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1999
Parallel Litigation
James P. George
Texas A&M University School of Law, pgeorge@law.tamu.edu
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Recommended Citation
James P. George, Parallel Litigation, 51 Baylor L. Rev. 769 (1999).
Available at: http://scholarship.law.tamu.edu/facscholar/427
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PARALLEL LITIGATION'
James P. George-
TABLE OF CONTENTS
I. PARALLEL LAWSUITS--AN OVERVIEW ............................................... 773
A. ParallelLitigation Defined and Distinguished............................ 773
B. The Milieu--FourDistinct Settings for ParallelLitigation.......... 776
C. The Remedies: Five Responses to ParallelLitigation................. 777
1. Do Nothing ............................................................................. 777
2. Transfer and Consolidation .................................................... 777
3. Dismissals and Stays (and Abatements) ............................... 778
4. Antisuit Injunctions ................................................................ 780
D. The Common Doctrines: Six Themes in ParallelLitigation ....... 782
1. The First-Filed Case ............................................................... 782
2. In Rem Cases .......................................................................... 782
3. Declaratory Actions ............................................................... 782
4. Degree of Similarity ................................................................ 783
5. Discretionary Standard ........................................................... 783
6. Com ity .................................................................................... 783
E. The Slow Development ofPrecedent and FederalCourt
Prom inence................................................................................... 784
F. Unitary Discussions...................................................................... 785
*G. Terminology.................................................................................. 785
II. INTRAJURISDICTIONAL LITIGATION ................................................... 785
A. Intra-FederalParallelLitigation................................................. 785
1. Who filed first? .......................................... . . .. . .. . . .. . . .. . . .. . . .. . . .. . 788
2. In rem cases ............................................................................ 788
3. Statutory Preemption ............................................................ 788
4. Which court decides? .................................... . . . .. . .. . . .. . . .. . . .. . . . .. 789
B. Transfer and Consolidation.......................................................... 789
1. Consolidation Within the Same Division .............................. 789
2. Move to Another Division Within the District ...................... 789
3. Move to Another Division or District to Correct Venue ....... 790
4. Transfers Based on Forum Selection Agreement .................. 791
*The author is grateful to Professors Anna Teller and Susan Phillips, and law librarian
Wendy Law, for significant help in researching and rewriting this article, and to attorneys Brian
Stagner, Lu Pham, Albon Head, and Jeff Bragalone for valuable editorial suggestions.
-Professor of Law, Texas Wesleyan University School of Law.
770 BA YLOR LA WREVIEW [Vol. 51:4
5. Inconvenient Forum Transfers ............................................... 792
6. Multidistrict Transfer of Multiple Cases for Consolidated
Pretrial Proceedings .............................................................. 795
C. Dismissal...................................................................................... 796
1. Voluntary Dismissals and The "Two Dismissal Rule" ......... 796
2. Involuntary Dismissals ........................................................... 797
D. Stays in Favor of OtherFederalCourt Litigation........................ 799
1. The Landis Case ..................................................................... 799
2. Various Tests in the Circuits .................................................. 801
3. Stay of Derivative Suits ......................................................... 807
.4. Enjoining Other Federal Litigation ........................................ 808
III. INTRASTATE PARALLEL LITIGATION ................................................... 813
A. Consolidationand TransfersIn Texas ......................................... 813
1. Consolidation W ithin One Court ........................................... 813
2. Transfers within a Judicial District ........................................ 813
3. Transfers Between Different Judicial Districts in the Same
State ........................................................................................ 814
a. Improper Venue .............................................................. 814
b. Impartiality................................... 814
c. Consent ...................................... 814
d. Inconvenient Forum........................................................ 815
e. Multidistrict Transfer..................................................... 815
B. Stays, Dismissals and Injunctions: Texas and Other States ..... 816
1. General Principles .................................................................. 816
2. Statutory Dismissal ................................................................ 819
IV. INTERSTATE PARALLEL LITIGATION ................................................... 820
A. "Transfers" to a Sister State ........................................................ 820
B. Dismissing or Staying the Local Action ....................................... 821
1. Dismissal Under the First-Filed Rule .................................... 822
2. Dismissal of the Second-Filed Declaratory Action ............... 825
3. Dismissals Based on Forum Selection Agreements ............... 826
4. Interstate Forum Non Conveniens ......................................... 832
5. Staying the Local Action ........................................................ 837
C. Antisuit Injunctions Against Sister State Litigation ..................... 840
1. General Principles in Texas ................................................... 841
2. Other States ............................................................................ 848
3. Refusal to Recognize Another State's Injunction .................. 849
V. FEDERAL COURTS AND PENDING STATE LITIGATION ......................... 849
A. Transferringthe FederalCase to State Court............. 850
B. Dismissingthe FederalAction Based on a Forum Selection
Agreement ..................................................................................... 851
1999] PARALLEL LITIGATION
854
C. Stays and DismissalsBased on the Abstention Doctrines............
1. Colorado River Abstention: Economy, Convenience and
"Wise Judicial Administration" ........................855
a. Moses Cone and Wilton Refine the Test .................
860
b. OtherFederal Tests for State-FederalParallels...........
863
2. Dismissals or Stays Based on Federalism-The Other
Abstention Doctrines ................................ 864
a. Pullman Abstention-- Unclear State Law with
ConstitutionalImplications.........................864
b. BurfordAbstention--Avoiding Conflict With Complex
State Regulatory Systems ...........................
870
c. Thibodaux Abstention: Difficult Questions of State
Law ........................................ 872
3. Abstention Procedure: Reserving Rights to a Federal
F orum .......................................... 874
D. Enjoining the State Action ............................... 875
1. The Younger/Pennzoil Doctrine and Equitable Abstention... 876
a. The Younger and Pennzoil Cases..................... 876
b. Younger's Application in Civil Cases...................
879
c. Perfecting a Younger Objection...................... 881
2. Statutory Abstention: The Anti-Injunction Act ...............
881
a. "ExpresslyAuthorized" Injunctions................... 882
b. Injunctions "In Aid of Its Jurisdiction"..................
885
c. Injunctions to Prevent Relitigation... * ...... 888
E. Summary of Limits on FederalCourtsEnjoining State Court
L itigation .......................................... 896
VI. 897
STATE COURTS AND PENDING FEDERAL LITIGATION ...................
A. "Transfers "from State to FederalCourt: FederalRemoval.....
897
B. Dismissing or Staying the State Case........................
898
1. Forum Selection Clauses ..............................898
2. O ther Grounds................................... 898
3. Enjoining the Federal Litigation .........................
901
VII. FEDERAL COURTS AND FOREIGN LITIGATION ........................
904
A. Dismissingor Staying the FederalAction .....................
904
1. The General In Personam Tests: Landis and
Colorado R iver .................................... 905
a. The First-to-JudgmentRule, the Laissez-Faire
Approach .................................... 909
b. Comity as a stand-alone test........................
910
2. Dismissals Based on Forum Selection Agreements .............
912
BA YLOR LAW REVIEW [Vol. 51:4
a.
Five FoundationalCases................................................ 913
i. The Bremen v. Zapata Off-Shore Company .............. 913
ii. Scherk v. Alberto-Culver Co ..................................... 916
iii. MitsubishiMotors Corp. v. Soler Chrysler-
Plymouth, Inc............................................................ 918
iv. Stewart Organization,Inc. v. Ricoh Corp................. 920
v. Carnival CruiseLines, Inc. v. Shute ......................... 921
b. Divergence as to Governing Law ................................... 923
c. IntrajurisdictionalCases................................................ 925
d. Interstate Cases.............................................................. 926
e. State-FederalCases........................................................ 926
f InternationalCases ........................................................ 928
i. Federal Question Cases ............................................. 929
ii. Diversity Cases Applying Federal Law to the
Forum Clause ............................................................ 931
iii. Diversity Cases Applying State Law to the Forum
Clause ........................................................................ 935
iv. Undecided as to Which Law Governs in Diversity
Cases ......................................................................... 936
g. What Law Governs Interpretation?................................ 937
h. The ProrogationDistinction........................................... 938
i. Form ofMotion and Standardof Review .............. 941
j. Ensuringthe Case's Survival ......................................... 941
3. Forum non conveniens dismissals ......................................... 942
a. Generally........................................................................ 942
b. Removal to FederalCourt to Obtain Different Forum
Non Conveniens Law ...................................................... 946
c. EnjoiningRepetitive Litigation of ForeignClaims
PreviouslyDismissed on Forum Non Conveniens
Grounds.......................................................................... 949
4. Dismissal or Stay of In Rem Cases ........................................ 950
B. FederalInjunctionsAgainst ForeignLitigation .......................... 953
1. Historical Development ......................................................... 953
2. Current Law ........................................................................... 955
3. M iscellaneous Points .............................................................. 966
VIII. STATE COURTS AND FOREIGN LITIGATION ......................................... 969
A. Transferringthe Case................................................................... 970
B. Dismissing or Staying the Local Case.......................................... 970
1. Comity .................................................................................... 971
2. Forum Selection Agreements ................................................. 974
3. Forum Non Conveniens ......................................................... 975
1999] PARALLEL LITIGATION 773
4. Another Dismissal Ground: Due Process and the Fair
Play and Substantial Justice Test ........................................... 979
C. Enjoiningthe ForeignLitigation.................................................. 981
1. The B asic Standard ................................................................ 981
2. Anti-Antisuit Injunctions ....................................................... 986
I. PARALLEL LAWSUITS--AN OVERVIEW
The keynote speaker at Fort Worth's 1999 bar awards banquet, Dee
Kelly, has stories about people and places in a career that began on
Speaker Sam Rayburn's congressional staff. Some of the audience no
doubt would have preferred his recollections to the intense address he
delivered. His choice--"What To Do When Your State Court Action is
Collaterally Attacked in Federal Court"--arose from the four lawsuits
generated by the airport dispute in Dallas and Fort Worth. This dispute is
not the first to generate duplicative litigation,, and the airport fight is not
Texas's most sensational example. That distinction may belong, at least
for the moment, to the Dallas Cowboys' decision to promote Pepsi and
Nike alongside the NFL's promotion of Coca Cola and Adidas, leading to
mirror-image lawsuits in New York. Outside of Texas, the Beatles did
their version in a management dispute that led to twin billings in New
York and England.2 So have Elvis,, Disney 4 and Caruso,5 to name only a
few. Although the tactics involved may be as old as litigation itself, their-
increasing high-stakes use have made parallel litigation a timely topic.
A. ParallelLitigationDefined and Distinguished
Parallel litigation-a dispute generating multiple lawsuits-is not a new
phenomenon and is not limited to celebrities or sensational controversies.
Besides the publicity-generating lawsuits noted above, divorce actions
have a long history of parallel lawsuits and conflicting judgments. Recent
years have seen an expansion both in the incidence and the subject matter
of parallel lawsuits, perhaps fueled by the traditional motivations of home-
'See Southwest Airlines Co. v. Texas Int'l Airlines, 546 F.2d 84, 87-89 (5th Cir. 1977)
(involving suits between Southwest Airlines and Dallas, filed in both federal and state courts).
2
See Abkco Indus., Inc. v. Lennon, 377 N.Y.S.2d 362 (N.Y. App. Div. 1975)
3
See Factors Etc., Inc. v. Pro Arts, Inc., 579 F.2d 215, 217 (2d Cir. 1978).
4
See Muller v. Walt Disney Prod., 822 F. Supp. 1033, 1034 (S.D.N.Y. 1993).
5
See Caruso v. Caruso, 143 A. 771, 772 (N.J. Ch. 1928), rev'd 148 A. 882 (N.J. 1930).
BAYLOR LAWREVIEW [Vol. 51:4
court advantage and differing laws, along with the expansion of personal
jurisdiction rules in the past fifty years.6
In spite of this increase, the vocabulary remains imprecise and
ambiguous. Parallel litigation would seem to mean identical or mirror
image lawsuits between identical parties, but is often used when the
lawsuits are not identical. Duplicative litigation has been defined as the
"simultaneous prosecution of two or more suits in which some of the
parties or issues are so closely related that the judgment in one will
necessarily have a res judicata effect on the other.", Earlier discussion
have noted three categories of parallel litigation: (1) repetitive actions:
multiple suits on the same claim by the same plaintiff against the same
defendant; (2) reactive suits: a separate suit filed by a defendant in the first
action against the plaintiff in the first action, seeking a declaratory
judgment that he is not liable under the conditions of the first action or
asserting an affirmative claim that arises out of the same transaction or
occurrence as the first suit; and (3) separate actions by class members on
the same cause of action raised in the class action, seeking to represent the
same or a similar class. These categories are perfectly parallel and clearly
subject to claim and issue preclusion, along with arguments that
simultaneous prosecution is inefficient and wasteful., A distinct fourth
category is "related litigation": separate suits involving similar parties or
issues to which claim preclusion may not apply, but eligible for issue
preclusion and to a lesser extent, subject to the same arguments as to
wasteful litigation. Treatment here includes all four categories, with
distinctions drawn as to their differing treatment in varying jurisdictions.
In discussing these cases and their remedies, this Article will use the
terms "parallel" and "duplicative" interchangeably, in reference both to
identical and mirror image lawsuits, as well as substantially similar
lawsuits with common questions of law or fact between substantially-but
not always perfectly-identical parties. This Article discusses (1)
repetitive suits by the same plaintiff against the same or similar
defendants, 9 (2) reactive suits filed by the defendant in the first action
6
See G. BORN, INTERNATIONAL CIVIL LITIGATION IN UNITED STATES COURTS 459 (3d ed.
1996) (hereinafter BORN, INTERNATIONAL CIVIL LITIGATION).
7
R. MARCUS & E. SHERMAN, COMPLEX LITIGATION 104 (3d ed. 1998).
sSee id. at 147-48 (citing Vestal, Repetitive Litigation, 45 IOWA L. REV. 525 (1960), and
Vestal, Reactive Litigation, 47 IOWA L. REV. 11 (1961)).
9
See Semmes Motors, Inc. v. Ford Motor Co., 429 F.2d 1197, 1200-01 (2d Cir. 1970); Foyt
v. Championship Auto Racing Teams, Inc., 947 F. Supp. 290, 291-92 (S.D. Tex. 1996).
1999] PARALLEL LITIGATION
against the plaintiff in the first action,' 0 (3) declaratory judgment suits filed
by a current or potential defendant lacking any real affirmative claim," and
(4) separate actions by class members on the same cause of action raised in
the class action.,,
Most of the cases discussed are reactive and anticipatory suits where the
defendant in the first case becomes the plaintiff in the second suit in a
different court, perhaps in a different state or country. In the two lawsuits,
both plaintiffs may believe their respective choice of forum to be more
appropriate, or even essential to success. Both plaintiffs may be reluctant
to forego their choice of forum, even though the entire lawsuit may be
litigable in one court.
Some of the cases are repetitive suits, and there are many reasons for a
party to file two lawsuits in the same matter. Three reasons are that (1)
the plaintiff anticipates a real or imagined jurisdictional flaw in the first
lawsuit, and files the second to beat the limitations period, (2) the first
forum makes a preliminary ruling that displeases the plaintiff, or (3)
without any ruling or action by the first forum, the plaintiff experiences
"post-filing dissonance" from discomfort with the judge, the type of court,
the locale, or some other aspect of the first lawsuit. Plaintiffs who file a
second lawsuit in the same matter often file a voluntary dismissal or
nonsuit in the first case. Some do not nonsuit, and that leads to repetitive
parallel litigation, and possibly reactive litigation. For example, assume
that P sues D in Forum A, and D then counterclaims against P. P now
decides that Forum A is undesirable because of the judge, locale, type of
court, a bad preliminary ruling, or P's intuition and files a second lawsuit
in Forum B that provides what P perceives as a better setting. Now the
lawsuit has two affirmative claimants, each desiring a distinct forum, in
what are now reactive suits that may both be aggressively pursued."
Yet another example is duplicative (but not quite parallel) litigation in
which a dispute is being litigated in two or more forums with somewhat
different parties and/or slightly different claims, but with significantly
overlapping parties, issues and claims. This example is not to suggest that
every time different lawsuits have overlapping issues or parties that they
"See Manufacturers Hanover Trust Co. v. Kingston Investors Corp., 819 S.W.2d 607, 609
(Tex. App--Houston [lst Dist.] 1991, no writ).
"See William Gluckin & Co., v. International Playtex Corp., 407 F.2d 177, 177-78 (2d Cir.
1969); Texas Liquor Control Bd. v. Canyon Creek Land Corp., 456 S.W.2d 891, 895 (Tex.
1970).
'2Katz v. Realty Equities Corp. of New York, 521 F.2d 1354, 1357 (2d Cir. 1975).
"See Semmes Motors, Inc., 429 F.2d at 1202-03.
776 BAYLOR LAWREVIEW [Vol. 51:4
are necessarily duplicative. To the contrary, many lawsuits in modem
litigation are repetitive and overlapping, but not duplicative. When the
lawsuits have a sufficient degree of overlap, or are identical, concerns may
arise as to the efficient use of the parties' and taxpayers' resources. This
Article explores the remedies for duplicative lawsuits and highlight a few
special problems in using those remedies.
One category of overlapping lawsuit that is not primarily featured in
this Article is the derivative suit. Some disputes involving multiple
litigation are not truly parallel or duplicative, but instead involve an
underlying suit with a later derivative. Two examples are (1) an
underlying action for liability where the defendant's insurer files a
derivative declaratory action to assert nonliability,1 and (2) an underlying
action in which a plaintiff's attorney has allegedly committed malpractice,
and the plaintiffs immediate derivative action for malpractice is filed
before the underlying action is final.' 5 These multiple disputes are neither
reactive nor repetitive. They often do not lend themselves to resolution
under the standard remedies for parallel litigation and instead may have
distinct tests. This category of multiple lawsuits is generally not addressed
here and when discussed is noted separately.
B. The Milieu--FourDistinct Settingsfor ParallelLitigation
The problems and tactical opportunities of parallel or related litigation
occur in four settings: (1) within the same jurisdiction, (2) between states
in the United States, (3) between the state and federal systems, and (4)
internationally. This discussion is organized under those headings. The
state and federal court approaches to these conflicts are similar in many
instances and identical in some. In spite of this similarity, this study
avoids consolidating different jurisdictions' approaches because of a
danger of quickly concluding that the law is homologous when it is not. In
many jurisdictions, there have been too few cases to permit development of
a well-considered policy for dealing with jurisdictional conflicts.
Moreover, the emergence of a more cohesive international community may
cause changes in the law.
The court's authority and willingness to remedy duplicative litigation
draws on a number of conflicting doctrines and policies. These include
honoring the plaintiffs choice of forum, favoring the first-filed lawsuit,
reluctance to dismiss an action that has proper jurisdiction and venue,
4
See Montrose Chem. Corp. v. Superior Court, 861 P.2d 1153, 1555-56 (Cal. 1993).
"See Adams v. Paul, 904 P.2d 1205, 1207 (Cal. 1995).
1999] PARALLEL LITIGATION 777
avoidance of waste, convenience to parties, respect paid to coordinate
courts and governments, and federalism concerns in state-federal conflicts.
C. The Remedies: Five Responses to ParallelLitigation
Litigants who find themselves in parallel litigation may choose from
five responses: (1) do nothing and continue to litigate both cases, (2)
transfer and consolidation, (3) dismissal, (4) stay, and (5) antisuit
injunctions. The Article discusses the latter four generally in that sequence
within each category, varying where the law combines two remedies, such
as dismissals and stays. The definitions immediately below provide a
common entry point for their application in the various jurisdictional
conflicts.
1. Do Nothing
Except for actions concerning real property, an outright bar to parallel
or related lawsuits does not exist in state and federal courts in the United
States. 6 There are, however, discretionary legal doctrines which may
cause the excessive suits to be dismissed, abated, enjoined, or transferred.
Parties to duplicative litigation may find relief in one or more of the four
remedies discussed below. On the other hand, if an attorney wishes to use
duplicate litigation, and the strategy is under attack by one of the motions
discussed below, these cases also provide the best defenses.
2. Transfer and Consolidation
Transfers and consolidations are distinct procedural functions, available
only within the same jurisdiction. This may be changing. Currently, there
are inter-jurisdictional means of moving disputes. Forum non conveniens
and enforcement of a forum selection agreement are examples, but these
methods are accomplished by dismissing in one forum and refiling in the
other. There are also proposals for inter-jurisdictional transfers in the form
of uniform acts and treaties, but few jurisdictions have adopted this
option.'" Within the jurisdiction, transferring a case for consolidation with
a parallel case is often unnecessary. Instead, parties merely amend one of
the lawsuits to add the necessary claims and parties from the other lawsuit.
Transfer and consolidation, may be necessary, however, to preserve claims
that for any reason may not be added by amendment. An example involves
"6See Princess Lida of Thum & Taxis v. Thompson, 305 U.S. 456, 466 (1939); Laker
Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 926-27 (D.C. Cir. 1984).
"7See infra Part IV.A.
BAYLOR LAWREVIEW [Vol. 51:4
a claim where a limitations period has run. Other reasons include using
discovery gathered in the transferred case and taking advantage of the
transferor court's preliminary rulings, which would be lost if the court
dismissed the case.
3. Dismissals and Stays (and Abatements)
The third and fourth responses to parallel litigation are dismissal and
stay, discussed together because of the confusion arising from the
ambiguous use of the term "abatement," which can mean both dismissal
and stay. A dismissal ends the case, usually without prejudice.", Dismissal
may not be the preferred option because it (1) terminates a lawsuit with
proper jurisdiction and venue, (2) upends the timetable in that case, and (3)
assumes a perfect identity with the parallel case, or at least sufficient
similarity that no claims are lost or other prejudice results. Nonetheless,
dismissal is available in several forms as discussed below. In both state
and federal courts, these forms include voluntary dismissals (either
unilaterally by the plaintiff or by stipulation), involuntary dismissal
pursuant to comity, and forum non conveniens dismissals.
A stay is a court's temporary suspension of the prosecution of its own
case. "Stay" sometimes describes a temporary suspension imposed by
another court, either on a party or the court.' 9 One example is a bankruptcy
court's automatic "stay" of related civil proceedings, and another is the
editor's title choice for the federal Anti-Injunction Act, which is termed a
"Stay of State court proceedings."20 This use may be a legitimate meaning
for stay, but it is less confusing to limit the term to a court's self-imposed
suspension of proceedings. Upon request, a court may suspend
prosecution of its own action, pending resolution of the other case. If the
other case becomes final (that is, it is decided on the merits by a competent
court, and becomes final under the law of the rendering state or country), it
should have a preclusive effect as to the stayed action which can then be
dismissed. On the other hand, if the parallel case does not result in a valid
and final judgment on the merits, then the stayed case may be revived and
litigated. If circumstances change during the stay, it may be lifted for good
cause. Case law, however, does not offer examples of this procedure in
stays imposed based on parallel litigation.
"But see the "two dismissal" rule, infra at Part II.C.1.
9See 28 U.S.C. § 2283 (1994).
2 See id.
1999] PARALLEL LITIGATION
Abatement is a more difficult term to understand because it can mean
both stay and dismissal. The Seventh Circuit has defined "abatement" as
"the overthrow or destruction of a pending action ... which defeats the
action for the present, but does not debar the plaintiff from commencing it
in a better way."2 Black's Law Dictionary echoes that definition, defining
"Abatement of Action" as "an entire overthrow or destruction of the suit so
that it is quashed and ended."2 2 On the other hand, "Plea in Abatement" is
defined as something that "merely suspends or postpones" the action's
prosecution.? Texas case law usage reflects this meaning, without
referring to Black's Law Dictionary.24 One Texas statute uses the term
"abatement" to describe a sixty-day suspension of prosecution arising from
the plaintiffs failure to provide written notice of the complaint prior to
filing suit.2 5 The first two meanings are consistent with dismissal, the last
three with a stay. An 1870 South Carolina case may explain. this
inconsistency:
The effect of an abatement at law and in equity is
materially different. "In the sense of Courts of Equity, an
abatement signifies only a preserit suspension of all
proceedings in the suit from the want of proper parties
capable of proceeding therein. At the common law, a suit,
26
when abated, is absolutely dead."
This distinction may have been lost with the merger of law and equity
in federal and most state courts. Whatever the reason for the conflicting
usage, this Article will avoid the term "abatement" where possible, using
dismissal or stay as indicated in the specific case. Where the case refers to
"abatement," this Article will note such usage and attempt to describe
whether the effect was a stay or dismissal.
One other distinction must be made between stays and dismissals.
Logically, dismissals are preferred over stays for duplicative litigation
within the same jurisdiction, while stays are preferred over dismissals (if a
remedy is available at all) for parallel cases in multiple jurisdictions. The
2
Bowles v. Wilke, 175 F.2d 35, 37-38 (7th Cir. 1949).
2BLACK'S LAW DICTIONARY 4 (6th ed. 1990).(quoting Carver v. State, 398 S.W.2d 719(1966)).
3ld. at 1151 (citing United States v. Brodson, 234 F.2d 97, 99 (7th Cir. 1956)).
2
See Miles v. Ford Motor Co., 914 S.W.2d 135, 139 (Tex. 1995).
25
See TEx. Bus. & COM. CODE ANN., § 17.505(d)(Vemon Supp. 1999).
26
Pringle v. Sizer, 2 S.C. 59, 68 (1870) (quoting JOSEPH STORY, COMMENTARIES ON EQUITY
PLEADING § 354 (C.C. Little & J. Brown 1848)).
780 BAYLOR LAWREVIEW [Vol. 51:4
use of dismissals for local duplication is more economical, while the use of
stays for interjurisdictional conflicts reflects courts' greater reluctance to
extinguish a case and expose the local plaintiff to the mercy of a distant
forum. Stays provide the protection of reviving the case in the event of
problems in the other forum. Where dismissals are available in
interjurisdictional conflicts the test is a heightened one, often linked to
forum non conveniens analysis.17 The test for stays, on the other hand, may
be as simple as the "first-filed rule."2 One exception to the no-dismissal
rule involves in rem cases, where courts will generally dismiss in deference
to the court first assuming control over the property.2 9
4. Antisuit Injunctions
A fourth option is to ask the court to enjoin the opposing party from
pursuing the other case. 0 This option is especially appropriate when the
other court may not grant a motion to stay its own action." The injunction
applies only to the party being enjoined; it does not apply to the court or
judge presiding over the parallel case.,2 In other words, courts of original
jurisdiction may not enjoin each other." However, an appellate court with
jurisdiction over a trial court may freeze the litigation in the lower court
34
where a court improperly denied a motion for stay.
One treatise describes four applications for antisuit injunctions: (1)
stopping litigation of the same dispute in another forum; (2) consolidating
related-but-not-identical claims in the moving party's preferred forum, (3)
stopping the relitigation of a completed case in another forum, and (4) a
counter-injunction, or anti-antisuit injunction to prevent the opponent from
seeking an antisuit injunction in another forum.3 Stays and dismissals may
achieve the same objectives, however, antisuit injunctions may be most
effective when the "other" forum is unlikely to grant the stay or dismissal.
The antisuit injunction remedy began as an intrajurisdictional device in
fifteenth century England, where common law courts issued writs of
"See, e.g., White Light Prods., Inc. v. On The Scene Prods., Inc., 660 N.Y.S.2d 568 (1997);
RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 84 cmt. e (1971).
28
See infra text accompanying notes 63-85.
29
See id.
3°See 16 WRIGHT & MILLER, FEDERAL PRACTICE AND PROCEDURE § 3923 (2d. ed. 1996).
3
'See id.
32See id.
33See id.
34
See id.
3'BORN, INTERNATIONAL CIVIL LITIGATION, supra note 6, at 475.
1999] PARALLEL LITIGATION
prohibition to undermine the expansion of ecclesiastical courts'
jurisdiction.36 The chancery courts adopted the remedy, using their
equitable power to restrain parties from bringing related suits in common
law courts. Antisuit injunctions were eventually used to enjoin foreign
proceedings, which Professor Bermann cites as its most common use in
English courts today.,8
Today, state courts have the power to enjoin litigation (1) within the
same state, pursuant to that state's law, with no constitutional or
international law hurdles to clear;19 (2) in sister state courts under the
common law doctrine of comity;40 and (3) in foreign countries.41 State
courts may not enjoin federal litigation absent extraordinary circumstances
such as maintaining the court's in rem jurisdiction.42 A federal court's
power is similar. A federal court may restrain federal litigation,'4 state
litigation where the effect would be to defeat or impair the jurisdiction of
the federal court,"4 and foreign litigation under the doctrine of comity and
4
the limits discussed in Gau Shan Co., Ltd. v. Bankers Trust Co. 1
Injunction is the most controversial of the remedies for parallel
litigation because it interferes with another court's power, often in another
state or country. As noted above, the injunction is against the party, not
against the other court.46 Some courts and commentators, however, suggest
that this is a meaningless distinction and that the other forum may perceive
7
that its powers are being challenged or compromised.4
36
See George A. Bermann, The Use of Anti-Suit Injunctions in InternationalLitigation, 28
COLUM. J. TRANSNAT'L L. 589, 593 (1990) (hereinafter Bermann, Anti-Suit Injunctions).
3"See id. at 593-94.
38
See id.; see also Hartley, Comity and the Use of Antisuit Injunctions in International
Litigation, 35 AM. J. COMP. L. 487, 489 (1987).
39
See Gannon v. Payne, 706 S.W.2d 304, 305-06 (Tex. 1986).
4°See Christensen v. Integrity Ins. Co., 719 S.W.2d 161, 163 (Tex. 1986).
41
See Gannon, 706 S.W.2d at 305-06 (noting that this power is accompanied by a "caveat of
limited use").
42
See Donovan v. City of Dallas, 377 U.S. 408,412 (1964); cf University of Tex. v. Morris,
344 S.W.2d 426, 428 (Tex. 1961).
4
3See Municipal Energy Agency of Miss. v. Big Rivers Elec. Corp., 804 F.2d 338, 343 (5th
Cir. 1986).
44See Kline v. Burke Constr. Co., 260 U.S. 226, 229 (1922).
4
1See Gau Shan Co. v. Bankers Trust Co., 956 F.2d 1349, 1354-55 (6th Cir. 1992).
"'See Gannon, 706 S.W.2d at 306.
47
1d. at 306-07(citing Laker Airways v. Sabena, Belgian World Airlines, 731 F.2d 909, 937
(D.C. Cir. 1984)); see also Total Minatome Corp. v. Santa Fe Minerals, Inc., 851 S.W.2d 336,
339 n.5 (Tex. App--Dallas 1993, no writ); BORN, INTERNATIONAL CIVIL LITIGATION, supra note
6 at 476 nn. 39-40; Trevor C. Hartley, Comity and the Use of Antisuit Injunctions in
782 BAYLOR LAWREVIEW [Vol. 51:4
D. The Common Doctrines: Six Themes in ParallelLitigation
Six points transcend these remedies, some with consistent applications
and some varied according to the setting and the law of a specific
jurisdiction.
1. The First-Filed Case
In intrajurisdictional conflicts, there is a heavy presumption favoring
the first-filed case, but it may be overcome by a party's misconduct (such
as forum shopping) or important state interests. The first-filed rule appears
irregularly in other settings, varying from a mere element of a larger test to
the same presumptive strength it has in intrajurisdictional settings.
2. In Rem Cases
The first-filed presumption is stronger for in rem cases, which almost
invariably defer to the first-filed action as noted in PrincessLida of Thurn
and Taxis v. Thompson . In many jurisdictions, the presumption is weaker
to non-existent for parallel case conflicts involving another jurisdiction,
including state-federal conflicts within the same territory. Because of the
dominance of the first-filed rule for in rem cases, readers should assume
that cases discussed herein are in personam unless stated otherwise.
3. Declaratory Actions
Declaratory actions are suspect when they are mirror images of the
other suit, but that alone will not cause one to be dismissed. In many
jurisdictions, a second-filed declaratory action is dismissed as a matter of
law if it seeks no greater relief than the first-filed action. In some
jurisdictions, this applies to first-filed declaratory actions under certain
circumstances, such as a perception that the first plaintiff was merely
forum shopping.
InternationalLitigation, 35 AM. J. COMP. L. 487, 506 (1987); William L. Reynolds, The Proper
Forumfor a Suit: TransnationalForum Non Conveniens and Counter-suit Injunctions in the
FederalCourts, 70 TEx. L. R V. 1663, 1713 (1992) (citing George A. Bermann, The Use of
Anti-Suit Injunctions in International Litigation, 28 COLUM. J. TRANSNAT'L L., 589, 629
(1990)).
41305 U.S. 456, 466 (1939). See infra Part VII.A.4.
1999] PARALLEL LITIGATION
4. Degree of Similarity
To the extent that identity of parties and claims is an issue, the meaning
of identity varies broadly among jurisdictions, and sometimes among
courts within a jurisdiction
5. Discretionary Standard
The legal issues that resolve conflicts in parallel litigation are generally
discretionary.
6. Comity
Some remedies rely on comity in various forms and to various degrees,
with some states' remedies based entirely on comity. As a legal doctrine,
comity is weak, imprecise and unreliable. Nonetheless, it has given many
courts a nail on which to hang a ruling. Comity's weakness derives from
its nonbinding nature-it is designed to promote friendly relations between
sovereigns and not to protect private rights. Its disfavor is reflected in its
omission from the Restatement (Second) of Conflict of Laws, although that
may be the result of the drafters' wish to compensate for the over-emphasis
on comity in earlier choice of law theories.49 Comity does receive'
somewhat greater mention in the Restatement (Third) of Foreign Relations
Law of the United States,so discussing (1) its role in international law;' (2)
extraterritorial application of antitrust law;12 (3) enforcement of foreign
judgments;"3 (4) "reasonableness";14 and (5) in the introductory note to Part
IV discussing prescriptive jurisdiction. Even so, these five references are
seemingly minimal treatment for a concept that is pervasive in American
courts, reflecting the dim view that scholarly texts have of the doctrine."
On the other hand, sufficient prolonged use of a nonbinding, nonlegal
doctrine can result in its ripening into a legal doctrine capable of
predictable application. It is difficult to determine whether this is the case
with regard to comity, in spite of the increased application of comity in
interstate and international procedural matters. In light of this uncertainty,
49RESTATEMENT (SECOND) OF CONFLICT OF LAWS (1971).
"°RESTATEMENT (THIRD) OF FOREIGN RELATIONS LAW OF THE UNITED STATES (1987).
1
" See id. § 101, cmt. e.
2
See id. § 415, note 4.
3
See id. § 481, note 1.
"'See id. § 402, cmt. a.
55
See EUGENE F. SCOLES & PETER HAY, CONFLICT OF LAWS 11-15 (2d ed. 1992)
(discussing comity and its critics); see also James Paul George & Fred C. Pedersen, Conflict of
Law, 41 SW. L.J. 383, 409-10 nn.217-21 (1987)
BAYLOR LAWREVIEW [Vol. 51:4
a lawyer should be aware of comity's arguably suspect status as a legal
norm and be prepared either to challenge or defend its application.
E. The Slow Development of Precedentand Federal Court
Prominence
Precedent developed slowly for the doctrines and remedies discussed
here. The reasons are speculative, but most prominent may be the
distance that inhibited all but local parallel litigation until the most recent
decades. To the extent that remedies were available, parties in parallel
lawsuits may not have raised them as often, instead preferring races to
judgment to gain a preclusion and execution advantage. Another reason
may be the interlocutory nature of these remedies and a possible non-
appealability that inhibited the development of stare decisis.
In examining this doctrinal development, this Article's earlier drafts
placed state courts first in each setting because of their status as courts of
general jurisdiction. It was the author's initial belief that these remedies
were largely based on common law that originated some time ago in state
courts. However, to the contrary, some of these doctrines developed
almost exclusively in federal courts.
The reasons for federal prominence are also speculative. First, orders
that were appealed may have been less likely to be reported in state courts.
Second, until the last fifty years American jurisprudence subscribed to a
strong concept of state sovereignty, which may have discouraged remedies
against parallel litigation except in intrajurisdictional conflicts. Federal
courts, as components of a single judiciary, had a greater opportunity to
develop rules and precedents for parallel litigation that spanned any
significant distance. Third, international disputes may have been more
likely to be filed in federal court or removed there for a dismissal motion.
Whatever the reason, federal law provides a somewhat better history of
these issues and is discussed first in each of the parallel settings.
State law discussions are nonetheless important for an accurate survey
of current law. This Article focuses on Texas because of the author's
familiarity with that law, but has examples from other states. Primary
attention is given to states whose decisions appeared in digests more often
and whose law was therefore presumably better developed, as well as to
states whose law provides a contrast. A brief foreign law section provides
general cites on these topics 'without attempting the same analysis.
1999] PARALLEL LITIGATION
F. UnitaryDiscussions
In spite of the individual treatment given each remedy in each
jurisdictional setting, some topics required a unitary discussion to fully
illustrate the doctrine and its development. These unitary discussions
which cover forum selection clauses, forum non conveniens, and antisuit
injunctions, appear in Section VII (addressing international parallel
litigation in federal courts), and are cross referenced to other specific
sections.
G. Terminology
The paucity of writing in this area has left the terminology imprecise.
As noted above, the term "parallel litigation" is itself ambiguous and is
used here as a generic reference to pending related lawsuits.16 The term
"abatement" also has conflicting definitions. This article opts for the more
precise terms "stay" and "dismissal," and attempts to identify the correct
meaning for each use of "abatement" from case law or statutes." For
inconvenient forum remedies, this article uses two terms. The first,
"inconvenient forum" means statutory transfers within the same
jurisdiction, while the second, "forum non conveniens" refers to the
common law doctrine that provides for dismissal and re-filing in a
geographically distinct jurisdiction. References to the federal practice
treatise by Professors Wright, Miller, and others are made simply to
"Professor Wright" or "Wright."
II. INTRAJURISDICTIONAL LITIGATION
A. Intra-FederalParallelLitigation
Federal law disfavors simultaneous federal litigation and distinguishes
it from state-federal duplication.
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 betweenfederal district
56
See discussion supra at Part I.A.
"'See discussion supra at Part I.C.3.
BAYLOR LAW REVIEW [Vol. 51:4
courts, however, though no precise rule has evolved, the
generalprinciple is to avoid duplicative litigation."
In the earlier Kerotest case, the Court had observed that solving the
problem of duplicative federal litigation must involve "giving regard to
conservation of judicial resources and comprehensive disposition of
litigation, [and did] not counsel [a] rigid mechanical solution." 9 Instead,
an evaluation of matters of equity should be made and "an ample degree of
discretion" should be afforded the lower court.60
When faced with duplicate federal litigation, most courts use all four
remedies: transfer and consolidation, dismissal, stay, and injunction,6
although some have observed only three, omitting dismissal.62 The
common thread in exercising these remedies is the "first-to-file" rule, and
its application is fairly uniform throughout the remedies. West Gulf
Maritime Ass 'n v. ILA Deep Sea Local 24 offers perhaps the best Fifth
Circuit statement, holding that the Texas federal court should have heeded
the first-filed rule and "stayed, dismissed, or transferred" its second-filed
action in deference to the New York federal court that had jurisdiction over
a broader range of issues in the dispute.63 West Gulf further noted the
policies underlying the first-filed rule were "comity and orderly
administration ofjustice," both of which stress the importance of deference
to prior exercised power and the efficiency and convenience of letting one
court adjudicate substantially-related issues.6
The following brief synthesis of the first-filed rule is generally
applicable to the discussion of remedies that follows. Application of the
rule dictates that the first action filed takes priority unless (1) the balance
of convenience strongly favors the other forum, or (2) there are special
(sometimes "compelling") circumstances that justify an alternative such as
SColorado River Water Conservation Dist. No. 7 v. United States, 424 U.S. 800, 817 (1976)
(emphasis added)(citations omitted).
59
Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180, 183 (1952).
'Id. at 183-84. See also Sutter Corp. v. P & P Indus., Inc., 125 F.3d 914, 917 (5th Cir. 1997)
(discussing the "first-to-file rule" of parallel federal litigation).
"' See West Gulf Maritime Ass'n. V,.ILA Deep Sea Local 24, 751 F.2d 721, 728-32 (5th Cir.
1985) (vacating a preliminary injunction and remanding for an order of stay, transfer, or
dismissal).
62
See Smith v. SEC, 129 F.3d 356, 361 (6th Cir. 1997).
63751 F.2d 721, 730 (5th Cir. 1985).
"Id. at 729 (quoting Washington Metro. Area Transit Auth. V. Ragonese, 617 F.2d 828, 830
(D.C. Cir. 1980)).
1999] PARALLEL LITIGATION 787
dismissing, enjoining or transferring the first action, or allowing both to be
litigated.
The balance of convenience test resembles an inconvenient forum
contest under 28 U.S.C. § 1404(a).65 The special factors are more vague,
but may include the following:
(1) the similarity of the claims, though perfect identity is not required;"
67
(2) the relative progress of the two cases;
(3) the existence of a forum selection clause;0
(4) a plaintiff's need to litigate that claim individually rather than join a
class;69
(5) the need to consolidate related actions; °
7
(6) multidistrict litigation transfer for pretrial purposes; '
(7) lack of notice of the first-filed claim;72
(8) having jurisdiction over necessary or desirable parties;71
61See 800-Flowers, Inc. v. Intercontinental Florists, Inc., 860 F. Supp. 128, 133 (S.D.N.Y.
1994); Igloo Prods. Corp. v. Mounties, Inc., 735 F. Supp. 214, 218 (S.D. Tex. 1990).
"See Save Power Ltd. v. Syntek Fin. Corp., 121 F.3d 947, 950-51 (5th Cir. 1997)
(transferring first suit to second forum). But see Congress Credit Corp. v. AJC Int'l, Inc., 42 F.3d
686, 689-90 (1st Cir. 1994) (quoting Thermal Dynamics Corp v. Union Carbide Corp., 214 F.
Supp. 773, 776 (S.D.N.Y. 1963) for the proposition that suits "must be materially on all fours
with the other," and "must have such an identity that a determination in one action leaves little or
nothing to be determined in the other"); Computer Assocs. Int'l v. Altai, Inc., 893 F.2d 26, 29
(2d Cir. 1990) (stating that it is improper to enjoin related proceedings where the claim therein
would not have been a compulsory counterclaim).
"See Cooperative Centrale Raiffeisen-Boerenleen Bank B.A. v. Northwestern Nat'l Ins. Co.,
778 F. Supp. 1274, 1279 (S.D.N.Y. 1991) (denying stay of second suit).
SSee International Software Sys., Inc. v. Amplicon, Inc., 77 F.3d 112 (5th Cir. 1996); In re
Fireman's Fund Ins. Co., 588 F.2d 93 (5th Cir. 1979); Texas Source Group, Inc. v. CCH, Inc.,
967 F. Supp. 234 (S.D. Tex. 1997) (holding that the forum selection clause was valid in spite of
allegations of breach of underlying contract); American Airlines, Inc. v. Rogerson ATS, 952 F.
Supp. 377 (N.D. Tex. 1996); Wellons v. Numerica Say. Bank, FSB, 749 F. Supp. 336 (D. Mass.
1990).
"See Savidge v. Fincannon, 784 F.2d 186 (5th Cir. 1986) (denying transfer of individual suit
for consolidation with class).
70
See Factors Etc., Inc. v. Pro Arts, Inc., 579 F.2d 215, 219 (2d Cir. 1978) (denying transfer
to first forum because of later filing in second forum of related actions against other defendants
for the same tort of misappropriation of Elvis Presley's likeness); Davidson v. Exxon Corp., 778
F. Supp. 909, 912 (E.D. La. 1991) (transferring later-filed class action to district with more than
100 actions already on file).
"See In re Antibiotic Drugs Antitrust Litig., 355 F. Supp. 1400, 1402 (J.P.M.L. 1973).
72
See Employers Ins. of Wausau v. Prudential Ins. Co. of America, 763 F. Supp. 46, 49-50
(S.D.N.Y. 1991) (denying dismissal and transfer of second suit).
BAYLOR LAWREVIEW [Vol. 51:4
(9) discouragement of forum shopping;74
(10) the bad faith filing of a declaratory judgment action;" and
6
(11) "state interest" of the second forum.7
The burden of proving special circumstances is, of course, on the party
challenging the first-to-file rule."
1. Who filed first?
Closely filed actions may be deemed filed simultaneously. The most
extreme example of this was simultaneous electronic filing that was
alleged to be four-tenths of a second apart; the two courts selected the
forum by a coin toss. 8 In removed cases, the state court filing date
controls.7
2. In rem cases
While the "special factors" exceptions make the first-to-file rule
flexible, the rule is rigid for in rem cases. That is, the first court to acquire
jurisdiction of the res has priority to the exclusion of other courts. 0
3. Statutory Preemption
The "first-filed" presumption yields to statutory overrides such as
mandatory venue,8' exclusive jurisdiction statutes such as 28 U.S.C. §
1346(b) giving federal district courts exclusive jurisdiction over claims
1
73See Span-Eng. Assoc. v. Weidner, 771 F.2d 464, 470 (10th Cir. 1985) (addressing the
opportunity to add defendants); see also Chiron Corp. v. Advanced Chemtech, Inc., 869 F. Supp.
800, 802 (N.D. Cal. 1994).
7"See Amerada Petroleum Corp. v. Marshall, 381 F.2d 661, 663 (5th Cir. 1967) (staying first-
filed action); S-Fer Int'l, Inc. v. Paladion Partners, Ltd., 906 F. Supp. 211, 217 (S.D.N.Y. 1995)
(denying transfer of first suit, and granting injunction against second suit); Johnson Bros. Corp.
v. Int'l Bhd. of Painters, 861 F. Supp. 28, 30 (M.D. La. 1994) (dismissing first suit).
71See Commercial Union Ins. Cos. v. Torbaty, 955 F. Supp. 1162, 1163-64 (E.D. Mo. 1997)
(dismissing first suit).
7'See Muller v. Walt Disney Prods., 822 F. Supp. 1033, 1034-40 (S.D.N.Y. 1993) (denying
defendant's motions to stay or transfer based on balance of convenience and the second forum's
greater interest in the litigation).
'See Hanson PLC v. Metro-Goldwyn-Mayer, Inc. 932 F. Supp. 104, 106-08 (S.D.N.Y.
1996) (holding that burden was met and first suit was dismissed).
71See Mobil Oil Exploration Co. v. Federal Energy Regulatory Comm'n, 814 F.2d
998,
1001(5th Cir. 1987).
'gSee Igloo Prods. Corp. v. Mounties, Inc., 735 F. Supp. 214, 217 (S.D. Tex. 1990).
8
See Dailey v. National Hockey League, 987 F.2d 172, 175 (3d Cir. 1993).
"1See Sutter Corp. v. P & P Indus., Inc., 125 F.3d 914, 917 (5th Cir. 1997).
1999] PARALLEL LITIGATION
under the Federal Torts Claims Act," or statutes divesting a court's
jurisdiction, such as 28 U.S.C. § 1500, which divests jurisdiction in the
Court of Federal Claims for a litigant involved in a parallel action."
4. Which court decides?
Dillard v. Merrill Lynch, Pierce, Fenner & Smith, Inc., was a patent
dispute with the first suit filed in the Eastern District of New York and the
second in the Western District of Texas, with the New York court
enjoining that defendant from pursuing the Texas case, and the Texas
federal court enjoining the New York plaintiff from adding a related patent
claim in that action. + The Fifth Circuit reversed the Texas injunction and
held that the court first having jurisdiction in a patent case should be the
one to determine where the case should be tried, thus deferring the decision
to the New York federal court. 5
B. Transfer and Consolidation
1. Consolidation Within the Same Division
Federal Rule of Civil Procedure 42(a) permits the consolidation of
actions having a common question of law or fact, and provides for "joint
trial of any or all the matters at issue."6 It does not, however, address case
transfer. Case transfer is achieved within the division in which a court sits
by 28 U.S.C. § 1404(c), which permits a district court to order that a case
be tried at any court within the division. However, Rule 42(a) is directed
to convenience and economy, and (unlike Texas Rule 41) does not merge
the suits into a single cause of action.?1
2. Move to Another Division Within the District
28 U.S.C. § 1404(b) provides the court with discretion to transfer the
case from one division to another in the same district." Professor Wright
2
See Calhoun v. United States, 32 Fed. Cl. 400,407 (Fed. C1. 1994), aff'd 61 F.3d 918 (Fed.
Cir. 1995).
3
See Keene Corp. v. United States, 508 U.S. 200 (1993).
"961 F.2d 1148, 1161 (5thCir. 1992).
"See id. at 1161; see also, Smith v. SEC, 129 F.3d 356, 361 (6th Cir. 1997); Kentucky
Fried Chicken Corp. v. Diversified Packaging Corp., 552 F.2d 601, 603 (5th Cir. 1977); Mann
Mfg., Inc. v. Hortex, Inc., 439 F.2d 403, 407 (5th Cir. 1971).
86FED. R. Civ. P. 42(a).
"7See Johnson v. Manhattan Ry. Co., 289 U.S. 479, 497 (1933).
"See e.g.. Country Maid, Inc. v. Haseotes, 312 F. Supp. 1116, 1117 (E.D. Pa. 1970).
790 BAYLOR LAWREVIEW [Vol. 51:4
argues that section 1404(b) is limited to transfers in which all parties
consent, pointing out that the second sentence of section 1404(b), which
permits transfer of in rem actions brought by the United States without its
consent, is meaningless unless consent of all parties is required for other
transfers. Wright concludes that section 1404(a), which addresses transfers
"to any other district or division," governs motions for transfer within the
district lacking consent of all parties8 9
3. Move to Another Division or District to Correct Venue
Two federal statutes provide for venue transfers to correct improper
filing, both of which may be used in limited cases to transfer and combine
parallel actions. The first is a venue statute, 28 U.S.C. § 1406(a), which
provides for the dismissal of cases filed in the wrong venue, but permits
the court "in the interests of justice" to transfer the case to any district or
division with proper venue. 9° The court may transfer even if it lacks
subject matter jurisdiction, 9' or personal jurisdiction.92 Section 1406(a) has
been used to transfer improperly filed cases to districts where a properly
filed parallel case was pending. 91 Venue must be improper to trigger the
94
statute.
The second statute is 28 U.S.C. § 1631, which provides for transfer of
an action filed in a federal court lacking subject matter jurisdiction to
any other such [federal] court in which the action or appeal
could have been brought at the time it was filed or noticed,
and the action or appeal shall proceed as if it had been
filed in or noticed for the court to which it is transferred on
the date upon which it was actually filed in or noticed for
the court from which it is transferred.95
$915 WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE, §§ 3809 n.29, 3842 n.3; see
also Williams v. Hoyt, 556 F.2d 1336 (5th Cir. 1977).
9028 U.S.C. § 1406(a) (West 1993).
9
See United States ex reL Ayala v. Tubman, 366 F. Supp. 1268, 1270 (E.D.N.Y. 1973).
"See Goldlawr, Inc., v. Heiman, 369 U.S. 463, 465-66 (1962); Dubin v. United States, 380
F.2d 813, 815 (5th Cir. 1967).
"See Papercraft Corp. v. Procter & Gamble Co., 439 F. Supp. 1060, 1063 (W.D. Pa. 1977);
Scaramucci v. FMC Corp., 258 F. Supp. 598, 602 (W.D. Okla. 1966).
94
But see Manley v. Engram, 755 F.2d 1463, 1467 (11 th Cir. 1985) (holding that where
venue is proper and personal jurisdiction is lacking, § 1406 authorizes transfer); Dubin, 380 F.2d
at 815.
9028 U.S.C. § 1631 (1994).
1999] PARALLEL LITIGATION
This statute is aimed at several matters, but is principally a safety net
for parties who mistakenly file in a federal court lacking some aspect of
subject matter jurisdiction. This can be especially useful in cases where
the limitations period may expire before correct filing occurs. By the
statute's express terms, it applies where the transferor court lacks subject
matter jurisdiction.96 If the transferor court lacks subject matter
jurisdiction, it is no impediment to transfer that it also lacks personal
jurisdiction. 97 Although there are no cases using section 1631 in parallel
cases, two decisions implicate its use to transfer from a court lacking
jurisdiction to one having jurisdiction."s
4. Transfers Based on Forum Selection Agreement
The law of forum selection agreements is problematic, requiring a
unitary discussion which appears in the International Section." This
section will briefly discuss the issue in intra-federal conflicts. Forum
selection agreements have been enforceable in federal courts since Bremen
v. Zapata Off-Shore Corporation.' Bremen, an admiralty case with an
English forum-selection clause, was not controlling for a federal court
faced with a forum-selection clause naming another federal court.'0 '
Clauses that created an intra-federal conflict were first considered in
Stewart Organization,Inc. v. Ricoh Corporation.1 02 At the court of appeals
level, the Eleventh Circuit had conducted an Erie analysis and determined
that federal common law (Bremen) governed because the issue was not
contract, but venue, an issue controlled by federal law.' 3 The Supreme
Court affirmed on different grounds-that the role of section 1404(a) as a
federal statute precluded Erie analysis.,, The Supreme Court further held
that under section 1404(a), the forum clause was not per se enforceable,
"See In re Exclusive Indus., 751 F.2d 806, 808-09 (5th Cir. 1985).
97
See O'Neal v. Hatfield, 921 F. Supp. 574, 575-76 (S.D. Ind. 1996). Lack of venue is also
no impediment to a transfer under 28 U.S.C. § 1631. See Dornbusch v. Commissioner, 860 F.2d
611, 612 (5th Cir. 1988).
"See Hill v. U.S. Air Force, 795 F.2d 1067, 1070 (D.C. Cir. 1986) (holding court did not
abuse its discretion in failing to transfer a case sua sponte where neither party raised the issue);
York Assocs., Inc. v. Secretary of H.U.D., 815 F. Supp. 16, ,22 (D.D.C. 1993) (holding no
transfer where claims were "completely duplicative").
"See infra Part VII.A.2.
1'407 U.S. 1, 15 (1972).
"'"Id. at 8-9.
102487 U.S. 22, 28-29 (1988).
'0 3See Stewart Org., Inc. v. Ricoh Corp., 810 F.2d 1066, 1068-69 (11 th Cir. 1987) (en banc).
"See Stewart, 487 U.S. at 28-29.
792 BAYLOR LAWREVIEW [Vol. 51:4
but would instead trigger an inconvenient forum analysis in which the
forum agreement would be a factor to be balanced against other factors
such as convenience and economy.0 5
There are at least three instances where forum selection clauses are not
governed by section 1404(a). The first is where a plaintiff files suit in a
federal court in the designated location, but the defendant challenges
personal jurisdiction, and federal law differs from that state's law on
whether a forum selection clause waives personal jurisdiction objections."1)
In this situation, the Eleventh Circuit has held that state law governs. 0
The second instance is where the forum selection clause specifies a state
court, which of course makes a section 1404(a) venue transfer irrelevant.108
The third instance is where the designated forum is a foreign country.'1
5. Inconvenient Forum Transfers
In 28 U.S.C. § 1404(a),'"' Congress provided an inconvenient forum
statute resembling the common law forum non conveniens standards of
Gulf Oil"' and PiperAircraft*'-. The statute's test is simpler, providing for
transfer "to any other district or division where [the action] might have
been brought" when it is justified "[flor the convenience of parties and
witnesses" and "in the interest ofjustice.",
Section 1404(a) transfers have choice of law implications missing in
other venue transfer statutes. Following a section 1404(a) transfer, the
"°SSeeid. at 29. For examples of 28 U.S.C. § 1404(a) transfers to enforce a forum selection
agreement, see In re Fireman's Fund Ins. Cos., 588 F.2d 93, 94-95 (5th Cir. 1979) (upholding a
transfer to federal court in New Jersey, honoring a forum selection clause, in spite of venue rule
appearing to fix venue at the place of the contract's performance in Louisiana); Texas Source
Group, Inc. v. CCH Inc., 967 F. Supp. 234, 238 (S.D. Tex. 1997) (holding forum selection clause
was valid in spite of allegations of breach of underlying contract, resulting in transfer to Illinois);
Wellons v. Numerica Savings Bank, FSB, 749 F. Supp. 336, 337-38 (D. Mass. 1990)
(transferring first-filed action from Massachusetts to New Hampshire for consolidation with
second-filed action, consistent with forum selection clause).
"See Alexander Proudfoot Co. World Headquarters v. Thayer, 877 F.2d 912, 916 (11 th Cir.
1989) (distinguishing the jurisdictional challenge from the venue issue in Stewart). But see
Northwestern Nat. Ins. Co. v. Donovan, 916 F.2d 372, 376 (7th Cir. 1990) (holding that federal
law (Bremen) governs defendant's challenge to jurisdiction in the contractually-chosen forum).
'°"See id. at 919.
O'See infra Part V.B. for a discussion of what law governs these transfers.
'"gSee infra Part VII.A.3.
"28 U.S.C. § 1404(a) (1993).
"'Gulf Oil v. Gilbert, 330 U.S. 501 (1947).
"'Piper Aircraft Co. v. Reyno, 454 U.S. 235 (1981).
11328 U.S.C. § 1404(a).
1999] PARALLEL LITIGATION 793
transferee court must apply the transferor court's choice of law rule.' The
transferor court's choice of law rule is that of the state in which the court is
located.1"
Ginsey Industries,Inc. v. I TK Plastics,Inc. illustrates several aspects
of a section 1404(a) transfer involving a parallel action."'l Plaintiff Ginsey,
a Pennsylvania corporation with its principal place of business in New
Jersey, purchased vinyl plastic sheeting from defendant manufacturer,
I.T.K., based in Massachusetts.",7 Then, alleging the plastic was not fit for
its intended purpose, Ginsey sued in feaeral court to recover his payment
and consequential damages.'- Ginsey brought the action in a Pennsylvania
federal court, even though the pertinent facts occurred in Massachusetts
and New Jersey.' 9 ITK objected on personal jurisdiction grounds, but
alternatively sought transfer to the District of Massachusetts. 0
Ginsey failed to come forward with evidence on the personal
jurisdiction challenge, but instead asked for transfer to its home base in
New Jersey.2 ' The court noted both New Jersey and Massachusetts
satisfied section 1404(a)'s requirement that a case be transferred only to a
district where the action might have been brought (under requirements of
jurisdiction and venue)., The more difficult question was "whether the
balance of convenience weighs decisively in favor of one of the proposed
districts.",-3
Although the law strongly favors a plaintiff's choice of forum,114 that
presumption was overcome here by the presence of a pending related case
in a Massachusetts federal court. 5 The actions were not identical-they
involved distinct but related purchases of plastic that were both rejected.'
"See Piper Aircraft Co., 454 U.S. at 243 n.8 (1981) (citing Van Dusen v. Barrack, 376 U.S.
612, 613 (1946)).
'See Klaxon v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496 (1941).
16545 F. Supp. 78, 79-80 (E.D. Pa. 1982).
7
- See id. at 79.
1"See id.
"-Seeid. at 79-80
"'Seeid. at 79.
1'See id.
'2 2See id. at 80.
13Id.
24See id. "It is well-settled that 'unless the balance is strongly in favor of the defendant, the
plaintiff's choice of forum should rarely be disturbed."' Id. (quoting Gulf Oil Corp. v. Gilbert,
330 U.S. 501, 508 (1947)).
'See id. at 80-81.
12See id.
794 BAYLOR LAWREVIEW [Vol. 51:4
Relying on judicial efficiency and economy, the court chose
Massachusetts:
[I]t would appear that significant economies of time and
effort can be achieved if these actions were consolidated in
a single district. The essential questions of liability in both
actions concern the fitness of I.T.K.'s vinyl products for
the commercial purposes Ginsey sought to pursue. The
witnesses who will testify about I.T.K.'s product and about
Ginsey's reasons for purchasing that product are likely to
be the same in both cases. To be sure, consolidation of
these actions in the District of Massachusetts imposes a
burden on Ginsey. But transfer to that district would, in
my judgment, promote efficient judicial administration to
such an extent that plaintiff's preference for New Jersey is
outweighed. And consolidation ultimately benefits both
parties since it is clearly more convenient to conduct
related litigation in a single district rather than in two
27
separate forums.
As Ginsey noted, section 1404(a) limits transfer to "a district where the
action might have been brought," requiring that the transferee court must
have personal jurisdiction over all parties.128 In ContinentalAirlines, Inc. v.
American Airlines, Inc., a Galveston federal court denied defendant's
motion to transfer venue to Dallas, where much of the witnesses and
documents were, or failing that, to Houston on the grounds that Galveston
lacked direct air service and Houston was more accessible.29 The court
soundly rejected the notion that its location fifty miles from Houston
amounted to the level of inconvenience contemplated by section 1404(a).130
The court denied a section 1404(a) transfer in Muller v. Walt Disney
Productions,where the executor of Leopold Stokowski's estate sued Walt
Disney Productions regarding royalties on the video cassette of Fantasia.-
Disney had already sued in Pennsylvania, and moved to stay or transfer
12'Id. at 80-81.
"I1d. at 80 (citing Hoffman v. Blaski, 363 U.S. 335, 342-43 (1960)); see also Liaw Su Teng
v. Skaarup Shipping Corp., 743 F.2d 1140, 1148 (5th Cir. 1984) (applying the Hoffman standard,
overruled on othergrounds, In re Air Crash Disaster Near New Orleans, LA, 821 F.2d 1147 (5th
Cir. 1987)).
.29805 F. Supp. 1392, 1394 (S.D. Tex. 1992).
"OSee id. at 1400-01.
822 F. Supp. 1033, 1040 (S.D.N.Y. 1993).
1999] PARALLEL LITIGATION
this action there.- The court denied the motions, finding that the balance
of convenience and New York interest favored the New York forum. 1"
First-filed actions do not always prevail on choice of forum. Factors
Etc., Inc. v. Pro Arts, Inc., was part of a two-case dispute in federal courts
in Ohio and New York regarding exclusive ownership of Elvis Presley's
likeness. ' The Second Circuit upheld the trial court's refusal to transfer
the second-filed case to the Ohio federal court, where convenience favored
35
the second district.
When both venue and personal jurisdiction are improper, section 1406136
is the authority for transfer.'7 But where venue is proper and personal
jurisdiction is lacking, some courts still use section 1406, in spite of its
application only in cases where venue is improper. 8 Other courts-and
sometimes other appellate panels-have held that section 1404(a) is
appropriate here."19
6. Multidistrict Transfer of Multiple Cases for Consolidated
Pretrial Proceedings
The multidistrict litigation statute, 28 U.S.C. § 1407, provides for the
transfer of multiple civil actions from different districts with "one or more
common questions of fact" to be transferred to a common forum for
pretrial proceedings only.140 Unlike transfers under sections 1404(a),
1404(b) or 1406, which may be consolidated with a parallel action under
Federal Rule of Civil Procedure 42(a) ("Rule 42"), this may not be done
1'2See id. at 1034-35.
3
1' See id. at 1039.
134579 F.2d 215, 217 (2d Cir. 1978), overruled on other grounds, Pirone v. McMillan, Inc.
894 F.2d 579 (2d Cir. 1990).
'See id. at 218-19. Other cases using 28 U.S.C. § 1404(a) (1994) to transfer and
consolidate a second-filed parallel federal case include Jarvis Christian College v. Exxon Corp.,
845 F.2d 523, 528 (5th Cir. 1988); Sundance Leasing Co. v. Bingham, 503 F. Supp. 139, 141
(N.D. Tex. 1980) (holding that pending related action is a factor under 28 U.S.C. § 1404(a));
Santa Fe Int'l Corp. v. Transcontinental Gas Pipe Line Corp., 728 F. Supp. 435, 437 (E.D. Tex.
1989).
' See 28 U.S.C. § 1406 (1993).
See Goldlawr, Inc. v. Heiman, 369 U.S. 463, 466 (1962); Aguacate Consolidated Mines,
Inc. v. Deeprock, Inc., 566 F.2d 523, 524 (5th Cir. 1978).
'See Dubin v. U.S., 380 F.2d 813, 815-16 (5th Cir. 1967).
'"See Sargent v. Genesco, Inc., 492 F.2d 750, 758-59 (5th Cir. 1974); 15 Wright Miller &
Cooper, FEDERAL PRACTICE AND PROCEDURE § 3827 (2d ed. 1986).
14028 U.S.C. § 1407 (1993).
BAYLOR LAW REVIEW [Vol. 51:4
with a multidistrict transfer under section 1407.' But Rule 42 does have
limited use in a section 1407 transfer, as illustrated in Katz v. Realty
Equities Corporation.14 The court made a creative use of Rule 42 to order
a consolidated complaint in a section 1407 transfer of cases (including
class actions) from four districts in three states.1 43 The consolidated
complaint allowed the judge to assess how best to conduct the pretrial
discovery before returning the cases to their original forums for trial.'"
However, while cases transferred under section 1407 may not be
consolidated for trial, if the multidistrict pretrial proceeding resolves the
case, by summary judgment for example, the case will not be remanded to
45
the transferor district court.
