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Fyfe Co., LLC v. Structural Group, Inc.

United States District Court, S.D. California

April 30, 2014

FYFE CO., LLC, Plaintiff,
v.
STRUCTURAL GROUP, INC., Defendant.

ORDER GRANTING DEFENDANT STRUCTURAL GROUP, INC.'S MOTION TO DISMISS (ECF No. 12)

GONZALO P. CURIEL, District Judge.

INTRODUCTION

Presently before the Court is defendant Structural Group, Inc.'s ("Structural") Motion to Dismiss, Transfer, or Stay plaintiff Fyfe Co., LLC's ("Fyfe") Complaint pursuant to the first-to-file rule and 28 U.S.C. § 1404. Fyfe opposed the motion, (ECF No. 15) and Structural replied, (ECF No. 16). Pursuant to Civil Local Rule 7.1(d)(1), the Court finds the matter suitable for adjudication without oral argument. Having considered the parties' submissions and the applicable law, the Court will GRANT Structural request to dismiss under the first-to-file rule.

BACKGROUND

Fyfe manufactures construction strengthening system products, particularly fiber reinforced polymer ("FRP") systems, used for the repair and restoration of pipelines, masonry, concrete, and steel and wooden structures. (ECF No. 1 at 2.) Structural provides specialty construction, repair and maintenance services internationally and throughout the United States. (ECF No. 1 at 1-2.) On November 15, 2011 Fyfe and Structural entered into a Private Label Agreement ("PLA") whereby Fyfe would supply Structural with Fyfe's Tyfo® products so that Structural could re-brand, market, and sell them under its "V-wrap" label. (ECF No. 16-2, Ex. A at 1.) The PLA also allowed Structural to use Fyfe's products for construction and restoration projects. (ECF No. 16-2, Ex. A at 1.) Because Fyfe's Tyfo® products are patented and trademarked, Structural is not permitted to re-brand and sell Tyfo® products without the rights bestowed upon it by the PLA. (ECF No. 12-2, Ex. A at 13; ECF No. 16-2, Ex. A at 1.)

A. Maryland Action I

On January 16, 2013, Fyfe and two related corporate entities sued Structural and four of Fyfe's previous employees whom Structural had hired ("Individual Defendants") in the U.S. District Court for the District of Maryland.[1] There, Fyfe alleges Structural and the Individual Defendants illegally conspired to injure Fyfe's business by: (1) violating contractual duties owed to it; (2) taking, transferring, accepting and using Fyfe's confidential business information and trade secrets; and (3) improperly competing with Fyfe ("Maryland Action I"). (ECF No. 12-3, Ex. A at 2.) Fyfe also alleges Structural breached the following provision of the PLA:

STRUCTURAL agrees to exclusively promote, purchase, install the FYFE tyfo® FRP systems including all system compatible material only as defined by the terms of this agreement and further agrees not to compete with FYFE or purchase from other vendors without prior written authorization from FYFE during the terms of this agreement except where FYFE Products are specifically excluded or not approved.

(ECF No. 16-2, Ex. A at 4.) Per the PLA's terms this provision extends through October 1, 2016. (ECF No. 16-2, Ex. A at 1.) Fyfe claims that, by hiring the Individual Defendants and using Fyfe's products to bid on projects, Structural breached the PLA's non-compete provision (Structural "agrees not to compete with FYFE"). (ECF No. 12-2, Ex. A at 34.)

B. Maryland Action II

On March 22, 2013, after Fyfe filed Maryland Action I, Fyfe gave Structural notice that it intended to terminate a license to perform work on certain water transmission projects, in which Structural was using Fyfe's patented products ("License"). (ECF No. 12-4 at 2.) Three months later Fyfe purported to terminate the License, effective October 1, 2013. (ECF No. 12-4 at 2.) Consequently, on December 20, 2013 Structural notified Fyfe of its position that it was no longer obligated to exclusively purchase Fyfe's products pursuant to the PLA after the October 1, 2013 termination date of the License. (ECF No. 1 at 3.) Fyfe responded that, despite its termination of the License, Structural was still under a continuing obligation under the PLA to exclusively purchase Fyfe's products through the PLA's 2016 expiration date. (ECF No. 1 at 3; ECF No. 12-4, Ex. E.) Fyfe further warned that Structural's "failure to purchase all of its FRP needs from Fyfe will constitute a breach of the PLA" because Structural "agree[d] to exclusively promote, purchase, [and] install the FYFE tyfo® FRP systems... during the terms of the agreement...." (ECF No. 12-4, Ex. E.)

Due to the dispute over the PLA's exclusivity provision, on January 10, 2014, at 4:24 p.m. EST, Structural filed a complaint against Fyfe in the District Court of Maryland for declaratory judgment and breach of contract ("Maryland Action II"). (ECF No. 12-1, Ex. B.) Structural designated the case as a "related case" to Maryland Action I. (ECF No. 12-3, Ex. C at 62.) Maryland Action II was thereafter assigned to the same district judge as in Maryland Action I. (ECF No. 12-1 at 10.) In Maryland Action II, Structural seeks declaratory relief as to its rights and obligations under the PLA's exclusivity provision. (ECF No. 12-1 at 10.)

C. California Action

Fyfe commenced the instant action (the "California Action") on January 10, 2014, at 6:42 p.m. EST-approximately two and a half hours after Structural filed Maryland Action II. (ECF 12-1, Ex. F.) In the California Action, Fyfe alleges breach of contract and seeks declaratory relief and specific performance of the PLA's exclusivity provision. In essence, Fyfe alleges that, under the PLA's terms, Structural is ...


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