Upstart Group LLC v. The Upstart Group Incorporated

• Court: District Court, W.D. Washington
• Decided: April 22, 2020
• Docket: 2:19-cv-01290
• Status: Unknown

Opinion

6 UNITED STATES DISTRICT COURT 7 FOR THE WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8

9 UPSTART GROUP LCC, Civil Action No. 2:19-cv-01290-RAJ-BAT 10 Plaintiff, ORDER 11 v. 12

THE UPSTART GROUP 13 INCORPORATED, 14 Defendant. 15 16 17 This matter is before the Court on Plaintiff’s objections to the Report and 18 Recommendation (“Report”) of the Honorable Brian A. Tsuchida. Having reviewed 19 Defendant’s Motion to Dismiss, the Report and Recommendation (Dkt. # 37), Plaintiff’s 20 objections (Dkt. # 38), and the remainder of the record, the Court concurs fully in Judge 21 Tsuchida’s recommendation. 22 I. BACKGROUND 23 On August 16, 2019, Plaintiff Upstart Group, LLC (“Plaintiff”) filed this action 24 against Defendant The Upstart Group Incorporated (“Defendant”) asserting trademark 25 violations arising from Defendant’s use of the marks “UPSTART” and “THE UPSTART 26 1 GROUP.” Dkt. # 1. In response, Defendant moved to dismiss or stay this action in 2 deference to an earlier-filed action in the Northern District of Illinois. Dkt. # 26; See The 3 Upstart Group, Incorporated v. Upstart Group, LLC, Case No. 1:19-cv-05405 (the 4 “Illinois Action”). On January 2, 2020, Judge Tsuchida recommended denying 5 Defendant’s motion to dismiss and granting the motion to stay. Dkt. # 37. Plaintiff 6 objects to the Report claiming it failed to consider the “discretionary nature” of the first- 7 to-file rule by not “weighing the equitable factors” such as evidence that the Illinois court 8 lacks jurisdiction over Plaintiff and that the Illinois action is anticipatory. Dkt. # 38. 9 II. DISCUSSION 10 The first-to-file rule is a “generally recognized doctrine of federal comity which 11 permits a district court to decline jurisdiction over an action when a complaint involving 12 the same parties and issues has already been filed in another district.” In applying the 13 first-to-file rule, courts consider three factors: (1) the chronology of the two actions, (2) 14 the similarity of the parties, and (3) the similarity of the issues. Alltrade, Inc. v. Uniwield 15 Prods., Inc., 946 F.2d 622, 625-26 (9th Cir. 1991). If the rule applies, the court in the 16 second-filed action may transfer, dismiss, or stay the proceeding to allow the court in the 17 first suit the opportunity to determine whether to keep the dispute. Alltrade, 946 F.2d at 18 622. The first-to-file rule is discretionary and need not be “mechanically applied.” 19 Pacesetter Sys., Inc. v. Medtronic, Inc., 678 F.2d 93, 95 (9th Cir. 1982). 20 Here, the parties do not dispute that the Illinois action is the “first-filed action.” 21 There are, however, exceptions to the rule, including where the first-filed suit constitutes 22 an improper anticipatory filing. Alltrade, at 628. “An action is anticipatory when the 23 plaintiff files it after receiving ‘specific, concrete indications that a suit by the defendant 24 is imminent.’” Topics Entm’t Inc. v. Rosetta Stone Ltd., No. C09-1408RSL, 2010 WL 25 55900, at *3 (W.D. Wash. Jan. 4, 2010) (internal citations omitted). Plaintiff argues that 26 the Illinois action is anticipatory and, when considered in conjunction with the underlying 1 jurisdictional issues, weighs in favor of denying the stay. Dkt. # 38 at 4-7 (discussing 2 Jefferson Ward Stores, Inc. v. Doody Co., 560 F. Supp. 35 (E.D. Pa. 1983), FirsTier 3 Bank, N.A. v. G-2 Farms, No. 4:CV95-3118, 1996 WL 539217 (D. Neb. Mar. 11, 1996), 4 and NanoLogix, Inc. v. Novak, No. 4:13-CV-1000, 2013 WL 6443376 (N.D. Ohio Dec. 9, 5 2013)). 6 The Court disagrees. There are currently two motions, implicating similar issues, 7 pending before two different courts. Plaintiff’s motion to dismiss the Illinois action was 8 filed first and is currently pending before that court. Dkt. # 27-1, Ex. 1. Under the 9 circumstances, the Illinois court is best positioned to determine if it has personal 10 jurisdiction over Plaintiff and, if it does, whether that first-filed declaratory action should 11 be dismissed in favor of this action. British Telecommunications plc v. McDonnell 12 Douglas Corp., No. C-93-0677 MHP, 1993 WL 149860, at *4 (N.D. Cal. May 3, 1993). 13 And while Plaintiff suggests that the Court need not “determine issues of personal 14 jurisdiction or anticipatory suit” to deny the motion (Dkt. # 38 at 5), the Court does not 15 believe it is an efficient use of judicial or party resources to permit this action to go 16 forward while these issues remain unresolved. Therefore, the Court will exercise its 17 discretion and stay this case pending the Illinois district court’s decision on Plaintiff’s 18 motion to dismiss or transfer and Defendant’s motion for limited discovery. 19 III. CONCLUSION 20 For the above reasons the Court ADOPTS the Report and Recommendation (Dkt. 21 # 37) and DENIES Plaintiff’s Objections (Dkt. # 38). Defendant’s motion to dismiss or 22 transfer is DENIED and Defendant’s alternative motion to stay this action is 23 GRANTED. Dkt. # 26. This action is STAYED until the United States District Court 24 for the Northern District of Illinois determines Plaintiff’s motion to dismiss or transfer 25 (for lack of jurisdiction and disfavored anticipatory suit) and Defendant’s motion for 26 limited jurisdictional discovery, which are presently pending in the Illinois Action. 1 Should the Illinois District Court determine that jurisdiction over Plaintiff is proper and 2 that the Illinois Action was not anticipatory, the Court will entertain a motion to revisit 3 whether dismissal or transfer of this action is warranted under the first-to-file rule. The 4 Clerk is directed to send copies of this Order to the parties and Judge Tsuchida. 5 6 DATED this 22nd day of April, 2020. A 7

8 The Honorable Richard A. Jones 9 United States District Judge 10

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