In re Aviation Products Liability Litigation is an early case
distinguishing between cases that should be transferred for pretrial
proceedings and those that should not.146 The panel considered twenty
related lawsuits in various federal districts, for defective design,
manufacture and installation of helicopter engines.'' 7 Another instructive
example is In re the Upjohn Co. Antibiotic "Cleocin" Products Liability
Litigation, holding that discovery orders made prior to the multidistrict
transfer may be modified by the transferee judge. 148
C. Dismissal
1. Voluntary Dismissals and The "Two Dismissal Rule"
Federal Rule of Civil Procedure 41(a) ("Rule 41(a)") provides for
plaintiffs unilateral dismissal, or nonsuit, by notice if filed before
defendant answers or files a motion for summary judgment.'"4 If defendant
has answered or filed a dispositive motion, voluntary dismissal is still
'4 'See Lexecon Inc. v. Milberg Weiss Bershad Hynes & Lerach, 523 U.S. 26, 38 (1998)
(holding that a court may not use section 1404 to retain a case for trial after obtaining the case
under section 1407).
142521 F.2d 1354, 1355 (2d Cir. 1975).
"14 See id. at 1356.
'"See id. at 1359.
1028 U.S.C. § 1407 (1993).
146347 F. Supp. 1401, 1404-06 (J.P.M.L. 1972).
' 47See id. at 1402.
148450 F. Supp. 1168, 1170 (J.M.P.L. 1978), affld 664 F.2d 114 (6th Cir. 1981). For other
examples, see In re Asbestos Litigation, 963 F. Supp. 247, 251 (S.D.N.Y. 1997); In re Air Crash
Disaster at Lockerbie, Scotland, 709 F. Supp. 231, 232 (J.P.M.L. 1989), aff'd, In re Pan Am
Corp., 16 F.3d 513, 517 (2d Cir. 1994).
"9Fed. R. Civ. P. 4 1(a).
1999] PARALLEL LITIGATION
available by stipulation signed by all parties.'1° A crucial feature of Rule
41(a) is the "two dismissal rule:" the first voluntary dismissal is without
prejudice, that is, it is not an adjudication on the merits unless otherwise
stated in the dismissal order.," The second dismissal is with prejudice, that
is, when a voluntary dismissal is filed "by a plaintiff who has once
dismissed in any court of the United States or of any state an action based
on or including the same claim."'" The rule's rigidity is illustrated in Lake
at Las Vegas Investors Group, Inc., v. PacificMalibu Development Corp.,
where the first dismissal, in state court, was not a dismissal as to all
defendants, and was required because the plaintiff was an unregistered
foreign corporation.'
2. Involuntary dismissals
If the plaintiff will not file a notice of dismissal or agree to a stipulated
dismissal, the court may involuntarily dismiss the case. This is not
authorized by Rule 41, in spite of Rule 41(b)'s provisions for involuntary
dismissals, they are expressly directed to the plaintiff's failure to prosecute
or comply with a court order or the Federal Rules of Civil Procedure.11 No
cases were found dismissing a duplicate lawsuit under Rule 41.
Federal Rule of Civil Procedure 12 ("Rule 12"), which authorizes
dismissals on seven grounds, also does not apply to parallel litigation
although it has been applied to motions to enforce a forum selection
clause.' 5 No other statute or rule authorizes dismissal for grounds other
than those in Rules 12 and 41. Federal law no longer provides for pleas in
abatement,S6 and as just stated, nothing in the federal rules or statutes
authorizes its equivalent. However, federal common law and the doctrine
of comity do provide for dismissal on other grounds. 157
'See id.
l5 11d.
15'Id. (emphasis added); see also Cooter & Gell v. Hartmarx Corp., 496 U.S. 384, 394-95
(1990).
11933 F.2d 724, 726-28 (9th Cir. 1991).
'"4Fed. R. Civ. P. 41(b).
'See infra Part VII.A.2.i.
'-See Fed. R. Civ. P. 7(a),(c).
'See Ulmet v. United States, 888 F.2d 1028, 1031 (4th Cir. 1989); 800-Flowers, Inc. v.
Intercontinental Florists, Inc., 860 F. Supp. 128, 135-36 (S.D.N.Y. 1994); Johnson Bros. Corp.
v. Int'l Bhd. of Painters, 861 F. Supp. 28, 29 (M.D. La. 1994); Commercial Union Ins. Cos. v.
Torbaty, 955 F. Supp. 1162, 1163 (E.D. Mo. 1997); Brower v. Flint Ink Corp., 865 F. Supp. 564,
567 (N.D. Iowa 1994); see also Michael Wells, The Role of Comity in the Law of Federal
Courts, 60 N.C. L. REv. 59, 61 n.5 (1981).
798 BAYLOR LA WREVIEW [Vol. 51:4
One federal rule that may impact, parallel cases is the compulsory
counterclaim rule stated in Federal Rule of Civil Procedure 13(a). In Adam
v. Jacobs, the court reversed the lower court's denial of Jacobs' motion to
dismiss the second-filed New York federal case in deference to his first-
filed Michigan federal case.158 The Second Circuit held that although
Adam had not technically violated Rule 13(a) by filing the second federal
action instead of a counterclaim in the first action in Michigan, the district
court abused its discretion in not dismissing or transferring Adam's
second-filed claim for consolidation with Jacobs' first action. 59 Although
the court recognized that filing a second lawsuit instead of a compulsory
counterclaim in the first did not violate Rule 13(a), Adam was taking a
chance.16° If Jacobs' first-filed action came to final judgment first, Adam's
compulsory counterclaim would then be precluded.'6 '
Courts are often reluctant to dismiss lawsuits for which there is valid
personal and subject matter jurisdiction. 162 In addressing duplicate
litigation, trial courts are more inclined to use the other remedies: stay of
the immediate case in that court; enjoining a party from pursuing the
parallel case; or, where appropriate, moving the immediate action to be
consolidated with the parallel case.163 Forum selection clauses are one area
providing for dismissals. The motion is raised under Federal Rule of Civil
Procedure 12(b)(6), failure to state a claim, rather than Rule 12(b)(3),
improper venue. '6
The problem of parallel federal adjudication also arises between federal
courts and federal administrative agencies. 165 Congress may assign certain
matters, for example, the granting of a federal permit to operate a
hazardous waste processor, to' a federal agency along with adjudicatory
authority as to parties who challenge the agency's decision.'" In these
cases, the agency may continue the litigation even when a party files suit in
an Article III court; that is, the lawsuit does not divest the agency of
158950 F.2d 89, 90 (2d Cir. 1991).
59
' See id. at 94.
'"See id. at 93.
16'See id.
" 2 See EEOC v. Univ. of Pa., 850 F.2d 969, 972 (3d Cir. 1988) (affirming the trial court's
refusal to dismiss the EEOC's second-filed lawsuit seeking enforcement of a subpoena against
the University of Pennsylvania for peer review records).
' 63See id. at 976 n.4.
'"See, e.g., Lambert v. Kysar, 983 F.2d 1 110, 1112 n.l (lst Cir. 1993).
16'See, e.g., Marine Shale Processors, Inc. v. EPA, 81 F.3d 1371, 1376 (5th Cir. 1996).
6See id.
1999] PARALLEL LITIGATION 799
jurisdiction.167 This was the result when Marine Shale Processors, Inc.,
applied to the Environmental Protection Agency ("EPA") for a permit to
dispose of hazardous waste."68 The EPA denied the permit, and Marine
Shale appealed within the agency's administrative review structure. 169 In
the meantime, the United States sued Marine Shale in federal district court
for burning waste without a permit.'7" In the federal lawsuit, Marine Shale
immediately challenged the EPA's continuing jurisdiction over the permit
application, arguing that by invoking the power of an Article III court, the
United States ended the EPA's adjudicatory authority.'-' The Fifth Circuit
disagreed, observing by comparison that,
State courts are not Article III courts, yet nothing in
Article III prevents a state court from litigating the same
controversy pending before a district court. In such cases,
if the state court reaches final judgment first, its
disposition may preclude further litigation in the [federal]
district court without violating Article III.'"7
D. Stays in Favor of Other FederalCourt Litigation
1. The Landis Case
In Landis v. North American Co., Justice Cardozo described a court's
inherent power to stay its own case. 17 Landis is not often cited by courts
addressing intrafederal parallels, apparently because its formulation of a
first-impression test has been superseded by later, more definitive cases. 74
It nonetheless established an important point.
The Landis opinion arises from two cases. 17 In understanding
Cardozo's ruling, it is important to note that the plaintiffs in the two cases
are distinct, although the issues were apparently identical.' 76 The plaintiff
in each of the two actions was a holding company described in the opinion
"67See id. at 1377.
68See id. at 1374.
169See id. at 1374-75.
'70See id.
'See id. at 1376-77.
at 1377 (citation omitted).
172ld.
'17299 U.S. 248, 254 (1936).
174See SEC v. Downe, 1993 WL 22126, at "12 (S.D.N.Y. Jan. 26, 1993).
See Landis, 299 U.S. at 249 (consolidating Landis v. North Amercan Co. and Landis v.
American Water Works & Elec. Co.)
"76See id. at 249.
800 BAYLOR LAW REVIEW [Vol. 51:4
as "the apex of a pyramid which includes subsidiary holding companies as
well as subsidiary operating companies, these last being engaged as public
' 77
utilities in supplying gas and electricity to consumers in different states.'
In addition to these two primary actions, other plaintiffs had filed forty-
seven similar suits in thirteen federal districts.17 Defendants filed motions
to stay in each of the two cases, hoping to use only one forum to resolve
the central issue of the constitutionality of the registration requirement. 7 9
The district court granted the stay, but the D.C. Circuit reversed.1SO On
review, the Supreme Court limited the question to a court's right to stay
cases pending the resolution of a related case.-1 This focus led to
Cardozo's often quoted statement:
Viewing the problem as one of power, and of power only,
we find ourselves unable to assent to the suggestion that
before proceedings in one suit may be stayed to abide the
proceedings in another, the parties to the two causes must
be shown to be the same and the issues identical ...
Apart, however, from any concession, the power to stay
proceedings is incidental to the power inherent in every
court to control the disposition of the causes on its docket
with economy of time and effort for itself, for counsel, and
for litigants. How this can best be done calls for the
exercise of judgment, which must weigh competing
interests and maintain an even balance. True, the suppliant
for a stay must make out a clear case of hardship or
inequity in being required to go forward, if there is even a
fair possibility that the stay for which he prays will work
damage to some one else. Only in rare circumstances will
a litigant in one cause be compelled to stand aside while a
litigant in another settles the rule of law that will define the
rights of both. Considerations such as these, however, are
counsels of moderation rather than limitations upon
82
power. 1
at
177Id. 249-50.
17'See id. at 252.
' 79See id. at 250-51.
'8 See id. at 253-54.
'8'See id. at 254.
'8 Ild. at 254 (citation omitted).
1999] PARALLEL LITIGATION
Thus, the Court ruled that a federal court may stay, at least temporarily,
an action that is less than a perfect parallel to a similar action that may
resolve common issues. 83 The test is a balancing test which requires the
movant to "make out a clear case of hardship or inequity in being required
to go forward, if there is even a fair possibility that the stay for which he
prays will work damage to some one else."114 Cardozo also clarified that
(1) the burden is on the party seeking the stay; and (2) the decision was
discretionary but must be kept "within the bounds of moderation."'' s
2. Various Tests in the Circuits
While Landis establishes the source of the power to stay a parallel case,
it did little to clarify when a stay should be granted, contrary to Cardozo's
opening paragraph: "The controversy hinges upon the power of a court to
stay proceedings in one suit until the decision of another, and upon the
propriety of using such a power in a given situation."186 To the extent that
the emphasized phrase promises a legal test, Landis offers only oblique
.phrases such as: (1) "the exercise of judgment, which must weigh
competing interests and maintain an even balance;"'- s (2) "clear case of
hardship or inequity;",s (3) "fair possibility that the stay ...will work
damage to someone else;"'1 9 (4) "scandal to the administration of
justice;"'' 0 and (5) "discretion was abused if the stay was not kept within
the bounds of moderation."'' The absence of a usable legal standard may
explain why Landis is often ignored in legal opinions and scholarship
tracing the heritage of stays to remedy parallel cases in federal courts. 9
"83See id. at 254-55. Landis noted several lower court opinions that limited stays to cases
with identical parties. The Court observed that these cases could have been resolved on the
grounds that the stays, all of indefinite duration, were an abuse of discretion. The other view,that
courts simply lacked the power to stay a case whose parallel had different parties, was
unacceptable.
4
'I 1d. at 255.
8
' I1d. at 256.
86
" 1d. at 249 (emphasis added).
8
Id. at 254-55.
'Id. at 255.
1891d.
9
"' Id. (quoting Amos v. Chadwick, L.R. 9 Ch. Div. 459, 462).
1911d. at 256.
92
' In spite of these shortcomings, the Fifth Circuit has applied Landis, explaining that: "A
stay can be justified only if, based on a balancing of the parties' interests, there is a clear inequity
to the suppliant who is required to defend while another action remains unresolved and if the
order granting a stay can be framed to contain reasonable limits on its duration." GATX Aircraft
Corp. v. M/V Courtney Leigh, 768 F.2d 711,716 (5th Cir. 1985) (citing Landis, 299 U.S. at 254-
BAYLOR LAWREVIEW [Vol. 51:4
With no solid guidance from Landis, federal courts have found other
authorities for staying local cases in deference to other federal litigation.
One often cited case is Kerotest Manufacturing Co. v. C-O-Two Fire
Equipment Co., a parallel patent dispute in which the Supreme Court
affirmed a stay of the second-filed declaratory judgment action.19 Kerotest
fails to add anything substantive to Landis:
Wise judicial administration, giving regard to conservation
of judicial resources and comprehensive disposition of
litigation, does not counsel rigid mechanical solution of
such problems. The factors relevant to wise administration
here are equitable in nature. Necessarily, an ample degree
of discretion, appropriate for disciplined and experienced
judges, must be left to the lower courts.... Even if we
had more doubts than we do about the analysis made by
the Court of Appeals, we would not feel justified in
displacing its judgment with ours.94
In other words, standards with identifiable elements are inappropriate
here because the management of parallel litigation within the federal
system requires a case-by-case analysis in which pertinent factors will vary
from case to case. Of course, this approach may have contemplated that
guidelines would develop over time, and they did.
In spite of being somewhat ignored in domestic parallel settings, Landis
is cited with some regularity by federal courts considering stays of the
immediate action in deference to foreign actions.19 These cases,
fortunately, have developed the legal test missing in Landis. One case
considering a stay in deference to a first-filed Canadian case identified the
following factors:
[1] principles of comity, [2] the adequacy of relief
available in the alternative forum, [3] promotion of judicial
efficiency, [4] the identity of the parties and issues in the
two actions, [5] the likelihood of prompt disposition in the
alternative forum, [6] the convenience of the parties,
55). GATX upheld the federal trial court's denial of a stay pending the resolution of a non-
parties' bankruptcy. See GATX, 768 F.2d at 717.
193342 U.S. 180, 186 (1952).
1941d. at 183-84.
195See infra Part VII.A. 1.
1999] PARALLEL LITIGATION
counsel and witnesses, and [7] the possibility of prejudice
if the stay is granted.196
When these factors are considered in a purely federal context,
presumably comity would decline or disappear, but the others are no doubt
appropriate. 197
The Seventh Circuit has stated a clear test based on Kerotest.19 In
Serlin v. Arthur Andersen & Co., the court upheld the trial court's
dismissal of a duplicate federal action.'" For authority, it drew from a
local federal district court opinion which paraphrased Kerotest's language
authorizing dismissal of a parallel action "for reasons of wise judicial
administration ... whenever it is duplicative of a parallel action already
pending in another federal court." 200 Interestingly, Kerotest's "wise
judicial administration" concept was also the basis for the ColoradoRiver
doctrine, which determines the appropriateness of stays and dismissals in
state-federal parallel litigation.2ol This has led to confusion for courts that
might be tempted to apply the multi-factored Colorado River test in an
intrafederal setting. Serlin's citation to Colorado River for the "wise
judicial administration" test, quoted above, is an example. The Seventh
Circuit corrected this in Chrysler Credit Corp. v. Marino, by rejecting
movant's reliance on Colorado River as a basis for a stay of a parallel
action:
Colorado River and its progeny, however, address the stay
of federal proceedings pending the conclusion of parallel
state actions and that is how we have applied it. Here,
both the guaranty and replevin actions were filed in federal
court in the Northern District of Illinois. Consequently,
abstention from the guaranty action under ColoradoRiver
is inapplicable.02
Of course there is no legal error in this if the court merely applies
Colorado River's elements without the federalism twist, and perhaps
without the heavy presumption of allowing the actions to continue. The
"I.J.A., Inc. v. Marine Holdings, Ltd., Inc., 524 F. Supp. 197, 198 (E.D. Pa. 1981).
97
1 See id.
198
See Serlin v. Arthur Anderson & Co., 3 F.3d 221, 223 (7th Cir. 1993).
99
1 d. at 222.
2
"Id. at 223 (quoting Ridge Gold Standard Liquors v. Joseph E. Seagram, 572 F. Supp. 1210,
1213 (N.D. III.1983) (citation omitted).
201
See infra Part V.C.
20263 F.3d 574, 578 (7th Cir. 1995) (citations omitted).
BAYLOR LA WREVIEW [Vol. 51:4
Seventh Circuit also has a narrower definition of "parallel:" "A suit is only
duplicative if it involves the 'same claims, parties, and available relief.' '23
This is contrary to the Supreme Court's approach in Landis, which held
that "we find ourselves unable to assent to the suggestion that before
proceedings in one suit may be stayed to abide the proceedings in another,
the parties to the two causes must be shown to be the same and the issues
identical."20
In other cases, the Fifth Circuit appears also to base its test on Kerotest,
in spite of its earlier reliance on Landis in GA TX, discussed above.25 The
best example of this Kerotest reliance is West Gulf Maritime Ass 'n v. ILA
Deep Sea Local 24.2- Like the Seventh Circuit, the Fifth Circuit cites the
inappropriate Colorado River precedent along with Kerotest.0? However,
the Court also identifies several useful considerations, including the degree
of identity of the actions, the courts' respective ability to resolve all the
issues in the dispute, and the likelihood of piecemeal litigation.208
West Gulf also draws from Mann ManufacturingInc. v. Hortex, Inc.,1 9
which provides the Fifth Circuit's position on stays in duplicate patent
litigation. For its own authority, Mann ignored Landis and Kerotest and
instead relied on two questionable cases and one appropriate precedent.210
The two questionable cases are Rickey Land & Cattle Co. v. Miller &
Lux,211 a state-federal conflict, enforcing the first-filed rule in an in rem
case, and In re Georgia Power Co.,212 holding the first-filed rule to be
axiomatic in both intrafederal conflicts and state-federal conflicts. The
appropriate authority is Tivoli Realty, Inc. v. Interstate Circuit, Inc.,
enforcing the first-filed rule by reversing an antisuit injunction from the
second court.213 In Mann, the court split its remedy, staying the first-filed
action in regard to claims related to the second action, and staying specific
claims pending plaintiffs motion for leave to add those claims in the
second action.114 Readers should not assume that legal tests and remedies
23
° Id. (quoting Serlin, 3 F.3d at 223).
2
"4See Landis v. North America Co., 299 U.S. 248, 254 (1936).
2 5
" See supra note 105.
206751 F.2d 721, 728-29 (5th Cir. 1985).
207
2 8
See id. at 728-29.
° See id. at 730-3 1.
209439 F.2d 403, 405 (5th Cir. 1971).
2
'°See id. at 407 n.2.
211218 U.S. 258, 262-63 (1910).
21289 F.2d 218, 221 (5th Cir. 1937).
213167 F.2d 155, 158 (5th Cir. 1948).
2 14
See Mann, 439 F.2d at 408.
1999] PARALLEL LITIGATION 805
applied in parallel patent cases are readily applicable to non-patent cases.
Caution is appropriate here. Although there is no authority on point--
neither judicial or academic--patent cases appear to make up a greatly
disproportionate number of federal parallel cases and have developed
21
somewhat distinct rules. 1
The Second Circuit uses a heavy presumption favoring the first-filed
case, with Semmes Motors, Inc. v. Ford Motor Co., as a leading
example.216 That presumption is qualified by the fact that Semmes was a
repetitive parallel case, that is, both cases were filed by the same party. 27
It might not be as strong in reactive cases in which each party has made a
bona fide choice of forum. The two cases arose from Ford's audit of
Semmes's Ford dealership in New York, which included the investigation
of warranty repairs and led to claims that the auditors randomly contacted
customers.21 1 In the audit, Ford found several instances of warranty refunds
charged to Ford where no work was done, and recommended remedial
measures to Semmes.219 In response, Semmes sued Ford in New Jersey
state court; Ford removed that claim to federal court, where the judge
denied Semmes's request for a temporary injunction against Ford's actions
and possible franchise termination.220 Semmes then sued Ford in a New
York federal court, still seeking the temporary injunction to stop Ford from
terminating the franchise.221 The New York federal court denied Ford's
motion to stay the New York action and granted Semmes's injunction
against Ford.m On appeal, the Second Circuit held the New Jersey action
had priority as the first filed, that the New Jersey federal court would have
been justified in enjoining Semmes from prosecuting the New York federal
action, and that the result should not differ where Ford chose instead to
seek a stay from the New York federal court. 23 The Second Circuit thus
stayed the New York action, but did leave in effect the New York Court's
injunction against Ford (that is, enjoining Ford from terminating Semmes's
2
'See, e.g., William Gluckin & Co. v. International Playtex Corp., 407 F.2d 177, 178 (2d
Cir. 1969) (discussing the "customer action" factor).
216429 F.2d 1197, 1202 (2d Cir. 1970)..
21
See id. at 1198-99, 1202.
"'See id. at 1200.
219
See id.
220
See id. at 1200 n.5.
221
See id.
2
USee id. at 1201.
2
2See id. at 1202.
806 BAYLOR LAW REVIEW [Vol. 51:4
dealership), even though the injunction had been denied by the New Jersey
22
federal court which would subsequently try the case. '
The D.C. Circuit has significantly altered its rule for parallel federal
actions. As recently as 1980, it had applied a "discretionary" rule that was
phrased in dispositive terms in Washington Metropolitan Transit Authority
v. Ragonese: "Where two cases between the same parties on the same
cause of action are commenced in two different Federal courts, the one
which is commenced first is to be allowed to proceed to its conclusion
first." ' Further underscoring the rule, the court stated that
"[c]onsiderations of comity and orderly administration of justice dictate
that two courts of equal authority should not hear the same case
simultaneously." ' In applying
226 the seemingly rigid first-filed rule, the D.C.
Circuit's approach was, by 1997, that "in strictly limited circumstances, we
have sometimes held that comity may warrant dismissal of [a pending]
action."227
The Ninth Circuit has a more discretionary approach, observing "a
generally recognized doctrine of federal comity which permits a district
court to decline jurisdiction over an action when a complaint involving the
same parties and issues has already been filed in another district." 228 The
court added that "this 'first to file' rule is not a rigid or inflexible rule to be
mechanically applied, but rather is to be applied with a view to the dictates
'
of sound judicial administration."229
The Tenth Circuit offers a case that illustrates the need for a stay
pending appeal of a possibly dispositive second case. 230 In O'Hare
International Bank v. Lambert, the bank originally sued Lambert in the
Northern District of Illinois on a guarantee agreement.23 When the federal
trial court initially ruled that it lacked personal jurisdiction, the bank sued
again in the Western District of Oklahoma (and in federal courts in Texas
and Arkansas) to protect its claim before the limitations period ran. 232 The
2 4
See id. at 1204.
225617 F.2d 828, 830 (D.C. Cir. 1980) (quoting Speed Products Co. v. Tinnerman, 171 F.2d
727, 729 (D.C. Cir. 1948) (upholding a dismissal in deference to a Virginia federal case)).
226
1d. [emphasis added](citing Hilton Hotels Corp. v. Weaver, 325 F.2d 1010, 1010 (D.C.
Cir. 22
1963)
7 (per curiam)).
Northwest Forest Resource Council v. Dombeck, 107 F.3d 897, 901 (D.C. Cir. 1997).
22
Pacesetter Sys., Inc. v. Medtronic, Inc., 678 F.2d 93, 94-95 (9th Cir. 1982) (citing Church
of Scientology of Cal. v. United States Dep't of the Army, 611 F.2d 738, 749 (9th Cir. 1979)).
229
Pacesetter,678 F.2d at 95.
23
°See O'Hare Int'l Bank v. Lambert, 459 F.2d 328, 329 (10th Cir. 1972).
2
Id. at 329.
232
See id. at 329-30.
1999] PARALLEL LITIGATION
bank then moved to stay the second action while appealing its first action;
however, the Oklahoma federal court rejected the stay and granted
summary judgment for the defendant on grounds unstated in the opinion.23
Meanwhile, the Seventh Circuit reversed the Illinois federal court decision
on personal jurisdiction, and remanded the case for litigation on the
merits.234 The bank now faced its loss in the Oklahoma federal court. 23s On
appeal, the Tenth Circuit held that the Oklahoma federal court abused its
discretion when it failed to stay the second-filed action while awaiting the
appeal in the Seventh Circuit.23 The Tenth Circuit's test included both a
strong first-filed presumption, countered by "the general rule . . . that
where the judgment sought is strictly in personam, courts having
concurrent jurisdiction may proceed with the litigation at least until
judgment is obtained in one of them which may be set up as res judicata in
the other."27
3. Stay of Derivative Suits
As noted in the introduction, this discussion focuses on "true" parallel
cases to the possible exclusion of derivative cases that arise out of the
original dispute but involve subsequent issues that may be determined in
the underlying lawsuit. A California federal case provides an example of
how the test for staying derivative suits can differ from that for ordinary
parallel actions.ns MD. Sass Investors Services, Inc. v. Reliance Insurance
Co. was a diversity case regarding an insurance bad faith claim, filed by
Sass, an investment advisor who was being sued in five other federal
actions by pension fund clients for losses on bond investments
recommended by Sassy 9 These actions were consolidated by the
Multidistrict Panel on Litigation for pretrial proceedings in the Eastern
District of Louisiana. 240 Sass then sued Reliance in this case for a
declaration of coverage and bad faith for Reliance's denial of coverage.2 4 '
Subsequently, Sass moved for a stay pending the resolution of the five
233See id. at 330
234See id.
23
'see id.
236
See id. at 331.
23
1Id. (citing Princess Lida v. Thompson, 305 U.S. 456 (1939)).
239
See M.D. Sass Investors Servs., Inc. v. Reliance Ins. Co., 810 F. Supp. 1082, 1086 (N.D.
Cal. 1992)
2 9Id. at 1083-84.
24°See id. at 1084.
24
'See id.
808 BAYLOR LAWREVIEW [Vol. 51:4
underlying lawsuits.12 The court noted the Ninth Circuit had no law on
point displaying the criteria for staying a derivative case regarding
insurance coverage pending a decision in the primary case.2 43 The court
then borrowed the following list of five factors from the Third Circuit:
(1) the likelihood that the declaration will resolve the
uncertainty of obligation which gave rise to the
controversy; (2) the covenience of the parties; (3) the
public interest in the settlement of the uncertainty of
obligation; (4) the availabililty and convenience of other
remedies; and (5) whether the same factual question lies at
the heart of both the insurance coverage dispute and the
underlying action.244
The court granted the stay after precisely evaluating these factors,
which differ somewhat from the Ninth Circuit's test for routine intra-
25
federal parallel cases. 1
4. Enjoining Other Federal Litigation
The standard for intra-federal antisuit injunctions is almost
identical to that of dismissals of duplicative litigation, with a strong first-
filed presumption. That is, federal law favors dismissal of all but first-filed
suits, unless there are special circumstances or the balance of convenience
favors the latter suit.46 The enjoining court need not be of coordinate
jurisdiction with the court where the action is enjoined. For example,
24 7
bankruptcy courts may enjoin actions in federal district courts.
William Gluckin & Co. v. International Playtex Corp., is a good
example of rejecting the presumption favoring the first-filed case, based on
the balance of convenience of the second forum.241 Playtex is a Delaware
corporation with its principal place of business in New York and three of
its five manufacturing plants in Georgia.249 F. W. Woolworth & Company
242
See id. at 1085.
243
See id. at 1089.
244
1d. (citing Terra Nova Ins. Co. v. 900 Bar, Inc., 887 F.2d 1213, 1224-25 (3d Cir. 1989)).
245
See Pacesetter Sys., Inc. v. Medtronic, Inc., 678 F.2d 93, 94-95 (9th Cir. 1982); see also
supra text accompanying notes 228-29.
246
See Semmes Motors, Inc. v. Ford Motor Co., 429 F.2d 1197, 1202 (2d Cir. 1970); see
also Municipal Energy Agency v. Big Rivers Elec. Corp., 804 F.2d 338, 343 (5th Cir. 1986).
247
See Steelman v. All Continent Corp., 301 U.S. 278, 288-91 (1937); In re North Am. Oil &
Gas Co. v. Fidelity & Deposit Co., 130 B.R. 482, 489 (W.D. Tex. 1991).
248407 F.2d 177, 180 (2d Cir. 1969).
249
See id. at 178.
1999] PARALLEL LITIGATION 809
("Woolworth") is a New York corporation with its principal place of
business in New York, though it operates retail stores throughout the
nation.250 Gluckin is a New York corporation with its principal place of
business in New York City.2 51 Even though these were federal question
cases, these facts are pertinent to the "balance of convenience" calculation.
On April 25, 1968, Playtex sued Woolworth in federal court in the
Northern District of Georgia for selling a brassiere manufactured by the
Gluckin Company, which Playtex alleged infringed on a Playtex patent.2 12
Gluckin was not registered to do business in Georgia, and according to the
court in this case, not amenable there."3 On May 28, 1968, Gluckin sued
Playtex in the Southern District of New York for a declaratory judgment of
non-infringement or patent invalidity.254 On Gluckin's motion, the New
York federal court enjoined Playtex from proceeding in the Georgia suit.55
Playtex then appealed the injunction.256
The Second Circuit began its analysis by noting its parallel case rule
that "as a principle of sound judicial administration, the first suit should
have priority, 'absent the showing of balance of convenience in favor of
the second action,' . . . or unless there are special circumstances which
justify giving priority to the second."257 The court then noted two special
circumstances: (1) the "customer action" exception, "where the first-filed
suit is against a customer of the alleged [patent] infringer while the second
involves the infringer himself," and (2) "where forum shopping alone
motivated the choice of the situs for the first suit."258 The second did not
apply; the district court had made no finding of forum shopping, and the
appellate court was unable to inferit.29 The district court, however, did
utilize the first special circumstance, the "customer action" exception, to
6
enjoin the first-filed action.2 0
2
25
"See id.
'See id.
22
S See id. at 177.
23
1' See id. at 178.
24
S See id.
2
1SSee id.
26
S See id. at 177
"'tId.at 178 (quoting Remington Prods. Corp. v. American Aerovap, Inc., 192 F.2d 872, 873
(2d Cir. 1951) (citation omitted).
28
1d. at 178.
9
25
20
See id.
" See id.
810 BAYLOR LAWREVIEW [Vol. 51:4
Playtex urged reversal, arguing the unfairness of the rigid application of
the customer exception.261 Playtex argued that in order to justify unseating
the first-filed case, more than mere customer action was needed, such as
harassment or probable harassment in litigating in the first forum.262 The
court rejected this argument, and instead described the need for a "flexible
approach":
Wise judicial administration, giving regard to conservation
of judicial resources and comprehensive disposition of
litigation, does not counsel rigid mechanical solution of
such problems. The factors relevant to wise administration
here are equitable in nature. Necessarily, an ample degree
of discretion, appropriate for disciplined and experienced
2 63
judges, must be left to the lower courts.
Under this approach, the customer exception would apply only when
the balance of convenience favored the second forum. It did in this case,
with the location of evidence and witnesses and other important factors
6
overwhelmingly pointing to New York and the second-filed action.21
Readers should note that the "customer exception rule" is limited to patent
cases like Gluckin. On the other hand, the special circumstances test
applies generally to parallel cases in federal courts.
The Fifth Circuit has a two-part test for enjoining federal duplicative
litigation: "(1) are the two pending actions so duplicative that one court
should decide the subject matter of both actions; and if so, (2) which of the
two courts should take the case?" 265 In Superior Savings Association v.
Bank of Dallas, the plaintiff was a judgment creditor which had filed
related garnishment actions against various law firms in Dallas, Texas and
Cleveland, Ohio, seeking unused fees held by the garnishee firms.26
Applying the two-part test, the court first observed that in considering
antisuit injunctions, "the customary rules governing the grant of injunctive
26
'See id. at 178-79.
262
See id. at 179.
263
1d. at 179 (quoting Kerotest Mfg. Co. v. C-O Two Fire Equip. Co, 342 U.S. 180, 183-84
(1951)).
2
'See id. at 179-80.
265
Superior Sav. Ass'n v. Bank of Dallas, 705 F. Supp 326, 328-29 (N.D. Tex. 1989) (citing
Coumbia Plaza Corp. v. Security Nat'l Bank, 525 F.2d 620, 628-29 (D.C. Cir. 1975); Mann
Mfg., Inc. v. Hortex, Inc., 439 F.2d 403, 407-08 (5th Cir. 1971)).
266
See id.at 327-28.
.1999] PARALLEL LITIGATION
relief are of 'secondary significance. "'267 The court denied the defendants'
motion to enjoin the Ohio litigation, finding that the two post-judgment
actions were not sufficiently duplicative to require that one be stopped.268
Additionally, special concerns arise when enjoining repetitive litigation
in the United States for claims arising outside the United States that have
been dismissed on forum non conveniens grounds. Injuries and deaths in
foreign countries often end up as claims in state or federal courts in the
United States, if there is a basis for personal jurisdiction. Whether our
courts should provide a forum for such claims is controversial.269 These
claims are sometimes dismissed on forum non conveniens grounds,270 but
claimants are not always deterred by the first or second dismissal.
Plaintiffs in these repetitive suits may be enjoined from refiling the claims
in any state or federal court in the United States, assuming that the United
States as a whole was found inconvenient.21 Compulsory counterclaims
can be another problem. Where a party elects to file a second federal
action rather than bring a compulsory counterclaim, and where the parties
in the two actions are the same, the second action should be enjoined.272
The scope of the antisuit injunction may present special issues as well.
In Wood v. Santa Barbara Chamber of Commerce, Inc., photographer
Wood sued several defendants for copyright infringement under federal
law.273 The district court dismissed Wood's claims for lack of personal
jurisdiction over many of the defendants, and the running of the limitations
periods as to some claims.74 Because Wood had already been litigious on
these issues, the court permanently enjoined Wood from relitigating these
claims, or any claims remotely connected, and the Ninth Circuit
267
1d. at 328 (citing Columbia Plaza Corp.,525 F.2d at 622 n.3 (D.C. Cir. 1975)); see also S-
Fer Int'l, Inc. v. Paladion Partners, Ltd., 906 F. Supp. 211,213-14 (S.D.N.Y. 1995).
268
See id. at 331.
269
See David W. Robertson & Paula K. Speck, Access to State Courts in Transnational
PersonalInjury Cases: Forum Non Conveniens and Antisuit Injunctions, 68 TEX. L. REv. 937,
938-975 (1990) [hereinafter Robertson & Speck, Access to State Courts]; infra Part IV.B.4.; see
also Carl Scherz Comment, Section 71.051 of the Texas Civil Practiceand Remedies Code-The
Texas Legislature'sAnswer to Alfaro: Forum Non Conveniens in Personal Injury and Wrongful
Death Litigation, 46 BAYLOR L. REv. 99 (1994) [hereinafter Legislature's Answer to Alfaro];
see infra Part IV.B.4.
2"See De Melo v. Lederle Lab., 801 F.2d 1058, 1064 (8th Cir. 1986).
"'See Villar v. Crowley Maritime Corp., 990 F.2d 1489, 1498-99 (5th Cir. 1993).
"2 See Columbia Plaza Corp. v. Security Nat'l Bank, 525 F.2d 620, 626 (D.C. Cir. 1975).
273705 F.2d 1515, 1518 (9th Cir. 1983).
274
See id.
812 BAYLOR LAWREVIEW [Vol. 5 1:4
affirmed. 5 As might be expected, this ruling does not reflect the norm as
to injunctions against future litigation. Albeit in a somewhat different
setting, federal antisuit injunctions against state litigation, the Supreme
Court has held that injunctions against future litigation must be narrowly
drawn and limited to matters actually decided in the federal action.216
Honoring the injunction may also be problematic since the court in
which the action has been enjoined is not always inclined to agree. In at
least one noteworthy case, Schauss v. Metals Depository Corp., the Fifth
Circuit did honor a New York federal injunction despite sufficient
justification to ignore it.277 In Schauss, defendant Metals Depository
Corporation ("MDC") was sued in two Texas federal courts and several
Texas state courts. 278 MDC was also a defendant in a New York federal
action brought by the Commodity Futures Trading Commission, in which a
receiver was appointed and all creditors were joined.279 The New York
federal court then enjoined the creditors from prosecuting any further
actions against MDC.8 0 One of the two Texas federal courts stayed its
action temporarily, in accordance with the New York injunction, to learn
what effect the New York injunction had on the Texas proceeding.2-1 The
New York receiver, however, failed to correspond with the Texas action,
even though he was a party and aware of the proceedings.28 2 The two
Texas actions were consolidated, and the Texas parties agreed on a
settlement and final judgment was entered.213 The New York receiver, a
non-participating party, appealed.214 The Fifth Circuit set aside the Texas
federal court's judgment, which was in violation of the New York
injunction, even though the New York receiver's inaction was a significant
25
cause. 1
27
See id. at 1526.
276
See Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 151 (1988); see also Deus v. Allstate
Ins. Co., 15 F.3d 506, 524 (5th Cir. 1994).
277757 F.2d 649, 653 (5th Cir. 1985).
278
1d. at 651-52.
279
See id. at 651.
2
'°See id.
281
2 2
See id. at 652.
1 See id.
23
" See id.
2 4
See id. at 653.
285
See id. at 655.
1.999] PARALLEL LITIGATION 813
III. INTRASTATE PARALLEL LITIGATION
Texas courts will defer to the plaintiffs choice of forum,86 but this
factor is nullified in reactive suits with two plaintiffs in different courts,
especially in declaratory judgment actions where the court determines that
the declaratory judgment plaintiff was forum shopping.287 Even with
deference to the plaintiffs choice, courts are inclined to economize
excessive litigation with a presumption favoring the first-filed case, unless
special factors compel a different decision.
A. Consolidationand TransfersIn Texas~
1. Consolidation Within One Court
Based on concerns of economy, convenience, and the avoidance of
inconsistent judgments and jurisdictional conflicts, Texas law
presumptively disfavors duplicative litigation among its state courts.288 A
primary remedy for multiple cases having a common question of law or
fact is transfer to the same court, and either (1) ordering of a joint trial, or
(2) consolidating them for all purposes, both pursuant to rule 174(a) of the
Texas Rules of Civil Procedure (based substantially on Rule 42 of the
Federal Rules of Civil Procedure).289 In addition, Rule 41 of the Texas
Rules of Civil Procedure (based on Rule 21 of the Federal Rules of Civil
Procedure), provides in part that actions may be jointly tried or
consolidated at any time before submission to the jury, on motion by any
party or by the court.2 90 Neither the parties nor the claims need to be
identical, and the decision is discretionary.29
2. Transfers within a Judicial District
Duplicative cases pending in the same court require only consolidation,
not transfer. Transfer is required to consolidate duplicative cases pending
in different courts in the same judicial district. Transfers between district
courts in the same judicial district are governed by section 24.303 of the
Texas Government Code92 and Rule 330(e) of the Texas Rules of Civil
26
See McIntosh v. Copeland, 894 S.W.2d 60, 65 (Tex. App.-Austin 1995, writ denied).
2
.See infra Part I11.B.1.
288
See Cleveland v. Ward, 116 Tex. 1,285 S.W. 1063, 1071 (1926).
289
Tex. R. Civ. P. 174(2).
2
9Tex. R. Civ. P. 41.
291
See Owens-Coming Fiberglas Corp. v. Martin, 942 S.W.2d 712, 716 (Tex. App.-Dallas
1997, no writ).
292
TEX. GOV'T CODE ANN. § 24.303 (Vernon 1988).
BAYLOR LAWREVIEW [Vol. 51:4
Procedure. 29 . Transfers between other courts in the same district use
section 74.121 of the Texas Government Code.294
3. Transfers Between Different Judicial Districts in the Same
State
Texas venue laws offer five grounds for moving cases to another
district or county that might be used to transfer and consolidate related
actions; none of the following cases are examples of parallel litigation.
a. Improper Venue
Section 15.063(1) of the Texas Civil Practice and Remedies Code
provides for transfer from an incorrect venue to a correct one.2 95 Upon
defendant's motion and plaintiffs failure to establish venue, the
presumption favoring plaintiffs choice is defeated and defendant may
choose, limited of course to appropriate venues.219 Plaintiffs may not use
this section to correct mistaken filings, thus permitting defendants a
presumptive choice after one filing mistake by plaintiffs.2 97
b. Impartiality
Section 15.063(2) of the Texas Civil Practice and Remedies Code
permits a change of venue if the moving party shows an inability to obtain
an impartial civil trial in the transferee district'.298
c. Consent
Section 15.063(3) of the Texas Civil Practice and Remedies Code
permits a transfer if the parties previously agreed to venue in another
county,299 for example by designating a contract's place of performance;1°°
by attorney stipulation during the lawsuit; °' or presumably by a choice of
forum agreement.
293
TEx. R. Civ. P. 330(e)
294TEx.Gov'T CODE ANN. § 74.121 (Vernon 1998).
295
TEx.Civ. PRAC. & REM. CODE ANN. § 15.063(1) (Vernon 1986).
29 6
See WTFO, Inc. v. Braithwaite, 899 S.W.2d 709, 714 (Tex. App.-Dallas 1995, no writ).
29
f See Tenneco, Inc. v. Salyer, 739 S.W.2d 448, 449 (Tex. App.-Corpus Christi 1987, no
writ).298
TEX. CIv. PRAC. & REM. CODE ANN. § 15.063(2) (Vernon 1986); see also Wilson v.
Texas Parks & Wildlife Dep't, 853 S.W.2d 825, 829 (Tex. App.-Austin 1993), rev'd, 886
S.W.2d 259 (Tex. 1994).
299
Tex. Civ. Prac. & Rem. Code Ann. § 15.063(3) (Vernon 1986).
3
°°See WTFO, 899 S.W.2d at 716.
3
'See Farris v. Ray, 895 S.W.2d 351, 352 (Tex. 1995).
1999] PARALLEL LITIGATION 815
d. Incbnvenient Forum
Prior to September 1, 1995, the three grounds listed above were the
only means in Texas of transferring a case between districts for
consolidation purposes. In 1995, the Texas legislature substantially
rewrote Texas venue law and added an "inconvenient forum" transfer
provision-section 15.002(b) of the Texas Civil Practice and Remedies
Code02 that resembles the federal venue transfer provision, 28 U.S.C. §
1404(a). 3 The motion must be filed prior to or with the answer. Thus,
duplicative litigation in different districts within Texas may be resolved by
a successful motion to transfer under section 15.002(b), followed by a
motion to consolidate under Rule 174(a) of the Texas Rules of Civil
Procedure. There are no transfer cases on point nor will there be, because
decisions to or not to transfer are not appealable and are not grounds for
3
reversible error. '
e. MultidistrictTransfer
Rule 11 of the Texas Rules of Judicial Administration provides a
multidistrict litigation procedure similar to the federal one, authorizing the
transfer of cases with "material questions of fact and law in common with
another case pending in another court in another county .... ,"3o Like the
federal version, the transfer is limited to pretrial proceedings including
summary judgment. The Rule has no provisions for consolidation, and
provides to the contrary that the assignment "under this rule terminates
302
TEx. Civ. PRAC. & REM. CODE ANN. § 15.002(b) (Vernon Supp. 2000).
For the convenience of the parties and witnesses and in the interest of justice, a
court may transfer an action from a county of proper venue under this subchapter or
Subchapter C to any other county of proper venue on motion of a defendant filed and
served concurrently with or before the filing of the answer, where the court finds:
(1) maintenance of the action in the county of suit would work an injustice to the
movant considering the movant's economic and personal hardship;
(2) the balance of interests of all the parties predominates in favor of the action
being brought in the other county; and
(3) the transfer of the action would not work an injustice to any other party.
Id.
30328 U.S.C. § 1404(a) (1993).
304
S TEX. Civ. PRAC. & REM. CODE ANN. § 15.002(c) (Vernon Supp. 2000).
305TEX. R. JUD. ADMIN. 11.1, reprinted in TEX. GoV'T CODE ANN., tit. 2, subtit. F app.
(Vernon 1998).
816 BA YLOR LAW REVIEW [Vol. 51:4
when ... all pretrial proceedings are completed . . . ."06 Whether a party
could then use Texas Civil Practice and Remedies Code section 15.002(b)
as the basis for an inconvenient forum transfer to the common forum for
consolidation for trial is unclear. That result is not permitted in the
equivalent federal practice under 28 U.S.C. § 1407.307
B. Stays, Dismissals and Injunctions: Texas and Other States
1. General Principles
Where transfer is unavailable, Texas follows the common law
presumption against duplicative litigation in the same jurisdiction, that is,
in other Texas state courts, and in favor of the first-filed suit °s The
second-filed case is either dismissed,09 or stayed, which is an "abatement"
in Texas.l 0 In Miles, the Texas Supreme Court discussed the options of
dismissal or abatement without providing guidelines as to which action is
preferable, other than to state that abatement offers certain benefits, such as
protecting a party's right to proceed in the second-filed forum if the first-
filing party has filed as a sham with no intent to proceed."
Consistent with federal practice, and no doubt with common law, Texas
recognizes an exception to the favoring of the first-filed suit when a party
is guilty of such inequitable conduct that he is estopped from using the
first-filed suit to abate the second.312 Inappropriate conduct includes
misrepresentations regarding the status of negotiations and intentions to
file suit.-' Failing to file a timely objection or motion waives the
presumption of the first-filed forum's dominant jurisdiction, allowing both
actions to proceed until one reaches final judgment and possibly precludes
the other.14
3
Id. at 11.3(f).
307
See infra Part II.B.6.
3
.SeeCleveland v. Ward, 116 Tex. 1, 285 S.W. 1063, 1071 (1926).
3
"See, e.g., id.; Mower v. Boyer, 811 S.W.2d 560, 563 n.2 (Tex. 1991); Curtis v. Gibbs,
511 S.W.2d 263, 267 (Tex. 1974).
3
"See Miles v. Ford Motor Co., 914 S.W.2d 135, 139 (Tex. 1995); Wyatt v. Shaw Plumbing
Co., 760 S.W.2d 245, 248 (Tex. 1988).
31 1914 S.W.2d at 139.
312
See Johnson v. Avery, 414 S.W.2d 441,443 (Tex. 1966).
3 13
See id.; see also Curtis, 511 S.W.2d at 267; V.D. Anderson Co. v. Young, 128 Tex. 631,
101 S.W.2d 798, 800-01 (1937); Russell v. Taylor, 121 Tex. 450, S.W.2d 733, 736 (1932).
3 14
See Mower, 811 S.W.2d at 563 n.2 (citing Estate of Maxey, 559 S.W.2d 458, 460-61 (Tex.
Civ. App.-Texarkana 1977, writ refrd n.r.e.)).
1999] PARALLEL LITIGATION 817
The degree of similarity in the two lawsuits is a matter of interpretation.
Cases approaching exact duplication require, as a matter of law, dismissal
of the second action.'" Similar, but not identical, cases may be
discretionarily stayed with the inquiry being "the practical results to be
obtained, dictated by a consideration of the inherent interrelation of the
subject matter of the two suits," that is, whether a determination of the
issues in one case will resolve all the issues in the other.36
Texas has a distinct rule for a declaratory judgment action that mirrors a
first-filed lawsuit.,17 "As a general rule, an action for declaratory judgment
will not be entertained if there is pending, at the time it is filed, another
action or proceeding between the same parties and in which may be
adjudicated the issues involved in the declaratory action."',
Texas law also allows for injunctions against parallel litigation. 319
Because the typical procedure is for the objecting party to file a plea in
abatement, or stay, in the second suit, unless there is a reason to stay the
first-filed suit2o few reported instances of in-state injunctive relief being
granted exist.
Texas practice is indicative of that in other states. California has a "rule
of exclusive concurrent jurisdiction" giving presumptive priority to the
first-filed case, provided that the first court has jurisdiction over the subject
matter and the parties.321 The rule resembles the statutory plea in
abatement but is more expansive in application, not requiring absolute
identity of the parties or remedies.322 Like the plea in abatement, the rule of
exclusive concurrent jurisdiction is mandatory.323 California has a similar
3
"See Wyatt, 760 S.W.2d at 248; see also TEx. R. Civ. P. 39, 97(a).
316
Dolenz v. Continental Nat'l Bank, 620 S.W.2d 572, 575 (Tex. 1981) (quoting North Texas
Coach Co. v. Morten, 92 S.W.2d 263, 266 (Tex. Civ. App.-Austin 1935, no writ).
3
"See Texas Liquor Control Bd. v. Canyon Creek Land Corp., 456 S.W.2d 891, 895 (Tex.
1970).
3 18
1d.
319
See Cleveland v. Ward, 116 Tex. 1, 285 S.W. 1063, 1073 (1926); Galveston, Harrisburg
& San Antonio Ry. Co. v. Dowe, 70 Tex. 5, 7 S.W. 368, 371 (1888); Gulf, Colorado & Santa Fe
Ry. Co. v. Pearlstone Mill & Elevator Co., 53 S.W.2d 1001, 1003 (Tex. Comm'n App. 1932,
holding approved) (enjoining Pearlstone's attempt to file ninety-seven separate small claims
suits, "from which no appeal will lie and in which the court costs and attorney's fees will be out
of proportion to the amounts involved").
"2See, e.g., McCurdy v. Gage, 123 Tex. 558, 69 S.W.2d 56, 59 (Tex. Comm'n App. 1934,
judgm't adopted).
2
People ex rel. Garamendi v. American Autoplan, Inc., 25 Cal. Rptr. 2d 192, 197 (Ct. App.
1993).
32
See id. at 198.
32
See id.
818 BAYLOR LAW REVIEW [Vol. 51:4
rule for derivative actions that grow out of other lawsuits. In Adams v.
Paul, the California Supreme Court stayed an attorney malpractice claim
pending the outcome of the underlying action which was being dismissed
on limitations grounds. 2 Although the court would seemingly stay the
derivative lawsuit, the legal grounds may differ from routine stays of
parallel actions. Thus, while California has developed a "rule of
conclusive concurrent jurisdiction" related to the plea in abatement for true
parallel actions, it stays derivative suits under the court's inherent
authority.
New York statutorily authorizes discretionary stays "in a proper case,
upon such terms as may be just."325 Stays apply to local parallel actions
and to other settings as well26 In spite of the statute's vague language,
case law has imposed a requirement of "complete identity of parties, cause
of action and judgment sought."321' Further, case law disregards judicial
economy by noting that the "possibility or actuality of two trials is not of
'
importance."328 Two New York cases refer to a "special circumstances"
exception that would permit litigation of the second-filed action, but the
cases involved probate matters first raised in the surrogate court's that
were also raised in the Supreme Court, which has concurrent jurisdiction
32 9
over such matters.
Similar to New York, Ohio case law provides for dismissal of a second-
filed in personam action, but requires that the claims be identical. 310
Pennsylvania appears to be in this camp, authorizing a stay in one action
that may be resolved or made moot by the resolution of another case."' In
contrast, California's identity rule is much looser, requiring only that the
324904 P.2d 1205, 1211 (Cal. 1995); see also Montrose Chem. Corp. v. Superior Court, 861
P.2d 1153, 1162 (Cal. 1993) (staying a declaratory action on insurance coverage, noting that "a
stay of the declaratory relief action pending resolution of the third party suit is appropriate when
the coverage question turns on facts to be litigated in the underlying action").
121N.Y. C.P.L.R. 2201 (McKinney 1991).
126See, e.g., 660 Riverside Drive Aldo Assoc. L.L.C. v. Marte, 681 N.Y.S.2d 436, 438
(Civ.
Ct. 1998) (granting stay of state case that was related to pending federal administrative action).
327
Pierre Assocs., Inc. v. Citizens Casualty Co., 304 N.Y.S.2d 158, 160 (App. Div. 1969)
(quoting Corporate Investing Co. v. Mt. Vernon Metal Prods. Co., 200 N.Y.S. 372, 374 (App.
Div. 1923)).
3281d
32 9
See Lupoli v. Lupoli, 613 N.Y.S.2d 423,424 (App. Div. 1994); In re Moody's Will, 176
N.Y.S.2d 1, 2 (App. Div. 1958).
33 0
See State ex reL. Judson v. Spahr, 515 N.E.2d 911, 913 (Ohio 1987).
33
'See Gwynedd Properties, Inc. v. Board of Supervisors, 635 A.2d 714, 718 (Pa. Commw.
Ct. 1993).
1999] PARALLEL LITIGATION 819
two actions grow out of the same transaction.32 Illinois cases provide for a
discretionary stay and have drawn authority from the Landis test."3
Louisiana ordinarily dismisses a second-filed case, but will stay it when
class action status is pending in the other suit, thus affecting the plaintiffs
presence in that action."3 Georgia law authorizes discretionary stays but
not mandatory dismissals?
2. Statutory Dismissal
At least two states, Illinois and New Jersey, have statutes providing for
involuntary dismissal of the local action in deference to a parallel action.
For both states, these dismissal remedies are in addition to stay remedies
for parallel actions. The Illinois statute applies when "there is another
action pending between the same parties for the same cause."'16 Dismissal
is available upon defendant's motion and may be supported by affidavit to
establish the existence of the parallel action. Also, dismissal applies to all
parallel actions in or out of Illinois, in state, federal, and foreign courts,
and gives preference, though not absolute, to the first-filed case. The court
has the discretion to stay the action to allow for the possibility of claim and
party joinder in the other action that would then justify dismissal.117 New
York has a more restrictive statute, Which provides for discretionary
dismissal of a parallel action in a New York court and "a court of any state
or the United States."'3 The statute also applies to conflicts between a
New York court and a court in another state or a federal court, but it does
not apply to actions in foreign courts.3 39
" 2See Lord v. Garland, 168 P.2d 5, 10 (Cal. 1946); Lawyers Title Ins. Corp. v. Superior
Court, 199 Cal. Rptr. 1, 2 (Ct. App. 1984).
a3 See Kaden v. Pucinski, 635 N.E.2d 468, 471 (111.App. Ct. 1994) (denying plaintiffs
motion to stay one of many taxpayer claims she had filed against county clerks of courts); First
Nat'l Bank v. Fabbrini, 627 N.E.2d 356, 358 (I11.App. Ct. 1993) (granting stay despite lack of
perfect identity between the two actions involving lender fraud and foreclosure).
4
11 See Perkins v. Mobil Oil Corp., 621 So. 2d 899, 901 (La. Ct. App. 1993).
3
" See International Telecomm. Exch. Corp. v. MCI Telecomm. Corp., 448 S.E.2d 71, 73
(Ga. Ct. App. 1994); accord Graham v. Graham, 648 So. 2d 814, 816 (Fla. Dist. Ct. App. 1995)
(discretionary stay of second-filed divorce action).
336735 ILL. COMP. STAT. 5/2-619(a)(3) (West 1992).
337
See Quantum Chem. Corp. v. Hartford Steam Boiler Inspection and Ins. Co., 616 N.E.2d
686, 690 (Ill. App. Ct. 1993).
a3 iN.Y. C.P.L.R. 321 i(a)(4) (Consol. 1994); see also supra notes 325-29 and accompanying
text (discussing New York's statute governing stays of parallel cases).
319 See Abkco Indus., Inc. v. Lennon, 377 N.Y.S.2d 362, 368 (N.Y. App. Div. 1975) (holding
that parallel actions in New York and England regarding contract dispute between the Beatles
and their management company does not support dismissal).
820 BAYLOR LAWREVIEW [Vol. 51:4
IV. INTERSTATE PARALLEL LITIGATION
Parallel litigation in an interstate setting involves slightly more rigid
rules and less willingness on the part of courts to subordinate a local action
to a foreign one, whether "foreign" means a sister state or another country.
The United States Constitution's strong full faith and credit mandate,
which compels states to recognize the "public Acts, Records, and judicial
Proceedings" of sister states,3 40 does not apply to pending litigation.341
Rather, the "authority" in this setting is the non-binding comity doctrine,
which leaves state courts free to maintain local preferences and prejudices.
Nonetheless, rules have developed that favor judicial economy and fairness
to the parties.
A. "Transfers " to a Sister State
Transfers to a sister state are not yet recognized. The Uniform Law
Commission has proposed a Uniform Transfer of Litigation Act ("Act")
that provides for an interstate transfer "to serve the fair, effective, and
efficient administration of justice and the convenience of the parties and
witnesses" based on "all relevant factors, including the interest of each
plaintiff in selecting a forum and the public interest in securing a single
litigation and disposition of related matters." 342The transferor court does
not have to have personal or subject matter jurisdiction.34 3 A transferee
court with subject matter jurisdiction, but lacking personal jurisdiction
under its own long arm statutes, may accept the case if the transferor court
had both subject matter and personal jurisdiction, although the transferee
court may not exercise personal jurisdiction inconsistent with due
process. 4 4 The proposed Act has choice of law provisions for specific
areas such as limitations, '14 pending proceedings, 3' 6 and attorney-client
agreements.3 7 The Act does not include provisions for selecting the
governing substantive law, but contemplates that this could be resolved in
34 0
U.S. CONST. art. IV, § 1.
341
See Texas Employers' Ins. Ass'n v. Jackson, 820 F.2d 1406, 1421-22 (5th Cir. 1987).
342
UNIF. TRANSFER OF LITIG. ACT § 104, 14 U.L.A. 194 (Supp. 1999).
343
See id.
344
See id. § 102.
34
'See id § 209.
34 6
See id. § 211. Proceedings must be completed after transfer under the procedural rules of
the transferring court. See id.
347
See id. § 213.
1999] PARALLEL LITIGATION
the transfer order. 48 The transfer motion may be made by a party, or on the
court's motion' 4 9 The proposed Transfer of Litigation Act was approved
in 1991 but has not yet been adopted by any state.
Even without the proposed Act, most states have a rough approximation
of an interstate transfer, common law forum non conveniens. Generally
patterned after the Supreme Court's decision in GulfOil Corp. v. Gilbert,"0
forum non conveniens allows a forum to dismiss an action that is
significantly inconvenient for a defendant, balanced against the plaintiffs
and the affected state's interests, conditioned on the defendant's agreement
to waive any objections to the refiling of the case in the convenient
jurisdiction. The dismissing forum typically conditions the dismissal on
successful refiling and an opportunity to litigate on the merits in the second
forum.
The significant difference between this practice and a venue transfer
within a single jurisdiction is that venue transfers are statutory and not
dependent on a vague doctrine like comity, on which forum non
conveniens is based. In spite of comity's vagueness, the movement of
cases from one forum to another by forum non conveniens is now common
and governed by reasonably uniform standards, such as those found in
Gilbert."'
B. Dismissingor Staying the Local Action
Historically, states ignored actions in other states. For example, in
1812, when plaintiffs Bowne and Seymour filed an action in assumpsit in
New York, defendant Joy pleaded the pendency of the same action in
Massachusetts.Y The New York court responded with a borrowed English
rule."' The rules states, "The pendency of a suit in a foreign court, by the
same plaintiff against the same defendant, for the same cause of action, is
no stay or bar to a new suit instituted here."114 The Bowne case did not
necessarily hold that the court lacked the discretion to stay the duplicate
action.'' Rather, the case stated that the defendant's responsive pleading
148See id. § 208.
'49See id. § 105. See generally Thomas D. Rowe, Jr., Jurisdictionaland TransferProposals
for Complex Litigation, 10 REv. LITIG. 325, 354-58 (1991) (covering interstate transfers).
350330 U.S. 501, 508 (1947).
31'See infra Part VII.A.2.
3"See Bowne & Seymour v. Joy, 9 Johns. 221, 221 (N.Y. 1812).
3"3See id.
4
31 1d. (citing Maule v. Murray 101 Eng. Rep. 1081 (K.B.
1798).
355Id.
822 BAYLOR LAWREVIEW [Vol. 51:4
did not set up a defense as a matter of law.356 In any event, neither this
opinion nor any of its contemporaries offer so much as a discretionary
357
stay.
Lynch v. Hartford Fire Insurance Co., provides a review of the early
precedents, from early holdings supporting dismissal to a clearly-
established contrary rule that "a plea of lis alibi pendens is not good when
the litigation is in a court of foreign jurisdiction."' In prescient dictum,
the court added that courts in the future would "hold that they may attain
the same end through their power of postponing actions and suspending
judgments." ' 59 That prediction proved true over time as stays tended to
become available. However, the rule of no dismissal for foreign actions, at
one time "almost an unbroken rule in the courts of the American states,"
remains valid in many states. 360
To the extent that a general rule may be derived from relatively few
cases, stays are discretionarily available today in many jurisdictions under
varying tests and presumptions, with a general preference for first-filed
actions and an almost routine dismissal of a local case in deference to a
first-filed in rem action. A few states, as discussed below, grant dismissals
in deference to in personam actions. Texas courts will dismiss a local
action in deference to an action in another state in three instances: (1)
when a second-filed declaratory action could be resolved in the first-filed
suit; (2) when the parties have a valid forum selection agreement
designating another state; and (3) on forum non conveniens grounds.
1. Dismissal Under the First-Filed Rule
One often cited rule is that, in an interstate setting, mere duplication of
actions is not grounds for dismissal.361 Thus, a court usually will not
dismiss its own action in deference to a parallel action in another state,
based on nothing more than the sequence of filing. A New York case
offers an explanation for the disfavor of dismissals on this ground in an
" 7See id.
11 See Lindsay v. Lamed, 17 Mass. 190, 190 (1821) (denying "abatement," apparently
meaning dismissal); accord Drake v. Brander, 8 Tex. 351, 357 (1852).
35817 F. 627, 628 (D.N.H. 1883) (denying "abatement" or dismissal)
359
1d.
36
Mexican Cent. Ry. Co. v. Charman, 24 S.W. 958, 958 (Tex. Civ. App. 1894, no writ)
(dismissing an action under the term "abatement").
36
See McClellan v. Carland, 217 U.S. 268, 282 (1910). This case was cited in Colorado
River Conservation District v. United States, 424 U.S. 800, 817 (1976).
1999] PARALLEL LITIGATION 823
interstate setting162 In White Light Productions, Inc. v. On The Scene
Productions, Inc., the lower court had dismissed the second-filed New
York action, deferring to a parallel case in California merely because of the
timing in filing.363 The appellate court reversed the dismissal, holding that
the dismissal was inappropriate without an evaluation of all forum non
conveniens factors.3" Thus, courts confronted with a motion to dismiss
because of a parallel action in another state or foreign country may
routinely reject the first-filed rule and instead apply forum non conveniens
analysis.
New York does, however, authorize a discretionary stay or dismissal of
a New York action that parallels one in a sister state. 6 New York is one of
the states that uses a statute for domestic parallel cases, providing:
A party may move for judgment dismissing one or
more causes of action asserted against him on the ground
that: ... there is another action pending between the same
parties for the same cause of action in a court of any state
or the United States; the court need not dismiss upon this
ground, but may make such order as justice requires.?"
New York courts have defined the statute's party identity requirement
as being one plaintiff and one defendant common in each action, thus
avoiding a more rigid complete identity requirement. 67 In spite of White
Light's heightened requirement of a forum non conveniens analysis for
dismissals, New York courts issue both stays3 68 and dismissals.169 Only one
case granting a dismissal for a sister state court can be found.310 In that
case, the trial court had dismissed the suit, but it was reversed with a stay
substituted.3'
362
See White Light Prods., Inc. v. On The Scene Prods., Inc., 660 N.Y.S.2d 568, 570 (App.
Div.363
1997).
Id.
3
64See id. at 574.
36
'See N.Y. C.P.L.R. 321 I(a)(4) (Consol. 1994).
366Id
367
See Morgulas v. J. Yudell Realty, Inc., 554 N.Y.S.2d 597, 599-600 (App. Div. 1990).
36
'See SafeCard Servs. v. American Express Travel Related Servs. Co., 610 N.Y.S.2d 23, 23
(App. Div. 1994) (ordering stay of local action in deference to Florida case).
9
. See Reliance Ins. Co. v. American Elec. Power Co., 637 N.Y.S.2d 710, 711 (App. Div.
1996) (affirming denial of dismissal in deference to Ohio federal action).
" See SafeCard, 610 N.Y.S.2d at 24.
3'See id.
BA YLOR LAW REVIEW [Vol. 51:4
Illinois is another state providing a statutory remedy when "there is
another action pending between the same parties for the same cause."71
The statute applies to al actions, including those in other states in the
73
United States, and gives priority to the first-filed case.
