Issues Relating To Parallel Litigation

• Pages: 335-368

CHAPTER XIII

ISSUES RELATING TO PARALLEL LITIGATION

The potential for multiple proceedings often arises in

antitrust and business tort litigation. This chapter addresses

the procedural issues that frequently arise in disputes involving

multiple proceedings. – Eds.

A. Introduction

Parties in antitrust and business tort litigation commonly disagree on

the “proper” forum for a dispute. Factors including jury pool

demographics, local publicity, docket speed, perceived judicial expertise,

evidentiary restrictions on expert testimony, and counsels’ familiarity

with local procedures may affect parties’ preference for one court over

another. Because these cases frequently 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 often 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 from the government’s investigation).

These factors frequently cause one party to attempt to stay private

proceedings until the government actions have been resolved. In all

these situations, parties commonly employ an array of litigation

strategies designed to promote the action in their chosen forum but 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.

336 Business Tort Law

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

another country.1 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.2 The reasons most frequently cited by

courts for granting such stays include: (1) preventing a multiplicity of

actions,3 (2) promoting principles of comity,4 and (3) protecting the

defendant from harassment or unnecessary inconvenience.5

State courts typically rely on the following factors in deciding

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

was filed first;6 (2) the comparative progress of both proceedings;7

(3) the potential res judicata effect of the action pending in the foreign

jurisdiction;8 (4) the interest of the forum state in the action;9 and

1. See, e.g., Howerton v. Grace Hosp., Inc., 476 S.E.2d 440 (N.C. Ct. App.

1996); Tonnemacher v. Touche Ross & Co., 920 P.2d 5 (Ariz. Ct. App.

1996); City of Miami Beach v. Miami Beach Fraternal Order of Police,

619 So. 2d 447 (Fla. Dist. Ct. App. 1993); Baisley v. Vielle (In re

Marriage of Baisley), 749 P.2d 446 (Colo. Ct. App. 1987).

2. See, e.g., El Paso Natural Gas Co. v. TransAm. Natural Gas Corp., 669

A.2d 36 (Del. 1995); Donnkenny, Inc. v. Nadler, 544 F. Supp. 166

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

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

4. See, e.g., Fried v. Bergman, 736 So. 2d 1281 (Fla. Dist. Ct. App. 1999);

Commercial Union Ins. Co. v. Wheeling Pittsburgh Corp., 666 N.E.2d 571

(Ohio. Ct. App. 1995); Brooks Erection Co. v. William R. Montgomery &

Assocs., Inc., 576 S.W.2d 273 (Ky. Ct. App. 1979); Simmons v. Sup. Ct.

of Los Angeles County, 214 P.2d 844 (Cal. Ct. App. 1950).

5. See, e.g., HFTP Invs., LLC v. ARIAD Pharms., Inc., 752 A.2d 115 (Del.

Ch. 1999) (comparing expense and speed of resolving dispute in either

forum).

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

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

Div. 1995).

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

(Iowa 2003).

8. See, e.g., Wiseman v. Law Research Serv., Inc., 270 N.E.2d 77 (Ill. App.

Ct. 1971).

Issues Relating to Parallel Litigation 337

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

obtain complete relief.10

Conversely, motions for stays are more likely to be denied if (1)

there are material differences between the named parties in both cases,11

(2) if the actions involve different facts,12 (3) if different legal claims are

asserted or different remedies are pursued in either court,13 and (4) if a

judgment in the foreign jurisdiction will not fully resolve the disputes

asserted in the forum state.14 While many states hold that the power to

stay or dismiss duplicative actions is inherent in the court,15 a number of

jurisdictions have enacted statutes expressly providing such authority.16

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.17

State business tort cases are most likely to be stayed or abated when

there are pending federal actions based on specialized federal laws (e.g.,

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

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

(Iowa 2003); El Paso Natural Gas Co., 669 A.2d at 38 n.1. But cf.

Derdiger v. Tallman, 773 A.2d 1005 (Del. Ch. 2000) (allowing stay even

though cases involved different named representatives in separate putative

class actions).

11. See, e.g., Del-Val Fin. Corp. v. FDIC, 598 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. 1980).

12. See, e.g., Cong. Factors Corp. v Meinhard Commercial Corp., 493

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

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

Coaxial Commc’ns, Inc. v. CNA Fin. Corp., 367 A.2d 994 (Del. 1976).

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

(Ill. App. Ct. 1999).

15. 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).

16. See, e.g., GA. CODE ANN. § 9-2-44; N.Y. C.P.L.R. 3211(a), ¶ 4 (permitting

New York courts to dismiss action on grounds that there is “another action

pending 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 2005) (providing Illinois courts discretion to dismiss action if “there

is another action pending between the same parties for the same cause”).

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