United States District Court, E.D. California
JEFFREY P. FORTIS, an individual, Plaintiff,
WARRIOR TRADING, INC., a Delaware Corporation; ROSS CAMERON, an individual; and DOES 1 through 50, inclusive, Defendants.
MEMORANDUM AND ORDER
MORRISON C. ENGLAND, JR.UNITED STATES DISTRICT JUDGE
of this action, Jeffrey P. Fortis (“Plaintiff”)
seeks to recover from Defendants Warrior Trading, Inc.
(“Warrior”) and Ross Cameron
(“Cameron”) for violations of California's
wage and hours laws, wrongful termination, and defamation.
Presently before the Court is Defendants' Motion for
Judgment on the Pleadings, or in the Alternative, to Stay
(“Motion”) (ECF No. 5) seeking to dismiss or stay
this action on the basis that it is substantially similar to
Warrior Trading, Inc. v. Jeffery P. Fortis, No.
2019-0140 (“Delaware Action”), filed by Warrior
in Delaware. For the following reasons, Defendants'
Motion is GRANTED to the extent this matter is stayed pending
disposition of the Delaware Action.
March 2016 and October 2018, Plaintiff was employed with
Warrior as its Chief Operating Officer. Pl.'s Compl., ECF
1-1 at ¶¶ 11, 16. Additionally, Plaintiff was a
shareholder and also served as a stock trading mentor for
Warrior. Defs.' MPA ISO MJOP, ECF 5-1 at 1:7-10.
Plaintiff and Warrior entered into a Shareholder Agreement
wherein the parties agreed that if Plaintiff were terminated
“for cause, ” the remaining shareholders of
Warrior, which included its founder and Chief Executive
Officer, Defendant Cameron, would have the option of buying
back all shares held by the Plaintiff. Pl.'s Compl.
at ¶ 12; Shareholder Agreement, ECF No. 5-5 at 19.
Additionally, the Shareholder Agreement provided, in
pertinent part, that “[a]ny controversy or claim
arising out of or relating to this Agreement . . . shall be
settled by binding arbitration to be held in Delaware.”
Defs.' MPA ISO MJOP at 4:7-9; Shareholder Agreement at
after September 2018, Cameron raised various concerns
regarding Plaintiff's performance, and on October 12,
2018, Plaintiff was terminated. Pl.'s Compl. at
¶¶ 14, 16. Plaintiff claims that Cameron wanted to
oust him from the company after Plaintiff complained of
certain improprieties concerning access to Warrior's bank
accounts and other confidential systems by unauthorized
employees. Stating that Plaintiff's termination was
nonetheless “for cause, ” Warrior sought to
enforce the process to repurchase Plaintiff's shares as
determined in the Shareholder Agreement. Defs.' MPA ISO
MJOP at 6:4-5. On October 16, 2018, Plaintiff received a
Notice of Buy Back regarding his shares. Id. at
6:6-8. By correspondence dated November 15, 2018, Plaintiff
disputed the “for cause” designation that Warrior
claimed permitted it to buy back the shares in accordance
with the Shareholder Agreement and refused to sell back the
shares. Id. at 6:13-15.
this refusal, Warrior demanded arbitration pursuant to the
Shareholder Agreement. Demand for Arbitration, ECF No. 5-6.
Plaintiff again refused, and Warrior initiated the Delaware
Action to compel arbitration on February 21, 2019. Delaware
Action, ECF No. 5-10. Subsequently, on March 7, 2019,
Plaintiff filed Jeffery P. Fortis v. Warrior Trading,
Inc., No. CV-19-472 (“California Action”) in
Yolo County Superior Court asserting causes of action for
retaliation and wrongful discharge in violation of state law,
wrongful termination in violation of public policy, and
defamation. Pl.'s Compl. at 1.