Although Alabama apparently diminishes its deference to sister state
parallel actions, it dismisses claims that should have been filed as
compulsory counterclaims in a first-filed action in another state.3 74 In
Martin v. Robbins, Stephanie Robbins sued her former husband, Howard
Robbins, in regard to a closely held company they owned.375 Apparently in
league with Mrs. Robbins, Jeanette Martin sued Howard Robbins in
Tennessee on a related claim, based on Martin's status as a shareholder in
the Robbins company. 76 Howard Robbins filed a third party claim against
Martin in the Alabama action and obtained a default judgment177 On
appeal, Martin asked the Alabama Supreme Court to dismiss Howard
Robbins's claim against her on the ground that it was a compulsory
counterclaim in the Tennessee action.17, The court disagreed and held that
the comity owed to Tennessee did not require dismissal in Alabama merely
3 79
because the claim could be raised in the Tennessee action.
Although Texas law does provide for the dismissal of a local action that
duplicates another Texas lawsuit,380 it distinguishes between intrastate
conflicts and those with sister states or foreign countries. For example,
Williamson v. Tucker noted that abatement, apparently meaning
"dismissal," of a duplicative case applies only where "[b]oth courts had
been created by the same sovereign," and in some cases was a matter of
right, while staying an action in deference to a foreign action is
discretionary.3 Thus, "[t]he fact that a plaintiff in a Texas case had prior
to filing such case in Texas, filed a suit, that still pends, against the same
372735 ILL. COMP. STAT. 5/2-619(a)(3) (West 1992).
373
See Doutt v. Ford Motor Co., 659 N.E.2d 89, 92 (II1.App. Ct. 1995) (affirming dismissal
of class action in deference to similar cases in several other state and federal courts).
" 4See Martin v. Robbins, 628 So. 2d 614, 617-18 (Ala. 1993).
37
ld. at 616.
376
See id.
377
See id.
17'See id. at 618.
79
3 See id.
3
M°See supra Part III.B.
31615 S.W.2d 881, 885-86 (Tex. Civ. App.-Dallas 1981, writ ref d n.r.e.).
1999] PARALLEL LITIGATION 825
defendant on the same cause of action in a court of a sister state is not
'
ground for abating the Texas suit."382
Although dismissals tend to be unavailable for routine interstate parallel
actions, they are available almost invariably for second-filed in rem actions
in which a first court has already acquired jurisdiction over the property."'
Dismissals may be available to enforce forum selection clauses,3 for
forum non conveniens matters," 5 and in some states, for second-filed
declaratory actions.386
The law is so little developed in most states that the few cases available
tend to rely on law from other states or federal courts. Because of the
differences among the states' laws, each state's law must be scrutinized for
these nuances. For example, Texas uses dismissals only for in-state
conflicts."7 Alabama, by contrast, dismisses not only in-state conflicts, but
also local suits in favor of a first-filed federal action.3- s This distinction
from Texas practice is more than semantic. Alabama does not apply this
rule to parallel actions in sister states8 9 and, thus, distinguishes between
state and federal courts in dismissing a local action. Texas, on the other
hand, generally treats federal courts the same as sister state courts by
making dismissal unavailable but providing for a discretionary stay of the
39
local action. 0
2. Dismissal of the Second-Filed Declaratory Action
Texas law requires the dismissal of a local declaratory judgment action
that is filed after a primary action in another state. In Space Master
International,Inc. v. Porta-KampManufacturingCo., the court of appeals
affirmed the dismissal of the Texas second-filed suit in favor of the first-
filed New Jersey action, and a prior-filed Massachusetts federal action,
382
Badgett v. Erspan, 476 S.W.2d 381, 382 (Tex. Civ. App.-Fort Worth 1972, no writ)
(citing Drake v. Brander, 8 Tex. 351 (1852)).
383
See e.g., Interfirst Bank-Houston v. Quintana Petroleum Corp., 699 S.W.2d 864, 877-78
(Tex. App.-Houston [1st Dist.] 1985, writ ref'd n.r.e.) (citing the Princess Lida rule).
384
See infra Part IV.B.3.
385
See infra Part IV.B.4.
3 86
See Foreman v. Smith, 133 So. 2d 497, 501 (Ala. 1961).
387
See Williamson v. Tucker, 615 S.W.2d 881, 885-86 (Tex. Civ. App.-Dallas 1981, writ
ref'd n.r.e).
38
'See Fegaro v. South Cent. Bell, 252 So. 2d 66, 68 (Ala. 1971).
389
See Galbreath v. Scott, 433 So. 2d 454, 456 (Ala. 1983).
3
"See Project Eng'g USA Corp. v. Gator Hawk, Inc., 833 S.W.2d 716, 724 (Tex. App.-
Houston [lst Dist.] 1992, no writ) (ordering stay in deference to parallel California action);
Williamson, 615 S.W.2d at 885-86 (ordering stay in deference to parallel federal action).
BAYLOR LAWREVIEW [Vol. 51:4
which involved only intrastate parallel actions.9l The decision also
invoked comity with other jurisdictions, observing that the "custom has
practically grown into a general rule which strongly urges the duty upon
the court in which the subsequent action is instituted to [dismiss the mirror
image declaratory action]."92
3. Dismissals Based on Forum Selection Agreements
The Dallas Court of Appeals provided a thorough statement of Texas
law on forum selection agreements in Accelerated Christian Education,
Inc. v. Oracle Corp.. 3 In this repetitive suit, the local plaintiff was
dissatisfied with the California defendant's removal of the case to federal
court. 94 The plaintiff filed a new case in state court, apparently hoping to
avoid the forum selection clause, which designated California as the proper
forum, in the parties' contract at issue."9
The plaintiff in both cases was Accelerated Christian Education
("Accelerated"), a Texas corporation which "designs and markets
educational materials for home study and Christian educational
institutions.", 9 Oracle is "a California corporation that designs and
markets computer software and related services."1' 97 An additional party,
Brady, was Oracle's regional sales manager in Dallas.39 Deciding to
upgrade its computer system, Accelerated entered into two contracts with
Oracle, giving Accelerated a license to Oracle's software and providing
Accelerated with technical support and consulting services. "99 "Both
contracts specified that California law would govern the contracts."4' °
Each contract contained the following forum selection clause:
In any legal action relating to this Agreement,
[Accelerated] agrees (a) to the exercise of jurisdiction over
it by a state or federal court in San Francisco or San Mateo
391794 S.W.2d 944, 947 (Tex. App.-Houston [ist Dist.] 1990, no writ) (relying on Texas
Liquor Control Bd. v. Canyon Creek Land Corp., 456 S.W.2d 891, 895 (Tex. 1970)).
392
Id. at 946 (citing Mills v. Howard, 228 S.W.2d 906, 908 (Tex. Civ. App.-Amarillo 1950,
no writ); Evans v. Evans, 186 S.W.2d 277, 279 (Tex. Civ. App.-San Antonio 1945, no writ)).
393925 S.W.2d 66 (Tex. App.-Dallas 1996, no writ).
394
" See id. at 68.
39
See id. at 69.
39 6
d.
39 7
id.
39 8
See id.
399
See id.
400Id.
1999] PARALLEL LITIGATION
County, California; and (b) that if [Accelerated] brings the
action, it shall be instituted in one of the courts specified in
subparagraph (a) above. Oracle may institute legal action
in any appropriate jurisdiction.401
In a few months, Accelerated became dissatisfied with Oracle's
software and services.402 Accelerated then sued Oracle and Brady in Dallas
County for breach of contract, violations of the Texas Deceptive Trade
Practices Act, negligent misrepresentation, breach of warranty, fraud,
promissory estoppel, and gross negligence.40 ° This was Accelerated's
second lawsuit because Oracle had removed the first suit to federal court
and then moved to dismiss for improper forum.404 Before the federal court
ruled on Oracle's motion, Accelerated dismissed its lawsuit.405 Accelerated
then filed this lawsuit in Texas state court.406 Other than joining Brady as a
party, the second lawsuit was identical to the first.407 The trial court
dismissed Accelerated's second lawsuit based on the contracts' forum
selection clause.408
In affirming the dismissal, the court of appeals made several key rulings
that provide a primer in this area of Texas law. First, contrary to
Accelerated's argument, Oracle was not required to perfect its choice of
forum defense by either entering a special appearance, which pertains only
to amenability issues, or filing a motion to transfer venue to California,
which the Texas court had no power to do .1 Second, Texas's status as a
more favorable forum, based on the interests of witnesses and Texas public
policy, was irrelevant and incorrect in light of the parties' forum
agreement.410 The court stated:
Forum selection clauses are valid in Texas. When a
party contractually consents to the jurisdiction of a
particular state, that state has jurisdiction over that party as
long as the agreed-to state will enforce the type of forum
selection clause signed by the parties. California enforces
4'0See id.
403
See id. at 68-69.
41
'See id. at 69.
40
'See id.
4
°6See id.
40 7
See id.
4
0°See id.
4
°See id. at 70.
4
"See id. at 71.
828 BAYLOR LAWREVIEW [Vol. 51:4
forum selection clauses as long as it would not be
unreasonable to do so. Nevertheless, a forum selection
clause does not bind a Texas court if the witnesses' and the
public's interest strongly favors jurisdiction in a forum
other than the one the parties agreed to in the contract.
Here, the parties agreed to litigate any disputes
"relating to" the agreements in California. Two
sophisticated parties in an arm's length commercial
transaction negotiated the agreements, and neither side
objected to the forum selection clause. Although Texas
has a significant interest in remedying civil injury to Texas
citizens, Texas also recognizes the validity of forum
selection clauses and the right of parties to contractually
select their forum for future litigation.
Accelerated argues enforcing the forum selection clause
will frustrate the "public's interest" because Accelerated
will then be deprived of its rights under the Texas DTPA.
We disagree. Enforcing the forum selection clause does
not automatically determine the law applicable to the case.
A California court may well determine, under its choice-
of-law principles, that Texas law, including the DTPA,
applies. We conclude the public's interest does not
strongly favor keeping this litigation in Texas.4"
Third, the forum clause also applied to the non-contract claims. The
court observed that "[p]leading alternate noncontractual theories of
recovery will not alone avoid a forum selection clause if those alternate
claims arise out of the contractual relations and implicate the contract's
terms. ' 12 The court also held that the forum selection clause's term
"relating to" indicated the parties' intent that related noncontractual claims
be covered.413 Fourth, the forum selection clause did not contravene a
specific Texas venue rule.' The court noted a shift in the law since the
1919 case cited by Accelerated and that American courts now routinely
411
Id. at 70-71 (emphasis added) (citations omitted).
4 12
1d. at 72 (citing Barnette v. United Research Co., 823 S.W.2d 368, 370 (Tex. App.-
Dallas 1991, writ denied) (enforcing a New Jersey forum clause)).
4 3
See id.
414
See id. at 73.
1999] PARALLEL LITIGATION
hold that forum selection clauses do not interfere with venue rules.41, Fifth,
the forum clause was not an impermissible waiver of Accelerated's right to
select venue under the Texas Deceptive Trade Practices Act.4 16 The court
acknowledged the venue waiver provision at Texas Business and
Commerce Code section 17.42, but held it inapplicable by extension of the
party autonomy rule, which allows parties to choose which law governs a
contract.4 1 1 Finally, the court held that the contractual forum selection
clause controlled the dispute even though the contract was not signed by
one of the California defendants.41
The public policy exception that is noted in Accelerated is that a Texas
court may disregard a forum selection clause if the witnesses' and the
public's interest strongly favors jurisdiction in a forum other than the one
the parties agreed to in the contract.4 19 In Turford v. Underwood, the
plaintiff, Turford, filed a declaratory judgment action in Texas seeking to
invalidate a non-compete agreement in regard to Anatec, a former
employer based in Michigan.420 After the Texas action was filed, Anatec
filed a parallel action in Michigan and then filed a dismissal motion in the
Texas action based on an employment contract addendum designating
Michigan as the parties' forum.412 Turford objected, stating that the
contract addendum was signed under duress and lacked consideration.42
The trial court denied Anatec's dismissal motion, but then granted its
motion to compel arbitration.423 Turford then filed a mandamus action
against District Judge Underwood.424 The court of appeals held that Texas
law controlled the non-compete agreement, despite the contract's choice of
Michigan law, because of Texas public policy regarding strict and narrow
4
"See id.; M/S Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 6 (1972); Greenwood v.
Tillamook Country Smoker, Inc., 857 S.W.2d 654, 656 (Tex. App.-Houston [ st Dist.] 1993, no
writ);4 Barnette, 823 S.W.2d at 369-70.
6
See Accelerated, 925 S.W.2d at 74.
47
See id. (relying on Wydel Assocs. v. Thermasol, Ltd., 452 F. Supp. 739, 742 (W.D. Tex.
1978); DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 677 (Tex. 1990)).
4
'See Accelerated, 925 S.W.2d at 75 (citing Brock v. Entre Computer Ctrs., Inc., 740 F.
Supp. 428, 431 (E.D. Tex. 1990); Clinton v. Janger, 583 F. Supp. 284, 290 (N.D. Iil. 1984)).
4'925 S.W.2d at 71; see also Greenwood, 857 S.W.2d at 656; Sarieddine v. Moussa, 820
S.W.2d 837, 839 (Tex. App.-Dallas 1991, writ denied).
420952 S.W.2d 641 (Tex. App.-Beaumont 1997, no writ).
42
'See id. at 642.
422
See id.
"23See id. This issue is reported in the appellate opinion, but was not raised on appeal. See
id. 424
See id.
BAYLOR LAWREVIEW [Vol. 51:4
readings of non-compete agreements.4 25 The argument that Texas law
should govern a contract dispute that might otherwise be governed by
Michigan law because of a choice of law clause is another reason for the
Texas court to deny the parties' forum selection agreement. That. is, the
Texas forum has a public policy interest in litigating a case in which Texas
law should govern in place of the forum law that would be applied under a
contrary choice of law agreement.
Many other states enforce forum clauses, but the interstate examples are
few. For example, as recently as 1995, the Oklahoma Supreme Court had
not ruled on forum clause enforceabilty in an interstate setting.426 Digest
and computer research indicates widespread acceptance of choice of forum
clauses, but with significant variations in application. Some states that do
enforce forum clauses use what appears to be a standard Bremen formula-2
although many limit enforcement to contracts or disputes with a
428
relationship to the forum state.
New York statutorily endorses certain forum agreements in section 5-
1402(1) of the General Obligation Laws, requiring that state courts honor
forum clauses in transactions of one million dollars or more that are subject
to New York law.429 New York's civil procedure rules supplement this
protection for forum clauses by providing that courts may not stay or
dismiss an action on inconvenient forum grounds if: (1) the suit arises
42
SSee id. at 643 (citing DeSantis v. Wackenhut Corp., 793 S.W.2d 670, 681 (Tex. 1990)).
426
See Bakhsh v. JACRRC Enters., Inc., 895 P.2d 746, 747 (Okla. Ct. App. 1995) (enforcing
a Texas forum clause, citing RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 187 (1969)).
427
See Professional Ins. Corp. v. Sutherland, 700 So. 2d 347, 350 (Ala. 1997) (overruling a
longstanding Alabama ban on forum clauses); Societe Jean Nicolas et Fils v. Mousseux, 597
P.2d 541, 542 (Ariz. 1979); Bancomer, S.A. v. Superior Court, 52 Cal. Rptr. 2d 435, 439 (Ct.
App. 1996) (noting presumptive validity and the challenger's heavy burden of proving
unreasonableness); Tuttle's Design-Build, Inc. v. Florida Fancy, Inc., 604 So. 2d 873, 873-74
(Fla. Dist. Ct. App. 1992); Brinson v. Martin, 469 S.E.2d 537, 538 (Ga. Ct. App. 1996); Dace
Int'l, Inc. v. Apple Computer, Inc., 655 N.E.2d 974, 977 (Ill. App. Ct. 1995); Brooke Group Ltd.
v. JCH Syndicate 488, 663 N.E.2d 635, 637-38 (N.Y. 1996); Kennecorp Mortgage Brokers, Inc.
v. Country Club Convalescent Hosp., Inc., 610 N.E.2d 987, 990 (Ohio 1993); Bakhsh v.
JACRRC Enterps., Inc., 895 P.2d 746, 747 (Okla. Ct. App. 1995); Leasefirst v. Hartford Rexall
Drugs, Inc., 483 N.W.2d 585, 587 (Wis. Ct. App. 1992); see also Central Ohio Graphics, Inc. v.
Alco Capital Resource, Inc., 472 S.E.2d 2, 3 (Ga. Ct. App. 1996); Woodmen of the World Life
Ins. Soc. v. Yelich, 549 N.W.2d 172, 175 (Neb. 1996); Reeves v. Chem Indus. Co., 495 P.2d
729, 732 (Or. 1972). But see Dailey v. Dallas Carriers Corp., 51 Cal. Rptr. 2d 48, 51 (Ct. App.
1996) (holding that a forum clause is enforceable only if it has reasonable basis and the forum
state's law does not conflict with fundamental California policy).
428
See, e.g., Vanier v. Ponsoldt, 833 P.2d 949 (Kan. 1992).
429
N.Y. GEN. OBLIG. LAW § 5-1402(1) (Consol. 1998).
1999] PARALLEL LITIGATION
from a contract governed by section 5-1402; and (2) the contract has a
New York choice of law clause.410
States also vary in the exceptions to forum clause enforcement. Some,
for example, readily enforce the public policy exception.4' In Iowa, forum
clauses are not enforceable per se, but are considered as one factor when
determining whether to exercise jurisdiction.412 New Jersey will generally
enforce forum clauses,' 41 but forum clauses in franchise agreements are
presumptively invalid. 44 Utah requires that it have some state interest in
the dispute.415 At least one Ohio case has held it reversible error to dismiss
following the enforcement of a forum clause and required that the case be
436
stayed pending recommencement in the proper court.
Some states still reject forum selection clauses, or severely limit them.
Until 1994, North Carolina enforced forum clauses under common law
standards similar to most other states.4 ' In 1993, the North Carolina
legislature statutorily overruled this precedent with the following language:
Except as otherwise provided in this section, any
provision in a contract entered into in North Carolina that
requires the prosecution of any action or the arbitration of
any dispute that arises from the contract to be instituted or
heard in another state is against public policy and is void
and unenforceable. This prohibition shall not apply to
non-consumer loan transactions or to any action or
arbitration of a dispute that is commenced in another state
pursuant to a forum selection provision with the consent of
43 0
See N.Y. C.P.L.R. 327(b) (Consol. 1998).
431
See, e.g., Morris v. Towers Fin. Corp., 916 P.2d 678, 679 (Colo. Ct. App. 1996).
432
See Holiday Inns Franchising, Inc. v. Branstad, 537 N.W.2d 724, 730 (Iowa 1995).
433
See Shelter Sys. Group Corp. v. Lanni Builders, Inc. 622 A.2d 1345, 1346 (N.J. Super. Ct.
App. Div. 1993).
434
See Kubis & Perszyk Assos. v. Sun Microsystems, Inc., 680 A.2d 618, 628 (N.J. 1996);
see also Benjamin A. Levin & Richard S. Morrison, Kubis and the Changing Landscape of
Forum Selection Clauses, 16 FRANCHISE L.J. 97.(1997).
43
S5ee Prows v. Pinpoint Retail Sys., Inc., 868 P.2d 809, 811 (Utah 1993).
436
See Barrett v. Picker Int'l, Inc., 589 N.E.2d 1372, 1376 (Ohio Ct. App. 1990).
437
See Perkins v. CCH Computax, Inc., 423 S.E.2d 780, 784 (N.C. 1992) (finding forum
clauses valid in North Carolina unless the product of fraud or unequal bargaining power or
enforcement would be unfair or unreasonable).
BAYLOR LAWREVIEW [Vol. 51:4
all parties to the contract at the time that the dispute
4
arises. 11
Delaware courts have held that forum clauses must be raised as
affirmative defenses in the derogating forum, thereby denying plaintiff's
request in the second forum for an antisuit injunction.419 While this rule is
logically sound, its result is that a party filing an action contrary to a forum
clause will have the benefit of having its chosen forum decide the validity
of the forum clause.
4. Interstate Forum Non Conveniens
Texas has three sources of forum non conveniens law: two statutes and
a common law model based on Gulf Oil Corp. v. Gilbert. ° The first
statute, Texas Civil Practice and Remedies Code section 71.051, applies
only to wrongful death and personal injury claims."' The statute was
enacted in 1993 to legislatively overrule Dow Chemical Co. v. Afaro,42
which had read the wrongful death statute as pre-empting traditional forum
"
non conveniens objections. 41
Section 71.051 distinguishes between plaintiffs who are not legal
United States residents and those who are. As to non-United States
residents, section 71.051(a) authorizes a discretionary application of
traditional forum non conveniens, without specifying criteria other than "in
the interests of justice." 4" Under section 71.051(b), plaintiffs who are
United States residents may obtain a stay or dismissal, in whole or in part,
by proving by a preponderance of the evidence that: (1) an alternative
forum exists; (2) it provides an adequate remedy; (3) litigation in Texas
"would work a substantial injustice to the moving party"; (4) the other
forum has jurisdiction over all proper defendants; (5) the balance of the
private and public interests favor litigation in the other forum; and (6) the
"stay or dismissal would not result in unreasonable duplication or
438
N.C. GEN. STAT. § 22B-3 (1996). See generally Joseph E. Smith, Note, Civil Procedure-
Forum Selection-NC. GEN. STAT. § 22B-3 (1994), 72 N.C. L. REv. 1608 (1994).
43
gSee El Paso Natural Gas Co. v. Transamerican Natural Gas Corp., 669 A.2d 36, 40 (Del.
1995) (denying plaintiffs request for an antisuit injunction against a related Texas action in
violation of the parties' Delaware forum clause).
440330 U.S. 501 (1947).
441
TEx. Civ. PRAC. & REM. CODE ANN. § 71.051 (Vernon 1997).
442786 S.W.2d 674 (Tex. 1990).
" 3See Legislature'sAnswer to Alfaro, supra note 269, at 101-02.
444
TEX. Civ. PRAC. & REM. CODE ANN. § 71.051(a).
1999] PARALLEL LITIGATION
proliferation' of litigation."' Section 71.051(e) provides that if Texas
plaintiffs are joined with foreign plaintiffs, whether United States residents
or not, the action may not be stayed or dismissed under the test in section
71.051(b) if the action arose from a single occurrence, although dismissal
is mandatory under section 71.05 1(e) if a party was joined solely to create
Texas jurisdiction, that is, to avoid forum non conveniens.4' The
remainder of section 71.051 sets out other procedural requirements and
deadlines." 7
The second statute, Texas Civil Practice and Remedies Code section
71.052, addresses asbestosis claims filed by persons who were not
residents at the time their claims arose and requires dismissal of claims that
did not arise in Texas and are filed after January 1, 1997.-1 For claims
filed after January 1, 1995, a plaintiff must elect whether to: (1) abate the
claim for 180 days while attempting to obtain another forum; or (2) retain
the claim in Texas, but agree to limitations on punitive damages." 9 If the
plaintiff opts for another forum, the defendant in the Texas court must
waive the right to object to limitations on cases that were timely filed in
Texas and must agree that discovery responses in Texas may be used in the
other forum.450 To date, no case on this 1997 statute exists.
All other causes of action are governed by common law forum non
conveniens, which has an erratic history in Texas. The Texas Supreme
Court has recently cited Flaiz v. Moore as the "embracing" of Gulf Oil's
analysis.5I Flaiz, however, does not compel the conclusion that the Texas
Supreme Court embraced any notion of forum non conveniens. Instead,
the opinion reveals the court was reluctant to endorse forum non
conveniens in any particular form and unwilling, in the circumstances of
that case, to affirm the lower court's forum non conveniens dismissal.411
As noted above, in Dow Chemical Co. v. Alfaro, the Texas Supreme Court
also construed the Texas wrongful death statute as precluding forum non
conveniens dismissals. 411 The case was then legislatively overruled by the
44Sld. § 71.051(b).
446See id. § 71.051(e).
7
" See id. § 71.05 1(0-(i).
"I81d. § 71.052 (Vernon Supp. 1999).
"See id. § 71.052(c).
4"See id. § 71.052(e), (f).
45'See In re Smith Barney, Inc., 975 S.W.2d 593, 596 (Tex. 1998) (citing Flaiz v. Moore, 359
S.W.2d 872, 874 (Tex. 1962)).
4
See Flaiz, 359 S.W.2d 872.
41'786 S.W.2d 674, 677-79 (Tex. 1990).
BAYLOR LAWREVIEW [Vol. 5 1:4
amendment to the wrongful death statute. 414 However, Texas continues to
follow common law forum non conveniens except where statutorily
modified.41
In a further development, the Texas Supreme Court recently changed
the law as to foreign corporations authorized to do business in Texas.5 6 A
1941 Texas appellate case, H. Rouw Co. v. Railway Express Agency, had
held that properly registered foreign corporations were entitled to maintain
actions in Texas courts, without regard to forum non conveniens, based on
two statutes that gave Texas corporations the power to maintain and defend
lawsuits.4 7 From this, the appellate court concluded that because Texas
corporations had an absolute right to sue in Texas, properly registered
foreign corporations did as well. 451 The Texas Supreme Court adopted the
opinion merely by refusing appellate review, 419 creating a precedent that
was reluctantly followed for years.4 60 In 1998, the Texas Supreme Court
rejected Rouw's reasoning, finding that the power to maintain a suit was
not the same as the right to do so, that Gulf Oil v. Gilbert had rejected this
very concept, and that, in fact, "[i]t simply makes no sense to allow foreign
corporations an absolute right to sue non-residents in Texas courts when
4' 61
individuals have never been accorded the same right."
In 1993, the Texas Supreme Court considered whether the act of
refiling in another state rendered the plaintiff's local appeal of a forum non
conveniens dismissal moot.462 Forum non conveniens dismissals are
always determined by comparing the immediate forum to another and are
based on a finding that the immediate forum is significantly less
454
See Smith Barney, 975 S.W.2d at 597.
455
See id. at 596; see also Sarieddine v. Moussa, 820 S.W.2d 837, 840 (Tex. App.-Dallas
1991, writ denied) (recognizing that forum non conveniens is not precluded by a forum selection
clause); Seguros Commercial America S.A. De C.V., v. American President Lines, Ltd., 966
S.W.2d 652, 656 (Tex. App.-San Antonio 1998, no writ) (apIlying forum non conveniens in
insurance cases).
456
See Smith Barney, 975 S.W.2d at 598.
457154 S.W.2d 143, 145 (Tex. Civ. App.-El Paso 1941, writ ref'd) (interpreting and
applying the statutes formerly codified as TEX. REV. CIv. STAT. ANN. art. 1320 (Vernon 1925)
and TEX. REv. Civ. STAT. ANN. art. 1532 (Vernon 1925), which provided properly registered
foreign corporations "all the rights and privileges conferred by the laws of this State on
corporations organized under the laws of this State").
45See id.
45 9
See TEX. R. APP.P. 56.1(c).
4"See '21' Int'l Holdings, Inc., v. Westinghouse Elec. Corp., 856 S.W.2d 479, 481 (Tex.
App.-San Antonio 1993, no writ).
"'Smith Barney, 975 S.W.2d at 597-98.
462
VE Corp. v. Ernst & Young, 860 S.W.2d 83, 84 (Tex. 1993) (per curiam).
1999] PARALLEL LITIGATION
convenient than the other.46 3 When the plaintiffs first choice of forum is
undone by a forum non conveniens dismissal, the plaintiff must file again
in the forum thought to be more convenient, and presumably this must be
done within a reasonable time. The plaintiff's appeal of the first forum's
dismissal does not necessarily eliminate the need for a timely filing in the
second forum. An important question is whether the plaintiff's filing in the
second forum renders the appeal of the forum non conveniens dismissal in
the first moot.
The Texas Supreme Court answered the question in the negative in VE
Corp. v. Ernst & Young. 46 VE Corporation ("VE") sued Ernst & Young
for accounting malpractice for work performed in California.'6 The
district court granted Ernst & Young's forum non conveniens dismissal
motion and VE appealed.46 Pending appeal of the dismissal, VE filed an
identical suit in California.467 Ernst & Young argued on appeal that the
California action indicated VE's acquiescence to California as the forum of
convenience and thus rendered the Texas appeal moot.4 68 The court of
appeals agreed and'dismissed for mootness,469 but the Texas Supreme Court
reversed:
Generally, an appeal is moot when the court's action on
the merits cannot affect the rights of the parties. The
court's action in this case does affect the rights of the
parties.
Identical suits may be pending in different states. In
such a situation, the principle of comity generally requires
the later-filed suit to be abated. Merely filing suit in
California does not affect moot [sic] the issue of whether
Texas is a proper forum for VE's suit against Ernst &
Young, nor does it, without more, indicate VE's agreement
that California is the forum of convenience. The court of
4 0
appeals erred in dismissing the appeal as moot.
3
46 See, e.g., Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 508 (1947).
464860 S.W.2d at 84.
46SSee id.
'See id.
4 See id.
4 8See id.
469
VE Corp. v. Ernst & Young, 860 S.W.2d 116, 117 (Tex. App.-Ft. Worth 1993), rev'd,
860 47
S.W.2d
083 (Tex. 1993).
VE Corp., 860 SW.2d at 84 (citations omitted).
836 BAYLOR LAWREVIEW [Vol. 51:4
Most states apply some version of the forum non conveniens doctrine,
generally resembling the Gulf Oil v. Gilbert test, although some codify the
doctrine.4' North Carolina's statute requires a stay of the local action
instead of dismissal and further provides a five year "jurisdictional" period
over the stayed case, after which the case must be dismissed.412 The statute
does not provide a test, but case law does enumerate relevant factors that
North Carolina courts may consider, including: (1) the nature of the case,
(2) witness convenience; (3) availability of compulsory process for
witnesses; (4) relative access to sources of proof; (5) the applicable law;
(6) the burden of litigating matters not of local concern; (7) the desirability
of litigating matters of local concern in local courts; (8) convenience and
access to another forum; (9) plaintiff's choice of forum; and (10) all other
practical considerations.41, Alabama did not have forum non conveniens
doctrine, under statutory or common law, until 1987 .474 In that year, the
state legislature adopted a statutory provision that considers "the location
where the acts giving rise to the action occurred, the convenience of the
parties and witnesses, and the interests of justice" and calls for dismissal if
the factors suggest "that there exists a more appropriate forum."4' 71 Georgia
appears not to subscribe to forum non conveniens lawY4 Louisiana has a
doctrine far more restrictive than the federal one.47 7
471
See Robertson & Speck, supra note 269, at 950 n.74. This appears to be the most
complete recent attempt at assessing state forum non conveniens laws. Whether the authors'
narrow focus on personal injury and wrongful death actions affects the accuracy of their state
compilations in regard to commercial and other non-injury actions is unclear. Recent illustrative
cases include Beckman v. Thompson, 6 Cal. Rptr. 2d 60 (Ct. App. 1992) (noting the California
presumption against forum non conveniens if the plaintiff is a forum resident); Vinson v.
Allstate, 579 N.E.2d 857 (Ill. 1991) (dismissing a case for indemnification in favor of Missouri
courts); Sturman v. Singer, 623 N.Y.S.2d 883 (App. Div. 1995) (dismissing the case in favor of
refiling in Delaware); Cheung v. General Slicing, Inc., 618 N.Y.S.2d 304 (App. Div. 1994)
(finding that New Jersey was the appropriate forum).
472
See N.C. GEN. STAT. § 1-75.12 (1999).
47
See Motor Inn Management, Inc. v. Irvin-Fuller Dev. Co., 266 S.E.2d 368, 371 (N.C. Ct.
App. 1980).
474
See Employers Ins. v. Alabama Ins. Guaranty Assoc., 590 So. 2d 888, 892 (Ala. 1991)
(denying forum non conveniens dismissal despite parallel, but not identical, California case).
475
Ala. Code § 6-5-430 (1993).
476
See Smith v. Board of Regents, 302 S.E.2d 124, 126 (Ga. Ct. App. 1983).
477
See Miller v. American Dredging Co., 595 So. 2d 615, 617 (La. 1992) (rejecting the
federal forum non conveniens law in favor of the more restrictive Louisiana law in maritime
case), afd, 510 U.S. 443 (1994). The Supreme Court's opinion in American Dredgingv. Miller
established the important point that state courts are free to apply their own forum non conveniens
law, or read more narrowly, that federal law does not preempt statute forum non conveniens law
1999] PARALLEL LITIGATION
Finally, Montana has provided a personal jurisdiction twist for the
effect of parallel cases on convenience balancing.478 The constitutional test
for personal jurisdiction over non-residents has, over time, developed a
convenience-balancing prong strongly resembling Gulf Oil's test.4 79 In
ColumbiaFallsAluminum Co., the court dismissed a second-filed Montana
action in favor of a prior California action, but instead of using traditional
comity and first-filed preferences, the court dismissed for lack of personal
jurisdiction under the due process clause.48o Specifically, the court found
that jurisdiction failed on the "fair play and substantial justice" test, a five-
factor balancing test from a series of Supreme Court cases.4 8' Interestingly,
the court found that without the California litigation, Montana would have
had jurisdiction, but that when comity was added to the jurisdictional test,
California was the more appropriate forum."'
5. Staying the Local Action
If a challenge to the parallel Texas action is not premised on its being a
second-filed declaratory action, or based on a forum selection clause or a
forum non conveniens motion, then the challenger will likely have to be
satisfied with a stay of the local action. A stay allows the local action to
remain pending, awaiting the outcome of the other litigation. At that time,
the other action may be given preclusive effect, and any issues not
precluded may be tried.
As noted in Part III.B. 1, Texas courts do not dismiss Texas actions in
deference to parallel actions in sister states.4 3 The related suit may,
in admiralty-type actions brought in state courts under the "savings to suitors" clause of 28
U.S.C. § 1333(1). 510 U.S. 443, 456-57 (1994). This does not mean, however, that federal
interests will not override state interests in some forum non conveniens issues involving foreign
interests. See EUGENE SCOLES & PETER HAY, CONFLICT OF LAWS 384-88 (2d ed. 1992). Note
that states may distinguish between United States residents and foreign country residents in
applying forum non conveniens. Texas is one example, as noted above in the discussion of
71.051(a) and 71.051(b).
478
See Columbia Falls Aluminum Co. v. Hindin/Owne/Engelke, Inc., 728 P.2d 1342, 1345
(Mont. 1987).
479
See, e.g., Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985).
480728 P.2d at 1345.
4 1
See id. at 1344.
48
See id.
483See, e.g., Mexican Cent. Ry. Co. v. Charman, 24 S.W. 958 (Tex. Civ. App. 1894, no writ)
(stating that the rule of no dismissal is almost unbroken in American states, but abating the action
in question).
838 BAYLOR LAWREVIEW (Vol. 51:4
however, be grounds for a discretionary stay. 41 One ground for denying a
stay is unreasonable delay in serving process on the defendant.485 Where
such a delay occurs, the trial court does not abuse its discretion in refusing
to stay the later filed case." 6 Other factors that a court will consider
include: (1) the action filed first; (2) the degree of party and issue identity;
and (3) the timing of the motion to stay.4 81 One of the more instructive
examples of what can go wrong is found in the twin cases Merritt v.
HarlessM8 and Brosseauv. Harless.419 These involved a dispute comprising
six separate legal actions excluding appeals and including two different
mandamus actions against a Texas district court judge by both of the
9
opposing litigants Merritt and Brosseau.4 0
Other states are generally aligned with Texas in providing for
discretionary stays and rejecting dismissals for second-filed local actions.
New Jersey applies comity which requires that "the court which first
acquires jurisdiction has precedence in the absence of special equities."' 9
California's underlying policy for staying interstate parallel actions
includes comity, the prevention of multiple and vexatious litigation,
judicial economy, forum state interests, and party convenience.492
Delaware law presumes against an identical second-filed Delaware case,
calling for the trial court's discretion to "be exercised freely in favor of the
stay when there is a prior action pending elsewhere, in a court capable of
doing prompt and complete justice, involving the same parties and the
44See Dawson-Austin v. Austin, 920 S.W.2d 776, 785 (Tex. App.-Dallas 1996), rev'd on
other grounds, 968 S.W.2d 319 (Tex. 1998); Project Eng'g USA Corp. v. Gator Hawk, Inc. 833
S.W.2d 716, 724 (Tex. App.-Houston [1st Dist.] 1992, no writ); Space Master Int'l, Inc. v.
Porta-Kamp Mfg. Co., Inc., 794 S.W.2d 944,946 (Tex. App.-Houston [1st Dist.] 1990, no writ)
(dismissing, rather than staying, a declaratory action); Mills v. Howard, 228 S.W.2d 906, 908
(Tex. Civ. App.-Amarillo 1950, no writ) (reversing the dismissal of an in rem, child custody
case that does not illustrate the rule well since in rem cases almost compel a deference to the
court first having jurisdiction).
.. 5See Dawson-Austin, 920 S.W.2d at 785.
"See id. at 785-86 (citing Reed v. Reed, 158 Tex. 298, 304, 311 S.W.2d 628, 631 (1958)).
4"See Project Eng 'g, 833 S.W.2d at 724 (denying a stay where Texas action was filed first,
the parties were not identical, and the motion was filed on the morning of the Texas trial).
489685 S.W.2d 708 (Tex. App.-Dallas 1984, no writ).
4"9697 S.W.2d 56 (Tex. App.-Dallas 1985, no writ).
49°See id. at 57; Merritt, 685 S.W.2d at 709.
49'American Home Prods. Corp. v. Adriatic Ins. Co., 668 A.2d 67, 72 (N.J. Super. App. Div.
1995) (quoting Yancoskie v. Delaware River Port Auth., 395 A.2d 192, 193 (N.J. 1978)).
42 See Leadford v. Leadford, 8 Cal. Rptr. 2d 9, 12 (Ct. App. 1992).
1999] PARALLEL LITIGATION
same issues. ' 9, This presumption is exercised along with typical balancing
factors: "(1)... access to proof; (2) availability of compulsory process for
witnesses; (3) the possibility of the view of the premises, if appropriate; (4)
whether Delaware law will govern; and (5) all other practical problems that
9
would make the trial of the case easy, expeditious, and inexpensive."4 4
Conversely, first-filed local cases will survive except in rare cases where
the defendant establishes that litigating in Delaware will cause "undue
hardship and inconvenience.", 9 In comparison, the discretion of a
Colorado court may be guided by considerations, such as: (1) whether the
subsequent action was filed solely to harass; (2) the nature of the actions;
(3) which court could provide complete relief, if the actions are not
identical; (4) where the cause of action arose; (5) which state's law will
apply; (6) expense and inconvenience; (7) witness availability; (8) the
cases respective progress; and (9) delay in obtaining trial.4 96 New York
provides for stays but requires a "complete identity of the parties, causes of
action and relief sought."491 Some courts will deny stays because of a
perceived procedural defect in the other forum.498 Other cases provide for a
stay without announcing a test, or simply invoking comity.4" North
Carolina has used its forum non conveniens statute to stay parallel cases.5 ®
493
McWane Cast Iron Pipe Corp. v. McDowell-Wellman Eng'g Co., 263 A.2d 281, 283 (Del.
1970).
49
General Foods Corp. v. Cryo-Maid, Inc., 198 A.2d 681, 684 (Del. 1964).
495
Chrysler First Bus. Credit Corp. v. 1500 Locust Ltd. Partnership, 669 A.2d 104, 107 (Del.
1995).
4
9See Nationwide Mut. Ins. Co. v. Mayer, 833 P.2d 60, 62 (Colo. Ct. App. 1992) (holding
that trial court should have stayed rather than dismissed the second-filed declaratory action by
insurer in favor of first action in New Mexico).
497
Del-Val Fin. Corp. v. Federal Ins. Co., 598 N.Y.S.2d 197, 198 (App. Div. 1993) (denying
stay regarding related New Jersey case, quoting from In re Bozorth, 555 N.Y.S.2d 131, 132
(App. Div. 1993)).
49'See, e.g., Newell v. Newell, 293 P.2d 663, 670 (Idaho 1956) (denying stay regarding
related California case because California lacked personal jurisdiction over the defendant).
4
"See, e.g., Sauter v. Sauter, 495 A.2d 1116, 1118 (Conn. App. Ct. 1985); Merrill Lynch
Pierce Fenner & Smith, Inc. v. Ainsworth, 630 So. 2d 1145, 1147 (Fla. Dist. Ct. App. 1993)
(citing Siegel v. Siegel, 575 So. 2d 1267, 1272 (Fla. 1991)); Fitch v. Whaples, 220 A.2d 170,
172 (Me. 1966); Commercial Union Ins. Co. v. Wheeling Pittsburgh Corp., 666 N.E.2d 571, 577
(Ohio Ct. App. 1995); Singer v. Dong Sup Cha, 550 A.2d 791, 793 (Pa. Super. Ct. 1988); Power
Train, Inc. v. Stuver, 550 P.2d 1293, 1294 (Utah 1976).
SOSee Lawyers Mut. Liab. Ins. Co. v. Nexsen Pruet Jacobs & Pollard, 435 S.E.2d 571, 573
(N.C. Ct. App. 1993) (granting stay in deference to first-filed South Carolina action).
840 BAYLOR LAWREVIEW [Vol. 51:4
Both the Uniform Child Custody Jurisdiction Act ("Uniform Act"),5 1
and the federal Parental Kidnapping Prevention Act,0 2 require the stay of a
local action for child custody in deference to a parallel action in a court
having superior jurisdiction.53 The Uniform Act also provides that if a
Texas court has assumed jurisdiction under emergency grounds after
another state has established primary jurisdiction, the Texas court will
communicate with the other state to resolve the emergency. 0 4 The
Uniform Act has been adopted in all fifty states, the District of Columbia,
and the Virgin Islands.
C. Antisuit Injunctions Against Sister State Litigation
Every state has the inherent power to issue antisuit injunctions in its
equity power over persons subject to its in personam jurisdiction.5 The
state law standards for interstate injunctions are often similar to those for
international injunctions, and the authoritative cases tend to be used
interchangeably.06 One reason is the inapplicability of the full faith and
credit clause to interstate antisuit injunctions. The clause, and its statutory
counterpart, 28 U.S.C. § 1738, require states to give full faith and credit to
the judicial proceedings of other states and would seemingly bar antisuit
injunctions. They do not do so5 7 because full faith and credit only applies
to final judgments, which antisuit injunctions are not.50°
In his article on international antisuit injunctions, Professor Bermann
briefly surveys interstate practice in! the United States and finds three
categories of interstate antisuit injunctions: (1) protecting local residents
S01The Texas version is codified at TEX. FAM. CODE ANN. §§ 152.001-.025 (Vernon 1996 &
Supp. 1999).
50228 U.S.C. § 1738A (1994).
.. 3See, e.g., Adoption of Zachariah K., 8 Cal. Rptr. 2d 423, 429 (Ct. App. 1992) (requiring
stay in deference to related Oregon proceeding); Ex rel. S.A.V., 837 S.W.2d 80, 88 (Tex. 1992).
5
s4See TEX. FAM. CODE ANN. § 152.204(d) (Vernon Supp. 2000); see also C.A.D. v.
Roberts, 839 P.2d 165, 171-72 (Okla. 1992).
"'See Roscoe Pound, The Progressof the Law, 33 HARV. L. REv. 420, 426 (1920); see also,
infra Parts IV.C, VIII.C. Although Professor Bermann's article provides general examples of
state practice, the number of states that are inclined to use that power for interstate parallel
conflicts is unclear. See Bermann, supra note 36, at 594-97 nn.22-38.
s6S5ee e.g., Gannon v. Payne, 706 S.W.2d 304, 305-06 (Tex. 1986) (reversing international
injunction); Golden Rule Ins. Co. v. Harper, 925 S.W.2d 649, 651 (Tex. 1996) (reversing
injunction of action filed in another state).
s°'See Cole v. Cunningham, 133 U.S. 107, 134 (1890).
See Texas Employers Ins. Ass'n v. Jackson, 820 F.2d 1406, 1421 (5th Cir. 1987), rev'don
...
rehearing, 862 F.2d 491 (5th Cir. 1988).
1999] PARALLEL LITIGATION
from inconvenience, vexatious, or harassing litigation in another forum, a
forum non conveniens argument; (2) enforcement of a prior obligation not
to sue, for example, forum selection clauses, arbitration clauses, or
injunctions from the other court; and (3) preventing interference with the
court's own jurisdiction, giving examples of gambling statutes, divorce,
preferences from an insolvent debtor, garnishment of exempt wages,
probate administration, and the likelihood of a less favorable choice of law,
which interferes with a state's legislative jurisdiction rather than its judicial
jurisdiction?0 In contrast, Texas law observes, four categories, or grounds
for enjoining a party from sister state litigation: (1) protecting the forum's
jurisdiction; (2) protecting the forum's public policy; (3) preventing a
"multiplicity of lawsuits;" or (4) protecting a party "from vexatious or
'
harassing litigation." 10
1. General Principles in Texas
Notably, the Texas Supreme Court has denied antisuit injunctions in its
last three opportunities, one as to a foreign lawsuits" and two as to sister
state actions.' In spite of the Texas Supreme Court's reluctance to enjoin
parallel litigation, lower courts are using these standards to issue
injunctions5 ,
Texas first considered its power to enjoin litigation outside the state in
1890 in Moton v. Hull.14 Otis Hull lived in Denison, Texas, and worked
there for the Missouri Pacific Railroad. 5- In 1887, he incurred a debt to
local merchant Moton & Son.5 ' 6 Moton was unable to collect from Hull in
Texas, so he filed an action in Missouri to garnish Hull's wages from his
employer, Missouri Pacific Railway Company, for whom Hull worked in
5
09Bermann, supra note 36, at 595-97.
5t 0
Golden Rule, 925 S.W.2d at 651. These four grounds are drawn intact from Texas'
bellwether antisuit injunction case, Gannon, 706 S.W.2d. at 307, which involved a Canadian
lawsuit rather than one from Asister state. See infra Part VIII.C.
5t
See Gannon, 706 S.W.2d at 308.
2
11 See Christensen v. Integrity Ins. Co., 719 S.W.2d 161, 164 (Tex., 1986); Golden Rule, 925
S.W.2d at 649-50.
"'See Admiral Ins. Co. v. Atchison, Topeka & Santa Fe Ry. Co., 848 S.W.2d 251, 256-58
(Tex. App.-Ft. Worth 1993, writ denied) (upholding the trial court's injunction against a later-
filed Illinois action, citing Gannon's special circumstances test and finding that there was a
multiplicity of suits and that the other action was vexatious and harassing).
51477 Tex. 80, 13 S.W. 849 (1890).
"' 5See id. at 850.
5t6
See id.
842 BAYLOR LA WREVIEW [Vol. 51:4
Texas.5"' Under Texas law, then and now, wages were exempt from
garnishment, and Moton was obtaining a remedy in Missouri it could not
obtain in Texas. ' ,8 Hull filed an action in Texas to enjoin Moton from
pursuing the Missouri garnishment. 5"9 In upholding the lower court's
granting of the injunction against the Missouri litigation, the Texas
Supreme Court gave a thorough statement of the theory underlying
injunctions against foreign litigation:
[I]f the averments of the petition for injunction are of such
a character as to make it the duty of the court to restrain or
enjoin the party from instituting or conducting like
proceedings in a court of this state, it would be a proper
case for restraining him by a similar process from
prosecuting such suit in the courts of another state ...
This power or authority is exercised upon the ground of
the right of the state to compel its citizens to respect its
laws beyond its territorial jurisdiction. "Although the
courts of one country have no authority to stay
proceedings in the courts of another, they have an
undoubted authority to control all persons and things
within their own territorial limits. When, therefore, both
parties to a suit in a foreign country are resident within the
territorial limits of another country, the courts of equity in
the latter may act in personam upon those parties, and
direct them by injunction to proceed no further in such
suit." Such is the principle laid down by Mr. Justice Story.
The exercise of this power does not proceed upon any
claim of right to interfere with or in any manner control or
stay the proceedings in the courts of another state, but
upon the ground that the person to whom the restraining
process is directed is residing within the court's
jurisdiction, and that he is in the power of the court issuing
such process. The decree acts directly upon the person,
and its validity as to him is not affected by the fact that it
does not extend to the court in which the proceedings are
directed to be restrained.520
51
See id. at 849.
518
See id.
"'See id.
2
°1d. at 849-50 (citations omitted).
1999] PARALLEL LITIGATION 843
Moton was the precedent for years in Texas appellate opinions. One
recent example of a Texas court considering enjoining litigation outside of
the state is New Process Steel Corp. v. Steel Corp. of Texas, in which the
court denied the plaintiff's antisuit injunction against the defendant's
prosecution of a second-filed Oklahoma case, one in which a receiver had
been appointed, thus creating an in rem jurisdiction for the Oklahoma
court.5 21 Despite the in rem nature of the Oklahoma case, the Texas
appellate court examined several factors and found no clear equity that
compelled the enjoining of the Oklahoma litigation.522 The court
distinguished the instant case from two others in which injunctions were
granted against Louisiana litigation, pointing out that in the other two
cases, the Texas court had both in personam and in rem jurisdiction and
that Texas was more convenient.123
Texas law on antisuit injunctions was significantly updated in 1984
with Gannon v. Payne.24 Gannon involved a second-filed Canadian case
and thus did not necessarily announce standards applicable to interstate
jurisdictional conflicts.525 The Texas Supreme Court had a second
opportunity to address jurisdictional conflicts that year with Christensen v.
Integrity Insurance Co., a case involving Texas and California lawsuits.5 26
In Christensen, the court employed Gannon's standards in an interstate
setting and illustrated the difficulty in meeting the requirements for
enjoining parallel litigation.527 Christensen, a California resident, owned
apartments in Houston that sustained hurricane damage in 1983 and freeze
damage a few months later.28 Integrity was the insurer.29 While claims
discussions were occurring in California, Integrity sued in Texas, alleging
that Christensen and others had misrepresented the losses and collected
521638 S.W.2d 522, 525 (Tex. App.-Houston [1st Dist.] 1982, no writ).
522
See id. at 526.
5
"See id. at 525 (distinguishing its holding from the holdings in PPG Indus., Inc. v.
Continental Oil Co., 492 S.W.2d 297 (Tex. Civ. App.-Houston [1st Dist.] 1973, writ ref d
n.r.e.) (affirming injunction against Louisiana action); Chapman v. Marathon Mfg. Co., 590
S.W.2d 549 (Tex. Civ. App.-Houston [1st Dist.] 1979, no writ) (affirming injunction against
Louisiana action); cf Gurvich v. Tyree, 694 S.W.2d 39 (Tex. App.-Corpus Christi 1985, no
writ) (reversing trial court's injunction against Louisiana action)).
524706 S.W.2d 304 (Tex. 1986).
5
"See id. at 305.
52719 S.W.2d 161 (Tex. 1986).
52
71d. at 163.
528
See id. at 162.
129See id.
BAYLOR LAWREVIEW [Vol. 5 1:4
excessive reimbursement? 3 - The California defendants filed a parallel
action in California six days later, seeking a declaratory judgment of
nonliability and damages for breach of contract.531 Integrity then sought a
temporary injunction from the Texas court to prohibit Christensen from
pursuing the California litigation.32 The Texas court granted the
injunction, and the court of appeals affirmed.- 3 However, the Texas
Supreme Court reversed:
No question exists that Texas courts are empowered to
issue injunctions to prevent parties from going forward
with litigation in a sister state. The principle of comity,
however, requires that courts exercise this equitable power
sparingly, and only in very special circumstances. A party
seeking to enjoin an out-of-state lawsuit must show that a
clear equity demands the Texas court's intervention.
Christensen contends that Integrity failed to demonstrate
that a clear equity is present in this case. We agree.
An anti-suit injunction may be justified when the
injunction will prevent a multiplicity of suits or will
protect a party from vexatious or harassing litigation. A
single parallel proceeding in a foreign forum, however,
does not constitute a multiplicity nor does it, in itself
create a clear equity justifying an anti-suit injunction.
While both proceedings here undoubtedly concern the
same general subject matter, Christensen's California
lawsuit raises issues and involves parties that differ from
those in the Texas litigation. Moreover, there is no
indication that Christensen filed suit for purposes of
vexation or harassment.
Integrity maintains that the trial court properly enjoined
the parties from participating in the California suit because
Christensen failed to prove that Texas was not a
convenient forum in which to try Integrity's suit. If
Christensen were attempting to prevent Integrity from
proceeding with the Texas litigation, this argument might
be relevant, but such is not the case: Christensen only asks
53
See id.
"'See id. at 163.
5 2See id.
53 See id.
1999] PARALLEL LITIGATION 845
this court to allow both lawsuits to go forward. The only
question before us is whether the trial court abused its
discretion in enjoining the California lawsuit.1
The Texas Supreme Court reaffirmed these principles in 1996, again
refusing an antisuit injunction in Golden Rule Insurance Co. v. Harper. 535
Harper, an Illinois resident, sued Golden Rule Insurance Company in state
district court in Houston for reimbursement of medical costs for his wife's
cancer treatments at M.D. Anderson Hospital, where she was treated and
where she died.16 Golden Rule moved for a venue change from Harris
County to Dallas County, where it had an agent. 37 Harper objected, and
Golden Rule withdrew the motion. 3 Golden Rule then filed a declaratory
judgment action in state court in Illinois, the state in which Harper resided
and in which the policy was issued.", Harper obtained a temporary
injunction from the Houston court, which enjoined Golden Rule from
pursuing the Illinois litigation.40 The court of appeals affirmed.14' Golden
Rule then sought a writ of error from the Texas Supreme Court, which
granted the writ and reversed, dissolving the injunction.5'2 The court began
its analysis with three important premises.14 First, "comity requires that
courts exercise the power to enjoin foreign suits 'sparingly, and only in
very special circumstances."'" Second, antisuit injunctions are
"appropriate in four instances: (1) to address a threat to the court's
jurisdiction; (2) to prevent the evasion of important public policy; (3) to
prevent a multiplicity of suits; or (4) to protect a party from vexatious or
harassing litigation." ' ' 41 Third, the party seeking the injunction must show
' 341d. (citations omitted).
'11925 S.W.2d 649 (Tex. 1996).
536
See id. at 650.
37
1 See id.
"85 See id.
139See id.
s40See id.
4
1 'See id.
14 See id. at 652.
43
1 See id. at 65 1.
"Id. (citing Christensen v. Integrity Ins. Co., 719 S.W.2d 161, 163 (Tex. 1986); Gannon v.
Payne, 706 S.W.2d 304, 306 (Tex. 1986)).
14'See id. (citing Gannon, 706 S.W.2d at 307). The fourth category, preventing vexatious or
harassing litigation, has been likened to a forum non conveniens analysis in a pre-Gannon
decision. That is, enjoining another state's litigation is inappropriate when the Texas forum is
not preferable under a forum non conveniens analysis. See PPG Indus., Inc. v. Continental Oil
Co., 492 S.W.2d 297, 300 (Tex. App.-Houston [1st Dist.] 1973, writ refd n.r.e.) (using the
BAYLOR LAWREVIEW [Vol. 51:4
that "a clear equity demands" the injunction.46 Fourth, "[a] single parallel
proceeding in a foreign forum ... does not constitute a multiplicity nor
'5 7
does it, in itself create a clear equity justifying an anti-suit injunction." '
With this foundation, the court first noted that the court of appeals had
not fit the instant case squarely within one of the four antisuit injunction
categories, but had merely held that the trial court had not abused its
discretion.14, However, the supreme court agreed with the dissenting
opinion in the appellate court, which had stated that the circumstances
amounted "to nothing more than the added inconvenience and expense
which are common to, and largely inevitable in, situations involving a
single parallel lawsuit.'1 Such circumstances could not "justify an
injunction without eliminating Christensen'srule that anti-suit injunctions
require 'very special circumstances."'5 ' 50 Observing
that even the court of
appeals deemed these actions to be mirror images, the supreme court
dissolved the injunction.5-l
In Gannon, we did not accept the argument that pursuing a
declaratory judgment action in a Canadian court on issues
that could have been brought as defenses in the first filed
Texas proceeding was a waste of resources, let alone that
such additional expense would justify an injunction against
the Canadian proceedings. Nor did we agree that the risk
of inconsistent judgments was a significant one, since "the
second forum is usually obliged to respect the prior
adjudication . . .," so that "even if both proceedings
continue, there should be only one judgment recognized in
both forums."
Moreover, we have never accepted the notion that a
mirror image proceeding is sufficiently different from an
ordinary single parallel proceeding to justify an injunction.
We reject the implicit distinction of the court below
between single parallel proceedings and mirror image
analysis from Flaiz v. Moore, 359 S.W.2d 872, 874-75 (Tex. 1962) and Gulf Oil Corp. v. Gilbert,
330 U.S. 501, 507-09 (1947)).
546
1d. (citing Christensen, 719 S.W.2d at 163).
547
d. (citing Christensen, 719 S.W.2d at 163); see also Gannon, 706 S.W.2d at 307.
548
See id.
549
1d. (quoting Golden Rule Ins. Co. v. Harper, 905 S.W.2d 804, 811 (Tex. App.-Houston
[14th Dist.] 1995) (Edelman, J., dissenting), rev'd, 925 S.W.2d 649 (Tex. 1996)).
-0 Golden Rule, 925 S.W.2d at 651 (quoting Christensen, 719 S.W.2d at 163).
551
See id. at 652.
1999] PARALLEL LITIGATION
proceedings . . . . This approach fails to give adequate
weight to the principle of comity and threatens to allow the
exception to swallow the rule. As we have said before, "if
the principle of comity is to have any application, a single
parallel proceeding . . . cannot justify issuing an anti-suit
injunction." Such a suit must be allowed to proceed absent
some other circumstances which render an injunction
necessary "to prevent an irreparable miscarriage of
justice." Merely because the suits present identical issues
does not make their proceeding an "irreparable miscarriage
ofjustice.",
In Total Minatome Corp. v. Santa Fe Minerals, the court of appeals
reversed the trial court's injunction against related Montana litigation,
holding that the equitable arguments raised by the party seeking the anti-
suit injunction must be balanced against the comity considerations of
interfering with another state's litigation."' s The court first noted that the
special circumstances required for an antisuit injunction included the
traditional elements for injunctive relief: (1) irreparable injury; (2) with no
54
adequate remedy at law; and (3) a likelihood of success on the merits.
The court then found that "[e]quity unquestionably permits an injunction to
prevent a multiplicity of suits" and that such cases offered no adequate
remedy at law, but that the mere existence of a related action did not justify
the injunction.-s~ To prevail, the party seeking an injunction would have to
show the other action to be vexatious or some other injury showing
irreparable harm.56 Although Santa Fe did make such distinctions, the
court held that they did not warrant the imposition of an injunction on the
Montana action .10
52
1d. at 651-52 (citations omitted).
... 851 S.W.2d 336, 339 (Tex. App.-Dallas 1993, no writ).
"14See id. at 339.
5
.ld. (citing Christensen, 719 S.W.2d at 163).
"16 See id. at 340.
"7 See id. at 340-41; see also Manufacturers Hanover Trust Co. v. Kingston Investors Corp.,
819 S.W.2d 607, 612 (Tex. App.-Houston [1st Dist.] 1991, no writ) (holding that a single
parallel proceeding in a foreign court does not constitute a multiplicity of suits or create a clear
equity justifying an anti-suit injunction in a promissory note action with a parallel lawsuit in New
York).
848 BAYLOR LAWREVIEW [Vol. 51:4
2. Other States
Antisuit injunctions are generally available under standards resembling
those in Golden Rule, or more likely, the federal standards cited in cases
such as Laker Airways, Ltd. v. Sabena, Belgian World Airlines",s or Seattle
Totems Hockey Club, Inc. v. National Hockey League 59 An example of a
court not applying these somewhat restrictive federal standards is Hoover
Realty Co. v. American Institute of Marketing Systems, Inc., in which the
Michigan court affirmed the enjoining of a party from pursuing a first-filed
Missouri action because the Missouri court had indicated it would not
apply Michigan's pertinent corporation law.110 In Williams v. Payne, the
Kansas Supreme Court approved a late-filed motion for injunction against
the Kansas plaintiff who had filed a repetitive suit in Missouri and then
engaged in several venue changes and other procedural maneuvers there."'
The defendant became exasperated with the plaintiffs actions and moved
to enjoin him from the Missouri action.56 2 The court held that laches did
not bar the motion and enjoined the already-developed Missouri action.61
A 1995 Delaware case highlighted the need to raise all appropriate
defenses in the first forum before seeking an antisuit injunction in the
second.164 Transamerican Natural Gas Corporation, which transports
natural gas throughout the United States for sale to public utilities, lost a
suit to the El Paso Natural Gas Company in a Texas court."5 After
judgment and during the pending appeal, the parties reached a settlement
agreement that included a forum selection clause designating Delaware as
the forum for any lawsuits concerning the settlement agreement.1"
Transamerican later sued El Paso Gas in a Texas court, alleging fraud and
6
breach of the settlement agreement. El Paso Gas filed its claim in
Delaware, requesting an injunction against the Texas lawsuit and specific
performance of the forum clause.58 The Delaware Chancery Court
558731 F.2d 909, 926-45 (D.C. Cir. 1984).
"59652 F.2d 852, 855 (9th Cir. 1981); see also infra Part VII.B.2.
'60179 N.W.2d 683, 686 (Mich. Ct. App. 1970).
56194 P.2d 341, 342 (Kan. 1939).
562 See id.
"'See id. at 344.
5
64See El Paso Natural Gas Co. v. Transamerican Natural Gas Corp., 669 A.2d 36 (Del.
1995).
5
'See id. at 38.
5
6See id.
7
56 See id.
8
" See id.
1999] PARALLEL LITIGATION 849
dismissed the case, and the Delaware Supreme Court affirmed, holding that
Transamerican had an adequate remedy at law to raise the forum clause as
a defense in the Texas case.5 69
3. Refusal to Recognize Another State's Injunction
Although the Full Faith and Credit Clause requires states to honor
"judicial proceedings" from sister states, the Supreme Court has held that it
does not apply to antisuit injunctions70 Professor Bermann has expressed
surprise at this by stating, "Curiously, although sister-state anti-suit
injunctions plausibly constitute just the sort of denial of full faith and credit
to 'Judicial Proceedings' in courts of other states that the Clause means to
forbid, the Supreme Court has held that the Clause does not pose a bar to
their issuance."'1 Bermann also stated that while "other courts whose
proceedings have been targeted by sister-state anti-suit injunctions have
accorded recognition to those decrees, in some instances reinforcing them
with their own orders of prohibition and in others simply dismissing the
action in question;" often courts ignore such injunctions, and "American
law provides no satisfactory solution to the problem."71 Where this
'
happens, "the suit in question presumably will proceed to judgment."171
In Great Global Assurance Co. v. McFarlin,the court refused to honor
a "stay" order from an Arizona court which had appointed a receiver for
Great Global.574 The court stated, "The injunctive clauses designed to
discontinue or enforce any suit proceeding against appellant [Great Global]
certainly could by no stretch of the imagination be binding on the 88th
District Court of Hardin County, Texas, until and unless the latter had
notice of it, if then."171 In fact, the Arizona "stay" order had no effect in
Texas. The order's only effect was in Arizona as to Great Global, which
could face sanctions for violating the injunction.
V. FEDERAL COURTS AND PENDING STATE LITIGATION
Conflicts with parallel state lawsuits are handled with four very distinct
approaches in federal courts: (1) dismissal based on forum selection
s11See id. at 41.
s"'See Cole v. Cunningham, 133 U.S. 107, 112 (1890).
57'Bermann, supra note 36, at 599.
s721ld at 600-01.
3
17 1d at 601.
s..728 S.W.2d 401, 402-03 (Tex. App.-Beaumont 1987, writ ref'd n.r.e.).
S7T1d. at 402 (emphasis added).
850 BAYLOR LAWREVIEW [Vol. 51:4
agreement;5 76 (2) abstention, dismissal or stay, under the Colorado River
77
doctrine, based on judicial economy or "wise judicial administration";1
(3) abstention, dismissal or stay, based on federalism under the Pullman,
Burford and Thibodeaux doctrines; 178 and (4) injunctions against the state
action under the strict limits of the Younger doctrine and the Anti-
Injunction Act.57 9 Other remedies such as transfer and forum non
conveniens have only an incidental presence in this setting.
A. Transferringthe FederalCase to State Court
At least one state, Pennsylvania, has a law authorizing the transfer to its
courts of a federal case with non-federal claims over which the court had,
but now lacks, jurisdiction.so The Third Circuit has approved this
procedure, holding that "the state could authorize transfer of cases even
though Congress had not spoken on the issue by analogy to procedures
adopted by states for certifying questions of state law."',
Importantly, the Third Circuit based its holding on two important
factors: (1) the federal court's jurisdiction over the state law claims that
were later transferred; and (2) the presence of Pennsylvania's enabling
legislation, similar to state legislation authorizing certified questions from
federal court to a state supreme court., The First Circuit rejected a similar
argument based on a Maine "savings statute" that permitted transfer when
the original action fails "for any matter of form."' Although the First
Circuit distinguished its case from the Third Circuit's Weaver on several
grounds, it questioned the Third Circuit's position that a court "bereft of
jurisdiction has an 'inherent power' to transfer a case."584 In this
questioning, the First Circuit apparently intended the term "bereft of
jurisdiction" to mean a court that currently lacks jurisdiction whether it
576
See International Software Sys., Inc. v. Amplicon, Inc., 77 F.3d 112, 115 (5th Cir. 1996).
577
See Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 818 (1976).
