United States District Court, W.D. Arkansas, Fayetteville Division
DR. WAYNE H. WELSHER, Individually and on behalf of all others similarly situated, Plaintiff,
FRITO-LAY NORTH AMERICA, INC., Defendant.
OPINION AND ORDER
P.K. HOLMES, III, Chief District Judge.
Currently before the Court is Defendant Frito-Lay North America, Inc.'s ("Frito-Lay") motion to transfer or stay (Doc. 12) and brief in support (Doc. 13). Plaintiff Wayne Welsher has filed a response (Doc. 15). Frito-Lay filed a reply (Doc. 16) to Welsher's response without leave of the Court. The Court has considered that reply, but the parties are cautioned that under Local Rule 7.2(b) of this district, only a reply to a response to a motion for summary judgment may be filed as a matter of course. Welsher has also filed a notice of supplemental authority (Doc. 24) to which Frito-Lay has responded (Doc. 25). The Court has considered these filings. For the reasons stated herein, Frito-Lay's motion will be DENIED.
This is a consumer-protection case in which Welsher seeks to bring a class action against Frito-Lay. The basis for the action is Welsher's allegation that Frito-Lay sold products-various chips and snack foods-that were improperly labeled per state and federal regulations. Welsher alleges that because Frito-Lay was selling misbranded products to consumers in Arkansas, Frito-Lay violated Arkansas's deceptive trade practices laws, was unjustly enriched, breached implied and express warranties, was negligent, and violated Arkansas's food labeling laws. Welsher submits that he and the putative class of Arkansas purchasers of misbranded Frito-Lay products are entitled to damages and an injunction against Frito-Lay.
A similar lawsuit has been filed against Frito-Lay in the Northern District of California, Wilson v. Frito-Lay N. Am., Inc., 3:12-cv-01586-SC (N.D. Cal.) (hereinafter " Wilson" ). The plaintiff in Wilson also seeks to certify a class action. The complaint in that case has been dismissed in part, and the putative class there is limited to California purchasers. Wilson, Doc. 73, pp. 24-25 (dismissing claims including those based on misbranding and limiting plaintiff's potential class claims to California purchasers). Wilson was filed on March 29, 2012, with the second amended complaint filed on May 1, 2013, and the instant case was filed by Welsher on May 22, 2014.
Frito-Lay now moves to transfer this case to the Northern District of California, pursuant to the first-filed rule. Though it is less clearly asserted, the Court also construes Frito-Lay's motion as requesting change of venue under 28 U.S.C. § 1404(a). Finally, Frito-Lay moves the Court to stay these proceedings should the case not be transferred.
II. Transfer Analysis
A. First-Filed Rule
The "first to file" or "first-filed" rule is a facet of federal comity doctrine intended to "promote efficient use of judicial resources." Orthmann v. Apple River Campground, Inc., 765 F.2d 119, 121 (8th Cir. 1985). The first-filed rule may be used to transfer a case from one federal district court to another when parallel litigation is proceeding concurrently before them. Midwest Motor Express, Inc. v. Cent. States Se. and Sw. Areas Pension Fund, 70 F.3d 1014, 1017 (8th Cir. 1995). Parallel litigation is litigation involving the same parties and embracing the same issues. Orthmann, 765 F.2d at 121. If both courts have personal jurisdiction and subject matter jurisdiction over the parties and claims, the first-filed rule indicates that "the court in which jurisdiction first attached should proceed to adjudicate the controversy." Nw. Airlines, Inc. v. Am. Airlines, Inc., 989 F.2d 1002, 1004 (8th Cir. 1993). This rule is not applied in a "rigid, mechanical, or inflexible" fashion, but "in a manner best serving the interests of justice." Id. at 1005 (citing Orthmann, 765 F.2d at 121). If compelling circumstances exist, the court which obtained jurisdiction later may decide the controversy. Id.
