1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8
Slick S lide LLC, ) No. CV-24-01925-PHX-SPL ) 9 ) 10 Plaintiff, ) ORDER vs. ) ) 11 ) Jokawiem Manufacturing LLC, ) 12 ) ) 13 Defendant. ) 14 )
15 Before the Court is Defendant Jokawiem Manufacturing LLC’s Motion to Transfer 16 Venue, or in the Alternative, to Stay (Doc. 18), Plaintiff Slick Slide LLC’s Response (Doc. 17 24), and Defendant’s Reply (Doc. 28). Also before the Court is Defendant’s Motion to 18 Dismiss (Doc. 19), which the parties have fully briefed (Docs. 25, 29). The Court now rules 19 as follows.1 20 I. BACKGROUND 21 This case arises out of alleged misappropriation of Plaintiff Slick Slide LLC’s 22 design information and artwork of its customized recreational slides. (Doc. 11 at 3). 23 Plaintiff designs recreational slides for water parks, amusement parks, and other customers 24 throughout the United States. (Id.). Plaintiff has registered copyrights in its various designs 25 and artwork. (Id. at 3–4). Defendant Jokawiem Manufacturing LLC (“Defendant 26
27 1 Because it would not assist in resolution of the instant issues, the Court finds the pending motions are suitable for decision without oral argument. See LRCiv. 7.2(f); Fed. 28 R. Civ. P. 78(b); Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998). 1 Jokawiem”) is a manufacturer and seller of recreational slides and previously worked with 2 Plaintiff to manufacture and supply slides utilizing Plaintiff’s designs. (Id. at 4). Plaintiff 3 provided Defendant with the copyrighted design information and artwork through this 4 engagement with the understanding that Defendant would keep the information 5 confidential and only use the designs for the manufacture of slides on behalf of Plaintiff. 6 (Id. at 4–5). 7 After the termination of the parties’ business relationship, Plaintiff alleges that 8 Defendant has reproduced, distributed, and displayed Plaintiff’s copyright-protected 9 design information and artwork. (Id. at 5). Plaintiff specifically alleges that one of 10 Defendant and one of its employees, Mr. Wan Yuen Tung, have used Plaintiff’s designs to 11 engage in dry slide manufacturing or fabrication and assist third parties with the design, 12 manufacturing, and sale of recreational slides. (Doc. 11 at 6). 13 On August 2, 2024, Plaintiff filed its suit. (Doc. 1). On October 7, 2024, Plaintiff 14 filed the operative Amended Complaint, alleging claims of copyright infringement, 15 inducement of copyright infringement, violation of the federal Defend Trade Secrets Act, 16 violation of Arizona’s Uniform Trade Secrets Act, conversion, civil conspiracy, and unjust 17 enrichment. (Doc. 11 at 1). On November 25, 2024, Defendant filed its Motion to Change 18 Transfer Venue and Motion to Dismiss. (Docs. 18, 19). 19 II. LEGAL STANDARD 20 “There is a generally recognized doctrine of federal comity which permits a district 21 court to decline jurisdiction over an action when a complaint involving the same parties 22 and issues has already been filed in another district.” Pacesetter Sys., Inc. v. Medtronic, 23 Inc., 678 F.2d 93, 94–95 (9th Cir. 1982). This is known as the “first-to-file” rule. “The 24 first-to-file rule may be applied when a complaint involving the same parties and issues 25 has already been filed in another district.” Kohn L. Grp., Inc. v. Auto Parts Mfg. Miss., Inc., 26 787 F.3d 1237, 1240 (9th Cir. 2015) (internal quotation marks omitted). Courts therefore 27 analyze three factors when determining whether to apply the first-to-file rule: (1) 28 chronology of the lawsuits, (2) similarity of the parties, and (3) similarity of the issues. Id. 1 “The first-to-file rule is intended to serve the purpose of promoting efficiency well and 2 should not be disregarded lightly.” Id. at 1239 (internal quotation marks omitted). If a court 3 determines the first-to-file rule does apply, it may transfer, stay, or dismiss the action. 