57 8
see CHARLES ALAN WRIGHT, LAW OF FEDERAL COURTS § 52, at 303-12 (1983).
579
See id. § 52A, at 320-26.
5a°See Electronic Lab Supply Co. v. Cullen, 782 F. Supp. 1016, 1021 (E.D. Pa. 1991) (citing
42 PA. CONS. STAT. ANN. § 5103(b)(1) (West 1991)), aff'd, 977 F.2d 798 (3d Cir. 1992).
'Id. (citing'Weaver v. Marine Bank, 683 F.2d 744, 747-48 (3d Cir. 1982)); cf Rehberg v.
Glassboro State College, 745 F. Supp. 1113, 1117 (E.D. Pa. 1990) (acknowledging 42 PA. CONS.
STAT. ANN. § 5103(b), but refusing to utilize it in a transfer to a New Jersey Court).
582
See Weaver, 683 F.2d at 746-47.
5t3
Mills v. State of Maine, 118 F.3d 37, 51-52 (1st Cir. 1997) (citing ME. REV. STAT. ANN.
tit. 14, § 855 (West 1980)).
584
1d. at 52 n.4 (quoting Dantes v. Western Found Corp., 614 F.2d 299, 301 n.2 (1st Cir.
1980)).
1999] PARALLEL LITIGATION
once existed or not. Although the cases cited in the First Circuit's Mills
opinion were all being considered for intra-federal transfers, the First
Circuit's analogy is appropriate. 85
The American Law Institute ("ALI") has proposed a more significant
possibility for inter-system transfer86 The ALI's Complex Litigation
Project has designed a series of procedures for transfer and consolidation
between various courts, both state and federal, for the more efficient
adjudication of duplicative litigation. The proposal calls for removal of
state court cases by using supplemental jurisdiction under 28 U.S.C. §
136757 for cases "transactionally related" to ones in federal court, for
consolidation there.88 The ALI also calls for the availability of antisuit
injunctions to suspend proceedings in the transferor court. 89 Interestingly,
the proposal also calls for the availability of state courts as transferee
courts for consolidation of actions that would include cases "transferred"
from federal courts. 90°
B. Dismissingthe FederalAction Based on a Forum Selection
Agreement
When contracting parties designate a state court in a forum clause and a
subsequent lawsuit is filed in federal court in derogation of that clause,
what law governs the clause's interpretation and enforceability? Enforcing
forum selection clauses in a state-federal setting is complicated by an Erie
doctrine issue, the determation of what law governs the forum clause's
interpretation and enforceability. The Fifth Circuit resolved this issue and
surveyed other circuit's laws, in International Software Systems, Inc. v.
Amplicon, Inc.", The choices for governing law are more complicated than
merely choosing federal or state law. Federal law on this issue may be
'"5Cf Moravian Sch. Advisory Bd. v. Rawlins, 70 F.3d 270, 274-76 (3d Cir. 1995) (rejecting
plaintiff's various theories for transferring her action brought under territorial law to the local
courts).
5
'See American Law Institution, Complex Litigation Proposal: Statutory Recommendations
and Analysis, § 5.01 (1994).
58728 U.S.C. § 1367 (1994).
"' 8See American Law Institution, supra note 586, § 5.01.
. 89See id. § 5.04.
5
9°See id. § 4.01; Sherman, Antisuit Injunction and Notice of Intervention and Preclusion:
Complementary Devices to Prevent Duplicative Litigation, 1995 B.Y.U. L. REv. 925 (1995);
Symeon Symeonides, The ALls Complex Litigation Project: Commencing the NationalDebate,
54 LA. L.J. 843, 844 (1994).
59177 F.3d 112 (5th Cir. 1996).
852 BAYLOR LA WREVIEW [Vol. 51:4
subdivided into federal common law, enunciated in the Bremen case,592 and
federal statutory law,5 3 which though not intended for a federal-state forum
conflict, may be applied by analogy. After reviewing the options, the Fifth
59 4
Circuit choose federal common law under Bremen.
In InternationalSoftware, International leased property from Amplicon,
with lease agreements designating "the California Superior Court for the
County of Orange" as the forum for any resulting lawsuits."9 When
International later decided that the leases were fraudulently induced, it
sued Amplicon in Texas state court.596 Amplicon removed the case to
federal court based on diversity jurisdiction and then filed a motion to
dismiss based on the leases' forum clause.197 The district court dismissed,
enforcing the forum clause under the Bremen test.598 On appeal, the Fifth
Circuit identified two issues: (1) whether a federal court may dismiss, as
opposed to transfer, based on a forum selection clause designating a state
court, where personal jurisdiction and venue are proper; and (2) what test
determines whether dismissal is appropriate if the federal court has the
99
power to dismiss.
The court found that dismissal was available under 28 U.S.C. § 1406 to
enforce a forum clause choosing a non-federal court, under both Fifth
Circuit precedent ® and implicitly in the Supreme Court's CarnivalCruise
Lines decision.601 Choosing the applicable test was more problematic. The
Fifth Circuit first noted the Supreme Court's decision to apply the
59 2
The Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972); see also infra Part VII.A.3.a.
593
See 28 U.S.C. § 1404(a) (1993).
594
See InternationalSoftware, 77 F.3d at 115.
595
ld. at 113-14.
596
See id. at 113.
59 7
See id.
59
'See id. at 114.
5
99See id.
'See, e.g., Zapata Marine Serv. v. O/Y Finnlines, Ltd., 571 F.2d 208, 209 (5th Cir. 1978)
(affirming Texas district court's dismissal to enforce forum selection clause). Despite the court's
reliance on section 1406, a federal district court in Texas has used Federal Rule of Civil
Proceedure 12(b)(3) regarding improper venue to dismiss a case to enforce a forum clause. See
Kessman & Assoc., Inc. v. Barton-Aschman Assoc., Inc., 10 F. Supp. 2d 682, 687 (S.D. Tex.
1997).
601
See InternationalSoftware, 77 F.3d at 114. In Carnival Cruise Lines, Inc. v. Shute, the
Court upheld the dismissal of a federal action in Washington state that had ignored the contract's
choice of Florida forum. 499 U.S. 585, 595 (1991). The Court acted on personal jurisdiction
grounds, thus failing to utilize dismissal under 28 U.S.C. § 1406. See id. at 593-95. The Fifth
Circuit nonetheless noted that this was an implicit approval of using dismissal to enforce a forum
clause. See InternationalSoftware, 77 F.3d at 114.
1999] PARALLEL LITIGATION
balancing test in 28 U.S.C. § 1404(a) to forum clause conflicts between
two federal courts.602 The Fifth Circuit would have preferred the same test
for this case, that is, a forum clause conflict between a federal and a state
court, but felt obliged to follow other federal courts' decisions and apply
Bremen.63 The important distinction is that Bremen tends to favor the
enforcement of forum clauses as matters of contract, while the section
1404(a) balancing test merely treats the forum clause as one of several
factors to be considered in a forum non conveniens analysis that tends to
favor the plaintiff s non-contractual choice of forum. Interestingly, having
decided that Bremen applies, the Fifth Circuit then enforced the forum
clause, but under an analysis that more resembles section 1404(a) than
Bremen in its discussion of burdens and convenience.6°4 Forum clauses are
discussed fully in the International section of this Article.05
The Fifth Circuit's statement in InternationalSoftware that it wished to
follow other federal courts 606 indicated some agreement on the issue of
which law should govern the interpretation and enforceability of forum
clauses that designate a non-federal, state or foreign, forum. To the
contrary, federal courts are split. The Second and Fifth Circuits, for
example, apply federal common law as expressed in Bremen.-°7 The Third
and Fourth Circuits use state law.601 The Eight Circuit has applied both
6o9
and in the same case.
Nonparties raise another issue dealing with how close someone must be
to the contract to be covered by the forum clause. This is illustrated in
2
See InternationalSoftware, 77 F.3d at 114-15 (citing Stewart Org., Inc. v. Ricoh Corp.,
487 U.S. 22, 29 (1988)).
' 3 See id. at 115 ("We choose to join the other courts rather than make a circuit split and
further complicate this area of the law.").
'See id. at 114-16.
6°"See infra Part VII.A.3; see also American Airlines, Inc. v. Rogerson ATS, 952 F. Supp.
377, 379, 383-84 (N.D. Tex. 1996) (enforcing the parties' agreement to submit to the jurisdiction
of "the courts of the State of Texas," and further retaining jurisdiction over challenges by a
nonsignatory to the contract containing the forum selection clause); Roberts & Schaefer Co. v.
Merit Contracting, Inc., 99 F.3d 248, 254 (7th Cir. 1996) (holding that the trial court committed
"clear error" in finding no forum selection clause).
60677 F.3d at 115.
607
See id.; Jones v. Weibrecht, 901 F.2d 17, 18-19 (2d Cir. 1990).
60
8See Nutter v. Rents, Inc., 1991 WL 193490, at *5 (4th Cir. 1991); In re Diaz Contracting,
Inc., 817 F.2d 1047, 1050 (3d Cir. 1987); accord, Rindal v. Seckler Co. 786 F. Supp. 890, 892
(D. Mont. 1992).
'See Farmland Indus. v. Frazier-Parrott Commodities, 806 F.2d 848, 852 (8th Cir. 1986)
(finding federal law and Missouri law applied to deny the clause's selection of Illinois state
courts); infra Part VII.A.3.
BAYLOR LAWREVIEW [Vol. 51:4
Kessman & Assoc. v. Barton-Aschman Assoc., where defendant Parsons,
a.k.a Barton-Aschman, obtained a contract with the Nevada Department of
Transportation ("NDOT") to upgrade the Las Vegas Area Traffic
Computer System.6 1 1 Parsons in turn subcontracted with plaintiff Kessman
regarding an aspect of the NDOT contract.6 11 Parsons' primary contract
with NDOT included a clause providing that any disputes with
subcontractors would be submitted to an NDOT referee.62 The clause did
not appear expressly in the Parsons-Kessman subcontract.613 A dispute
arose and Kessman sued in federal court in Houston. 614 Parsons moved to
dismiss for improper venue." 5 The court upheld the NDOT forum clause,
holding that it was incorporated by reference from Parsons's primary
NDOT contract. 616 The court also disallowed plaintiffs argument that the
dispute arose from work done subsequent to the expiration of the NDOT
contract." 7 The court dismissed the case under Federal Rule of Civil
Procedure 12(b)(3), improper venue, for refiling with NDOT or in a
618
Nevada state court.
C. Stays and Dismissals Based on the Abstention Doctrines
Four abstention doctrines exist by most accounts, although the count
varies both in Supreme Court opinions and scholarship. Professor Wright
identifies these doctrines as Pullman, Burford, Younger, and Colorado
River, but suggests that their number is irrelevant.619 Some discuss a
"Thibodeaux" abstention as a separate doctrine20 while Wright treats
Thibodeaux as a Burford variant though noting its failure to fit neatly
within either the Pullman or Burford doctrines.61
While most abstention discussions begin with Pullman, it is appropriate
to begin with ColoradoRiver as the doctrine most pertinent to state-federal
61010 F. Supp. 2d 682, 684 (S.D. Tex. 1997).
6'See id.
612
See id. at 689-90.
6
"See id. at 689.
614
See id. at 687.
61
See id.
616
See id. at 692.
617
See id. at 692-93.
61
'See id. at 693.
619
See 17A CHARLES ALAN WRIGHT ET AL., FEDERAL PRACTICE AND PROCEDURE:
JURISDICTION 2d § 4241, at 28 (1988).
62
°See, e.g., Weinberg, FEDERAL COURTS 598-99 (1994).
62 1
17A WRIGHT, supra note 619, § 4244, at 89-90 n.1 1.
1999] PARALLEL LITIGATION
parallel litigation and the only doctrine not based primarily on federalism.
Pullman and Burford impose limits on federal courts' attempts to resolve
matters of substantive law that are better left to the states. This article
deals separately with the Younger doctrine, which involves a different limit
on federal courts. That limit being interference with the state litigation
process by issuing an antisuit injunction. The Younger discussion is
followed by a brief summation of the Anti-Injunction Act, which combines
with Younger to provide strict limits on federal courts enjoining parties
from pursuing state litigation.
Recurring themes include whether a particular doctrine calls for stay or
dismissal and whether it is imposed on a discretionary standard or as a
matter of law. All but ColoradoRiver may be raised at any time, including
on appeal, and may be raised by the court.'22 The Tenth Circuit has ruled
that Colorado River abstention requires a timely objection, since its
purpose is to prevent excessive litigation, which will occur anyway if no
timely objection is raised.613
1. ColoradoRiver Abstention: Economy, Convenience and
"Wise Judicial Administration"
Colorado River v. United States provides the essential state-federal
parallel doctrine.624 The case arose from a water rights dispute that would
seem to implicate federal interests to the degree of requiring a federal
forum, but did not because of a federal statute providing for state litigation
of federal water interests.625 Responding to increasing water rights claims,
several southwestern states created procedures for allocating water rights
and resolving conflicting claims.626 One such state was Colorado, which in
22
6 See Grimes v. Crown Life Ins. Co., 857 F.2d 699, 706-07 (10th Cir. 1988) ("(U]nder
Colorado River, once a federal court has tried the case on the merits, it would be rare that the
judicial resources would be conserved by abstaining on appeal."); Waldron v. McAtee, 723 F.2d
1348, 1351 (7th Cir. 1983) (finding court has the power and in the appropriate case the duty to
order abstention, if necessary for the first time at the appellate level, even though no party
requests it); Naylor v. Case & McGrath, Inc., 585 F.2d 557, 563 (2d Cir. 1978) (noting Colorado
River abstention may be raised sua sponte); AFA Distrib. Co. v. Pearl Brewing Co., 470 F.2d
1210, 1213 (4th Cir. 1973) (noting that abstention may be raised on appeal); Urbano v. Board of
Managers, 415 F.2d 247, 254 n.20 (3d Cir. 1969) (concluding abstention may be raised on
appeal).
23
' See New Mexico v. Molybdenum Corp. of Am., 570 F.2d 1364, 1367 (10th Cir. 1978).
64424 U.S. 800 (1976).
"2 See id. at 804-806.
6
See id. at 804 n.2.
856 BAYLOR LAWREVIEW [Vol. 51:4
1969 enacted a law dividing the state into seven Water Divisions.627 Each
division encompassing one or more entire drainage basins had adjudication
occurring continuously in state courts.628 Although not yet joined as a
party, the United States claimed water rights in Division 7 relating to
Indian reservations and other federal lands, such as national parks and
forests.629
On November 14, 1972, the Government sued in federal district court in
Denver, 300 miles from Division 7.630 The federal action asserted rights
6 1
under federal and state law, and was against some 1,000 water users. '
The United States had earlier adjudicated non-Indian claims and other
water claims based on state law in state courts in Water Divisions 4, 5, and
6.32 This litigation continued at the time of this suit.633 A defendant in the
federal suit then joined the United States in the state action in Division 7
under the McCarran Amendment.64 Several defendants and intervenors in
the federal proceeding then moved to dismiss the federal action for lack of
jurisdiction, citing to the McCarran Amendment.63 5 The federal district
court granted the motion and dismissed on abstention grounds.66 On
appeal, the Tenth Circuit Court of Appeals reversed, holding that the suit
of the United States was within district court jurisdiction under 28 U.S.C. §
1345 and that abstention was inappropriate.
The Supreme Court granted certiorari to consider whether the
McCarran Amendment terminated jurisdiction of federal courts to
adjudicate federal water rights and "whether, if that jurisdiction was not
terminated, the District Court's dismissal in this case was nevertheless
appropriate.637 The Court found that: (1) 28 U.S.C. § 1345 created federal
627
See id. at 804
628
See id.
629
See id. at 805.
630
See id.
63
'See id.
632See id. at 806.
633
See id.
634
See id. The McCarran Amendment (also known as the McCarran Water Rights Suit Act),
consents to the United States being joined as a defendant in state or federal court "in any suit (I)
for the adjudication of rights to the use of water of a river system or other source, or (2) for the
administration of such rights, where it appears that the United States is the owner of or is in the
process of acquiring water rights by appropriation under State law, by purchase, by exchange, or
otherwise, and the United States is a necessary party to such suit." 43 U.S.C. § 666 (1994).
635
See Colorado River, 424 U.S. at 806.
636
See id.
637
1d.
1999] PARALLEL LITIGATION
jurisdiction over the case; 38 (2) the state court had jurisdiction over Indian
water rights under the Amendment;619 and (3) none of the federal abstention
doctrines warranted dismissal.6o The Court then considered another basis
for dismissal."
Although this case falls within none of the abstention
categories, 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. This
difference in general approach between state-federal
concurrent jurisdiction and wholly federal concurrent
jurisdiction stems from the virtually unflagging obligation
of the federal courts to exercise the jurisdiction given
them. Given this obligation, and the absence of weightier
considerations of constitutional adjudication and state-
federal relations, the circumstances permitting the
dismissal of a federal suit due to the presence of a
concurrent state proceeding for reasons of wise judicial
administration are considerably more limited than the
circumstances appropriate for abstention. The former
circumstances, though exceptional, do nevertheless exist.
It has been held, for example, that the court first
assuming jurisdiction over property may exercise that
jurisdiction to the exclusion of other courts. This has been
true even where the Government was a claimant in
6
'Seeid. at 809.
639
See id.
"64Seeid. at 813.
6"See id. at 817-20.
BAYLOR LA WREVIEW [Vol. 51:4
existing state proceedings and then sought to invoke
district-court jurisdiction under the jurisdictional provision
antecedent to 28 U.S.C. § 1345. In assessing the
appropriateness of dismissal in the event of an exercise of
concurrent jurisdiction, a federal court may also consider
such factors as the inconvenience of the federal forum, the
desirability of avoiding piecemeal litigation, and the order
in which jurisdiction was obtained by the concurrent
forums. No one factor is necessarily determinative; a
carefully considered judgment taking into account both the
obligation to exercise jurisdiction and the combination of
factors counselling against that exercise is required. Only
the clearest of justifications will warrant dismissal.-2
Applied to the facts, the Court first found an overriding federal policy
in the McCarran Amendment for the avoidance of "piecemeal adjudication
of water rights," which the Court likened to the first-filed rule for in rem
cases. 43 Apart from federal policy and applying the eclectic multi-factor
test, the Court found that: (1) the federal action had not progressed; (2) a
significant interest in the underlying action existed; (3) the 300-mile
distance between the District Court in Denver and the court in Division 7
was inconvenient; and (4) an ongoing participation by the United States in
other water rights actions in Colorado state courts undercut the federal
government's argument that it required a federal forum.64 Notably, the
Court did not stay the case, as is common in some abstention doctrines, but
affirmed the decision to dismiss it.64 In doing so, the Court emphasized
'
that it did "not overlook the heavy obligation to exercise jurisdiction."6
From this, we have a strong presumption favoring ongoing jurisdiction
in a federal case with a state parallel, but with a multi-faceted test that
provides, in extraordinary circumstances, for dismissal. The decision was
not easily derived, with a strong dissent by Justice Stewart with whom
Justices Blackmun and Stevens joined.647 The Colorado River test is
obviously derived from the factors used in dealing with intra-federal
parallel actions. One important difference is the preference for dismissal
62
1d. at 817-19 (citations omitted).
"3See id. at 819.
14See id. at 820.
64SSee id. at 821.
646
1d. at 819.
"7 See id. at 821.
1999] PARALLEL LITIGATION 859
or transfer in a pure federal conflict,S contrasted with the presumption
favoring the exercise of jurisdiction in state-federal conflicts.6 9
Of course, the ColoradoRiver opinion was not the first approach to this
problem6s 0 and understanding the current doctrine requires a brief look at
Colorado River's forebears. Most prominent is Brillhart v. Excess
InsuranceCo., in which the Supreme Court dismissed a federal declaratory
judgment action paralleling a state action on the grounds that a district
court is "under no compulsion" to exercise jurisdiction that overlaps a
pending state action.5 This "under no compulsion" standard was
6"See Kerotest Mfg. Co. v. C-O-Two Fire Equip. Co., 342 U.S. 180, 183 (1952).
"See Colorado River, 424 U.S. at 817, 820. But see Wilton v. Seven Falls Co., 515 U.S.
277, 279 (1995) (discussed infra at Part V.C. l.a).
0
1SIllinois federal court had a distinct approach prior to Colorado River, applying an Illinois
statute that permitted involuntary dismissal where "there is another action pending between the
same parties for the same cause." 735 ILL. COMP. STAT. 5/2-619(a)(3) (West 1992). See, e.g.,
Seaboard Fin. Co. v. Davis, 276 F. Supp. 507, 518 (N.D. Ill. 1967). Even though the Illinois
statute would seem procedural and therefore inappropriate in federal court, the practice was
arguably justified under the Erie Doctrine since federal law was relatively undeveloped at the
time and no direct conflict existed. Later federal cases have rejected its use, in part because of
the body of law developed under ColoradoRiver. See Basic v. Fitzroy Engineering, Ltd., 949 F.
Supp. 1333, 1336 (N.D. 11. 1996); W.E. O'Neil Const. Co. v. National Union Fire Ins. Co., 721
F. Supp. 984, 990 (N.D. 11. 1989).
61 316 U.S. 491, 494 (1942). PPG Indus., Inc. v. Continental Oil Co. depicts the Brillhart-
based standard prior to Colorado River for dealing with second-filed federal actions that
duplicated state lawsuits. 478 F.2d 674 (5th Cir. 1973). In that case, the Fifth Circuit stayed a
Louisiana diversity action regarding a gas sale contract that paralleled an action in Texas state
district court in Harris County. See id. at 697. The court found that federal case law "made
manifest a policy against dual litigation which applies with equal force to declaratory actions and
ordinary equity suits." Id. at 679 (providing for "discretionary power in the federal courts to stay
proceedings in equity suits" in reliance on Brillhart. In PPG,the decision was simplified by two
factors. First, both actions were in rem, qualifying for an almost mandated stay of the second-
filed action under the Princess Lida doctrine. See supra Part I.D. Second, this parallelism was
not the first in the dispute. Prior to filing the federal diversity action in Louisiana, which the
Fifth Circuit later stayed, PPG Industries had filed a duplicative action in Louisiana state court
that, because of the in rem issues, led to the Texas state court's issuing an antisuit injunction
against PPG, which effectively ended the Louisiana state case. See PPG Indus., Inc. v.
Continental Oil Co., 492 S.W.2d 297, 301 (Tex. Civ. App.-Houston [lst Dist.] 1973, writ ref'd
n.r.e.). When PPG then filed the same action in a Louisiana federal court, Conoco could not use
the Texas state court to enjoin that action. See Donovan v. City of Dallas, 377 U.S. 408 (1964)
(discussed infra at Part VI.B.3). Accordingly, Conoco had to ask the federal court to stay its own
action. See Continental,492 S.W.2d at 305. The standards cited in PPG Industries for dealing
with parallel state-federal litigation resemble those in Colorado River, with the significant
difference of lacking a strong presumption favoring the continuation of both parallel actions to
judgment.
860 BAYLOR LA WREVIEW [Vol. 51:4
seemingly overruled by ColoradoRiver's "unflagging obligation" standard
for jurisdiction, but two years after ColoradoRiver, the Court resuscitated
Brillhart in greatly expanding Colorado River-type abstention in Will v.
Calvert FireInsurance Co. 52 Will was a second-filed federal declaratory
judgment action, seeking to litigate a securities claim that was an
affirmative defense in a state court action.653 Four justices relied on
'
Brillhart's "no compulsion standard,"654 and Justice Blackmun concurred
based on ColoradoRiver's "exceptional circumstances" test, believing that
the facts overcame the strong presumption favoring jurisdiction.615 The
four dissenters agreed that Colorado River governed, and that exceptional
circumstances were not present.65 6 Will thus appeared to greatly relax the
federal standard for staying or dismissing a federal case paralleling a state
case, although the expanded standard was limited on its facts to federal
declaratory judgment actions.
a. Moses Cone and Wilton Refine the Test
Moses H. Cone Memorial Hospital v. Mercury Construction Corp.
retreated from and distinguished Will more narrowly defining the concept
of abstention in duplicative state-federal litigation.61 In the initial state
court action, the plaintiff, Moses Cone Hospital, sought declaratory relief
to avoid arbitration in a dispute with a builder and architect.68 Mercury
Construction then filed a federal diversity action to compel arbitration
under the Federal Arbitration Act.69 The federal district court stayed its
action in deference to the prior state litigation, citing ColoradoRiver, and
the court of appeals reversed, finding Colorado River abstention
inappropriate. 660 The Supreme Court upheld the appellate court,
underscoring the point that parallel litigation was not per se inappropriate
and that Colorado River abstention required exceptional circumstances
missing in this dispute.661
652437 U.S. 655 (1978).
653
d.at 657.
654
See id. at 662-64.
65
See id. at 667-68.
66
1 See id. at 668-77.
657460 U.S. 1 (1983).
658
1 See id. at 6-7.
659
See id. at 7.
660
See id. at 7-8.
66
'See id. at 29.
1999] PARALLEL LITIGATION
The analysis reiterated Colorado River's factors and added two.66 2
Colorado River's four primary factors ("primary" only in ColoradoRiver,
since Moses Cone uses all factors evenly) are: (1) which court first
assumed jurisdiction over property, if applicable; (2) the relative
convenience of the state and federal forums; (3) the desirability of avoiding
piecemeal litigation; and (4) the order in which jurisdiction was obtained.66
Colorado River's other factors, usually credited to Moses Cone, are: (5)
the relative progress in the two actions; (6) the extent to which federal
substantive law applies; and (7) any other special factors (in Colorado
River, one was the federal government's previous willingness to litigate
similar claims in state court).66 Moses Cone then added: (8) the adequacy
of the state forum in protecting the parties' rights; and (9) whether the
5
federal court action was vexatious or filed in bad faith.6
Although the first four factors are treated as primary considerations, the
language in both Colorado River and Moses Cone suggests that none has
priority, 6 that any one factor might stand out in a given case,66 and that
there is a need for case-specific balancing rather than using the factors as a
checklist.6s Moses Cone expressly avoids any decision as to whether a
stay or dismissal "should ordinarily be the preferred course of action"
when Colorado River abstention is appropriate, but notes that both are
refusals to exercise jurisdiction.669 Presumably, then, the district court
would select the appropriate remedy for the case-stays where the court
has reason to retain the case and dismissals otherwise. Several federal
60
actions have now opted for a stay. 1
Wilton v. Seven Falls Co. clarified the confusion surrounding the
Colorado River/Moses Cone standard, under which federal courts must
exercise jurisdiction except in exceptional circumstances, and
Brillhart/Will, which endorsed a broad discretionary standard without
"'2 See id. at 19-28.
'See id. at 15 (quoting Colorado River v.United States, 424 U.S. 800, 818 (1976)).
'Colorado River, 424 U.S. at 820 (providing factors 1-4 and 7); see Moses Cone, 460 U.S.
at 21-26 (providing factors 5 and 6).
"1460 U.S. at 17 n.20.
'" See id. at 15 (stating they are merely "some of the factors").
"7See id. at 16; ColoradoRiver, 424 U.S. at 818-19.
"'See Moses Cone, 460 U.S. at 15-16.
" 91d. at 28.
670
See, e.g., Trent v. Dial Medical of Florida, Inc., 33 F.3d 217 (3d Cir. 1994); LaDuke v.
Burlington Northern R.R. Co., 879 F.2d 1556 (7th Cir. 1989); Allen v. Louisiana State Bd. of
Dentistry, 835 F.2d 100 (5th Cir. 1988); Lumen Const., Inc. v. Brant Const. Co., 780 F.2d 691(7th Cir. 1986). See also 17A WRIGHT ET AL., supra note 619, § 4247 n.83.
BAYLOR LA WREVIEW [Vol. 51:4
Colorado River's balancing test.- Upholding the stay of an insurer's
federal declaratory judgment action, Wilton held that Brillhartis valid, but
limited to staying federal declaratory judgment actions that parallel state
actions.612 From these cases, it appears that a federal court may: (1) apply
the Brillhart/Will standard to stay a federal declaratory judgment action
that parallels a state action; or (2) apply the more rigorous Colorado
River/Moses Cone balancing test to stay or dismiss a federal action,
673
whether it seeks declaratory relief or not.
Having stated the current Colorado River doctrine, other issues are
ongoing. For example, when are actions parallel enough? In Exxon Corp.
v. St. Paul Fire and Marine Insurance Co., the court refused to stay the
federal action because it was not sufficiently similar to the related state
case.6 74 The court identified the necessary similarity as involving "the
same parties and the same issues," and noted that in the instant case, the
state court proceeding did not have the same precise claims before it.675
Another issue, in light of the number of Colorado River abstentions
granted, is how difficult the standard is in practice, that is, how often is the
doctrine declined? As discussed above, the ColoradoRiver standard is a
difficult one; cases are rejected, although if the standard were as tough as
its rhetoric sounds, more cases would be refused. Tucker v. First
Maryland Savings & Loan, Inc., is one example of a strict application of
Colorado River's "'virtually unflagging obligation' to exercise
jurisdiction.."676
671515 U.S. 277 (1995).
672
1d. at 289. For an example of a denial of a stay motion under Wilton, see Exxon Corp. v.
St. Paul Fire and Marine Insurance Co., 129 F.3d 781 (5th Cir. 1997).
673
For examples of stays, rather than dismissals, granted under Colorado River, see Lumen
Construction, Inc. v. Brant Conststruction Co., 780 F.2d 691, 698 (7th Cir. 1985); Garber v. Sir
Speedy, Inc., 930 F. Supp. 267, 271 (N.D. Tex. 1995), aff'd, 91 F.3d 137 (5th Cir. 1996);
Morisada Corp. v. Beidas, 939 F. Supp. 732, 741 (D. Haw. 1995).
674129 F.3d 781, 788 (5th Cir. 1997). For additional cases discussing the necessary degree of
parallelism, see Ryan v. Johnson, 115 F.3d 193, 196 (3d Cir. 1997); Trent v. Dial Medical of
Florida, Inc., 33 F.3d 217, 223-24 (3d Cir. 1994); Schneider National Carriers Inc. v. Carr, 903
F.2d 1154, 1156 (7th Cir. 1990).
67 5
Exxon Corp., 129 F.3d at 785.
676942 F.2d 1401, 1407 (9th Cir. 1991) (quoting Colorado River Conservation Dist. v. United
States, 424 U.S. 800, 817 (1976)); see also Ryan v. Johnson, 115 F.3d 193 (3d Cir. 1997)
(reversing the trial court's dismissal under Colorado River); St. Paul Insur. Co. v. Trejo, 39 F.3d
585, 591 (5th Cir. 1994) (reversing the trial court's dismissal under Colorado River); Bums v.
Watler, 931 F.2d 140, 147-48 (lst Cir. 1991) (reversing the district court's stay); In re Chicago
Flood Litigation, 819 P. Supp. 762, 767 (N.D. III. 1993) (denying abstention in damage suit for
river flooded downtown tunnel); National Union Fire Ins. Co. v. Texaco Ref. & Mktg., Inc., 803
1999] PARALLEL LITIGATION
When the doctrine is declined, which standard of review is appropriate?
The abstention doctrines are discretionary, but some exercises of discretion
are greater than others. In Doctor'sAssociates., Inc. v. Distajo, the Second
Circuit affirmed the district court's refusal to abstain in an action to compel
arbitration and enjoin numerous state court actions by Subway restaurant
franchisees.6 77 The court noted that the standard of review for declining
abstention was less rigorous than for exercising abstention.617
b. Other Federal Tests for State-FederalParallels
Apart from reliance on Brillhart or ColoradoRiver, a distinct approach
to dealing with federal declaratory judgment actions that parallel state
actions is to highlight the Declaratory Judgment Act's discretionary nature.
In Travelers Insurance Co. v. LouisianaFarm Bureau FederationInc., the
Fifth Circuit held that a federal court has discretion to adjudicate or dismiss
a declaratory judgment action under factors that
include, but are not limited to, (1) whether there is a
pending state action in which all of the matters in
controversy may be fully litigated, (2) whether the plaintiff
filed suit in anticipation of a lawsuit filed by the defendant,
(3) whether the plaintiff engaged in forum shopping in
bringing the [federal] suit, (4) whether possible inequities
in allowing the declaratory plaintiff to gain precedence in
time or to change forums exist, (5) whether the federal
court is a convenient forum for the parties and witnesses,
and (6) whether retaining the lawsuit in federal court
679
would serve the purposes ofjudicial economy.
Some federal courts have continued to use the first-filed rule in federal-
state parallel actions without referring to Colorado River or any of the
other cases discussed above.610 This statement is especially true of in rem
cases. As in other settings, the Princess Lida rule giving absolute priority
to the first filed in rem case applies here:
F. Supp. 1247, 1251 (S.D. Tex. 1992) (a thorough application of Colorado River/Moses Cone
factors, denying motion to dismiss first-filed federal claim in favor of parallel state action).
677107 F.3d 126, 136-38, 139 (2d Cir. 1997).
678
See id. at 138.
679996 F.2d 774, 778 (5th Cir. 1993) (citations omitted).
680
See Merrill Lynch, Pierce, Fenner & Smith, Inc. v. Haydu, 675 F.2d 1169, 1173 (11 th Cir.
1982); Commercial Union Ins. Cos. v. Torbaty, 955 F. Supp. 1162, 1163 n.1 (E.D. Mo. 1997)
(denying dismissal of second-filed federal case because of plaintiff's bad faith conduct).
BAYLOR LAWREVIEW [Vol. 51:4
To avoid unseemly and disastrous conflicts in the
administration of our dual judicial system, and to protect
the judicial processes of the court first assuming
jurisdiction, the principle, applicable to both federal and
state courts, is established that the court first assuming [in
rem] jurisdiction over the property may maintain and
exercise that jurisdiction to the exclusion of the other.",
2. Dismissals or Stays Based on Federalism-The Other
Abstention Doctrines
While state-federal parallel litigation is best addressed by Colorado
River abstention and its derivatives, the other federal abstention doctrines
may be useful to parties who: (1) wish to reinforce a Colorado River
argument; or (2) were contemplating a state court action when the
opponents filed a federal case first and otherwise meet certain requirements
discussed below. These other doctrines have vague boundaries that have
prompted calls for a more comprehensive and succinct statement of this
important federalism concept. 682 While Pullman is thought of as
authorizing a stay and Burford a dismissal, these are not necessarily rigid.
Dismissals have been granted in Pullman abstentions, '6 3 as stays have in
Burford abstentions.84
a. Pullman Abstention-UnclearState Law with
ConstitutionalImplications
The Pullman abstention doctrine comes from Railroad Commission of
Texas v. Pullman Co., which began with an administrative ruling from the
Texas Railroad Commission that "no sleeping car shall be operated on any
61'United States v. $270,000 in United States Currency, Plus Interest, I F.3d 1146, 1147-48
(IIth Cir. 1993) (quoting Penn Gen. Casualty Co. v. Commonwealth, 294 U.S. 189, 195 (1935));
see also Cassity v. Pitts, 995 F.2d 1009, 1012 (10th Cir. 1993) (citing Princess Lida v.
Thompson, 305 U.S. 456, 466 (1939)); Scarabin v. Drug Enforcement Admin., 966 F.2d 989,
995 (5th Cir. 1992) (finding that an initial state action regarding the forfeiture of alleged drug
proceeds had priority over the federal agency's subsequent actions in federal court).
2
68 See generally 17A WRIGHT ET AL., supra note 619, § 4241, at 28; BT Inv. Mgrs., Inc., v.
Lewis, 559 F.2d 950 (5th Cir. 1977).
683See Stainback v. Mo Hock Ke Lok Po, 336 U.S. 368, 383-84 (1949); Roe v. Rampton,
535 F.2d 1219, 1221 (10th Cir. 1976); Henson v. Atchley, 453 F. Supp. 555, 556 (E.D. Tenn.
1978).
6"4See Ankenbrandt v. Richards, 504 U.S. 689, 706 n.8 (1992); Kaiser Steel Corp. v. W. S.
Ranch Co., 391 U.S. 593, 594 (1968) (per curiam); Feige v. Sechrest, 90 F.3d 846, 851 (3d Cir.
1996); see also 17A WRIGHT ET AL, supra note 619, § § 4243, 4245.
1999] PARALLEL LITIGATION
line of railroad in the State of Texas ... unless such cars are continuously
in the charge of an employee ... having the rank and position of Pullman
conductor."6s' The order had been requested by Pullman conductors who
disagreed with the decision by the Railroad Commission to require a
conductor on trains having only one Pullman sleeping car. 6 6 These cars
would have otherwise been left in the charge of one Pullman porter.687 The
conductors were white and the porters were black, so the railroads, no
doubt, had a purely economic motive in keeping the lower paid porters.6
The Pullman Company and the railroads sued in federal court to enjoin
the Commission's order.689 The Pullman porters were allowed to intervene
as complainants, and the Pullman conductors intervened in support of the
order.690 Plaintiffs argued that the Commission's order violated both Texas
law and the federal Constitution.691 The Commission's decision was based
on a Texas statute that charged it with general regulatory oversight,
although nothing in the statute addressed this particular issue.692 Because
the underlying Texas statute was ambiguous on this point and because the
Commission's order had not been reviewed for its conformity to Texas
law, the Supreme Court ordered the federal district court to defer further
adjudication pending a state court review of the matter "to be brought with
reasonable promptness.693 The Supreme Court reasoned that if the Texas
court found the Commission's order to be a violation of Texas law, then
the federal constitutional issue would be moot, and if the Texas court
upheld the order, then the federal court could adjudicate the constitutional
issues.694 From this comes the doctrine that federal courts should defer, or
stay, litigation regarding constitutional challenges to unresolved issues of
ambiguous state law, where the state's resolution of the question might
moot the constitutional issue.
The test for Pullman abstention, that is, how to recognize an appropriate
abstention setting is as vague as the state statutes it protects from
premature constitutional scrutiny. Pullman clearly, requires: (1) a vague
685312 U.S. 496, 497-98 (1941).
686
See id. at 498.
687
See id.
688
See id. at 497.
6"gSee id. at 498.
69°See id.
691See id.
692See id. at 498-99.
693
1d. at 501-02.
694
See id. at 501.
866 BAYLOR LAWREVIEW [Vol. 51:4
or ambiguous question of state law that is one of first impression in that
state's courts and under attack on constitutional grounds; and (2) a
reasonable possibility that the state court's construction of the question will
avoid the need for federal constitutional review, or at least materially
change the inquiry.695 Beyond that, the Supreme Court has not provided a
clear test for the variety of fact settings that come under Pullman scrutiny.
Various circuits have developed their own tests. The Second Circuit
has a three-part test for Pullman abstention: (1) unclear state law; (2) a
constitutional issue based on the construction of the unclear state law; and
(3) the unclear state law susceptible to a reasonable interpretation that
would avoid the constitutional issue.696 The Third Circuit also has a three
part test, with the first two elements embracing the Cuomo test, and a third
directed to "state interest": (1) unclear state law underlying federal
constitutional claims; (2) subject to state court interpretation that would
obviate the need for, or substantially narrow the scope of, federal
adjudication; and (3) where an erroneous federal court decision on state
law would disrupt important state policies.697 The Ninth and Tenth
Circuits' test mirrors that of the Third Circuit: (1) uncertain state law; (2)
for which a definitive ruling would obviate the need for constitutional
adjudication in the federal court; and (3) which touches on a sensitive area
of state social policy.698
The Fifth Circuit also adopted a three-part test that was used in three
cases from 1980 to 1984, but it was an erroneous statement of Pullman
precedentsY.69 High 01' Times, Inc. v. Busbee, held that Pullman abstention
is appropriate if any one of the following, factors is present: (1) if the
"disposition of a question of state law can eliminate or narrow the scope of
the federal constitutional issue"; (2) if the "state law question presents
difficult, obscure or unclear issues of state law"; or (3) if "a federal
decision could later conflict with subsequent state court resolutions
695
See Bellotti v. Baird, 428 U.S. 132, 147 (1976); Baggett v. Bullitt, 377 U.S. 360, 375-77
(1964).
6
"See United Fence & Guard Rail Corp. v. Cuomo, 878 F.2d 588, 594 (2d Cir. 1989).
697
See Presbytery of New Jersey of the Orthodox Presbyterian Church v. Whitman, 99 F.3d
101, 106 (3d Cir. 1996).
69
See Cedar Shake & Shingle Bureau v. City of Los Angeles, 997 F.2d 620, 622 (9th Cir.
1993); Lehman v. City of Louisville, 967 F.2d 1474, 1478 (10th Cir. 1992).
699
See Mireles v. Crosby County, 724 F.2d 431, 433 (5th Cir. 1984); Pietzsch v. Mattox, 719
F.2d 129, 131 (5th Cir. 1983); High 01' Times' Inc. v. Busbee, 621 F.2d 135, 139-40 (5th Cir.
1980); Note, Pullman Abstention: Reconsidering the Boundaries 59 TEMPLE L. Q. 1243, 1255-
57 (1986).
1999] PARALLEL LITIGATION
concerning the same regulatory program or scheme, thus engendering more
confusion."700
A better statement of Fifth Circuit law is found in BT Investment
Managers,Inc. v. Lewis, which states that the Pullman case "teaches that
in certain federal constitutional challenges to state statutes a federal district
court should exercise its discretion01 to stay its action pending
interpretation of the challenged statute by the courts of the enacting state
and thereby avoid an unnecessary federal constitutional decision," based
on the doctrines of comity and federalism. 7 2 This somewhat broader test
mirrors the Supreme Court's reluctance to define the Pullman doctrine in
terms of distinct elements. This broader definition, however, narrows in
two later cases. Nissan Motor Corp. in U.S.A. v. Harding held that "a
federal court must find that the case presents a difficult, obscure, or
unsettled issue of state law, the resolution of which could eliminate or
substantially narrow the scope of the federal constitutional issue.."703 Then
in 1993, Word of Faith World Outreach Center Church, Inc. v. Morales,
held that "Pullman abstention ... is addressed to the inappropriateness of
federal court resolution of difficult or unsettled questions of state law and
the undesirability of reaching constitutional questions that might be
mooted by the application of state law." 704 Again in 1995, the Fifth Circuit
deemed Pullman "appropriate only when there is an issue of uncertain state
law that is 'fairly subject to an interpretation [by a state court] which will
"°621 F.2d at 139; see also Pietzch, 719 F.2d at 131; Mireles, 724 F.2d at 433. The third
factor seems to invoke Burford abstention concepts. See infra Part V. C. 2. b. During the 1980s,
the Fifth Circuit issued at least one Pullman ruling without applying anything more than a basic
definition. See O'Hair v. Hill, 641 F.2d 307, 310 (5th Cir. 1981). In O'Hair v. Hill, the plaintiff
Madalyn Murray O'Hair filed a federal action asking for an injunction against the continued
prosecution of four civil suits in Texas state courts, on the grounds that under Texas law,
prospective jurors would be asked to "acknowledge the existence of a Supreme Being." Id. The
Fifth Circuit upheld the lower court's denial, citing Pullman, to which the court referred to as
mandating the "avoidance of a decision which would be based upon a tentative interpretation of
state law." Id.
701 559 F.2d 950 (5th Cir. 1997). Pullman's discretionary nature is another unresolved issue,
or at least one at variance. The Supreme Court has held that Pullman abstention was a matter of
law. See, e.g. City of Meridian v. Southern Bell Tel. & Tel. Co., 358 U.S. 639, 640 (1959). The
Court has also held that it was discretionary. See Baggett v. Bullitt, 377 U.S. 360, 375 (1964).
The Fifth Circuit deems it discretionary as well. See Louisiana Debating & Literary Ass'n v.
City of New Orleans, 42 F.3d 1483, 1491 (5th Cir. 1995). See also 17A WRIGHT ET AL., supra
note 619, § 4241, 8 n.l1.
702
Lewis, 559 F.2d at 953.
703739 F.2d 1005, 1008 (5th Cir. 1984).
7-986 F.2d 962, 967 (5th Cir. 1993).
BAYLOR LAWREVIEW [Vol. 51:4
render unnecessary or substantially modify the federal constitutional
question.' '"705 The Fifth Circuit would seem, then, to have a two part test:
(1) a constitutional challenge to a difficult, obscure, or unsettled question
of state law; (2) whose resolution may eliminate or substantially narrow
the scope of the federal constitutional issue. Other circuits seem to act as
the Fifth, citing broader and more general descriptions of the Pullman
doctrine and declining consistent distinct-element tests.Y0
The Pullman doctrine has seen cyclical use in the Supreme Court, and,
to a large extent, the doctrine has been supplanted by the time and cost-
saving practice of certifying unresolved questions of state law to state
supreme courts.707 This shift in.favor of utilizing certified questions applies
mostly to cases with no parallel lawsuit. Pullman abstention remains
appropriate for staying a federal case involving a novel question of the
constitutionality of state law where the same issue is being litigated in a
parallel state case.
To the extent that Pullman cases arise, one recurring question is the
degree of uncertainty or ambiguity required for abstention. Baggett v.
Bullitt held that mere constitutional challenges to state law does not call for
abstention unless there is a substantial likelihood that the state court's
ruling will avoid the need for a federal constitutional review.701 In so
holding, Baggett distinguished between two categories of statutory
vagueness: (1) vagueness as to whom the statute applies, which is grounds
for abstention; and (2) vagueness as to conduct required by the statute,
which is not grounds for abstention.9
This requirement may be better illustrated in cases rejecting Pullman
abstention for lack of ambiguity. In HawaiiHousing Authority v. Midkiff,
the Court found that a state law that condemned privately held property in
an effort to redistribute land ownership was not subject to Pullman
7
°Baran v. Port of Beaumont Navigation Dist., 57 F.3d 436, 442 (5th Cir. 1995) (quoting
Louisiana Debating and Literary Ass'n v. City of New Orleans, 42 F.3d 1483, 1492 (5th Cir.
1995) (quoting Harman v. Forssenius, 380 U.S. 528, 534-35 (1965)).
7
°6See generally 17A WRIGHT ET AL., supra note 619, §§ 4242-4243 (2d ed. 1988) (giving
examples of the various interpretations of the Pullman doctrine by the circuits).
77
° See Arizonans for Official English v. Arizona, 520 U.S. 43, 76 (1997); see generally 17A
WRIGHT ET AL., supra note 619, §§ 4242-4243 (2d ed. 1988) (discussing the Pullman abstention
doctrine and state certification procedures).
708377 U.S. 360, 376 n.12 (1964); see also Babbitt v. United Farm Workers Nat'l Union, 442
U.S. 289, 306 (1979) (holding that the state law must be "fairly subject to an interpretation which
will render unnecessary or substantially modify the federal constitutional question" to justify
abstention.) (quoting harman v. Forssenius, 380 U.S. 528, 535 (1965)).
7
"See id. at 375-78; see also, Procunier v. Martinez, 416 U.S. 396, 401 & n.5 (1974).
1999] PARALLEL LITIGATION
abstention because the state law was clear on its face, even though the
Hawaii courts had not had an opportunity to review it.71o Similarly, City of
Houston v. Hill held that when a statute is not ambiguous, the federal
courts do not need to abstain even if the state courts have never interpreted
the statute.7 1 The Court has also held that the availability of certification
to the state supreme court is not by itself sufficient to justify abstention?.1
Where ambiguity does exist, it may be appropriate to resort to state
court if two other important issues emerge regarding the need for, or
viability of, a parallel case. First, state court resolution of ambiguous
questions is not an exhaustion of the remedies requirement. 7 3 The second
issue is the problem of delay seriously harming constitutional rights.
Where awaiting the state court resolution will seriously harm constitutional
rights, the court may refuse otherwise appropriate abstention.714 These
rulings provide guidance not only to the federal court ruling on a Pullman
motion, but for parties contemplating a parallel state action and state courts
ruling on the appropriateness of a stay there.
Although Pullman may be applicable without parallel state and federal
cases (where only a federal case has been filed), it is applicable in parallel
cases.71 5 In fact, the Supreme Court has emphasized that a pending state
court action makes Pullman abstention more likely.7'6 In Employers
Association, Inc. v. United Steelworkers of America, the Eighth Circuit
withdrew its opinion when it learned that the Minnesota Supreme Court
7'467 U.S. 229, 236-37 (1984).
7t"482 U.S. 451, 468-69 (1987); see also Wisconsin v. Constantineau, 400 U.S. 433,438-39
(1971); Peyote Way Church of God, Inc. v. Smith, 742 F.2d 193, 199 (5th Cir. 1984); Johnson
v. American Credit Co. of Georgia, 581 F.2d 526, 529-30.
7 2
1 See Hill, 482 U.S. at 470.
7"See Constantineau, 400 U.S. at 433. At issue in this case was the constitutionality of a
Wisconsin statute permitting a police chief to post a person's picture in liquor stores to prohibit
his purchase of alcohol for one year. See id. at 434-35. Three dissenting justices viewed this as
appropriate for Pullman abstention to give Wisconsin courts a chance to review it under
Wisconsin's due process clause, which was identical to the federal clause. The majority
disagreed, holding that Pullman abstention was not appropriate merely to give a state court the
chance to declare the state statute unconstitutional. See id. at 439. The Court reasoned that such
a requirement would undermine the federal courts' role as the constitutional watchdog.
7 4
"See Nissan Motor Corp. v. Harding, 739 F.2d 1005, 1011 (5th Cir. 1984); Mayor of
Philadelphia v. Educational Equality League, 415 U.S. 605, 628 (1974).
7
"See Word of Faith World Outreach Center Church, Inc. v. Morales, 986 F.2d 962, 969
n.l 1 (5th Cir. 1993).
716
See Arizonans for Official English v. Arizona, 520 U.S. 43, 79-80 (1997); see also
Morales, 986 F.2d at 969 n.12.
870 BAYLOR LAWREVIEW [Vol. 51:4
had already issued an opinion on state law." The state opinion did not
eliminate the constitutional question, and the federal court ruled that it
would hold the case on its docket pending the United States Supreme
Court's review of the certiorari petition.,s The federal court stated that it
71 9
would consider the merits of the constitutional claim later, if necessary.
b. Burford Abstention--Avoiding Conflict With Complex State
Regulatory Systems
The Burford abstention doctrine, from Burford v. Sun Oil Co., requires
dismissal of federal actions involving questions governed by a complex
state regulatory scheme that raises a constitutional issue.720 The case
involved the Texas Railroad Commission's regulation of drilling permits.71
Sun Oil filed suit in federal court challenging the validity of the
Commission's decision granting Burford permission to drill four oil wells
on a small plot of land in an East Texas oil field.722 The action was based
both on diversity of citizenship and Sun Oil's due process claim.723 If Sun
Oil had sought judicial review within the Texas courts, it would have been
required to file its claim in the courts of Travis County, the location of the
state capitol724 As do many states, Texas had created a centralized judicial
review system for complex regulatory areas, such as oil and gas. 725 This
judicial review system was designed to enhance judicial expertise in Travis
County regarding oil and gas regulation.76 Moreover, oil and gas fields
require regulation as a single unit, necessitating a consistency in judicial
review that was provided by the centralized appeal process.7 27 To allow
federal court review of the Commission's orders would disrupt this
centralized process. 72 Accordingly, the Supreme Court upheld the District
Court's dismissal of the action, resulting in a doctrine that federal courts
should completely abstain by dismissal from interference with complex
71723 F.3d 214, 215 (8th Cir. 1994).
71
See id.
719
See id.
720319 U.S. 315, 331-334 (1943).
72 1
See id. at 317.
722
See id.
723
See id.
24
7 See id. at 326.
725See id.
726
See id. at 327.
727
See id. at 333-34.
72
'See id. at 332.
1999] PARALLEL LITIGATION
state regulatory schemes that would disrupt state efforts to establish a
719
coherent policy with respect to a matter of substantial public concern.
In New Orleans PublicService, Inc. v. Council of New Orleans, Justice
Scalia summarized the Burford doctrine:
Where timely and adequate state-court review is
available, a federal court sitting in equity must decline to
interfere with the proceedings or orders of state
administrative agencies: (1) when there are "difficult
questions of state law bearing on policy problems of
substantial public import whose importance transcends the
result in the case then at bar"; [sic] or (2) where the
''exercise of federal review of the question in a case and in
similar cases would be disruptive of state efforts to
establish a coherent policy with respect to a matter of
' 71
substantial public concern." 0
Quackenbush v. Allstate Insurance Co., clarified Burford's test,
describing it as balancing the federal interest in retaining jurisdiction
against the "concern for the 'independence of state action,"' which, it
' But as with Pullman abstention,
noted, "only rarely favors abstention."71
the Court has been reluctant to offer a test with distinct elements,
cautioning that there is no "formulaic test for determining when dismissal
under Burford is appropriate."3 Quackenbush also emphasized that
Burford abstention is not limited to equity cases, but instead applies to "all
cases in which a federal court is asked to provide some form of
discretionary relief."' 7 1 The Court added that in this damages action, which
is neither equitable nor discretionary, a stay might have been more
appropriate than dismissal.714 A Burford abstention resulting in remand to
state court is immediately appealable under both 28 U.S.C. § 1291 and the
collateral order doctrine of Cohen v. Beneficial IndustrialLoan Corp.75
Until Quackenbush, the Fifth Circuit based Burford abstention on two
distinct situations, either of which justifies abstention:
729
See id. at 332-34.
730491 U.S. 350, 361 (1989) (quoting Colorado River water Conservation Dist. v. United
States, 424 U.S. 800, 814 (1976)).
711517 U.S. 706, 728 (1996) (quoting Burford, 319 U.S. at 334).
73
1d. at 727.
3
7 Id. at 730.
734
See id. at 730-31.
735337 U.S. 541, 545-547 (1949).
BAYLOR LAWREVIEW [Vol. 51:4
(1) when there are "difficult questions of state law bearing
on policy problems of substantial public import whose
importance transcends the result in the case then at bar"or
(2) where the "exercise of federal review of the question in
a case and in similar cases would be disruptive of state
efforts to establish a coherent policy with respect to a
'
matter of substantial public concern."736
The Fifth Circuit appears to have abandoned those standards because of
7
Quackenbush's "no formulaic test" language. 17
With Quackenbush's caveat in mind, an attempted synthesis is:
Burford abstention requires that federal courts abstain from diversity
jurisdiction in matters where a state has a unified scheme for review of its
administrative order, and federal adjudication would be disruptive of the
state's efforts to establish consistent and coherent policy in matters of
substantial public concern. 7 38 The balancing of federal and state interests
should only rarely result in abstention. When it does, dismissal is
appropriate in equity cases and matters of discretion, while damages
actions require stays. Unlike Pullman, Burford does not necessarily
require an unclear or ambiguous state law.1 Although Burford does not
M
require a pending parallel state case, it does apply where review is
underway in an administrative agency 740 or a state court.74T
c. Thibodaux Abstention: Difficult Questions of State Law
A seldom used third variety of abstention is the dismissal or stay of
diversity cases involving difficult or unclear questions of state law where
no constitutional issue is present. The introductory case establishing
precedent opposing this third type of absenteion was Meredith v. City of
Winter Haven, holding that mere difficulty in deciding state law questions
736
St. Paul Insur. Co. v. Trejo, 39 F.3d 585, 588 (5th Cir. 1994) (quoting New Orleans Pub.
Serv. Inc. v. Council of New Orleans, 491 U.S. 350, 361 (1989)); see also Baran v. Port of
Beaumont Navigation Dist., 57 F.3d 436, 441-42 (5th Cir. 1995).
737
See Sierra Club v. City of San Antonio, 112 F.3d 789, 793-97 (5th Cir. 1997) (granting
Burford abstention without stating any particular test, instead noting the similarity of its facts to
those in Burford's).
738See 17A WRIGHT ET AL, supra note 619, § 4244 (2d ed. 1988).
739
See id. § 4244.
74 0
See, e.g., Atlantic Coast Line R.R. Co. v. City of St. Petersburg, 242 F.2d 613, 615-16 (5th
Cir. 71957).
4
'Forest Hills Util. Co. v. City of Heath, 539 F.2d 592, 596 (6th Cir. 1976).
1999] PARALLEL LITIGATION 873
did not justify abstention. 42 This precedent was undercut in 1959 with the
issuance of the Thibodaux- and Mashuda" cases on the same day.
Louisiana Power & Light Co. v. City of Thibodaux, was an eminent
domain case removed to federal court on diversity grounds that did not
involve any issue of constitutionality or federal law.145 The Court ordered
abstention on the grounds that Louisiana law was unclear in pertinent parts
and federal courts should not interfere with or construe unclear state law in
matters of the state's sovereign prerogative.746 The companion case of
County of Allegheny v. Frank Mashuda Co., held that eminent domain in
that diversity case did not justify abstention7 47 The only difference in the
two decisions was the Court's assessment in Mashuda that the pertinent
Pennsylvania law was clear,141 while Louisiana law Was not in
749
Thibodeaux.
For a time this seemed to authorize abstention in matters of state
importance where the law was unclear and no federal law was implicated.
For example, Harris County Commissioners Court v. Moore appeared to
expand Thibodaux beyond eminent domain to matters "peculiarly within
the province of the local courts." 5 0 The clear trend, however, is a
reaffirmation of Meredith and the principle that mere difficulty in deciding
state law issue, or the possibility of conflicting state and federal decision
do not justify abstention. 5 ' Rather than abstention, the better action is now
certification of the difficult question to the state supreme court, if that
procedure is available.2 Another possibility is to postpone the litigation (a
form of abstention) to await a decision on the difficult issue from a
73
pending (not necessarily parallel) state case. 1
742320 U.S. 228, 234 (1943).
743
Louisiana Power & Light Co. v. City of Thiboaux, 360 U.S. 25 (1959).
744
County of Allegheny v. Frank Mashuda Co., 360 U.S. 185 (1959).
745360 U.S. 25, 25-26 (1959).
746
See id. at 25-3 1.
747360 U.S. 185, 191-96 (1959).
74
See id at 196.
749
See Thibodeaux, 360 U.S. at 30.
750420 U.S. 77, 83-84 (1975); see also United Servs. Life Ins. Co. v. Delaney, 328 F.2d 483,
489 (5th Cir. 1964).
"'See McNeese v. Board of Educ. for Community Unit Sch. Dist. No. 187, 373 U.S. 668,
671-73 & n.5 (1963); Colorado River Water Conservation Dist. v. United States, 424 U.S. 800,
816(1976).
72 See Lehman Bros. v. Schein, 416 U.S. 386, 391-92 (1974).
75'See Federated Rural Elec. Ins. Corp. v. Arkansas Elec. Coops., Inc., 48 F.3d 294, 299 (8th
Cir. 1995) (cited at 17A WRIGHT ET AL, supra note 619, § 4246 n.3 (2d ed. Supp. 1998)).
874 BAYLOR LAWREVIEW [Vol. 51:4
But Thibodaux may have a special purpose in parallel litigation.
Although Thibodeaux's use may have been minimized by the Supreme
Court allowing certification of unclear state law questions to that state's
supreme court, that procedure is very likely undermined where a state court
action is pending.
Thibodeaux abstention would seem ideal to permit the state judiciary to
answer the question. That answer would preclude further federal inquiry if
all claims were resolved in the state court action. But where claims
remained in the federal action, the state court answer would then permit the
resumption of federal litigation, under the same circumstances as having a
certified question answered. While Colorado River may also apply here,
the Thibodaux doctrine has fewer elements and perhaps a lesser
presumption for continuing the federal litigation.
3. Abstention Procedure: Reserving Rights to a Federal Forum
In England v. LouisianaState Board of Medical Examiners,5 4 the Court
clarified the means of ensuring access to federal court when faced with
abstention. The Supreme Court held that if a party is required to seek a
ruling from a state court, the party may either submit all issues to the state
court (which would very likely resolve the case under preclusion
principles) or make a reservation of the federal issues. The reservation is
made by notifying the state court that it is including the federal issues only
as a matter of information and that it reserves their resolution for the
federal court.7 5 The holding was rendered in a Pullman-type case, but
should apply to any exercise of abstention by stay or deferral. Babbitt v.
United Farm Workers National Union added to this protection by
providing that in cases where enforcement of state law during abstention
will cause serious harm to the federal plaintiff, the federal court may
provide appropriate interim relief to protect the plaintiff until the case is
56
either resolved in the state court or reactivated in federal court.
Texas federal courts have a special procedure on this point. Texas law
bars advisory opinions, and this bar is implicated when a federal court
77
retains jurisdiction, even over nothing more than the federal claims. 1
Because of this, the Fifth Circuit practice is to dismiss the federal case
without prejudice rather than staying it.711
754375 U.S. 411 (1964).
755
See id. at 418-22.
756442 U.S. 289, 312 n.18 (1979).
7 7
1 See United Servs. Life Ins. Co. v. Delaney, 396 S.W.2d 855, 863-64 (Tex. 1965).
75
S5ee Harris County Comm'r Court v. Moore, 420 U.S. 77, 88-89 & n.14 (1975).
1999] PARALLEL LITIGATION
In contrast, the Eighth Circuit provides for stays. Employers
Association, Inc. v. United Steelworkers of America, concerned
Minnesota's attempt to enforce a state law prohibiting employers from
hiring permanent replacements for striking workers, and Employers
attempt to enjoin its enforcement by federal injunction. 719 The federal
district court had ruled that the National Labor Relations Act preempted
the state law. 760 The Eighth Circuit then stayed that ruling pending the
Minnesota Supreme Court's ruling on the state law.61 Two months later,
the Eighth Circuit withdrew the stay upon learning that the Minnesota
Supreme Court had already issued its opinion.76 The state opinion did not
eliminate the constitutional question, and the federal court ruled that it
would hold the case on its docket pending the United States Supreme
Court's review of the certiorari petition. Then, if necessary, the federal
court would litigate the merits of the constitutional claim.76 Apparently
the certiorari petition was never filed, and the Eighth Circuit upheld the
original federal district court ruling that federal law preempted the
Minnesota labor law.7"
D. Enjoiningthe State Action
Antisuit injunctions against parallel litigation can be effective, but it can
also be the most difficult remedy to obtain. In any setting a domestic or
international movant must meet rigid standards to persuade the court to
enjoin an action in another court. The highest hurdles, however, are found
in the federal-state setting where a movant must meet not only comity
standards, but narrow federalism standards as well.765, Attorneys seeking
the help of federal courts to delay or stop pending state court litigation
must clear two significant hurdles." The Younger/Pennzoil doctrine is
equitable and is basically nothing more than a rigid application of the
equity test for injunctive relief, which requires that the party show: (1)
irreparable harm, and (2) no adequate remedy at law in the state court
71919 F.3d 405, 405-06 (8th Cir. 1994), withdrawn, 23 F.3d 214 (8th Cir. 1994).
7
6"See id. at 406.
76
'See id. at 408.
762
Employers Ass'n, Inc. v. United Steelworkers of America, 23 F.3d 214, 215 (8th Cir.
1994).
76323 F.3d at 215.
7"See id.
76
'See Younger v. Harris, 401 U.S. 37, 44 (1971).
7
"See First Alabama Bank of Montgomery v. Parsons Steel, Inc., 825 F.2d 1475, 1482-83
(11th Cir. 1987).
BAYLOR LAWREVIEW [Vol. 51:4
action.167 The other hurdle is statutory: the Anti-Injunction Act,76 8 the Tax
Injunction Act,6 9 and the Johnson Act.70 Although these separate grounds
may at times seem to interact or overlap, they are distinct barriers that must
be satisfied independently before a federal court may enjoin state court
litigation.7'
Before examining the limitations on federal antisuit injunctions against
state litigation, an examination of the authority for those injunctions is
77 2
helpful. Congress provided such authority through the All Writs Act.
The Act is a jurisdictional grant for injunctions against potential, but not
pending state court actions under the same grounds as the "in aid of
jurisdiction" exception to the Anti-Injunction Act. "3 It reads:
(a) The Supreme Court and all courts established by
Act of Congress may issue all writs necessary or
appropriate in aid of their respective jurisdictions and
agreeable to the usages and principles of law.
(b) An alternative writ or rule nisi may be issued by a
justice or judge of a court which has jurisdiction.77
As stated, these two requirements apply only to pending state litigation;
federal courts may enjoin future state court litigationwithout clearing these
hurdles.77
1. The Younger/Pennzoil Doctrine and Equitable Abstention
a. The Younger and Pennzoil Cases
Equitable abstention began with Younger v. Harris, 77
dictating that a
federal court may not enjoin a pending state criminal proceeding absent a
showing of (1) bad faith, (2) irreparable harm, and (3) no adequate remedy
7 67
1 See Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 10 (1987).
7 68
See 28 U.S.C.A. § 2283 (West 1994).
76
aSee id. § 1341 (West 1993).
77 0
See 28 U.S.C.A. § 1342 (West 1993).
771
See First Alabama Bank of Montgomery v. Parsons Steel, Inc., 825 F.2d at 1483 (stating
the fact that because an injunction fits an exception to the Anti-Injunction Act does not mean the
court should not also consider appropriateness under principles of Younger).
772See 28 U.S.C. § 1651 (1994).
'7 See id.
774
1d.
775
See Dombrowski v. Pfister, 380 U.S. 479, 484 n.2 (1965).
