McCormick counts are reinstated, we conclude that the suits are parallel.
Once the court determines that the state and federal actions are parallel, the court must then decide whether to defer to the concurrent jurisdiction of the state court. There are a number of factors that the court must consider when making the decision to refrain from exercising jurisdiction over an action. These factors include:
1) whether the state has assumed jurisdiction over property; 2) the inconvenience of the federal forum; 3) the desirability to avoiding piecemeal litigation; 4) the order in which jurisdiction was obtained by the concurrent forums; 5) the source of governing law, state or federal; 6) the adequacy of state court action to protect the federal plaintiff's rights; 7) the relative progress of state and federal proceedings; 8) the presence or absence of concurrent jurisdiction; 9) the availability of removal; 10) the vexatious or contrived nature of the federal claim.
Lewis, No. 90-0291, slip op. (N.D. Ill. July 2, 1991).
No single factor, however, is determinative. See Lumen, 780 F.2d at 694 (citing Colorado River, 424 U.S. at 818-19). As the Supreme Court warned, an analysis of the relevant factors "does not rest on a mechanical checklist, but on a careful balancing of the important factors as they apply to a given case, with the balance heavily weighed in favor of jurisdiction." Moses H. Cone Memorial Hospital v. Mercury Constr. Corp., 460 U.S. 1, 74 L. Ed. 2d 765, 103 S. Ct. 927 (1983). Thus, we must balance these factors to determine whether "exceptional circumstances" exist in this case which would justify abstention under Colorado River.
The Colorado River doctrine was created to "promote wise judicial administration giving regard to conservation of judicial resources and comprehensive disposition." La Duke, 879 F.2d at 1558. The state court litigation has been pending since 1988 and has consumed hundreds of hours and thousands of pages of work. The state complaint has been dismissed by the trial court. The complaint was partially reinstated on appeal and the appellate court's decision is currently pending review before the Illinois Supreme Court.
Both the state and federal complaints are based on the same facts. The central issue in both cases is whether the documents submitted by the defendants to the IDOT and other state and federal agencies contained false information and fraudulent misrepresentations concerning the defendants' MBE and WBE status. The major difference between the two complaints it that the state complaint is premised on common law fraud, breach of contract and state statutory fraud whereas the federal complaint is based solely on violations of the FCA. In order to succeed on the merits of the FCA action, however, Illinois must prove fraud and breach of contract.
"Piecemeal litigation occurs when different tribunals consider the same issue, thereby duplicating efforts and possibly reaching different results." La Duke, 879 F.2d at 1560 (citing Day, 862 F.2d at 659). In this case, the identical issues will be litigated in both forums. As already stated, both cases arose out of the same investigation. Both cases were brought with the express purpose of enforcing federal laws and regulations regarding minority and women business enterprise programs. Under principles of issue preclusion, an earlier decision in one court may bind the parties in the other court. Thus, the result of simultaneous litigation of identical issues in the state and federal courts may be both "unseemly" and a "grand waste" of the efforts of the parties and the court. As the Seventh Circuit stated in Lumen:
When cases proceed simultaneously, the threat of efficient adjudication is self-evident. But judicial economy is not the only value that is placed in jeopardy. The legitimacy of the court system in the eyes of the public and fairness to the individual litigants also are endangered by duplicative suits.
780 F.2d at 694.
Other factors also weigh in favor of exercising our power under Colorado River. First, the federal complaint was not filed until almost three years after the state court obtained jurisdiction. There is no explanation for the delay in bringing the federal court action. Further, because the state court complaint contained a RICO count, it could have been originally filed in federal court. Illinois, however, chose to exercise its right to choose a forum and chose to bring the suit in state court. Additionally, there is no reason that all of the parties and all of the claims could not have been originally filed in federal court.
Second, there has been substantial progress in the state court action. Even though the defendants have not answered the complaint in the state court, their motions to dismiss have been pending for over two years and have been considered by numerous state courts. Many of the counts have been dismissed and their dismissal has not been appealed. Allowing concurrent suits to continue in both forums would be inefficient and duplicative.
Additionally, there is no possibility that the federal rights sought to be protected in the FCA suit will not adequately be protected in the state court proceedings. Illinois began the state court litigation to enforce federally mandated business set-aside provisions. In doing so, Illinois placed federal statutes and regulations in the center of its state court complaint. Further, the state court complaint contains a federal civil RICO count. Thus, Illinois has acknowledged that the state court is more than capable of protecting federally created rights.
Finally, as stated earlier, FCA claims involve allegations of fraud and misrepresentations. FCA claims, therefore, are premised on common law fraud. Thus, the governing rules are originally derived from state, not federal, law.
We conclude that the state and federal actions are parallel. We also conclude that the factors relevant to a Colorado River abstention analysis clearly suggest that "exceptional circumstances" exist in this case to warrant a dismissal of the federal court proceedings under Colorado River. Although a stay is generally the proper procedural mechanism for a district court to employ when deferring to a parallel state-court proceeding under the Colorado River doctrine," La Duke, 879 F.2d at 1562, we feel that judicial economy and administration would be better served if we dismiss the federal proceedings without prejudice and with leave to reinstate within forty-five days of the completion of the state court proceedings.
For the reasons set forth above, Counts I, II, and XI-XVII are dismissed for lack of subject matter jurisdiction pursuant to Rule 12(b)(1). Further, defendants' motion to dismiss pursuant to Colorado River is granted. Counts III-X and XVIII-XXII of the plaintiffs' federal action are hereby dismissed without prejudice and with leave to reinstate if the parties so desire within forty-five days of the completion of People ex rel. Hartigan v. E & E Hauling, Inc., Circuit Court of Cook County, Illinois Docket No. 88 CH 5544.
GEORGE M. MAROVICH
UNITED STATES DISTRICT JUDGE
DATED: June 5, 1992