1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 RAQUEL MEIRA DAVIS, an No. 2:19-cv-01947 WBS KJN individual, 13 Plaintiff, 14 MEMORANDUM AND ORDER RE: v. MOTION TO DISMISS, STAY OR 15 TRANSFER MACUHEALTH DISTRIBUTION, INC.; 16 FREDERIC JOUHET, an individual; and DOES 1-10, inclusive, 17 Defendants. 18
19 ----oo0oo---- 20 Plaintiff Raquel Meira Davis brought this action 21 against her former employer, MacuHealth Distribution, Inc. 22 (“MacuHealth”) and MacuHealth’s CEO, Frederic Jouhet, alleging, 23 inter alia, claims for wrongful termination and sexual harassment 24 under California state law and federal law. (Compl. (Docket No. 25 1).) Before the court now is defendants’ motion to dismiss, stay 26 or transfer pursuant to the first-to-file rule, or in the 27 alternative, transfer pursuant to 28 U.S.C. § 1404(a). (Docket 28 1 No. 16.) 2 I. Background 3 MacuHealth is a limited partnership registered and 4 headquartered in Michigan. (Compl. ¶ 1.) It manufactures and 5 sells supplements that allegedly preserve and improve one’s 6 vision. (Id. ¶ 10.) On June 22, 2015, plaintiff joined the 7 company as a sales representative, covering California, Nevada, 8 and Hawaii. (Id. ¶ 13.) As part of her employment, she signed 9 an agreement that contained a forum selection clause providing 10 federal and state courts in Michigan would have “jurisdiction . . 11 . with respect to any action or proceeding arising out of or 12 relating to” her employment. (Docket No. 16-3, Ex. A.) 13 Plaintiff alleges that, throughout the duration of her 14 employment, she was sexually harassed by Frederic Jouhet, 15 MacuHealth’s CEO. (Compl. ¶¶ 19-24.) She repeatedly denied his 16 advances, but the harassment continued. (Id. ¶¶ 28-30, 44, 47.) 17 In May 2017, plaintiff’s supervisor told her Jouhet was unhappy 18 with her and had threatened to terminate her employment despite 19 her excellent performance reviews. (Id. ¶¶ 37, 55.) Over the 20 next few years, plaintiff was denied customary raises and 21 allowances despite her success, until she felt she was forced to 22 resign in August 2018. (Id. ¶¶ 56-60, 65-68, 74.) 23 Before filing this lawsuit, plaintiff filed a complaint 24 against each defendant with the California Department of Fair 25 Employment and Housing (“DFEH”) and the Equal Employment 26 Opportunity Commission (“EEOC”) and obtained right to sue 27 letters. (Id. ¶ 86.) Shortly after obtaining these letters, 28 plaintiff’s counsel wrote to the defendants in July 2019 to 1 inform them of Davis’s intent to file suit in California. (Decl. 2 of Zainah Alfi (“Alfi Decl.”) ¶ 2 (Docket No. 17-2).) After 3 proceeding through unproductive alternative dispute resolution 4 negotiations, plaintiff’s counsel again wrote to defendants in 5 September 2019 to inform them they would be filing suit on 6 September 20, 2019. (Id. ¶¶ 8-10.) On September 19, 2019, 7 defendants filed a case in Oakland County Circuit Court in 8 Michigan, alleging plaintiff had misappropriated confidential 9 information in violation of her employment agreement (the 10 “Michigan action”). (Docket No. 17-3.) Plaintiff then filed 11 this case on September 24, alleging unlawful harassment and 12 failure to prevent harassment in violation of California’s Fair 13 Employment and Housing Act (“FEHA”), Cal. Gov. Code § 12940, et 14 seq.; unlawful retaliation in violation of Title VII of the Civil 15 Rights Act, 42 U.S.C. § 2000e-3(a); wrongful termination in 16 violation of public policy; breach of contract; and waiting time 17 penalties pursuant to California Labor Code § 203. (See Compl.) 18 On November 12, 2019, plaintiff removed the Michigan 19 action to the United States District Court for the Eastern 20 District of Michigan. She subsequently filed a motion to dismiss 21 or transfer to this court, contesting the validity of her 22 employment agreement’s forum selection clause and the court’s 23 personal jurisdiction over her. (Docket No. 16-4.) 24 On March 6, 2020, Judge Sean Cox of the Eastern 25 District of Michigan denied plaintiff’s motion in its entirety. 26 (Docket No. 16-6.) Judge Cox found Davis had failed to overcome 27 the “presumptive validity” of her employment agreement’s forum 28 selection clause and it was therefore enforceable. (Id. at 4-5.) 