776401 U.S. 37, 43-49 (1971).
1999] PARALLEL LITIGATION 877
at law. Younger's earliest progeny highlighted three fact settings that
implicate all three elements: an inadequate state forum,'" bad faith state
prosecutions, 778 and patently unconstitutional state laws.779 From these
criminal and quasi-criminal cases, the Younger Doctrine leapt into civil
proceedings with Pennzoil v. Texaco, which extended Younger to civil
7
cases involving important state interests. 10
In the Pennzoil case, the plaintiff had negotiated an agreement to
purchase about three-sevenths of Getty Oil's outstanding shares for $110 a
share.71 Late into the transaction, Texaco paid $128 a share and stepped
into Pennzoil's shoes.782 Pennzoil sued Texaco in a Texas state court for
tortious interference with contract, eventually winning a judgment of $7.53
billion in actual damages and $3 billion in punitive damages. 781 Under
Texas law, Texaco was required to file a supersedeas bond for the entire
judgment amount to stay execution pending appeal.114 It was clear that
Texaco could neither get a bond for that amount nor post a cash bond."5
The judgment was so large that Texaco immediately began to suffer on the
stock market, its bond rating was lowered, and creditors refused to sell it
6
crude oil on customary terms.11
Texaco wished to challenge the constitutionality of the Texas bond and
lien provisions, but it did so in a New York federal court instead of a Texas
state or federal court.78 7 In fact, at no time did Texaco raise the supersedeas
bond issue in the Texas state court that issued the judgment.71
In the New York federal court, and prior to the finality of the Texas
state court judgment, Texaco sought to enjoin Pennzoil from its collection
attempts on the Texas judgment.79 Texaco claimed the Texas proceedings
79 0
violated the Constitution and federal statutes.
777See Gibson v. Berryhill, 411 U.S. 564, 578-81 (1973).
..8 See Juidice v. Vail, 430 U.S. 327, 331-36 (1977).
779
See Trainor v. Hernandez, 431 U.S. 434, 447 (1977).
780481 U.S. 1 (1987).
71
See id. at 4.
8
7 2See id.
783See id.
784
See id. at 4-5.
785
See id. at 5.
76
" See id.
7
1TSee id. at 6.
7
1'See id. at 6 n.5.
789
See id. at 6.
7
9'See id. at 6 n.6.
878 BAYLOR LAWREVIEW [Vol. 51:4
Pennzoil responded to the New York federal action with an objection
under the Anti-Injunction Act and the Younger doctrine.7 9, The federal
district court found that the Anti-Injunction Act did not apply because
Texaco had sought the injunction under 28 U.S.C. § 1983, a statute the
Supreme Court has interpreted as providing an express authorization for
injunctive relief.792 The court further found that Younger did not apply
because an injunction would not interfere with a state official's pursuit of a
fundamental state interest .79 The New York federal court then issued the
injunction.794 On Pennzoil's appeal, the Second Circuit upheld the
injunction, finding that (1) Texaco did state a claim under § 1983 because
execution necessarily involved state agent, and that because § 1983 is an
exception to the Anti-Injunction Act, it did not apply; (2) common law
abstention was unnecessary in that Pullman did not apply because the mere
possibility that a court would find the Texas supersedeas law
unconstitutional did not require abstention; and, (3) that Younger did not
apply because the state interests required for Younger abstention differ in
both kind and degree.9 The Second Circuit further found that Texas had
failed to provide adequate procedures for adjudicating Texaco's federal
79 6
claims and that the balance of hardships favored Texaco.
The Supreme Court reversed, finding a new, expanded role for
abstention.9 In particular, the Court found that the bases for Younger in
this civil case were (1) equity jurisprudence, specifically the injunction
element of "adequate remedy at law,"719 (2) comity, which justifies
abstention not only when the pending state proceedings are criminal (as in
Younger), but also when certain categories of civil cases are pending "if
the State's interests in the proceeding are so important that exercise of the
federal judicial power would disregard the comity between the States and
National Govemment;" ' 99 and (3) avoiding unwarranted determinations of
federal constitutional questions regarding state law.1°° Because federal
interpretations of state law are not binding on state courts, they could be
791
See id. at 6-7.
2
79 See id. at 7 (citing Mitchum v. Foster, 407 U.S. 225 (1972)).
793
794
See id.
See id. at 7-8.
79 5
See id. at 8-9.
796
See id. at 9.
797
See id. at 10.
79 8
1d
799
1d. at 11.
'°°See id.
1999] PARALLEL LITIGATION 879
discredited by a state court's later clarification of the statute that would
render it constitutional1l
Texaco chose not to raise its constitutional claims in the Texas state
court, thus making it impossible for the court to determine whether the
Texas supersedeas and post judgment procedures violated the Constitution,
as Texaco alleged.1°2 Moreover, the Court found that the Texas
Constitution's "open courts" provision was more on point than the Due
Process Clause of the Fifth and Fourteenth amendment.03 The Court noted
that "[t]he common thread of [the Texas Supreme Court's] decisions
construing the open courts provision is that the legislature has no power to
make a remedy by due course of law contingent on an impossible
condition."' ' 4 As a final note on this expansion of Younger, the Court
emphasized a narrow reading of its opinion.805 In concurring opinions,
Justices Brennan, Blackmun and Stevens agreed that the Younger doctrine
should not be applied to purely civil proceedings.1°6
Pennzoil's application of Younger was merely an exercise in strict
equity oversight to injunctive relief.8o1 That is, for a court to issue any
injunction, the applicant must show irreparable harm and no adequate
remedy at law.os A dimension added by Pennzoil is that the Younger
Doctrine may overlap Pullman in its interest in avoiding constitutional
litigation on ambigous state laws that the state has not had a chance to
review 09
b. Younger's Application in Civil Cases
Pennzoil may be read narrowly as holding that the enforcement of
judgments is an important state interest in which federal courts may not
interfere1lo It may also be read broadly as applying to all civil proceedings
where the state is exercising some executive power, or where the state
proceedings are capable of resolving the constitutional problem (with a
corollary that a defendant who fails to exhaust those state procedures may
8
°-Seeid. at11-12.
802
See id. at11.
8 3
" See id.at11-12.
°4Id. at 15 (quoting Nelson v. Krusen, 678 S.W.2d 918, 921 (Tex. 1984)).
0
"°S ee id. at 17-18.
"°Seeid. at 18-34.
8 7
1d. at 10 (noting that each court failed to apply the appropriate standard for injunctive
relief).
80
SSee id.
8
"See id. at14-19.
"' 0See id. at13.
880 BAYLOR LAW REVIEW [Vol. 51:4
not resort to a federal court in order to interfere with the pending
proceeding).' '
Subsequent case law has provided some guidance. For example, the
New OrleansPublic Service Inc. v. City of New Orleans ("NOPSI") case
clarified that the Younger/Pennzoil doctrine does not apply to all civil
litigation, but only to those cases "involving certain orders that are
uniquely in furtherance of the state courts' ability to perform their judicial
functions."' Furthermore, the doctrine does not require abstention to a
"state judicial proceeding reviewing legislative or executive action.' ' 3
The Fifth Circuit has interpreted NOPSI as limiting Younger/Pennzoil
abstention to antisuit injunctions against state civil cases involving an
important state interest. '1
Current attempts to define Younger's parameters after its expansion into
civil cases are at best obtuse. A better explanation is that the
Younger/Pennzoil doctrine limits federal interference with important state
executive power related to pending state adjudication. This explanation
does not contradict NOPSFs statement that Younger does not apply to state
courts reviewing executive action; rather, it suggests that Younger applies
to federal interference with the state's performance of its executive power
that would have an immediate impact because of the pending litigation." '
In Younger, the injunction interfered with the district attorney's
executive function of prosecuting a criminal action against Harris. 81 In
Trainor, the injunction interfered with the state attorney's executive
function of recouping welfare benefits wrongfully paid to Hernandez.17 In
Pennzoil, the injunction interfered with the sheriffs executive function to
enforce Pennzoil's judgment against Texaco. 8 Thus, in each case the
federal court was interfering with the state's performance of its executive
function in pending state court litigation.8' 9 If Younger/Pennzoil is defined
in this way, the definition simplifies determinations of its criminal and civil
overlap and requires that the federal court identify a state executive
8
'See id. at 14-15.
812491 U.S. 350, 367-68 (1989).
8 13
1d.
8 14
See Louisiana Debating and Literary Ass'n v. City of New Orleans, 42 F.3d 1483, 1490
(5th Cir. 1995).
"'See New Orleans Public Service, 491 U.S. at 367-68.
816
See Younger v. Harris, 401 U.S. 37, 38-39 (1971).
81
See Trainor v. Hernandez, 431 U.S. 434, 438 (1977).
...See Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 6 (1987).
s19See Pennzoil Co., 481 U.S. at 6; Trainor,431 U.S. at 438; Younger, 401 U.S. at 38-39.
1999] PARALLEL LITIGATION
function that will be affected by the injunction. If the injunction would
affect a state interest other than its executive power, then Younger would
not apply; however, the Anti-Injunction Act might.
c. Perfectinga Younger Objection
Younger always involves a pending state lawsuit that allegedly violates
a constitutional right and the alleged victim of the constitutional injury
seeking a federal injunction against the state action.1 ° To the extent that
the state is a party, it may waive its Younger defense by arguing the merits
821
of the constitutional issue to the federal court.
It is unclear whether this waiver would apply in a Pennzoil situation
involving only private parties in a civil case. On the one hand, a private
party stands in the state's position when it submits the constitutional issue
to the federal court, thus inviting the federal court to enjoin the state action
in order to maintain the status quo pending the resolution of the
constitutional issue.
On the other hand, the Younger doctrine's very purpose is to protect
certain state governmental interests from federal interference, an interest
that can only be waived by the state itself21
2. Statutory Abstention: The Anti-Injunction Act
Two federal statutes provide another layer of regulation for federal
courts looking to enjoin state court lawsuits. The Anti-Injunction Act
addresses the same problem as Younger; both restrict federal courts from
interfering with states, but they use different guidelines.823 The statute
reads: "A court of the United States may not grant an injunction to stay
proceedings in a State court except as expressly authorized by Act of
Congress, or where necessary in aid of its jurisdiction, or to protect or
effectuate its judgments. '824
V2 0See Louisiana Debating & Literary Ass'n v. City of New Orleans, 42 F.3d 1483, 1489-90
(5th Cir. 1995).
2
S lSee Ohio Bureau of Employment Serv. v. Hodory, 431 U.S. 471, 480 & n.10 (1977)
(holding that a state's decision to submit constitutional issues to federal court waived the
Younger doctrine objection to injunction against state action).
822
See generally Brian Stagner, Avoiding Abstention: The Younger Exceptions, 29 TEX.
TECH. L. REv. 137 (1998) (describing generally the Younger doctrine and its purpose).
82
In considering an injunction against state court litigation, the Fifth Circuit stated,
"Nevertheless, we are guided by the overarching principle that federal courts are to be cautious
about infringing on the legitimate exercise of state judicial power." State of Texas v. United
States, 837 F.2d 184, 186 (5th Cir. 1988) (citing Younger, 401 U.S. 37, 44-45 (1971)).
82428 U.S.C. § 2283 (1994).
BAYLOR LA WREVIEW [Vol. 51:4
The Act thus provides three exceptions that allow injunctions: (1)
expressly authorized, (2) in aid of jurisdiction, or (3) to protect or
effectuate its judgments.25 These exceptions are exclusive and may not be
expanded by judicial interpretation or federal common law.26 The Act
does not apply if the injunction issues before the state court action is
filed.127 However, if a state official is the party to be enjoined, the movant
must also satisfy the Eleventh Amendment.- On the other hand, the Act
does not apply to suits brought by the United States12 1or federal agencies.83 °
The Fifth Circuit has noted the difficulty of meeting one of the
exceptions:
These statutory exceptions "are narrow and are not [to]
be enlarged by loose statutory construction,". and are
the exclusive exceptions under the act; "the prohibition [of
section 2283] is not to be whittled away by judicial
improvisation." Furthermore, under the Anti-Injunction
Act, the presumption is that state courts are the best
arbiters of state court jurisdiction; thus, state proceedings
"should normally be allowed to continue unimpaired by
intervention of the lower federal courts, with relief from
error, if any, through the state appellate courts and
ultimately [the Supreme] Court." Thus, "any doubts are to
be resolved in favor of allowing the state court action to
proceed." This holds true even when the state proceedings
"interfere with a protected federal right or invade an area
pre-empted by federal law, even when the interference is
unmistakably clear."83
The exceptions require further explanation.
a. "Expressly Authorized" Injunctions
Mitchum v. Foster held that the "expressly authorized" exception does
not require express reference to the underlying federal statute.112 Thus, 42
.2 See id.
826
See Vendo Co. v. Lektro-Vend Corp., 433 U.S. 623, 630 (1977).
827
See Dombrowski v. Pfister, 380 U.S. 479, 484 n.2 (1965).
828
See Pennhurst State Sch. and Hosp. v. Haldeman, 465 U.S. 89, 106 (1984).
829
See Leiter Minerals, Inc. v. United States, 352 U.S. 220, 226 (1957).
83
See N.L.RB. v. Nash-Finch Co., 404 U.S. 138, 146 (1971).
83
Total Plan Serv., Inc. v. Texas Retailers Ass'n., Inc., 925 F.2d 142, 144 (5th Cir. 1991)
(citations omitted).
132407 U.S. 225, 237 (1972).
1999] PARALLEL LITIGATION
U.S.C. § 1983, with no express authorization to enjoin state lawsuits,
nonetheless indicates a congressional intent to do so under its general
power for injunctive relief.833 In Mitchum, the prosecuting attorney of Bay
County, Florida, sued to close down Mitchum's bookstore as a public
nuisance.134 The state court entered a preliminary order prohibiting
continued operation of the bookstore.835 After further inconclusive
proceedings in the state courts, Mitchum filed a complaint in the United
States District Court for the Northern District of Florida, alleging that the
actions of the state judicial and law enforcement officials were depriving
him of First and Fourteenth Amendment rights.136 Under 42 U.S.C. §
1983,837 he requested injunctive and declaratory relief against the state
court proceedings on the ground that the state court unconstitutionally
applied Florida laws and caused irreparable harm.3,
The language of § 1983 does not provide for an antisuit injunction to
remedy violations of civil rights. In inferring one, the Supreme Court
articulated the test as "whether an Act of Congress, clearly creating a
federal right or remedy enforceable in a federal court of equity, could be
'
given its intended scope only by the stay of a state court proceeding."839
This reduces to a two-prong test for a non-express statute to meet the
"expressly authorized" exception: (1) whether the statute in question
provided for equitable relief, and (2) whether legislative history established
that the statute was enacted due to a mistrust of state court ability or
willingness to protect federal constitutional rights. In finding that § 1983
actions provide an exception to the Anti-Injunction act, the Court recalled
its holding a year earlier in Younger v. Harris that equity and comity also
prevent federal courts from enjoining state criminal proceedings.40 Thus, a
33
1See id. at 242-43.
834
1d. at 227.
35
See id.
836
See id.
837
See id. at 227-28 & n.5. Federal jurisdiction was based upon 28 U.S.C. § 1343(3) (1994).
The statute states in relevant part:
The district courts shall have original jurisdiction of any civil action authorized by law to be
commenced by any person...
(3) To redress the deprivation, under color of any State law, statute, ordinance, regulation,
custom or usage, of any right, privilege or immunity secured by the Constitution of the United
States or by any Act of Congress providing for equal rights of citizens or of all persons within the
jurisdiction of the United States ...
838
1d. at 227.
839
1d. at 238.
"0 See id. at 243.
BAYLOR LAWREVIEW [Vol. 51:4
federal court injunction against a state criminal prosecution must clear two
hurdles: the Anti-Injunction Act and the Younger doctrine.
While Mitchum illustrates that "expressly authorized by Congress" does
not mean expressed in the statute, Total Plan Services, Inc. v. Texas
Retailers Assoc., Inc., illustrates the converse, that is, express injunction
language in a federal statute may not overcome the strong presumption
against federal courts enjoining state litigation.14 The dispute began in
state court, where the Texas Retailers Association sued regarding pension
claims.2 The Texas Retailers Assocation obtained a preliminary state
court ruling that the Employee Retirement Income Security Act (ERISA)
did not preempt its claims; Total Plan Services, the state court defendant,
immediately sued in federal court for a contrary declaratory judgment and
an injunction against further state court proceedings.141 The federal trial
court dismissed the action for failure to state a claim, and the Fifth Circuit
affirmed over Total's objection that ERISA expressly provided for the
injunction.44 Specifically, Total relied on 29 U.S.C. § 1132(a)(3)45 which
allows a civil action to be brought "to enjoin any act or practice which
violates any provision of this subchapter .... ,"846 Evaluating the legislative
intent, the Fifth Circuit found that "act or practice" did not apply to
lawsuits, and that Congress had not created a federal right in ERISA which
"could be given its intended scope only by the stay [read "enjoining"] of a
state court proceeding. ''s"
There are examples of "expressly authorized" exceptions where the
language is express and it means what it says. Under the federal
interpleader statute,8 48 an interpleader plaintiff may obtain an injunction
under a corollary statute8 49 against the prosecution of pending state actions
so as to protect the limited fund that is a predicate to interpleader
practice.1s Similarly, in admiralty and maritime law a vessel owner may
file a petition in federal court seeking protection under the Limitation of
841925 F.2d 142, 144 (5th Cir. 1991).
8 42
See id. at 143.
84 3
See id. at 143.
844
See id.
845
Id. at 144.
84629 U.S.C. § 1132(a)(3) (1994).
847
See Total, 925 F.2d at 144 (quoting Mitchum v. Foster, 407 U.S. 225, 238 (1972)).
84828 U.S.C. § 1335 (1994).
84928 U.S.C. § 2361 (1994).
"' 0See State Farm Fire & Cas. Co. v. Tashire, 386 U.S. 523, 524 (1967).
1999] PARALLEL LITIGATION 885
Vessel Owner's Liability Act,",l and upon depositing security in the value
of the vessel and its freight, the court may use Federal Rule of Civil
Procedure Supp. R. F(3) to enjoin claimants from filing or prosecuting
852
actions in other courts.
Vendo Co. v. Lektro- Vend Corp. established that "expressly authorized"
may turn on plurality votes.853 In Vendo, a five vote plurality held that
Section 16 of the Clayton Act did not expressly authorize a federal
injunction against state court action.114 Justices Rehnquist, Stewart and
Powell found that Section 16 did not under any circumstance expressly
authorize federal injunctions against state court litigation.855 Justices
Blackmun & Burger held that it did if certain factors are present which
were not present here.116 Justices Stevens, Brennan, White and Marshall
argued that Section 16 did in all cases expressly authorize the injunction.",
Compulsory counterclaims may also qualify as "expressly authorized"
exceptions. In Seattle Totems Hockey Club, Inc. v. The National Hockey
League, the Ninth Circuit noted that Federal Rule of Civil Procedure 13(a)
(compulsory counterclaims) was not an expressly authorized exception,
and that "accordingly, a federal court is barred by § 2283 from enjoining a
party from proceeding in state court on a claim that should have been
pleaded as a compulsory counterclaim in a prior federal suit. '' 858
b. Injunctions "In Aid of Its Jurisdiction"
Congress amended the Anti-Injunction Act in 1948 in response to the
Supreme Court's holding in Toucey v. New York Life Insurance Co. that
the Act did not empower a federal court to enjoin a state court from
relitigating a case already litigated in federal court.859 After Toucey,
Congress amended the Anti-Injunction Act to include the words "to protect
or effectuate its judgments," enabling federal courts to enjoin the
relitigation of cases in state courts.86 0 The phrase "in aid of its jurisdiction"
85146 U.S.C.A. app. § 183(a) (1999).
852
See Beiswenger Enterprises Corp. v. Carletta, 86 F.3d 1032, 1033-34 (11 th Cir. 1996).
853433 U.S. 623, 626, 643 (1977).
854
Id. at 630-45.
855
See id. at 630-43.
856
See id. at 643-45 (Blackmun, J., concurring).
85
See id. at 647-66 (Stevens, J., dissenting).
858652 F.2d 852, 855 n.5 (9th Cir. 1981) (referencing Nolen v. Hammet Co., Inc., 56 F.R.D.
361, 362 (D.S.C. 1972), and 6 Wright & Miller, FEDERAL PRACTICE AND PROCEDURE, § 1418,
at 106) (2d ed. 1988).
859314 U.S. 118, 137-141 (1941).
86028 U.S.C. § 2283 (1994).
886 BAYLOR LAWREVIEW [Vol. 51:4
was added to make clear the already recognized power of federal courts to
stay proceedings in state courts that have been removed to a federal
61
court.
The leading case is Kline v. Burke Construction Co.s62 Burke
Construction, a Missouri paving company, contracted with the city of
Texarkana, Arkansas to repave city streets. 63 In a subsequent dispute on
the contract, Burke filed a diversity claim against Kline (a Texarkana city
86
board member) in federal district court in Arkansas, seeking damages. "
Kline then filed a parallel equity action against Burke in an Arkansas
chancery court. 65 Both actions were in personam, and both sought money
damages." Kline removed the state action to federal district court, but it
was remanded.67 The federal court lawsuit ended in a mistrial.6 Pending
retrial, Burke asked the federal district court to enjoin Kline from
proceeding with the state action, citing the "in aid of its jurisdiction"
exception to the Anti-Injunction Act.86 9 The federal district court denied
the injunction, and the Eighth Circuit reversed the district court decision
and remanded the case, ordering the issuance of an injunction. 7° The
Supreme Court held that the Act's "in aid of its jurisdiction" exception was
for in rem actions in which the federal court had assumed jurisdiction over
87
the res, and that it did not extend to in personam actions such as this one. '
In Texas v. United States, the Interstate Commerce Commission (ICC)
disagreed with the State of Texas about jurisdiction over a series of in-state
truck shipments."' Reeves was transporting carpet made by Armstrong
Carpets in Arlington, Texas to other points in Texas Y3 The State of Texas
sought to regulate this as an intrastate shipment and began an investigation.
Upon petition by Reeves seeking a declaratory ruling an administrative
action, seeking to regulate the carpet shipments as interstate because some
862260 U.S. 226 (1922).
3
.. See id. at 227.
SMSee id.
865
See id.
s 66See id. at 228.
s67See id.
86
SSee id.
s69See id.
ST°See id.
7
'See id. at 230-31.
872837 F.2d 184, 184-85 (5th Cir. 1988).
8 73
See id.
1999] PARALLEL LITIGATION 887
of the carpet materials originated out of state. 74 Texas then initiated state
court proceedings. 871 The ICC then filed a federal court action seeking to
enjoin the state proceeding176 No ruling on the request for injunction was
made, but the State of Texas filed a direct appeal to the Fifth Circuit from
an ICC decision not to reconsider its declaratory order.877 There, the ICC
asked the federal appellate court to enjoin the state court proceeding
pending the review of the ICC's declaratory order.71 The Fifth Circuit held
that the injunction was not necessary to protect the federal court's eventual
jurisdiction over the ICC's agency ruling in the case. 87 9 The Fifth Circuit
also held that the "in aid of its jurisdiction" exception was ordinarily
limited to the preservation of in rem jurisdiction, and that it may not be
invoked merely to avoid the prospect of inconsistent state and federal
judgments110
Although perhaps focused on in rem cases, the "in aid of its
jurisdiction" exception is not limited to them. For example, where the
court has declared ongoing jurisdiction it may enjoin inconsistent state
court proceedings. In Doctor's Associates, Inc. v. Distajo, the Second
Circuit affirmed a federal district court's order enjoining various Subway
restaurant franchisees from pursuing state court actions, both in aid of the
federal district court's jurisdiction over its order enforcing an arbitration
agreement, and as the injunction continued, to effect the federal district
court's judgment. 811 Similarly, in Wesch v. Folsom, the Eleventh Circuit
affirmed a federal district court's injunction of a state suit seeking
congressional redistricting in Alabama because the Anti-Injunction Act did
not bar the injunction when there was an active federal district court order
imposing a congressional redistricting plan for Alabama effective until the
state legislature adopted a valid plan of its own.88 2 In Flanagan v. Arnaiz,
the Ninth Circuit held that where the federal district court "expressly
retains jurisdiction to enforce a settlement agreement, and to resolve
disputes that may arise under it," injunction is appropriate under the "in aid
874
See id.
87'See id. at 186.
876
See id.
877See id.
'8sSee id.
s79See id.
"80See id. at 186-87 n.4 (citing Atlantic Coast Line R. Co. v. Brotherhood of Locomotive
Engr's, 398 U.S. 281, 295-96 (1970)).
881107 F.3d 126, 135-36 (2d Cir. 1997).
8826 F.3d 1465, 1467-69, 1474 (11 th Cir. 1993).
BAYLOR LA W REVIEW [Vol. 51:4
of its jurisdiction" exception."' These cases seem to rest on the federal
court having made a dispositive judgment that takes on an in rem
character. In all three cases, the injunction is based both on the "in aid of
its jurisdiction" and the "to protect or effectuate its judgments" exceptions.
c. Injunctions to Prevent Relitigation
The Full Faith and Credit Act requires "every court within the United
States" to give state judicial proceedings "the same full faith and credit...
as they have by law or usage in the courts of such State ... from which
they are taken."'1 4 This requirement applies to state and federal courts
equally.188 Coupled with this, the Anti-Injunction Act prohibits federal
courts from granting an injunction to stay proceedings in a state court, but
excepts from that prohibition the issuance of an injunction by a federal
court "where necessary ... to protect or effectuate its judgments."' These
two considerations regulating federal injunctions of state court actions and
mandating the state judgment's preclusive effect, are highlighted in
Parsons Steel, Inc. v. First Alabama Bank,1 7 and illustrate an important
requirement in obtaining claim preclusion rulings to protect a prior
judgment.
This raises the question: what is a "judgment?" In Chick Kam Choo v.
Exxon Corp., the Supreme Court established the standard, stating that "an
essential prerequisite for applying the relitigation exception is that the
claims or issues which the federal injunction insulates from litigation in
state proceedings actually have been decided by the federal court."' 8 This
standard is illustrated in a recent Third Circuit case. In re GeneralMotors
Corp. Pick-Up Truck Fuel Tank Products Liability Litigation involved a
nationwide settlement class in the Eastern District of Pennsylvania, to
which eleven "gas tank" class actions had been transferred by the Judicial
Panel on Multidistrict Litigation under 28 U.S.C. § 1407.889 Rejecting the
settlement of a $1,000 coupon for each class member, the Third Circuit
decertified the settlement class but left open the possibility of curing the
settlement class problem.'" Instead of attempting to cure the problem, the
883143 F.3d 540, 545 (9th Cir. 1998).
88428 U.S.C. § 1738 (1994).
8
'See Parsons Steel, Inc. v. First Alabama Bank, 474 U.S. 518, 525-26 (1986).
88628 U.S.C. § 2283 (1994).
887474 U.S. 518, 519 (1986).
888486 U.S. 140, 148 (1988).
119134 F.3d 133, 137 (3d Cir. 1998).
19°See id. at 137, 146.
1999] PARALLEL LITIGATION
settling parties renewed their attempts in a parallel case in a Louisiana state
court, which had certified a nationwide class action19 1 Several non-settling
class members in the Pennsylvania Multidistrict proceeding moved for an
injunction against the Louisiana class action192 The federal court denied
the request and the Third Circuit affirmed, rejecting defendants' argument
that the injunction should issue "to protect or effectuate" the federal court
decision decertifying the class.093 The Third Circuit held that denial of
class certification was not a final judgment because the case was still
pending, and the decertifying order could not have a preclusive effect in
the Louisiana state court. 94 Here the court relied on the Fifth Circuit's
holding, under identical facts, in JR. Clearwater,Inc. v. Ashland Chemical
Co."' In General Motors, the Third Circuit also rejected defendant's
argument that the "in aid of its jurisdiction" exception warranted
injunctions against the state court actions; instead, the court held that the
exception applied only "to prevent a state court from so interfering with a
federal court's consideration or disposition of a case as to seriously impair
the federal court's flexibility and authority to decide that case."' 8
A second fundamental issue is the effect of the Full Faith and Credit
Act on the religitation exception. In ParsonsSteel, Inc. v. FirstAlabama
Bank, Parsons Steel and its owners, Jim and Melba Parsons, sued First
Alabama Bank of Montgomery and Edward Herbert, a bank officer, in
Alabama state court in February 1979, "alleging that the bank had
fraudulently induced the Parsonses to permit a third person to take control
891
See id. at 137.
892
See id.
893
See id. at 146.
'9See id. at 145-46.
89593 F.3d 176, 179 (5th Cir. 1996)
896134 F.3d at 144 (quoting Atlantic Coast Line R. Co. v. Brotherhood of Locomotive
Engineers, 398 U.S. 281, 295 (1970)); see also Royal Ins. Co. of America v. Quinn-L Capital
Corp., 960 F.2d 1286, 1293-97 (5th Cir. 1992). ("In determining what was 'actually decided, the
emphasis is on the record and on what the earlier federal court actually stated, not on the current
court's post hoc judgment as to what the previous judgment was intended to state."' Id. at 1294
(quoting Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 148 (1988)). The court further held
that "[a]ny doubt[s] as to whether the order precludes subsequent claims must be resolved in
favor of allowing the state court to proceed." Id. (citing Texas Employers' Ins. Ass'n v. Jackson,
862 F.2d 491, 501 (5th Cir. 1988) (en banc), cert denied, 490 U.S. 1035 (1989); Flanagan v.
Arnaiz, 143 F.3d 540 (9th Cir. 1998); Doctor's Assocs., Inc. v. Distajo, 107 F.3d 126, 135-36
(2d Cir. 1997) (discussing the intersection of "in aid of its jurisdiction" and "to protect or
effectuate its judgments"); Wesch v. Folsom, 6 F.3d 1465 (1 lth Cir. 1993); 17 WRIGHT MILLER
& COOPER, supra note 619, § 4226 (discussing what amounts to a "judgment" for these
purposes).
BAYLOR LA WREVIEW [Vol. 51:4
of a Parsons Steel subsidiary and eventually to obtain complete
ownership.",7 In April of 1979, the subsidiary was found to be in
involuntary bankruptcy, and the bankruptcy trustee was joined as a
plaintiff in the state suit. 98 In May 1979, without the participation of the
bankruptcy trustee, Parsons Steel and the Parsons brought suit against the
bank in federal district court alleging that the bank's conduct giving rise to
the state suit also violated the federal Bank Holding Company Act
("BHCA") amendments, 12 U.S.C. § § 197-198.199
Before the state action proceeded to trial, the federal action went to trial
on the issue of liability.- The federal jury found in favor of the Parsonses,
but the federal district court granted judgment n.o.v. to the bank, and the
decision was affirmed by the Eleventh Circuit. 90' In the state action,, the
bank plead the defenses of res judicata and collateral estoppel based on the
federal court judgment.92 The Alabama court, however, ruled that the
federal judgment did not bar the state action.903 Almost a year after the
federal judgment, plaintiffs amended their petition to include a Uniform
Commercial Code ("UCC") claim that the bank's foreclosure sale of the
subsidiary's assets was commercially unreasonable90 The jury in the state
court returned a verdict in favor of plaintiffs, awarding four million and
9 5
one dollars in damages. 0
After losing in state court, the defendants returned to the federal court
and sought an injunction against the Parsons. 9°* The federal district court
found that the federal and'state lawsuits were based on the same factual
allegations and claimed substantially the same damages.-" The federal
court held that the state claims should have been raised in the federal
action as pendent claims to the federal question claims, barring the state
claims under res judicata.98 Determining that the Alabama state judgment
897474 U.S. 518, 520 (1986).
898
See id.
8
See id.
9°°See id.
90'See id.
902See id.
9°3See id.
9°4See id.
9SSee id.
'See id. at 520-21.
97See id. at 521.
90
'See id.
1999] PARALLEL LITIGATION
nullified the earlier federal-court judgment in favor of the bank, the District
Court enjoined the Parsonses from further prosecuting the state action.199
A divided appellate panel affirmed, holding that the issuance of the
federal injunction was not an abuse of discretion, and that the parties to the
federal action and their privies, including the trustee in bankruptcy, were
barred by res judicata from raising these claims in state court after the
entry of the federal judgment.910 The majority then held that the injunction
was proper under the relitigation exception to the Anti-Injunction Act.91"
The Supreme Court reversed, finding that the appellate court had given
"unwarrantedly short shrift to the important values of federalism and
comity embodied in the Full Faith and Credit Act," 9'2 and further that the
court had ignored the Supreme Court's recent decision reaffirming "that
under the Full Faith and Credit Act a federal court must give the same
preclusive effect to a state-court judgment as another court of that State
would give.' 9 13 The Court then quoted the basic rule from Kremer v.
Chemical Construction Corp.:
It has long been established that § 1738 does not allow
federal courts to employ their own rules of res judicata in
determining the effect of state judgments. Rather, it goes
beyond the common law and commands a federal court to
accept the rules chosen by the State from which the
judgment is taken.114
Rather than heed this clearly-established rule, the appellate court
concluded that the Anti-Injunction Act's relitigation exception was a limit
on the Full Faith and Credit.915 The Supreme Court rejected this, again
quoting from Kremer that "an exception to § 1738 will not be recognized
unless a later statute contains an express or implied partial repeal."96 The
Court decided the case based on the fact that § 2283 lacks any express
repeal of the Full Faith and Credit Act, and rejected the notion that an
implied repeal can overcome the full faith and credit mandate. 91 The Court
9gSee id.
9 10
See id.
911
See id. at 521-22.
91
id. at 523.
913
1d. (citing Marrese v. American Academy of Orthopaedic Surgeons, 470 U.S. 373 (1985))
9 14
Parsons, 474 U.S. at 523 (quoting Kremer v. Chemical Constr. Corp., 456 U.S. 461, 481-
482 (1982)).
9
'See Parsons Steel, 474 U.S. at 523.
916
1d. at 523 (quoting Kremer, 456 U.S. at 468).
91
See id.
892 8 BA YLOR LAWREVIEW [Vol. 51:4
held that it was best to read the two statutes harmoniously by "limiting the
relitigation exception of the Anti-Injunction Act to those situations in
which the state court has not yet ruled on the merits of the res judicata
issue.98 Thus, "[o]nce the state court has finally rejected a claim of res
judicata, then the Full Faith and Credit Act becomes applicable and federal
courts must turn to state law to determine the preclusive effect of the state
court's decision."'9 9
One of the more evasive issues is the "last in time" rule. In Treinies v.
Sunshine Mining Co., the Supreme Court held that when a first court
reaches a valid and final judgment in a matter, and a second court
erroneously fails to give preclusive effect to that first judgment, that the
first judgment holder must appeal the second court's error; failure to
appeal results in the second judgment taking precedence over the first both
as to enforcement and as to preclusive effect in any later litigation.920 The
appeal of the second court's error could reach the Supreme Court under a
Full Faith and Credit argument. 91 Failure to seek certiorari in the second
case presumptively waives all rights under the first judgment.922 This result
may seem illogical but is consistent with the concept of finality. Consider
what would happen if one could contest the second court's error by filing
yet a third lawsuit to correct the error in order to have the first judgment
honored. That result could in turn be contested in a fourth lawsuit, and so
on.
Thus, a party having a favorable judgment (state or federal) but facing
parallel litigation in a second court must raise the claim preclusion issue
and obtain a favorable ruling from the second court. If the claim
preclusive effect of the first judgment is not raised in the second action, it
is waived and the second action takes precedent under Treinies.92 If the
preclusion argument is raised but ruled against in the second court, then
that issue must be appealed (after final judgment is acceptable).924 If it is
not appealed, it is again waived and the second judgment takes
precedent.925 Where the first judgment is from a federal court, Parsons
98
Id at 524.
919
1d.
920308 U.S. 66, 74-78 (1939).
92
'See id. at 74-77.
922
See id.
923308 U.S. at 77.
924
See id.
925
See id.
1999] PARALLEL LITIGATION
Steel offers an additional remedy.926 In addition to raising the claim
preclusion argument in state court, a party may immediately seek an
injunction from the federal court, enjoining any further state court
proceedings under the "protect or effectuate its judgments" exception to
the Anti-Injunction Act. 927
The anti-suit injunction's breadth is another critical feature, and Chick
Kam Choo v. Exxon Corp., provides the definitive discussion.928 The action
arose from the death of Leong Chong, a Singapore resident killed while
working on a ship.92 9 His widow, Chick Kam Choo, sued in federal court
in Texas. 90 The federal district court granted defendants a summary
judgment on plaintiff's claims under federal law, on the grounds that
Singapore law applied, and dismissed the other claims on forum non
conveniens grounds.931 Plaintiff then sued in Texas state court, bringing the
same claims under federal maritime law, Texas law, and Singapore law.932
The federal district court then enjoined her from state court litigation. 93
The Fifth Circuit affirmed the injunction under the "relitigation" exception
to the Anti-Injunction Act. 94 The Supreme Court affirmed in part and
reversed in part: it affirmed (1) as to claims under federal law that were
resolved by summary judgment in the first action in federal court, and (2)
as to the claim under Texas law that was necessarily resolved by the
federal court's ruling that Singapore law governed. The Supreme Court
reversed as to plaintiff's claims under Singapore law. 915 The Court
underscored the preclusion basis for the "protect or effectuate its
judgments" exception, stating that "[t]he relitigation exception was
designed to permit a federal court to prevent state [court] litigation of an
issue that previously was presented to and decided by the federal court. It
is founded in the well-recognized concepts of res judicata and collateral
estoppel."936
926474 U.S. 518,525-26 (1985).
927
See id. at 524-26.
928486 U.S. 140 (1988).
929
See id. at 142.
93
°See id.
93
See id. at 143.
932
See id. at 143-44.
933
934
See id. at 144.
See id. at 144-45.
935
See id.
936
1d. at 147. See also Santopadre v. Pelican Homestead & Savings Assoc., 937 F.2d 268,
272-74 (5th Cir. 1991).
894 BAYLOR LA WREVIEW [Vol. 51:4
Deus v. Allstate Ins. Co., is another instructive case. 937 In this case
insurance agent, Deus, sued his employer in federal court for breach of
contract and workers' compensation benefits. 98 The employer, however,
obtained a judgment as a matter of law.", Deus then filed a state court
action, which the federal court enjoined.- ° The Fifth Circuit held that the
injunction was proper as to claims adjudicated in federal court, but that it
was too broad to the extent that it barred the employee from litigating
claims that were not adjudicated earlier, .or as to new parties that were not
9
joined in the first action. '
Another aspect of the anti-suit injunction's breadth is that it applies to
fully adjudicated issues as well as claims. The Fifth Circuit, in Quintero v.
Klaveness Ship Lines, held that a plaintiff whose federal action was
dismissed on forum non conveniens grounds may not relitigate in a later
state court action the choice of law issue that was an element of the federal
court's decision to dismiss.942 The Fifth Circuit has established more than
its share of precedents on this point941
Other less than fundamental examples illustrate the variety of issues
arising under the relitigation exception. One example is enjoining the
relitigation of amenability. In Foyt v. ChampionshipAuto Racing Teams,
Inc., a federal court in Houston dismissed the plaintiffs' antitrust claims for
lack of personal jurisdiction in Texas. 944 Plaintiffs then filed a related claim
in a Texas state court arguing tortious interference instead of antitrust, with
slightly different parties, but including Championship Auto Racing Teams
("CART"). 941 CART asked the federal court to enjoin the second action,
which it argued was an attempt to thwart the first court's ruling on CART's
non-amenability in Texas. 941 The court agreed and enjoined plaintiffs from
suing CART "in any state or federal court in the State of Texas."' 947 The
93715 F.3d 506 (5th Cir. 1994).
938
See id. at 511-13.
939
See id. at 513. "
90
" See
94 1
id. at 523-24.
See id. at 523-25. Cf Wood v.Santa Barbara Chamber of Commerce, Inc., 705 F.2d 1515,
1523-26 (9th Cir. 1983) (holding that the plaintiff was enjoined from relitigating the just-
dismissed claims, or any remotely related to them).
942914 F.2d 717, 720-22, 726 (5th Cir. 1990).
943
See Royal Ins. Co. of American v. Quinn-L Capital Corp., 960 F.2d 1286, 1297-1301 (5th
Cir. 1992); 17 WRIGHT MILLER & COOPER, supra note 619, § 4226 n.12.
944947 F. Supp. 290, 295 (S.D. Tex. 1996)
94 5
See id. at 292.
946
See id.
947
1d. at 295.
1999] PARALLEL LITIGATION
court rejected plaintiffs argument that the Anti-Injunction Act, forbade this
anti-suit injunction because (1) the state action had been removed to
federal court, and (2) even if it had not, the injunction was authorized
under § 2283's relitigation exception. 94s
Declaratory judgment actions also fall under the exception. Litigants
sometimes file federal declaratory judgment actions seeking a resolution
on the merits of a pending state court case. Because the declaratory
judgment could have preclusive effect in the state action, this practice has
been deemed an attempt to make "an end run around the requirements the
Anti-Injunction Act.."94 9 Accordingly, courts have held that declaratory
judgment actions in these circumstances must satisfy the requirements of §
2283.950
Tax injunctions have their own specific federal bar. The Tax Injunction
Act provides that "[t]he district courts shall not enjoin, suspend or restrain
the assessment, levy or collection of any tax under State law where a plain,
speedy and efficient remedy may be had in the courts of such State." 91'
Fox River Valley Railroad sued the Wisconsin Department of Revenue for
civil rights violations under color of state law for setting a tax assessment
as the purchase price of another railroad it had purchased.952 Specifically,
Fox sued for a declaration that the tax assessment method was
unconstitutional and for an injunction against collection. 913 In dismissing
the case, the federal court noted that the underlying principle against
enjoining state taxation had been around "[1]ong before the passage of §
1341 ." 9 4 The court invoked the Supreme Court's recognition of the
importance of a government's ability to levy taxes unimpeded by outside
forces, and the resulting comity owed the states.955
94
'See id.
949
Travelers Ins. Co. v. Louisiana Farm Bureau Federation, Inc., 996 F.2d 774, 776 (5th Cir.
1993).
95
°See id.
95128 U.S.C. § 1341 (1994).
952
See Fox River Valley R.R. Corp. v. Dept. of Revenue, 863 F. Supp. 893, 895 (E.D. Wis.
1994).
93
" See id.
954
Id.at 896.
95
See id. (citing Dows v. Chicago, 78 U.S. [1 Wall.] 108, 110 (1871)).
BAYLOR LAWREVIEW [Vol. 51:4
E. Summary ofLimits on FederalCourts Enjoining State Court
Litigation
Parallel litigation in distinct jurisdictions, such as two states or two
countries, has somewhat similar rules applicable to the staying, dismissing,
or enjoining of one case, or alternatively, the ongoing prosecution of both
cases. The rules for state-federal parallel litigation differ significantly, and
the difference is federalism and its delicate balance of state and federal
power. Federalism affects parallel litigation in two areas: stays/dismissals
and antisuit injunctions.
The stay and dismissal remedies are addressed by three common law
abstention doctrines, giving federal courts discretion to decline jurisdiction
in three settings (very broadly and approximately described here):
Pullman abstention applies to disputes raising a constitutional issue in
regard to an ambiguous state law, where the dispute might be resolved
without constitutional concern if addressed first by the state court. Burford
abstention applies to disputes in areas of complex state regulation, where
review by a federal court would be inconsistent with the centralized state
judicial review system. Thibodeaux abstention applies to diversity cases
with unclear questions of state law with no constitutional implications, that
would ideally be addressed by certification to the state supreme court but
cannot because of a pending state court action. Pullman and Burford apply
whether a state court action is pending or not, but this use of Thibodeaux
applies only where a state action is pending, thus undermining the use of
certification. In a situation with parallel state and federal actions, whether
in the same state or not, these doctrines support the stay or dismissal of the
federal case regardless of its first or second filed status.
A fourth abstention doctrine, ColoradoRiver, is not substantially based
on federalism and is merely the stay/dismissal test for all parallel state-
federal litigation. Because Colorado River applies to all instances of
parallel state-federal litigation, its presumption against abstention could
clash with strong federalism concerns in a case also covered by Pullman,
Burford, or Thibodeaux, and presumably the federalism concerns would
prevail. Although some cases have raised Colorado River with another
abstention doctrine, none has discussed a priority of underlying policies.96
The second area is the antisuit injunction remedy against a pending
state action, governed both by the Anti-Injunction Act and the traditional
equitable rules embodied in the Younger doctrine. In spite of their seeming
956
See University of Maryland v. Peat Marwick Main & Co., 923 F.2d 265, 275-76 (3d Cir.
1991); Tucker v. First Md. Say. & Loan, Inc., 942 F.2d 1401, 1408 (9th Cir. 1991).
1999] PARALLEL LITIGATION
interaction and overlapping, Younger and the Anti-Injunction Act are
distinct requirements that create separate barriers to federal injunctions
against state court actions. Thus, federal courts may enjoin potential state
court litigation under the All Writs Act, but a federal injunction against
pending state court litigation must satisfy both the equitable standards of
Younger/Pennzoil and one of the three exceptions to the Anti-Injunction
Act.
VI. STATE COURTS AND PENDING FEDERAL LITIGATION
A. "Transfers"from State to FederalCourt: FederalRemoval
Cases may not be transferred from state to federal court (or between
any jurisdictions), but removal to federal court readily achieves the same
effect. This is a common procedural tool in remedying parallel litigation,
used to consolidate duplicate cases or obtain a federal forum for ruling on a
motion to dismiss the immediate case or enjoin the other one. 9 7 For this
tactic to work, however, there must be a basis for removal. That is, the
state claims must be subject to federal jurisdiction and the fact that they are
related to the federal claims is not enough. In Carpenterv. Wichita Falls
LS.D., plaintiff Rose Carpenter sued her employer, the Wichita Falls
Independent School District, simultaneously in state court for breach of
contract and in federal court for infringement of free speech. 911 The
defendant removed the state action to federal court and had it consolidated
with the similar federal action9?" The Fifth Circuit reversed based on the
lack of any basis for federal jurisdiction over the breach of contract claim
in state court.960 The fact that Carpenter could have brought the contract
action as a supplemental claim under 28 U.S.C. § 1367 was irrelevant.961
While the Fifth Circuit practice reflects the strong majority, there are
exceptions and the future may provide more. Thus, in spite of the basic
notion of non-transferability between state and federal courts,
Pennsylvania has statutorily authorized a transfer to its state courts of a
957
See International Software Sys., Inc. v. Amplicon, Inc., 77 F.3d 112, 115 (5th Cir. 1996)
(forum selection agreement); American Dredging Co. v. Miller, 510 U.S. 443, 453-57 (1994)
(forum non conveniens).
95844 F.3d 362, 365 (5th Cir. 1995).
959
See id. at 565.
9
1*See id. at 368-72.
96 1
See id. at 368.
898 BAYLOR LAWREVIEW [Vol. 51:4
claim that has lost its jurisdictional basis in federal court.962 In addition, the
American Law Institute has proposed a system of transfer of
transactionally-related cases from state to federal court, using removal and
supplemental jurisdiction, for possible venue transfer and consolidation
with federal cases, and antisuit injunctions to suspend the state
proceedings.",
B. Dismissing or Staying the State Case
1. Forum Selection Clauses
It is unlikely that a forum selection agreement would specify a federal
court for a non-federal matter that could be filed in state court, but there is
no reason that such an agreement could not be enforced under the same
terms courts enforce any other choice of forum clause. Courts currently
enforce the converse, that is, parties' choices of specific state courts.9"
The question would seem to be one of the forum choosing to decline
otherwise valid jurisdiction in deference to the forum selection agreement,
rather than a court creating or diminishing the jurisdiction of another
965
court.
2. Other Grounds
Texas law is unclear on the standard to be applied to state-federal
conflicts in litigation, but appears to favor the venerable "mere pendency"
rule, that is, the mere pendency of a federal action does not abate the Texas
action.- In Taiwan Shrimp Farm Village Ass'n. v. US.A. Shrimp Farm
Development, Inc., the court explained its refusal to abate the action in
deference to a first-filed federal action.96? The court observed that the test
92 See supra V.A.
9 63
5ee Complex Litigation Proposal, §§ 5.01-.04, discussed supra V.A; see also Edward F.
Sherman, Comment, Antisuit Injunction and Notice of Intervention and Preclusion:
Complementary Devices to Prevent Duplicative Litigation, 1995 B.Y.U. L. REv. 925, 926
(1995).
9
'See American Airlines, Inc. v. Rogerson ATS, 952 F. Supp. 377, 381 (N.D. Tex. 1996).
" ee Stewart Org., Inc. v. Ricoh Corp., 810 F.2d 1066, 1075-76 (Tjoflat, J., concurring).
'See Space Master Int'l, Inc. v. Porta-Kamp Mfg. Co., 794 S.W.2d 944, 946 (Tex. App.--
Houston [1st Dist.] 1990, no writ); Green Oaks Apts., Ltd. v. Cannan, 696 S.W.2d 415, 418
(Tex. App.--San Antonio 1985, no writ); Williamson v. Tucker, 615 S.W.2d 881, 885 (Tex.
App.--Dallas 1981, writ ref'd n.r.e.); Byrnes v. University of Houston, 507 S.W.2d 815, 816-17
(Tex. Civ. App.--Houston [14th Dist.] 1974, writ ref'd n.r.e.).
967915 S.W.2d 61, 68 (Tex. App.--Corpus Christi 1996, writ denied).
1999] PARALLEL LITIGATION 899
is "inherent interrelation" between the two cases, and found further that the
test resembled by the rules "governing persons to be joined if feasible and
the compulsory counterclaim rule."961 While the parties were identical in
the two cases, the court found that the claims were distinct, although
arising from an ongoing dispute.69 The federal action involved a deceptive
trade 'practice claim by Taiwan's owner, while the state court action was
U.S.A. Shrimp Farm's claim for Taiwan's alleged conversion of six water
pumps. 970 Taiwan had attempted its answer to raise the federal claims as
counterclaims in the state action91' Nevertheless, while the two lawsuits
were related on a personal level, they were legally distinct.9 72 Even though
all claims could have been litigated in one court, the Texas state court
refused to abate.973 Although a parallel federal action does not
automatically abate the state case, Texas law does provide for a
74
discretionary stay.
At least one Texas appellate court has applied the first-filed rule in a
state-federal conflict to justify its refusal to stay or dismiss its action in
deference to a second-filed declaratory judgment action in a New York
federal court. 9 5 This rule was applied in the federal court's favor in Alpine
Gulf, Inc. v. Valentino,976 in which the court reversed the trial court and
granted a stay of the Texas second-filed action in favor of the first-filed
New York federal action.
Dismissals may be available in Texas in two instances: where the
federal action is a first-filed in rem case,977 and, at least in Texas, where the
state action is a second-filed declaratory judgment action. 97 Presumably,
forum non conveniens is not a grounds in regard to federal courts in Texas.
8
%
969
1d.
See id.
970
See id.
97 t
See id. at 66.
972
See id.
97 3
See id. at 65-66.
974
See Williamson v. Tucker, 615 S.W.2d 881, 886 (Tex. App.--Dallas 1981, writ ref'd
n.r.e.).
97
See '21' Int'l Holdings, Inc. v. Westinghouse Elec. Corp., 856 S.W.2d 479, 484-85 (Tex.
App.--San Antonio 1993, no writ) (noting the "mere pendency" rule).
976563 S.W.2d 358, 259-60 (Tex. Civ. App.--Houston [14th Dist.] 1978, writ ref d n.r.e.).
977
See '21' International Holdings, 856 S.W.2d at 484 (negative inference from statement
that mere pendency of second action is not grounds for abatement of an in personam action).
97 8
See Texas Liquor Control Bd. v. Canyon Creek Land Corp., 456 S.W.2d 891, 895 (Tex.
1970).
900 BAYLOR LA WREVIEW [Vol. 51:4
For federal courts outside of Texas, the analysis is presumably the same as
979
that for interstate forum non conveniens.
Other states' practices vary, often applying similar rules for both instate
and interstate parallel cases. Florida has one of the older cases dealing
directly with state federal parallels, providing a presumption for the stay of
a second-filed Florida case. 90 The current Florida test is stated in City of
Miami Beach v. Miami FraternalOrder of Police; it is a presumptive
dismissal in deference to a first-filed federal case unless outweighed by
factors such as a congested federal docket.9 8' New York, however,
requires, consistent with its treatment of all parallel cases, a complete
identity of the parties and claims, or alternatively, a showing that a
determination in the federal action would necessarily dispose of all issues
in both actions. 982Absent this, neither stay nor dismissal is available.3
Many states, however, will at least stay a state case that is sufficiently
94
similar to a federal one.
Delaware has what may be the most multi-faceted rules for parallel
conflicts. It treats state-federal parallel conflicts the same as interstate
conflicts, providing that comity and judicial economy ordinarily call for a
stay of a second-filed Delaware case.985 The Delaware Supreme Court has
included "similar claims" in this provision, 98 6 but has also stated the
requirement as cases 'involving the same parties and the same issues.'"987
Conversely, for first-filed local cases, "a motion to stay or dismiss should
979
See supra Part IV.B.4.
98
See Wade v. Clower, 114 So. 548 (Fla. 1927).
98"619 So. 2d 447, 448 (Fla. Dist. Ct. App. 1993). See also State v. Harbour Island, Inc., 601
So. 2d 1334, 1335 (Fla. Dist. Ct. App. 1992) (granting stay for non-identical cases because
resolution of first-filed federal action would determine many issues in state case); Ricigliano v.
Peat, Marwick, Main & Co., 585 So. 2d 387, 387 (Fla. Dist. Ct. App. 1991) (staying of second-
filed Florida action in deference to substantially similar federal case).
..2 See Guilden v. Baldwin Sec. Corp., 189 A.2d 716, 592 N.Y.S.2d 725, 726 (N.Y. App. Div.
1993) (denying stay for lack of complete identity); Hope's Windows v. Albro Metal Prods.
Corp., 460 N.Y.S.2d 580, 581 (N.Y. App. Div. 1983).
9 3
" See Guilden, 592 N.Y.S.2d at 726.
984
See Kaselaan & D'Angelo Assoc. v. Soffian, 675 A.2d 705, 707 (N.J. Super. Ct. App. Div.
1996); Caiafa Prof'l Law Corp. v. State Farm Fire & Cas. Co., 19 Cal. Rptr. 2d 138, 139-40
(Cal. Ct. App. 1993); Polaris Pub. Income Funds v. Einhom, 625 So. 2d 128, 129 (Fla. Dist. Ct.
App. 1993); see also Tonnemacher v. Touche Ross & Co., 920 P.2d 5, 8-10 (Ariz. Ct. App.
1996) (holding that discretionary stay is available, although dismissal is not).
85
' See Local Union 199, Laborers' Int'l Union v. Plant, 297 A.2d 37, 38-39 (Del. 1972).
986
See Prezant v. De Angelis, 636 A.2d 915, 919-20 (Del. 1994).
9
'Aciemo v. New Castle County, 679 A.2d 455, 458 (Del. 1996) (quoting McWane Cast
Iron Pipe Corp. v. McDowell-Wellman Eng'g Co., 263 A.2d 281, 283 (Del. 1970)).
1999] PARALLEL LITIGATION
be granted only in a rare case, after defendant has established that litigating
in Delaware will cause undue hardship and inconvenience."' 981 After stating
these guidelines, the Acierno court refused to stay the state action on
different groundsY8 9 Determining the first-filed case was difficult because
of the parties' race to the courthouse indicated filings minutes apart.990 The
court disregarded the first-filed status and held that the nature of the
dispute, the denial of a building permit, was a distinctly local government
issue, and thus worthy of on-going litigation in a Delaware state court.99'
Delaware law, however, is not clear as to how far from identical two cases
may be to qualify for these tests and presumptions.
3. Enjoining the Federal Litigation
State courts may not enjoin parties from pursuing federal litigation,
parallel or otherwise, as explained in the less-than-unanimous Donovan v.
City of Dallas.92 James P. Donovan had filed a pro se federal class action
suit against the City of Dallas and others to stop the construction of a new
runway at Love Field, the primary Dallas airport at that time. 3 The action
had already been litigated and lost through the Texas Supreme Court,
including a certiorari denial by the United States Supreme Court.94
Following the state court loss, Donovan filed in federal court in Dallas,
seeking to relitigate the claim which included injunctive relief to stop
construction and a declaration that the fund-raising bonds were illegal and
void."' Under Texas law, the bonds could not be issued while the litigation
was pending." 6 The City of Dallas answered in federal court, but also
applied to the state court of appeals for a writ of prohibition barring
plaintiffs from the federal action. 997 The state appellate court denied the
writ on the grounds that it lacked the power to enjoin federal litigation991
The Texas Supreme Court reversed and directed the lower court to issue
9
"Id. at 458 (citing Chrysler First Bus. Credit Corp. v. 1500 Locust Ltd., 669 A.2d 104, 107
(Del. 1995)); see also supra Part IV.B.5 for additional aspects of Delaware's test.
99
1 See Acierno, 679 A.2d at 458.
'9See id. at 457.
99'See id. at 458.
99377 U.S. 408 (1964).
3
99See id. at 408-09.
194See id. at 409.
5
" See id.
996See id.
997
See id. at 409-10.
"'See id.
BAYLOR LAWREVIEW [Vol. 51:4
the writ, which it did.99 The United States Supreme Court reversed and
dissolved the injunction, noting the underlying premise regarding state
injunctions against federal litigation as described by Justice Black.- °
Justice Black described a seemingly inviolable rule: "Early in the
history of our country a general rule was established that state and federal
courts would not interfere with or try to restrain each other's proceedings.
That rule has continued substantially unchanged to this time."l °
Noting the sole exception of in rem cases in which the first-filed action
has exclusive jurisdiction, the Court quoted the overriding rule that
"'where the judgment sought is strictly in personam, both the state court
and the federal court, having concurrent jurisdiction, may proceed with the
litigation at least until judgment is obtained in one of them which may be
set up as res judicata in the other."'02
The Court then examined the role of res judicata, since a state court
judgment had already been rendered.
It may be that a full hearing in an appropriate court
would justify a finding that the state-court judgment in
favor of Dallas in the first suit barred the issues raised in
the second suit, a question as to which we express no
opinion. But plaintiffs in the second suit chose to file that
case in the federal court. They had a right to do this, a
right which is theirs by reason of congressional enactments
passed pursuant to congressional policy. And whether or
not a plea of resjudicatain the second suit would be good
is a question for the federal court to decide.'- °
In spite of the apparent lack of controversy in the majority's statement
of the law, a three-justice dissent argued that the question was narrower
than the majority had described:
The question presented by this case is not the general
one stated by the Court at the outset of its opinion, but a
much narrower one: May a state court enjoin resident
state-court suitors from prosecuting in the federal courts
vexatious, duplicative litigation which has the effect of
thwarting a state-court judgment already rendered against
9
99See id. at 410.
"'0°See id. at 411-12.
1001d. at 412 (citations omitted).
"I21d.(quoting Princess Lida v. Thompson, 305 U.S. 456, 465-68 (1939)).
1 3
0 d.
1999] PARALLEL LITIGATION 903
them? Given the Texas Supreme Court's finding, amply
supported by the record and in no way challenged by this
Court, that this controversy "has reached the point of
vexatious and harassing litigation," I consider both the
state injunction and the ensuing contempt adjudication to
have been perfectly proper. 0
Justice Harlan's dissent correctly suggests that the rule is not absolute.
Three years before the Supreme Court decided Donovan, the Texas
Supreme Court upheld a state court injunction against a parallel action in a
New Mexico federal court, where both lawsuits were in personam.05 The
court of appeals had reversed the trial court's issuance of the injunction,
but the supreme court reversed again, with an analysis that did not address
any issues of federalism or treat the federal court in any manner other than
an out of state court.' °°
In Blanchard v. Commonwealth Oil Co., the Fifth Circuit upheld a
dismissal of a federal action based on the state court's injunction against
the federal litigation..0°7 The Fifth Circuit stated that while state courts may
not enjoin federal proceedings per se, the following was offered by the
court as a substitute:
Nevertheless, under the proper equitable circumstances the
parties to a suit in another state or in the federal courts
may be enjoined from continuing to prosecute. Although
the court need not heed such an injunction where
jurisdiction has properly attached, it may.recognize the
order of another court as a matter of comity and terminate
the proceedings or stay them for the duration of the
injunction. Where the two courts involved are a state and
a federal court, special attention should be given to such an
anti-suit injunction.10°s
The court cited special concerns where the state and federal courts had
concurrent territorial jurisdiction, where the claim arose under state law,
and the need to avoid "an unseemly conflict between the state and federal
"Id. at 414-15 (Harlan, J., dissenting) (citations omitted).
"'°See University of Texas v. Morris, 344 S.W.2d 426, 429 (Tex. 1961).
1°°6See id. at 427, 429.
1007294 F.2d 834, 841 (5th Cir. 1961).
"SId. at 839 (citations omitted).
904 BAYLOR LA WREVIEW [Vol. 51:4
system."- This illustrates the Anti-Injunction Act's proscription on
federal anti-suit injunctions against state litigation.100
Another earlier example of a state court enjoining federal litigation is
Southern Railway Co. v. Painter, in which the Supreme Court reversed a
federal court injunction against a second-filed Tennessee chancery suit,
and where the Tennessee court had enjoined the first-filed federal
°
litigation.011 One justification was the application of Toucey v. New York
Life Insurance Co., decided on the same day, which reactivated the use of
the Anti-Injunction Act as a severe limit on federal courts' ability to enjoin
state litigation.012 The case is perhaps equally-well explained by the
federal plaintiffs (the target of the state injunction) failure to appeal the
Tennessee injunction, thus letting it become final and triggering the "last in
time" rule for preclusion, that is, preclusive effect is given to the last
judgment on point.101
VII. FEDERAL COURTS AND FOREIGN LITIGATION
A. Dismissingor Staying the FederalAction
Historically, a parallel foreign case was not grounds for dismissal,
although stays were possible.014 That rule has broken down, and both
state and federal courts may now grant dismissals as well as stays. On the
other hand, no jurisdiction has gone as far as authorizing dismissal under a
first-filed rule. As one court has noted, the first-filed rule was never meant
to apply in cases where two courts were not of the same sovereignty.101S
Federal law has a variety of doctrines on point. Two are fairly precise:
dismissals of the second-filed in rem action, and dismissals based on forum
selection clauses. Another forum non conveniens is reasonably precise
even with its balancing factors. These apply in specific settings, with two
(forum non conveniens and forum selection dismissals) not requiring a
'"Id. (citing Toucey v. New York Life Ins. Co., 314 U.S. 118 (1941)).
"1°See supra Part V.D.2.
'"314 U.S. 155, 159-60 (1941).
1012314 U.S. 118, 141 (1941).
°1 3See Treinies v. Sunshine Mining Co., 308 U.S. 66, 78 (1940); see also supra Part V.D.
10 14
See Lynch v. Hartford Fire Ins. Co., 17 F. 627, 628 (C.C.D.N.H. 1883) (using
"abatement" for dismissal, and speculating that the court's inherent power to stay cases was
preferrable).
'015See Compagnie des Bauxites de Guinea v. Insurance Co. of N. Am., 651 F.2d 877, 887
n.10 (3d. Cir. 1981), afftd, 456 U.S. 694 (1982).
1999] PARALLEL LITIGATION
parallel case in order to be useful. Before examining these fact-specific
doctrines, this Article will analyze the least clear of the dismissal/stay
areas: in personam parallel litigation with no forum selection clause and
when not argued under forum non conveniens grounds. The test(s) for
these generic parallel cases is far from clear, although the following
analysis suggests a uniform approach, drawn from Colorado River Water
ConservationDistrict v. United States, which may be a reconfiguration of
the Bremen forum non conveniens test. 016
1. The General In Personam Tests: Landis and ColoradoRiver
Federal law has at least three doctrines applicable to a motion for stay
or dismissal of an in personam federal action that is duplicated in a foreign
court. With overlapping concepts and policies, these grounds are far from
distinct. Each has been deemed sufficient, standing alone, to grant or deny
a stay or dismissal of a federal action in deference to a foreign one. The
first doctrine is comity, drawn from what may be a misreading of the
comity formula stated in Hilton v. Guyot.101, Comity is also a factor in the
second and third doctrines, which are derived from parallel litigation
remedies aimed at conflicts within the United States. The second doctrine
is drawn from Landis v. North American Co.,101 dealing with parallel
federal cases, and the third is from Colorado River Water Conservation
District v. United States, addressing parallel state-federal cases. 01 9
Federalism plays a role in ColoradoRiver that is missing in Landis, and
one might expect the tests to differ. In fact, their elements are similar, as
discussed below, but a principal distinction is that Colorado River has a
stronger presumption for retaining the challenged case and allowing both
actions to proceed until one reaches judgment. ColoradoRiver thus has a
higher burden of proof, at least as stated, but whether it is higher in
application is another question. Landis and Colorado River are well-
developed doctrines; the comity standard, on the other hand, is vague and
may be a misreading of Hilton. Accordingly, this analysis begins with the
cases relying on Landis and ColoradoRiver, and then examines the comity
standard.
In contemplating a stay or dismissal in deference to foreign litigation,
0 20
most federal courts have relied on either Landis or Colorado River.
