The opinion of the court was delivered by: Marilyn L. Huff, District Judge United States District Court
ORDER DENYING DEFENDANT'S MOTION TO DISMISS, STAY, OR TRANSFER SUIT BASED ON "FIRST TO FILE" RULE AND DENYING WITHOUT PREJUDICE DEFENDANT'S MOTION TO TRANSFER SUIT UNDER 28 U.S.C. 1404(a)
On September 12, 2006, Plaintiff Brighton Collectibles, Inc. ("Plaintiff") filed a complaint against Defendants Coldwater Creek, Inc. and Does 1-10, alleging copyright infringement, trade dress infringement, false designation of origin, common law unfair competition and statutory unfair competition arising from the manufacture and sale of handbags, wallets, and other accessories. (Doc. No. 1.) On October 4, 2006, Defendant Coldwater Creek, Inc. ("Defendant") filed a motion to dismiss, stay or transfer this action in light of a prior pending action in the District of Idaho. (Doc. No. 8.) On November 6, 2006, Plaintiff filed its opposition. (Doc. No. 12.) On November 13, 2006, Defendant filed a reply. (Doc. No. 15.) The Court held a telephonic hearing regarding the motion to dismiss, stay or transfer this action on November 20, 2006. Attorneys Peter Ross and Steven Winton represented Plaintiff at the hearing, and attorneys Alison Pivonka, Peter Brann and Stacy Stitham represented Defendant.
For the following reasons, the Court DENIES Defendant's motion to dismiss, stay, or transfer the suit based on the "first to file" rule, and DENIES WITHOUT PREJUDICE Defendant's motion to transfer the suit to the District of Idaho under 28 U.S.C. § 1404(a).
FACTUAL AND PROCEDURAL BACKGROUND
On August 23, 2006, Plaintiff sent Defendant a letter alleging that certain identified products sold by Defendant infringed Plaintiff's copyright and trade dress rights, demanding that Defendant cease and desist from marketing those goods, and demanding an accounting of all revenues Defendant had obtained from the sale of those goods. The letter stated that "if we do not hear from you by the close of business next Friday, August 18, 2006 that you will comply with our demands, we have been instructed to file suit against [Defendant] for copyright infringement, trade dress infringement, false designation of origin and unfair competition and to seek compensatory and punitive damages, injunctive relief and all other remedies afforded by law." (Defendant's Mem. P's & A's in Supp. of Mot., Exh. A, at 2.) On August 31, 2006, an attorney for Defendant called Plaintiff's attorney to ask for more time to respond, and the two agreed that Defendant would have until September 14, 2006 to respond to the August 23 letter. (Ford Decl. ¶¶ 5, 6; Ross Decl., Exh. 2.)
On September 7, 2006, Defendant filed a declaratory judgment action in the District of Idaho, Coldwater Creek Inc. v. Brighton Collectibles, Inc., Case No. CV-06-355 ("the Idaho suit"), seeking a declaration that Defendant has not infringed Plaintiff's copyrights or trade dress, has not engaged in unfair competition, and has not falsely designated the origin of their products. On September 12, 2006, Plaintiff filed the instant suit ("the California suit"). (Doc. No. 1.)
On September 14, 2006, Defendant's counsel sent counsel for Plaintiff a letter denying that Defendant had infringed Plaintiff's copyright or trade dress interests. (Ross Decl., Exh. 4.) The letter stated that "the threat of imminent litigation contained in your letter requires that [Defendant] respond proactively to protect its legitimate business interests. Accordingly, [Defendant] has initiated a lawsuit seeking declaratory relief in connection with the issues described in your letter. . . ." (Id.)
Plaintiff has filed a motion to dismiss or stay the Idaho suit, arguing that it is an anticipatory declaratory judgment action and therefore subject to an equitable exception to the first to file rule. Defendant's opposition to the motion was due on November 17, 2006, and Plaintiff's reply is due ten days later. (Plaintiff's Mem. P's & A's in Opp. of Mot. 2:8-12 & n.1.)
Under the "first to file" rule, when cases involving the same parties and issues have been filed in two different districts, the second district court has discretion to transfer, stay, or dismiss the second case in the interest of efficiency and judicial economy. See Cedars-Sinai Medical Center v. Shalala, 125 F.3d 765, 769 (9th Cir. 1997). As the Ninth Circuit has explained, "[t]he first-to-file rule was developed to "serve[ ] the purpose of promoting efficiency well and should not be disregarded lightly." Alltrade, Inc. v. Uniweld Products, Inc., 946 F.2d 622, 625 (9th Cir. 1991). "While no precise rule has evolved, the general principle is to avoid duplicative litigation, and to promote judicial efficiency." Barapind v. Reno, 225 F.3d 1100, 1109 (9th Cir. 2000) (internal quotations and citations omitted). The Alltrade court set forth three prerequisites for application of the first to file rule: (1) chronology of the two actions; (2) similarity of the parties; and (3) similarity of the issues. See Alltrade, 946 F.2d at 625.
However, the first to file rule "is not a rigid or inflexible rule to be mechanically applied, but rather is to be applied with a view to the dictates of sound judicial administration." Pacesetter Sys., Inc. v. Medtronic, Inc., 678 F.2d 93, 95 (9th Cir. 1982); see also Alltrade, 946 F.2d at 627-28. A court "can, in the exercise of [its] discretion, dispense with the first-filed principle for reasons of equity." See Alltrade, 946 F.2d at 628. "The circumstances under which an exception to the first-to-file rule typically will be made include bad faith, anticipatory suit, and forum shopping." Id. (internal citations omitted).
1. Applicability of the "First to File" Rule
The Alltrade Court set forth three prerequisites for application of the first to file rule: (1) chronology of the two actions; (2) similarity of the parties; and (3) similarity of the issues. See id. at 625. The parties agree that all three factors indicate that the first to file rule is applicable to this case. Defendant filed the Idaho suit on September 7, 2006, five days before Plaintiff filed the California suit. The parties in both suits are Brighton Collectibles, Inc. and Coldwater Creek, Inc.*fn1 ...