4 Alltrade, Inc. v. Uniweld Prods., Inc., 946 F.2d 622, 623 (9th Cir. 1991). 5 III. DISCUSSION 6 Defendant faces a pending lawsuit in the United States Court for the Middle District 7 of Tennessee (the “Tennessee case”). (Doc. 18 at 1); see Family of Eight v. JRP Solutions, 8 LLC et al., Case No. 3:24-cv-00519 (M.D. Tenn.) (filed April 26, 2024). Defendant seeks 9 to transfer the present action before this Court to the Middle District of Tennessee pursuant 10 to the first-to-file rule. (Doc. 18 at 5). 11 The first factor is obviously satisfied: the Tennessee case was filed on April 26, 12 2024, and the present case was filed on August 2, 2024. (Doc. 1). To the extent Plaintiff 13 argues that the party invoking the rule must have filed the first case, the Court is 14 unconvinced. (Doc. 24 at 6–7). This Court is unaware of, and Plaintiff does not assert, any 15 binding authority that holds as such. 16 As to the second factor—similarity of the parties—exact identity of the parties is 17 not required. Kohn, 787 F.3d at 1240. “Rather, the first-to-file rule requires only substantial 18 similarity of parties.” Id. Defendant Jokawiem is a defendant in both cases. Although the 19 Tennessee case has additional Defendants, courts have routinely allowed transfer under the 20 first to file rule where the first-filed case has additional defendants. Id. (“A contrary holding 21 could allow a party . . . to skirt the first-to-file rule merely by omitting one party from a 22 second lawsuit.”). Moreover, the additional defendants in the Tennessee case are 23 Defendant Jokawiem’s parent company and the members, owners, and founders of 24 Defendant, an LLC entity, which further weighs in favor of finding substantial similarity. 25 (Doc 18-2 at 6). Plaintiff Slick Slide is not a party in the Tennessee suit. However, the 26 Court finds that the parties are still substantially similar enough to warrant transfer. 27 Defendant alleges that the plaintiff in the Tennessee case owns 27 percent of Slick Slide. 28 (Doc. 28 at 3). Additionally, the Court finds the plaintiff in the Tennessee case is similarly 1 positioned as the Plaintiff in this case with respect to the issues at hand, as further discussed 2 below: both plaintiffs allege that and seek to determine whether Defendant misappropriated 3 Slick Slide’s confidential design information. The plaintiffs have employed the same 4 counsel in both cases, as well. Family of Eight v. JRP Solutions, LLC et al., Case No. 3:24- 5 cv-00519 (M.D. Tenn.) (filed April 26, 2024); (Doc. 18-2 at 12). As such, the Court finds 6 the second factor is satisfied. 7 The third factor—substantial similarity of issues—requires the Court to consider 8 whether there is “substantial overlap” between the two suits. Kohn, 787 F.3d at 1241. 9 Plaintiff argues that transfer is not warranted because the claims and the operative facts in 10 the two actions are different. (Doc. 24 at 8). The cases do involve different causes of action: 11 the Tennessee case considers a breach of contract claim, while the present case involves 12 claims for copyright infringement, violations of state and federal trade secret laws, 13 conversion, civil conspiracy, and unjust enrichment. (Docs. 18 at 2; 11 at 1.). Plaintiff 14 asserts that the confidential information at issue in the Tennessee case is much broader than 15 the trade secrets at issue in the present case. (Doc. 24 at 10). But this Court is unconvinced 16 that “[t]here is absolutely no overlap in the claims being asserted in the two actions.” (Id. 17 at 8).
