Synthes, Inc. v. Knapp

978 F. Supp. 2d 450, 2013 WL 5594706, 2013 U.S. Dist. LEXIS 147239
CourtDistrict Court, E.D. Pennsylvania
DecidedOctober 11, 2013
DocketCivil Action No. 13-3285
StatusPublished
Cited by53 cases

This text of 978 F. Supp. 2d 450 (Synthes, Inc. v. Knapp) is published on Counsel Stack Legal Research, covering District Court, E.D. Pennsylvania primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Synthes, Inc. v. Knapp, 978 F. Supp. 2d 450, 2013 WL 5594706, 2013 U.S. Dist. LEXIS 147239 (E.D. Pa. 2013).

Opinion

MEMORANDUM OPINION

SAVAGE, District Judge.

In this action to enforce a non-competition agreement and a non-disclosure agreement brought by his former employer, Depuy Synthes Sales, Inc. (“Depuy”), and its parent, Synthes, Inc. (“Synthes”), the defendant, Gregory Knapp, has moved to dismiss, stay or transfer the action to the Eastern District of California where he has already initiated an action to have the agreements declared unenforceable. Invoking the first-filed rule and 28 U.S.C. § 1404(a), Knapp argues that because this action was filed five days after he had filed an action against Depuy in the Eastern District of California, a more convenient forum, this case should be dismissed, stayed or transferred. Opposing the motion, plaintiffs rely upon a forum selection provision in the non-compete agreement and they claim that Knapp filed the California action in bad faith and in anticipation of this action. Additionally, they argue that Knapp has failed to meet his burden under § 1404(a) to justify transfer from the plaintiffs’ preferred forum.

We must determine whether the forum selection provision trumps the first-filed rule and whether exceptions to the rule apply. If the first-filed rule does not apply, we then analyze whether the action should be transferred pursuant to 28 U.S.C. § 1404(a).

We conclude that the case should be transferred to the Eastern District of California because it is the more convenient forum and the first-filed rule should be applied. Therefore, the motion to transfer will be granted.

Background Facts

Knapp, a citizen of California, is a former employee of Depuy. Compl. ¶ 7. During his tenure with Depuy, Knapp worked in and around Sacramento, California. Compl. ¶¶ 2, 9. Depuy’s principal place of business is in Raynham, Massachusetts and Synthes, Depuy’s parent, has its principal place of business in West Chester, Pennsylvania. Compl. ¶¶ 5-7. Plaintiffs claim that although Depuy is a Massachusetts corporation, it has significant operations located in West Chester, Pennsylvania. Compl. ¶ 6.

[455]*455Depuy and Synthes allege that Knapp breached a Confidentiality, Non-Solicitation and Non-Competition Agreement (“Non-Compete Agreement”) and an Employee Innovation and Non-Disclosure Agreement (“Non-Disclosure Agreement”). Compl. ¶¶ 3, 68, 73. Knapp and Synthes Spine Company, L.P., a predecessor of Depuy, executed the Non-Compete Agreement in February of 2006. Compl., Ex. B. The parties to the Non-Disclosure Agreement, Knapp and Synthes U.S.A., a subsidiary corporation of Synthes, entered into that agreement in October of 1994. Compl., Ex. A. Plaintiffs also bring claims against Knapp for breach of fiduciary duty and misappropriation of trade secrets. Compl. ¶¶ 78-79, 94.