1016424 U.S. 800, 820 (1976) (stating the Colorado River test).
1017159 U.S. 113, 228 (1895).
1018299 U.S. 248, 254 (1936). See supra Part II.D.1 for additional discussion of Landis.
1019424 U.S. at 820. See supra Part V.C. I for additional discussion of Colorado River.
'020See BORN, INTERNATIONAL CIVIL LITIGATION, supra note 6, at 462-64.
906 BAYLOR LAWREVIEW [Vol. 51:4
Some have used both. Understanding the less-than-uniform tests for
foreign cases first requires a brief statement of the two domestic cases.
Colorado River is used for state-federal parallels and has a strong
presumption favoring the exercise of jurisdiction, based on a federal
court's "virtually unflagging obligation" to exercise its Article III
jurisdiction when properly invoked.02 In spite of this strong presumption,
federal courts have the discretion to dismiss based on a vague test of at
least nine components drawn from ColoradoRiver and a successor case,
22
Moses H. Cone Memorial Hospital v. Mercury Construction Corp. 10 The
nine components are (1) which court first assumed jurisdiction over a res,
if applicable; (2) the relative convenience of the alternative forums; (3) the
desirability of avoiding piecemeal litigation; (4) which cases was first
filed; (5) the relative progress of the two actions; (6) the extent to which
federal law applies; (7) any other special factors1°23(in Colorado River, it
was the government's willingness to litigate similar claims in state court);
(8) the adequacy of the alternative forum in protecting the litigants' rights;
and (9) whether the action in the immediate forum was vexatious or filed
in bad faith.024 These factors may be summarized as federalism, comity,
fairness to parties, and judicial economy. The original cases favored
dismissal as a remedy, but some have now gone to stays, especially when
dealing with foreign litigation.1025
The Landis case, an instance of intra-federal parallel litigation, is not
often cited as authority in intra-federal parallel disputes.1026 The reason
may be that the Landis text fails to provide clear standards to determine
which case should have priority. More recent cases, primarily in the
international setting, have provided those standards: they include (1)
comity; (2) the adequacy of relief available in the other forum; (3) judicial
efficiency; (4) the degree of identity of the parties and issues in the two
cases; (5) the likelihood of prompt disposition in the other forum; (6)
convenience to the parties, counsel, and witnesses; and (7) the possibility
1
of prejudice if the stay or dismissal is granted. 027 Landis, like Colorado
River, is discretionary. A key distinction, though is Landis' lack of a stated
presumption favoring ongoing exercise of jurisdiction in both courts. The
02 1
Colorado River, 424 U.S. at 817.
1022460 U.S. 1 (1983).
023
See id.
1024See id. at 15-28.
1025See. e.g., Lumen Constr. Inc. v. Brant Constr. Co., Inc., 780 F.2d 691 (7th Cir. 1985).
°26See supra Part II.D.1.
'0127See I.J.A., Inc. v. Marine Holdings, Ltd., 524 F. Supp. 197, 198 (E.D. Pa. 1981).
1999] PARALLEL LITIGATION
original case favored a stay as the remedy rather than dismissal, but some
courts now use Landis to grant dismissals, as discussed in the following
cases.
The two tests are similar in their elements, in their balancing approach,
and in that they are discretionary. They are distinct in that ColoradoRiver
raises federalism concerns and appears to have a higher burden for a party
seeking dismissal. The two tests may be reconciled through agreement that
Colorado River's dismissal remedy requires a higher burden than the
Landis stay. This explanation is undermined, however, by the current
tendency to use these cases somewhat interchangeably for both stays and
dismissals.
From this confusion, three arguments emerge as to which test is
appropriate. The first is that Landis is clearly the appropriate standard for
federal/foreign conflicts because federalism is not an issue in federal-
foreign conflicts, as was the case in Landis which concerned parallel
federal cases. The second is that Landis is clearly inappropriate because it
over-emphasizes judicial economy, which gives too little weight in reactive
litigation to each plaintiffs right to a forum. The Colorado River test
therefore has the appropriate emphasis. Third, in spite of somewhat
distinct language in Colorado River and Landis, the similarity of their
tests, the discretionary standard, and their integrated use by the courts
suggests that the tests are the same, and either may be used.
There is no satisfactory answer at present, and some confusion results.
Some cases rely on only one test, while others cite both with no specificity
as to which one was followed. A reading of the cases may endorse
Argument Three (the tests are the same in application), but caution
suggests that courts subscribe to Argument Two. That is, use Colorado
River to provide an appropriate emphasis on a plaintiff's right to choose a
forum absent compelling reasons to intervene.
Ingersoll Milling Machine Co. v. Grangerused a ColoradoRiver test to
uphold the trial court's stay of the Illinois federal action, awaiting the
outcome on appeal of a Belgian action regarding job termination
benefits.102
Ingersoll had hired Granger in Illinois to work in its Brussels plant.1029
After that job ended (for unstated reasons), Granger sued Ingersoll in
Belgium for benefits due under Belgian labor law.1030 He won at trial, but
1028833 F.2d 680, 685 (7th Cir. 1987).
029
' See id. at 682.
' 30see id.
908 BAYLOR LAWREVIEWV [Vol. 51:4
while the Belgian action was on appeal, Ingersoll sued in federal court in
Illinois.1031 The Illinois federal court stayed the action, and the Seventh
Circuit upheld it.1032 Just two years before, the Seventh Circuit had
occasion to apply the ColoradoRiver precedent to dismiss a federal action
that paralleled a state court proceeding.1011 Noting that this situation
involving a foreign action was "somewhat different," the court found that
those factors could nonetheless "serve as a helpful guide" when faced with
duplicative foreign litigation.104 The pertinent factors were (1) no strong
federal interest in having a United States forum; (2) what interest the
United States might have was countered by a very significant Belgian
interest; (3) that the United States also had an interest in exercising
international comity favoring deference to the Belgian action; (4) that
judicial economy favored a stay pending the outcome of the Belgian
appeal, since that action had been fully litigated; and (5) that in light of a
careful balancing of these factors, the trial court's stay was "a common
sense approach... clearly within the sound discretion of the trial court."1035
The same standards led to the reversal of the trial court's stay in
Neuchatel Swiss General Insurance Co. v. Lufthansa Airlines1036
Emphasizing ColoradoRiver's "exceptional circumstances" language, the
court held that this action for the loss of a sealed carton of gold and jewels,
which became a bag of lead at the end of its transport to Switzerland, was
an unexceptional commercial dispute.1037 A significant distinction from
Ingersoll was that the Swiss action had not gone any further than the one in
California.131 It is unclear which was filed first. Addressing the foreign
aspect, the court found the distinction immaterial, rejecting "the notion that
a federal court owes greater deference to foreign courts than to our own
state courts."1039 While the Neuchatel case underscored Colorado River's
emphasis on presuming against dismissal or stay, its facts did not warrant a
stay under any test.' °40
'03 'See id.
1032See id.
'033See Lumen Constr., Inc. v. Brant Constr. Co., 780 F.2d 691, 698 (7th Cir. 1985).
10341d. at 685.
1 35
° 1d. at 686. (citing Landis, 299 U.S. at 254). See also Finova Capital Corp. v. Ryan
Helicopters U.S.A., Inc., 1998 WL 698900 (N.D. 111.1998).
1036925 F.2d 1193, 1194 (9th Cir. 1991).
1037
See id. at 1194-5.
03
'See id. at 1195.
03 9
' /d.
4
"°°See id.
1999] PARALLEL LITIGATION 909
The Landis test, with the arguably lighter burden, has also been used in
denying stays. In Itel Corp. v. MIS Victoria U, the Fifth Circuit vacated the
trial court's stay in an action for breach of leases of cargo containers.' 4'
The trial court had imposed the stay to permit a defendant to pursue its
third party claim against Iran in the Iran-United States Claims Tribunal.1042
After citing Landis, the Fifth Circuit vacated the stay to permit the parties
to litigate the remaining claims, observing that the Claims Tribunal lacked
power to render effective relief as to all the claims in the local case. 43 On
the other hand, courts granting dismissals have used Landis as well.044
Some courts use both Landis and Colorado River to justify a granting
or denying of stay or dismissal requests. 01 45
a. The First-to-JudgmentRule, the Laissez-FaireApproach
The Colorado River doctrine begins with a strong presumption against
interfering with parallel litigation.10" The same principle is found in
citations to Laker Airways'047 and China Trade,'o04 two cases involving
antisuit injunctions. Language such as the following, referring to judicial
reluctance to enjoin foreign litigation, is used by analogy to reject motions
for dismissal or stay:
141710 F.2d 199, 204 (5th Cir. 1983).
"'4 2See id. at 200.
'043See id. at 203-04; see also Modem Computer Corp. v. Ma, 862 F. Supp. 938, 949
(E.D.N.Y. 1994) (denying stay because case in Taiwan would not resolve all the issues); Ronar,
Inc. v. Wallace, 649 F. Supp. 310, 318-19 (S.D.N.Y. 1986) (denying stay and rejecting
arguments of inconvenience and different West German discovery laws); I.J.A., Inc. v. Marine
Holdings, Ltd., Inc., 524 F. Supp. 197, 198-99 (E.D. Pa. 1981) (denying stay because the
Canadian litigation was in initial stages, and the claims and parties were not identical; thus the
stay would not lead to preclusion and would not favor judicial economy).
44
1 See Continental Time Corp. v. Swiss Credit Bank, 543 F. Supp. 408,410 (S.D.N.Y. 1982)
(dismissing in favor of first-filed Swiss action).
'045See, e.g., Caspian Inv., Ltd. v. Vicom Holdings, Ltd., 770 F. Supp. 880, 884 (S.D.N.Y.
1991) (dismissal in favor of Irish litigation, relying equally 6h Landis and Colorado River);
Brinco Mining, Ltd. v. Federal Ins. Co., 552 F. Supp. 1233, 1240-42 (D.D.C. 1982) (deferring to
Canadian action, citing comity, forum shopping, and judicial economy; relying more heavily on
Colorado River).
046
' See Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817-18
(1976).
"'4 7Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 926-27 (D.C. Cir.
1984); see also infra Part VII.B.2.
"'4 3China Trade & Dev. Corp. v. M.V. Choong Yong, 837 F.2d 33, 36-37 (2d Cir. 1987); see
also infra Part VII.B.2.
910 BAYLOR LAW REVIEW [Vol. 51:4
[p]arallel proceedings on the same in personam claim
should ordinarily be allowed to proceed simultaneously, at
least until a judgment is reached in which one can be plead
as res judicata. The mere filing of a suit in one forum does
not cut off the pre-existing right of an independent forum
to regulate matters subject to its prescriptive
jurisdiction.'4 9
While this "first-to-judgment" language has developed its own
following, it is drawn from the ColoradoRiver presumption favoring the
exercise of jurisdiction. 15
b. Comity as a stand-alonetest
Apart from the Landis and ColoradoRiver tests, a few courts have used
comity inappropriately based on too narrow an interpretation of Hilton v.
Guyot.101 As discussed in the Introduction, comity is a broad doctrine with
a number of variations.10°5 The use in Hilton was for the recognition of
foreign judgments, either for preclusion or enforcement, providing the
basic norm that international comity is "the recognition which one nation
allows within its territory to the legislative, executive or judicial acts of
another nation .... 01 But Hilton was directed to the preclusive effect of
final judgments from foreign countries, which dictated a greater deference
for comity as well as preclusion reasons. 0 5 4 Hilton's language and
application alludes to the full faith and credit mandated for state and
federal judgments in the United States, but reliance on this strong comity
argument is inappropriate when applied to pending actions in foreign
countries.1055 That is, a pending lawsuit is not a "legislative, executive or
"°9 Black & Decker Corp. v. Sanyei Am. Corp., 650 F. Supp. 406, 408 (N.D. II1. 1986)
(quoting Laker Airways, 731 F.2d at 926-27); see also Madanes v. Madanes, 981 F. Supp. 241,
263-64 (S.D.N.Y. 1997) (rejecting dismissal related to parallel Swiss case and citing the
"exceptional circumstances" test from Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp.,
460 U.S. 1, 25-26 (1983)); H rbstein v. Bruetman, 743 F. Supp. 184, 188 (S.D.N.Y. 1990)
(rejecting stay related to parallel Argentine case).
'O5 See Laker Airways Ltd., 731 F.2d at 926-27, n.48. (discussing the "first-to-judgment"
concept and citing Colorado River Water Conservatory Dist. v. United States, 424 U.S. 800, 817
(1976)).
1051159 U.S. 113 (1895).
' 2See supra Part I.D.
1053159 U.S. at 164.
10 541d. at 114-15.
"'55See id. at 181-82.
1999] PARALLEL LITIGATION
judicial act" entitled to recognition. 056 ° Moreover, to the extent that
Hilton's comity evokes comparisons to full faith and credit, the latter
doctrine does not apply to pending, non-final lawsuits.011 This is not to say
that comity is inappropriate in parallel litigation questions.058 To the
contrary, it is a cited factor in countless instances of parallel litigation, and
at all intersections: intrastate, interstate, state-federal and international.1009
While comity in its larger sense may be an appropriate consideration, the
Hilton language, which mirrors the full faith and credit directive, should be
irrelevant to the local effect of pending foreign litigation.
Nonetheless, courts have cited Hilton in this setting, and at least one
may have strayed in this direction by applying comity as an independent,
stand-alone justification for dismissing or staying an action in deference to
a pending parallel action in a foreign country, without regard to other
factors such as convenience, fairness, or economy. °00 In Ensign-Bickford
Co. v. ICIExplosives USA Inc., the court dismissed the case in deference to
a pending Canadian case on the sole grounds of international comity.'1'0
The court noted the requirement of comity to defer to foreign judgments,
and it articulated an additional requirement "that domestic courts take
reasonable steps to prevent potential conflicts form ripening into overt
confrontations with foreign tribunals."'0 In its analysis, the court
observed the distinction between pending cases and final judgments, but
held that comity applied to both. 36 ' The court then cited to two cases. The
first, EEOC v. University of Pennsylvania, involved a refusal to dismiss the
EEOC's lawsuit seeking enforcement of a subpoena against the University
of Pennsylvania for peer review records.'- While subpoenas, as an
exercise of executive power, might well call for comity, the point is lost
since the court rejected dismissal.' °6 The second case cited by the Ensign
Bickford court was, Timberlane Lumber Co. v. Bank of America National
0 56
1 1d. at 164.
0
' 7See Texas Employers Ins. Ass'n v. Jackson, 820 F.2d 1406, 1422 (5th Cir. 1987) rev'd,
862 F.2d 491 (5th Cir. 1988).
0
S ee discussion supra Part I.D.
1059See id.
"°See Ensign-Bickford Co. v. ICI Explosives USA Inc., 817 F. Supp 1018, 1032 (D. Conn.
1993).
1'6'See id. at 1031-32.
1062Id. at 1032.
" See id at 1031-33.
1-850 F.2d 969, 969 (3d Cir. 1988).
'065See id. at 971-72.
BAYLOR LA WREVIEW [Vol. 51:4
Trust & Savings Association.0 66 This case was dismissed for lack of
subject matter jurisdiction, and the case involved the inapplicability of
United States antitrust law, not parallel litigation. 1-7 Essentially, while
comity might be an appropriate factor to consider along with other bases
for dismissal, there appears to be very little authority for using comity as
the sole determining factor. As illustrated here, cases using comity as
exclusive authority for dismissal are either misconstruing it or using
strained and inappropriate analogies.
Basic v. Fitzroy Engineering, Ltd. is another case citing Hilton as an
appropriate standard, though rejecting the stay or dismissal.1068 This case
was dismissed for lack of subject matter jurisdiction, and the court stated
that even if the court had subject matter jurisdiction, the case still would
have been dismissed based on international comity toward the pending
New Zealand action. 06 9 Other courts have avoided this excessive
application of comity. For example, Sumitomo Corp. v. Parakopi
Compania Maritima, S.A., acknowledged the Hilton standard but declined
its application because until the foreign court issued a judgment, there was
"no legislative, executive or judicial act of another nation... involved."1070
Conversely, in rem litigation may justify a pure comity dismissal based on
the almost universal rule that defers to the court first assuming
jurisdiction.107 ,
2. Dismissals Based on Forum Selection Agreements
Even more so than the other topics in this Article, a discussion of forum
selection clauses requires a unitary treatment to understand both the basic
doctrine and its variations. The unitary treatment is best placed in this
international section where, as with forum non conveniens, its factors are
the most exaggerated and best contrasted, and where its most important
precedents have arisen.
1066749 F.2d 1378 (9th Cir. 1984).
'067See id. at 1379-80.
106949 F. Supp. 1333, 1340-41 (N.D. III. 1996). Cf Herbstein v. Bruetman, 743 F. Supp.
184, 188 (S.D.N.Y. 1990) (holding that the action would not be stayed based on comity because
of pending Argentine litigation).
'0 6 See Basis, 949 at 1340-41.
1070477 F. Supp. 737, 742 (S.D.N.Y. 1979).
'071See Allstate Life Ins. Co. v. Linter Group Ltd., 994 F.2d 996, 998-1000 (2d Cir. 1993)
(acknowledging the Hilton standard by dismissing a United States case in favor of an Australian
bankruptcy action).
1999] PARALLEL LITIGATION
A forum selection clause, known alternatively as a "forum selection
agreement," "choice of forum clause," or "forum clause," is any clause in a
contract indicating the location and possibly the manner of dispute
resolution for disputes related to the contract. 072 It may call for a specific
location or court, or merely designate any court in the identified state or
country.10 73 It may be exclusive, electing one court or jurisdiction and
excluding others, or merely authorize the filing of suit there without
excluding others.1074 It may designate adjudication or arbitration.1075 At the
very least, it is consent by each party to be sued in the chosen forum,
possibly to the exclusion of others.1076 The question is whether the clause
will be enforced.
These clauses are generally enforceable in state and federal courts in the
United States if they are reasonable, but this was not always so. 10 77 Before
1972, courts routinely rejected forum selection clauses as improper
attempts by the parties to oust the court's jurisdiction. 07 Thus, the law of
forum selection agreements has only recently been developed, and many
questions remain. Because forum selection clauses arise in contracts, the
issue is how clear must the choice be and what law governs. The answer
varies depending on the setting.
The old view rejecting forum selection clauses gave way in a set of five
Supreme Court cases dating from 1972 to 1991. The five cases do not
provide a single principle, and to the extent they appear to, there are
deviations in both state and federal courts. Nonetheless, these decisions
are the key to understanding forum selection clauses in state and federal
courts in the United States.
a. Five FoundationalCases
i. The Bremen v. Zapata Off-Shore Company
Houston-based Zapata Off-Shore Company contracted with
Unterweser, a German company, "to tow Zapata's ocean-going, self
'072See BLACK'S LAW DICTIONARY 665 (7th ed. 1999).
1073See id.
0 74
1 See, e.g., Insurance Co. of North America v. ABB Power Generation Inc., 112 F.3d 70, 72
(2d. Cir. 1997).
75
"° See generally Allied-Bruce Terminex Cos. Inc. v. Dobson, 513 U.S. 265 (1995).
0 6
1 7 See Blanco v. Banco Industrial De Venezuela, S.A., 997 F.2d 974, 979 (2d Cir. 1993).
077
1 See Carbon Black Export, Inc. v. Monrosa, 254 F.2d 297, 300-01 (5th Cir. 1958); see
also EUGENE SCOLES & PETER HAY, CONFLICT OF LAWS, §§ 11.3-.4 (2d ed. 1992).
'0 8See id.
914 BAYLOR LAW REVIEW [Vol. 51:4
elevating drilling rig (Chaparral)from Louisiana to a point off Ravenna,
Italy, in the Adriatic Sea."'' 70 The contract, drafted by Unterweser in
bidding for the job, had a forum clause designating the London Court of
Justice as the forum to resolve disputes. 08" A dispute arose when
Unterweser's tug, the Bremen, encountered rough seas in the Gulf of
Mexico and was forced to limp into port at Tampa, Florida. 08s Each party
claimed the other was negligent. Zapata claimed that the Bremen was not
a seaworthy tug and that its crew was negligent, and Unterweser claimed
that the Chaparral was not a seaworthy rig.1012 Zapata ignored the
contract's London forum clause and filed an admiralty action in federal
court in Tampa, Florida. °8' Unterweser responded with an action in
England, seeking to compel litigation there.10 4 The Tampa court denied
Unterweser's motion to enforce the forum selection clause by dismissing
its action, and enjoined Unterweser from continuing in the latter-filed
English action.0 s5 The English court responded by denying Zapata's
1
motion to stay or dismiss that action.1086
Back in the United States, the Fifth Circuit upheld the lower federal
court's ruling against Unterweser based on Carbon Black's holding that
"agreements in advance of controversy whose object is to oust the
jurisdiction of the courts are contrary to public policy and will not be
enforced," on the in rem nature of Zapata's admiralty claim and the
convenience of litigating in Florida near the site of the damage.'081 The
Fifth Circuit later reaffirmed its holding in a sharply divided en banc
s
opinion, with eight judges favoring the prior holding and six opposed. lo8
The Supreme Court reversed, and in doing so restated the basic rules for
forum selection clauses.' s9 The policy underlying the change was clear,
with strong references to the "expansion of overseas commercial activities"
and the demise of the "barrier of distance that once tended to confine a
"' 9Bremen v. Zapata Off-Shore Co., 407 U.S. 1,2 (1972).
t
SSee id.
'"'8 See id. at 3.
' 8 2See id. at 3-4.
'"See id.
4
"01 See id. at 6.
'"See id. at 6-7.
"0'6See id. at 4.
....Zapata Off-Shore Co. v. Bremen (in re Unterweser Reederei GMBH), 428 F.2d 888, 893
(5th Cir. 1970) (quoting Carbon Black Export, Inc. v. The SS Monrosa, 254 F.2d 297, 300-01
(5th Cir. 1958)).
"°"Seeid. at 908.
'°SSee Bremen, 407 U.S. at 8-20.
1999] PARALLEL LITIGATION
business concern to a modest territory."'' 190 These changes required a legal
endorsement of the necessary contractual obligations:
The expansion of American business and industry will
hardly be encouraged if, notwithstanding solemn contracts,
we insist on a parochial concept that all disputes must be
resolved under our laws and in our courts .... We cannot
have trade and commerce in world markets and
international waters exclusively on our terms, governed by
our laws, and resolved in our courts. 19'
Applying this policy shift to the instant facts, the Court noted that the
contracting parties were sophisticated companies from different countries,
and that the contract was for a specific one-time service towing of "an
extremely costly piece of equipment from Louisiana across the Gulf of
Mexico and the Atlantic Ocean, through the Mediterranean Sea to its final
destination in the Adriatic Sea." 092 The fact that the towing would pass
through many distinct national jurisdictions, and that a problem could have
occurred at any point along the way, was ample justification for the parties
to agree on a forum:
It cannot be doubted for a moment that the parties
sought to provide for a neutral forum for the resolution of
any disputes arising during the tow. Manifestly much
uncertainty and possibly great inconvenience to both
parties could arise if a suit could be maintained in any
jurisdiction in which an accident might occur or if
jurisdiction were left to any place where the Bremen or
Unterweser might happen to be found. The elimination of
all such uncertainties by agreeing in advance on a forum
acceptable to both parties is an indispensable element in
°
international trade, commerce, and contracting.' 19
The Court then generalized the new rule:
[I]n the light of present-day commercial realities and
expanding international trade we conclude that the forum
clause should control absent a strong showing that it
should be set aside .... [I]t seems reasonably clear that
"'9°See id. at 8.
1
I9'1d.
at 9.
1092Id. at 13.
'"3 Id. at 13 (emphasis in original).
BAYLOR LA W REVIEW [Vol. 51:4
the District Court and the Court of Appeals placed the
burden on Unterweser to show that London would be a
more convenient forum than Tampa, although the contract
expressly resolved that issue. The correct approach would
have been to enforce the forum clause specifically unless
Zapata could clearly show that enforcement would be
unreasonable and unjust, or that the clause was invalid for
4
such reasons as fraud or overreaching.'10
Bremen also addressed a concern that, in some cases, the enforcement
of a forum selection clause would subject a local party to an unfriendly
forum or unfair law. The Court held that a forum clause "should be held
unenforceable if enforcement would contravene a strong public policy of
the forum in which suit is brought, whether declared by statute or by
judicial decision."' 09 The Court embraced the dissenters' view from the
Bremen appellate opinion, finding that the enforcement of the clause in
Bremen did not violate public policy because the conduct occurred outside
United States territory, and that "we should not invalidate the forum
selection clause here unless we are firmly convinced that we would thereby
significantly encourage negligent conduct within the boundaries of the
United States."- °
The Court also suggested that an "unreasonable" forum clause would be
unenforceable in situations where the chosen forum was "seriously
inconvenient."'' 19 7 The Court placed the burden for establishing
unreasonableness on the party challenging the clause, noting that "it should
be incumbent on the party seeking to escape his contract to show that trial
in the contractual forum will be so gravely difficult and inconvenient that
he will for all practical purposes be deprived of his day in court."' 98
ii. Scherk v. Alberto-Culver Co.
Arbitration clauses were the next step in expanding forum selections
clauses. In Scherk, the Court considered whether the parties' freely-
negotiated arbitration clause, designating the International Chamber of
Commerce in Paris, should be enforced against a domestic corporation's
1094d. at 15.
"'"5 1d. at 15 (citing Boyd v. Grand Trunk W.R. Co., 338 U.S. 263 (1949)).
"'I1d. at 16 (quoting Zapata Off-Shore Co. v. Bremen (In re Unterweser Reeder GMBH),
428 F.2d 888, 907-08 (5th Cir. 1970)).
"'97See id. at 16 (emphasis in original).
"See id. at 18.
1999] PARALLEL LITIGATION 917
wish to litigate its securities fraud claim in the United States.'1 99 The case
arose from Illinois-based Alberto-Culver's expansion into the European
market.1"00 One of its initial moves was to contract with German
businessman Fritz Scherk to acquire his rights to three interrelated business
entities organized under German and Liechtenstein law.I0l Scherk's
express warranty that he was conveying "the sole and unencumbered
ownership of these trademarks" was overstated, and Alberto-Culver sued
for securities fraud in federal court in Illinois.102 Scherk sought to enforce
the contract's arbitration clause, but the lower courts denied Scherk's
motion to dismiss on forum non conveniens grounds, drawing from the
holding in Wilko v. Swan,1103 which stated that actions under the Securities
Act of 1933 were exempt from arbitration clauses.1'1' The decision in
Wilco was based on statutory language in the 1933 Act that barred "[a]ny
condition, stipulation, or provision binding any person acquiring any
' 5
security to waive compliance with any provision of this subchapter." 1
The Wilko opinion noted the policy clash between this language and the
policies underlying the United States Arbitration Act. As recounted in
Scherk:
The [Wilko] Court found that "[t]wo policies, not easily
reconcilable, are involved in this case." On the one hand,
the Arbitration Act stressed "the need for avoiding the
delay and expense of litigation," and directed that such
agreements be "valid, irrevocable, and enforceable" in
federal courts. On the other hand, the Securities Act of
1933 was "[d]esigned to protect investors" and to require
"issuers, underwriters, and dealers to make full and fair
disclosure of the character of securities sold in interstate
and foreign commerce and to prevent fraud in their sale,"
by creating "a special right to recover for
misrepresentation."'°0
"°SeeScherk v. Alberto-Culver Co., 417 U.S. 506, 508-10 (1974).
"OoSee id. at 508.
I"0 'See id.
1l0 21d.
1103346 U.S. 427 (1953).
"'See Scherk, 417 U.S. at 509-10.
"0'15 U.S.C.A. § 77n (West 1997).
"06417 U.S. at 512 (quoting Wilko, 346 U.S. at 431, 438) (citations omitted)).
918 9 BAYLOR LA WREVIEW [Vol. 51:4
While Wilko struck this balance in favor of litigation of securities fraud
claims and the non-enforcement of arbitration clauses, Scherk did the
opposite, finding that the strong international flavor of Scherk's facts
called into play policy interests that dictated an opposite result from
Wilko. 107Scherk also noted that neither an arbitration clause nor any other
forum selection clause could be defeated by allegations of securities fraud,
or presumably any other fraud.1 °1 That is, a mere allegation of fraud did
not negate the contract containing the choice of forum agreement.1''
However, the forum selection clause could be defeated by showing the
"inclusion of that clause in the contract was the product of fraud or
coercion."1I10
There was significant dissent in Scherk. While Bremen's enforcement
of a forum clause was an 8-1 decision, Scherk's enforcement of a foreign
arbitration agreement was a 5-4 vote, owing to concerns about federal
securities policy rather than the distinction between adjudication and
arbitration. The four dissenters would have enforced-the arbitration clause
had it been a mere trademark dispute," but argued that the Congressional
policy underlying securities fraud claims compelled support for the'
plaintiffs choice of a federal judicial forum, and that the majority's
"invocation of the 'international contract' talisman" was insufficient to
'
override that policy.112
iii. MitsubishiMotors Corp. v. Soler Chrysler-Plymouth,
Inc.
Eleven years after Scherk, the Court had another close vote along
similar lines, this time with antitrust as the non-arbitral federal right."'" In
Mitsubishi, the Court held by a 5-3 vote that in international cases, unlike
domestic ones, the federal policy favoring enforcement of arbitration
clauses prevailed over a conflicting federal policy that made antitrust
claims non-arbitrable.'1" The case arose from a dispute between car maker
Mitsubishi (a joint venture of Chrysler International, a Swiss corporation,
07
" See id. at 515.
"°See id. at 518.
"°ee id.
.' 0Od. at 519 n.14.
"See id. at 522 (Douglas, J., dissenting).
2
"' 1d. at 529 (Douglas, J., dissenting).
".3 See generally Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth Inc., 473 U.S. 614(1985).
"1 41d. at 631-40.
1999] PARALLEL LITIGATION 919
and Mitsubishi Heavy Industries, a Japanese corporation) and Soler, a
Puerto Rican corporation located in Pueblo Viejo, Puerto Rico."' Two
years into the parties' distributorship agreement, Soler's sales declined and
it sought to delay or cancel some shipments and "transship" other cars to
be sold in the continental United States and Latin America.1 6 Mitsubishi
refused, and when attempts to resolve the dispute failed, it sued in federal
court in Puerto Rico, seeking to compel arbitration under the terms of the
distributorship agreement." 7 Soler objected to arbitration and
counterclaimed for violations of the Sherman Antitrust Act and the related
Automobile Dealers' Day in Court Act." The district court ordered
9
arbitration of all claims."' The First Circuit reversed as to the antitrust
claims, following American Safety Equipment Corp. v. J.P. Maguire &
Co.,"2 0 which had held that antitrust claims were non-arbitrable.121
Focusing narrowly on the arbitrability of an antitrust claim arising in an
international agreement, the Supreme Court reversed.,22 Recognizing that
not "all controversies implicating statutory rights are suitable for
arbitration,"123 the Court nonetheless found that the concerns raised in
American Safety were insufficient in international cases to overcome the
federal presumption favoring arbitration clauses.12, The majority further
noted that where foreign arbitration did not, in hindsight, protect antitrust
concerns, that the problem could be addressed at the award-enforcement
stage even though this assumes that the award would be enforced in a
25
United States court."
As in Scherk v. Alberto-Culver Co., we conclude that concerns of
international comity, respect for the capacities of foreign and transnational
tribunals, and sensitivity to the need of the international commercial
system for predictability in the resolution of disputes require that we
enforce the parties' agreement, even assuming that a contrary result would
26
be forthcoming in a domestic context"
". 5See id. at 616-17.
6
1' See id. at 617-18.
"' 7 See id. at 618-19.
"'.See id. at 619-20.
9
.. See id. at 620.
1120391 F.2d 821, 827-28 (2d Cir. 1968).
"..See Mitsubishi,473 U.S. at 621-23.
" 22 See id. at 640.
"23/d.at 627.
"24See id. at 629.
2
'See id. at 635-36.
6
1 1d. at 629.
920 BAYLOR LA WREVIEW [Vol. 51:4
In a lengthy dissent, Justices Stevens, Brennan and Marshall contested
the concept that "vague notions of international comity" compelled a
different treatment for international disputes than for local ones regarding
antitrust claims. ' 27 The dissent derided the majority's "repeated
incantation of the high ideals of 'international arbitration' [that] creates the
impression that this case involves the fate of an institution designed to
' 2
implement a formula for world peace.", 1 1
iv. Stewart Organization,Inc. v. Ricoh Corp.
New Jersey-based Ricoh Corporation had a dealership agreement with
Stewart Organization, a closely-held Alabama corporation, containing a
choice of forum clause "providing that the courts in New York City, the
Borough of Manhattan, would have 'exclusive jurisdiction over any case or
controversy arising under or in connection with this Agreement and shall
be a proper forum in which to adjudicate such case or controversy.' '' 129 In
1984, Stewart sued in federal court in Alabama for breach of contract and
° Invoking the forum
related claims, as well as antitrust claims."3 clause,
Ricoh moved for a 28 U.S.C. § 1404(a) transfer to the Southern District of
New York., 3 The federal district court denied the motion on the grounds
that this was a contract issue controlled, under the Erie Doctrine, by
Alabama law which disfavored forum clauses.-, The Eleventh Circuit
reversed: it agreed that the Erie Doctrine applied, but determined that the
issue was one of venue, not contract, and that for venue issues the Erie
analysis favored federal law." In doing so, the appellate court obviously
believed that section 1404(a) did not apply, and in the absence of federal
law on point, the Eleventh Circuit applied the federal common law found
34
in Bremen. 11
The Supreme Court affirmed, but on very different grounds under the
Erie Doctrine, setting the stage for a circuit split on what law governed
forum clauses, in federal courts." 5 The Court agreed with the Eleventh
"Id. at 641 (Stevens, J., dissenting).
28
1d at 665 (Stevens, J., dissenting).
"29Stewart Org., Inc. v. Ricoh Corp., 810 F.2d 1066, 1067 (11 th Cir. 1987) (en banc) aff'd
on other grounds, 487 U.S. 22 (1988).
"'3See Stewart Org., Inc., 487 U.S. at 24 n.I.
31
1 See id.
"32See id.
1133See Stewart, 810 F.2d at 1068.
" 34See id. at 1069 (citing Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 9-12 (1972)).
135See Stewart, 487 U.S. at 28.
1999] PARALLEL LITIGATION
Circuit that this was a venue issue, but there was a federal statute on point,
namely 28 U.S.C. § 1404(a).116 The Erie Doctrine flows from the Rules of
Decision Act, which provides that state law is the rule of decision in
federal courts, *"except where the Constitution or treaties of the United
States or Acts of Congress otherwise require or provide." , " In this case,
the Court determined that Congress had otherwise provided by enacting 28
U.S.C. § 1404(a), which the Court found on point."8 In doing so, the
Court took care to highlight the difference between the Eleventh Circuit's
analysis under Bremen and its own under 28 U.S.C. § 1404(a)." 39 Bremen
enforces the parties' forum clause as a contractual obligation with comity
as an additional consideration.1140 Section 1404(a) does not automatically
enforce the forum clause, but uses it as a trigger for a § 1404(a) analysis, in
which the parties' expectations, convenience, economy, and "those public-
interest factors of systemic integrity and fairness ... under the heading of
'the interest of justice"' are elements.,4, All this is to be done in an
"individualized, case-by-case consideration of convenience and
fairness.",142
Thus, for intrafederal conflicts, Stewart holds that a forum clause may
or may not be enforced, depending on the balancing of section 1404(a)
factors. ' 3 In federal-foreign conflicts under Bremen, on the other hand,
the federal court will honor the forum clause unless it is strongly contrary
to public policy, or seriously inconvenient to the extent that the local
plaintiff will be denied a fair trial. 44 The Supreme Court's affirmance on
a different ground, that section 1404(a)'s role as a federal statute precluded
Erie analysis, made no difference on the typical diversity case where the
chosen forum was in the United States., 14 This holding had a significant
impact, however, where the chosen forum was in a foreign country, for
which transfers under 28 U.S.C. § 1404(a) are unavailable.1146
v. Carnival CruiseLines, Inc. v. Shute
6
11 See id.
17 28 U.S.C. § 1652 (1994).
"See Stewart, 487 U.S. at 29-32.
"See Stewart, 810 F.2d at 1068.
1"See id. at 1069.
4
1 'Stewart, 487 U.S. at
30.
'" 21d. at 29 (quoting Van Dusen v. Barrack, 376 U.S. 612, 622 (1964)).
43
11 Id. at 29-30.
"See Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 13-18 (1972).
I"See id. at 15.
146See infra Part VII.A.3.
BAYLOR LAW REVIEW [Vol. 51:4
The last of the five cases expanded the enforcement of forum clauses
from Bremen's "freely negotiated agreement" standard to one honoring
even fine print clauses in adhesion contracts."' The cruise began with the
Shutes' purchase of tickets through a local Seattle travel agency for a
Pacific cruise departing from Los Angeles. 148 Among other fine print in
the three attached pages, the ticket included a clause requiring that all suits
related to the cruise be litigated in Florida." 9 Mrs. Shute was injured in a
fall aboard ship while off the west coast of Mexico, allegedly caused by
Carnival's negligence.150 The Shutes filed suit in federal court in
Washington state, which dismissed for lack of personal jurisdiction." The
Ninth Circuit reversed and further rejected Carnival's attempt to enforce
the forum selection clause, finding that it was not freely negotiated and that
the Shutes were physically and financially incapable of pursuing the
litigation in Florida.' 52 The Supreme Court reversed the Ninth Circuit's
holding, taking forum selection clauses to new extremes by holding that a
non-freely-negotiated clause was sufficient to oust a court's otherwise
valid jurisdiction and compel litigation in the selected forum, subject, of
course, to judicial scrutiny for fundamental fairness. "
A brief summary is appropriate before examining the divergent law. In
these five opinions, the Supreme Court held that: (1) forum selection
clauses are enforceable unless they are unreasonable or violate public
policy;"1' (2) adhesion contacts are not per se unreasonable;"', and (3) the
burden to show unreasonableness is on the party challenging the clause.156
Thus, the Supreme Court has created a presumption favoring the
enforcement of forum clauses. In international contracts, forum clauses
calling for foreign arbitral tribunals are enforceable even for antitrust and
securities claims that would not be arbitrable domestically." Finally,
forum selection clauses arising in federal courts, designating another
federal courts as the proper forum for disputes are deemed venue contracts
"47See Carnival Cruise Lines, Inc. v. Shute, 499 U.S. 585, 597-98 (1991).
114See id. at 587-88.
149See id. at 587-88.
"oSee id at 588.
"'See id.
"152See id. at 589.
"See id. at 590-98.
"14See Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972).
"55See Carnival Cruise, 499 U.S. at 593.
"See Bremen, 407 U.S. at 15.
"See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth Inc., 473 U.S. 614, 640-41
(1985); Scherk v. Alberto-Culver Co., 417 U.S. 506, 519-20 (1974).
1999] PARALLEL LITIGATION 923
and are to be evaluated under 28 U.S.C. § 1404(a), the inconvenient forum
statute.'" 8 Stewart OrganizationInc. reversed an Eleventh Circuit opinion
holding that the law governing forum clauses is an Erie question for which
the answer may vary." 5 9 Additionally, Professor Lowenfeld concludes that
the choice of law that may be made by the chosen forum is irrelevant.
"Putting Zapata [Bremen], PiperAircraft, and Carnival Cruise together, it
seems fairly clear that the 'heavy burden' required to overcome
enforcement of a forum selection clause would not be satisfied by a
showing by plaintiffs that if the clause were upheld they would be subject
to a less favorable law .... ",
Bremen, Scherk, and Mitsubishi Motors involved forum clauses
choosing foreign tribunals.,61 Carnival Cruise and Stewart, on the other
hand, are domestic.1162 While these first three cases seemingly turned on
the issues surrounding the involvement of a foreign forum, subsequent
cases often seem to apply precedents without weighing the foreign factor
as heavily. Thus, Bremen is sometimes used for conflicts not involving a
foreign court 61 3 while Stewart and Carnival Cruisehave been used in cases
that do." ,6
b. Divergence as to GoverningLaw
In spite of an apparently smooth synthesis in these five cases, a
problematic question arises as to which law should be applied to forum
clauses.116s This confusion gives rise to several issues. The first is which
115828 U.S.C. § 1404(a) (1994). See also Stewart Org. Inc. v. Ricoh Corp., 487 U.S. 22, 29
(1987).
"'9487 U.S. 22, 28 (1988).
"'Andreas F. Lowenfeld, INTERNATIONAL LITIGATION AND ARBITRATION 327 (West
1993).
116'MitsubishiMotors, 473 U.S. at 640; Sherk, 417 U.S. at 508; Bremen, 407 U.S. at 15.
1162499 U.S. 585, 587-88 (1991); 487 U.S. 22, 24 (1988).
1163See, e.g., International Software Sys., Inc. v. Amplicon, Inc., 77 F.3d 112, 113 (5th Cir.
1996) (following Bremen in state-federal conflict).
"See, e.g., Royal Bed and Spring Co. v. Famousssul Industria e Commercio de Moveis,
Ltda., 906 F.2d 45, 50 (1st Cir. 1990) (applying Stewart to an international case).
" 65 See BORN, INTERNATIONAL CIVIL LITIGATION, supra note 6, at 448-53 nn.l-12
(discussing various courts' approaches to the question of what law governs forum selection
agreements); see also LAWRENCE W. NEWMAN & DAVID ZASLOWSKY, LITIGATING
INTERNATIONAL COMMERCIAL DISPUTES, Ch. 6 (1996) (hereinafter "Newman & Zaslowsky,
INTERNATIONAL COMMERCIAL DISPUTES"). See generally Comment, Your Place or Mine: The
Enforceabilityof Choice-of-Law/Forum Clauses in InternationalSecurities Contracts, 8 DUKE J.
COMP. & INT'L L. 469 (1998); Levin & Morrison, Kubis and the Changing Landscape of Forum
Selection Clauses, 16 FRANCHISE L. J. 97 (1997); Comment, Forum Selection Clauses and
BAYLOR LAWREVIEW [Vol. 51:4
law governs the clause's acceptability? In a federal court, the possibilities
are (1) federal statutory law," (2) federal common law,,167 (3) state law
under the Erie Doctrine, or (4) the law governing the contract. In a state
court, the choices are (1) the forum state's law, (2) the law governing the
contract, and (3) in international cases, federal common law under Bremen
to promote national uniformity. The second issue: if forum clauses are
acceptable under the governing law, which law governs the contract's
validity, and which law governs its interpretation? The answer depends
not only on which court considers the clause, but on the forum to which the
case might move. This analysis breaks into the categories employed in this
article: intrajurisdictional, interstate, state-federal, and international. This
section will discuss the entire range of answers briefly, with cross
references to other sections.
A third important choice of law issue is the prorogation/derogation
distinction. "Prorogation" is the conferral of jurisdiction by the agreement
of the parties, for example, in the contract containing the forum selection
clause." 61 "Derogation" occurs if the forum clause is exclusive, thatis, the
forum clause is in derogation of other courts jurisdiction." 69 In prorogation
instances, the question is whether the chosen forum will accept the parties'
agreement as a conferral of jurisdiction on its court. ' 70 In derogation
instances, where one party ignores the forum clause and files in a different
forum, the question is whether a forum not selected by the parties will
enforce the forum clause and subordinate its own jurisdiction to the chosen
forum's."11 There is an important difference in the applicable law. In
derogation cases, as most of these are, the issue is whether the forum will
enforce the forum clause under any of the theories discussed below., 72 But
in prorogation cases where a party has filed in the chosen forum consistent
with the parties' earlier agreement, and the other party challenges the
clause, the issues may include amenability.' Although amenability may
Forum Non Conveniens in InternationalEmployment Contracts, 4 J. INT'L L. & PRAC. 117
(1995); Park, Bridging the Gap in Forum Selection: Harmonizing Arbitration and Court
Selection, 8 TRANSNAT'L L. & CONTEMP. PROBS. 19 (1998); Rapore & Stockel, Selecting the
ProperForum To Enforce One's Choice of Forum, 18 FRANCHISE L. J. 7 (1998).
"See 28 U.S.C. § 1404(a) (1994).
"67See generally Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972).
"6'See EUGENE SCOLES & PETER HAY, CONFLICTS OF LAW 361 (2d ed. 1992).
'S69Seeid.
"170See id.
17'See id.
2
StTSee id.
117 See id.
1999] PARALLEL LITIGATION 925
have elements in common with some of the theories for enforcing forum
clauses, the distinction could nonetheless be outcome determinative if, for
example, a federal court in a diversity case would apply the state long arm
statute, along with the due process test, to amenability questions, and
federal law to forum selection questions.1174
c. IntrajurisdictionalCases
Where both the considering court and the chosen court are federal,
forum clauses are viewed as contractual venue choices, requiring the
instant court to conduct a venue transfer analysis under 28 U.S.C. §
1404(a), in which the factors that are considered include the parties'
11 7
5
contractual choice of forum, convenience and economy.
There are at least three instances where forum selection clauses are not
governed by section 1404(a). The first is where the plaintiff files the suit
in a federal court in the designated location, but the defendant challenges
personal jurisdiction, and federal law differs from that state's law on
whether a forum selection clause waives personal jurisdiction
objections."7 The second is where the forum clause specifies a state court,
making a section 1404(a) venue transfer irrelevant." 7 The third is where
the designated forum is a foreign country.' 8 Where both courts are in the
same state, the law will vary by state. Texas, for example, authorizes
venue by agreement,1 179 which presumably applies to forum clauses,
although no cases are reported111°
I"4See infra Part VII.A.2.f.ii.
17 'See In re Fireman's Fund Ins. Cos., 588 F.2d 93, 94-95 (5th Cir. 1979) (honoring a forum
selection clause and transferring to federal court in New Jersey, despite venue rule appearing to
fix venue at the place of the contract's performance in Louisiana); Texas Source Group, Inc. v.
CCH, Inc., 967 F. Supp. 234, 238-39 (S.D. Tex. 1997) (holding that forum selection clause was
valid in spite of allegations of breach of underlying contract, resulting in transfer to Illinois);
Wellons v. Numerica Sav. Bank, FSB, 749 F. Supp. 336, 337-38 (D. Mass. 1990) (transferring of
first-filed action from Massachusetts to New Hampshire for consolidation with second-filed
action, consistent with forum selection clause).
1176See supra Part II.B.4.
"See supra Part II.B.4.
117'See supra Part II.B.4.
" 79See TEX. CIv. PRAC. & REM. CODE § 15.063(3) (Vernon's 1986).
" 0See supra Part IIl.A.3.c. for a discussion of intra-state forum clause issues.
BAYLOR LAWREVIEW [Vol. 51:4
d. Interstate Cases
Many states now follow the Bremen guidelines presuming the
enforceability of forum clauses," although some, like Texas, may.
disregard a forum selection clause if the witnesses' and the public's
interest strongly favors jurisdiction in a forum other than the one the
parties agreed to in the contract.118 2 In Greenwood v. Tillamook County
Smoker, Inc. and Sarieddine v. Moussa, forum law governed the clause's
83
acceptability and validity.
Some states have yet to rule definitively on the issue. For example the
Oklahoma Supreme Court, as of 1995, had not ruled on forum clauses'
enforceabilty, even in an interstate setting. 8 1 Until recently, Alabama
maintained the older view that the clauses are an unacceptable ousting of
jurisdiction," replacing that with a Bremen-based rule in 1997.1186 The
issue of which law governs the enforcement issue is, for the most part, not
discussed in these cases, but presumably forum law governed.,117
e. State-FederalCases
Federal courts will enforce a forum clause that specifically designates a
state court, dismissing the federal action for refiling in the chosen state
court. 8" Here too, choice of law is an ongoing issue. In International
Software Systems, Inc. v. Amplicon, Inc., the Fifth Circuit examined the
circuit split, finding that other federal courts had considered the different
possible choices of (1) federal common law under Bremen, (2) the
"importing" of federal statutory law under section 1404(a), and (3) state
law1'19 The court chose Bremen, explicitly rejecting the Fourth Circuit's
choice of state law.1l90 The Second Circuit also applies federal law."''9
't8'See, e.g., Accelerated Christian Educ., Inc. v. Oracle Corp., 925 S.W.2d 66, 73-74 (Tex.
App.--Dallas 1996, no writ).
" 2See Greenwood v. Tillamook Country Smoker, Inc., 857 S.W.2d 654, 656 (Tex. App.--
Houston [lst Dist.] 1993, no writ); Sarieddine v. Moussa, 820 S.W.2d 837, 839 (Tex.App.--
Dallas 1991, writ denied); see also supra Part IV.B.3.
"8 3Greenwood, 857 S.W.2d at 656; Sarieddine, 820 S.W.2d at 839.
84
1 See Bakhsh v. JACRRC Enters., Inc., 895 P.2d 746 (Okla. Ct. App. 1995) (citing the
RESTATEMENT (SECOND) OF CONFLICT OF LAWS, § 187 (1971)).
5
" See White Spunner Constr., Inc. v. Cliff, 588 So. 2d 865 (Ala. 1991).
" 6See Professional Ins. Corp. v. Sutherland, 700 So. 2d 347, 350 (Ala. 1997).
"See supra Part IV.B.3 (listing states enforcing forum clauses under Bremen guidelines
and others with qualifications).
l11"See, e.g., International Software Sys., Inc. v. Amplicon, Inc., 77 F.3d 112 (5th Cir. 1996).
"See International Software Sys. Inc., 77 F.3d at 115.
"19 See id; see also Nutter v. Rents, Inc., 945 F.2d 398 (4th Cir. 1991) (unpublished opinion).
1999] PARALLEL LITIGATION
The Third Circuit, like the Fourth, applies state law to determine the
enforceability of forum clauses that designate a state forum.1192 In re Diaz
Contracting,Inc. used New Jersey law to enforce a contract's designation
that "all actions arising under the contract be brought in the courts of the
State of New York. ' ' 193 The court reiterated prior Third Circuit law
rejecting Bremen's application to all forum selection issues." 94 Applying
New Jersey law, the court found that Bremen applied anyway, because the
parties had chosen New York law, which applied Bremen, and New Jersey
95
also followed Bremen. 1
In FarmlandIndustries, Inc. v. Frazier-ParrottCommodities, Inc., the
Eighth Circuit applied both federal law and Missouri state law to reject the
clause's selection of Illinois state courts.11 96 The parties had entered a
commodities futures trading agreement which included a clause providing
that suits could be brought "only in courts located within Cook County,
Illinois. . .. "'l Plaintiff Farmland sued in the Western District of
Missouri, alleging federal securities fraud as well as other state and federal
claims.' '1 The court held that plaintiffs claims were broader than those
contemplated by the agreement, and that "where a fiduciary relationship..
. is created by a contract tainted by fraud, the person defrauded can not
[sic] be held to the contractual forum selection clause. ' '' 99 The court also
stated that "consideration should be given to the public policy of Missouri
forbidding forum clauses."' 200 Note that this case was decided prior to
Stewart, when some federal courts were applying state law even to intra-
federal conflicts.
Kessman & Associates v. Barton-Aschman & Associates illustrates the
application of a forum clause to a subcontractor whose contract did not
expressly contain the clause,120° though this is countered by other cases
"9 'See Jones v. Weibrecht, 901 F.2d 17 (2d Cir. 1990).
'1 92See In re Diaz Contracting, Inc., 817 F.2d 1047, 1050 (3d Cir. 1987).
1193 1d.
94
11 See id.
95
" See id; accord, Rindal v. Seckler Co., 786 F. Supp. 890 (D. Mont. 1992).
1196806 F.2d 848, 852 (8th Cir. 1986).
97
" 1d. at 849.
"198See id.
" 991d. at 851.
'200Id. at 852.
120110 F. Supp. 2d 682, 692 (S.D. Tex. 1997).
928 BA YLOR LAWREVIEW [Vol. 51:4
holding that parties may not be compelled to arbitrate absent "clear and
unmistakable evidence" of an agreement to arbitrate.1 °2
As for state courts enforcing forum clauses directed to federal courts,
no cases were found. Such clauses would probably be enforceable in states
03
that otherwise honor forum clauses.21
f InternationalCases
State and federal courts in the United States will generally enforce
forum clauses designating foreign courts under the same standards applied
to domestic forum clauses; a forum clause will be applied unless it is
unreasonable or violates forum public policy. Boiler plate clauses are not
unreasonable, and the possibility of a less favorable governing law is not
necessarily a violation of public policy.1204 In spite of this pro-forum clause
standard, if the reasonableness and policy factors have any meaning at all,
they are magnified by the prospect of litigation in a foreign forum. Thus, a
non-western forum is more likely to raise local public policy concerns,
directed both to procedural and substantive legal issues, as well as raising
convenience issues undermining the clause's reasonableness.205 On the
other hand, federal practice mandates the enforcement of foreign forum
clauses in circumstances where they would not be enforced in a domestic
conflict.206 This has led one treatise to compare the United States standard
for enforcing foreign forum clauses to that of many other countries where
"'2 2Dayhoff Inc. v. H.J. Heinz Co., 86 F.3d 1287, 1294 (3d Cir. 1996) (citing First Options
Inc. v. Kaplan, 514 U.S. 938, 944 (1995)).
1203See infra Part VIII.B.2.
1204See supra Part VII.A.2.a.
1201The cases rejecting foreign forum clauses after Bremen are rare. See, e.g., Itek Corp. v.
First Nat'l Bank of Boston, 566 F. Supp. 1210, 1216 (D. Mass. 1983), aff'd 730 F.2d 19 (1st Cir.
1984) (rejecting a forum clause choosing Iran, because of the Khomeni revolution and unstable
conditions there). Perhaps the better illustration of the strong presumption favoring forum
clauses is found in cases upholding forum clauses under strained circumstances. See Argueta v.
Banco Mexicano, S.A., 87 F.3d 320, 327 (9th Cir. 1996) (dismissing an Arizona federal case to
uphold a clause designating Mexico, despite evidence that plaintiff would be in danger if he
returned to Mexico to litigate); Haynsworth v. Corporation, 121 F.3d 956, 963 (5th Cir. 1997)
(illustrating the difficult burden of proving fraud and overreaching or, alternatively, illustrating
the lengths plaintiffs will pursue to challenge forum clauses).
26
See Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 639
(enforcing foreign arbitration clauses that overrode federal law and policy regarding the
inviolability of a United States forum for, respectively, securities and antitrust claims); Sherk v.
Alberto-Calver Co., 417 U.S. 506 (1974); supra Part VII.B.3.
1999] PARALLEL LITIGATION 929
such clauses create exclusive jurisdiction that voids any judgment from
another forum.1207
More difficult questions arise in federal courts, where choice of law is
an issue. As discussed above, federal courts use section 1404(a) to govern
intra-federal transfers arising from forum clauses. For cases where section
1404(a) does not apply, forum clauses choosing non-federal courts, the
applicable law is disputed.
Although Bremen established a federal common law that set the basis
for the entire area of forum clauses in United States courts, the holding was
limited to its subject matter, admiralty. While there has been no clear
Supreme Court mandate for Bremen's application to all federal question
cases, at the very least it has become the dominant standard in federal
question cases.'20
Thus, for all cases except possibly admiralty, the question remains as to
what law governs the various questions surrounding forum selection
clauses. Born notes four possibilities: (1) federal substantive common law
(Bremen); (2) federal procedural law, treated as a venue issue but with
dismissal as the remedy rather than transfer; (3) state law, under an Erie
analysis; and (4) the law chosen by parties, which may or may not be the
same as (3).1209 These possibilities are illustrated in the cases that follow.
This discussion assumes that a forum clause choosing a foreign tribunal
differs from one choosing a domestic state court; thus, no conclusions are
reached as to circuits or lower courts that applied federal or state law in a
purely domestic setting.
i. Federal Question Cases
Although the Bremen precedent is limited by its facts to admiralty
cases, federal courts have tended to apply Bremen to a variety of federal
questions.120 On the other hand, Bremen's application to admiralty has not
120 See EUGENE SCOLES & PETER HAY, CONFLICT OF LAWS 368-69 nn.3-4 (2d ed. 1992).
The authors point out that the Uniform Foreign Money-Judgment Recognition Act implicitly
assumes that a forum clause creates exclusive jurisdiction, even though it does not mandate
nonrecognition of ajudgment from a non-chosen forum. See id. at 368 nn.l-3.
' 208See BORN, INTERNATIONAL CIVIL LITIGATION, supra note 6, at 432 (discussing Bremen's
persuasive but not binding authority in federal question cases other than admiralty).
2
'gSee id. at 431-32.
"°See generally TAAG Linhas Aereas v. Transamerica Airlines, Inc., 915 F.2d 1351 (9th
Cir. 1990) (involving claim against foreign sovereigns under the Foreign Sovereign Immunities
Act); Coastal Steel Corp. v. Tilghman Wheelabrator Ltd., 709 F.2d 190 (3d Cir. 1983)
(concerning bankruptcy); Bense v. Interstate Battery Sys. Inc., 683 F.2d 718 (2d Cir. 1982)
(concerning federal antitrust); Envirolite Enters. Inc. v. Glastechnische Indus. Peter Lisec
930 BAYLOR LAWREVIEW [Vol. 51:4
fully resolved forum clause issues in that area. In 1995, the Supreme Court
held that actions under the Carriage of Goods by Sea Act'1 2
" were now
subject to arbitration clauses, reversing a long-standing statutory bar under
46 U.S.C. § 1303(8).122 In 1997, the Fifth Circuit extended this
liberalization to forum selection clauses directed at foreign litigation
generally.1211 In spite of this general use of Bremen in federal question
cases, problematic areas remain. One notable example is federal securities
regulation, where the key issue is the enforceability of forum clauses in
light of the strong public policy behind securities claims and a statutory bar
on agreements in derogation of those rights. The strong majority has held
that reasonable forum clauses designating foreign adjudication or
arbitration are enforceable. The most recent example is Richards v.
Lloyd's of London, arising from an underwriting agreement with a clause
specifying that "the courts of England shall have exclusive jurisdiction to
settle any dispute and/or controversy of whatsoever nature arising out of or
relating to the Member's membership of, and/or underwriting of insurance
1
business at Lloyd's." 214 Plaintiffs sued in the Southern District of
California, alleging federal securities fraud and RICO violations, along
with other state and federal claims.25 Defendants moved for dismissal to
enforce the forum clause, which plaintiffs argued was overridden by the
anti-waiver provisions of the 1933 Securities Act.' 2 6 The Ninth Circuit
affirmed the lower court's dismissal, holding that Bremen applied to
international contracts with forum clauses in spite of Congress' anti-waiver
provisions in the 1933 Act.' 27
Richards and its forerunners seemingly extend the Scherk principle to
non-arbitration cases requiring that federal securities fraud claims arising
from international contracts are subject to forum clauses that designate
Gesellschaft M.B.H., 53 B.R. 1007 (S.D.N.Y. 1985), aff'd 788 F.2d 5 (2d Cir. 1986) (applying
Bremen in general federal question cases); see also, BORN, INTERNATIONAL CIVIL LITIGATION,
supra note 6, at 452 n.6(e).
121146 U.S.C. app. §§ 1300-1315 (1994).
22
1 1 See Vimar Seguros Y Reaseguros, S.A. v. MN Sky Reefer, 515 U.S. 528, 540 (1995).
21
1 See Mitsui & Co. Inc. v. MIRA M/V, Ill F.3d 33, 35 (5th Cir. 1997).
1214135 F.3d 1289, 1292 (9th Cir. 1998).
'215See id. at 1290-92.
216
1 See 15 U.S.C.A. § 77(n) (West 1998).
17
12 See Richards, 135 F.3d at 1294.
1999] PARALLEL LITIGATION
foreign adjudication tribunals.1218 Richards also discussed the important
issue of whether the contract is "international."1219
ii. Diversity Cases Applying Federal Law to the Forum
Clause
The issue of diversity cases applying federal law to the forum clause
has been more difficult, producing a circuit split with no clear majority
rule. Many, perhaps most forum clause contests arise in diversity cases
where the forum clause is found in a contract between the litigants, the
action in most cases arises at least in part on that contract, and contracts are
generally questions of state law. In discussing the choice of law issue,
many courts do not distinguish clauses choosing foreign courts from those
choosing domestic state courts. Instead, they merely lump them all
together as cases not governed by section 1404(a). Two are discussed in
the following paragraphs.
Manetti-Farrow,Inc. v. Gucci America, Inc., is a leading authority for
the application of the Bremen test in diversity cases.220 It involved parallel
cases in Italy and California, and provides a full Erie analysis, justifying
the application of federal common law rather than California law to the
parties' forum clause favoring Italy.221 The case arose from an exclusive
dealership contact between Manetti-Farrow, a California corporation, and
Gucci Parfum, an Italian corporation, and its U.S. counterpart, Gucci
American, Inc., to sell Gucci perfume in the United States. 222 The contract
had a forum clause specifically stating that in "any controversy regarding
interpretation or fulfillment of the present contact, the Court of Florence
[Italy] has sole jurisdiction."1223 In July 1986, Gucci terminated Manetti-
Farrow's exclusive agreement and brought suit in Florence for breach of
2
1 "See supra Part VII.A.2.a.ii.
1219135 F.3d at 1294. See also Stamm v. Barclays Bank of New York, 153 F.3d 30 (2d Cir.
1998); Lipcon v. Underwriters at Lloyd's, London, 148 F.3d 1285 (11 th Cir. 1998); Haynsworth
v. The Corporation, 121 F.3d 956 (5th Cir. 1997); Allen v. Lloyd's ofLondon, 94 F.3d 923 (4th
Cir. 1996); Shell v. R.W. Sturge, Ltd., 55 F.3d 1227 (6th Cir. 1995); Bonny v. Society of
Lloyd's, 3 F.3d 156 (7th Cir. 1993); Roby v. Corporation of Lloyd's, 996 F.2d 1353 (2d Cir.
1993); Riley v. Kingsley Underwriting Agencies, Ltd. 969 F.2d 953 (10th Cir. 1992). See
generally Comment, Your Place or Mine: The Enforceability of Choice-of-Law/Forum Clauses
in InternationalSecurities Contracts, 8 DUKE J. COMP. & INT'L L. 469 (1998).
1220858 F.2d 509 (9th Cir. 1988).
'221See id. at 512-13.
222
1 See id. at 511.
22 3
1 1d.
BAYLOR LAWREVIEW [Vol. 51:4
contract.22
1 4
One month later, Manetti-Farrow sued in a California federal
court for various state law claims in contract and tort, alleging that Gucci
terminated in bad faith by seeking to bring the sales in the United States
under its own corporate structure.12 The federal district court granted
1226
Gucci's motion to enforce the forum clause and dismissed the case.
The Ninth Circuit affirmed the lower court's dismissal of Manetti-
Farrow's United States action, addressing first the question of what law
governed the effect and scope of the forum selection clause.1227 The court
noted that, unlike Stewart where section 1404(a) controlled, there was no
statute here; consequently, the Erie doctrine required consideration to
determine what law governed.22s Noting further that a circuit split had
occurred on this issue, the court used an Erie/Byrd balancing test and
concluded that this was primarily a venue matter, even though not
governed by federal statutory venue law, and accordingly, held that United
States' interests outweighed California's interest in controlling this
issue.1229 Thus, federal law controls in the Ninth Circuit for forum selection
clauses not governed by section 1404(a). The court relied heavily on an
earlier analysis conducted by the Eleventh Circuit in Stewart.30 Although
that opinion was displaced (affirmed on other grounds) by the Supreme
Court, its Erie analysis and conclusion that federal law controlled in such
cases was persuasive in the Ninth Circuit.21 The dispute here was
primarily as to Manetti-Farrow's tort claims, which it argued were not
covered by the contract or the forum clause.1232 The Ninth Circuit
disagreed, finding that forum clauses did cover tort claims that related to
the interpretation of the underlying contract. 1233 Manetti-Farrowdid not
distinguish between forum clauses choosing foreign courts and domestic
state courts, and is used as precedent for both. 134
' 224See id.
'225See id.
1226See id. at 511-12.
1227See id at 512.
'22SSee id.
1229See id.
1230810 F.2d 1066, 68 (11 th Cir. 1987) (per curiam) (en banc), aff'd on other grounds, 487
U.S. 22 (1988).
23
See Mannetti-Farrow,858 F.2d at 513.
1232See id.
233
1 See id. at 514.
234
1 See Spradlin v. Lear Siegler Management Serv. Co., 926 F.2d 865, 867 (9th Cir. 1991)
(applying Bremen to Saudi foreign forum clause).
1999] PARALLEL LITIGATION 933
Haynsworth v. The Corporation was a suit by "names," Lloyd's
underwriters, against Lloyd's for various wrongs.'235 Several actions were
filed in various federal courts throughout the United States; two were
consolidated for this opinion regarding dismissal based on a forum clause
designating England.1116 The Fifth Circuit distinguished between the two
cases in that one was based on a federal question (securities fraud) and the
other on diversity.1231 7 The court pointed out that the law was settled as to
federal question claims, and that after Scherk, federal law and Bremen
controlled forum selection clauses in federal question cases.' 238 As to
diversity, the court found that the Fifth Circuit had already addressed this
in InternationalSoftware Systems v. Amplicon Inc., even though that case
did not involve an international contract, but instead one designating a
specific state court. 1239 Thus, the Fifth Circuit does not distinguish between
federal-state and federal-foreign conflicts and holds that Bremen controls
in all such cases.