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1 WO 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE DISTRICT OF ARIZONA 8
Slick S lide LLC, ) No. CV-24-01925-PHX-SPL ) 9 ) 10 Plaintiff, ) ORDER vs. ) ) 11 ) Jokawiem Manufacturing LLC, ) 12 ) ) 13 Defendant. ) 14 )
15 Before the Court is Defendant Jokawiem Manufacturing LLC’s Motion to Transfer 16 Venue, or in the Alternative, to Stay (Doc. 18), Plaintiff Slick Slide LLC’s Response (Doc. 17 24), and Defendant’s Reply (Doc. 28). Also before the Court is Defendant’s Motion to 18 Dismiss (Doc. 19), which the parties have fully briefed (Docs. 25, 29). The Court now rules 19 as follows.1 20 I. BACKGROUND 21 This case arises out of alleged misappropriation of Plaintiff Slick Slide LLC’s 22 design information and artwork of its customized recreational slides. (Doc. 11 at 3). 23 Plaintiff designs recreational slides for water parks, amusement parks, and other customers 24 throughout the United States. (Id.). Plaintiff has registered copyrights in its various designs 25 and artwork. (Id. at 3–4). Defendant Jokawiem Manufacturing LLC (“Defendant 26
27 1 Because it would not assist in resolution of the instant issues, the Court finds the pending motions are suitable for decision without oral argument. See LRCiv. 7.2(f); Fed. 28 R. Civ. P. 78(b); Partridge v. Reich, 141 F.3d 920, 926 (9th Cir. 1998). 1 Jokawiem”) is a manufacturer and seller of recreational slides and previously worked with 2 Plaintiff to manufacture and supply slides utilizing Plaintiff’s designs. (Id. at 4). Plaintiff 3 provided Defendant with the copyrighted design information and artwork through this 4 engagement with the understanding that Defendant would keep the information 5 confidential and only use the designs for the manufacture of slides on behalf of Plaintiff. 6 (Id. at 4–5). 7 After the termination of the parties’ business relationship, Plaintiff alleges that 8 Defendant has reproduced, distributed, and displayed Plaintiff’s copyright-protected 9 design information and artwork. (Id. at 5). Plaintiff specifically alleges that one of 10 Defendant and one of its employees, Mr. Wan Yuen Tung, have used Plaintiff’s designs to 11 engage in dry slide manufacturing or fabrication and assist third parties with the design, 12 manufacturing, and sale of recreational slides. (Doc. 11 at 6). 13 On August 2, 2024, Plaintiff filed its suit. (Doc. 1). On October 7, 2024, Plaintiff 14 filed the operative Amended Complaint, alleging claims of copyright infringement, 15 inducement of copyright infringement, violation of the federal Defend Trade Secrets Act, 16 violation of Arizona’s Uniform Trade Secrets Act, conversion, civil conspiracy, and unjust 17 enrichment. (Doc. 11 at 1). On November 25, 2024, Defendant filed its Motion to Change 18 Transfer Venue and Motion to Dismiss. (Docs. 18, 19). 19 II. LEGAL STANDARD 20 “There is a generally recognized doctrine of federal comity which permits a district 21 court to decline jurisdiction over an action when a complaint involving the same parties 22 and issues has already been filed in another district.” Pacesetter Sys., Inc. v. Medtronic, 23 Inc., 678 F.2d 93, 94–95 (9th Cir. 1982). This is known as the “first-to-file” rule. “The 24 first-to-file rule may be applied when a complaint involving the same parties and issues 25 has already been filed in another district.” Kohn L. Grp., Inc. v. Auto Parts Mfg. Miss., Inc., 26 787 F.3d 1237, 1240 (9th Cir. 2015) (internal quotation marks omitted). Courts therefore 27 analyze three factors when determining whether to apply the first-to-file rule: (1) 28 chronology of the lawsuits, (2) similarity of the parties, and (3) similarity of the issues. Id. 1 “The first-to-file rule is intended to serve the purpose of promoting efficiency well and 2 should not be disregarded lightly.” Id. at 1239 (internal quotation marks omitted). If a court 3 determines the first-to-file rule does apply, it may transfer, stay, or dismiss the action. 4 Alltrade, Inc. v. Uniweld Prods., Inc., 946 F.2d 622, 623 (9th Cir. 1991). 5 III. DISCUSSION 6 Defendant faces a pending lawsuit in the United States Court for the Middle District 7 of Tennessee (the “Tennessee case”). (Doc. 18 at 1); see Family of Eight v. JRP Solutions, 8 LLC et al., Case No. 3:24-cv-00519 (M.D. Tenn.) (filed April 26, 2024). Defendant seeks 9 to transfer the present action before this Court to the Middle District of Tennessee pursuant 10 to the first-to-file rule. (Doc. 18 at 5). 