1 Additionally, Judge Cox denied her request under 28 U.S.C. § 2 1404(a) to transfer the action to this court, finding the forum 3 selection clause and public interest favored keeping the case in 4 Michigan. (Id. at 7.) 5 Davis filed an answer in the Michigan action and 6 brought counterclaims nearly identical to those alleged in the 7 California action on March 16, 2020. (Docket No. 16-7.) 8 Similarly, defendants brought counterclaims in the California 9 case that were nearly identical to those they alleged in the 10 Michigan action. (Docket No. 6.) Defendants now move to 11 dismiss, stay or transfer the California action pursuant to the 12 first-to-file rule, or in the alternative, transfer pursuant to 13 28 U.S.C. § 1404(a). (Mot. (Docket No. 16).) 14 II. Discussion 15 The first to file rule is “a judicially created 16 doctrine of federal comity, which applies when two cases 17 involving substantially similar issues and parties have been 18 filed in different districts.” In re Bozic, 888 F.3d 1048, 1051 19 (9th Cir. 2018) (internal quotations and citations omitted). 20 “Under that rule, the second district court has the discretion to 21 transfer, stay, or dismiss the second case in the interest of 22 efficiency and judicial economy.” Id. at 1051-52 (internal 23 quotations and citation omitted). To determine whether to apply 24 the rule, a district court will consider three factors: 25 “chronology of the lawsuits, similarity of the parties, and 26 similarity of the issues.” Kohn Law Grp., Inc. v. Auto Parts 27 Mfg. Miss., Inc., 787 F.3d 1237, 1240 (9th Cir. 2015). Even if 28 the rule applies, a district court has discretion to refrain from 1 applying the rule in the presence of “bad faith, anticipatory 2 suit, and forum shopping.” Alltrade, Inc. v. Uniweld Prod., 3 Inc., 946 F.2d 622, 628 (9th Cir. 1991) (citations omitted). A 4 court may also decline to apply the rule when the balance of 5 convenience weighs in favor of the later-filed action. Id. 6 The parties do not dispute that the first two factors 7 of the first-to-file rule are satisfied in this case. The 8 Michigan action was indisputably filed first, on September 19, 9 while the California action was not filed until September 24. 10 (Mot. at 4; Opp’n at 6 (Docket No. 17).) This satisfies the 11 first factor. Additionally, the parties agree that the second 12 factor is satisfied, because the parties in both actions are the 13 same. (Mot. at 7; Opp’n at 7.) 14 However, the parties dispute whether the issues in both 15 actions are sufficiently similar to satisfy the first-to-file 16 rule’s third factor. “To determine whether two suits involve 17 substantially similar issues, we look at whether there is 18 ‘substantial overlap’ between the two suits.” Kohn Law Grp., 787 19 F.3d at 1241.
Free access — add to your briefcase to read the full text and ask questions with AI
1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 EASTERN DISTRICT OF CALIFORNIA 10 ----oo0oo---- 11 12 RAQUEL MEIRA DAVIS, an No. 2:19-cv-01947 WBS KJN individual, 13 Plaintiff, 14 MEMORANDUM AND ORDER RE: v. MOTION TO DISMISS, STAY OR 15 TRANSFER MACUHEALTH DISTRIBUTION, INC.; 16 FREDERIC JOUHET, an individual; and DOES 1-10, inclusive, 17 Defendants. 18
19 ----oo0oo---- 20 Plaintiff Raquel Meira Davis brought this action 21 against her former employer, MacuHealth Distribution, Inc. 22 (“MacuHealth”) and MacuHealth’s CEO, Frederic Jouhet, alleging, 23 inter alia, claims for wrongful termination and sexual harassment 24 under California state law and federal law. (Compl. (Docket No. 25 1).) Before the court now is defendants’ motion to dismiss, stay 26 or transfer pursuant to the first-to-file rule, or in the 27 alternative, transfer pursuant to 28 U.S.C. § 1404(a). (Docket 28 1 No. 16.) 2 I. Background 3 MacuHealth is a limited partnership registered and 4 headquartered in Michigan. (Compl. ¶ 1.) It manufactures and 5 sells supplements that allegedly preserve and improve one’s 6 vision. (Id. ¶ 10.) On June 22, 2015, plaintiff joined the 7 company as a sales representative, covering California, Nevada, 8 and Hawaii. (Id. ¶ 13.) As part of her employment, she signed 9 an agreement that contained a forum selection clause providing 10 federal and state courts in Michigan would have “jurisdiction . . 