If I am sued in one court can I later sue them in a different court?
Generally no. The first filed rule in cases of concurrent jurisdiction requires that the first court in which jurisdiction attaches has priority to consider the case over later filed cases.
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Eagle Creek Software Services, Inc.,
and Kenneth C. Behrendt,
This matter is before the court upon the motion to compel
arbitration and stay litigation by petitioners Eagle Creek Software
Services, Inc. (Eagle Creek) and Kenneth C. Behrendt. Based on a
review of the file, record and proceedings herein, and for the
following reasons, the court stays consideration of the motion
pending action by the United States District Court for the District
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This employment-compensation dispute arises out of the
termination of respondent Jeremy Paradise by Eagle Creek. Paradise
worked for Eagle Creek in Massachusetts and was terminated in
September 2010. On September 30, 2010, he sued petitioners in the
District of Massachusetts claiming breach of contract, breach of
the covenant of good faith and fair dealing and failure to pay
wages in violation of Massachusetts General Laws chapter 149,
sections 148 and 150 (the Massachusetts action). See Pet. Ex. 2
In the Massachusetts action, petitioners moved to dismiss,
transfer or stay proceedings based on a purported agreement to
arbitrate in Minnesota. See Defendant Eagle Creek Software
Services, Inc.’s Memorandum in Support of its Motion to Dismiss or
Alternatively, to Transfer Venue at 6–14, 21, Paradise v. Eagle
Creek Software Servs., Inc., No. 10-cv-11678 (D. Mass. Dec. 20,
2010) (“Eagle Creek requests that the Court stay the present action
in its entirety so that the parties can arbitrate their disputes in
Minnesota.”). According to petitioners, the parties are bound by
the terms of an employment agreement that mandates arbitration and
litigation in Minnesota. Paradise disputes accepting the terms of
the employment agreement.
Paradise amended the complaint on November 15, 2010. 1
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On September 26, 2011, the Massachusetts court determined that
a genuine dispute exists regarding contract formation. See Pet.
Ex. 3. As a result, the Massachusetts action is summarily
proceeding to trial to resolve the threshold dispute. Id. On
October 5, 2011, petitioners began the instant action and now move
to compel arbitration and stay litigation in the Massachusetts
action. The court heard oral argument on November 2, 2011.
I. Federal Arbitration Act
Congress enacted the Federal Arbitration Act (FAA) to
counteract “longstanding judicial hostility to arbitration
agreements” by “plac[ing] arbitration agreements upon the same
footing as other contracts.” E.E.O.C. v. Waffle House, Inc., 534
U.S. 279, 289 (2002) (quoting Gilmer v. Interstate/Johnson Lane
Corp., 500 U.S. 20, 24 (1991)). The role of the court is limited
to determining the existence and scope of an agreement to
arbitrate. See Gannon v. Circuit City Stores, Inc., 262 F.3d 677,
680 (8th Cir. 2001). Whether a valid agreement to arbitrate formed
is a question of contract. Keymer v. Mgmt. Recruiters Int’l, Inc.,
169 F.3d 501, 504 (8th Cir. 1999) (“[A]rbitration is a matter of
consent, not of coercion.” (citation omitted)).
Sections 3 and 4 of the FAA allow parties to move to stay or
compel, and motions under either section pose the same threshold
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question: whether the dispute is subject to an arbitration
agreement. See 9 U.S.C. §§ 3–4. If a court finds that the parties
agreed to arbitrate a dispute, it must stay further litigation
(§ 3) or order the parties to arbitrate (§ 4). In the present
dispute, the threshold question is being litigated under § 3 in the
II. First-Filed Rule
It is well established that “in cases of concurrent
jurisdiction, the first court in which jurisdiction attaches has
priority to consider the case.” Orthmann v. Apple River Campground
Inc., 765 F.2d 119, 121 (8th Cir. 1985). The first-filed rule is
not “rigid, mechanical, or inflexible” and the court applies it to
serve the interests of justice. Id. The rule exists “[t]o
conserve judicial resources and avoid conflicting rulings.” Nw.
Airlines, Inc. v. Am. Airlines, Inc., 989 F.2d 1002, 1006 (8th Cir.
1993). Absent compelling circumstances, “the first-filed rule
gives priority, for purposes of choosing among possible venues when
parallel litigation has been instituted in separate courts, to the
party who first establishes jurisdiction.” Id.
