Wakaya Perfection, LLC v. Youngevity International , 910 F.3d 1118 ( 2018 )

FILED
United States Court of Appeals
PUBLISH Tenth Circuit
UNITED STATES COURT OF APPEALS December 11, 2018
Elisabeth A. Shumaker
FOR THE TENTH CIRCUIT Clerk of Court
_________________________________
WAKAYA PERFECTION, LLC, a
Utah limited liability company;
TODD SMITH, an individual;
BLAKE GRAHAM, an individual;
DAVE PITCOCK, an individual;
BARB PITCOCK, an individual;
ANDRE VAUGH, an individual;
TOTAL NUTRITION, INC, d/b/a
TNT a Utah corporation,
Plaintiffs - Appellants, -
No. 17-4178
v.
YOUNGEVITY INTERNATIONAL,
INC., a California corporation;
STEVE WALLACH, an individual;
MICHELE WALLACH, an
individual; DAVE BRISKIE, an
individual,
Defendants - Appellees.
_________________________________
Appeal from the United States District Court
for the District of Utah
(D.C. No. 2:16-CV-00315-DN)
_________________________________
Jonathan O. Hafen (Jonathan R. Schofield, Michael S. Anderson, and
Cynthia D. Love, with him on the briefs), of Parr Brown Gee & Loveless,
Salt Lake City, Utah, for Plaintiffs-Appellants.
Jonathan W. Emord (Peter A. Arhangelsky with him on the briefs), of
Emord & Associates, Gilbert, Arizona, for Defendants-Appellees.
_________________________________
Before BACHARACH, EBEL, and MORITZ, Circuit Judges.
_________________________________
BACHARACH, Circuit Judge.
_________________________________
This appeal involves the interplay between two related lawsuits. In
the first one, Wakaya Perfection, LLC and its principals sued Youngevity
International Corp. and its principals in Utah state court. The Youngevity
parties responded by bringing their own suit against the Wakaya parties in
a California federal district court and removing the Utah case to federal
court. These steps resulted in concurrent federal cases sharing at least
some claims and issues. For example, in both cases, the parties disagreed
over whether Wakaya could bring its claims in court rather than in
arbitration.
The California litigation progressed; and in November 2017, the
federal district court in Utah ordered dismissal, holding that
 the court should abstain from exercising jurisdiction under the
Colorado River test and
 an arbitrator would need to decide the arbitrability of Wakaya’s
claims. 1
1
The district court also concluded that an arbitrator would need to
decide the arbitrability of all of the Wakaya parties’ claims. But the issue
here involves the arbitrability of claims brought by Wakaya itself rather
than the other Wakaya parties.
2
We reverse on both grounds: The court applied the wrong abstention
test and erroneously ruled that an arbitrator should decide whether
Wakaya’s claims are arbitrable.
Issues in the Appeal
I. The district court erroneously applied the Colorado River test in
dismissing the Utah lawsuit.
The district court erred in using an inapplicable test when deciding
whether to dismiss the Utah lawsuit.
A. Reversal is necessary when the district court applies the
wrong test.
We apply the abuse-of-discretion standard when reviewing a district
court’s decision to abstain from exercising jurisdiction over one of two
duplicative federal cases. Hartsel Springs Ranch of Colo., Inc. v. Bluegreen
Corp., 296 F.3d 982, 985 (10th Cir. 2002). A district court abuses its
discretion when it bases a decision on an erroneous legal conclusion.
Kansas v. United States, 249 F.3d 1213, 1227 (10th Cir. 2001); see also
Sprint Nextel Corp. v. Middle Man, Inc., 822 F.3d 524, 535 (10th Cir.
2016) (stating that a district court’s application of the wrong legal standard
constitutes an abuse of discretion). We must therefore reverse when the
district court applies the wrong test. See Sierra Club v. Cargill, 11 F.3d
1545, 1548 (10th Cir. 1993) (reversing because the “[t]he district court
abused its discretion” in applying “the wrong standard of review and, as a
result, the wrong analytical framework”).