11 . with respect to any action or proceeding arising out of or 12 relating to” her employment. (Docket No. 16-3, Ex. A.) 13 Plaintiff alleges that, throughout the duration of her 14 employment, she was sexually harassed by Frederic Jouhet, 15 MacuHealth’s CEO. (Compl. ¶¶ 19-24.) She repeatedly denied his 16 advances, but the harassment continued. (Id. ¶¶ 28-30, 44, 47.) 17 In May 2017, plaintiff’s supervisor told her Jouhet was unhappy 18 with her and had threatened to terminate her employment despite 19 her excellent performance reviews. (Id. ¶¶ 37, 55.) Over the 20 next few years, plaintiff was denied customary raises and 21 allowances despite her success, until she felt she was forced to 22 resign in August 2018. (Id. ¶¶ 56-60, 65-68, 74.) 23 Before filing this lawsuit, plaintiff filed a complaint 24 against each defendant with the California Department of Fair 25 Employment and Housing (“DFEH”) and the Equal Employment 26 Opportunity Commission (“EEOC”) and obtained right to sue 27 letters. (Id. ¶ 86.) Shortly after obtaining these letters, 28 plaintiff’s counsel wrote to the defendants in July 2019 to 1 inform them of Davis’s intent to file suit in California. (Decl. 2 of Zainah Alfi (“Alfi Decl.”) ¶ 2 (Docket No. 17-2).) After 3 proceeding through unproductive alternative dispute resolution 4 negotiations, plaintiff’s counsel again wrote to defendants in 5 September 2019 to inform them they would be filing suit on 6 September 20, 2019. (Id. ¶¶ 8-10.) On September 19, 2019, 7 defendants filed a case in Oakland County Circuit Court in 8 Michigan, alleging plaintiff had misappropriated confidential 9 information in violation of her employment agreement (the 10 “Michigan action”). (Docket No. 17-3.) Plaintiff then filed 11 this case on September 24, alleging unlawful harassment and 12 failure to prevent harassment in violation of California’s Fair 13 Employment and Housing Act (“FEHA”), Cal. Gov. Code § 12940, et 14 seq.; unlawful retaliation in violation of Title VII of the Civil 15 Rights Act, 42 U.S.C. § 2000e-3(a); wrongful termination in 16 violation of public policy; breach of contract; and waiting time 17 penalties pursuant to California Labor Code § 203. (See Compl.) 18 On November 12, 2019, plaintiff removed the Michigan 19 action to the United States District Court for the Eastern 20 District of Michigan. She subsequently filed a motion to dismiss 21 or transfer to this court, contesting the validity of her 22 employment agreement’s forum selection clause and the court’s 23 personal jurisdiction over her. (Docket No. 16-4.) 24 On March 6, 2020, Judge Sean Cox of the Eastern 25 District of Michigan denied plaintiff’s motion in its entirety. 26 (Docket No. 16-6.) Judge Cox found Davis had failed to overcome 27 the “presumptive validity” of her employment agreement’s forum 28 selection clause and it was therefore enforceable. (Id. at 4-5.) 1 Additionally, Judge Cox denied her request under 28 U.S.C. § 2 1404(a) to transfer the action to this court, finding the forum 3 selection clause and public interest favored keeping the case in 4 Michigan. (Id. at 7.) 5 Davis filed an answer in the Michigan action and 6 brought counterclaims nearly identical to those alleged in the 7 California action on March 16, 2020. (Docket No. 16-7.) 8 Similarly, defendants brought counterclaims in the California 9 case that were nearly identical to those they alleged in the 10 Michigan action. (Docket No. 6.) Defendants now move to 11 dismiss, stay or transfer the California action pursuant to the 12 first-to-file rule, or in the alternative, transfer pursuant to 13 28 U.S.C. § 1404(a). (Mot. (Docket No. 16).) 14 II. Discussion 15 The first to file rule is “a judicially created 16 doctrine of federal comity, which applies when two cases 17 involving substantially similar issues and parties have been 18 filed in different districts.” In re Bozic, 888 F.3d 1048, 1051 19 (9th Cir. 2018) (internal quotations and citations omitted). 