Moyer v. Cellura ( 2023 )

1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 7 ALLEN MOYER, et al., Case No. 23-cv-03004-SVK 8 Plaintiffs, ORDER GRANTING DEFENDANTS’ 9 v. MOTION TO STAY CASE 10 JOSEPH R. CELLURA, et al., Re: Dkt. No. 23 11 Defendants. 12 On June 20, 2023, Plaintiffs Allen Moyer (“Moyer”) and ADMI Incorporated 13 (“Plaintiff-ADMI”) filed the complaint in this action (the “California Action”), which alleges that 14 Defendants Joseph R. Cellura (“Cellura”), ADMI Inc. (“Defendant-ADMI”), and Tarsin Mobile 15 Inc. (“Tarsin”) have unfairly competed with Plaintiffs by falsely representing that Defendants 16 purchased and/or were connected with Plaintiffs’ business operations and by “impersonating” and 17 “imitat[ing]” Plaintiff-ADMI in a variety of ways. Dkt. 1. Now before the Court is Defendants’ 18 motion to stay this California Action under the first-to-file rule in light of a lawsuit between the 19 Parties pending in the United States District Court for the Southern District of New York, ADMI 20 Inc. et al. v. Moyer et al., S.D.N.Y. Case No. 1:22-cv-09339-ALC (the “SDNY Action”). Dkt. 23. 21 All Parties have consented to the jurisdiction of a magistrate judge. Dkt. 7, 21. This matter is 22 suitable for determination without oral argument. Civ. L.R. 7-1(b). After reviewing the Parties’ 23 submissions, the relevant case law, and the case file, the Court GRANTS Defendants’ motion to 24 stay for the reasons discussed below. 25 I. FACTUAL BACKGROUND 26 A. The Parties 27 According to the complaint in this case, Plaintiff-ADMI is incorporated in the State of 1 District. Dkt. 1 ¶ 2. Plaintiff Moyer is the sole owner and shareholder of Plaintiff-ADMI. Id. ¶ 1. 2 Defendant-ADMI is incorporated in Nevada and has its principal place of business in New York. 3 Id. ¶ 4. Defendant Tarsin is incorporated in Florida and has its principal place of business in 4 Nevada. Id. ¶ 5. Defendant Cellura is a Nevada resident who is a director and officer of 5 Defendant-ADMI and Tarsin. Id. ¶ 3. 6 B. The California Action 7 In their complaint in this California Action, Plaintiffs describe their business as “program, 8 project, and design management, often in the entertainment and hospitality industries.” Dkt. 1 9 ¶ 11. For a year and a half starting in or around 2016, Defendants, who were seeking to enter this 10 area of business, discussed the possibility of Defendants purchasing Plaintiff-ADMI, leading to an 11 exchange of unsigned letters of intent. Id. ¶¶ 12-14. Plaintiffs allege that during these 12 discussions, they instructed Defendants on aspects of how to operate the business. Id. ¶ 13. 13 Ultimately, Defendants did not purchase Plaintiff-ADMI. Id. ¶¶ 14-15. 14 According to Plaintiffs, while the Parties were still in discussions, Defendants started to 15 represent to investors and prospective clients that they had already purchased Plaintiff-ADMI. Id. 16 ¶ 14. Defendants then created Defendant-ADMI, which “started operating in concert with 17 Tarsin.” Id. ¶ 15. Plaintiffs allege that Defendants unfairly competed with Plaintiffs by 18 representing that they purchased Plaintiffs and/or were part of Plaintiffs’ business operations and 19 by “impersonating” and “imitat[ing]” Plaintiff-ADMI in a variety of ways. Id. ¶¶ 15-22. 20 Plaintiffs allege that Defendants’ “impersonation” of Plaintiffs was intentionally misleading and 21 caused confusion in the industry. Id. 22 On June 20, 2023, Plaintiffs filed the complaint in this case, which contains causes of 23 action for: (1) Violation of 15 U.S.C. § 1125; (2) Violation of California Business and Professions 24 Code § 17200, and (3) Common Law Tortious Interference with Business Relations and 25 Opportunities. Dkt. 1. 26 C. The SDNY Action 27 On or about October 31, 2022—more than seven months before Plaintiffs filed this 1 California Action—Defendants filed the SDNY Action.1 Dkt. 26-1 ¶ 4; Dkt. 26-4. The original 2 complaint in the SDNY Action alleged that during the Parties’ discussions that began in 2016, 3 Moyer agreed to be an outside consultant for Defendant-ADMI but that Moyer then made false 4 claims that customers of Defendant-ADMI and Tarsin were required to use the services of Moyer 5 and Plaintiff-ADMI. Dkt. 26-4 ¶¶ 11, 15-21. The original complaint contained causes of action 6 for: (1) Intentional Interference with Prospective Business Advantage; (2) Defamation Per Se; 7 (3) Intentional Infliction of Emotional Distress; and (4) Injunctive Relief. Id. 8 On December 13, 2022, the court in the SDNY Action stayed the case at the Parties’ 9 request. Dkt. 26-7. On July 27, 2023, Defendants informed the court in the SDNY Action that 10 they wanted to lift the stay. SDNY Action Dkt. 25. On July 31, 2023, Defendants filed a motion 11 to enjoin Plaintiffs from pursuing this California Action. SDNY Action Dkt. 27. 