In the instant case, neither the parties nor the issues are substantially the same as those in Wilson, so the parallelism generally required before comity doctrines come into play does not exist. Accord Williams v. Sec. Nat'l Bank, 314 F.Supp.2d 886, 898 (N.D. Iowa 2004) (explaining that parallel lawsuits are a threshold requirement for application of the first-filed rule just as for Colorado River abstention). While Frito-Lay is also the defendant in Wilson, Welsher is neither a party to that class action nor a putative class member. (Doc. 13, p. 11). There is no apparent overlap of identity, whether strict or substantial, such that a plaintiff's claims in one lawsuit would be precluded by a decision in the other. Although adjudicating Welsher's claims will likely involve interpretation of Food and Drug Administration labeling regulations, the claims themselves arise under Arkansas law, and Welsher's proposed class is limited to Arkansas purchasers of allegedly-misbranded products. (Doc. 1, pp. 18-20, 23-29). Rulings in Wilson will doubtless be informative and persuasive on the issue of interpreting the FDA regulations. However, Frito-Lay has not shown that those rulings will resolve the issue of whether selling the products resulted in a violation of Arkansas law. For these reasons, the Court does not find that the parties or issues in these cases are substantially similar.
The authorities cited by Frito-Lay are distinguishable. In many of the cases, there was at least some overlap of parties on each side of the lawsuit. See, e.g., HRB Tax Group, Inc. v. Nat'l Union Fire Ins. Co. of Pittsburgh, Pa., No. 4:12-CV-00501, 2012 WL 4363723, *2 (W.D. Mo. Sept. 21, 2012) ("In the instant case, the parties in the two actions in question are nearly, but not quite, identical. H & R Block, Inc. is currently a party in the New York lawsuit but not a party in this action. All other parties in the New York lawsuit are parties in this action."). In those cases cited where there was limited or no identity of parties on one side of a dispute, the courts tended to apply the first-filed doctrine only if there was a very substantial identity of issues, such that a decision in one case would essentially decide the other. See, e.g., Gen. Comm. of Adjustment GO-386 v. Burlington N. R.R., 895 F.Supp. 249, 252 (E.D. Mo. 1995) ("[T]he legal issue in dispute and the industry affected are identical in all of these cases. Furthermore, although the parties may differ in the cases, they are all carriers and unions or local committees in the railway industry with a significant stake in the resolution of this issue.... [T]he issue involved is one of national ramifications' that requires a single definitive ruling by a single court...."); see also Cadenasso v. Metro. Life Ins. Co., No. 13-CV-05491, 2014 WL 1510853, *1, *10 (N.D. Cal. Apr. 15, 2014) (applying first-to-file rule in class actions against identical defendants where there could be no overlap of identity on plaintiffs' side because each action raised identical federal law claims based on defendants' nation-wide behavior); and Achari v. Signal Int'l, LLC, No. 1:13CV222, 2013 WL 5705660, *1 (S.D.Miss. Oct. 18, 2013) (applying first-filed rule despite no plaintiff overlap on federal law claims for human trafficking scheme directed at Indian nationals).
In these cases, the courts found that the common issues were so substantial as to overcome the lack of identity of parties. Frito-Lay has not shown that such is the case here. While Frito-Lay's nationwide behavior may be identical, Welsher's claims are state law claims that differ from the claims in Wilson. Because Frito-Lay has not demonstrated that a decision in Wilson will all but resolve the dispute before this Court, the lack of any overlap of identity among plaintiffs in these cases counsels against applying the first-filed rule. Even if the common issue were more substantial than Frito-Lay has shown, when weighing the substantial nature of the common issue against the lack of identity of plaintiffs, on the balance the Court would not exercise its discretion to transfer under the first-filed rule. Accord Landis v. N. Am. Co., 299 U.S. 248, 255 (1936) ("Only in rare circumstances will a litigant in one cause be compelled to stand aside while a litigant in another settles the rule of law that will define the rights of both.").
Finally, even in cases where parallelism exists, "the first court in which jurisdiction attaches has priority to consider the case." Orthmann, 765 F.2d at 121. For the same reasons explained below in the Court's analysis of the motion for transfer under 28 U.S.C. § 1404, Frito-Lay has not demonstrated that personal jurisdiction over it first attached-or ever attached-in California for the purpose of resolving this dispute involving food product sales in Arkansas. Indeed, the Court is not sure that Frito-Lay could even make such a demonstration in light of its successful due process arguments before the Wilson court. See Wilson, Doc. 59, pp. 30-31 ("Courts have thus refused to apply California law to out-of-state purchases where a plaintiff fails to show that the defendant has a significant contact or significant aggregation of contacts to the claims asserted by each member of the plaintiff class, recognizing that the application of California law in such circumstances would be arbitrary and unfair." (internal quotations omitted)). The same reasoning ...