Issues Relating to Parallel Litigation

• Pages: 373-408

373

CHAPTER XIII

ISSUES RELATING TO PARALLEL LITIGATION

There is often the potential for multiple proceedings in

antitrust and business tort litigation. This chapter addresses

the procedura l issues that frequently arise in disputes involving

multiple proceedings. – Eds.

A. Introduction

Parties to antitrust and business tort litigation often disagree on the

forum for their dispute. Factors such as jury pool demographics, local

publicity, docket speed, judicial expertise with applicable law,

evidentiary restrictions on expert testimony, and counsels’ familiarity

with local courts and their procedures may affect parties’ preference for

one court over another. Because these cases often involve numerous

parties with different interests and the ability to bring separate actions in

the forums of their choice, such disputes frequently trigger multiple

proceedings in different courts. In addition, business tort cases

sometimes run in tandem with administrative and criminal proceedings,

raising an array of complex issues in concurrent private civil litigation

such as adverse civil inferences from Fifth Amendment invocations,

waivers of attorney-client privilege, preclusive effects from criminal or

administrative findings, and alternative discovery opportunities arising

from the government’s investigation. In all these situations, parties may

employ an array of litigation strategies designed to promote the action in

their chosen forum while seeking to dismiss, stay, or otherwise impede

concurrent litigation elsewhere.

The more common of these strategies include motions for stays

under a court’s inherent powers, invocation of abstention doctrines,

requests for anti-suit injunctions, and attempts to transfer claims. The

following discussion addresses each of these strategies as well as the role

of claim and issue preclusion in disputes involving multiple proceedings.

B. Stay or Abatement of State Court Proceedings

State courts generally have the discretion, but usually not the

obligation, to stay or dismiss proceedings before them when there is a

concurrent related action in another state court, in a federal court, or in

374 Business Torts and Unfair Competition Hand book

another country.

1

An order dismissing a state court case without

prejudice, absent special circumstances, is generally not a final order,

and therefore not appealable.

2

When both actions involve the same or similar parties and issues,

state courts frequently stay their own proceedings to await the outcome

of the foreign action.

3

The reasons most often cited by courts for granting

such stays include: (1) preventing a multiplicity of actions,

4

(2)

promoting principles of comity,

5

and (3) protecting the defendant from

harassment or unnecessary inconvenience.

6

State courts typically rely on the following factors when deciding

whether to impose a stay in favor of another action: (1) which action was

filed first;

7

(2) the comparative progress of both proceedings;

8

(3) the

potential res judicata effect of the action pending in the foreign

jurisdiction;

9

(4) the interest of the forum state in the action;

10

and

1

. See, e.g., Tonnemacher v. Touche Ross & Co., 920 P.2d 5 (Ariz. Ct. App.

1996); Baisley v. Vielle (In re Marriage of Baisley), 749 P.2d 446 (Colo.

App. 1987); City of Miami Beach v. Miami Beach Frate rnal Order of

Police, 619 So . 2d 447 (Fla. Dist. Ct. App. 1993 ); Howerton v. Grace

Hosp., 476 S.E.2d 440 (N.C. Ct. App. 1996).

2

. See Farmers Union Mut. Ins. Co. v. Bodell, 197 P.3d 913 (Mont. 2008)

(case of first impression, reviewing recent d ecisions in other jurisdictions,

including North Dakota, Missouri, Illinois, Colorado, North Carolina, and

Florida).

3

. See, e.g., El Paso Natural Gas Co. v. Transamerican Natural Gas Cor p.,

669 A.2d 36 (Del. 1995); Donnkenny, Inc. v. Nadler, 54 4 F. Supp. 166

(S.D.N.Y. 1982).

4

. See, e.g., Zurich Ins. Co. v. Baxter Int’l, 670 N.E.2d 664 (Ill. 1996).

5

. See, e.g., Simmons v. Sup. Ct. of L.A. Cnty., 214 P.2d 844 (Cal. Dist. Ct.

App. 1950); Fried v. Bergman, 736 So. 2d 1281 (Fla. Dist. Ct. App.

1999); Brooks Erection Co. v. William R. Montgomery & Assocs., 576

S.W.2d 273 (Ky. Ct. App. 197 9); Commercial Union Ins. Co. v.