11 The first factor is obviously satisfied: the Tennessee case was filed on April 26, 12 2024, and the present case was filed on August 2, 2024. (Doc. 1). To the extent Plaintiff 13 argues that the party invoking the rule must have filed the first case, the Court is 14 unconvinced. (Doc. 24 at 6–7). This Court is unaware of, and Plaintiff does not assert, any 15 binding authority that holds as such. 16 As to the second factor—similarity of the parties—exact identity of the parties is 17 not required. Kohn, 787 F.3d at 1240. “Rather, the first-to-file rule requires only substantial 18 similarity of parties.” Id. Defendant Jokawiem is a defendant in both cases. Although the 19 Tennessee case has additional Defendants, courts have routinely allowed transfer under the 20 first to file rule where the first-filed case has additional defendants. Id. (“A contrary holding 21 could allow a party . . . to skirt the first-to-file rule merely by omitting one party from a 22 second lawsuit.”). Moreover, the additional defendants in the Tennessee case are 23 Defendant Jokawiem’s parent company and the members, owners, and founders of 24 Defendant, an LLC entity, which further weighs in favor of finding substantial similarity. 25 (Doc 18-2 at 6). Plaintiff Slick Slide is not a party in the Tennessee suit. However, the 26 Court finds that the parties are still substantially similar enough to warrant transfer. 27 Defendant alleges that the plaintiff in the Tennessee case owns 27 percent of Slick Slide. 28 (Doc. 28 at 3). Additionally, the Court finds the plaintiff in the Tennessee case is similarly 1 positioned as the Plaintiff in this case with respect to the issues at hand, as further discussed 2 below: both plaintiffs allege that and seek to determine whether Defendant misappropriated 3 Slick Slide’s confidential design information. The plaintiffs have employed the same 4 counsel in both cases, as well. Family of Eight v. JRP Solutions, LLC et al., Case No. 3:24- 5 cv-00519 (M.D. Tenn.) (filed April 26, 2024); (Doc. 18-2 at 12). As such, the Court finds 6 the second factor is satisfied. 7 The third factor—substantial similarity of issues—requires the Court to consider 8 whether there is “substantial overlap” between the two suits. Kohn, 787 F.3d at 1241. 9 Plaintiff argues that transfer is not warranted because the claims and the operative facts in 10 the two actions are different. (Doc. 24 at 8). The cases do involve different causes of action: 11 the Tennessee case considers a breach of contract claim, while the present case involves 12 claims for copyright infringement, violations of state and federal trade secret laws, 13 conversion, civil conspiracy, and unjust enrichment. (Docs. 18 at 2; 11 at 1.). Plaintiff 14 asserts that the confidential information at issue in the Tennessee case is much broader than 15 the trade secrets at issue in the present case. (Doc. 24 at 10). But this Court is unconvinced 16 that “[t]here is absolutely no overlap in the claims being asserted in the two actions.” (Id. 17 at 8). 18 Instead, a review of both complaints reveals substantial overlap between the 19 allegations and operative facts. In the Tennessee case, the plaintiff, a Tennessee 20 corporation, entered into a Stock Purchase Agreement (“SPA”) with Defendant 21 Jokawiem’s parent company to purchase stock of Slick City LLC and Plaintiff Slick Slide 22 LLC. (Doc. 18-2 at 4). The SPA included a non-compete provision and a confidentiality 23 provision, which required the stock sellers to destroy confidential information belonging 24 to Slick Slide LLC, including “molds, schematics, designs, proprietary technology, 25 intellectual property, trademarks, symbols, strategies, business plans, and financial 26 statements.” (Id. at 5). The Tennessee case complaint alleges that the defendants, including 27 Defendant Jokawiem, did not destroy the confidential information and instead “retained 28 such information in order to assist third parties with the design, manufacturing, offering 1 for sale, and sale, of recreational slides” and “to engage in dry slide manufacturing and/or 2 fabrication, including through their employees and affiliated companies.” (Id. at 7). 3 Additionally, just like the present case, the Tennessee plaintiff further alleges that 4 Defendant Jokawiem’s employee, Mr. Wan Yuen Tung, failed to destroy the 5 aforementioned confidential information and has assisted third parties with the design, 6 manufacturing, and sale of recreational slides and the fabrication and manufacturing of dry 7 slides. (Id. at 8–9). 