12 Defendants filed an amended complaint in the SDNY Action on August 28, 2023 that 13 contains additional allegations and causes of action against Plaintiffs. Dkt. 26-1 ¶ 5; Dkt. 26-5. 14 On August 28, 2023, Plaintiffs filed a motion to dismiss the SDNY Action for insufficient 15 service of process and for lack of personal jurisdiction and a response to the OSC. SDNY Action 16 Dkt. 41. 17 When Defendants filed the present motion to stay on September 15, 2023, they indicated 18 that the court in the SDNY Action had not yet ruled on Defendants’ motion to enjoin this case or 19 Plaintiffs’ motion to dismiss the SDNY Action. Dkt. 23 at 4. From the Court’s review of the 20 docket in the SDNY Action on PACER, it appears that those motions remain pending in the 21 SDNY Action. 22 II. LEGAL STANDARD 23 Under the first-to-file rule, a district court has discretion to dismiss, transfer, or stay 24 proceedings if a similar case with substantially similar issues and parties was previously filed in 25 another district court. Kohn Law Group, Inc. v Auto Parts Mfg. Mississippi, Inc., 787 F.3d 1237, 26 1239 (9th Cir. 2015); see also Alltrade, Inc. v. Uniweld Prods., Inc., 946 F.2d 622, 628-29 (9th 27 1 Cir. 1991). “The first-to-file rule is intended to serve the purpose of promoting efficiency well and 2 should not be disregarded lightly.” Kohn Law Group, 787 F.3d at 1239 (internal quotation marks 3 and citations omitted). When evaluating the first-to-file rule, “courts should be driven to 4 maximize economy, constituency, and comity” and may apply the rule “when a complaint 5 involving the same parties and issues has already been filed in another district.” Id. at 1239-40 6 (internal quotation marks and citation omitted). “Thus, in applying the first-to-file rule, a court 7 analyzes three factors: chronology of the lawsuits, similarity of the parties, and similarity of the 8 issues.” Id. at 1240 (citation omitted). 9 III. EVIDENTIARY ISSUES 10 Defendants attached a number of exhibits to the motion to stay without an authenticating 11 declaration, in violation of Civil Local Rule 7-5(a), which provides: 12 Affidavit or Declaration Required. Factual contentions made in support of or in opposition to any motion must be supported by an affidavit or declaration and by 13 appropriate references to the record. Extracts from depositions, interrogatory 14 answers, requests for admission and other evidentiary matters must be appropriately authenticated by an affidavit or declaration. 15 Accordingly, the Court STRIKES Exhibits 1 to 10 to the motion to stay (Dkt. 23-1 to 23-10). 16 Any evidence outside the record in this case that the Court has considered is either authenticated 17 by declaration filed with Plaintiffs’ opposition to the motion to stay (Dkt. 26-1 and exhibits 18 thereto) or was located by reviewing the docket in the SDNY Action.2 19 As a result of this ruling, the Court STRIKES AS MOOT Plaintiffs’ Objections to 20 Defendants’ Exhibits in Support of Motion to Stay at Dkt. 26-9, which contains objections to 21 Defendants’ Exhibits 1-10 on hearsay and lack of authentication grounds. However, the Court 22 notes that by filing these objections as a separate document, Plaintiffs also violated the Civil Local 23 Rules, namely Civil Local Rule 7-3(a), which requires that “[a]ny evidentiary and procedural 24 25 26 2 A court may take judicial notice of facts not subject to reasonable dispute, including facts that can be accurately and readily determined from sources whose accuracy cannot reasonably be 27 questioned. Fed. R. Ev. 201(b)(2). Under appropriate circumstances, facts concerning other court 1 objections to the motion must be contained within the brief or memorandum” filed in opposition to 2 a motion. 3 The Court instructs all Parties to familiarize themselves and comply with this District’s 4 Civil Local Rules and the undersigned’s Standing Orders in connection with all future filings in 5 this case. 6 IV. DISCUSSION 7 Defendants move to stay this case pursuant to the first-to-file rule on the grounds that the 8 SDNY Action was filed before this California Action and involves substantially similar parties 9 and issues. Dkt. 23 at 4-6. The Court finds that all three relevant factors weigh in favor of a stay. 10 First, Defendants filed the SDNY Action more than seven months before Plaintiffs filed this 11 California Action. Second, the parties in each of the two actions are identical. Third, the issues in 12 the two actions are substantially similar. The first-to-file rule does not require exact identity of 13 parties or issues. Kohn Law Group, 787 F.3d at 1240. The issues in each case need only be 14 “substantially similar,” tested by whether there is “substantial overlap” between the two suits. Id. 15 at 1240-41. Both the SDNY Action and this California Action involve the Parties’ dispute over 16 their respective rights to operate competing businesses. Dkt. 1; Dkt. 26-4; Dkt. 26-5. 