United States District Court, N.D. Illinois
April 6, 2004.
ILLINOIS BLOWER, INC. Plaintiff,
DELTAK, L.L.C. Defendant
The opinion of the court was delivered by: DAVID COAR, District Judge
MEMORANDUM OPINION AND ORDER
Before this court is Deltak's L.L.C.'s ("Deltak" or "Defendant")
motion to transfer venue to the District Court of Minnesota pursuant to
28 U.S.C. § 1404 ("§ 1404(a)") For the reasons set forth below,
Deltak's motion to transfer venue is GRANTED,
I. FACTUAL AND PROCEDURAL HISTORY
Plaintiff, Illinois Blower, Inc. ("IBI") is an Illinois corporation
with its principal place of business in Cary, Illinois, (Pl. Comp. ¶
2). IBI markets and sells industrial equipment, including ventilation
fans and exhaust blowers. Id. Deltak is a Delaware limited
liability company with its principal place of business in Plymouth,
Minnesota. (Pl. Comp. ¶ 3), Deltak manufactures and sells heat
recovery steam generators ("HRSGs"), equipment that is used to make use
of waste heat generated by industrial activities, such as electric power
generation. (See Deltak's Memo, in Support of Motion to
Transfer Venue, p. 1). In early 2000, Deltak requested that IBI provide specialized fans to be
used at some of Deltak's construction projects. (Pl. Comp. ¶ 6).
Consequently, Deltak issued numerous purchase orders, which were filled
by IBI. Id. After designing and manufacturing the fans
according to Deltak's specifications, IBI delivered them to the Deltak
project sites. (Pl. Comp. ¶ 7). Deltak contends it received
complaints from its customers regarding work quality, and some of those
complaints related to the IBI fans. (Pl. Comp. ¶ 8). EBI agreed to
assist Deltak in resolving the problems that arose at its project sites.
Id. To resolve those problems, IBI negotiated a Fan Repair
Agreement ("Agreement") with Deltak. (Pl. Comp. ¶ 9). Under the
Agreement, Deltak agreed to pay and contends that it did pay IBI certain
sums and agreed to be responsible for the costs of certain replacement
materials. (See Zack Aff.). Deltak contends that IBI promised
that it would design a complete and satisfactory solution to the fan
problems, and assume financial responsibility for work associated with
the problem. (See Fan Repair Agreement). *fn1 IBI contends
that it did provide Deltak with quality fans, parts and services, yet
never received compensation for theses services. (Pl. Comp. ¶¶ 10,
11). On December 15, 2003, Deltak sent a letter to IBI regarding the
invoices and IBI's purported breach of the Agreement. (Zack Aff.). On
December 17, 2003, IBI responded to Deltak by letter, demanding immediate
payment of all allegedly outstanding invoices. (Zack Aff.; see
also Hall Aff.; Def. Ex. 2).
Each letter was responded to with subsequent legal action. On January
13, 2004, Deltak served a summons and complaint upon IBI, claiming breach
of the Fan Repair Agreement and breach of warranty, and seeking a declaration of the Parties'
rights under the Agreement and purchase orders issued by Deltak.
(See Hall Aff.; Def. Exs. 3 and 4). On January 16, 2004, IB1
filed the action currently before this Court in the Northern District of
Illinois. On January 24, 2004, IBI amended its Complaint in this Court
pursuant to Fed.R.Civ.P. 15(a). Subsequently, Deltak's summons and
complaint were filed in Minnesota State Court, Hennepin County District,
on January 28, 2004. (See Hall Aff.; Def. Ex. 5). On February
11, 2004, IBI removed the case to the United States District Court for
the District of Minnesota. (See Hall Aff.; Ex. 7). IBI answered
Deltak's complaint on February 17, 2004. (See Hall Aff.;
IBI and Deltak do not dispute that the claims, parties and relief
sought in their respective suits do not differ in any material respect.
However, the Parties do dispute whether the Minnesota action or the
Illinois action should be considered "first filed", which is a
significant factor in determining where this cause of action should
proceed. Additionally, the Parties dispute whether this cause of action
should be transferred pursuant to § 1404(a). Therefore, this Court
will address: (1) which action was "first filed"; and (2) whether the
Illinois action should be transferred to the District of Minnesota
pursuant to § 1404(a).
A. Which Action Was "First Filed" ?
It is undisputed that Deltak perfected service on Plaintiff in
Minnesota State Court prior to IBI filing its Complaint in the Northern
District of Illinois. However, IBI filed its Complaint in the Northern
District of Illinois before Deltak filed its Complaint in Minnesota State
Court. Therefore, the Court must determine, according to Eighth Circuit
standards, whether a suit is filed after service is perfected, although
no Complaint was filed before that service.*fn2
"In cases of concurrent jurisdiction, the first court in which
jurisdiction attaches has priority to consider the case as a matter of
federal comity." Keymer v. Management Recruiters, Int'l Inc.,
169 F.3d 501, 503 n.2 (8th Cir. 1999) (citing Northwest Airlines.
Inc. v. American Airlines. Inc., 989 F.2d 1002, 1004-05 (8th Cir.