The FAA does not grant jurisdiction, and any court with an
independent basis of jurisdiction may address the question of
contract formation through a motion to stay or motion to compel.
See Northport Health Servs. of Ark., LLC v. Rutherford, 605 F.3d
483, 486-87, 491 (8th Cir. 2010) (holding FAA “bestows no federal
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jurisdiction”); see also 9 U.S.C. §§ 3–4. In the present case, it
is undisputed that complete diversity exists, the amount in
controversy exceeds $75,000 and the Massachusetts action began over
a year before the instant action. As a result, both this court and
the Massachusetts court have jurisdiction under 28 U.S.C. § 1332,
and the Massachusetts court is the first court in which
jurisdiction attached. Cf. Pub. Sch. Ret. Sys. of Mo. v. State St.
Bank & Trust Co., 640 F.3d 821, 825 (8th Cir. 2011) (analyzing
issue of jurisdiction independently from forum-selection clause).
Petitioners argue that the first-filed rule does not apply
because the Massachusetts court cannot order arbitration in
Minnesota. Specifically, petitioners argue that if (1) the parties
agreed to arbitration and (2) that agreement mandates arbitration
in Minnesota, then the Massachusetts court cannot compel
arbitration in Minnesota. But petitioners’ series of contingencies
does not preclude application of the first-filed rule. See Keymer,
169 F.3d at 503 n.2 (finding first-filed court “had priority to
consider [the] arbitrability question as a matter of comity” and
rejecting argument that § 4 motion in second-filed court should
Moreover, an inability to order arbitration in a foreign forum
does not preclude a court from inquiring about whether the parties
formed an agreement. Nothing in the plain language of the FAA
suggests that Congress intended to strip courts of jurisdiction to
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decide a threshold question of contract formation. Instead,
Congress used broad language, and allowed any court with subjectmatter
jurisdiction to consider a motion to stay or compel. See 9
U.S.C. §§ 3–4. If no agreement to arbitrate exists, then the FAA
has no bearing, and there is nothing to compel. In the present
case, the instant § 4 motion does not divest the first-filed court
from proceeding to determine the same threshold question under § 3.
Therefore, this argument fails.
Petitioners next argue that their motion to compel requires
this court to act notwithstanding the first-filed rule, because a
motion to compel under § 4 raises different issues than a motion to
stay under § 3. The court disagrees. In general, “[t]he
arbitrability question is the same in a motion to compel
arbitration as in a motion to stay proceedings pending
arbitration.” Keymer, 169 F.3d at 503 n.2. In this case, the
question is identical: did the parties form an agreement to
arbitrate? Application of the first-filed rule in this case is 2
not contrary to congressional intent to remove barriers to
arbitration and quickly move parties to arbitration. See Moses H.
Cone Mem’l Hosp. v. Mercury Const. Corp., 460 U.S. 1, 22 (1983).
The Massachusetts court is familiar with the case and is prepared
The parties do not identify, and the court is not aware of, 2
any outcome-determinative differences between the law of contract
formation in Massachusetts and Minnesota.
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to address the threshold question. Should the Massachusetts court
find that the parties formed a valid agreement to arbitrate in
Minnesota, the case will be transferred to Minnesota for entry of
an order to arbitrate.
Assuming the parties agreed to arbitrate, any possible delay
resulting from deference to the Massachusetts would be de minimis,
especially in light of petitioners’ long delay in moving to compel
arbitration. Petitioners became aware of Paradise’s intent to
litigate rather than arbitrate in September 2010. Petitioners
litigated in Massachusetts for over a year, and filed the instant
action only when the Massachusetts action reached the threshold of
trial. Therefore, deference to the first-filed court in this case
is in accordance with the FAA.
In short, no compelling circumstances exist to override the
first-filed rule. The threshold issue has been litigated in the
Massachusetts action for over a year. The familiarity of the
Massachusetts court with the case will allow it to proceed quickly.
Should the first-filed court determine that the parties reached an
agreement to arbitrate, the case may be transferred to Minnesota
for arbitration. Further, considerations of judicial economy and
comity weigh strongly in favor of deference to the Massachusetts
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Accordingly, based on the above, IT IS HEREBY ORDERED that
consideration of the instant motion to compel arbitration [ECF No.
3] is stayed pending resolution of the threshold contract-formation
question by the Massachusetts court.
Dated: November 22, 2011
s/David S. Doty
David S. Doty, Judge
United States District Court
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