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Starin Marketing, Inc. v. Swift Distribution, Inc.

United States District Court, N.D. Indiana, Hammond Division

January 19, 2017

STARIN MARKETING, INC., Plaintiff,
v.
SWIFT DISTRIBUTION, INC., d/b/a ULTIMATE SUPPORT SYSTEMS, Defendant, SWIFT DISTRIBUTION, INC., d/b/a ULTIMATE SUPPORT SYSTEMS, Counter Claimant,
v.
STARIN MARKETING, INC., Counter Defendant.

          OPINION AND ORDER

          JOHN E. MARTIN MAGISTRATE JUDGE

         This matter is before the Court on Swift Distribution, LLC's Motion to Transfer [DE 41], filed by Defendant and Counter Claimant Swift Distribution doing business as Ultimate Support Systems (“Ultimate”) on September 8, 2016. Ultimate asks the Court to transfer this case to the District of Colorado under 28 U.S.C. § 1404(a). On September 21, 2016, Plaintiff and Counter Defendant Starin Marketing (“Starin”) filed a response, and on October 3, 2016, Ultimate filed a reply.

         I. Background

         Starin is an Indiana corporation with its principal place of business in Indiana. Starin markets and delivers audio equipment to customers. Ultimate is a California corporation with its principal place of business in Colorado, specializing in wholesale audio equipment sales. This case arises out of an August 2014 contract between the two companies. Under the contract, Ultimate[1] agreed to sell audio equipment to Starin, and Starin in turn agreed to store the equipment, manage inventory, and fulfill orders from Ultimate's customers in exchange for cost reimbursements and a monthly sales commission.

         Around September 2015, the parties began to dispute whether the contract capped the amount of equipment Starin would buy and store. Starin filed this case in Indiana state court on January 21, 2016, alleging a breach of contract claim and a declaratory relief claim against Ultimate. On February 23, 2016, Ultimate removed this case to this Court. Two months later, on April 20, 2016, Ultimate filed a complaint against Starin in the District of Colorado, alleging breach of contract and fraud claims related to the same contract underlying this case.

         Starin moved to dismiss or transfer the Colorado case to this Court. Ultimate opposed the motion, arguing that Starin improperly filed this case in anticipation of the Colorado case. On November 4, 2016, after the parties completed their briefing on Ultimate's Motion to Transfer in this case, Starin filed a notice stating that its motion to dismiss the Colorado case was granted.

         II. Standard of Review

         “For the convenience of parties and witnesses, in the interest of justice, a district court may transfer any civil action to any other district or division where it might have been brought or to any district or division to which all parties have consented.” 28 U.S.C. § 1404(a). Therefore, for a case to be transferred, the movant must demonstrate that (1) venue is proper in the transferor court; (2) venue is proper in the transferee court; and (3) the transfer serves the convenience of the parties and witnesses and is in the interest of justice. See Coffey v. Van Dorn Iron Works, 796 F.2d 217, 219-20 (7th Cir. 1986); see also Key Electronics, Inc. v. Earth Walk Commc'ns, Inc., No. 4:13-CV-00098-SEB, 2014 WL 2711838, at *8 (S.D. Ind. June 16, 2014). The decision to transfer an action is within the sound discretion of the trial court, and the analysis is made on a case-by-case, fact-intensive inquiry; the statute does not indicate the relative weight to be accorded each factor. Coffey, 796 F.2d at 219, 220 n. 3.

         III. Analysis

         Ultimate raises two categories of argument to support its motion to transfer. The court discusses each in turn.

         A. First to File

         The majority of Ultimate's brief detailed arguments concerning the so called “first-to-file” rule. “Under the ‘first to file' rule, district courts normally stay or transfer a federal suit ‘for reasons of wise judicial administration . . . whenever it is duplicative of a parallel action already pending in another federal court.'” Ginmar Corporate Promotions, Inc. v. Cardinal Health, Inc., No. 8-CV-4109, 2008 U.S. Dist. LEXIS 92752, at *2 (N.D. Ill. Nov. 12, 2008) (citing Serlin v. Arthur Anderson & Co., 3 F.3d 221, 223 (7th Cir. 1993)). However, the Seventh Circuit does not adhere to a strict first-to-file rule. See Trippe Mfg. Co. v. Am. Power Conversion Corp., 46 F.3d 624, 629 (7th Cir. 1995). Instead, a “declaratory judgment action that is brought in the face of clear threats of suit and seeking a determination that no liability exists will be closely scrutinized as a potentially improper anticipatory filing if the other party proceeds to file.” Id.

         Ultimate contends that Starin's action filed in this district was an “anticipatory” one, and that this case should be transferred to Colorado due to the pending action in that district. However, the District of Colorado dismissed Ultimate's action, pointing out that “the Indiana Action now fully states the parties' claims against each other, while this action does not. With claims fully framed, the Indiana Action is poised to proceed at a faster pace for pretrial preparation and an early resolution.” Order of the District of Colorado on Recommendation to Transfer Case, DE 54-1 at 6. Without a case pending in the District of Colorado, there is no “duplicative action” requiring transfer, stay, or dismissal of this case under the first-to-file rule. See Serlin, 3 F.3d at 223.

         Furthermore, when one lawsuit is filed before another, the order of the filings, without more, does not compel transfer. See Research Automation, Inc. v. Schrader-Bridgeport Int'l, Inc., 626 F.3d 973, 982 (7th Cir. 2010) (“We hold that where a district court faces one of two identical lawsuits and one party moves to transfer to the other forum, the court should do no more than consider the order in which the suits were filed among the factors it evaluates under 28 U.S.C. § 1404(a).”). Accordingly, this Court need not decide between the venues of two ...


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