BAE Sys Info v Mark Storer

2011 DNH 007

• Court: District Court, D. New Hampshire
• Decided: January 11, 2011
• Docket: CV-10-215-PB
• Status: Published

Opinion

BAE Sys Info v Mark Storer CV-10-215-PB 1/11/11 UNITED STATES DISTRICT COURT FOR THE DISTRICT OF NEW HAMPSHIRE

BAE Systems Information and Electronic Systems, Inc.

v. Case N o . 10-cv-00215-PB Opinion N o . 2011 DNH 007 Mark Storer, Stephen Luker, Terry Mohn, Duane Pearson, Thomas Gregg, Allen Zwan, Catherine Bloom, and Fatima Abassi

MEMORANDUM AND ORDER

(“BAE”) has sued the defendants, former employees of BAE,

seeking a declaratory judgment that the defendants were at-will

employees who are not owed any additional compensation based

upon the circumstances of their termination. The defendants

filed a motion to dismiss the complaint.1 For the reasons

discussed below, I grant the defendants’ motion.

I. BACKGROUND

BAE is a subsidiary of one of the nation’s largest defense

contractors. The defendants are all former employees of BAE. 1 Defendants seek a change of venue. I need not resolve the venue question because I determine that the complaint should be dismissed for other reasons. 1 In 2007, BAE started a business venture known as the Innovation

and Growth Initiatives (“I&GI”). This program, headed by BAE

executive Larrie Cable, was to act as a “venture capitalist” to

a group of initiatives that would operate like start-up business

entities within BAE. One of those initiatives was known as the

Balance Energy Initiative (“Balance Energy”).

In early 2009, Cable engaged in phone and email

correspondence with Mark Storer, then a BAE employee, regarding

Balance Energy. Cable and Storer eventually met in San Diego,

California, where Storer agreed to head up Balance Energy.

Storer and the other defendants claim that Cable told Storer

during the meeting that he would have at least five years to

execute the proposed business plan for Balance Energy and the

initiative would only be terminated for failure to perform.

From February to July of 2009, Storer recruited the other

seven co-defendants, all of whom began working for Balance

Energy. In March of 2010, however, BAE terminated the

initiative for reasons unrelated to its performance and gave the

defendants sixty days to find alternative employment within BAE.

The defendants retained counsel, who sent correspondence to BAE

in May challenging the company’s decision to terminate the

initiative and issuing a settlement demand. BAE responded with

2 an email requesting a more specific monetary demand and an

extension of time to respond to the defendants’ settlement

demand. Defendants’ counsel added more detail to their demand

and gave BAE until June 4 , 2010 to respond. Instead, on June 3 ,

2010, BAE filed this action seeking a declaratory judgment that

the defendants were at-will employees who are not due any

additional compensation.

The defendants filed their lawsuit against BAE and its

affiliate, BAE Systems Information Solutions, Inc., on July 19

in San Diego County, California Superior Court. The state

action seeks damages against BAE on a variety of state statutory

and common-law claims stemming from their termination.

I I . ANALYSIS

It is apparent that BAE rushed to file this declaratory

judgment action in an effort to stave off threatened litigation

by the defendants. In such circumstances, a federal court has

broad discretion to dismiss a parallel claim for declaratory

relief if the court determines that the dispute “can better be

settled in the proceeding pending in the state court.” Wilton

v . Seven Falls Co., 515 U.S. 277, 282 (1995) (quoting Brillhart

v . Excess Ins. Co., 316 U.S. 491, 495 (1942)).

3 BAE does not seriously challenge the defendants’

contention that this case and the California state court

case are parallel proceedings. Instead, it argues that the

court lacks discretion to dismiss the federal case because

BAE filed it before the defendants filed the state court

case. I reject this argument because it is foreclosed by

First Circuit precedent. In American Home Assurance C o . v .

Insular Underwriters Corp., 494 F.2d 317 (1st Cir. 1974),

the state court action was filed later in the same day as

the federal action. In rejecting the argument that BAE

presents here, the court stated that “it is irrelevant who

won the race to the courthouse door.” Id. at 320.

Instead, the court noted that “[t]he relevant question i s ,

rather, whether at the time of hearing on the motion to

dismiss, there is such a plain, adequate, and speedy remedy

afforded in the pending action, that a declaratory action

will serve no useful purpose.” Id. (internal quotations

omitted). 2

2 BAE also argues that exercising my discretion to dismiss the case in light of the California proceeding would “effectively gut the first-filed rule.” Pl.’s Opp’n to Def.’s Mot. To Dismiss o r , in the Alternative, Transfer Venue, Doc. N o . 2 5 , 2 5 . However, the first-filed rule is irrelevant here, as it only applies when a complaint involving the same parties and issues has already been filed in a different federal district. See

4 This action raises a question that is worth deciding only

because it may affect the defendants’ entitlement to relief in

the California state court case. Although the state court case

presents additional issues and names an additional defendant,

these facts, if anything, weigh in favor of dismissing this

action. Id. at 320-21 (concluding that additional claims and

parties in the state court proceeding favor dismissal of the

federal action because resolution of the state action is “likely

to still the controversy more completely than in the federal

courts”). In short, there is simply no good reason why BAE

should be permitted to proceed in this court when the issue it

seeks to raise can be expeditiously resolved in the state court

action.3

Coady v . Ashcraft & Gerel, 223 F.3d 1 , 11 (1st Cir. 2000) (“Where identical actions are proceeding concurrently in two federal courts . . . the first filed action is generally preferred in a choice-of-venue decision.”) (emphasis added). 3 A stay is usually the “preferable course” where the basis for declining to proceed is the pendency of a state court proceeding because a stay assures that the federal action will not be time- barred if the state case fails to resolve the issues completely. Wilton, 515 U.S. at 288 n.2. In this declaratory judgment action, however, the relief BAE seeks is potentially valuable to BAE only because it may provide an effective response to the various breach of contract claims that the defendants have brought in state court. Because the need for declaratory relief will disappear if the state court action is resolved, there is no need to keep the case alive to preserve BAE’s ability to protect itself through declaratory relief. Thus, dismissal rather than a stay is warranted in this case.

5 III. CONCLUSION

For the reasons stated above, I conclude that moving

forward with the declaratory judgment claim in this case would

be inappropriate in light of the pending state court proceeding,

and I grant the defendants’ motion to dismiss (Doc. N o . 20)

without prejudice to BAE’s right to press the issue it seeks to

raise here in the California state court action.

SO ORDERED.

/s/Paul Barbadoro Paul Barbadoro United States District Judge

January 1 1 , 2011

cc: Anthony S . Califano, Esq. Bret A . Cohen, Esq. Micha Danzig, Esq. Dana L. Fleming, Esq. Daniel B . Klein, Esq. James R. Patterson, Esq. Maura M. Pelham, Esq. Arthur G. Telegen, Esq. Martha Van Oot, Esq. Steven L. Winer, Esq.