3
B. The district court applied the wrong test by treating the
Colorado River test as controlling on abstention when both
cases are in federal court.
The district court applied the abstention test set out in Colorado
River Water Conservation District v. United States, 424 U.S. 800 (1976). In
this opinion, the Supreme Court recognized a narrow doctrine permitting a
federal court to abstain from exercising jurisdiction when a parallel case
exists in state court. Colo. River, 424 U.S. at 813. Given the narrowness of
this doctrine, the Colorado River test requires “exceptional circumstances”
and an “important countervailing interest” for a federal court to abstain
from exercising jurisdiction based on pending litigation in state court. Id.
(quoting Cty. of Allegheny v. Frank Mashuda Co., 360 U.S. 185, 189
(1959)); see also Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,
460 U.S. 1, 16 (1983) (noting that “the balance [is] heavily weighted in
favor of the exercise of [federal] jurisdiction” in a case involving state-
federal concurrent litigation).
In this appeal, we must decide whether the Colorado River test
controls when both of the cases are in federal court. We have recognized
that the test applies when one of the cases is in state court. Rienhardt v.
Kelly, 164 F.3d 1296, 1302 (10th Cir. 1999). In this circumstance, we have
applied the Colorado River test and recognized eight pertinent factors:
1. the possibility that one of the two courts has exercised
jurisdiction over property
4
2. the inconvenience from litigating in the federal forum
3. the avoidance of piecemeal litigation
4. the sequence in which the courts obtained jurisdiction
5. the “vexatious or reactive nature” of either case
6. the applicability of federal law
7. the potential for the state-court action to provide an effective
remedy for the federal plaintiff
8. the possibility of forum shopping.
Fox v. Maulding, 16 F.3d 1079, 1082 (10th Cir. 1994).
Here, however, both of the parallel cases were pending in federal
court. In this situation, courts elsewhere have held that the Colorado River
test does not apply. See Missouri ex rel. Nixon v. Prudential Health Care
Plan, Inc., 259 F.3d 949, 953 (8th Cir. 2001) (“By its own terms, Colorado
River applies only to concurrent state and federal litigation.”); Levy v.
Lewis, 635 F.2d 960, 967 (2d Cir. 1980) (“[I]t is clear . . . that abstention
for purposes of judicial economy from exercising its jurisdiction under
Colorado River applies only where concurrent federal-state jurisdiction
exists.”); cf. Life-Link Int’l, Inc. v. Lalla, 902 F.2d 1493, 1494 (10th Cir.
1990) (per curiam) (“[Paris v. Affleck, 431 F. Supp. 878 (M.D. Fla. 1977)]
was a removal case regarding whether claims could be concurrently
5
litigated in two federal courts and, thus, is inapplicable to this case of
concurrent litigation as between a state and a federal court.”). 2
These holdings comport with Colorado River itself in that the
Supreme Court recognized the need for different approaches depending on
whether the concurrent litigation involves
 parallel cases in federal courts or
 parallel cases in federal and state courts.
Colo. River, 424 U.S. at 817; see also Missouri ex rel. Nixon, 259 F.3d at
953 (observing that the Supreme Court had contrasted its holding in
Colorado River, which focused on concurrent federal-state litigation, with
cases involving concurrent federal litigation). The need for a difference in
approaches stems from the different purposes underlying each type of
abstention: When a federal district court defers in favor of another federal
case, the only concern is venue because federal jurisdiction will be
exercised in one of the two districts. As a result, “no precise rule” has
2
Although the Utah action began in state court, the Youngevity parties
removed the case prior to the dismissal. So at the time of the dismissal, the
Colorado River test did not apply because the case was no longer in state
court. See Kirkbride v. Continental Cas. Co., 933 F.2d 729, 734 (9th Cir.