Wheeling Pittsburgh Corp., 666 N.E.2d 571 (Ohio. Ct. App. 1995).

6

. See, e.g., HFTP Invs., v. ARIAD Pharms., 752 A.2d 115 (Del. Ch. 1999)

(comparing expense and speed of resolving dispute in either forum).

7

. See, e.g., Acierno v. New Castle Cnty., 679 A.2d 455 (Del. 1996);

Sensient Colors Inc. v. Allstate Ins. Co., 939 A.2d 767 (N.J. 2008) ;

American Home Prods. Corp. v. Adriatic Ins. Co., 668 A.2d 67 (N.J.

Super. Ct. App. Div. 1995).

8

. See, e.g., First Midwest Corp. v. Corporate Fin. Assoc s., 663 N.W.2d 888

(Iowa 2003).

9

. See, e.g., Wiseman v. Law R esearch Serv., 2 70 N.E.2d 77 (I ll. App. Ct.

1971).

10

. See, e.g., Biondi v. Scrushy, 820 A.2d 1148 (Del. Ch. 2003).

Issues Relating to Pa rallel Litigation 375

(5) whether the foreign proceeding provides the parties the ability to

obtain complete relief.

11

Motions for stay are likely to be denied if the cases are not genuinely

duplicative or “parallel,” as when (1) there are material differences

between the named parties in both cases,

12

(2) the actions involve

different facts,

13

(3) different legal claims are asserted or different

remedies are pursued in either court,

14

or (4) a judgment in the foreign

jurisdiction will not fully resolve the disputes asserted in the forum

state.

15

While many states hold that the power to stay or dismiss

duplicative actions is inherent in the court,

16

some jurisdictions have

enacted statutes expressly conferring such authority.

17

Moreover, a state

court may stay an action as to one or more of the parties, while allowing

it to proceed as to other parties.

18

When a federal court abstains, and that

abstention becomes a final order, the state court should not, on the

11

. See, e.g., El Paso Natural Gas Co. v. Transamerican Natural Gas Cor p.,

669 A.2d 36, 38 n.1 (Del. 1995); First Midwest Cor p., 663 N.W.2d 888

(Iowa 2003).

12

. See, e.g ., Del-Val Fin. Corp. v. FDIC, 59 8 N.Y.S.2d 197, 198

(N.Y. App. Div. 1993) (citing “no identity of parties” as one factor in

denying motion to stay action); Argonaut Ins. Co. v. Occidental

Petroleum Corp ., 430 N.Y.S.2d 982 (N.Y. Sup. Ct. 1 980). But cf.

Derdiger v. Tallman, 77 3 A.2d 1005 (Del. Ch. 20 00) (allowing stay even

though cases involved different named r epresentatives in separate

putative class actions).

13

. See, e.g., Congress Factors Corp. v. Meinhard Commercial Corp., 493

N.Y.S.2d 917 (N.Y. Sup. Ct. 1985).

14

. See, e.g., Coaxial Co mmc’ns v. CNA Fin. Corp., 367 A.2d 994 (Del.

1976); Keene Corp. v R.W. Taylor Steel Co., 594 P.2d 889 (Utah 1979).

15

. See, e.g., May v. Smithkline Beecham Clinical Labs., 710 N.E.2d 460

(Ill. App. Ct. 1999).

16

. See, e.g., Myshko v. Galanti, 309 A.2d 729 ( Pa. 1973) (involving

dismissal of action in equity when similar action was pending at law).

17

. See, e.g., ALA. CODE § 6-5-440 (prohibiting a party from prosecuting two

actions in the state or federal courts of Alabama for the same ca use and

against the same party); GA. CODE ANN. § 9-2-44; N.Y. C.P.L.R. 3211(a)

¶ 4 (McKinney 2006) (permitting New York courts to dismiss act ion on

grounds that there is “another action p ending between the same parties

for the same cause of action in a court of any state or the United States”);

735 ILL. COMP. STAT. ANN. 5/2-619(a)(3) (West 1983) (providing Illinois

courts discretion to dismiss action if “there is another action pending

between the same parties for the same cause”).

18

. See, e.g., Sparrow v. Nerzig, 89 S.E.2d 718 (S.C. 1955).