8 The Court cannot rationally conclude, as Plaintiff requests, that the issues of 9 Defendant’s misappropriation of confidential information in the Tennessee case would not 10 substantially overlap with the questions in this case regarding “Defendant’s copying and 11 use of engineering drawings and artwork relating to Slick Slide’s recreational slide 12 products,” “the supplier, and designs, of the mats and coating used by Slick Slide,” 13 “Defendant’s use of Slick Slide’s molds,” the economic value of its trade secrets, computer 14 files, and the tower systems for the slides. (Doc. 24 at 9). Both lawsuits will require a court 15 to determine whether Defendant and its alleged agent, Mr. Tung, misappropriated Slick 16 Slide’s design, molding, artwork, and engineering or technological information and used 17 that information to design, manufacture, and sell recreational slides or assist third parties 18 in the design, manufacture, and sale of recreational slides. As such, the Court finds that 19 while there are some distinctions in the legal questions in the cases, there is substantial 20 overlap between the factual issues in the cases such that transfer would be “consistent with 21 the policy of the first-to-file rule, which is to maximize judicial economy, consistency, and 22 comity.” Kohn, 787 F.3d at 1240. The Court finds that Defendant has satisfied the third 23 factor. 24 To the extent that Plaintiff argues that a transfer would destroy diversity jurisdiction 25 in the Tennessee case, that the deadline for amending claims or adding parties in the 26 Tennessee action expired months ago, and that combining the damages claims and potential 27 remedies of the two cases would increase complexity (Doc. 24 at 11–12), the Court notes 28 that the transfer of a case to a venue with a pending substantially similar case does not 1 necessitate consolidation of the two cases. See generally Bite Tech, Inc. v. X2 Impact, Inc., 2 No. C-12-5888 EMC, 2013 WL 871926, at *6 (N.D. Cal. Mar. 7, 2013) (“Even if the 3 Western District of Washington could or did not consolidate these cases, it would at least 4 have the ability to relate and coordinate the two cases [if the case were transferred], thereby 5 streamlining the litigation.”). Moreover, as Defendant correctly notes, the Tennessee court 6 would retain federal question jurisdiction over many of Plaintiff’s claims and can justly 7 exercise supplemental jurisdiction over related claims. (Doc. 28 at 6–7); 28 U.S.C. § 1331; 8 28 U.S.C. § 1367. 9 IV. CONCLUSION 10 All told, considering all the circumstances of this case, and weighing the interests 11 of justice, efficiency, convenience, and the avoidance of inconsistent judgments, in light of 12 the Ninth Circuit’s admonition that the first-to-file rule “should not be disregarded lightly,” 13 the Court finds that application of the first-to-file rule is appropriate in this case. Kohn L. 14 Grp., Inc., 787 F.3d at 1239; see Pacesetter Sys., Inc., 678 F.2d at 95 (holding that a court’s 15 discretion in applying the first-to-file rule should be guided by “determinations concerning 16 wise judicial administration, giving regard to conservation of judicial resources and 17 comprehensive disposition of litigation” (internal quotation marks omitted)). 18 Because the Court applies the first-to-file rule, the final remaining question is 19 whether this case should be stayed, transferred, or dismissed. The Court finds that transfer 20 of this case to the Middle District of Tennessee would best serve the interests of justice and 21 efficiency. Whether to consolidate the cases will, of course, be in that court’s sound 22 discretion, but it may be possible to resolve the claims and issues raised through a single 23 proceeding. Accordingly, 24 IT IS ORDERED that Defendant Jokawiem Manufacturing LLC’s Motion to 25 Transfer Venue (Doc. 18) is granted. 26 /// 27 /// 28 /// 1 IT IS FURTHER ORDERED that this Court will not rule on Defendant’s Motion to Dismiss (Doc. 19), and it shall be administratively terminated on this Court’s docket 3] by the Clerk of Court. 4 IT IS FURTHER ORDERED that the Clerk of Court shall transfer this matter to the United States District Court for the Middle District of Tennessee and terminate this 6 | case in the District of Arizona. 7 Dated this 24th day of March, 2025. 8 9 10 CEC GS 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28