Afram Carriers,Inc. v. Moeykens is perhaps more instructive because it
applies Bremen in a pure diversity claim for wrongful death.240 The death
occurred on a job governed by an employment contract with a choice of
Peruvian forum.14, The opinion cites Haynsworth but has no choice of law
discussion, and further holds the plaintiffs claim that the contract was
fraudulently induced could not defeat the forum clause, unless the clause
itself was fraudulent or otherwise illegal.1242
Another approach in diversity cases has been to forego Bremen and
federal common law and view the issue as one of federal venue.
Reasoning from Stewart that forum clauses are primarily a venue matter,
and wishing to take advantage of Stewart's invocation of the section
1404(a) test, these opinions apply section 1404(a) by analogy. For
example, in Royal Bed andSpring Co. v. FamossulIndustriaE Commercio
de Moveis, Ltda., a Puerto Rican company sued a Brazilian defendant in
Puerto Rico, alleging breach of their distributorship agreement which had a
123121 F.3d 956, 958-59 (5th Cir. 1997).
236
See id. at 958.
237
See id. at 961.
2
12'See id. at 962.
123977 F.3d 112, 114-15 (5th Cir. 1996).
240145 F.3d 298, 300 (5th Cir. 1998).
'141See id. at 301.
242
1 See id. at 301-02.
BAYLOR LAWREVIEW [Vol. 51:4
Brazilian forum clause. 113 The district court enforced the forum clause and
dismissed the case.1 4 The First Circuit affirmed, holding:
In this case, since we are dealing with a forum-selection
clause that refers to a forum outside of the United States,
and not within the scope of the statute, section 1404(a)
does not apply. Nonetheless, even though a foreign
jurisdiction was chosen by the parties, that fact should not
preclude the application of the sound principles of forum
24
non conveniens enunciated in Stewart and similar cases.
Under this approach, the court observed that "the forum selection
provision in the [parties' agreement] is not given dispositive effect.
Rather, it is simply one of the factors that should be considered and
'
balanced by the courts in the exercise of sound discretion."46 However,
three years later in' Lambert v. Kysar, the First Circuit ignored this
precedent and avoided the Erie choice of law questions entirely.1247
The Seventh Circuit applied Bremen to validate a forum clause in an
international case in PaperExpress, Ltd. v. Pfankuch Maschinen GmbH.14
Although there was no choice of law discussion, the court cited
Northwestern National Insurance Co. v. Donovan, in which Judge Posner
observed the circuit split on governing law and held in dicta that federal
law no doubt governs. 21 9 Similarly, the D.C. Circuit applied Bremen to
validate a forum clause pointing to Italy in a diversity case, but without a
choice of law analysis.1210 The Second Circuit has applied Bremen to an
international contract in a diversity case, but the issue was interpretation
and not validity.'2 ' There was no choice of law discussion, but if Bremen
applies to forum clause interpretation in the Second Circuit, it would
presumably apply to validity.
1143906 F.2d 45, 46 (lst Cir. 1990).
1244See id.
'2451d. at 5 1.
12461d
1247983 F.2d I110, 1116 (1st Cir. 1993).
1248972 F.2d 753, 756 (7th Cir. 1992).
1249916 F.2d 372, 374 (7th Cir. 1990).
250
1 See Commerce Consultants Int'l, Inc. v. Vetrerie Riunite, S.p.A., 867 F.2d 697, 700 (D.C.
Cir. 1989).
251
See John Boutari & Son, Wines & Spirits, S.A. v. Attiki Importers and Distribs. Inc., 22
F.3d 51, 52-53 (2d Cir. 1994).
1999] PARALLEL LITIGATION 935
iii. Diversity Cases Applying State Law to the Forum
Clause
Several federal courts have applied state law to validity and
enforcement issues for forum clauses. The Third Circuit held in a
domestic case that Erie compels the application of state law to forum
clause issues.' 25 2 A more recent case applies this precedent in an
international case but does not offer the Erie analysis.1253 In Snider v. Lone
Star Art Trading Co., the parties' contract provided for litigation in the
courts of Harris County, Texas.12 14 The plaintiff sued in Michigan, and
defendant invoked the forum clause.5" The court held that the Erie
doctrine called for state law, relying heavily on the Third Circuit's opinion
in GeneralEngineeringCorp.11 56 Applying Michigan law, the court looked
to Michigan's choice of law clause, which pointed to Texas. 257 Under
Texas law, as the court perceived it, the forum clause was subordinated to
a federal venue rule in the civil RICO statute on which plaintiff sued.1258
In a domestic forum clause case, the Fourth Circuit applied state law
and further held that the applicable state was the one designated in the
contract's choice of law clause.12 59 This approach was contrary to the
Fourth Circuit's earlier application of Bremen in a domestic case, affirming
the lower court's application of state law to the forum clause. 260 That case,
however, may have been no more than the court's confirming that the same
result was reached under Bremen and state law, rather than a decision that
federal law governed.
When applying state law to forum clauses, the question arises as to how
much further the choice of law process goes. The standard approach found
in Klaxon Co. v. Stentor ElectricManufacturingCo. requires that the court
look to the forum state's choice of law rule, and apply the law that the local
state court would apply.1261 Another approach is to defer to the parties'
252
' See General Eng'g Corp. v. Martin Marietta Alumina, Inc., 783 F.2d 352, 357 (3d Cir.
1986).
'253See Dayhoff Inc. v. H.J. Heinz Co., 86 F.3d 1287, 1298 (3d Cir. 1996) (enforcing the
parties' choice of abitration in Italy against the signatories of the agreement).
1254672 F. Supp. 977, 979 n.3 (E.D. Mich. 1987), aft'd, 838 F.2d 1215 (6th Cir. 1988).
125 See id.
2 6
1 1 See id. at 981-82.
27
1 1 See id. at 982.
'25sSee id. at 982-83.
259
1 See Nutter v. Rents, Inc., 945 F.2d 398 (4th Cir. 1991) (unpublished opinion).
1 60See Bryant Elec. Co., v. City of Fredericksburg, 762 F.2d 1192, 1196-97 (4th Cir. 1985).
1261313 U.S. 487,486 (1941).
BAYLOR LAWREVIEW [Vol. 51:4
contractual choice of law.262 The better view is that the parties choice of
law may only control issues of contract interpretation. 1263
Some cases are erroneously listed in the state law category, most
notably Alexander Proudfoot Co. World Headquarters v. Thayer.26 At
least three texts list this as an Erie decision, directing the application of
state law to a forum clause enforcement issue, in the same vein as Manetti-
Farrow'sdecision to apply federal law.265 To the contrary, Proudjootwas
a prorogation case involving a correct filing in the chosen forum and
defendants challenge to jurisdiction.266 Choice of law as to amenability is
quite distinct from choice of law for a contractual forum clause.1267
iv. Undecided as to Which Law Governs in Diversity Cases
The First Circuit originally applied Bremen in diversity cases involving
international contracts, 268 but backed away in Lambert v. Kysar, opting to
find false conflicts where state and federal law were the same.' 26 9 The
Eleventh Circuit is even more difficult to pin down. In Stewart
Organization Inc. v. Ricoh Corp., an en banc court held that Bremen's
federal common law governed forum clauses in all forum clause cases; but
Stewart concerned a contest between two federal courts, and the Supreme
Court elected instead to apply section 1404(a) to intra-federal forum
choices.270 Proudfoot then applied state law in a different context to an
amenabilty question in a prorogation case, which has since been miscited
as putting the Eleventh Circuit in the state law camp.' 27 ' As of 1998, the
Eleventh Circuit remains undecided on this issue. In Smith v. Professional
1262See, e.g., Lambert v. Kysar, 983 F.2d 1110, 1118 (1st Cir. 1993) (applying parties' choice
of Washington law to validate forum clause because that was the practice under Massachusetts
law, where the court was located); Nutter v. Rents, Inc., 945 F.2d 398 (4th Cir. 1991)
(unpublished opinion) (applying parties' choice of Louisiana law to validate forum clause
because West Virginia forum law so directed).
'263See Northwestern Nat'l Ins. Co. v. Donovan, 916 F.2d 372, 376 (7th Cir. 1990).
1264877 F.2d 912, 919 (11 th Cir. 1989).
265
See EUGENE F. SCOLES & PETER HAY, CONFLICT OF LAWS § 11.5 n. I1 (2d. ed. 1992 &
Supp. 1995); William W. Park, INTERNATIONAL FORUM SELECTION, at 34 n.129 (Kluwer,
1995); BORN, INTERNATIONAL CIVIL LITIGATION, supra note 6, at 448-49 n.3.
1266877 F.2d at 914-15.
267
1 See infra Part VII.A.2.h. for additional discussion of Proudfoot.
1268See Royal Bed & Spring Co. v. Famossul Industria e Comercio de Moveis Ltda., 906 F.2d
45, 48-49 (1st Cir. 1990).
1269983 F.2d 1110 (1st Cir. 1993).
1270487 U.S. 22, 28 (1988).
27
1 'See supra note 1265.
1999] PARALLEL LITIGATION
Claims, Inc., the district court observed that the Eleventh Circuit was still
undecided but that it was now irrelevant for federal courts in Alabama
since the state had adopted Bremen.1 7
, Although Smith was a domestic
conflict, its statement no doubt applies to the Eleventh Circuit's position on
international cases as well.
Although the Eleventh Circuit's position on this issue is not clear, the
best indicator is the majority opinion in Stewart."3 Notably, the Seventh
Circuit cites Stewart as establishing the Eleventh Circuit's position in the
camp applying Bremen.2174 If this is the Eleventh Circuit's position on
domestic forum conflicts, surely it would be the position for forum clauses
choosing foreign tribunals where the federal interest is stronger. In any
event, the Eleventh Circuit cannot be placed in the "state law" category on
the basis of Proudfoot.
g. What Law Governs Interpretation?
AmerMed Corp. v. DisetronicHolding AG held that state law governs
interpretation issues.27 The forum clause provided that "the courts of the
canton of Berne, Switzerland, shall have jurisdiction for all disputes arising
out between [sic] the parties and waive any claim to the contrary."1?6 The
issue was whether this was permissive or mandatory. 27 Disetronic argued
that Swiss law governed this issue, but the court rejected this noting that
forum clauses "are interpreted without reference to the contractual choice
of law clause."'1278 The court applied Georgia law, which for this issue, was
ironically Bremen .279 The court then held that ambiguity required that the
clause be construed against the drafter, and that the clause must use
language indicating exclusivity.1210 The Second Circuit disagrees, instead
2
applying federal law to interpretation issues. 1'
The Seventh Circuit offers a different approach. In dicta, Judge Posner
has stated that "[v]alidity and interpretation are separate issues, and it can
127219 F. Supp. 2d 1276, 1280 (M.D. Ala. 1998) (citing Professional Ins. Corp. v. Sutherland,
700 So. 2d 347, 350 (Ala. 1997)).
1271810 F.2d 1066, 1067 (1Ith Cir. 1987), aff'don other grounds, 487 U.S. 22 (1988).
274
See Northwestern Nat'l. Ins. Co. v. Donovan, 916 F.2d 372, 374 (7th Cir. 1990).
12756 F. Supp. 2d 1371, 1374 (N.D. Ga. 1998).
276
1 1d. at 1373.
.27 7See id. at 1374.
278
' 1d. at 1374-75.
279
1 See id.
0
121See id. at 1374.
2
I S'See John Boutari and Son, Wines and Spirits, S.A. v. Attiki Importers & Distribs. Inc., 22
F.3d 51, 52-53 (2d Cir. 1994).
938 BAYLOR LAWREVIEW [Vol. 5 1:4
be argued that as the rest of the contract in which a forum selection clause
is found will be interpreted under the principles of interpretation followed
by the state whose law governs the contract, so should that clause be." '2 2
That case applied Bremen to validity issues, and Posner's approach thus
calls for federal common law to govern forum clause validity, and the law
governing the contract to govern interpretation issues.'28 3 The Third Circuit
followed this approach, without citation, in Instrumentation Associates,
Inc. v. Madsen Electronic, holding that the parties' choice of Ontario law
applied to interpretation of the forum clause as permissive or exclusive
although it was a false conflict since Pennsylvania forum law would
interpret it the same. 21 4 In Terra International, Inc. v. Mississippi
Chemical Corp., the court avoided the issue and applied contract law from
all three possibilities: federal common law, Iowa forum law, and
Mississippi as the parties' chosen law.285
h. The ProrogationDistinction
The forum clause cases discussed to this point have been derogation
cases involving suits filed in forums other than the one chosen in the forum
clause. These cases address whether the clause successfully derogated
from the immediate court's jurisdiction. The issues and applicable law
may differ in prorogationcases, where the plaintiff sues in the contracted-
for forum, and the defendant challenges both the forum clause and personal
'
jurisdiction. The Proudfoot case is a well-reasoned example. 286
Alexanander Proudfoot Company filed suit in Florida to enforce a non-
compete agreement against a former employee, Thayer, who had worked at
various locations in Brazil and Europe.287 The employment contract had a
forum clause exclusively designating "the federal and state courts located
in the state of Florida."'128 When Thayer resigned and took a job with a
competitor in California, Proudfoot sued in Florida state court. 2 9 Thayer
removed the case to federal court and then challenged Florida's
.2 2Northwestern Nat'l. Ins. Co. v. Donovan, 916 F.2d 372, 374 (7th Cir. 1990).
'2.See id. at 375-76.
124859 F.2d 4, 9 (3d Cir. 1988).
1285119 F.3d 688, 697 (8th Cir. 1997).
6
121 Alexander Proudfoot Co. World Headquarters L.P. v. Thayer, 877 F.2d 912, 916 (11th
Cir. 1989).
.2. ee id. at 915.
.288/d.at 915 n.6.
' 2-s9 ee id. at 915.
1999] PARALLEL LITIGATION 939
jurisdiction.190 The federal district court dismissed, finding that the forum
clause was not sufficient to confer jurisdiction under Florida's long arm
statute. 291 The Eleventh Circuit reversed, finding that while the lower
court was correct to apply the Florida long arm, it was not applied
correctly.'2 92 That is, Florida did have personal jurisdiction over Thayer
under Florida law.
In reaching this conclusion, the court conducted a thorough Erie
analysis and carefully distinguished its earlier holding in Stewart, along
with the Supreme Court's affirmance of Stewart on other grounds.1293
Proudfoot concluded that Stewart was inapplicable because it dealt with a
defendant's attempt to enforce a forum clause by dismissing a case filed in
a different forum, while Proudfoot dealt with Thayer's attempt to defeat
jurisdiction in a case filed in the contractual forum. 294 Proudfoot thus
holds that in defendant's challenge to the contractual forum's jurisdiction,
state law is an essential element.
As discussed above, the Eleventh Circuit's position is unclear on the
law governing derogation cases, but as Proudfoot establishes, it is quite
clear on the law governing prorogation cases where the issue is the forum
clause's effectiveness in establishing jurisdiction. We may extrapolate
from Proudfoot that merely because a circuit applies federal law to forum
clause enforceability in derogation cases does not mean it will in
prorogation cases. The argument that defendant waived any objection to
jurisdiction by agreeing to the forum clause is not valid where the
governing state law does not treat the forum clause as a per se waiver to
jurisdictional objections, or would not otherwise enforce that particular
clause.
Proudfoot's rationale is that the issue in prorogation cases is
jurisdiction, not venue, and that cases analyzing the Erie question as to
venue are inapplicable. The questiod is whether state or federal law
determines the foreign defendant's amenability. Proudfoot's answer is the
same as that for personal jurisdiction generally. In both federal question
and diversity cases, amenability is controlled by two tests: the forum
state's long arm statute, and the due process "minimum contacts" test
'
(except where Congress has passed a federal long arm statute). 295
290
1 See id. at 916.
29
1 11d.
' 292See id. at 921.
' 293See id. at 918.
294
1 1d. at 916-19.
'295See id. at 919.
940 BAYLOR LAW REVIEW (Vol. 51:4
Proudfoot was not an international case; it involved only one forum, the
one chosen in the forum clause, and defendant was a resident of the United
States. Proudfoot seems nonetheless applicable to international cases since
a foreign defendant would have at least as much right to challenge personal
jurisdiction of the chosen forum. Thus, although there are no international
cases on point, state law would seem to govern forum selection clauses
when personal jurisdiction challenges arise.
The Seventh Circuit provides a contrasting prorogation case. In
Northwestern National Insurance Co. v. Donovan, the plaintiff filed five
diversity suits in a Wisconsin federal court to enforce indemnity claims
2 96
arising from contracts with a forum clause pointing to Wisconsin courts.
It was undisputed that the plaintiff's choice of forum was consistent with
the forum clause. 297 The defendant objected to personal jurisdiction, and
the trial court agreed and dismissed on the grounds that (1) the forum
clause was part of an adhesion contract and thus invalid, and (2) there was
no other basis for personal jurisdiction in Wisconsin. 129, The Seventh
Circuit reversed, finding that the clause was valid under Bremen and other
2 99
federal cases addressing the specific issue of adhesion contracts. It
noted that the circuits are split on the issue of which law governs forum
clauses in diversity cases, but held that, "the signing of a valid forum
selection clause is a waiver of the right to move for a change of venue on
the ground of inconvenience to the moving party.' ' "30 The court also
stated: "[T]herefore, the parties before us are correct to concede that the
issue of validity is one of federal law, though we need not decide this,
since litigants are, within limits not exceeded here, permitted to designate
13 1
what law shall control their case.."0
These cases offer contrasts that help explain the choice of law dispute
here. Using a bit of speculation as to the judges' thinking, Proudfoot holds
that Florida's long arm statute is pertinent to the issue of whether a
nonresident defendant has waived amenabilty objections by signing a
contract with a forum clause designating Florida courts. 13 2 Northwestern
holds that federal law governs a forum clause's validity in federal court,
1296916 F.2d 372, 373-74 (7th Cir. 1990).
297
1 See id. at 374.
129 See id. at 375.
299
1 See id. at 378.
3
°Id. at 378 (citing 883 F.2d 1286, 1293 (7th Cir. 1989)).
3
' 'Id. at 374 (citing Casio, Inc. v. S.M.G.R. Co., 755 F.2d 528, 531 (7th Cir. 1985);
RESTATEMENT (SECOND) OF CONFLICT OF LAWS § 187 (1971)).
1302877 F.2d 912 (11 th Cir. 1989).
1999] PARALLEL LITIGATION
and if valid, the defendant has consented to jurisdiction.3 °3 One important
point is that these opinions are shaped by the arguments made by counsel
in each case, and the attorneys in Northwestern made only federal
arguments.' 3°4 Both approaches have merit, and no court has yet ruled
clearly on this issue in a prorogation case.
i. Form ofMotion and StandardofReview
The courts are also split as to which procedural device is appropriate to
challenge a forum clause, which in turn affects the standard of appellate
review. The First Circuit uses Federal Rule of Civil Procedure 12(b)(6),
failure to state a claim, leading to a de novo review.305 The Second Circuit
uses Federal Rule of Civil Procedure 12(b)(1), lack of subject matter
jurisdiction, also reviewable de novo.'1°0 The Fifth, Sixth, and Tenth
Circuits have not determined the proper pleading form, but conduct de
novo reviews. 1 °7 The Eighth, Ninth, and D.C. Circuits use Federal Rule of
Civil Procedure 12(b)(3), improper venue, which leads to an abuse of
discretion review.l308 The Seventh and Eleventh Circuits follow the other
three using Rule 12(b)(3), but impose a de novo review rather than abuse
of discretion109
j. Ensuringthe Case'sSurvival
Because transfers under section 1404(a) are not available when the
chosen forum is a foreign country, plaintiffs facing objections to suits filed
in the United States contrary to the forum clause should ensure that the
case may be litigated in the other forum. Although defendant's attempt to
enforce the forum clause may take one of several forms, plaintiff should
take care that the dismissal is conditional on the successful refiling in the
other forum. This is routinely done in forum non conveniens dismissals
1303916 F.2d at 374.
4
13O1d"
0
13°See Lambert v. Kysar, 983 F.2d I 110, 1112 n.l (1st Cir. 1993).
13°6See AVC Nederland B.V. v. Atrium Inv. Partnership, 740 F.2d 148, 153 & n.8 (2d Cir.
1984).
1307See Haynsworth v. Lloyd's of London, 121 F.3d 956, 961 (5th Cir. 1997); Shell v. R. W.
Sturge, Ltd., 55 F.3d 1227, 1229 (6th Cir. 1995); Riley v. Kingsley Underwriting Agencies, Ltd.,
969 F.2d 953, 956 (10th Cir. 1992).
8
13° See Richards v. Lloyd's-of London, 135 F.3d, 1289, 1292 (9th Cir. 1998); Commerce
Consultants Int'l, Inc. v. Vetrerie Riunite, 867 F.2d 697, 698 (D.C. Cir. 1989); Sun World Lines,
Ltd. v. March Shipping Corp., 801 F.2d 1066, 1068 & n.3 (8th Cir. 1986).
3
'See Lipcon v. Underwriters at Lloyd's, London, 148 F.3d 1285, 1289-90 (11 th Cir. 1998);
Hugel v. Corporation of Lloyd's, 999 F.2d 206, 207 (7th Cir. 1993).
BAYLOR LAW REVIEW [Vol. 51:4
and is well advised in forum clause dismissals. Another option for
plaintiffs facing the enforcement of a forum clause is to request a stay or
administrative closing in lieu of the dismissal.
3. Forum non conveniens dismissals
a. Generally
A modem legal myth is that forum non conveniens originated in
Scotland in 1866, in the case Clements v. Macauley.130 Recent scholarship
has disputed this myth, arguing that Paxton Blair's 1929 article concocted
this notion in order to promote the concept in the United States of a
discretionary dismissal on less-than-jurisdictional grounds. 131 This
controversy aside, there is at least one earlier account of a similar
procedure in a United States court, predating the Scottish and English
cases. In 1817, a New York court used a discretionary standard to dismiss
one British seaman's action against another for assault and battery aboard a
British ship on the high seas. 3 1 The court did not use the term "forum non
conveniens," and it is unclear what factors supported the decision.
However, it is clear that the court had personal jurisdiction over the
defendant, and that the dismissal was premised on the availability of an
English court. Although this early example clearly was not a basis for Gulf
Oil Corp. v. Gilbert, it is an example of an American court declining
otherwise valid jurisdiction in preference to a more appropriate forum.
Forum non conveniens is perhaps best illustrated in the international
setting, with its exaggerated issues of fairness, convenience and adequacy
of the remedy in a culturally-distinct forum. In all settings, including
interstate and international, it is used for nonjurisdictional challenges to
plaintiff's choice of forum, and it is frequently pleaded alternatively with a
motion to dismiss for lack of personal jurisdiction. In federal courts, it
applies only where the alternative forum is not within the United States; if
114 Macpherson (Sess. Cas., 3d ser.) 583, 592 (1866). Clements is credited in any number
of sources, including EUGENE F. SCOLES & PETER HAY, CONFLICT OF LAWS § 11.9 at 373 n.2
(2d ed. 1992).
See Robertson & Speck, supra note 269, at 948-49, n.68 (citing Paxton Blair, The
....
Doctrine of Forum Non Conveniens in Anglo-American Law, 29 COLUM. L. REV. i, 20-23
(1929)). Robertson and Speck point out that Blair based his conclusion on early Scottish cases
that were dismissed on abuse of process grounds, that is, the Scottish court lacked any reasonable
connection to the claim. Robertson & Speck, supra note 269, at 949 & n.68. They further note
that the purported early Scottish doctrine ran counter to a common law mandate to exercise
jurisdiction. Id. Robertson & Speck, supra note 269 at n.70.
3 2
See Gardner v. Thomas, 14 Johns. 134 (N.Y. 1817).
1999] PARALLEL LITIGATION 943
it were, the appropriate motion would be for change of venue under 28
U.S.C. § 1404(a).13 The doctrine is not designed specifically for resolving
parallel cases, and its application does not depend on a parallel pending
lawsuit. But it is appropriate in that setting, in fact, the other lawsuit
enhances the forum non conveniens motion by providing the necessary
alternative forum.
Federal common law provided the basis in GulfOil Corp. v. Gilbert,1314
providing the operative test in United States federal courts and many state
courts. 315 Gilbert was an action in a New York federal court by a Virginia
plaintiff against a Pennsylvania defendant, based on a fire in Virginia. 16
At the time, 28 U.S.C. § 1404(a) motions were not available, and forum
non conveniens was used for purely domestic forum contests, as well as
foreign ones. In dismissing the suit, the Court held that the essential
precondition is an adequate alternative forum.131 This means that there
must be at least one other jurisdiction where the defendant is amenable to
process or agrees to jurisdiction. The dismissing court may ensure this by
conditioning the dismissal on defendant's agreement to litigate on the
merits in the other forum. 131 Under these circumstances, the other forum
will ordinarily be sufficient unless the remedy there is "so clearly
inadequate or unsatisfactory that it is no remedy at all . . .. "119 However,
the fact that the other forum's substantive law is "decidedly less favorable
to the plaintiff should not be given substantial weight... ''1 °
Once the availability of an adequate alternative forum is established, the
court must conduct a dual-focus balancing test, examining 'private and
public interests' to determine if dismissal is warranted. The focus on
"private factors" looks to the litigants' interests:
[(1)] the relative ease of access to sources of proof; [(2)
the] availability of compulsory process for attendance of
unwilling, and the cost of obtaining attendance of willing,
witnesses; [(3) the] possibility of view[ing] of premises, if
' 3"See supra Part II.B.5.
1314330 U.S. 501 (1947).
31
See, e.g., Sarieddine v. Moussa, 820 S.W.2d 837, 840 (Tex. App--Dallas 1991, writ
denied).
1 6330 U.S. at 503.
17
1 See id. at 506-07.
13
"See De Melo v. Lederle Lab., 801 F.2d 1058, 1059 (8th Cir. 1986); Constructora
Spilimerg, C.A. v. Mitsubishi Aircraft Co., 700 F.2d 225, 226 (5th Cir. 1983).
319
1 Piper Aircraft Co. v. Reyno, 454 U.S. 235, 254 (1981).
132
°De Melo, 801 F.2d at 1061 (citing PiperAircraft, 454 U.S. at 247).
944 BAYLOR LAWREVIEW [Vol. 51:4
..appropriate to the action; and [(4)] all other practical
problems that make trial of a case easy, expeditious and
inexpensive. 321
The second focus of the balancing test looks to public factors: (1) the
administrative difficulties flowing from court congestion; (2) the "local
interest in having localized controversies decided at home;" (3) the interest
"in having the trial of a diversity case in a forum that is at home with the
state law that must govern" the action; (4) the avoidarice of unnecessary
problems in conflict of laws or in the application of foreign law; and (5)
the unfairness of burdening citizens in an unrelated forum with jury
duty. 1322
The Second Circuit's forum non conveniens dismissal regarding the
Bhopal disaster is an instructive example of imposing conditions on the
dismissal that favor plaintiff. 323 The trial court had granted dismissal
provided that Union Carbide consent to India's jurisdiction and waive
limitations defenses, agree to satisfy any resulting judgment, and submit to
discovery under the Federal Rules of Civil Procedure.'12 4 The Second
Circuit upheld the dismissal but removed the requirements as to judgment
payment and discovery, because of possible later problems in construing
32
the meaning of those requirements and the standards that might attach.1
When using this test in a parallel litigation setting, as opposed to one in
which no other lawsuit has been filed, there should be no difference in the
argument or the analysis. The movant should bear the same burden of
persuasion in both instances, and it should be understood that the mere fact
of having a parallel case does not compel the dismissal of other cases. The
court must apply just as strict an analysis under Gilbert as it would in the
absence of a pending parallel case. 326 In that case, the court denied both a
stay and a forum non conveniens dismissal of the United States action,137
noting that the defendant bears the burden of persuasion at all times.132,8
The court concluded that the defendant had not met that burden, and that
132'Gilbert, 330 U.S. at 508.
3 22
1 1d. at 508-09.
323
1 See In.re Union Carbide Corp. Gas Plant Disaster, 809 F.2d 195, 205-06 (2d Cir. 1987).
324
1 See id. at 198.
132'See id. at 205-06.
326
1 See generally American Cyanamid Co. v. Picaso-Anstalt, 741 F. Supp. 1150 (D. N.J.
1990) (holding that dismissal under the doctrine of forum non conveniens is not warranted even
if the French forum could not respolve the dispute).
327
1 See id. at 1159.
28
'1 See id. at 1155.
1999] PARALLEL LITIGATION
the alternative French forum did not satisfy the public and private interests
tests." 9 Moreover, plaintiffs should not rely on the fact that the other
forum has already taken jurisdiction of the controversy. Rather, plaintiffs
should insist that the dismissing court condition such dismissal upon the
case being litigated on the merits in the other forum, with a fall back
position that if the other case is resolved other than on the merits, the
dismissing forum will reassume jurisdiction.1330
In spite of the Gilbert test's unquestioned dominance of international
forum non conveniens in federal courts, not all issues are settled. One split
among the United States courts of appeals concerns the application of
forum non conveniens in antitrust cases involving foreign parties. In
United States v. National City Lines, Inc., hereinafter National City I, the
Supreme Court held that forum non conveniens could not be applied in
antitrust suits involving domestic parties.33l National City I, was overruled
in United States v. National City Lines Inc. due to the Court's
interpretation of the then-recently-enacted 28 U.S.C. § 1404, as governing
inconvenient forum transfers within the federal system. 3 2 This resolved
the question of forum non conveniens in domestic antitrust cases, but left
open the international question. The Fifth Circuit held that National City I
governs all instances of forum non conveniens, both domestic and
international, and that National City II overruled it only in regard to
intrafederal transfers.1 33 The United States Courts of Appeals for the First
and Second Circuits disagree with the Fifth Circuit, holding that National
1329See id. at 1157-58; accord Biblical Archaeology Soc'y v. Qimron, No. CIV.A.92-5590,
1993 WL 39572, at *4 (E.D. Pa. 1993); see generally Lacey v. Cessna Aircraft Co., 862 F.2d 38(3d Cir. 1988) (dicussing the burden of proof for forum non conveniens dismissals).
"°See generally Rolls Royce (Canada), Ltd. v. Cayman Airways, Ltd., 617 F. Supp. 17(S.D. Fla. 1985) (holding that in a suit against a Cayman Island defendant by a resident plaintiff
in federal court, dismissal on grounds of forum non conveniens is appropriate). For other useful
discussions of forum non conveniens in an international setting, though not necessarily a parallel
litigation setting, see generally In re Air Crash DisasterNear New Orleans,La., 821 F.2d 1147(5th Cir. 1987) (holding that the district court did not abuse its discretion in denying a motion to
dismiss on grounds of forum non conveniens in a suit by Uruguayan plaintiffs); DeYoung v.
Beddome, 707 F. Supp. 132 (S.D.N.Y. 1989) (dismissing on grounds of forum non conveniens
and comity in light of pending Canadian litigation); MAURICE ROSENBERG, CONFLICT OF LAWS
189-92 (10th ed. 1996).
1331334 U.S. 573, 580 (1948).
3 2
a United States v. Nat'l City Lines, Inc., 337 U.S. 78, 83-84 (1949) (holding that 28 U.S.C.
§ 1404 overruled National City 1).
.3 .See Industrial Inv. Dev. Corp. v. Mitsui & Co., 671 F.2d 876, 890 (5th Cir. 1982); accord
Kempe v. Ocean Drilling & Exploration Co., 876 F.2d 1138, 1144-45 (5th Cir. 1989).
946 BAYLOR LAW REVIEW [Vol. 51:4
City I did not consider international cases, which are therefore subject to
33
forum non conveniens motions.'
b. Removal to FederalCourt to Obtain Different Forum Non
Conveniens Law
Removal to federal court is one tactic in seeking a forum non
conveniens dismissal. That is, defendants in state court cases based partly
or wholly on foreign events, with claims arising under federal law or
having the elements of diversity jurisdiction, may remove the case to
federal court to file the forum non conveniens motion. Reasons for
removing a case to federal court range from a perception of the federal
court's more liberal application of Gilbert to an outright unavailability of
forum non conveniens in the state court.
Removing the case to federal court will not work if the desired forum is
another state in the United States. 3 This is so because in American
Dredging Co. v. Miller, the Supreme Court held that federal courts should
apply state law in forum non conveniens issues in a domestic setting.1336
Although the Supreme Court has refrained from ruling on the same
question involving a foreign setting, 1331 the negative implication in
American Dredging nonetheless suggests a uniform federal law of forum
non conveniens in cases involving some foreign parties. In spite of the
Court's avoidance in Piper,this rule has been followed consistently and is
clearly the appropriate choice according to Professor Wright.'" 8 The First,
Fifth, Tenth and Eleventh Circuits have held that federal law applies to
forum non conveniens motions in federal courts, 339 and that a federal court
13
40
may dismiss for forum non conveniens where a state court would not.
Plaintiffs hoping to take advantage of state forum non conveniens law,
or the lack thereof, will understandably attempt to avoid removal by
restricting the prayer for damages to less than the diversity amount until
'334See Howe v. Goldcorp Inv., Ltd., 946 F.2d 944, 948-49 (1st Cir. 1991); Capital Currency
Exch., N.V. v. National Westminster Bank PLC, 155 F.3d 603, 607-08 (2d Cir. 1998).
See American Dredging Co. v. Miller, 510 U.S. 433,456 (1994).
....
33 6
1 1d"
33 7
1 See Piper Aircraft Co. v. Reyno, 454 U.S. 235, 248 n.13 (1981).
33
1 $See C. WRIGHT, FEDERAL PRACTICE & PROCEDURE § 3828, at n.42.
1339That is, those not governed by 28 U.S.C. § 1404. See supra Part II.B.4.
134 0See Seguros Comercial Am. S.A. v. American President Lines, Ltd., 105 F.3d 198, 199
(5th Cir. 1996); Rivendell Forest Products, Ltd. v. Canadian Pac. Ltd., 2 F.3d 990, 993-94 (10th
Cir. 1993); Royal Bed & Spring Co. v. Famossul Industria, 906 F.2d 45, 50 (1st Cir. 1990);
Sibaja v. Dow Chem. Co., 757 F.2d 1215, 1216-17 (11 th Cir. 1985).
1999] PARALLEL LITIGATION 947
the one year removal time has passed under 28 U.S.C. § 1446(b).
Defendants will understandably try to establish the potential for a higher
recovery. This forum-selection struggle was at issue in De Aguilar v.
Boeing Co., a case involving a wrongful death claim in a Texas state court
based on an airplane crash in Mexico.'1'1 Plaintiffs, or others with related
claims, had filed at least four other lawsuits in state and federal courts in
the United States, all dismissed either voluntarily, or on grounds of
sovereign immunity or forum non conveniens.32 In this case, plaintiffs
wished to restrict their damages to an amount less than the federal
jurisdictional amount, $50,000 at the time, but were thwarted by Texas law
which did not allow pleading for a specific amount of damages.11 3 When
defendants removed the case to federal court, plaintiffs submitted affidavits
'
stipulating their damages as less than the diversity jurisdiction amount. 14
3
The district court denied remand, and the Fifth Circuit affirmed.1 41
Defendants then moved for a forum non conveniens dismissal.1346 The
court noted that in wrongful death cases, forum non conveniens was
unavailable in Texas at the time the action accrued,' 34 7 but because removal
was valid, federal law governed forum non conveniens and the case was
dismissed.
Torres v. Southern Peru Copper Corp., provides an additional point on
removal aimed at dismissal. 41 Torres involved a toxic tort claim by
Peruvian citizens against the defendant, a Delaware corporation with its
principal place of business in Peru.' 34 9 The government of Peru submitted a
letter to the State Department urging dismissal on the grounds of adverse
effects on foreign policy.1350 The Torres court first noted that it could not
consider a forum non conveniens motion until it had resolved questions of
subject matter jurisdiction.135 The court found questions as to subject
matter juridiction under both federal question (federal common law
regarding the case's implications to United States foreign policy) and
134147 F.3d 1404, 1406 (5th Cir. 1995).
' 34'See id. at 1406-07.
43
11 See id. at 1407.
344
1 See id.
1345See id. at 1408
346
1 See id.
347
D See id.
1141 13 F.3d 540, 542 (5th Cir. 1997).
349
1 d. at 541.
350
' See id. at 542.
1
"I 1d. at 542-43.
948 BAYLOR LAWREVIEW [Vol. 51:4
diversity jurisdiction (as a Delaware corporation with its principal place of
business in Peru; the defendant was solely a Delaware citizen for diversity
purposes, thus creating diversity with the Peruvian plaintiffs).'" Two
conclusions flow from Torres. First, a state court defendant seeking a
federal ruling on forum non conveniens dismissals must clearly establish
federal removal jurisdiction. Second, removal jurisdiction in a typical state
court action may exist not only on diversity grounds, but also as a federal
question in cases where foreign policy is implicated by adjudication in the
United States of a foreign dispute.
Torres must be read, however, in light of the Supreme Court's recent
holding in Ruhrgas AG v. Marathon Oil Co. 353 In Ruhrgas, the defendant
removed a state action to federal court seeking dismissal on personal
jurisdiction grounds, an issue that could have been decided in state
court.'31 4 Plaintiff challenged the basis for removal, and in a nine to seven
en banc opinion, the Fifth Circuit held that after removal from state court, a
federal court must first resolve questions of subject matter jurisdiction
before addressing dismissal on personal jurisdiction grounds.13-5 The
Supreme Court reversed, holding that although questions of subject matter
jurisdiction should ordinarily be decided first, a federal court has discretion
to decide a straightforward question of personal jurisdiction first, if faced
with a complex issue of subject matter jurisdiction that is "resolved" by
5
dismissal on personal jurisdiction grounds.13 6
Torres and Ruhrgas may be analogous in that both involved the
defendant's removal to federal court for a dismissal motion rather than
adjudication on the merits. The analogy is weakened in that forum non
conveniens is a discretionary question while personal jurisdiction is a
question of law. In other words, while it may be permissible to dismiss on
legal grounds prior to resolving subject matter jurisdiction questions, it
may not be permissible to dismiss on discretionary grounds without
establishing subject matter jurisdiction. This point is underscored by the
accepted view that forum non conveniens is inapplicable in a court that
lacks either subject matter jurisdiction or personal jurisdiction. 357
Nonetheless, the Supreme Court's reversal in Ruhrgas raises questions
about Torres.
13521d. at 543-44.
1153526 U.S. 574.
354
1 at 587-88.
M1d.
'355See Marathon Oil Co. v. A.G. Ruhrgas, 145 F.3d 211, 225 (5th Cir. 1998).
'356See Marathon, 526 U.S. at 588.
357
1 See Gulf Oil Corp. v. Gilbert, 330 U.S. 501, 504 (2d Cir. 1947).
1999] PARALLEL LITIGATION 949
c. EnjoiningRepetitive Litigation ofForeign Claims
Previously Dismissedon Forum Non Conveniens Grounds
Injuries and deaths in foreign countries often end up as claims in state
or federal courts in the United States, if there is a basis for personal
jurisdiction. Whether our courts should provide a forum for such claims is
controversial.- , These claims are sometimes dismissed on forum non
conveniens grounds, 359 but claimants are not always deterred by the first or
second dismissal. Villar v. Crowley Maritime Corp., arose from Renerios
Villar's drowning death in Saudi Arabia, where he worked for a Saudi
corporation on a tug boat registered in Panama. 1360 The Philippino
employment contract governing Villar's employment provided that any
resulting injuries could be compensated either under Philippine law or
Panamanian law.116 ' His survivors, all from the Phillipines, sued first in a
California federal court, then in a California state court, then in a Texas
state court.'3 62 The two California state courts dismissed the cases on
forum non conveniens grounds, conditioned on defendants' agreement to
litigate in the Philippines.1363 Plaintiffs did not sue in the Philippines, in
Saudi Arabia, or in Panama, but instead brought a third claim in Texas
358
See generally George D. Brown, The Ideologies of Forum Shopping: Why Doesn 't a
Conservative Court Protect Defendants?, 71 N.C. L. REV. 649 (1993)) (identifying
inconsistencies in the Supreme Court's treatment of federal law vs. state law forum shopping and
state law vs. state law forum shopping); Laurel E. Miller, Forum Non Conveniens and State
Control of Foreign PlaintiffAccess to US. Courts in International Tort Actions, 58 U. CHI. L.
REV. 1369 (1991) (stating that the federal courts' interpretation of the forum non coveniens
doctrine has closed the federal courts' doors to foreign plaintiffs); William L. Reynolds, The
Proper Forum for a Suit: Transnational Forum Non Conveniens and Counter-Suit Injunctions in
the Federal Courts, 70 TEX. L. REV. 1663 (1992) (examining the effects of expansive
interpretations of forum non conveniens on transactional litigation); David W. Robertson, The
Federal Doctrine of Forum Non Conveniens: An Object Lesson in Uncontrolled Discretion, 29
TEX. INT'L L.J. 353 (1994); Linda J. Silberman, Developments in Jurisdiction and Forum Non
Conveniens in International Litigation: Thoughts on Reform and a Proposal for a Uniform
Standard, 28 TEX. INT'L L.J. 501 (1993) (discussing forum shopping as part of a responsible
litigator's job as well as legislation in Texas that permits forum non conveniens dismissal where
it was previously unavailable); Russell J. Weintraub, International Litigation and Forum Non
Conveniens, 29 TEX. INT'L L.J. 381 (1994) (advocating understandable choice of law rules for
liability issues).
1359See, e.g., De Melo v. Lederle Labs., 801 F.2d 1058, 1059 (8th Cir. 1986).
'160990 F.2d 1489, 1492 (5th Cir. 1993).
6
13 'See id.
362
1 See id. at 1492-93
1a63See id. at 1492.
950 BAYLOR LAW REVIEW [Vol. 51:4
state court.'3" The suit was removed to federal court and dismissed on
grounds of lack of personal jurisdiction (as to some defendants) and forum
non conveniens.16 5 On its own motion, the federal trial court enjoined
plaintiffs from filing any other action "in any other state or federal court in
the United States."1 66 The Fifth Circuit affirmed,367 holding that since the
Anti-Injunction Act 13 61applies only to pending state actions the court could
enjoin plaintiffs from future filings both in federal courts, citing Harrelson
v. United States,3 69 and in state courts. An injunction against repetitive
70
litigation has been issued in a domestic setting limited to federal courts.'
However, in a federal-state setting, litigation may be barred by the Anti-
Injunction Act, under which the Supreme Court limits antisuit injunctions
37
to matters actually decided in the federal action.' '
4. Dismissal or Stay of In Rem Cases
The requirements are somewhat clearer and more predictable for in rem
litigation, that is, cases involving jurisdiction over property that is at least
theoretically within the court's possession. In these cases, the first-filed
rule is applied far more uniformly, with fewer exceptions based on
misconduct and forum shopping. The general rule is that the court first
obtaining jurisdiction over the property be allowed to adjudicate the matter
without interference. 317 The doctrine is attributed to the Princess Lida
case, involving a dispute over a trust in parallel domestic cases.' 373 The
Court stated the rule broadly:
We have said that the principle applicable to both
federal and state courts that the court first assuming
jurisdiction over property may maintain and exercise that
jurisdiction to the exclusion of the other, is not restricted to
cases where property has been actually seized . . .but
"See id. at 1493.
365
1 See id.
13661d"
1 6'See id. at 1499.
136828 U.S.C. § 2283 (1994). See supra Part V.D.2.
1369613 F.2d 114, 116 (5th Cir. 1980).
1370See Wood v. Santa Barbara Chamber of Commerce, Inc., 705 F.2d 1515, 1518 (9th Cir.
1983).
17See Chick Kam Choo v. Exxon Corp., 486 U.S. 140, 148 (1988); see also Deus v.
Allstate Ins. Co., 15 F.3d 506, 524 (5th Cir. 1994).
'372See Princess Lida v. Thompson, 305 U.S. 456, 466 (1939).
13731d.
1999] PARALLEL LITIGATION
applies as well where suits are brought to marshal assets,
administer trusts, or liquidate estates, and in suits of a
similar nature where, to give effect to its jurisdiction, the
374
court must control the property.
The italicized phrase embraces quasi in rem jurisdiction, now
disapproved in the United States to the extent that it authorizes jurisdiction
based only on the presence of defendant's unrelated property in the
forum.1371 In fact, in Princess Lida the state court's jurisdiction was
described as quasi in rem, 3 76 even though the state court action related to a
Pennsylvania trust and sought an accounting and specific performance by
the trustee, all seemingly in rem matters. 377 Nevertheless, because of
Shaffer's disapproval of quasi in rem jurisdiction, the rule should currently
be read without the italicized phrase, but only in regard to parallel actions
within the United States. Where the first-filed case is in a foreign forum
that exercises quasi in rem jurisdiction, arguably, the Princess Lida rule
mandates deference to that first-filed case, even though its language is
378
limited to "federal and state courts.'"1
Princess Lida's rule for state and federal courts applies equally where
one of the actions is foreign.137 In Dailey v. The National Hockey League,
the Third Circuit dismissed a United States action in deference to a parallel
Canadian action involving a trust, stating that the Princess Lida doctrine is
"a 'mechanical rule' which requires that the court in which the second suit
is brought yield its jurisdiction if the requisite 'property' showing is
made." 1380 Dailey employed a two-part test from PrincessLida: "(1) the
litigation in both the first and second fora are in rem or quasi in rem in
nature, and (2) the relief sought requires that the second court exercise
control over the property in dispute and such property is already under the
'
control of the first court."1381
The most common examples are bankruptcy and receiverships, wherein
the rule is statutory and perhaps more favorable to local creditors who need
'3741d. (emphasis added).
37
SSee Shaffer v. Heitner, 433 U.S. 186, 212 & n.39 (1977).
1376305 U.S. at 467.
13"Id. at 458.
13"ld. at 466.
37
' 9See Dailey v. The National Hockey League, 987 F.2d 172, 176 (3d Cir. 1993).
8
13 °Id. (quoting PPG Industries, Inc. v. Continental Oil Co., 478 F.2d 674, 677 (5th Cir.
1973)).
'381 Id. (citing Princess Lida, 305 U.S. at 466); see also Poseidon Schiffahrt v. M/S Netuno,
335 F. Supp. 684, 687 (S.D. Ga. 1972) (dismissing in favor of parallel Canadian action).
952 BAYLOR LA WREVIEW [Vol. 51:4
protection. Federal law requires its courts to defer to foreign bankruptcy
proceedings,112 "provided the foreign laws comport with due process and
fairly treat claims of local creditors."'" s The Bankruptcy Code further
authorizes the dismissal or suspension of a United States bankruptcy action
if "there is pending a foreign proceeding" and certain factors are met.'4
For these purposes, a "foreign proceeding" is one "in a foreign country in
which the debtor's domicile, residence, principal place of business, or
principal assets were located at the commencement of such proceeding, for
the purpose of liquidating an estate, adjusting debts by composition,
extension, or discharge, or effecting a reorganization."-, 5 Under these and
similar provisions, a number of federal courts have deferred to foreign
proceedings."
There are exceptions, and United States courts need not invariably defer
to foreign insolvency proceedings."7 In Underwood an involuntary
bankruptcy petition filed in the United States was held not to violate an
injunction by the High Court of Nevis (in Malaysia) against other
insolvency proceedings., This holding is mitigated by the fact that the
Nevis court had not formally obtained jurisdiction over the assets, and that
its injunction was not operative against the United States creditors who
filed the involuntary bankruptcy proceeding." 89 Nonetheless, the
Underwood opinion notes that under the United States Bankruptcy Code,
the court had the discretion to dismiss the local action, but was not required
82
. See 1IU.S.C. § 304 (1994).
' "Victrix S.S. Co. v. Salen Dry Cargo, 825 F.2d 709, 714 (2d Cir. 1987) (citing Canada S.
Ry. Co. v. Gebhard, 109 U.S. 527, 539 (1883)).
138411 U.S.C. § 305(a)(2)(A)-(B) (1993).
138511 U.S.C. § 101(23) (1994); see also Underwood v. Hilliard, 98 F.3d 956, 960 (7th Cir.
1996).
1316See generally Allstate Life Ins. Co. v. Linter Group Ltd., 994 F.2d 996, 1002 (2d Cir.
1993) (deferring to Australia); Cunard S.S. Co., v. Salen Reefer Servs., 773 F.2d 452, 461 (2d
Cir. 1985) (deferring to Sweden); Pravin Banker Assocs., Ltd. v. Banco Popular del Peru, 165
B.R. 379, 386 (S.D.N.Y. 1994) (deferring to Peru); Lindner Fund, Inc. v. Polly Peck Int'l PLC,
143 B.R. 807, 810 (S.D.N.Y. 1992) (deferring to the United Kingdom); Caddel v. Clairton
Corp., 105 B.R. 366, 368 (N.D. Tex. 1989) (dismissing district court claim in deference to
Canadian bankruptcy proceeding); Daniels v. Powell, 604 F. Supp. 689, 698 (N.D. Ill. 1985)
(deferring to Bermuda); Kenner Prods. Co. v. Societe Fonciere et Financiere Agache-Willot, 532
F. Supp. 478, 480 (S.D.N.Y. 1982) (deferring to France). The Pravin, Linder, and Caddel
decisions, although reported in the Bankruptcy Reporter, are dismissals of district court claims in
deference to foreign insolvency proceedings.
" 87See Underwood v. Hilliard, 98 F.3d 956, 961 (7th Cir. 1996).
138SId.
9See id.
...
1999] PARALLEL LITIGATION
to do so.3 90 Similarly, in Elgin Sweeper Co. v. Melson Inc., the court held
that the principle of comity and the parties failure to obtain permission
from the Canadian court in a pending Canadian bankruptcy proceeding,
could be sufficient grounds for dismissal of a related United States action
for fraud. 1391
Forum selection agreements may provide other grounds to override in
rem jurisdiction. For example, in Bremen, the Supreme Court vacated and
remanded the Fifth Circuit's endorsement of an in rem admiralty case,
based on a policy favoring forum selection agreements, thus dismissing the
first-filed United States action in deference to a second-filed English action
39
that fulfilled the parties' contractual choice of forum. 2
B. FederalInjunctionsAgainst ForeignLitigation
1. Historical Development
Authorities describe four circumstances for antisuit injunctions: (1)
stopping litigation of the same dispute in another forum; 93 (2)
consolidating related but not identical claims in the moving party's
preferred forum; 1 94 (3) the prevailing party in a completed case, stopping
the relitigation in the other forum; 119and (4) preventing the opponent from
seeking an antisuit injunction in the other forum through an anit-antisuit
injunction.'"9 As with federal antisuit injunctions against parallel state
litigation, federal courts derive their injunctive authority from the All Writs
Act, 97 although the power to enjoin foreign litigation may exist
independently." 9, Unlike federal injunctions against state litigation, federal
courts may enjoin parties from foreign litigation without regard to the
0
"9 d. at 960.
1391884 F. Supp. 641,650 (N.D.N.Y. 1995).
" 9 2 Bremen v. Zapata Off-Shore Co., 407 U.S. 1, 15 (1972); supra Part VII.A.2.a.
3'See Compagnie des Bauxites de Guinea v. Insurance Co. of N. Am., 651 F.2d 877, 887
(3d Cir. 1981); Kaepa, Inc. v. Achilles Corp., 76 F.3d 624, 626 (5th Cir. 1996).
1394See Seattle Totems Hockey Club, Inc. v. National Hockey League, 652 F.2d 852,
854-55
(9th Cir. 1981).
'-See Bethell v. Peace, 441 F.2d 495, 498 (5th Cir. 1971); Scott v. Hunt Oil Co., 398 F.2d
810, 811 (5th Cir. 1968).
"See Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 930 (D.C. Cir.
1984); Owens-Illinois, Inc. v. Webb, 809 S.W.2d 899, 902 (Tex. App.-Texarkana 1991, writ
dism'd w.o.j.); see generally BORN, INTERNATIONAL CIVIL LITIGATION, supra note 6, at 475.
139728 U.S.C. § 1651 (1994).
"39"SeeCole v. Cunningham, 133 U.S. 107, 124 (1890) (stating that courts of equity have
power to enjoin parties within their jurisdiction from prosecuting actions in foreign countries).
BAYLOR LAWREVIEW [Vol. 51:4
federalism concerns found in enjoining state court litigation. Those issues
are replaced, however, by considerations of comity and deference to
foreign policy that can result in an equally difficult standard.
Because of the other disagreements in remedies for parallel litigation, it
is no surprise that federal law is split on the requirements for issuing an
antisuit injunction against foreign litigation. This split is best understood
by briefly recounting the cases sequentially. One of the earlier reported
cases is Gage v. Riverside Trust Co., in which defendants were restrained
from an action in England on claims regarding loan securities pending in
the California federal court.' 3" The court drew from Justice Story, among
others, in finding authority to grant the antisuit injunction:
But, although the courts of one country have no authority
to stay proceedings in the courts of another, they have an
undoubted authority to control all persons and things
within their own territorial limits. When, therefore, both
parties to a suit in a foreign country are resident within the
territorial limits of another country, the courts of equity in
the latter may act in personam upon those parties, and
direct them, by injunction, to proceed no further in such
suit. In such a case these courts act upon acknowledged
principles of public law in regard to jurisdiction. They do
not pretend to direct or control the foreign court, but,
without regard to the situation of the subject-matter of the
dispute, they consider the equities between the parties, and
decree in personam according to those equities, and
enforce obedience to their decrees by process in personam.
...It is now held that, whenever the parties are resident
within a country, the courts of that country have full
authority to act upon them personally, with respect to the
subject of suits in a foreign country, as the ends of justice
may require, and, with that view, to order them to take, or
omit to take, any steps and proceedings in any other court
of justice, whether in the same country, or in any foreign
country.14°°
19986 F. 984, 999 (C.C.S.D. Cal. 1898).
14"Id. (citing Story, Eq. Jur. §§ 899, 900).
1999] PARALLEL LITIGATION 955
Although the defendants were British corporations, their offices in
Riverside were sufficient to qualify them as residents for purposes of in
personam enforcement. 1401
Prior to Laker and the current circuit split,1402 the legal standard for
injunctions against foreign litigation was sometimes slim. In Bethell v.
Peace the Fifth Circuit enjoined Florida defendants from a quiet title action
in the Bahamas in regard to a sale of Bahama property that was negotiated
and executed between Florida residents in Florida, and in which the federal
court had already ruled on the merits of a related contract issue.1403 The
court's sources for the injunction were a citation to Florida law authorizing.
injunctions from equity courts and a quote from Professor Ehrenzweig on
the point that American courts
will be willing to enjoin foreign proceedings which
involve the same parties and the same cause of action...
where the foreign suit was brought by a resident of the
forum state against another resident of the state to evade a
protection provided for the latter under forum law... or
where the foreign suit would be vexatious in other
4
respects.' 04
2. Current Law
The modem discussion starts with a Fifth Circuit case, In re Unterweser
Reederei, GMBH.1405 Zapata's drilling barge was damaged while being
towed by Unterweser's tug.'140 Both parties sued in federal court in
Florida, and Unterweser filed an action in the High Court of Justice in
1401
See id. at 985.
14 2
See infra notes 1488-1496.
1403441 F.2d 495, 497 (5th Cir. 1971).
' 14 Id. at 498 (quoting from EHRENZWEIG, CONFLICT OF LAWS 129-30 (1962)); see also
American Home Assurance Co. v. Insurance Corp. of Ireland, Ltd., 603 F. Supp. 636, 643
(S.D.N.Y. 1984) (describing English action enjoined under two-part test: (I) the parties must be
the same; and (2) the adjudication of one case must resolve the other); cf.Sperry Rand Corp. v.
Sunbeam Corp., 285 F.2d 542, 546 (7th Cir. 1960) (reversing the trial court's injunction against
foreign suit having different issues that would not be resolved in the United States action, and
there was no evidence that the foreign suit was vexatious or harassing).
'1405428 F.2d 888 (5th Cir. 1970), aff'd on reh "gen banc, 446 F.2d 907 (1971), rev 'd on other
grounds sub nom. Bremen v. Zapata Off-Shore Co., 407 U.S. 1 (1972). Readers should note that
the precedent here is the Fifth Circuit opinion in the Bremen case, and not its Supreme Court
reversal on other grounds. See supra Part VII.A.2.a. for a full discussion of the Bremen case and
its application to forum selection clauses.
"'See Unterweser, 428 F.2d at 889.
.956 BAYLOR LAWREVIEW [Vol. 51:4
London.'4 07 The Florida federal court enjoined Unterweser from
proceeding in England.'40 8 The Fifth Circuit affirmed, holding that
injunctions against foreign litigation were appropriate where the foreign
action would "(1) frustrate a policy of the forum issuing the injunction; (2)
be vexatious or oppressive; (3) threaten the issuing courts in rem or quasi
in rem jurisdiction; or (4) where the proceedings prejudice other equitable
considerations." ' 140 The court then noted that "allowing simultaneous
prosecution of the same action in a foreign forum thousands of miles away
would result in 'inequitable hardship' and 'tend to frustrate and delay the
speedy and efficient determination of the cause."'410 The Supreme Court
reversed on the grounds that the parties' contractual choice of forum
designating England required the lower court to dismiss on forum non
conveniens grounds unless the forum clause was unreasonable, unjust or
invalid. '4'
In spite of the Supreme Court reversal, the Fifth Circuit Unterweser
opinion not only retained its vitality for cases not involving forum
selection clauses, but picked up an endorsement from the Ninth Circuit in
Seattle Totems Hockey Club, Inc. v. National Hockey League.1 4 1 The
owners of the Seattle Totems ice hockey team filed an antitrust action
against the National Hockey League, Northwest Sports, and other
defendants, alleging "unlawful monopolization of the ice hockey industry
in North America."''41 The action also sought to void plaintiffs' executory
agreement to sell the Totems to Northwest Sports.141 More than two years
later, Northwest Sports sued the Totems' owners in Canada for damages
for breach of the same agreement.1 41 5 The district court enjoined Northwest
from pursuing the Canadian action, noting that Northwest's claims were
compulsory counterclaims in the United States action. 1416 Northwest
responded that Canadian law governed under the contract's choice of law
clause, and that their claims were permissive in Canada.1417 The Ninth
'4°See id. at 889-90.
1408See id. at 890.
4
1'09d.
1410 d. at 896.
"'SeeBremen v. Zapata Off-Shore Co:, 407 U.S. 1, 15 (1972); supra Part VII.A.2.a.
142652 F.2d 852, 855-56 (9th Cir. 1981).
14"Id. at 853.
4 14
' See id.
14tsSee id.
1416See id.
4 17
1 See id. at 853-54.
1999] PARALLEL LITIGATION 957
Circuit upheld the district court's injunction on the grounds that: (1) the
compulsory status of Northwest's claims was a procedural issue governed
by forum law, and (2) the action should be litigated in one forum.48 In
doing so, the Ninth Circuit observed that injunctions against foreign
litigation should be used sparingly, but justified its use here because of
party and witness convenience, the courts' interest in promoting the
efficient administration of justice, and the lack of prejudice to
Northwest. 1419
A significant change in reasoning occurred in the D.C. Circuit's opinion
in Laker Airways Ltd. v. Sabena, Belgian World Airlines,1410 and current
discussions of federal injunctions against foreign litigation turn on its
stringent standards. The U.S.-English dispute involved the once-notorious
Freddie Laker, perhaps the originator of the cut-rate transatlantic air
fare.1421 When his business eventually failed, Mr. Laker filed an antitrust
action against several airlines in a United States district court in
Washington, D.C.14 12 The defendant airlines went to an English court to
obtain an injunction against Mr. Laker, an English citizen, to stop his
United States antitrust action.1423 Laker then persuaded the United States
district court to issue an anti-antisuit injunction against the American and
remaining foreign litigants, countering the English injunction424 On
appeal, the United States Court of Appeals for the D.C. Circuit rejected the
relaxed standard fround in Unterweser and Seattle Totems, and held
instead that antisuit injunctions could only be issued to protect the forum's
jurisdiction or to prevent evasion of the forum's important public
policies.1415 Finding these rigid criteria satisfied, the court upheld the
injunction against the English antisuit injunction.1426 The Second Circuit
adopted this narrow test in China Trade & Development Corp. v. M V.
Choong Yong,' 427 and the D.C. Circuit reaffirmed its decision in Sea
1 428
ContainersLtd. v. Stena AB.
4
' "See id. at 854-55.
'4 9See id. at 855-56.
1420731 F.2d 909 (D.C. Cir. 1984).
421
1 See id. at 916-17.
141See id. at 917.
4
1 'See id. at 917-18.
424
1 See id. at 918-19.
14 SSee id. at 927-28.
426
1 See id. at 956.
1427837 F.2d 33, 36 (2d Cir. 1987). For a pre-China Trade decision in the Second Circuit,
using broader standards to justify an antisuit injunction, see Garpeg, Ltd. v. United States, stating
that "a foreign action should be enjoined 'when it would (1) frustrate a policy in the forum
BAYLOR LA WREVIEW [Vol. 51:4
This decision created a tie among the circuit courts that was broken in
4 9
Sixth Circuit's 1992 opinion in Gau Shan Co., v. Bankers Trust Co.
Gau Shan provided a valuable explanation of the various circuits' positions
and the underlying policies, and has additional merit because it involved
parallel litigation in a routine international business transaction (as
opposed to an American litigant's attempt to prosecute United States
antitrust law in foreign countries), thus illustrating the underlying policy
concerns in a more typical lawsuit. 1430
It began in October 1989, when the People's Republic of China
approached the Gau Shan Company ("Gau Shan"), a Hong Kong cotton
merchant, about buying American cotton. 43' Gau Shan in turn contacted
one of its American suppliers, the Julien Company of Memphis, Tennessee
("Julien").1432 Julien financed its cotton trading through Bankers Trust
Company of New York ("Bankers Trust"), and it was through Julien that
Gau Shan had first dealt with Bankers Trust. 433 On Bankers Trust's
assurances that it would finance the large transaction, Gau Shan contracted
with the People's Republic to ship fifteen million metric tons of cotton, for
3
two shipments in late October 1989. 1
Julien, however, had a momentary problem, a $20 million outstanding
debt to LOR, Ltd. ("LOR"), for prior unpaid cotton acquisitions that
undermined Julien's ability to acquire more cotton. 1435 Bankers Trust,
which apparently worked quite closely with Julien, agreed that it would
structure the Gau Shan deal so as to buoy Julien's finances.1436 Bankers
Trust then advised Gau Shan that it could not advance the loan money to
Julien (to acquire the cotton) unless Gau Shan signed a $20 million
issuing the injunction, (2) be vexatious, (3) threaten the issuing court's in rem or quasi in rem
jurisdiction or (4) where the proceedings prejudice other equitable considerations.' Similarly, an
injunction is appropriate if adjudication of the same issue in separate actions would result in
'unnecessary delay, substantial inconvenience and expense to the parties and witnesses, and
where separate adjudications could result in inconsistent rulings or a race to judgment."' 538 F.
Supp. 789, 798 (S.D.N.Y. 1984) (quoting Cargill, Inc. v. Hartford Accident & Indem. Co., 531 F.
Supp. 710, 715 (D. Minn. 1982)).
1428890 F.2d 1205, 1214 (D.C. Cir. 1989).
1429956 F.2d 1349, 1349 (6th Cir. 1992).
143 Id. at 1351.
1431See id.
1432See id.
'433See id.
434
1 See id.
'433See id.
1436See id.
1999] PARALLEL LITIGATION 959
promissory note payable to Bankers Trust.4 3 7 Gau Shan agreed under
protest, and signed the note which contained a New York choice of law
clause. 1438
Bankers Trust then instructed Julien that Gau Shan would pre-pay for
the cotton with the proceeds of the $20 million note.'4 '9 Bankers Trust
would credit the $20 million to Julien's account, and then debit that
account to pay the unrelated debt to LOR. 1440 LOR would then release
cotton for shipment to Mocatta Fixtures Corporation ("Mocatta"), an
unrelated transaction.'' Mocatta would, in turn, pay Julien for the cotton,
which would be used to buy the Gau Shan cotton.4 4 2 No one told Gau
Shan of these aspects of the deal.'' 3 On October 26, 1989, Bankers Trust
deposited $20 million in Julien's account, then wired the money to LOR.'4
The arrangement did not work out as planned from that point, resulting in
44
Julien's shipment to China of only about 24% of the cotton agreed upon.' 1
Gau Shan thus only partially performed its contract with the People's
Republic. 144
In February 1990, Gau Shan received Bankers Trust's demand on the
$20 million note, with a warning that Bankers Trust would sue to collect in
Hong Kong if payment was not received by February 26.'4 7 Gau Shan
ignored the demand and instead filed suit in federal district court in
Memphis, seeking rescission of the note and damages for fraud and
negligence.'' 8 In addition, Gau Shan feared that if Bankers Trust were
allowed to proceed in Hong Kong, it could take advantage of a local legal
procedure called a "Deed of Charge," which would permit Bankers Trust
"to appoint a receiver of its choice for Gau Shan without court approval,"
who would then have the power to seize Gau Shan's assets, discharge its
employees, and abandon the Tennessee federal litigation, all without court
oversight.' The Sixth Circuit analogized this to an "authorization to
1437See id.