1991) (stating that the Colorado River “doctrine is inapplicable here
because FDIC removed the entire case to federal court; therefore there was
no concurrent or pending state court proceeding when the appellees moved
for remand”); Noonan South, Inc. v. Volusia Cty., 841 F.2d 380, 382 (11th
Cir. 1988) (stating that the case did not fit within Colorado River
abstention because the state-court action had been removed to federal
court).
6
emerged to govern abstention when two federal district courts are
addressing similar suits between the same parties. Colo. River, 424 U.S. at
817; see Katz v. Gerardi, 655 F.3d 1212, 1217 (10th Cir. 2011).
The Youngevity parties apparently recognized this distinction when
seeking sanctions; there they acknowledged that the Colorado River factors
are immaterial when both cases are pending in federal court:
Furthermore, Youngevity did not address the Colorado
River factors because those factors are irrelevant when two
duplicative suits are pending in federal court. Those factors are
relevant only when determining whether to dismiss a federal
suit in favor of a concurrent state suit. Indeed, the Wakaya
Parties concede that those factors would apply only where a
federal court decides whether to dismiss a federal action in
favor of a concurrent and duplicative state suit. In their
Opening Appeal Brief, however, the Wakaya Parties argued that
the district court misapplied those exact same factors in
dismissing a concurrent federal suit. The Wakaya Parties now
concede that those factors are inapplicable to concurrent
duplicative federal proceedings.
Appellees’ Reply to Appellants’ Opp. to Mot. for Sanctions at 12 (citations
omitted). But in their response brief, the Youngevity parties take a
different approach, arguing that the Colorado River test applies even when
both of the parallel cases are in federal court.
For this argument, the Youngevity parties rely on a single sentence in
United States v. Rice, 605 F.3d 473 (8th Cir. 2010), insisting that it
recognizes the applicability of Colorado River when both cases are in
federal court. In Rice, the defendant argued unsuccessfully that the district
court should have abstained under Colorado River. In rejecting this
7
argument, the Eighth Circuit Court of Appeals stated: “Colorado River
abstention arises in limited ‘situations involving the contemporaneous
exercise of concurrent jurisdictions, either by federal courts or by state and
federal courts.’” Id. at 476 (quoting Colo. River Water Conservation Dist.
v. United States, 424 U.S. 800, 817 (1976)).
The Eighth Circuit was quoting part of a passage from Colorado
River, where the Supreme Court had contrasted
 the principles supporting abstention in cases involving
concurrent litigation and
 the principles supporting abstention in other situations.
The passage in Colorado River had stated:
Although this case falls within none of the abstention
categories [that we have previously recognized], there are
principles unrelated to considerations of proper constitutional
adjudication and regard for federal-state relations which govern
in situations involving the contemporaneous exercise of
concurrent jurisdictions, either by federal courts or by state and
federal courts. These principles rest on considerations of
“[w]ise judicial administration, giving regard to conservation
of judicial resources and comprehensive disposition of
litigation.” Generally, as between state and federal courts, the
rule is that “the pendency of an action in the state court is no
bar to proceedings concerning the same matter in the Federal
court having jurisdiction. . . .” As between federal district
courts, however, though no precise rule has evolved, the
general principle is to avoid duplicative litigation.
424 U.S. at 817 (internal citations omitted). As the full passage reflects,
the Supreme Court had differentiated between cases involving (1)
concurrent federal-state litigation and (2) concurrent federal litigation. Id.
8
The Rice court observed this distinction, stating that “a necessary premise
of Colorado River abstention is the pendency of ‘parallel state and federal
proceedings.’” Rice, 605 F.3d at 476 (citation omitted).
Unlike the Eighth Circuit and each other circuit court to address the
issue, the district court treated the Colorado River test as controlling in
cases involving concurrent federal litigation. In doing so, the district court
applied the wrong test, treating Colorado River as controlling when it
wasn’t. This error dictates reversal.