1993)). The "first filed rule" gives priority "to the party who first
establishes jurisdiction" in order to conserve judicial resources and
avoid conflicting rulings. Id.
There has been a dispute among the District Courts of the Eighth
Circuits as to what actions "establish jurisdiction" for purposes of the
first filed rule. Though authority exists for both positions, most courts
consider the act of filing, rather than service, as determinative under
the first filed rule. Federal Cartridge Company v. Remington Arms
Company. No. Civ. 03-6105, 2003 WL 23101805 at *2. (citing
Hospah Coal Co. v. Chaco. Energy Co., 673 F.2d 1161, 1163 (10th Cir.
1982) (use of date of filing of the complaint gives effect to Rule 3 of
Federal Rules of Civil Procedure); Slidell. Inc. v. Archer Daniels
Midland Co., No. 02-4841, 2003 WL 22050776, at * 5 (D. Minn. Sept. 2,
2003) (holding same). But see Red Wing Shoe Co. v. B-JAYS
USA, Inc., No. Civ. 02-257, 2002 WL 1398538 at *2 (using service
date as priority criterion).; see also R.K. Dixon v. Dealer
Marketing Services, 284 F. Supp.2d 1204, 1215 n.14 (S.D. Iowa 2003)
(citing Med-Tec Iowa, Inc. v. Nomos Corp., 76 F. Supp.2d 962,
968 n.3 (N.D. Iowa 1999) for the proposition that "the first court in which jurisdiction attaches
means the first court in which a civil action is properly commenced.").
While the Eighth Circuit has not directly addressed the issue of when
jurisdiction first attaches, it has referenced filing dates, as opposed
to dates of service, when addressing the first-filed rule. Federal
Cartridge Company, 2003 WL 2310180 at *2 (citing
Northwest. 989 F.2d at 1005; Anheuser-Busch. Inc. v.
Supreme lnt'l Corp., 167 F.3d 417, 418-19. (8th Cir. 1999). Though a
close case, the majority of Eighth Circuit precedent dictates that
jurisdiction does not attach until a complaint is actually filed, even if
service was perfected prior to the filing of that complaint. Therefore,
because IBI's Complaint was filed prior to Deltak's Complaint, IBI's was
the first filed.
While the first-filed complaint is significant, the rule "is not
intended to be rigid, mechanical, or inflexible." Orthmann v. Apple
River Campground. 765 F.2d 119, 121 (8th Cir. 1985). In fact, the
Seventh Circuit does not rigidly adhere to the first-filed rule.
Trippe Mfg. Co. v. American Power Conversion Corp.,
46 F.3d 624, 629 (7th Cir. 1995). The Court may allow second-filed actions to
proceed where it is favored by the interests of justice. Tempco
Elec. Heater Corp. v. Omega Eng'g, Inc., 819 F.2d 746, 749-50 (7th
Cir. 1987). Additionally, courts disfavor a first-filed suit if that suit
is an improper anticipatory filing. "A suit for declaratory judgment
aimed solely at wresting the choice of forum from the `natural' plaintiff
will normally be dismissed and the case allowed to proceed in the usual
way." Allendale Mut. Ins. Co. v. Bull Data Systems. Inc.,
10 F.3d 425, 431 (7th Cir. 1993) (citing Tempco. 819 F.2d at 747)). However,
the Parties' submissions indicate that both IBI and Deltak may
potentially have cognizable claims against the other; consequently,
neither suit can be characterized as an improper anticipatory filing.
Therefore, the Court will determine if any of the considerations of § 1404(a) mandate a transfer of this case to the District of
Minnesota, even though IBF's Complaint was "first filed."
B. Motion To Transfer Venue
Pursuant to § 1404(a), a court may transfer a civil action, "for
the convenience of the parties and witnesses, in the interest of
justice." Transfer under § 1404(a) is appropriate if: (1) venue is
proper in both the transferor and transferee court; (2) transfer is for
the convenience of parties and witnesses; and (3) transfer is in the
interests of justice. Barnes v. Rollins Carriage Services.
Inc., 976 F. Supp. 767, 768 (N.D. Ill. 1997). Whether a transfer is
appropriate under § 1404(a) is left to the sound discretion of the
trial court. Bryant v. ITT Corp., 48 F. Supp.2d 829, 832 (N.D.