subsequently removed the California Action to this Court on
diversity of citizenship grounds pursuant to 28 U.S.C. §
1332 and now move for judgment on the pleadings under the
so-called “first-to-file” rule. Alternatively,
they seek to stay this action pending disposition of the
may stay proceedings pending before it where interests of
judicial economy make a stay appropriate. Landis v. North
Am. Co., 299 U.S. 248, 254 (1936). This power stems from
the court's inherent ability to control the disposition
of cases on its docket. Fernandez v. Obesity Research
Inst., LLC., 2013 WL 4587005 at *6 (E.D. Cal. Aug. 28,
2013). A stay can be indicated where resolution of another
case “may have a substantial impact” on the
pending matter. Doyle v. OneWest Bank, N.A., 2015 WL
4605776 at *3 (C.D. Cal. May 21, 2015). In determining the
propriety of such a stay, courts look to issues of judicial
economy and the prejudice to either party that may result if
the stay is granted or denied. CMAX, Inc. v. Hall,
300 F.2d 265, 268 (9th Cir. 1962). Whether to issue a stay in
this regard is a decision necessarily relegated to the
court's discretion. Nken v. Holder, 556 U.S.
418, 433-34 (2009).
contend that judgment on the pleadings, or alternatively a
stay of these proceedings, is appropriate because “the
first-filed Delaware Action involves the substantially same
parties and issues” as the California Action.
Defs.' MPA ISO MJOP at 12:3-5. The federal comity
doctrine allows a district court to “decline
jurisdiction over an action when a complaint involving the
same parties and issues has already been filed in another
district.” Pacesetter Sys., Inc. v. Medtronic,
Inc., 678 F.2d 93, 94-95 (9th Cir. 1982). When two cases
are substantially identical and 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.”
Id. at 95. In evaluating whether to apply this
so-called first-to-file rule, “a court analyzes three
factors: chronology of the lawsuits, similarity of the
parties, and similarity of the issues.” Kohn Law
Grp., Inc. v. Auto Parts Mfg. Miss., Inc., 787 F.3d
1237, 1240 (9th Cir. 2015).
appears to dispute the “similarity of issues”
factor above, although this is not perfectly clear since
Plaintiff fails to specifically address Defendants'
first-to-file rule analysis in its Opposition. As to the
chronology of the lawsuits, there can be no dispute that the
Delaware Action was filed first. The Delaware Action was
filed February 21, 2019, whereas the California Action was
filed on March 7, 2019. Delaware Action at 1; Pl.'s
Compl. at 1. Additionally, as to the similarity of parties,
both Plaintiff and Warrior are parties to both suits.
However, in the California Action, Plaintiff also sues
Defendant Cameron. Id. Strict identity between the
parties and the issues of the two actions in question is not
required, but rather only “substantial
similarity.” Negrete v. Petsmart,
Inc., 2013 U.S. Dist. LEXIS 129237 at *2-*3 (E.D.
Cal. Sept. 10, 2013). Because the disputes in both actions
are primarily between Fortis as Plaintiff and Warrior, or an
agent of Warrior, as Defendant, the parties are substantially
the similarity of issues, Plaintiff contends that the claims
brought in the California Action “have nothing to do
with the Shareholder Agreement” and further alleges he
is “not invoking any provision within the Shareholder
Agreement.” Pl.'s Opp., ECF 11 at 4:1-4. This
argument is not well taken. Plaintiff specifically references
the Shareholder Agreement in the “Facts Common to All
Causes of Action” portion of the Complaint. Pl.'s
Compl. at 3:7-8. Plaintiff further contends that Defendant
Cameron manufactured performance deficiencies and made
defamatory accusations against Plaintiff, both in retaliation
for raising concerns during employment and to establish
“cause” for termination, as defined in the
Shareholder Agreement, all in order to force Plaintiff to
relinquish his shares at a reduced price. Id. at
¶¶ 14, 32. Alternatively, Defendants contend
Plaintiff was terminated “for cause” due to a
myriad of performance issues. Defs.' MPA ISO MJOP at
5:12-22. Plaintiff responds by alleging that Defendants'
reasons for termination were entirely pretextual. Pl.'s
Compl. at ¶¶ 13-17. Thus, the issues share
substantial similarity in revolving around the determination
of the reason for Plaintiff's termination. As such, each
factor is met, and the so-called first-to-file rule applies.
in similar proceedings before two different courts will
unnecessarily burden the courts and may subject the parties
to inconsistent rulings. Particularly given the savings of
time and money that will result by refraining from litigation
in California that may prove unnecessary depending on the