C. We provide guidance for the district court if it again
considers abstention.
Although we conclude that the district court erred by applying the
wrong test, we recognize that we have not yet established a comprehensive
test governing abstention when both cases are in federal court. See Katz v.
Gerardi, 655 F.3d 1212, 1217 (10th Cir. 2011) (“‘As between federal
district courts . . . no precise rule has evolved.’” (quoting Colo. River, 424
U.S. at 817)). We therefore supply guidance for the district court if it
revisits the possibility of abstention.
When two federal suits are pending, the district court cannot resort to
a “rigid mechanical solution.” Kerotest Mfg. Co. v. C-O-Two Fire Equip.
Co., 342 U.S. 180, 183 (1952). As a starting point, courts should apply the
first-to-file rule. See Hospah Coal Co. v. Chaco Energy Co., 673 F.2d
1161, 1163 (10th Cir. 1982). Under this rule, courts consider three factors:
9
“(1) the chronology of events, (2) the similarity of the parties involved,
and (3) the similarity of the issues or claims at stake.” Baatz v. Columbia
Gas Transmission, LLC, 814 F.3d 785, 789 (6th Cir. 2016). But these
factors are not exhaustive, and other equitable factors may bear on the
inquiry. See id. (listing inequitable conduct, bad faith, anticipatory suits,
and forum shopping as equitable considerations).
1. The First-to-File Rule
Our circuit has adopted the first-to-file rule as a baseline. See
Hospah Coal Co. v. Chaco Energy Co., 673 F.2d 1161, 1163 (10th Cir.
1982). Some early cases in our circuit described this rule as a strict one.
See, e.g., O’Hare Int’l Bank v. Lambert, 459 F.2d 328, 331 (10th Cir.
1972) (holding that once a federal district court obtains jurisdiction, “that
right cannot be arrested or taken away by proceedings in another federal
district court”). More recently, we stated that the first-to-file rule is a
“general rule” and that the first court to acquire jurisdiction may not be
ideally suited to decide the merits. Hospah Coal Co., 673 F.2d at 1163–64;
see also Buzas Baseball, Inc. v. Bd. of Regents of the Univ. Sys. of Ga.,
1999 WL 682883, at *2 (10th Cir. 1999) (unpublished) (noting that the
first-to-file rule “permits,” but does not require, a federal district court to
abstain from exercising its jurisdiction in deference to a first-filed case in
a different federal district court). We therefore consider not only the
10
chronology of events but also the similarities in the parties, issues, and
claims.
a. The Chronology of Events
To determine chronology, we have recognized that “the first court in
which jurisdiction attaches has priority to consider the case” and
jurisdiction “relates back to the filing of the complaint.” Hospah Coal Co.,
673 F.2d at 1163 (citation omitted). 3 As a result, determining the
chronology of events typically requires only a comparison of the two filing
dates. 4
3
The Youngevity parties observe that the Wakaya parties had not
served process before the start of the California case. Appellees’ Resp. Br.
at 36. This observation is irrelevant because the operative filing date is
when the complaint was filed. Hospah Coal Co., 673 F.2d at 1163; see p.
14, below (citing Fed. R. Civ. P. 3).
4
The sequence of filings bears on both the first-to-file rule and the
Colorado River test. But as the Youngevity parties acknowledge, the two
tests vary in the weight placed on which complaint was filed first. When
both cases are pending in federal courts, the first-filed case often obtains
priority. Smart v. Sunshine Potato Flakes, 307 F.3d 684, 687 (8th Cir.
2002). But when one of the cases is in state court, the sequence of filing
dates is less likely “to be determinative because of the federal court’s
‘virtually unflagging obligation’ to exercise its jurisdiction.” Id. (quoting
Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 817–
18 (1976)).
