FF PLLC won in the Southern District of New York, with a very favorable decision in by U.S. District Judge Loretta A. Preska denying Petitioner American Home’s motion to compel arbitration pursuant to an allegedly binding Payment Agreement between American Home and another party and granting our motion to dismiss and transfer to the U.S. District Court for the District of Nevada.
Judge Preska, in a terse 11-page decision, laid out the facts objectively, without comment as to the underlying merits (who is bound by the Payment Agreement). She proceeded to recite the legal standards, fully agreeing with our arguments. She concluded that the date of the first-filed case – the case filed by our client Peccole-Nevada (PNC) in Nevada state court – is the date to be used to determine which forum will hear the case, including whether any exception applies. The state court filing governs even when that claim is removed to federal court, and even for a consolidated case.
The Court rejected Petitioner’s reliance on the subject Payment Agreement’s forum selection clause.
The Court rejected Petitioner’s argument that “this case is a bit unusual in that, among the competing actions [there were 5], each has a first-filed case.” In her most quotable line, she stated: “While this may be possible in Lake Wobegon, where all the children are above average, here in the Southern District of New York, there can be only one first.”
Judge Preska then addressed Petitioner’s “five arguments against this straightforward analysis,” and rejected each of them one by one.
First, the Court rejected Am. Home’s argument that it filed suit before all but the PNC parties and therefore the date of consolidation should govern.
Second, the Court rejected Am. Home’s argument that the venue/forum selection clause in the Payment Agreement governs.
Third, the Court rejected Am. Home’s argument that PNC’s filing in New York state court “signaled that they believe New York is an appropriate venue/forum.” The Court specifically stated: “As Respondents note, their filing in New York was ‘to file a defensive Petition asserting a limited appearance to contest personal jurisdiction and preserve the right to stay arbitration.’”
Fourth, the Court rejected Am. Home’s argument that the Nevada District Court may not have jurisdiction over all the parties.
And fifth, the Court rejected Am. Home’s argument that the Nevada actions are “anticipatory suits” that are not entitled to any first-to-file weight, stating that “[t]his is not an accurate characterization of the first-filed Nevada action.” In rejecting this argument the Court distinguished National Union v. Las Vegas Prof’l Football Ltd, P’ship, since, in that case it was “undisputed that the parties agreed to arbitrate some claims.” The Court added (in a comment that suggested a favorable view of the merits): “Here, Respondents contest whether the arbitration clause applies to them at all. This is at least a plausible claim and not simply a pretense to avoid this Court’s jurisdiction.”
The Court also added: “Petitioner has not shown that the suit was filed ‘in response to a direct threat of litigation that gives specific warnings as to deadlines and subsequent legal action’.” The Court’s rejection of the “anticipatory suit” exception to the first-file rule, at the very least, would have been helpful if American Home were to attempts to make the same “anticipatory suit” argument in Nevada District Court.
Judge Preska, in a terse 11-page decision, laid out the facts objectively, without comment as to the underlying merits (who is bound by the Payment Agreement). She proceeded to recite the legal standards, fully agreeing with our arguments. She concluded that the date of the first-filed case – the case filed by our client Peccole-Nevada (PNC) in Nevada state court – is the date to be used to determine which forum will hear the case, including whether any exception applies. The state court filing governs even when that claim is removed to federal court, and even for a consolidated case.
The Court rejected Petitioner’s reliance on the subject Payment Agreement’s forum selection clause.
The Court rejected Petitioner’s argument that “this case is a bit unusual in that, among the competing actions [there were 5], each has a first-filed case.” In her most quotable line, she stated: “While this may be possible in Lake Wobegon, where all the children are above average, here in the Southern District of New York, there can be only one first.”
Judge Preska then addressed Petitioner’s “five arguments against this straightforward analysis,” and rejected each of them one by one.
First, the Court rejected Am. Home’s argument that it filed suit before all but the PNC parties and therefore the date of consolidation should govern.
Second, the Court rejected Am. Home’s argument that the venue/forum selection clause in the Payment Agreement governs.
Third, the Court rejected Am. Home’s argument that PNC’s filing in New York state court “signaled that they believe New York is an appropriate venue/forum.” The Court specifically stated: “As Respondents note, their filing in New York was ‘to file a defensive Petition asserting a limited appearance to contest personal jurisdiction and preserve the right to stay arbitration.’”
Fourth, the Court rejected Am. Home’s argument that the Nevada District Court may not have jurisdiction over all the parties.
And fifth, the Court rejected Am. Home’s argument that the Nevada actions are “anticipatory suits” that are not entitled to any first-to-file weight, stating that “[t]his is not an accurate characterization of the first-filed Nevada action.” In rejecting this argument the Court distinguished National Union v. Las Vegas Prof’l Football Ltd, P’ship, since, in that case it was “undisputed that the parties agreed to arbitrate some claims.” The Court added (in a comment that suggested a favorable view of the merits): “Here, Respondents contest whether the arbitration clause applies to them at all. This is at least a plausible claim and not simply a pretense to avoid this Court’s jurisdiction.”
The Court also added: “Petitioner has not shown that the suit was filed ‘in response to a direct threat of litigation that gives specific warnings as to deadlines and subsequent legal action’.” The Court’s rejection of the “anticipatory suit” exception to the first-file rule, at the very least, would have been helpful if American Home were to attempts to make the same “anticipatory suit” argument in Nevada District Court.
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