The First-Filed Rule

The first-filed rule requires, absent extraordinary circumstances, that eases sharing substantially similar subject matter and subject to concurrent federal jurisdiction be decided by the court where the litigation was first filed. E.E.O.C. v. Univ. of Pennsylvania, 850 F.2d 969, 971 (3d Cir.1988), aff'd on other grounds, 493 U.S. 182, 110 S.Ct. 577, 107 L.Ed.2d 571 (1990); Villari Brandes & Kline, P.C. v. Plainfield Specialty, No. 09-2552, 2009 WL 1845236, at *6 (E.D.Pa. June 26, 2009) (Bartle, J.); Koresko v. Nationwide Life Ins. Co., 403 F.Supp.2d 394, 399 (E.D.Pa.2005) (Robreno, J.). The rationale for the rule is the desire for sound judicial administration and comity among federal courts of equal stature. EEOC, 850 F.2d at 971. It is also designed to relieve a party who first brings a controversy into a court of competent jurisdiction from vexation of multiple litigations covering the same subject matter. QVC, Inc. v. Patiomats.com, LLC, No. 12-3168, 2012 WL 3155471, at *3 (E.DJPa. Aug. 3, 2012) (Schiller, J.).

Although its application is typically the norm, the first-filed rule is not applied rigidly. EEOC, 850 F.2d at 976. Exceptions, though rare, do exist.1 They are: (1) the existence of rare or extraordinary circumstances; (2) the first-filer engaged in inequitable conduct; (3) he acted in bad faith; (4) he engaged in forum shopping; (5) the later-filed action has developed further than the first-filed action; and (6) the first-filing party instituted suit in one forum in anticipation of the opposing party’s imminent suit in a less favorable forum. EEOC, 850 F.2d at 972, 976.

Plaintiffs argue that we should depart from the first-filed rule because Knapp engaged in patent forum shopping and inequitable conduct, his action is an improper anticipatory one, and the action later filed in this district asserts claims not included in the first-filed action. Hence, we must determine whether there are exceptional circumstances warranting a departure from the first-filed rule.

Knapp’s behavior in filing a declaratory judgment action on the same day that he resigned from Depuy was not inequitable and anticipatory. That the California action is for a declaratory judgment does not supply a basis for not applying the first-filed rule. The rule has been regularly applied in actions where the first-filed case was a declaratory judgment action. Fisch[456]*456er & Porter Co. v. Moorco Int’l, Inc., 869 F.Supp. 328, 325 (E.D.Pa.1994) (Brody, J.) (first-filed rule routinely applied where first suit is an action for declaratory judgment); Koresko, 403 F.Supp.2d at 401 (same); Pep Boys, Manny, Moe & Jack v. Am. Waste Oil Servs. Corp., No. 96-7098, 1997 WL 367048, at *6 (E.D.Pa. June 25, 1997) (Kelly, J.); Peregrine Corp. v. Peregrine Indus., Inc., 769 F.Supp. 169, 174 (E.D.Pa.1991) (Huyett, J.) (applying first-filed rule in favor of declaratory judgment action filed in California).

Because one of the cases involves claims that are not asserted in the other does not necessarily preclude application of the first-filed rule where the core facts are similar and the causes of action in both arise out of the same employment relationship and conduct. To hold otherwise would ignore the rationale for the rule— comity and efficient judicial administration.

Those district court decisions holding that the two cases must be duplicative for the first-filed rule to apply rest on an interpretation of the Third Circuit’s decision in Grider v. Keystone Health Plan Ctr., Inc., 500 F.3d 322 (3d Cir.2007). They have concluded that the rule is narrowly restricted to only those cases that are identical. See, e.g., PhotoMedex, Inc. v. St. Paul Fire & Marine Ins. Co., No. 09-00896, 2009 WL 2326750, at *5 (E.D.Pa. July 28, 2009); CertainTeed Corp. v. Nichiha USA, Inc., No. 09-3932, 2009 WL 3540796, at *3-4 (E.D.Pa. Oct. 29, 2009).

The language relied upon by these courts is that “the issues must have such an identity that a determination in one action leaves little or nothing to be determined in the other.” Grider, 500 F.3d at 333 n. 6.

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978 F. Supp. 2d 450, 2013 WL 5594706, 2013 U.S. Dist. LEXIS 147239, Counsel Stack Legal Research, https://law.counselstack.com/opinion/synthes-inc-v-knapp-paed-2013.