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Benefitelect, Inc. v. Strategic Benefit Solutions Corp.

United States District Court, D. Oregon

December 23, 2019

BENEFITELECT, INC., an Oregon corporation; COMMUNICATION PARTNERS, INC., an Oregon corporation, Plaintiffs,
v.
STRATEGIC BENEFIT SOLUTIONS CORPORATION, a New Jersey corporation, Defendant.

          OPINION AND ORDER

          MICHAEL J. MCSHANE UNITED STATES DISTRICT JUDGE

         In 2018, Plaintiffs BenefitElect, Inc. (“BenefitElect”) and Communication Partners, Inc. (“Communication Partners”) worked with Defendant Strategic Benefit Solutions Corporation (“Strategic Benefit”) to construct and install a computer program in Pennsylvania that would assist state employees in obtaining insurance. The relationship soured when the parties disputed the amount owed for the work completed. Plaintiffs filed the present action in Oregon alleging breach of contract and other related claims, but Strategic Benefit had already filed suit in New Jersey alleging tortious interference and seeking declaratory relief on the alleged contract between the parties.

         Accordingly, Strategic Benefit now moves to dismiss Plaintiffs claims pursuant to the “first-to-file” rule. However, because of jurisdictional considerations, the Court will not dismiss the claims but rather stay the case to allow resolution of the New Jersey case. Thus, Defendant's motion to dismiss, ECF No. 18, is DENIED, but the case is STAYED until resolution of the pending New Jersey action.

         PROCEDURAL AND FACTUAL BACKGROUND

         BenefitElect, Communication Partners, and Strategic Benefit are corporations engaged in the insurance benefits industry. Le Phan Decl. ¶ 4, ECF No. 20. In 2018, Strategic Benefit contacted Plaintiffs to construct and operate a benefits computer program. First Amend. Compl. ¶ 5, ECF No. 17. Plaintiffs allege that they performed as required, but that Strategic Benefit failed to pay $312, 000 on their performance. Hansen Decl., Ex. 5 ¶¶ 12-13, ECF No. 27.

         On May 1, 2019, Plaintiffs, through counsel, contacted Strategic Benefit and demanded payment in full. Hansen Decl., Ex. 1. Plaintiffs' counsel also threatened to file suit if payment was not received within five business days. Id. On May 3, 2019, Plaintiffs' counsel received a response from Lorena E. Ahumada, who at the time represented Strategic Benefit. Hansen Decl., Ex. 2. Ms. Ahumada requested further documentation, which Plaintiffs' counsel provided on May 6, 2019. Hansen Decl., Ex. 3. Ms. Ahumada acknowledged receipt of the requested information. Id. However, on May 10, 2019, Ms. Ahumada emailed Plaintiffs' counsel to communicate that she no longer represented Strategic Benefit and that they had retained new counsel. Hansen Decl., Ex. 4.

         On May 13, 2019, twelve days after Plaintiffs originally contacted Strategic Benefit, Strategic Benefit filed suit in the Superior Court of New Jersey seeking declaratory relief and tortious interference. Hansen Decl. ¶ 9. The New Jersey action has been removed to the United States District Court for the District of New Jersey, No. 1:19-cv-14277-JHR-KMW. Spiegel Decl. ¶ 5, ECF No. 19. Nine days after Strategic Benefit filed suit in New Jersey, Plaintiffs brought this instant action in Oregon before the Court. Hansen Decl. ¶ 10.

         Plaintiffs have moved to dismiss the New Jersey action for improper venue or, in the alternative, to transfer venue to this Court. Although fully briefed, the New Jersey court has not yet decided the pending motion to dismiss.

         STANDARD OF REVIEW

         Prior to filing a responsive pleading, a party may assert the defense of improper venue and move the Court to dismiss the action. Fed.R.Civ.P. 12(b)(3). When considering the motion, the “pleadings need not be accepted as true, and facts outside the pleadings may be considered.” Doe 1 v. AOL LLC, 552 F.3d 1077, 1081 (9th Cir. 2009) (citing Argueta v. Banco Mexicano, S.A., 87 F.3d 320, 324 (9th Cir. 1996)). The Court resolves any factual conflicts in favor of the non-moving party while also drawing all reasonable inferences in the non-moving party's favor. See Murphy v. Schneider Nat'l, Inc., 362 F.3d 1133, 1138 (9th Cir. 2004).

         DISCUSSION

         Defendant Strategic Benefit, in reliance on the “first-to-file” rule, contends that venue is improper because the New Jersey action was initiated prior to the pending case before the Court. In response, Plaintiffs argue that the Court should apply an equitable interest exception and deny Strategic Benefit's Motion to Dismiss.

         The “first-to-file” rule allows a district court to transfer, stay, or dismiss an action after a similar suit has been filed in another federal court. Alltrade, Inc. v. Uniweld Prod.'s., 946 F.2d 622, 625 (9th Cir. 1991). Application of the first-to-file rule “turns on three factors: (1) the chronology of the actions; (2) the similarity of the parties; and (3) the similarity of the issues.” City Antiques, Inc. v. Planned Furniture Promotions, Inc., No. 3:14-cv-00467-SI, 2014 WL 3955216, at *3 (D. Or. Aug. 12, 2014) (citing Alltrade, 946 F.2d at 625). “[The] ‘first to file' rule is not a rigid or inflexible rule to be mechanically applied, but rather is to be applied with a view to the dictates of sound judicial administration.” Pacesetter Sys.'s, Inc. v. Medtronic, Inc., 678 F.2d 93, 95 (9th Cir. 1982).

         Plaintiffs concede that the three first-to-file rule factors are present. However, they argue that equitable interests weigh against the first-to-file rule's application. The Court has the discretion disregard the first-to-file rule when equitable interests advise otherwise. Alltrade, 946 F.2d at 628. The Ninth Circuit has recognized three equitable considerations “under which an exception to the first-to-file rule typically will be made”: (1) anticipatory suits; (2) forum shopping; and (3) bad faith. Id. (citations omitted). Because Plaintiffs argue that “[Strategic Benefit's] New Jersey complaint was an anticipatory ...


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