17 Accordingly, the SDNY Action is the first-filed action and involves substantially similar parties 18 and issues as this action. 19 None of Plaintiffs’ arguments in opposition to the motion to stay persuade the Court to 20 exercise its discretion to deny a stay. Plaintiffs attack Defendants’ reliance on the first-to-file rule 21 by asserting that the amended complaint in the SDNY Action, which was filed after the Complaint 22 in this California Action, superseded the original complaint in that case. Dkt. 26 at 6. Plaintiffs 23 argue that because the amended complaint doubled the number of causes of action from four to 24 eight and was 37 pages long rather than the 15 pages of the original complaint, the amended 25 complaint “significantly diverges from the initial complaint” and thus “the ‘first-to-file’ rule no 26 longer favors Defendants.” Id. Plaintiffs do not cite legal authority for their assertion that “[d]ue 27 to the amended complaint [in the SDNY Action] being submitted after the initial lawsuit [in this 1 can no longer be regarded as the first one filed in time.” Id. In fact, relevant authority is to the 2 contrary. Ward v. Follett, 158 F.R.D. 645, 648 (N.D. Cal. 1994) (“In determining when a party 3 filed an action for purposes of the first to file rule, courts focus on the date upon which the party 4 filed its original, rather than its amended complaint”); see also Greenline Indus., Inc. v. Agri- 5 Process Innovations, Inc., No. C 08-2438 CW, 2008 WL 2951743, at *4 (N.D. Cal. July 28, 2008) 6 (rejecting argument that original complaint was irrelevant to first-to-file analysis because it was 7 never served); Pacesetter Sys., Inc. v. Medtronic, Inc., 678 F.2d 93, 96 n.3 (9th Cir. 1982) (it is 8 “the filing of actions in coordinate jurisdictions that invokes considerations of comity”). 9 Next, Plaintiffs argue that the first-to-file rule does not apply because the SDNY Action “is 10 clearly not based on the same facts as the instant lawsuit.” Dkt. 26 at 5. Plaintiffs offer no 11 analysis in support of this bald assertion, other than inviting the Court to infer that Defendants 12 would not have raised in the SDNY Action issues Plaintiffs have raised in this case concerning the 13 alleged “impersonation of Plaintiffs” by Defendants. Id. As explained above, however, the issues 14 in the two cases do not need to be identical to support application of the first-to-file rule. Kohn 15 Law Group, 787 F.3d at 1240. The Complaint in this Action and both the original and amended 16 complaints in the SDNY Action all arise from the Parties’ interactions with each other in the same 17 time frame and concern their respective rights to operate similar types of businesses. As just one 18 example, Defendants’ complaints in the SDNY Action allege that Plaintiff Moyer interfered with 19 Defendants’ business relationships by falsely telling others that Defendants were using Moyer’s 20 prior projects and other information without permission. See, e.g., Dkt. 26-4 (original SDNY 21 complaint) ¶ 49; see also Dkt. 26-5 (amended SDNY complaint) ¶ 100. Meanwhile, Plaintiffs’ 22 complaint in this California Action alleges that “Defendants impersonated [Moyer] by boasting of 23 achievements that were actually accomplished by the Plaintiffs,” thereby deceiving and misleading 24 others with prior or prospective business relationships with Plaintiffs. Dkt. 1 ¶¶ 18-20. Although 25 differences between the issues in the SDNY and California Actions may exist, they do not 26 overcome the “ultimate similarity” between the two actions. See Ward, 158 F.R.D. at 649. 27 Plaintiffs also argue that “a court may opt not to enforce [the first-to-file rule] if there is 1 Dkt. 26 at 3 (citing Rutter Group, Federal Civil Practice Before Trial ¶ 2:4600 (2021)); see also 2 id. at 3-4. Relatedly, Plaintiffs argue that the court has authority to depart from the first-to-file 3 rule where a party who is aware of an impending lawsuit initiates an action in a different forum 4 regarding the same issue beforehand. Dkt. 26 at 6. Plaintiffs offer no evidence in support of these 5 accusations. Instead, they are based on attorney argument as well as speculation on issues such as 6 whether an attorney for Defendants in the SDNY Action is willing or able to appear in this 7 District. See id. at 4. These unsupported arguments do not warrant departure from the first-to-file 8 rule. 9 Plaintiffs also argue that the Court should not stay this action in favor of the SDNY Action 10 because there is no personal jurisdiction over Plaintiffs in that court and venue in SDNY is 11 improper. Dkt. 26 at 4-5, 7-8. However, Plaintiffs’ pending motion to dismiss in the SDNY 12 Action raises issues concerning personal jurisdiction and service. See SDNY Action Dkt. 41. 