The Youngevity parties implicitly recognized this difference, urging
the California court to dismiss the Wakaya parties’ counterclaims based on
the first-to-file rule (rather than the Colorado River test). Even now the
Youngevity parties assert that if the dismissal is overturned, the Wakaya
parties’ claims in Utah should take priority over their counterclaims in the
California case. Appellees’ Resp. Br. at 36 n.10.
11
But what if one of the complaints was filed initially in state court?
Here, for example, the Utah complaint had been filed in Utah state court
before the Youngevity parties sued in California federal court. The
Youngevity parties eventually removed the Utah action to federal district
court. But by then, the California complaint had already been filed. See
note 2, above. In applying the first-to-file rule, do we consider the date
that the Utah complaint had been filed in state court or the date that the
Utah case was removed to federal court? 5 The district court focused on the
date that the case had been removed. But many district courts in our
circuit 6 and elsewhere 7 have focused on the date that the case was filed in
5
The Youngevity parties argue that the first-to-file rule does not apply
because the Wakaya parties had filed the Utah case only six days before
the California case was filed. Appellees’ Resp. Br. at 35–36. We disagree:
The first-to-file rule applies regardless of how many days separate the
filings. But district courts can exercise discretion on a case-by-case basis
when weighing the impact of which case was filed first.
6
E.g., Norrid v. D.A.R.P., Inc., No. 17–401, 2018 WL 2977384, at *2
(E.D. Okla. June 13, 2018) (“When a state action is removed to federal
court, for first-to-file purposes, the state court filing date is the date used.”
(citation omitted)); MedSpring Grp., Inc. v. Atl. Healthcare Grp., Inc., No.
05–115, 2006 WL 581018, at *3 (D. Utah Mar. 7, 2006) (same); United
States v. Kinder Morgan CO2 Co., L.P., No. 04–716, 2005 WL 3157998, at
*2 (D. Colo. Nov. 21, 2005) (“[T]he first case filed . . . is measured from
the state court filing date, not the date of removal.”).
7
E.g., Motiv Power Sys., Inc. v. Livernois Vehicle Dev., LLC, No. 13–
4811, 2014 WL 94370, at *2 (N.D. Cal. Jan. 9, 2014) (“[T]he date of
removal is immaterial to the first-to-file analysis.”); Innovation Ventures,
L.L.C. v. Custom Nutrition Labs., L.L.C., 534 F. Supp. 2d 754, 756 (E.D.
Mich. 2008) (“[T]he date the removed action was filed in state court is the
controlling date to determine which of two actions has priority. The date of
12
state court rather than the removal date. We agree that courts should focus
on the date that the complaint was filed in state court. To do otherwise
would reward gamesmanship. See Kohn Law Grp., Inc. v. Auto Parts Mfg.
Miss., Inc., 787 F.3d 1237, 1240 (9th Cir. 2015) (applying the first-to-file
rule to avoid gamesmanship).
The power of removal rests solely with the defendants. See 28 U.S.C.
§ 1446(b)(1). So focusing on the removal date would allow defendants to
manipulate the first-to-file rule by suing in another forum before removing
the first case. This sort of manipulation would allow defendants, not
plaintiffs, to select the forum for the plaintiff’s claim. See Gulf Oil Corp.
v. Gilbert, 330 U.S. 501, 508 (1947) (recognizing that “the plaintiff’s
choice of forum should rarely be disturbed”).
removal is immaterial.”); Feinstein v. Brown, 304 F. Supp. 2d 279, 283
(D. R.I. 2004) (concluding that the plaintiffs’ case had been filed first
based on the date that the petition had been filed in state court prior to
removal); First Health Grp. Corp. v. Motel 6 Operating L.P., No. 00–524,
2000 WL 984160, at *2 (N.D. Ill. July 17, 2000) (“Motel 6’s suit, when
removed to federal court, must be treated as though it started in federal
court as of the date it was filed in state court.”); Affinity Memory & Micro,
Inc. v. K & Q Enter., Inc., 20 F. Supp. 2d 948, 954 n.10 (E.D. Va. 1998)
(“When a state action is removed to federal court, for first-to-file
purposes, the state court filing date is the date used.”); 800-Flowers, Inc.