Ill. 1999) (citing Heller Fin., Inc. v. Midwhey Powder Co.,
883 F.2d 1286, 1293 (7th Cir. 1989)); Coffey v. Van Dorn Iron
Works, 796 F.2d 217, 219 (7th Cir. 1986)). Deltak, the moving party,
has the burden of showing that "the transferee forum is clearly more
convenient." Coffey, 796 F.2d at 219-20. Deltak and IBI do not
dispute that venue is proper in both this Court and the District of
Minnesota. Therefore, this Court will address whether transfer is for the
convenience of the parties and witnesses, and in the interests of
Courts consider four factors in determining whether transfer is
convenient for the parties and witnesses: (1) the plaintiff's choice of
forum; (2) the site of material events; (3) the availability of evidence
in each forum; and (4) the convenience of the parties litigating in the
respective forums. Barnes, 976 F. Supp. at 768. The second,
third and fourth factors are relatively balanced between the parties, and
weigh neither for nor against either IBI or Deltak. However, the first
factor is significant to IBI. IBI's choice of forum is Illinois, which is
also its home forum. In general, a party's choice of forum is given
substantial deference, particularly if that choice is also the plaintiff's home forum. Central
States. Southeast and Southwest Area Pension Fund v. Salasnek Fisheries,
Inc., 977 F. Supp. 888, 890 (N.D. Ill. 1997). Therefore, IBI's choice
of forum will be given substantial deference.
1. Does Transfer Serve the Interests of Justice?
Whether a transfer under § 1404(a) will serve the interests of
justice "embraces traditional notions of judicial economy rather than the
private interests of the litigants and their witnesses."
Bryant, 48 F. Supp.2d at 834 (quoting TIG Ins. Co. v.
Brightly Galvanized Prod., Inc., 911 F. Supp. 344, 346 (N.D. Ill.
1996)). The court makes several considerations, including whether
litigants are more likely to receive a speedy trial in one district or
the other, if the litigation is related to other litigation in either
forum, and in a diversity action, having a federal judge try the case who
is familiar with the applicable law. Coffey. 796 F.2d at 221.
The interests of justice "may be determinative in a particular case, even
if the convenience of the parties and witnesses might call for a
different result." Id. at 220. Most significant is the final
factor, having a judge try the case who is familiar with the applicable
law. The contract between the Parties expressly provides that all
disputes are to be resolved according to Minnesota law. While this Court
is able to address disputes that arise under the laws of other states,
the fact remains that a Minnesota District Court, who must deal with
Minnesota law with a significantly greater frequency than this Court, has
the opportunity to hear the Parties' dispute. Therefore, this weighs in
favor of transfer to the District of Minnesota. 2. Relevance of Forum Selection Clause
A forum selection clause in a contract does not mandate a transfer of
venue. Newell Co. v. Lee. 950 F. Supp. 864 (N.D. Ill. 1997)
(citing Heller & Co. v. Godbe Co., 601 F. Supp. 319, 321, n.
2 (N.D. Ill. 1984)). A court should consider a forum selection clause as
one of many factors to consider in deciding a motion to transfer venue.
Id. (citing G.H. Miller & Co. v. Hanes,
566 F. Supp. 305, 307 (N.D. Ill. 1983)). However, § 1404(a) may not be
used to circumvent a valid forum selection clause. Id.
(citing Northwestern Nat. Ins. Co. v. Donovan. 916 F.2d 372,
378 (7th Cir. 1990)). "The forum-selection clause . . . should receive
neither dispositive consideration . . . nor no consideration."
Stewart v. Rioch, 487 U.S. 22, 31 (1988). The forum selection
clause at issue in this case provides: [t]his Agreement shall be governed
by the laws of the State of Minnesota. Venue for any disputes arising
hereunder, at Deltak's option, may be the Courts of the State of
Minnesota." (See Fan Repair Agreement). In this particular
circumstance, it is significant that the Fan Repair Agreement, which is
at the heart of the Parties' dispute, elects Minnesota as the appropriate
forum. Consequently, the fact that the Parties' forum selection clause
elects Minnesota as the chosen forum for any disputes weighs in favor of
After a consideration of all factors, the balance tips in favor of
transfer to the District of Minnesota. Though IBI was technically the
first to file its Complaint, the split in the Eighth Circuit concerning
when jurisdiction attaches makes this fact less significant. Further,
IBI's selection of Illinois as the forum for suit has less significance
in context of the Parties' forum selection clause. Additionally, the
forum selection clause electing Minnesota, as well as the fact that
Minnesota law governs the Parties' suits, makes it a more appropriate
forum for adjudicating the Parties' disputes. Therefore, this Court will
transfer this cause of action to the District of Minnesota, and allow
that court to consolidate IBI's cause of action with Deltak's cause of
action filed there.
For the foregoing reasons, Deltak's motion to transfer venue to the
Minnesota District Court is GRANTED.