13 Questions about whether the court in the first-filed case has jurisdiction weigh against dismissing 14 a case under the first-to-file rule. Vimo, Inc. v. Norvax Corp., No. C-07-01897 RMW, 2007 WL 15 9812883, at *3 (N.D. Cal. June 22, 2007) (“Where the first-to-file rule applies, dismissal is proper 16 in most cases, except where a motion for dismissal or transfer is pending in the court of first 17 filing”). However, Defendants do not seek dismissal of this case and instead seek a stay, which is 18 appropriate despite the challenges Plaintiffs have raised in the SDNY Action. See Molander v. 19 Google LLC, 473 F. Supp. 3d 1013, 1020 (N.D. Cal. 2020) (“If there are concerns regarding the 20 availability of remedies in the court of first filing, or regarding its jurisdiction over claims which 21 might implicate a statute of limitations if dismissed by that court, or if that court is preparing to 22 transfer its matter to the court of second filing, then the court of second filing should consider a 23 stay”). 24 The Court also rejects Plaintiffs various equitable arguments as to why this case should not 25 be stayed because, as with other arguments discussed above, Plaintiffs’ accusations of bad faith 26 and other improprieties are based on speculation and attorney argument rather than evidence. 27 Finally, Plaintiffs argue that the motion to stay should be denied under the “law of the case 1 respond to the Complaint. Dkt. 26 at 4 (citing Dkt. 16). This argument appears to refer to an 2 earlier motion by Defendants in this case, which was styled a “motion to enlarge time to file a 3 responsive pleading to Plaintiffs’ complaint.” Dkt. 15 (“motion for extension”). According to that 4 motion, Defendants’ newly-retained counsel for this litigation had learned in the course of 5 negotiating with Plaintiffs for an extension of the deadline for filing a responsive pleading in this 6 case that Defendants had moved in the SDNY Action to enjoin Plaintiffs’ prosecution of this 7 Action pursuant to the first-to-file rule. Dkt. 15-1 at 2. Defendants’ motion for extension in this 8 case cited Federal Rule of Civil Procedure 12 (regarding the deadline for filing and answer) and 9 Rule 6(b) (regarding extensions of time). Id. at 3. The motion for extension also stated in the 10 conclusion that “this Court should stay the proceedings under the first-to-file rule.” Id. at 4. 11 Because the motion for extension was unclear as to what relief Defendants were seeking, the Court 12 issued an order clarifying that it would treat the motion for extension as a motion to change time 13 pursuant to Civil Local Rule 6-3. Dkt. 16. After reviewing Plaintiffs’ opposition to the motion for 14 extension (Dkt. 19), the Court granted Defendants a 30-day extension, until September 15, 2023, 15 to respond to the Complaint in this case. Dkt. 20. Based on these facts, there is no basis for 16 Plaintiffs’ argument on the present motion to stay that “[t]he Court already impliedly ruled against 17 the stay.” Dkt. 26 at 4.3 18 Accordingly, the Court concludes that the requirements for application of the first-to-file 19 rule are satisfied, and the Court does not find circumstances sufficient to justify an exception to 20 that rule. Therefore, the Court will stay this action pending a decision by the Court in the SDNY 21 Action on the motions now pending there. 22 V. CONCLUSION 23 For the reasons discussed above, the Court GRANTS Defendants’ motion to stay this 24 action. The Parties must file a joint status report by the earlier of (1) 14 days after a ruling by the 25 26 3 In their opposition to the motion to stay, Plaintiffs comment, without elaborating, that “Defendants did not comply with the Court order, because they simply resubmitted their prior 27 request to stay, rather than submitting a response permitted by Fed. R. Civ. P. 12.” Dkt. 26 at 4. 1 court in the SDNY Action on the pending motion to enjoin and/or motion to stay, or 2 (2) December 18, 2023. 3 SO ORDERED. 4 Dated: October 19, 2023 5 6 Sees vat 4 SUSAN VAN KEULEN United States Magistrate Judge 8 9 10 11 a 12 13 © 15 16 it Z 18 19 20 21 22 23 24 25 26 27 28