v. Intercontinental Florist, Inc., 860 F. Supp. 128, 131 n.1 (S.D.N.Y. 1994)
(“Where a state action is subsequently removed to federal court, for the
purposes of the First-to-File Rule, ‘the state court filing date is the
relevant benchmark.’” (citation omitted)); Igloo Prods. Corp. v. The
Mounties, Inc., 735 F. Supp. 214, 217 (S.D. Tex. 1990) (“The question is
whether in applying the first-filed rule, the Court should look to the date
on which the Oregon state court suit was filed or the date on which it was
removed to federal court. The Court considers the date of filing in state
court to be the relevant benchmark.”).
13
The Youngevity parties point out that the court in Hospah Coal
described the operative date as the date in which “jurisdiction attaches.”
Hospah Coal, 673 F.2d at 1163. Out of context, this description could
arguably be interpreted as a reference to the removal date. But in context,
the Hospah Coal court was not referring to the removal date: The court
used the phrase “jurisdiction attaches” when discussing cases initially filed
in federal court, where the filing dates also constituted the dates that
jurisdiction attached. Id. at 1161, 1163; see Fed. R. Civ. P. 3 (“A civil
action is commenced by filing a complaint with the court.”). In this
context, the court held that we should compare concurrent cases based on
the date that the complaint was filed: We have no reason to jettison that
approach when considering cases removed from state court. See Wallace v.
Microsoft Corp., 596 F.3d 703, 706 (10th Cir. 2010) (“‘After the removal
of an action from state court . . . the case will proceed as if it originally
had been brought in the federal court.’” (quoting 14C Wright et al.,
Federal Practice and Procedure § 3738 at 692–98 (4th ed. 2009)). 8 We
8
The Ninth Circuit Court of Appeals has also recognized priority
under the first-to-file rule for “the court which first acquired jurisdiction.”
Pacesetter Sys., Inc. v. Medtronic, Inc., 678 F.2d 93, 95 (9th Cir. 1982).
But district courts in the Ninth Circuit have recognized that this priority
refers to the filing of the complaint in state court rather than the removal.
E.g., SVF Weston Lakeside, LLC v. Certain Underwriters at Lloyds of
London, No. 16–7676, 2017 WL 6949285, at *1 n.1 (C.D. Cal. Feb. 9,
2017) (stating that “for the purposes of this first-to-file analysis,” the
pertinent date is when the plaintiff had filed the complaint in state court
rather than the removal date); Diversified Metal Prod., Inc. v. Odom
14
therefore focus on the date that the complaint had been filed in state court
rather than the removal date.
b. The Similarity of the Parties and the Issues or Claims
We also consider whether the two cases bear substantial overlap in
(1) the parties and (2) the issues or claims. Baatz v. Columbia Gas
Transmission, LLC, 814 F.3d 785, 790–91 (6th Cir. 2016). 9 We place less
weight on similarity when considering abstention in concurrent federal
cases than when one of the cases is in state court; when two federal cases
Indus., Inc., No. 12–00162, 2012 WL 2872772, at *3 (D. Idaho July 12,
2012) (“At least for the purposes of the first-to-file rule, . . . the filing date
assumed by a removed case is the date the action was filed in state
court.”); Allstate Prop. & Cas. Ins. Co. v. Mercury Plastics, No. 13–1763,
2014 WL 2197749, at *2 (D. Nev. May 27, 2014) (holding that the
pertinent date, for purposes of the first-to-file rule, is the filing date in
state court rather than the removal date); Fakespace Labbs, Inc. v.