20 “Under that rule, the second district court has the discretion to 21 transfer, stay, or dismiss the second case in the interest of 22 efficiency and judicial economy.” Id. at 1051-52 (internal 23 quotations and citation omitted). To determine whether to apply 24 the rule, a district court will consider three factors: 25 “chronology of the lawsuits, similarity of the parties, and 26 similarity of the issues.” Kohn Law Grp., Inc. v. Auto Parts 27 Mfg. Miss., Inc., 787 F.3d 1237, 1240 (9th Cir. 2015). Even if 28 the rule applies, a district court has discretion to refrain from 1 applying the rule in the presence of “bad faith, anticipatory 2 suit, and forum shopping.” Alltrade, Inc. v. Uniweld Prod., 3 Inc., 946 F.2d 622, 628 (9th Cir. 1991) (citations omitted). A 4 court may also decline to apply the rule when the balance of 5 convenience weighs in favor of the later-filed action. Id. 6 The parties do not dispute that the first two factors 7 of the first-to-file rule are satisfied in this case. The 8 Michigan action was indisputably filed first, on September 19, 9 while the California action was not filed until September 24. 10 (Mot. at 4; Opp’n at 6 (Docket No. 17).) This satisfies the 11 first factor. Additionally, the parties agree that the second 12 factor is satisfied, because the parties in both actions are the 13 same. (Mot. at 7; Opp’n at 7.) 14 However, the parties dispute whether the issues in both 15 actions are sufficiently similar to satisfy the first-to-file 16 rule’s third factor. “To determine whether two suits involve 17 substantially similar issues, we look at whether there is 18 ‘substantial overlap’ between the two suits.” Kohn Law Grp., 787 19 F.3d at 1241. The issues in the suits “need not be identical, 20 only substantially similar.” Id. at 1240. 21 Plaintiff claims the California and Michigan actions 22 are not substantially similar because the California case 23 concerns plaintiff’s sexual harassment and retaliation claims 24 while the Michigan action involves her alleged misappropriation 25 of confidential information. (Opp’n at 7.) Plaintiff argues 26 there would be “no meaningful overlap in discovery” and the 27 injunctive relief sought in the Michigan case distinguishes it 28 from the monetary relief she requests in the California case. 1 (Id.) 2 Despite some differences, the actions mirror each other 3 in all material respects. In the Michigan action, defendants 4 here (plaintiffs there) sued Davis for breach of contract, unfair 5 competition, and unjust enrichment. (Docket No. 17-3.) She then 6 counterclaimed, alleging the same causes of action she brought in 7 the California action against defendants, albeit including two 8 additional claims under Michigan’s Elliot-Larsen Civil Rights 9 Act, MCL 37.2101 et seq. (Docket No. 16-7.) Similarly, in the 10 California action, defendants brought counterclaims identical to 11 their causes of action in the Michigan action, although they 12 included additional claims for conversion and violations of 13 California’s Uniform Trade Secrets Act, Cal. Civ. Code § 3426, 14 California Penal Code § 502, and California Business & 15 Professions Code § 17200. (Docket No. 6.) The “substantial 16 overlap” between these two suits satisfies the third and final 17 factor of the first-to-file rule. See Kohn Law Grp., 787 F.3d at 18 1241. 19 Moreover, “the interest of efficiency and judicial 20 economy” would not be served by allowing this action to continue 21 in this court because it would effectively permit the same 22 dispute to be adjudicated by two different federal courts. See 23 In re Bozic, 888 F.3d at 1051-52. Plaintiff argues that the 24 “hypothetical judgments in either [the California or Michigan] 25 case would be unrelated and would not impact the other case.” 26 (Opp’n at 8.) However, with the introduction of each parties’ 27 counterclaims intertwining the substantive and factual issues of 28 the independent actions, that cannot be the case. Accordingly, 1 the first-to-file rule must apply to “avoid the embarrassment of 2 conflicting judgments” that could otherwise result. See Church 3 of Scientology v. U.S. Dep’t of Army, 611 F.2d 738, 749 (9th Cir. 4 1979). 