'438See id.
'439See id.
'"'See id.
'"'See id.
1" 2See id.
3
14 See id.
"See id.
I"'See id.
6
'" See id.
1"See id. at 1351-52.
"'See id. at 1352.
'"91d.at 1352, 1356.
960 BAYLOR LAWREVIEW [Vol. 51:4
confess judgment," which was a violation of public policy under the
controlling New York law.40 Gau Shan accordingly moved to enjoin
Bankers Trust from suing in Hong Kong.45 l After a hearing on
"international comity" issues, in which the federal district court determined
that Gau Shan would suffer irreparable harm and that it would likely
succeed on the merits because of Bankers Trust's lies both in the
transaction and in the hearing, the court granted an antisuit injunction,
which succeeded the temporary restraining order it had already granted. 14S2
Bankers Trust appealed. 141 The Sixth Circuit noted at the outset the
opposing policies.14 14 First, "American courts have the 'power to control
the conduct of persons subject to their jurisdiction to the extent of
forbidding them from suing in foreign jurisdictions."'14' This contrasts
with the idea that "'parallel proceedings on the same in personam claim
should ordinarily be allowed to proceed simultaneously, at least until a
judgment is reached in one [jurisdiction] which can be pled as res judicata
in the other."'1416 As to how to resolve these conflicting policies, the court
noted that the circuits were split and that the Sixth Circuit had not
addressed the question. 1457
The court analyzed the circuit split as follows: The Fifth and Ninth
Circuit Courts hold that "' foreign litigation may be enjoined when it would
(1) frustrate a policy of the forum issifing the injunction; (2) be vexatious
or oppressive; (3) threaten the issuing courts [sic] in rem or quasi in rem
jurisdiction, or (4) where the proceedings prejudice other equitable
'
considerations."'148 On the other side of the split, the Second and D.C.
Circuit Courts have a narrower view, holding that a foreign antisuit
injunction may only be granted "(1) to protect the forum's jurisdiction, or
(2) to prevent evasion of the forum's important public policies," and that
"a duplication of the parties and issues, alone, is not sufficient to justify a
140 d. at 1356 n.l.
14 1
See id. at 1352.
1452See id.
'4"3See id. at 1351.
454
1 See id. ai 1352-53.
'4551d. at 1352 (quoting Laker Airways, Ltd. v. Sabena, Belgian World Airlines, 731 F.2d
909, 926) (D.C. Cir. 1984)).
6
14s 1d. (quoting Laker Airways, 731 F.2d at 926-27).
457
1 See id. at 1352-53.
14"1jd. (quoting Seattle Totems Hockey Club, Inc. v. National Hockey League, 652 F.2d 852,
855 (9th Cir. 1981)).
1999] PARALLEL LITIGATION
foreign antisuit injunction."'" 5 With these opinions as the range of
standards, the appellate court noted that the district court had not adopted
either of the opposing views, and instead
used elements from each and found that 'because parallel
proceedings duplicate the parties and issues, the federal
courts' important public policy of a just, speedy and
inexpensive determination of every action under
Fed.R.Civ.P. I and 13 would be evaded should Bankers
1 460
Trust be permitted to sue Gau Shan in Hong Kong.
Having noted the range of precedents and the lower court's lack of
adherence to any of them, the court began its ruling with a policy
statement:
Comity dictates that foreign antisuit injunctions be issued
sparingly and only in the rarest of cases. The days of
American hegemony over international economic affairs
have long since passed. The United States cannot today
impose its economic will on the rest of the world and
expect meek compliance, if indeed it ever could. The
modem era is one of world economic interdependence, and
economic interdependence requires cooperation and
comity between nations. In an increasingly international
market, commercial transactions involving players from
multiple nations have become commonplace. Every one
of these transactions presents the possibility of concurrent
jurisdiction in the courts of the nations of the parties
involved concerning any dispute arising in the
transaction."'
The present case was a prime example, and included plaintiff Gau
Shan's request "to disregard the principles of international comity and
affirm the issuance of an antisuit injunction which effectively denies the
Hong Kong court jurisdiction over a matter otherwise properly before it,
and reserves to a United States court exclusive jurisdiction over a dispute
involving parties from different nations."'1462
'4591d. at 1354 (citing China Trade and Dev. Corp. v. M.V. Choong Yong, 837 F.2d 33, 36
(2d Cir. 1987)); Laker Airways, 731 F.2d at 928.
146Old"
146 1d. (citation omitted).
46 2
1 1d"
962 BAYLOR LA WREVIEW [Vol. 51:4
The court also noted Laker Airways's concern that while an antisuit
injunction does not, in theory, "interfere in a foreign court's jurisdiction, it
'effectively restrict[s] the foreign court's ability to exercise its
jurisdiction. '1463 The very issuance of the injunction restricts the Hong
Kong court's jurisdiction by preventing (or at least discouraging) Bankers
Trust from bringing suit there. 1464 Moreover, if both parties were to obtain
antisuit injunctions, "both actions will be paralyzed and neither party will
be able to obtain any relief' and "[t]he more readily courts resort to this
extraordinary device, the more frequently this sort of undesirable stalemate
will occur."1465 Thus:
The inappropriate use of antisuit injunctions can have
unintended, widespread effects. International commerce
depends in no small part on the ability of merchants to
predict the likely consequences of their conduct in
overseas markets. Predictability depends in turn on an
atmosphere of cooperation and reciprocity between
nations. The issuance of antisuit injunctions threatens
predictability by making cooperation and reciprocity
between courts of different nations less likely.'146
Following these policy underpinnings, the Gua Shan court rejected the
district court's conclusion that the antisuit injunction "was justified in
order to prevent 'vexatious' litigation in Hong Kong that would delay and
complicate the litigation already pending in its court."1461 The court held
instead that it should adopt the stricter standards from Laker Airways and
China Trade.468 The court explained this standard saying it would
'463Id. (quoting LakerAirways, 731 F.2d at 927).
See id.
1464
•'46'd. at 1354-55.
46
1 61d. at 1355.
1467
1d. The appellate court further found that "the district court's reasoning ... is more
properly the analysis to be used when considering a motion for dismissal of a case on forum non
conveniens grounds rather than a motion for a foreign antisuit injunction." Id.
1468See id. Specifically, the court stated that "[t]he policies of avoiding hardships to the
parties and promoting the economies of consolidated litigation 'do not outweigh the important
principles of comity that compel deference and mutual respect for concurrent foreign
proceedings. Thus, the better rule is that duplication of parties and issues alone is not sufficient
to justify issuance of an antisuit injunction."' Id. (quoting LakerAirways, 731 F.2d at 928). The
court further stated that "[flactors such as 'vexatiousness' or 'oppressiveness' and a 'race to
judgment' are 'likely to be present whenever parallel actions are proceeding concurrently."' Id.
(quoting China Trade and Dev. Corp. v. M.V. Choong Yang 837 F.2d 33, 36 (2d Cir. 1987).
1999] PARALLEL LITIGATION
"consider only two factors in determining whether Bankers Trust should be
enjoined from proceeding in its Hong Kong action: 1) whether this court's
jurisdiction is threatened by the Hong Kong action, and 2) whether this
court's important public policies are being evaded by the Hong Kong
action. " 146
The court then examined whether an injunction against the Hong Kong
litigation was necessary to protect its own jurisdiction or uphold important
forum policies.1410 As to protecting the court's jurisdiction, the court
identified two possibile situations that could require injunctions.1 7' The
first was for in rem or quasi in rem cases, which this was not.1472 The
second addressed in personam actions where the foreign court attempts to
"'carve out exclusive jurisdiction over the action."' 1471 The court observed
that this second possibility had prompted an antisuit injunction in Laker
Airways, where the foreign lawsuit was not an action on the merits, but
was filed solely to enjoin the United States action.1474 In this case,
however, Gau Shan had offered nothing to show such interference.' 4
Bankers Trust had agreed not to seek an antisuit injunction from the Hong
Kong court, and not to exercise its receivership rights under the feared
Deed of Charge.1476
The court then turned to the second grounds, noting that:
While an injunction may be appropriate when a party
attempts to evade compliance with a statute of the forum
that effectuates important public policies, an injunction is
not appropriate merely to prevent a party from seeking
"slight advantages in the substantive or procedural law to
' 7
be applied in a foreign court. "1
Gau Shan argued two procedural policies were being undermined by
the Hong Kong litigation. First, under the rules of civil procedure the court
has a duty to provide for "'the just, speedy, and inexpensive determination
1469d.
'47°See id.
1471See id. at 1356.
147 See id.
147'Id. (quoting China Trade, 837 F.2d at 36).
474
1 See id. (citing Laker Airways, Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 915
(D.C. Cir 1984)).
1475See id. at 1356-57.
'476See id.
477
l at 1357 (quoting China Trade, 837 F.2d at 37, in turn quoting Laker Airways, 731
1d.
F.2d at 931 n.73).
964 BAYLOR LA WREVIEW [Vol. 51:4
of every action.' "'78 Second, Gau Shan argued Bankers Trust was required
to file a compulsory counterclaim in the United States action rather than
raise it in a separate suit, which would promote the policy of preventing a
"'multiplicity of actions and to achieve resolution in a single lawsuit of all
disputes arising out of common matters."'1 ' 4 79 But these arguments, the
court noted, should be directed to a forum non conveniens dismissal
motion rather than an antisuit injunction.140
Gau Shan next argued that permitting the Hong Kong action to go
forward to judgment might deny Gau Shan its treble damages remedy
under Tennessee law, thereby subverting that state's policies.141 The court
also rejected this argument, pointing out that: (1) "courts rarely resort to
public policy as a basis for refusing to enforce a foreign judgment;1482 (2)
"the unavailability of a treble damages remedy in Hong Kong is not so
'repugnant to fundamental notions of what is decent and just' as to permit
the issuance of an antisuit injunction;"14' and (3) that to the extent that
Tennessee policies were affected here, they were entitled to less weight in
considering a foreign antisuit injunction than the policies of the United
States, which Gau Shan had not referenced.1414 Finding no justification
under the two areas of inquiry - protecting jurisdiction and public policy -
the Sixth Circuit dissolved the injunction against the Hong Kong
litigation. 1415
In the current circuit split on standards for antisuit injunctions, the Fifth,
Seventh and Ninth Circuits have the more liberal standard, permitting an
injunction if the foreign action "would (1) frustrate a policy of the forum
issuing the injunction; (2) be vexatious or oppressive; (3) threaten the
issuing courts [sic] in rem or quasi in rem jurisdiction; or (4) where the
proceedings prejudice other equitable considerations."'14 The Second,
478
' 1d. (quoting FED. R. Civ. P. 1).
"4791d. (quoting Seattle Totems Hockey Club, Inc. v. National Hockey League, 652 F.2d 852,
854 (9th Cir. 1981) in turn quoting Southern Construction Co. v. Pickard, 371 U.S. 57, 60
(1962)).
148
°See id.
'4 1 See id.; TENN. CODE ANN. § 47-50-109 (Michie 1995).
'412Gau Shan, 956 F.2d at 1358 (citing Tahan v. Hodgson, 662 F.2d 862, 866 (D.C. Cir.
1981)).
'4 3Id.
I at 1358 (quoting Tahan, 662 F.2d at 866).
1484
See id.
48
'1 See id. at 1358-59.
1486
Seattle Totems Hockey Club, Inc. v. National Hockey League, 652 F.2d 852, 855 (9th
Cir. 1981); see also Allendale Mut. Ins. Co. v. Bull Data Sys., Inc. 10 F.3d 425,428-33 (7th Cir.
1993); Unterweser Reederei, GMBH v. M/S Bremen, 428 F.2d 888, 890 (5th Cir. 1970), aft'd on
1999] PARALLEL LITIGATION 965
Sixth and D.C. Circuits have a stricter standard, limiting foreign antisuit
injunctions: (1) to protect the forum's jurisdiction, or (2) to prevent evasion
of the forum's important public policies. 18 7 This view includes the concept
that a "duplication of the parties and issues, alone, is not sufficient to
' China Trade added that the need to
justify a foreign antisuit injunction."1481
protect a federal court's jurisdiction from a parallel foreign action usually
occurs when: (1) the jurisdiction is in rem or quasi in rem, or (2) in in.
personam actions, the foreign proceeding is an attempt to establish
exclusive jurisdiction over the dispute.1489 This narrower standard has been
affirmed without significant discussion in 4the Eleventh Circuit, after
adoption by an Alabama federal district court.' 90
Gau Shan broke a tied circuit split concerning the standard applied to
enjoining foreign lawsuits, and the other votes are not yet in. The Fifth
Circuit examined the circuit split in Kaepa, Inc. v. Achilles Corp., restating
its own standard from Unterweser and Bethell, and noting that the Seventh
and Ninth Circuits had more or less adopted this standard.49, The court
then found that "other circuits have employed a standard that elevates
principles of international comity to the virtual exclusion of essentially all
other considerations."192 The court further expressed its disagreement with
the stricter standard:
Achilles urges us to give greater deference to comity
and apply the latter, more restrictive standard. We note
preliminarily that, even though the standard espoused in
Unterweser and Bethell focuses on the potentially
vexatious nature of foreign litigation, it by no means
excludes the consideration of principles of comity. We
decline, however, to require a district court to genuflect
before a vague and omnipotent notion of comity every
reh 'g, 446 F.2d 907 (1971), rev'd on other grounds sub. nom. Bremen v. Zapata Off-Shore Co.,
407 U.S.
41 (1972).
1"See Gau Shan, 956 F.2d at 1353; Sea Containers Ltd. v. Stena AB, 890 F.2d 1205, 1212-
15 (D.C. Cir. 1989); China Trade & Dev. Corp. v. M.V. Choong Yong, 837 F.2d 33, 36 (2d Cir.
1987); Laker Airways Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 927-33 (D.C. Cir.
1984).
'"8 Gau Shan, 956 F.2d at 1355 (quoting Laker Airways, 731 F.2d at 928).
4
1"China Trade, 837 F.2d at 36-37. See also Gau Shan, 956 F.2d at 1356.
149°See Mutual Serv. Cas. Ins. Co. v. Frit Indus., Inc., 805 F. Supp. 919, 924-25 (M.D. Ala.
1992), aff'd, 3 F.3d 442 (11 th Cir. 1993) (unpublished table decision).
'49 76 F.3d 624, 626-27 (5th Cir. 1996).
'492Id. at 627 (citing Gau Shan, 956 F.2d at 1355; China Trade, 837 F.2d at 36; Laker
Airways, 73 F.2d at 927, 937).
BAYLOR LAWREVIEW [Vol. 51:4
time that it must decide whether to enjoin a foreign
action."3
In regard to these distinct tests, the Seventh Circuit has complained,
Comity-the respect that sovereign nations . . . owe
each other-is a traditional, although in the nature of
things a rather vague, consideration in the exercise of
equitable discretion .... An injunction that has the effect
of dictating the outcome of a suit in an Argentine court
could conceivably though improbably ruffle relations
between the United States and Argentina. Fear of that
consequence has led some courts to withhold injunctive
relief in such case' unless necessary to head off an
"irreparable miscarriage of justice," while other courts are
content with a lesser showing of a need for the relief -
perhaps nothing more than a duplication of the parties and
the issues, the sort of thing that might suffice where
"respect for a co-equal sovereign's jurisdiction is not
implicated. ",494
3. Miscellaneous Points
A hasty conclusion in the international setting is reliance on the first-
filed rule, which was never meant to apply in cases where the two courts
were not of the same sovereignty.1495 But this is not true of the first-to-
judgment rule. Although foreign judgments are subject to more scrutiny
than domestic ones whose recognition is compelled by full faith and credit,
nonetheless the first case to judgment has preclusive effect whether the
forum is foreign or domestic.496
This does not mean, however, that filing first is not important to antisuit
injunctions or any other tactical issue in litigation. Both the strict Laker
493
1 1d "
1494
Phillips Med. Sys. Int'l B.V. v. Bruetman, 8 F.3d 600, 604-05 (7th Cir. 1993) (citations
omitted).
495
' See Newman and Zaslowsky, INTERNATIONAL COMMERCIAL DISPUTES, supra note 1165,
at 136-37 (citing Compagnie des Bauxites de Guinea v. Insurance Co. of N. Am., 651 F.2d 877,
887 n.10 (3rd Cir. 1981)).
'496See Laker Airways, 731 F.2d at 926-27 & n.48.; Kline v. Burke Const. Co., 260 U.S. 226,
230 (1922). Courts sometimes use the first-to-judgment approach to deny an injunction against a
pending foreign case. See Compagnie des Bauxites 651 F.2d at 887 (denying an injunction
against parallel English litigation).
1999] PARALLEL LITIGATION 967
test and the more liberal Unterweser test identify the protection of the
forum's public policy as a consideration in enjoining foreign litigation."4"7
Accordingly, if the first-filed rule is an important forum public policy, then
it would be a factor in enjoining the second-filed foreign action. By filing
first, parties thus gain: (1) the advantage of that presumption of priority;
(2) the choice of forum; and (3) maybe the choice of law (in that the
forum's choice of law rules will control). But if there is no injunction, then
being the first to judgment is crucial for preclusion purposes.
There may be an exception in the "last-in-time rule" which provides, at
least in the United States, that preclusive effect must be given to the last
judgment rendered. 498 The rule is articulated in Treinies v. Sunshine
Mining Co., where the Supreme Court held that when the first court
reaches a valid and final judgment in a matter, and a second court
erroneously fails to give preclusive effect to that first judgment, then the
first judgment holder must appeal the second court's error.' 4" Failure to
appeal results in the second judgment taking precedence over the first, both
as to enforcement and as to preclusive effect in any later litigation. 5® The
appeal of the second court's error could reach the Supreme Court under a
Full Faith and Credit Clause argument, and failure to seek certiorari in the
second case presumptively waives all rights under the first judgment.
A question arises as to how this might be treated where the second court
is foreign, thus barring direct appeal to the Supreme Court, and ruling out
the Full Faith and Credit Clause argument. If the only issue is the foreign
judgment's preclusive effect (presumably in yet a third case), then there is
no basis for Supreme Court review and under Treinies, the second
judgment is preclusive.'50 But if the issue is enforcement, the foreign
judgment must be domesticated under a state law such as the Texas
Uniform Foreign Country Money Judgment Act.'50 2 The recognition and
enforcement procedure creates an opportunity for appeal, although not for
United States Supreme Court review since foreign judgment enforcement
is now deemed a state law question by most courts, state and federal.1'"0 In
1497See Gau Shan, 956 F.2d at 1353-54; In re Unterweser Reederei, GMBH, 428 F.2d 888,
895 (5th Cir. 1970).
' 49'See Treinies v. Sunshine Mining Co., 308 U.S. 66, 77-78 (1939).
14991d.
0
"O
50
See id.
"' See id. at 77-78.
150° TEX. Civ. PRAC. & REM. CODE ANN. §§ 36.001 et seq. (Vernon 1997 & Supp. 2000).
"O'See Banque Libanaise Pour Le Commerce v. Khreich, 915 F.2d 1000, 1003 (5th Cir.
1990) (applying Texas law to reject enforcement of Abu Dhabi judgment).
BAYLOR LAWREVIEW [Vol. 51:4
those few federal and state jurisdictions that characterize foreign judgment
enforcement as a question of federal law, the local party would still have a
basis of Supreme Court review.'5 °'
Antisuit injunctions against foreign litigation may raise constitutional
issues, both in state and federal courts, although this concept is limited to
scholarly speculation at this point. Bermann has described two potential
problems.1 °0 The first, applicable to federal courts, is a separation of
powers concern regarding foreign policy, although no cases have yet
addressed this issue.5"° The second applies to state courts, which, in
enjoining foreign litigation, may invade foreign policy interests reserved to
the federal government. 5 °7 This, too, has not been raised in case law.11°1
Professor Reynolds notes a marked reluctance to issue an antisuit
injunction, at least if the foreign action is impartial.11" He points out Judge
Wilkey's statement in Laker Airways that an injunction "should be granted
only for vexatious conduct by the defendant which requires equitable
relief, to protect the forum's jurisdiction, or to protect an important forum
policy." ' Reynolds agrees with Professor Bermann that courts must be
"wary of imposing our views on others," given the anti-suit injunction's
extraordinary impact -- both personal and political -- in the foreign
forum."' , Courts have also noted the antisuit injunction's effect on the
foreign court's powers, and that an injunction against a party is tantamount
to enjoining the foreign court."
4
"'" See EUGENE SCOLES & PETER HAY, CONFLICT OF LAWS 999-1003 (2d Ed. 1992)
(providing a discussion of federal and state courts in each position).
'0 See Bermann, Anti-Suit Injunctions,supra note 36, at 604-05.
5
"°6See
1
id.
"' See id. at 605.
1S'See id.
"'mSee William L. Reynolds, The Proper Forum for a Suit: Transnational Forum Non
Conveniens and Counter-suit Injunctions in the Federal Courts, 70 TEx. L. REv. 1663, 1712
(1992).
"'"Id. (citing Laker Airways, Ltd. v. Sabena, Belgian World Airlines, 731 F.2d 909, 928-33
(D.C. Cir. 1984)).
"'Ild. at 1713 (citing George A. Bermann, The Use ofAnti-Suit Injunctions in International
Litigation, 28 COLUM. J.TRANSNAT'L L., 589, 629 (1990)); see also Trevor C. Hartley, Comity
and the Use ofAntisuit Injunctions in InternationalLitigation, 35 AM. J. Coilp. L. 487 (1987).
" 2See Compagnie des Bauxites de Guinea v. Ins. Co. of N. Am., 651 F.2d 877, 887 (3rd Cir.
1981); Canadian Filters (Harwich) Ltd., v. Lear-Siegler, Inc., 412 F.2d 577, 578 (1st Cir. 1969);
Garpeg, Ltd., v. United States, 583 F. Supp. 789, 798 (S.D.N.Y. 1984); Laker Airways, Ltd. v.
Pan American World Airways, 559 F. Supp. 1124, 1128 n.14 (D.D.C. 1983); Medtronic, Inc. v.
Catalyst-Research Corp., 518 F. Supp. 946, 955 (D.Minn. 1981), aff'd 664 F.2d 660 (8th Cir.
1981). For a discussion of three other significant recent cases, see Andreas F. Lowenfeld, Forum
1999] PARALLEL LITIGATION 969
If the issuance of a foreign antisuit injunction is problematic, whether to
honor the foreign court's antisuit injunction is equally so. In Laker
Airways, the D.C. Circuit discussed a court's range of responses to a
foreign court's antisuit injunction:
Long experience derived from this country's federal
system teaches that a forum state may, but need not, stay
its own proceedings in response to an antisuit injunction
against a party before the court. This is consistent with the
general rule permitting concurrent proceedings on
transitory causes of action. In extreme cases it may even
be necessary to issue a counterinjunction to thwart another
state's attempt to "assert exclusive jurisdiction over a
matter legitimately subject to concurrent jurisdiction." 3
The court continued that in interstate conflicts, the Full Faith and Credit
Clause does not mandate the recognition of sister state antisuit injunctions,
and concluded that the same result should be available here.,-' 4 Professor
Bermann proposes a more open-minded judicial reception of foreign court
orders involving interlocutory or provisional relief55
VIII. STATE COURTS AND FOREIGN LITIGATION
There is a surprising paucity of state court opinions on parallel foreign
litigation throughout United States history. It may be that few state/foreign
parallel cases were filed until recently because of the low incidence of
international interaction -- there was comparatively little international
Shopping, Antisuit Injunctions, Negative Declarations, and Related Tools of International
Litigation, 91 AM. J. INT'L L. 314 (1997) (discussing parallel disputes involving courts in the
United States and, respectively, Australia, Japan, and England). The Australian dispute is
updated in Andreas F. Lowenfeld, Forum Non Conveniens andAntitsuit Injunctions: An Update,
92 AM. J. INT'L L. 41 (1998); see also Markus Lenenbach, Antisuit Injunctions in England,
Germany, and the United States: Their Treatment Under European Civil Procedureand the
Hague Convention, 20 LoY. L.A. INT'L & COMP. L.J. 257 (1998); Edward F. Sherman, Antisuit
Injunctions and Notice of Intervention and Preclusion: Complementary Devices to Prevent
Duplicative Litigation, 1995 B.Y.U. L. REv. 925 (1995); Steven R. Swanson, The Vexatiousness
of a Vexation Rule: InternationalComity and Antisuit Injunctions, 30 GEO. WASH. J. INT'L L. &
ECON. I (1996); Louise Ellen Teitz, Taking Multiple Bites of the Apple: A Proposalto Resolve
Conflicts ofJurisdictionandMultiple Proceedings,26 INT'L LAW. 21 (1992).
"l3731 F.2d at 933-34 (footnotes omitted).
4
See id. at 934.
5
"' See George A. Bermann, ProvisionalRelief in TransnationalLitigation, 35 COLUM. J.
TRANSNAT'L L. 553, 615-17 (1997).
BAYLOR LAWREVIEW [Vol. 5 1:4
commerce, and where it existed parties were not in position to file two
lawsuits simultaneously. There are, however, many examples of a party
obtaining a foreign judgment and trying to enforce it here.
Another reason may be that state court cases were removed to federal
court based on diversity between the local citizen and the foreign person or
corporation; easily-found examples span this century. 51 6 Yet another
reason is that the interlocutory remedies discussed here, (i.e. the motions
for stay, dismissal and injunction) may not have been appealable under
state law, or if appealable, may not have been appealed, or may not have
been reported. In any event, there is little case law from which to derive
historic trends or current views.
For the cases that do exist, states have mixed and matched the tests used
in federal courts. This analysis does not differ significantly from that of
federal courts, but one de-emphasized element is the need for non-
interference with foreign sovereigns. On the other hand, foreign litigation
often magnifies the parties' concerns regarding distance and convenience,
and intensifies the perception that the other lawsuit is vexatious or
harassing, thus leading state courts to protect local parties by ignoring a
forum selection clause pointing to a foreign tribunal, or enjoining a party
from pursuing foreign litigation.
A. Transferringthe Case
As with interstate parallel litigation, it is not currently possible to
transfer duplicate international actions, and there are no current proposals
for a means to transfer in uniform or model acts or proposed conventions.
B. Dismissing or Staying the Local Case
Dismissals are usually available only for: (1) in rem cases; (2)
enforcement of a forum selection clause; or (3) granting of forum non
conveniens motion.5"7 Other examples of pending parallel cases between a
state court in the United States and one in a foreign country are subject to a
strong presumption favoring jurisdiction. Where relief is granted it is
almost always in the form of a stay, and generally under the doctrine of
comity. Cases invoking comity to stay a local case in deference to a
151
6See Ronar, Inc. v. Wallace, 649 F. Supp. 310, 319 (S.D.N.Y. 1986) (removing case to seek
stay, unsuccessfully, regarding parallel West German action); Gage v. Riverside Trust Co., 86 F.
984, 989 (S.D. Cal. 1898) (removing case to obtain antisuit injunction against related suit in
England).
1517See supra Part I.C.3.
1999] PARALLEL LITIGATION
foreign one do not provide much guidance, although the first-filed rule is
evident, as noted below. As in other sections of this article, the term
"abatement" is unclear and may mean either stay or dismissal, depending
on the usage that state adopted after the merger of law and equity.1' s
1. Comity
Some state's laws reflect a strong presumption for exercising
jurisdiction, which is consistent with Colorado River's underlying
premise."'" For example, "[i]n Illinois, the rule is that the mere pendency
of a lawsuit in a foreign country is not a bar to proceedings in our
courts."1520 Similarly,
[t]he pendency of the action in the Republic of Mexico is
not a bar to the institution of another action between the
same parties and for the same cause of action in the courts
of California, nor was it the duty of the Superior Court to
stay the action pending the determination of the earlier suit
in Mexico, even though the entire controversy might be
there disposed of. As a matter of comity, although not a
matter of right, the court had power to continue the case if
52
the circumstances warranted such action. 1
The courts' willingness to ignore foreign parallel actions goes beyond
commercial lawsuits to matters such as family law.522 On the other hand,
some states will readily stay a local action in deference to an earlier filed
foreign action.
The pendency of an action in a court of competent
jurisdiction will abate a later action filed in a court of like
jurisdiction. Birnholz v. Steisel, 338 So. 2d 862 (Fla. 3d
DCA 1976). Abatement is proper where the two pending
Iss See id.
11"9See discussion supra Part V.C. I.
"2°Dayan v. McDonald's Corp., 382 N.E.2d 55, 58 (111.App. Ct. 1978) (affirming denial of
stay in.an action to enjoin McDonald's from terminating restaurant franchise in France).
'5 2 Pesquera del Pacifico v. Superior Court, 201 P.2d 553, 554-55 (Cal. Ct. App. 1949)
(denying stay in action for damages for seizure of raw shelled clams); see also Mexican Cent.
Ry. Co. v. Charman, 24 S.W. 958 (Tex. Civ. App. 1894, no writ) (holding that an in personam
parallel foreign action is not grounds for abatement, citing Drake v. Brander, 8 Tex. 352 (1849)).
1522See, e.g., Farah v. Farah, 323 N.E.2d 361, 368-69 (I1. App. Ct. 1975) (denying stay in
Illinois/Lebanon parallel divorce actions).
BAYLOR LA WREVIEW [Vol. 51:4
actions involve the same parties and substantiallythe same
causes of action.123
Florida's apparently strong language (parallel foreign action "will
abate" a later-filed Florida action) is modified in Maraj v. Maraj:
Generally, Florida courts will acknowledge priority in
favor of foreign courts first exercising concurrent
jurisdiction.
However, here, we cannot say that the trial court's
decision departed from the essential requirements of law.
There remains a degree of trial court discretion in applying
comity principles where supported, as here, by the
record.1124
As with the cases presuming against stays, here too the subject matter goes
beyond contract and tort to family law.,5
New York has statutory law providing for discretionary dismissal of
parallel actions involving Courts within New York, as well as conflicts with
sister-states' courts, and with United States federal courts.1 26 The law does
not apply to actions in foreign courts, 2 7 although New York courts may
stay a local action that is identical to a foreign action.521 Illinois also
statutorily provides an involuntary dismissal where "there is another action
pending between the same parties for the same cause"19 which applies in
deference to first-filed actions in foreign countries111° However, dismissal
52
Banco Bilbao Vizcaya, S.A. v. Naiz, S.A., 615 So. 2d 233, 234 (Fla. Dist. Ct. App. 1993)
(emphasis added) (discussing actions for fraud in Florida and Spain; "abate" apparently means
"stay").
1524642 So. 2d 1103, 1104 (Fla. Dist. Ct. App. 1994) (involving parallel divorce actions in
Florida and Trinidad-Tobago) (citations omitted).
1125See Mary F.B. v. David B., 447 N.Y.S.2d 375, 378 (N.Y. Fain. Ct. 1982) (involving
parallel divorce actions in New York and France).
'526 See N.Y. C.P.L.R. § 3211 (a)(4) (Consol. 1994).
5 27
1 See Abkco Industries, Inc. v. Lennon, 377 N.Y.S.2d 362, 367-68 (N.Y. 1975) (denying
dismissal under Rule 3211 (a)(4) of parallel actions in New York and England regarding contract
dispute between the Beatles and their management company); accord Mary F.B., 447 N.Y.S.2d
at 377.
'528See, e.g., American Marine Ins. Group v. Price Forbes, Ltd., 560 N.Y.S.2d 638, 639 (N.Y.
App. Div. 1990) (affirming stay of local action pending outcome of English lawsuit).
1529735 ILL. COMP. STAT. ANN. 5/2-619(a)(3) (West 1992).
... See Kapoor v. Fujisawa Pharm. Co., 699 N.E.2d 1095, 1100 (111. App. Ct. 1998) (holding
that the crucial test is whether the actions "arise out of same transaction or occurrence, not
whether legal theory, issues, burden of proof or relief sought materially differ." Id.).
1999] PARALLEL LITIGATION 973
is discretionary, and the foreign action is not an outright bar to the Illinois
proceedings.l
Interestingly, there are no Texas reported opinions dismissing or
staying a local action in deference to one in a foreign country, although
Texas courts have done so for interstate parallels.,", The applicable rule -
that while a foreign action is not grounds for dismissal, it may be
appropriate for a stay - would seemingly apply to foreign country actions.
Another notable absence is a dismissal by any state court of a second-
filed in rem case in deference to a foreign court's having assumed
jurisdiction over the res. This apparent nullity is not caused by a non-
occurrence of international parallel litigation concerning in rem issues. To
the contrary, state courts have dismissed local cases in response to a
foreign case that appears to be in rem, 5 33 but the opinions turn on
traditional comity rules that could apply to in personam cases, rather than a
more definitive "Princess Lida" rule requiring the dismissal of a second-
filed in rem case.'5 34 Presumably that rule applies equally in this state-
foreign setting, but when faced with the question, courts have chosen to act
on a less stringent standard. Nonetheless, the rule does appear to be
universal, as stated in a federal opinion involving a foreign conflict, "[a]
long-standing exception to the usual rule tolerating concurrent proceedings
has been recognized for proceedings in rem or quasi in rem, because of the
threat a second action poses to the first court's basis for jurisdiction.."'113
The Second Circuit based this statement on two cases that did not involve a
foreign conflict: Donovan v. City of Dallas 1536 a state-federal conflict, and
Princess Lida v. Thompson,51 an interstate conflict. China Trade was a
federal-foreign conflict, and the apparent cross-application of these
precedents supports the notion that they apply equally to state courts faced
with first-filed in rem cases in foreign courts.
One ongoing issue that will vary from state to state is the degree of
similarity required to grant a stay. As noted above, Florida case law
11 See Dayan v. McDonald's Corp., 382 N.E.2d 55, 58 (Il. App. Ct. 1978).
2
See supra Part II.B.5.; see, e.g., Project Eng'g USA Corp. v. Gator Hawk, Inc., 833
S.W.2d 716 (Tex. App.-Houston [Ist Dist.] 1992, no writ).
I533See, e.g., Safety-Kleen v. Canadian Universal Ins. Co., 631 N.E.2d 475, 484 (Ill. App. Ct.
1994) (dismissing an Illinois case in deference to Canadian court's orders regarding
receivership).
3
'11 See supra Part VII.A.4.
"China Trade & Dev. Corp. v. M.V. Choong Yang, 837 F.2d 33, 36 (2d Cir. 1987).
1536377 U.S. 408, 408 (1964).
1537305 U.S. 456, 456 (1939); supra Part VII.A.4.
BAYLOR LAWREVIEW [Vol. 51:4
provides for stays in parallel actions that are merely "substantially the
same." '538 On the other hand, courts are likely to scrutinize allegations of
t
parallel lawsuits for differences that remove the parallelism.539
2. Forum Selection Agreements
Many states now enforce forum selection clauses.540 Examples of
enforcement involving foreign judicial or arbitral tribunals include
53 t54
California, 154 Florida,'5 42 Georgia 1 and Illinois. "
New York statutorily endorses certain forum agreements, requiring that
state courts honor forum clauses in transactions of $1 million or more that
are subject to New York law. 51 New York civil procedure further protects
forum clauses by providing that
the court shall not stay or dismiss any action on the ground
of inconvenient forum, where the action arises out of or
relates to a contract, agreement or undertaking to which
section 5-1402 of the general obligations law applies, and
the parties to the contract have agreed that the law of this
state shall govern their rights or duties in whole or in
part. 1546
States using the Uniform Foreign Money Judgment Recognition Act
(UFMJRA or "the Act") may provide another endorsement for forum
clauses. 145 The Act is a means of filing a foreign judgment for collection
"See Banco Bilbao Vizcaya, S.A. v. Naiz, S.A., 615 So. 2d 233, 234 (Fla. Dist. Ct. App.
1993).
' 539See, e.g., Rocha Toussier y Asociados, S.C. v. Rivero, 457 N.Y.S.2d 798, 800 (App. Div.
1983) (denying stay in parallel actions in New York and Mexico regarding corporate
management).
140
See supra Part IV.B.3.
's54 See generally CQL Original Prods., Inc. v. National Hockey League Players' Ass'n, 46
Cal. Rptr. 2d 412, 416 (Ct. App. 1995) (enforcing Canada forum clause).
'542See generally Colonia Ins. Co. v. Assuranceforeningen Skuld, 588 So. 2d 1009, 1011
(Fla. Dist. Ct. App. 1991) (enforcing Sweden forum clause).
543
See generally Bradley v. British Fitting Group, PLC, 472 S.E.2d 146, 149 (Ga. Ct. App.
1996) (enforcing England forum clause).
1144See generally Whirlpool Corp. v. Certain Underwriters at Lloyd's London, 662 N.E.2d
467, 469-71 (II1. App. Ct. 1996) (enforcing England forum clause).
1S4 See N.Y. GEN. OBLIG. LAW § 5-1402(1) (Consol. Supp. 1998).
1 546
N.Y. C.P.L.R. 327(b) (Consol. Supp. 1998). See also Gio, Buton, & C., S.p.A. v.
Mediterranean Importing Co., Inc., 510 N.Y.S.2d 171, 172 (App. Div. 1986) (upholding
dismissal based on forum clause designating the Court of Bologna, Italy).
547
1 UNIF. FOREIGN MONEY-JUDGMENTS RECOGNITION ACT § 3,13 U.L.A.265 (1986).
1999] PARALLEL LITIGATION
without necessarily going through the motions (literally) of the common
law enforcement method, which requires filing a new lawsuit using the
foreign judgment as a basis for summary judgment. 114 The UFMJRA
simplifies this somewhat, depending on the aspects of its adoption in a
specific state. The Texas version of the Act enumerates seven grounds for
nonrecognition, including that "the proceeding in the foreign country court
was contrary to an agreement between the parties under which the dispute
in question was to be settled otherwise than by proceedings in that
court. '" 1149 This would appear to apply to creditors who obtain judgments in
violation of a forum clause designating any forum or arbitral tribunal other
than the one issuing the judgment. To obtain this protection, however, a
defendant or judgment debtor must attempt to enforce the forum clause. In
Dart v. Balaam, judgment debtor Dart sought to avoid the Texas execution
on an Australian judgment obtained in violation of a forum clause pointing
to Vanuatu.'550 Both the trial and appellate courts rejected the defense
because Dart made no attempt to enforce the forum clause.'"
3. Forum Non Conveniens
This section will briefly cite to trends in other states' laws, followed by
a closer look at Texas law." In reviewing forum non conveniens cases,
readers should note that states such as Texas distinguish between plaintiffs
who are residents of the United States and foreign plaintiffs.-, Thus,
readers should treat this discussion only as the brief overview that it is,
without concluding anything specific about any state's law in an interstate
or international setting.
Almost all states now have a version of forum non conveniens law, and
most are based on the federal model following Gulf Oil v. Gilbert,'55 4 as
noted in a 1990 article."5 Although the article's discussion is narrowly
focused on personal injury and wrongful death, it appears to be the most
complete recent attempt at assessing states' forum non conveniens laws.
One significant event since that article's publication is the Florida Supreme
"48See, e.g., Interamerican Lambs Wool Prods., Ltd. v. Doxsee Food Corp., 642 S.W.2d 823,
825 (Tex. App.-Fort Worth 1982, writ ref'd n.r.e.).
1149TEX. CIv. PRAC. & REM. CODE ANN., § 36.005(b)(5) (Vernon 1997).
"50953 S.W.2d 478, 479 (Tex. App.-Fort Worth 1997, no writ).
'"See id. at 482.
"See supra Part VII.A.3.a. for a discussion of the history of forum non conveniens law.
553
See TEX. Civ. PRAC. & REM. CODE ANN. § 71.051(a)-(b) (Vernon 1997).
1'14330 U.S. 501, 501 (1947).
....See Robertson & Speck, supra note 269 at 950-51.
BAYLOR LAWREVIEW [Vol. 51:4
Court's adoption of the federal forum non conveniens approach in Kinney
System, Inc. v. Continental Insurance Co., 556 which also enacted
emergency Rule of Civil Procedure 1.061 to implement the change.' 557 No
other significant changes since the article's publication were found,
559
although there are updated cases in California's5" and New York.
Georgia still does not subscribe to the forum non conveniens doctrine, and
Louisiana has a restricted doctrine.1 60 Of course, the doctrine's
applications no doubt vary significantly from state to state, and several
may have doctrines as restrictive as that of Louisiana.
Texas has three sources of forum non conveniens law: two statutes and
a common law model based on Gulf Oil v. Gilbert. The first statute,
section 71.051 of the Texas Civil Practice and Remedies Code, applies
only to wrongful death and personal injury claims, and distinguishes
between plaintiffs who are legal United States residents, and plaintiffs who
are not.'56' As to non-United States residents, section 71.051(a) authorizes
a discretionary application of traditional forum non conveniens, as follows:
if a court of this state, on written motion of a party, finds
that in the interest of justice a claim or action to which this
section applies would be more properly heard in a forum
outside this state, the court may decline to exercise
jurisdiction under the doctrine of forum non conveniens
and may stay or dismiss the claim or action in whole or in
part on any conditions that may be just.' 561
1556674 So. 2d 86, 93 (Fla. 1996).
7
... See id. at 94-95 (quoting the text of that rule).
.... See generally Stangvik v. Shiley, Inc., 819 P.2d 14 (Cal. 1991) (applying California's
forum non conveniens statute to stay an action pending trials in two related cases in Sweden and "
Norway in a products liability action for a defective heart valve).
1559See generally Brooke Group, Ltd. v. JCH Syndicate 488, 663 N.E.2d 635 (N.Y. 1996)
(dismissing for refiling in England); Zelouf v. Republic Nat'l Bank, 640 N.Y.S.2d 15 (App. Div.
1996) (dismissing in favor of pending English action); State of Romania v. Former King
Michael, 622 N.Y.S.2d 704 (App. Div. 1995) (granting dismissal in action by Romanian
government against former king, for the return of art objects, based on claims under a 1899 will);
Islamic Republic of Iran v. Pahlavi, 464 N.Y.S.2d 487 (N.Y. App.Div. 1983) (dismissing claim
to seize assets from the estate of the former Shah of Iran).
56See Miller v. American Dredging Co., 595 So. 2d 615 (1992) (rejecting federal forum non
conveniens law in favor of more restrictive Louisiana law in maritime case), aff'd, 510 U.S. 443(1994).
56
'TEX. CIV. PRAC. & REM. CODE ANN. § 71.051 (Vernon Supp. 1999).
562
1 1d '
1999] PARALLEL LITIGATION 977
Section 71.051 was a 1993 legislative overruling of Dow Chemical Co.
v. Alfaro, in which the Texas Supreme Court held that the Texas wrongful
death statute (section 71.031) did not permit forum non conveniens
dismissals.563 Although this ruling has been clearly rejected by the
enactment of section 71.051, one holdover case is the thoroughly-litigated
claim by Philippine resident Chick Kam Choo for her husband's death in
Singapore.' 64 Having suffered a forum non conveniens dismissal in federal
court for her claims under federal and Texas law, Choo was left with only
a claim under Singapore law, which she filed in a Texas state court in
1984.565 Exxon moved for dismissal on the grounds that her claim was
governed by federal maritime law, which preempted Texas forum non
conveniens law.I566 The trial court dismissed, but the court of appeals
reversed. 567 The Texas Supreme Court affirmed and reinstated her case,
based on the United States Supreme Court's ruling in American Dredging
Co. v. Miller-, that federal law does not preempt state forum non
conveniens law. 1569 Although the current Texas forum non conveniens law
pertinent to Choo's claim would perhaps be identical to the federal
maritime analysis, the fact that Choo had filed her claim prior to the 1993
enactment of section 71.051 meant that her claim was governed by the
Alfaro holding, thus eliminating forum non conveniens.1570
Plaintiffs who are United States residents are considered in section
71.051(b), which statutorily recites Gilbert-like factors.'1"' If Texas
plaintiffs are joined with foreign plaintiffs (whether United States residents
or not), the action may not be stayed or dismissed under the test in section
71.051(b) if the action arose from a single occurrence, although dismissal
is mandatory under section 71.05 1(e) if a party was joined solely to create
57 2
Texas jurisdiction, that is, to avoid forum non conveniens.'
The second statute, section 71.052 of the Texas Civil Practice and
Remedies Code, addresses claims for personal injury or wrongful death,
1563786 S.W.2d 674, 679 (Tex. 1990).
15 "See Exxon Corp. v. Choo, 881 S.W.2d 301, 301 (Tex. 1994).
's6SSee id. at 302-03.
SSee id. at 303.
567
See id.
068510 U.S. 443, 447 (1994).
'569See Exxon, 881 S.W.2d at 304.
'170See id.
'1'See supra Part IV.B.4.
72
1s See Tex. Civ. Prac. & Rem. Code Ann. § 71.05 1(b),(e) (Vernon Supp. 2000).
BAYLOR LAWREVIEW [Vol. 51:4
caused by asbestosis, filed by nonresidents. 5" This statute was enacted in
response to large numbers of claims from plaintiffs in other states in the
United States and has little impact on foreign country residents.'17,
All other causes of action are governed by common law forum non
conveniens, which follows the Gulf Oil test. 575 A recent example is
Seguros Commercial America S.A. v. American President Lines, Ltd., an
action in Texas by the subrogated insurer against shipper for the loss of
cargo that had been hijacked at gunpoint in Mexico.15 76 The shipment had
originated in Hong Kong and was being shipped to Mexico City.'"77 The
contact with Texas was that after receipt of the Cargo in Long Beach,
California, it was shipped by rail to San Antonio and from there by truck to
Laredo, Texas, where it went through customs. 78 Another shipper took
over in Nuevo Laredo, and en route to Mexico City, the cargo was hijacked
and stolen.'11 9 The insurer, Seguros, sued both the original shipper and the
one who took over in Nuevo Laredo and was in possession at the time of
1 The plaintiff sued in Texas in spite of overwhelming contacts
the theft. 580
with Mexico.- 8 ' Noting these contacts, the trial court dismissed for forum
non conveniens, and the court of appeals affirmed in spite of plaintiffs
argument that the Texas legislature had abolished forum non conveniens in
cases involving foreign corporations with permits to do business in Texas,
which plaintiff Seguros had. 82 The appellate court found that Texas
general corporations law did permit foreign corporations to sue in Texas
without worrying about forum non conveniens motions, but that plaintiff
Seguros, as a foreign casualty insurer, was not governed by the Texas
Business Corporations Act, but instead by the Texas Insurance Code,
which made Seguros subject to a forum non conveniens motion.'5 3
15 7'Tex. Civ. Prac. & Rem. Code Ann. § 71.052 (Vernon Supp. 2000).
5 74
1 See generallySenate Bill Analysis, TX C.S.S.B. 220, 75th Leg. R.S. (1997).
5 75
1 See In re Smith Barney, Inc., 975 S.W.2d 593, 596 (Tex. 1998); Sarieddine v. Moussa,
820 S.W.2d 837, 839-40 (Tex. App.-Dallas 1991, writ denied) (holding forum non conveniens
is not precluded by a forum selection clause).
1576966 S.W.2d 652, 653 (Tex. App.-San Antonio 1998, no writ).
1577See id.
1578See id.
' 579See id.
'580See id.
' 58'See id.
2
...See id. at 654.
3
15"See id.
1999] PARALLEL LITIGATION 979
Until recently, foreign corporate plaintiffs authorized to do business in
Texas were exempt from forum non conveniens dismissals.584 This
changed in 1998, and they are now subject to having actions dismissed.1585
A common tactic in state courts is to remove the case to federal court,
provided a basis for federal court jurisdiction exists, and then move to
dismiss on forum non conveniens grounds.' 586 Alternatively, a common
tactic for plaintiffs is to structure the state court lawsuit so as to avoid
removal.,517
Finally, state courts applying forum non conveniens in international
disputes must consider constitutional limitations. The Supremacy Clause
restricts states from denying access to their courts in violation of a
treaty.'58 The foreign relations power may further restrict states' ability to
589
limit access to courts.'
4. Another Dismissal Ground: Due Process and the Fair Play
and Substantial Justice Test
Another grounds for dismissal in cases involving foreign parties or
events may be available from the constitutional test for personal
jurisdiction. 90 That test is the subject of considerable disagreement, but a
popular view is that it has two components. The first requires that a
nonresident have some contact with the forum under one of several
"contact theories."'' 9 The second component is that even with a contact,
the forum may not exercise personal jurisdiction inconsistent with
"traditional notions of fair play and substantial justice."' ' 12 Most cases in
which personal jurisdiction is lacking result from the lack of sufficient
'1 4 See H. Rouw Co. v. Railway Exp. Agency, 154 S.W.2d 143, 145 (Tex. Civ. App.-El
Paso 1941, writ ref'd), overruledby In re Smith Barney, Inc., 975 S.W.2d 593, 598 (Tex. 1998).
'"5See In re Smith Barney, 975 S.W.2d at 595-98; see also discussion supra Part IV.B.4.
'586See, e.g., Torres v. Southern Peru Copper Corp., 113 F.3d 540, 541-42 (5th Cir. 1997).
7
158 See, e.g., De Aguilar v. Boeing Co., 47 F.3d 1404, 1414-15 (5th Cir. 1995) (holding that
plaintiffs' attempt to restrict damages to less than $50,000 was ineffective to defeat removal of
case to district court, where it was then dismissed for forum non conveniens).
' 3' See Clark v. Allen, 331 U.S. 503, 517 (1947); United States v. Pink, 315 U.S. 203, 230-
31(1942).
'...See EUGENE SCOLES & PETER HAY, § 11.16 (2d ed. 1992); see also RESTATEMENT
(SECOND) OF CONFLICT OF LAWS, § 84 comment i; Bermann, supranote 36 at 604-06.
'"°See International Shoe Co. v. Washington, 326 U.S. 310, 316 (1945).
'5 9 'See id. at 319.
' 921d. at 316 (borrowing the term from prior cases and using it to form a new jurisdictional
model).
BAYLOR LAWREVIEW [Vol. 51:4
contacts. 51 93 Some, however, rest on the fair play and substantial justice
test, a five-factor balancing test 594 that strongly resembles the Gulf Oil v.
Gilbert forum non conveniens test. 595 The fair play and substantial justice
test measures the parties' interests and convenience, as well as that of the
affected states or countries, and includes a vague reference to "the
interstate judicial system's interest in obtaining the most efficient
resolution of controversies.."1596 This "interstate" interest was expanded,
where appropriate, to include the "interests of other nations.' 597
Thus, the due process test for amenability has elements that may
provide an additional opportunity (that must be exercised at the outset of
litigation) for dismissal based on the existence of another pending case.
Although there are no examples available of a pending parallel case being
a factor in declining personal jurisdiction, it is conceivable that the parallel
filing in a United States court could be challenged on the basis of fairness
and convenience. One case that does offer support for this notion is Asahi,
a product liability claim in California arising from a single motorcycle
accident allegedly caused by a tire blowout119 The local plaintiff settled
with the tire manufacturer, Cheng Shen of Taiwan.1199 But Cheng Shen
wished to pursue its third party claim against Asahi, the Japanese valve
manufacturer allegedly at fault.160 Although it was clear that California
had personal jurisdiction over Cheng Shen, and reasonably clear that it
would have had personal jurisdiction over Asahi if the plaintiff had sued
Asahi, the Supreme Court upheld Asahi's challenge to California's
personal jurisdiction, where the only remaining claim was that of a foreign
party, Cheng Shen. 160' The Court reasoned that when the local plaintiff
settled, the forum state's interest was negated, thus shifting the balance in
Asahi's favor.62
593
1 See, e.g., World-Wide Volkswagen Corp. v. Woodson, 444 U.S. 286, 299 (1980);
Hanson v. Denckla, 357 U.S. 235, 254 (1958).
594
See Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477 (1985) (citing World-Wide
Volkswagen, 444 U.S. at 292).
1595330 U.S. 501, 508-09 (1947).
1596Burger King Corp., 471 U.S. at 477 (upholding personal jurisdiction based on fairness to
the parties involved).
1597Asahi Metal Indus. Co. v. Superior Court, 480 U.S. 102, 115 (1987) (declining to find
personal jurisdiciton because of a lack of forum state interest in the lawsuit).
15981d. at 105-06.
1599See id. at 106.
' 660OSee
1
id.
. See id at 113-14.
' 60See id. at 114-16.
1999] PARALLEL LITIGATION
The Asahi analysis applies to a local case with multiple international
parties and a foreign parallel case. If the local parties' claims are resolved,
or if the local parties are significantly outnumbered by foreign parties, then
the forum's interest may be sufficiently small such that personal
jurisdiction is lacking. Interestingly, under Asahi it does not seem to
matter that the underlying event occurred in the forum.11t °
While it is true that the fair play and substantial justice test resembles
the test for forum non conveniens because both the elements and the
underlying policies are substantially the same, the advantage in a personal
jurisdiction argument is that it has constitutional underpinnings absent in
forum non conveniens. Thus, a personal jurisdiction challenge can lead to
Supreme Court review, while a forum non conveniens argument in state
court cannot. The disadvantage in a personal jurisdiction challenge is that
it must be made at the outset of the litigation. Having to wait for local
parties to settle may mean losing the opportunity to make the argument.
The personal jurisdiction argument should be equally applicable in federal
court. 1604
C. Enjoiningthe ForeignLitigation
1. The Basic Standard
Roscoe Pound observed the state's inherent power to enjoin foreign
litigation, but cautioned against overuse:
Undoubtedly a state may coerce its citizens not to sue
abroad. It does not follow, however, that its courts of
equity... ought to exercise such jurisdiction in every case
where it exists. We have to ask: What are the legal rights
of the plaintiff in equity, defendant abroad, and are the
legal remedies which are open to him adequate to maintain
those rights? We have then to ask, is the injustice and
hardship upon the plaintiff such as to make it expedient for
equity to act, in view of the delicate considerations
involved in interference with legal proceedings in other
states?,605
1 3
6"See id. at 105.
16°4See FED. R. Civ. P. 4(k)(1)(A); see, e.g., Bullion v. Gillespie, 895 F.2d 213, 215 (5th Cir.
1990).
6
°SRoscoe Pound, The Progressof the Law 1918-1919: Equity, 33 HARV. L. REv. 420, 426
(1920) cited in Bermann, supra note 36 at 594 & n.22.
982 BAYLOR LAWREVIEW [Vol. 51:4
Despite this inherent power, there are few examples of state courts
enjoining parties from pursuing cases in foreign courts and standard
principles are difficult to derive. Texas is one of the states that has
announced standards and has used them repeatedly to deny both interstate
and international antisuit injunctions. Gannon v. Payne is the foundational
case in Texas, drawing from both Laker Airways and Seattle Totems to
6
impose a restrictive standard. 06
Robert Payne and Fred Gannon were partners in an oil and gas venture
in Alberta Province.- 7 When Gannon unilaterally reduced Payne's profit
share by five percent, Payne sued Gannon in Canada and obtained a
judgment that became final6.60 Payne then sued Gannon again in Dallas
County, and Gannon filed a parallel claim in Canada seeking a declaration
that some of the issues in the Texas suit had been decided in the prior
Canadian action."160 Next, Payne asked the Texas court to enjoin Gannon
from the Canadian action."'6 0 While Payne was seeking the Texas
injunction, Gannon was also seeking one in Canada although he later
withdrew the request.6"
The trial court granted Payne's injunction, noting the possibility of
interference with its jurisdiction, the extra cost to Payne of the Canadian
action, and the disfavor of multiple lawsuits and possible inconsistent
judgments.1' The court of appeals affirmed."' 3 In its reversal, the Texas
Supreme Court confirmed the power of Texas courts to enjoin parties from
prosecuting parallel actions in Texas or sister states."1' 4 However, where
sister states were concerned, necessarily involving a second sovereignty,
"the power to enjoin proceedings pending in a foreign jurisdiction should
be exercised sparingly and only by reason of very special
circumstances.."'1 5 Moreover, "[w]hen the sovereigns involved are not
sister states but a state and a foreign nation, the policy of allowing parallel
1606706 S.W.2d 304, 307-08 (Tex. 1986).
7
"'°See id. at 305.
16"See id.
"gSee id.
16"See id.
6"See id. at 307.
162 See id.
1613See Gannon v. Payne, 695 S.W.2d 741, 745 (Tex. App.-Dallas 1985), rev 'd, 706 S.W.2d
304 (Tex. 1986).
6"4See Gannon, 706 S.W.2d at 305-06.
"'1ld.at 306.
1999] PARALLEL LITIGATION
court proceedings to continue simultaneously requires more scrupulous
adherence."1616
With the statement that enjoining parallel litigation in foreign countries
requires "more scrupulous adherence" to the "special circumstances"
standard, the Texas Supreme Court implicitly held for the first time that
Texas courts could enjoin parties from prosecuting actions in foreign
countries. 617 Then the court turned to the applicable standards and
attendant problems. The court applied a comity standard, drawn from the
standard definition in Hilton v. Guyot as "the recognition which one nation
allows ... another nation, having due regard both to international duty and
convenience, and to the rights of its own citizens or of other persons who
are under the protection of its laws." ' "8 The foremost problem with this
less-than-black-letter standard, particularly in regard to enjoining a parallel
case, was the injunction's reception in the foreign court. As to this, the
court noted:
No state or nation can demand that its laws have effect
beyond the limits of its sovereignty .... Only comity can
compel courts to act in a manner designed to advance the
rule of law among and between nations. An anti-suit
injunction necessarily restricts a foreign court's ability to
exercise its jurisdiction. The foreign court cannot be
compelled to recognize such an injunction, and if it
responds by issuing a similar injunction, no party may be
able to obtain a remedy. 1619
The court then noted the lack of precise guidelines and the varying
standards used in federal courts, from the stricter Laker Airways to the
more liberal Seattle Totems and Bethell.1620
1616ld"
'6 "See id. at 306-07.
1618159 U.S. 113, 163-64 (1895).
16
"Gannon, 706 S.W.2d at 306-07 (citations omitted).
620
' See id. at 307. The court observed,
Some courts have issued anti-suit injunctions to protect their own jurisdiction or to
prevent evasion of important public policies of the forum nation. Laker Airways v.
Sabena, Belgian World Airlines, 731 F.2d 909. Other courts have enjoined the
prosecution of foreign actions to prevent a multiplicity of suits or to protect a party
from vexatious or harassing litigation.
Id.(citing Seattle Totems Hockey Club, Inc. v. National Hockey League, 652 F.2d 852; Bethell v.
Peace, 441 F.2d 495 (5th Cir. 1971)).
BAYLOR LAWREVIEW [Vol. 51:4
Without adopting any particular standard, but examining the request
before it in terms of the range of standards, the court found Payne's
injunction request to be without merit.1621 First, in applying the Laker
Airways test, the court found that Gannon's Canadian action was neither a
subversion of public policy nor an attempt "to carve out exclusive
jurisdiction in this case."'622 Second, under the Seattle Totems standard, the
court held that a single parallel proceeding in a party's home country was
not a "multiplicity," and that "the possibility of inconsistent judgments
does not justify an injunction" because of the operation of res judicata in
both Canada and Texas. 623 Finally, the court found no indication that the
Canadian suit was vexatious or harassing.624 Although Payne had already
spent some $24,000 on the Texas action (which could be wasted if the
Canadian action came to judgment first), such expenses could not be
considered without creating a standard that would justify an injunction in
625
every parallel case.
Because Payne's facts did not satisfy any of the exceptional
circumstances raised by the court, his injunction was reversed.626 More
importantly, the Texas Supreme Court established that Texas courts could
enjoin litigants from parallel litigation in foreign countries, but only under
the strictest of standards.1627 Gannon noted the conflicting federal
standards between Laker Airways and Seattle Totems but embraced neither.
Instead, the court listed four aggregate factors that these opinions have
used to justify foreign antisuit injunctions, and rather than stating them as
standards under Texas law, merely held that the facts before the court were
insufficient to meet any of the four standards.1628 A prior Texas decision,
621
1 See id. at 308.
16221d. at 307.
1623
jd '
1624See id.
1625See id. at 307-08.
626
1 See id. at 308.
1627See id.
' 62'See id. Other standards have been suggested. Professor Bermann provides a fifth: the
presence of a pre-existing and independent obligation not to file another suit, such as a forum
selection clause or an arbitration agreement. See Bermann, supra note 36, at 595-96. Bermann
also points out possible constitutional limitations on state court injunctions against foreign
country litigation, suggesting that they may invade foreign policy interests reserved to the federal
government. See id. at 604-05. This issue has not been litigated. See id.
1999] PARALLEL LITIGATION
however, did appear to adopt two of the standards: preventing a
multiplicity of lawsuits, and preventing vexatious or harassing lawsuits.629
Although Gannon did not expressly adopt the four standards it cited
from other cases, the Texas Supreme Court did adopt standards in Golden
Rule Insurance Co. v. Harper, rejecting an antisuit injunction against an
Illinois case. 630 The Golden Rule standards resemble those for forum non
conveniens dismissals, and may be the result of a hasty reading of Gannon,
or a well-considered decision to follow the Fifth Circuit's more generous
view in granting antisuit injunctions. On the other hand, if the Texas
Supreme Court has in fact adopted the more lax Fifth Circuit standard, it
has used that standard to reject the three latest requests for antisuit
injunctions-two affecting sister states and one involving Canada.1611
Thus, despite an apparent embracing of the Fifth and Ninth Circuits' liberal
standards for granting antisuit injunctions, the Texas Supreme Court has
embraced the very restrictive attitude of the Second, Sixth and D.C.
Circuits as embodied in the Laker Airways case, from which Gannon
quotes heavily.
The Texas antisuit injunction standard appears to be the same for
injunctions against sister-state litigation and foreign country litigation, as
illustrated in Christensen and Golden Rule, both of which rely on Gannon
without distinguishing between sister state settings and foreign settings.
This result ignores the Gannon opinion, which noted that when antisuit
injunctions in multiple litigation did not involve sister states, but rather a
state and a foreign nation, the policy of permitting parallel actions to
continue simultaneously requires more scrupulous adherence to the
standards, that is, the court should be more reluctant to enjoin foreign
litigation.1612
Antisuit injunctions are most often seen in commercial and tort cases,
but also occur in domestic relations actions. In Jacobsen v. Jacobsen, the
court upheld the trial court's injunction against the Canadian wife,
directing her not to proceed with a Canadian divorce action.1633 The
appellate court found no Texas precedent authorizing an antisuit injunction
'29See University of Texas v. Morris, 162 Tex. 60, 344 S.W.2d 426, 428 (1961); see also
Repka v. American Nat'l Ins. Co., 148 Tex. 542, 186 S.W.2d 977, 979-80 (1945).
1630925 S.W.2d 649, 651-52 (Tex. 1996); supra Part IV.C.I.
3
61 'The two interstate parallel cases are Christensen v. Integrity Ins. Co., 719 S.W.2d 161(Tex. 1986), and Golden Rule Ins. Co. v. Harper, 925 S.W.2d 649 (Tex. 1996), both discussed
supra Part IV.C. Gannon is the Canadian parallel dispute.
632
1' Gannon, 706 S.W.2d at 306.
16133695 S.W.2d 44, 48 (Tex. App.-Corpus Christi 1985, writ ref d n.r.e.).
986 BAYLOR LAWREVIEW [Vol. 51:4
ordering a foreign citizen not to proceed with a lawsuit in that person's
home country, but found sufficient persuasive authority from other
jurisdictions.1634
2. Anti-Antisuit Injunctions
The D.C. Circuit upheld what is currently the best known anti-antisuit
injunction in the Laker Airways case. 6 35 A Texas appellate court offered
its version of Laker Airways in Owens-Illinois, Inc. v. Webb, affirming an
anti-anti-injunction to prevent parties from obtaining an anti-injunction suit
in British Columbia.6 3 6 The underlying action was for one hundred and
eighteen Canadian plaintiffs in an asbestosis action against Texas corporate
defendants, for injuries arising in Canada 637 The Texas corporations filed
a parallel action in Canada seeking to enjoin the Canadian plaintiffs from
the Texas action. 38 However,the Texas trial court enjoined the Texas
defendants from seeking the Canadian anti-suit injunction. 63 9 The
appellate court affirmed, pointing to Texas's power to regulate its own
corporate citizens' conduct outside of Texas territory.,640
6 4
See id. at 47-48.
635731 F.2d 909, 956 (D.C. Cir. 1984); supra Part VII.B.2.
1636809 S.W.2d 899, 903 (Tex. App.-Texarkana 1991, writ dism'd w.o.j.).
637
1 See id. at 900.
63
' 'See id.
'639$ee id.
'"0 See id. at 904. The court relied in part on the RESTATEMENT (THIRD) OF FOREIGN
RELATIONS LAW OF THE UNITED STATES, which provides that a state has prescriptive
jurisdiction (the power to apply its law) over "the activities, interests, status, or relations of its
citizens outside as well as within its territory..." See § 402(2) (1987); see also James v. Grand
Trunk Western R.R. Co., 152 N.E.2d 858, 867 (Ill. 1958) (granting an anti-antisuit injunction).
The Gannon case was almost an anti-antisuit injunction case: Payne's initial request to enjoin the
Canadian proceedings was made at a time when Gannon was seeking an antisuit injunction from
the Canadian court, but Gannon later withdrew his injunction request. See Gannon v. Payne, 706
S.W.2d 304, 307 (Tex. 1986).