Robinson, No. 99–5258, 2000 WL 1721061, at *2 (N.D. Cal. Nov. 6, 2000)
(“When one of the federal cases has been removed from state court, courts
look to the date on which it was filed in state court [for purposes of the
first-to-file rule].”). The Ninth Circuit Court of Appeals took a similar
approach in an unpublished opinion, applying the first-to-file rule based on
the filing date in state court because “[w]hen an action is commenced in
state court and removed to federal court, the action remains the same.”
Hartford Acc. & Indem. Co. v. Margolis, 1992 WL 43484, at *1 (9th Cir.
1992) (unpublished).
9
The district court described some of the differences between the
parties and issues when discussing the Utah and California cases. But the
court did not discuss the significance of these differences. If the
possibility of abstention is revisited, the district court should consider the
significance of the differences between the two federal cases. See Fox v.
Maulding, 16 F.3d 1079, 1082 (10th Cir. 1994) (“[T]he court must make its
findings about the parallel nature of the . . . proceedings and the balance of
the factors on the record.” (emphasis removed)).
15
are involved, we do not risk depriving a litigant of a federal forum. Ritchie
Capital Mgmt., L.L.C. v. BMO Harris Bank, N.A., 868 F.3d 661, 664 (8th
Cir. 2017).
2. Equitable Considerations
After determining the sequence and similarities in the cases,
“court[s] must also determine whether any equitable considerations . . .
merit not applying the first-to-file rule in a particular case.” Baatz v.
Columbia Gas Transmission, LLC, 814 F.3d 785, 789 (6th Cir. 2016).
We have previously recognized some of these considerations. 10 For
example, we’ve noted that the first-to-file rule may be disregarded “to
prevent a misuse of litigation in the nature of vexatious and oppressive
foreign suits.” O’Hare Int’l Bank v. Lambert, 459 F.2d 328, 331 (10th Cir.
1972). And we’ve said that courts need not defer to the first-filed case
when doing so would reward forum shopping. See Span-Eng Assocs. v.
Weidner, 771 F.2d 464, 470 (10th Cir. 1985) (noting that a district court
may “take into account circumvention of the rules of procedure or court
rulings” in determining whether to enjoin a party from pursuing one of two
concurrent federal cases). These factors are not exhaustive. For example,
the equitable factors bearing on state-federal concurrent litigation may also
10
The Wakaya parties argue that the district court erred by considering
only the four equitable factors discussed in Colorado River and failing to
consider other factors recognized in Fox v. Maulding, 16 F.3d 1079, 1082
(10th Cir. 1994). Appellants’ Opening Br. at 14. We need not address this
argument.
16
apply so long as courts observe that state-federal concurrent litigation
triggers a different test. See pp. 4–9, above.
D. The Wakaya parties did not forfeit their challenge to the
district court’s reliance on the Colorado River test.
In the alternative, the Youngevity parties argue that the Wakaya
parties forfeited their challenge to the district court’s reliance on the
Colorado River test. We disagree: The district court raised the abstention
issue sua sponte, so the Wakaya parties had no opportunity to address this
issue in the Utah case. 11 We therefore conclude that the Wakaya parties did
not forfeit this challenge.
11
The Youngevity parties also contended in oral argument that the
Wakaya parties had waived reliance on the first-to-file rule by (1) failing
to seek dismissal of the California litigation and (2) actively litigating in
California for two years. We disagree.
For the sake of argument, we can assume that the first-to-file rule
could be waived through intentional relinquishment of a known right or
manipulation of the judicial process. Cf. In re Cox Enters., Inc. Set-Top
Cable Television Box Antitrust Litig., 835 F.3d 1195, 1205 (10th Cir. 2016)
(discussing waiver of a right to arbitration). Here, though, the Wakaya
parties did neither. When the Wakaya parties filed a counterclaim in the
California case, they had already waited over a year for the Utah court to
rule on the motion to dismiss. At that point, the Wakaya parties could have
declined to file a counterclaim in California. But that tactic risked losing
an opportunity to assert the claims anywhere if the Utah court were to
eventually order dismissal. To avoid this risk, the Wakaya parties
protected themselves by filing a counterclaim in California while waiting
for the Utah court to rule. This protective course did not constitute an
intentional relinquishment of a known right or manipulation of the judicial
process.
