Academic journal article Defense Counsel Journal

Conning the IADC Newsletters

Academic journal article Defense Counsel Journal

Conning the IADC Newsletters

Article excerpt

Recognizing that a wide range of practical and helpful material appears in the newsletters prepared by committees of the International Association of Defense Counsel, this department highlights interesting topics covered in recent newsletters and presents excerpts from them.

Judicial Comity and Resolving Business Disputes

Writing in the February issue of the Business Litigation Committee newsletter, James T. Marnen of Knox McLaughlin Gornall & Sennett, Erie, Pennsylvania, discussed different ways courts sort out cases of "equal dignity":

The resolution of business disputes without resort to litigation is to the obvious benefit of the parties involved. While working toward that goal, however, counsel should not lose sight of the fact that if suit is first initiated by a party to that dispute other than their client, the consequences can be significantly adverse.

"Home field" advantages

Modern business transactions frequently involve parties whose business locations are remote from one another. Liberal state venue rules often allow litigation to be commenced in a county distant from the defendant's "home," and liberal long-arm statutes can result in litigation in another state or country. The result can be not only expense and inconvenience, but also unfavorable precedent and a "home field" advantage to the other party.

Regardless of the types of jurisdictions involved, if the action is in rem, the court first assuming jurisdiction over the property in dispute may exercise that jurisdiction to the exclusion of other courts. Colorado River Water Conservation District v. United States, 424 U.S. 800, 818 (1976). However if the action is in personam and is first filed in a foreign country, that court and the American court in which a second action is filed involving the same cause of action may proceed with the litigation until judgment is obtained in one of them, which may be set up as res judicata in the other. The same is true of concurrent in personam litigation in a U.S. federal court and a state court. Princess Lida v. Thompson, 305 U.S. 456, 466 (1939); Compagnie des Bauxites de Guinea v. Insurance Co. of North America, 651 F.2d 877, 887 (3d Cir. 1981).

But where two actions are pending in courts of equal dignity within the judicial system of a single sovereignty, such as two federal district courts, or two courts of the same state, the general rule is that the court first having the case before it is to decide it. Smith v. Mclver, 22 U.S. (9 Wheat.) 532, 535 (1824).

Precedence of suit has been defined in terms of the time of filing, not the time of service of process. Pacesetter Systems Inc. v. Medtronic Inc., 678 F.2d 93 (9th Cir. 1982); Hospah Coal Co. v. Chaco Energy Co., 673 F.2d 1161 (10th Cir. 1982); Peregrin Corp. v. Peregrine Industries Inc., 769 F.Supp. 169 (E.D. Pa. 1991); American Modern Home Insurance v. Insured Accounts Co. Inc., 704 F.Supp. 128 (S.D. Ohio 1988).

An exercise of discretion

The federal courts have considered whether the general rule should be applied in similar fashion, and they have viewed the issue as one for an exercise of discretion in light of a number of factors. It has been held that while the general rule favors the forum of the first-filed action, exceptions are not rare, and are made when "justice or expediency" requires. Factors to be considered are (1) the convenience and availability of witnesses, (2) the absence of jurisdiction over all necessary or desirable parties, (3) the possibility of consolidation with related litigation, (4) considerations relating to the real party in interest, (5) whether a compulsory counterclaim should have been asserted in the first action, and (6) whether forum shopping was the only motive for that action. Genentech Inc. v. Eli Lilly & Co., 998 F.2d 931, 937-38 (Fed. Cir. 1993).

Columbia Plaza Corp. v. Security National Bank, 525 F.2d 620, 627-28 (D. …

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