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SUPERMICRO COMPUTER, INC. v. DIGITECHNIC

January 30, 2001

SUPERMICRO COMPUTER INC., A CALIFORNIA CORPORATION, PLAINTIFF,
v.
DIGITECHNIC, S.A. A FRENCH CORPORATION, AND CARRI SYSTEMS, DBA DIGITECHNIC, A FRENCH CORPORATION, DEFENDANT.



The opinion of the court was delivered by: Legge, U.S. District Judge.

ORDER ON PLAINTIFF'S MOTION FOR PARTIAL SUMMARY ADJUDICATION; AND DEFENDANT'S MOTION TO DISMISS OR STAY

I.

Plaintiff is a California corporation that manufactures computer parts. Defendant is a French corporation that assembles and sells computer network systems. Defendant made fourteen purchases of computer parts from plaintiff between May 1996 and December 1997. In each of the transactions, defendant placed an order with plaintiff via phone or e-mail, and plaintiff shipped the goods to France. Plaintiff included a sales invoice and a user's manual with each shipment. The sales invoice and user's manual contained certain terms and conditions, including a limited warranty and limitations of liability.

Beginning in 1998, defendant allegedly experienced electrical problems with some of the parts that it had purchased from plaintiff; specifically, some of the parts caught fire. Defendant demanded $200,400 in replacement costs, and consequential damages of approximately $6,000,000. Plaintiff rejected the demand and claimed that, based on the limited warranty contained in the sales invoices and the consequential damages waiver found in the user's manual, defendant's sole remedy was the repair and replacement of any malfunctioning parts.

In December 1998 defendant filed an action in France in the Tribunal de Commerce de Bobginy (the "French Commercial Court.") The French case has been ongoing since that time and plaintiff has been participating in it. The parties disagree on the posture and scope of the French case. Plaintiff contends that it is an "interim relief procedure" that has no judicial effect. Defendant argues that it is a legal proceeding wherein the parties can be afforded complete relief.

Plaintiff filed this action on January 20, 2000, more than a year after the French action began. The complaint seeks a declaration that: (1) the computer parts were not defective; (2) the parts failed as a result of defendant's misuse, and (3) even if plaintiff were at fault, defendant's sole remedy is for repair or replacement. Jurisdiction is based on the Declaratory Judgment Act; 28 U.S.C. § 2201, et seq.

Plaintiff now moves for partial summary adjudication, solely on the issue of what remedy is available to defendant. Defendant opposes the motion for partial summary adjudication, and moves for a stay or dismissal based on the first-filed French case.

II.

Defendant bases its motion to stay or dismiss on the principle of "International Abstention." The international abstention doctrine allows a court to stay or dismiss an action where parallel proceedings are pending in the court of a foreign nation. See Schwarzer et al., Federal Civil Procedure Before Trial, ¶ 2:1326.4 (2000). International abstention is rooted in concerns of international comity, judicial efficiency and fairness to litigants. Id. In short, the doctrine allows a court to abstain from hearing an action if there is a first-filed foreign proceeding elsewhere. Id. The doctrine has been expressly adopted by the Eleventh and Seventh Circuits. See Turner Entertainment Co. v. Degeto Film GmbH, 25 F.3d 1512, 1523 (11th Cir. 1994); Finova Capital Corp. v. Ryan Helicopters, U.S.A. Inc., 180 F.3d 896, 900-901 (7th Cir. 1999).

The Ninth Circuit has not ruled on international abstention. While the facts of this case appear to fit neatly with the doctrine as expressed by the Turner and Finova courts, it is unnecessary for this court to go that far. Instead, defendant's motion can be resolved by considering the discretionary nature of the jurisdiction of this court under the Declaratory Judgment Act.

A.

Under the Act, a district court may decline to exercise jurisdiction over a declaratory action, even though subject matter jurisdiction is otherwise proper. See 28 U.S.C. § 2201 (a); Brillhart v. Excess Ins. Co. of America, 316 U.S. 491, 494, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942). In enacting the Declaratory Judgment Act, "Congress . . . created an opportunity, rather than a duty, [for a district court] to grant a new form of relief to qualifying litigants." See Wilton v. Seven Falls Co., 515 U.S. 277, 288, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995).

A district court's discretion to decline jurisdiction under the Act is broader than any abstention doctrine recognized by the U.S. Supreme Court. In Wilton, the Court explained that "[d]istinct features of the Declaratory Judgment Act, we believe, justify a standard vesting district courts with greater discretion in declaratory judgment actions than that permitted under the `exceptional circumstances' test of ...


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