17
II. The district court erred by ruling that an arbitrator should
decide whether Wakaya’s claims were arbitrable.
The district court ruled that arbitrability should be decided by an
arbitrator. Wakaya challenges this ruling, arguing that the arbitrability of
its claims should be decided by a court rather than an arbitrator. On this
issue, we engage in de novo review. See Hancock v. Am. Tel. & Tel. Co.,
701 F.3d 1248, 1261 (10th Cir. 2012).
The district court recognized that Wakaya was not a party to the
arbitration agreement, adding that Wakaya’s claims were “likely
arbitrable” because they were intertwined with claims asserted by some of
the parties to the arbitration agreement. Appellants’ App’x, vol. II, at 394.
Ultimately, however, the court declined to decide whether Wakaya was
subject to the arbitration agreement, leaving this question to the arbitrator
to decide.
If the district court declines to abstain after our remand, the court
would need to decide the arbitrability of Wakaya’s claims. 12 The Supreme
Court has repeatedly held that “[u]nless the parties clearly and
unmistakably provide otherwise, the question of whether the parties agreed
to arbitrate is to be decided by the court, not the arbitrator.” AT&T Techs.,
12
The Youngevity parties argue that Wakaya’s claims have already
been litigated in California, mooting the arbitration issue. Appellees’ Resp.
Br. at 42–43. But the Youngevity parties are currently appealing the
California court’s ruling on arbitrability. Appellees’ Resp. Br. at 18. Given
the pendency of this appeal, the issue of arbitrability is not moot.
18
Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 649 (1986). The parties
might “provide otherwise” by entering into an arbitration agreement. Id.
But Wakaya did not sign the arbitration agreement. As a result, the
arbitrability of Wakaya’s claims must be decided by a court rather than an
arbitrator. See First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 943
(1995) (stating that if the parties did not agree to submit the arbitrability
question itself to arbitration, the court should decide this question).
* * *
If the district court again considers whether Wakaya’s claims are
arbitrable, 13 the court should decide this issue rather than refer it to the
arbitrator.
The Youngevity Parties’ Pending Motions
The Youngevity parties have moved for judicial notice and sanctions.
We grant the motion for judicial notice and deny the motion for sanctions.
Sanctions are impermissible here because (1) the appeal is not
frivolous and (2) the Wakaya parties did not act in bad faith. By the time
that the Wakaya parties filed their opening brief, they faced two conflicting
judicial conclusions:
13
If the district court again decides to abstain from exercising
jurisdiction of the Utah action, the court would not need to reach the
arbitration issue. Deciding arbitrability in this situation could create a
conflict with prior rulings in the California case (that are now pending on
appeal).
19
 dicta in the District of Utah that Wakaya’s claims are likely
arbitrable and
 a ruling in the Southern District of California that the
Youngevity parties had waived arbitration on Wakaya’s claims
for a declaratory judgment, breach of contract, breach of the
covenant of good faith and fair dealing, conversion, and
tortious interference with existing relations.
Absent an appeal of the Utah ruling, Wakaya faced conflicting decisions.
And the Wakaya parties explain that they
 asserted counterclaims in the California case only because the
Utah case had stalled and
 planned to seek dismissal of the California case if the motion
to dismiss in Utah were eventually denied.
See note 11, above. This strategy was reasonable because the Wakaya
parties could otherwise have lost the right to sue in either forum. We
therefore deny the Youngevity parties’ motion for sanctions.
Disposition
We reverse and remand for further proceedings. We also grant the
Youngevity parties’ motion for judicial notice and deny the motion for
sanctions.
20