5 In a last effort, plaintiff argues that even if the 6 first-to-file rule applies, equitable exceptions exist to keep 7 the case before this court. (Opp’n at 9.) Plaintiff primarily 8 argues that the “anticipatory suit” exception applies. (Id.) “A 9 suit is ‘anticipatory’ for the purposes of being an exception to 10 the first-to-file rule if the plaintiff in the first-filed action 11 filed suit on receipt of specific, concrete indications that a 12 suit by the defendant was imminent.” Intersearch Worldwide, Ltd. 13 v. Intersearch Grp., Inc., 554 F. Supp. 2d 949, 960 (N.D. Cal. 14 2008) (citations omitted). However, “a letter which suggests the 15 possibility of legal action . . . in order to encourage or 16 further a dialogue, is not a specific, imminent threat of legal 17 action.” Id. Consequently, courts normally find a suit is 18 anticipatory only in a narrow set of circumstances, such as when 19 a declaratory action has been filed to declare a party’s rights 20 before litigation proceeds. See Xoxide, Inc. v. Ford Motor Co., 21 448 F. Supp. 2d 1188, 1193 (C.D. Cal. 2006). 22 Here, plaintiff’s letter to defendants warning them of 23 their intent to pursue legal action, (See Alfi Decl. ¶ 8), does 24 not rise to the level of an “anticipatory suit.” Instead, 25 defendants pursued an independent action in Michigan and sought 26 injunctive and monetary relief against Davis for her alleged 27 misappropriation of confidential information, rather than a 28 judicial determination that the harassment did not happen or was 1 not actionable. (Docket No. 17-3.) Accordingly, the 2 anticipatory suit exception does not preclude the application of 3 the first-to-file rule. 4 Plaintiff also argues that convenience weighs in favor 5 of proceeding in this court. A court may decline to apply the 6 first-to-file rule when the balance of convenience weighs in 7 favor of the later-filed action. Alltrade, 946 F.2d at 628. To 8 determine convenience, courts consider the location of witnesses 9 and evidence, the lack of connection to the forum, and the degree 10 of calendar congestion in the court, among other factors. Ward 11 v. Follett Corp., 158 F.R.D. 645, 648 (N.D. Cal. 1994). 12 Plaintiff represents that the relevant witnesses reside 13 all over the country. (Opp’n at 13.) But plaintiff concedes 14 “[n]early every witness would have to travel to a trial 15 regardless of whether it proceeds in Michigan or California.” 16 (Id. (emphasis added).) Similarly, plaintiff concedes the 17 discovery will likely be all electronic, meaning it could happen 18 anywhere. (Opp’n at 12-13.) This consideration has no bearing 19 either way. Plaintiff then argues she resides in Sacramento, 20 with “no connection to Michigan as a forum.” (Id.) But 21 regardless of her lack of connection to Michigan, plaintiff 22 consented to Michigan as the forum for all disputes arising 23 between her and her employer in her employee agreement. (Docket 24 No. 16-3, Ex. A.) Furthermore, MacuHealth is a Michigan 25 corporation and Jouhet is a Michigan resident. (Compl. ¶¶ 1-2.) 26 These facts seemingly favor allowing the action to proceed in 27 Michigan. 28 The most persuasive consideration, however, is the 1 | relative congestion of the court. As Judge Cox noted in his 2 order, the Eastern District of Michigan “is less congested than 3 | the proposed federal court in California.” (Docket No. 16-6.) 4 | Plaintiff argues that litigating in the Eastern District of 5 | Michigan “does not necessarily ensure a more efficient process” 6 | because of its closure until July 2 due to COVID-19. However, in 7 light of the public response to COVID-19 this court is also 8 closed to the public and has suspended jury trials “until further 9 notice.” (Opp’n at 13); See General Order No. 618 (May 13, 10 2020). Accordingly, the convenience considerations weigh in 11 favor of transferring this case to the Eastern District of 12 Michigan. 13 For the foregoing reasons, the court finds no 14 | exceptions to the first-to-file rule apply, and it will transfer 15 the case to the Eastern District of Michigan pursuant to the 16 | first-to-file rule.? 17 IT IS THEREFORE ORDERED this action be, and the same 18 | hereby is, TRANSFERRED to the United States District Court for 19 | the Eastern District of Michigan. 20 | Dated: May 28, 2020 hi tleom th. A. be—~ 21 WILLIAM B. SHUBB UNITED STATES DISTRICT JUDGE 22 23 24 25 26 27 1 Because the action is transferred under the first-to- file rule, the court need not address defendants’ argument that 28 | transfer is proper under 28 U.S.C. § 1404(a).