United States District Court, D. Maine
ORDER ON DEFENDANT'S MOTION TO STAY
LEVY U.S. DISTRICT JUDGE
matter is before the court on the motion to stay this action
filed by the defendant, Netgear, Inc.
(“Netgear”). For the reasons explained below,
Netgear's motion is granted.
Redzone Wireless, LLC, is a Maine company that provides
wireless broadband Internet access to customers in Maine. In
the spring of 2015, it entered into an agreement to purchase
4, 000 wireless routers from Netgear for approximately $500,
000. In April 2015, the parties executed Netgear's
Standard Terms and Conditions Agreement and entered into a
separate side letter agreement a month later. The routers did
not operate as well as Redzone expected, and consequently,
the parties now dispute what their respective rights are
under the Standard Terms and Conditions Agreement and the
side letter agreement.
September 2016, Redzone sent a demand letter to Netgear's
in-house counsel formally revoking Redzone's acceptance
of the routers, asserting various contractual and statutory
rights, and stating Redzone's intent to pursue all
available legal remedies, including litigation. Redzone also
requested that Netgear contact Redzone within five business
days of receiving the letter to discuss the dispute.
fourth business day after Redzone sent the demand letter,
October 3, 2016, Netgear filed suit for a declaratory
judgment in California state court seeking a declaration that
it is not obligated to spend further time and resources
assisting Redzone in resolving the problem with the routers.
Redzone removed the California lawsuit to the U.S. District
Court for the Northern District of California in December
2016 and filed a motion to dismiss for lack of personal
jurisdiction. That same month, Redzone filed this action
against Netgear in the District of Maine. Netgear responded
by filing its Motion to Stay.
Netgear filed suit in California first, it contends that its
action should proceed rather than Redzone's, and cites
the first-filed rule as the basis for its motion. The rule
generally gives preference to the first of two duplicative
actions proceeding in different federal courts, Cianbro
Corp. v. Curran-Lavoie, Inc., 814 F.2d 7, 11 (1st Cir.
1987), and lends a strong presumption in favor of the
first-filed forum, see Coady v. Ashcraft &
Gerel, 223 F.3d 1, 11 (1st Cir. 2000); see also
Nowak v. Tak How Invs., Ltd., 94 F.3d 708, 719 (1st Cir.
have recognized two exceptions to the first-filed rule.
Getty Petroleum Marketing, Inc. v. 2211 Realty, LLC,
2011 WL 2489988, at *4 (D. Mass. June 17, 2011). First,
courts may disregard the rule where the party bringing the
first-filed action engaged in misleading conduct in order to
prevail in a pre-emptive “race to the
courthouse.” Id. Second, courts may disregard
the rule where the balance of convenience substantially
favors the second-filed action. Id. (citing
Holmes Grp., Inc. v. Hamilton Beach/Proctor Silex, 249
F.Supp.2d 12, 16 (D.Mass.2002)) (other citations omitted).
argues that Netgear's motion should be denied because it
“plainly . . . engaged in a race to the courthouse for
the sole purpose of trying to secure what it perceived to be
a more advantageous forum in California.” Yet Redzone
does not identify any conduct on Netgear's part that
misled Redzone into “staying [its] hand in anticipation
of negotiation” so as to rebut the first-filed rule.
See Veryfine Prods., Inc. v. Phlo Corp., 124
F.Supp.2d 16, 22 (D. Mass. 2000). In fact, Redzone's
demand letter capped an approximately two-month period during
which Redzone and Netgear's relationship deteriorated to
the point that Netgear informed Redzone that it would
“not be able to support further investigation on the
[router] issue” and flatly stated that it would
undertake no further efforts on Redzone's behalf.
See ECF No. 16-3 at 20. This course of action does
not suggest that Netgear engaged in “deception or
stalling” to “buy time in order to secure a more
favorable forum, ” Dining Alliance, Inc. v.
Nat'l Produce Consultants, LLC, 2014 WL 6609233, at
*2 (D. Mass. Nov. 20, 2014) (quoting Transcanada Power
Mktg., Ltd. v. Narragansett Elec. Co., 402 F.Supp.2d
343, 348-49 (D. Mass. 2005)), or otherwise
“lulled” Redzone into deferring a possible
lawsuit, see Biogen, Inc. v. Schering AG, 954
F.Supp. 391, 398-99 (D. Mass. 1996).
also argues that the balance of convenience favors litigating
the case in Maine because: (1) Maine is a more convenient
forum for its employees and customers, whom Redzone asserts
will make up most of the witnesses at trial; (2) the routers
at issue in the case are located in Maine; (3) Redzone is a
significantly smaller business than Netgear and operates
entirely within Maine; and (4) Maine has a greater public
interest in the case than does California because Maine
consumers were affected by the problem with the routers.
although the convenience of the witnesses is the most
important factor, Getty Petroleum, 2011 WL 2489988,
at *6, the fact that Redzone's employees and customers
are located in Maine does not overcome the strong presumption
in favor of California as Netgear's chosen forum. Redzone
estimated at oral argument that its customers number in the
thousands, but did not identify a single key witnesses, nor
provide an indication of “the nature and quality of
their testimony, ” nor state whether any of its
witnesses can be compelled to testify, nor state why its
customers could not provide statements by deposition or
affidavit. See Id. (citing Princess House, Inc.
v. Lindsey, 136 F.R.D. 16, 18 (D. Mass. 1991)). Second,
the availability and location of evidence only has
substantive weight where an onsite viewing of the evidence or
location is necessary. See Id. (citing Wright,
Miller & Cooper, Fed. Prac. & Proc. 3d,
§ 3854 at 297-98 (2007)). Where, as here, a case
involves claims that are primarily contract-based, there is
at best “a slight likelihood” that this will be
necessary. Id. Third, although Redzone is the
smaller company, it has only shown the “common
‘hardships' associated with civil litigation,
namely, travel, employee absence, document production, etc.,
” and, therefore, is not “entitled to deference
because its operation is small.” Veryfine, 124
F.Supp.2d at 26.
Redzone has not identified any case law that suggests that a
court should take into account which forum has the greater
“public interest” in a dispute. To the extent
this factor is considered here, however, there has been no
showing that Maine consumers will benefit if Redzone is
successful in this litigation. In addition, the parties'
contract provides that it is to be governed by California
law. Thus, Maine's “public interest” and
California's “public interest” stand in