing the Georgia Action was the “first-filed” suit against the Appellants. On November 14, 2011 November 18, 2011, and November 30, 2011, the Appellants filed in the Georgia district court their separate motions to transfer the Georgia Action to California.

On December 14, 2011, before the Georgia district court ruled on CLC's motion to enjoin the Appellants from intervening in the California Action or the Appellants' motions to transfer, the California district court granted the Appellants' motions to intervene in the California Action and granted the Appellants leave to file their intervention complaints on or before December 21, 2011. The California district court found permissive intervention was appropriate.

The California district court undertook the classic permissive intervention analysis. Citing the relevant Rules of Civil Procedure, it found the Appellants' actions shared common questions of law or fact with National Union's lawsuit because the Appellants proposed to seek the same declaratory relief as National Union and because the insurance policies at issue in the Georgia Action involved certain provisions and exclusions that are identical to those of the National Union policies. The California district court also found that the Appellants would have had complete diversity with CLC if they had filed complaints independent of the California Action. Finally, the California district court found the motions to intervene were timely because the lawsuit was still in its beginning stages and intervention would not cause any prejudice to the existing parties. Although the first-filed issue was argued before the California district court, the California district court's order was silent on that issue.

On December 19, 2011, after the Appellants filed their intervention complaints in the California Action, CLC filed an emergency motion with the Georgia district court asking it to issue an injunction precluding the Appellants from proceeding with their intervention complaints in the California Action. After holding a hearing on the motion, the Georgia district court granted CLC's motion and ordered the Appellants to dismiss their intervention complaints without prejudice. The Georgia district court found it was the first-filed court for purposes of deciding the CLC declaratory action in Georgia and the Appellants' intervention complaints in California.

Conducting its analysis of the applicability of the first-filed rule, the Georgia districtcourt rejected the Appellants' notion that the relevant cases for comparison purposes were CLC's complaint filed in Georgia versus National Union's complaint in California. It found that the National Union Action and the CLC Action in Georgia were distinct actions because the policies issued by National Union and ISOP to EA and CLC, which are at issue in the California Action, are “different policies, [involving] different insureds, different brokers, and different adjusters, and they were placed in different states.”²See (R. Vol.27, Tab.101, p. 4.) The Georgia district court concluded instead that, for purposes of the first-filed analysis, the Georgia Action...