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IT Convergence v. Moonracer, Inc.

United States District Court, Ninth Circuit

December 12, 2013

IT CONVERGENCE, Plaintiff,
v.
MOONRACER, INC., d/b/a SYNAPTIS, Defendant.

ORDER DENYING MOTION FOR JUDGMENT ON THE PLEADINGS AND TRANSFERRING CASE Re: Dkt. No. 9

WILLIAM H. ORRICK, District Judge.

INTRODUCTION

Defendant Moonracer, Inc., d/b/a/Synaptis ("Moonracer"), moves for judgment on the pleadings or for a stay because of a similar action pending in North Carolina. In its briefs, Moonracer has also suggested that the Court may dismiss the case, transfer it to North Carolina, or consolidate it with the North Carolina action. The Court construes these suggestions as motions. For the reasons below, the motion for judgment on the pleadings is DENIED and the motion for transfer is GRANTED.

BACKGROUND

Jordan Collard, who is not a party in this suit, signed an employment contract with Moonracer, a corporation located in North Carolina, on September 28, 2009. Compl. (Dkt. No. 1) ¶¶ 2, 14. The employment contract contained a non-compete covenant. Compl. ¶ 16. Moonracer terminated Collard's employment in April 2013. Compl. ¶ 13. In June 2013, plaintiff IT Convergence, a corporation located in California, hired Collard. Compl. ¶¶ 1, 12. Collard is based in Incline Village, Nevada, but his responsibilities for IT Convergence cover Northern California. Compl. ¶ 12.

On May 23, 2013, Moonracer filed suit against Collard in the Superior Court of Wake County, North Carolina. RJN[1] (Dkt. No. 10) Ex. A. The suit alleges breach of the confidentiality and non-compete provisions in the employment agreement. The complaint brings two causes of action, breach of contract and preliminary or injunctive relief, and is accompanied by a motion for a temporary restraining order and preliminary injunction to enforce the agreement. On May 28, 2013, the state court denied Moonracer's motion for a temporary restraining order. RJN Ex. A (Dkt. No. 1-1 at 58). On June 24, 2013, Collard removed the suit to the United States District Court for the Eastern District of North Carolina. RJN Ex. B.

On August 23, 2013, IT Convergence filed suit against Moonracer in the Superior Court of California, County of San Mateo. IT Convergence alleges that Moonracer is interfering with IT Convergence's employment of Collard and that the non-compete covenant between Collard and Moonracer is illegal under California law. On September 26, 2013, Moonracer removed the suit to this Court based on diversity jurisdiction. Dkt. No. 1. The Complaint brings the following causes of action: (1) intentional interference with contract; (2) violation of California's Unfair Competition Law ("UCL"), CAL. BUS. & PROF. CODE § 17200; and (3) declaratory relief and permanent injunction. Dkt. No. 1-1. Moonracer filed this motion on October 15, 2013.

LEGAL STANDARD

I. JUDGMENT ON THE PLEADINGS

The standard for deciding a motion for judgment on the pleadings under "Rule 12(c) is functionally identical' to [a motion under] Rule 12(b)(6)." Cafasso, United States ex rel. v. Gen. Dynamics C4 Sys., Inc., 637 F.3d 1047, 1055 n.4 (9th Cir. 2011). When deciding such a motion, "the allegations of the non-moving party must be accepted as true, while the allegations of the moving party which have been denied are assumed to be false." Hal Roach Studios, Inc. v. Richard Feiner & Co., Inc., 896 F.2d 1542, 1550 (9th Cir. 1989). "Judgment on the pleadings should be granted when, accepting all factual allegations in the complaint as true, there is no issue of material fact in dispute and the moving party is entitled to judgment as a matter of law." Chavez v. United States, 683 F.3d 1102, 1108 (9th Cir. 2012) (quotation marks and brackets omitted).

II. FIRST-TO-FILE RULE

"[W]hen two identical actions are filed in courts of concurrent jurisdiction, the court which first acquired jurisdiction should try the lawsuit and no purpose would be served by proceeding with a second action." Pacesetter Sys., Inc. v. Medtronic, Inc., 678 F.2d 93, 95 (9th Cir. 1982); see also Barnes & Noble, Inc. v. LSI Corp., 823 F.Supp.2d 980, 986 (N.D. Cal. 2011) ("When two actions involving nearly identical parties and closely related [ ] questions are filed in separate districts... the general rule is that the case first filed takes priority, and the subsequently filed suit should be dismissed or transferred or stayed."). This is known as the "first to file" rule. Under the 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." Cedars-Sinai Med. Ctr. v. Shalala, 125 F.3d 765, 769 (9th Cir. 1997).

"The most basic aspect of the first-to-file rule is that it is discretionary...." Alltrade, Inc. v. Uniweld Prods., Inc., 946 F.2d 622, 628 (9th Cir. 1991). It "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., 678 F.2d at 95. "Courts analyze three factors in determining whether to apply the first-to-file rule: (1) chronology of the actions; (2) similarity of the parties; and (3) similarity ...


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