United States District Court, N.D. Illinois
February 11, 2004.
WEBER-STEPHEN PRODUCTS CO., Plaintiff,
GARDENA NORGE A/S, GARDENA DANMARK A/S, GARDENA NEDERLAND B.V., AND GARDENA HOLDING (AG) GmbH, Defendants
The opinion of the court was delivered by: JOHN W. DARRAH, District Judge
MEMORANDUM OPINION AND ORDER
Plaintiff, Weber-Stephen Products Co. ("Weber"), filed suit against
Defendants, Gardena Norge A/S, Gardena Danmark A/S, Gardena Nederland
B.V., and Gardena Holding (AG) GmbH (collectively "Gardena"), seeking
monetary damages for breach of contract and a declaratory judgment
determining that Weber is not liable to Gardena for any violations of law
(including breach of contract, tortious interference, fraud, constructive
fraud, conversion, conspiracy and violations of the Illinois Franchise
Disclosure Act of 1987) arising out of its contractual duties and
responsibilities with respect to the Norwegian, Danish or Dutch
Distributor Agreements. Presently pending before the Court is Defendants'
Motion to Dismiss.
A reading of Weber's Complaint, including the documents attached to the
Complaint, as well as Gardena's Complaint filed in the United States
District Court for the Western District of Virginia, supports the
following summary of the alleged operative conduct of the parties.
On October 1, 1997, Weber and Gardena Norge entered into a Distributor
Agreement pursuant to which Gardena Norway would be the exclusive
distributor for specified Weber products for Norway. Weber and Gardena
Danmark entered into a similar agreement on March 31, 1998. Weber and
Gardena Holland also entered into such an agreement on September 1, 1999.
The Norwegian Distributor Agreement was to expire on September 30, 2000;
the Danish Distributor Agreement was to expire on August 31, 2000; and
the Dutch Distributor Agreement was to expire on August 31, 2001.
On April 27, 2000, Weber notified Gardena Holding (AG) GmbH that it
intended to terminate its contracts with Gardena and in the future would
distribute its own products. Weber formed Weber Scandanavia A/S and Weber
Nederland, B.V. to distribute said products.
On May 23, 2003, Virginia counsel for Gardena notified Weber in a
letter that Gardena Holland would assert claims in the United States
District Court for the Western District of Virginia against Weber arising
out of the Norwegian Distributor Agreement, the Danish Distributor
Agreement, and the Dutch Distributor Agreement on behalf of its
subsidiaries, including Gardena Norge, Gardena Danmark, and Gardena
Holland. The letter also invited Weber to discuss settlement of the
issues before Gardena would file its claims and requested a response by
June 30, 2003. Gardena received no response from Weber to this May 23rd
letter. However, on June 25, 2003, Weber filed the instant complaint in
the Circuit Court of Cook County. In July 2003, Gardena removed the case
from the Circuit Court of Cook County to this Court.
On July 31, 2003, Gardena filed its own complaint in the United States
District Court for the Western District of Virginia against Weber for
breach of contract, tortious interference, fraud,
statutory conspiracy, civil conspiracy, unjust enrichment, constructive
fraud, and violation of the Illinois Franchise Disclosure Act of 1987
(fraud and wrongful termination of franchise agreement).
Gardena argues that Weber has filed a declaratory action in this Court
as a preemptive strike in anticipation of Gardena's lawsuit in the
Western District of Virginia.
In general, federal courts have observed the "first to file" rule,
under which the first suit filed receives priority. See Natural Gas
Pipeline Co. of Amer. v. Union Pac. Res. Co., 750 F. Supp. 311, 313
(N.D. Ill. 1990) (Natural Gas). However, the Seventh Circuit has never
adhered to this rigid "first to file" rule. Natural Gas, 750 F. Supp. at
Federal courts have the discretion to decline to hear a declaratory
judgment action, even though it is within their jurisdiction. Tempco
Elec. Heater Corp. v. Omega Eng'g., Inc., 819 F.2d 746, 747 (7th Cir.
1987) (Tempco). Dismissal of a declaratory action is proper when, as a
result of the pendency of another suit, the suit for declaratory relief
will serve no useful purpose. See Tempco, 819 F.2d at 747-49. The federal
declaratory judgment is not a prize to the winner of the race to the
courthouse. Tempco, 819 F.2d at 750. This rule applies to declaratory
judgment actions designed to preempt not only infringement suits but
other lawsuits as well. Natural Gas, 750 F. Supp. at 314. When the
accused party has not been unfairly deprived of an opportunity to
adjudicate its rights, a declaratory judgment is unnecessary. Eli's
Chicago Finest, Inc. v. The Cheesecake Factory, Inc., 23 F. Supp.2d 906,
908 (N.D. 111. 1998) (Eli's Chicago Finest).
Allowing a potential defendant to make a procedural preemptive strike
robs the natural plaintiff of his ability to select his forum. Eli's
Chicago Finest, 23 F. Supp.2d at 909. Furthermore, prohibiting a
race to the courthouse encourages settlement and discourages costly
Eli's Chicago Finest, 23 F. Supp.2d at 909. A potential defendant should
not respond to accusations of a potential plaintiff by rapidly bringing a
declaratory judgment suit in hopes of securing a favorable forum. Eli's
Chicago Finest, 23 F. Supp.2d at 909. Therefore, a declaratory judgment
suit with the express purpose of wresting the choice of forum from the
`natural' plaintiff is generally dismissed, whereby the case can then
proceed in the usual way. M Credit, Inc. v. Cadlerock, L.L.C., 2003 WL
21800017 (N.D. Ill. 2003).
In the instant case, Weber responded to Gardena's letter and threat of
litigation by rapidly bringing its own declaratory judgment suit in its
chosen forum. Weber argues that it filed its action because the Western
District of Virginia is an inappropriate forum for Gardena's suit against
Weber and also because the Virginia complaint is invalid on its face.
These arguments are properly addressed to the Virginia federal court
hearing the breach of contract action rather than in this declaratory
Weber also asserts that since Weber's Illinois action against Gardena
is not merely a declaratory judgment action, Gardena's motion should be
dismissed. However, the fact that the declaratory judgment action also
includes other claims for relief does not prevent its dismissal when the
main purpose of the action is for declaratory relief, and any other
claims can be brought as counterclaims in the other pending action.
Natural Gas, 750 F. Supp. at 314-15.
Weber also argues that this Court need not dismiss declaratory actions
it deems inappropriately filed in contexts other than trademark
infringement. However, "The rule set forth in Tempco (cited by this Court
above) applies to declaratory judgment actions designed to preempt not
only infringement suits, but other lawsuits as well." Natural Gas, 750
F. Supp. at 314. It is not controlling that the competing suits filed in
this case are not trademark infringement actions.
Contrary to its arguments in this case, in 1993, Weber argued in
opposition to a motion to stay that a delay of negotiations and a "race to
the courthouse" as a means of forum shopping was inexcusable. See
Weber-Stephen Products Co. v. Ivy Mar Co., Inc., 1994 WL 11711 (N.D.
Ill.) (Weber-Stephen Products). Weber argued, "Such conduct . . . smacks
of forum shopping and is exactly the type of equitable concern which
mandates that exception be taken from the first-filed rule."
Weber-Stephen Products, 1994 WL 11711 (N.D. Ill.). The court, in that
case, agreed that the first-to-file rule was not compelling, and the
motion to stay was denied. Weber-Stephen Products, 1994 WL11711 (N.D.
For the foregoing reasons, Gardena's Motion to Dismiss is granted.
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