Wedi Corp. v. Hydroblok Grand Int'l

1

WEDI CORP., an Illinois corporation, Plaintiff, v. HYDROBLOK GRAND INTERNATIONAL LTD., a Canadian corporation; HYDROBLOK GRAND INTERNATIONAL INC., a Nevada corporation; and HYDRO-BLOK USA LLC, a Washington limited liability company, Defendants.

No. C23-0452 TSZ

United States District Court, W.D. Washington, Seattle

May 19, 2023

ORDER

Thomas S. Zilly United States District Judge.

THIS MATTER comes before the Court on a motion brought by plaintiff wedi Corp. (“wedi”) to transfer this action back to the District of Nevada, docket no. 57. wedi has also brought a motion, docket no. 58, to extend the deadline for filing a pleading or motion in response to defendants' counterclaim, docket no. 56. Having reviewed all papers filed in support of, and in opposition to, both motions, the Court enters the following Order.

Background

Over eight years ago, wedi was named as a defendant in a declaratory judgment action filed in this district by Hydro-Blok USA LLC (“Hydro-Blok”), Hydroblok International Ltd., and Brian Wright. See Compl & Am. Compl. (C15-615, docket nos. 1 & 7). wedi initiated a contemporaneous lawsuit against Wright Hydro-Blok, and Sound Product Sales L.L.C. (“Sound Product”). See Compl. (C15-671, docket no. 1). The two cases were eventually consolidated, see Order (C15-671 docket no. 37), and wedi's claims, counterclaims, and counter-counterclaims (collectively, “Claims”) were resolved via a combination of arbitration proceedings,^[1]dispositive motion practice,^[2]settlement,^[3]and voluntary dismissal. The latter means of disposition came after remand from the Ninth Circuit, and a few weeks before trial. At that time, wedi moved, pursuant to Federal Rule of Civil Procedure 41(a)(2), for voluntary dismissal of its remaining Claims under the Lanham Act and CPA, and the Court dismissed those Claims with prejudice, reinstated a cost award against wedi that had been entered before wedi's appeal, and allowed Wright, Sound Product, Hydro-Blok, and Hydroblok International Ltd. to tax costs incurred on appeal and remand. See Order (C15-671, docket no. 369). Judgment was entered and the consolidated cases were closed on September 23, 2021. See Judgment (C15-617, docket no. 370).

In March 2022, wedi commenced this litigation in the District of Nevada against Hydroblok Grand International Ltd. (“Hydroblok Grand”), Hydroblok Grand International Inc. (“Hydroblok-Nevada”), and Hydro-Blok.^[4]See Compl. (docket no. 1). In the operative pleading, wedi asserts two claims against all defendants, one under the Lanham Act and the other under Nevada's Deceptive Trade Practices Act and Nevada Revised Statute 41.600. Compl. at ¶¶ 39-51. Both claims relate to defendants' statements concerning ICC-ES certification of their products, which wedi asserts are false and/or misleading. Id. at ¶¶ 42 & 49; see also supra note 2 (defining ICC-ES). The factual predicates for these claims are similar, if not identical, to those relating to the Lanham Act and CPA Claims that wedi voluntarily dismissed in the prior litigation.

After this matter had been pending for over a year in the District of Nevada, it was transferred to this district pursuant to a six-page order by the Honorable Cristina D. Silva, which indicates, in relevant part:

Because I find that venue is improper in the District of Nevada, I grant the defendants' motion to transfer.... I agree with wedi that the defendants incorrectly attempt to transfer this action under 28 U.S.C. § 1406(a), which mandates dismissal or transfer only when venue is wrong or improper.... The District of Nevada may well have been a proper venue for the instant suit, but for wedi's filing of a substantially similar suit in the Western District of Washington in 2015....I construe the defendants' motion to transfer as one based primarily on the first-to-file rule, rather than on 28 U.S.C. § 1406. I do so because the defendants concede that “Nevada as a venue would be completely appropriate had [the Washington case] not been previously litigated.”. . . Because wedi brought this case almost seven years after initiating its Washington lawsuit against the defendants-and because the parties and issues are substantially similar in both cases-I find that the first-to-file rule should apply here.

Order at 1-2 & 5-6 (docket no. 43) (alteration in original, citations omitted). The first-to-file rule, on which Judge Silva based the transfer of this action, is a “doctrine of federal comity” that allows a district court to decline jurisdiction when an action involves the same parties and issues as an already-filed matter in another district. See Pacesetter Sys., Inc. v. Medtronic, Inc., 678 F.2d 93, 94-95 (9th Cir. 1982) (affirming the dismissal of a patent infringement dispute that was essentially identical to an earlier-filed matter then pending in another district). Under the first-to-file rule, a court may stay its own proceedings, to promote judicial economy, consistency, and comity, after considering three factors: chronology of the lawsuits, similarity of the parties, and similarity of the issues. See Kohn Law Grp., Inc. v. Auto Parts Mfg. Miss., Inc., 787 F.3d 1237, 1239-40 (9th Cir. 2015). wedi contends that Judge Silva erred in relying on the first-to-file rule to transfer this case, that this Court therefore lacks jurisdiction, and that the action should be transferred back to the District of Nevada.

Discussion

A. Section 1406

A case may be dismissed or transferred pursuant to 28 U.S.C. § 1406 if it was filed in the “wrong division or district.” 28 U.S.C. § 1406(a). With certain exceptions not relevant in this matter, the proper venue for a civil action is one of the following: (i) if all defendants are residents of the same state, then a judicial district in such state in which any defendant resides, (ii) a judicial district in which the claim arose or in which the property at issue is situated, or (iii) if neither (i) nor (ii) apply, then a judicial district in which any defendant is subject to personal jurisdiction. 28 U.S.C. § 1391(b). Residency for purposes of venue is different from citizenship for purposes of diversity; a business entity that has the capacity to be (and is) sued is a “resident” of any judicial district in which it is subject to personal jurisdiction. Id. at § 1391(c)(2). A foreign defendant may be sued in any judicial district. See id. at § 1391(c)(3).

The parties agree that Hydroblok Grand is a Canadian company and Hydroblok-Nevada is a Nevada corporation. See Corp. Discl. Stmt.; Compl. at ¶¶ 4 & 5. Thus, both Hydroblok Grand and Hydroblok-Nevada could be sued in the District of Nevada. The operative pleading alleges that Hydro-Blok, which is a Washington limited liability company with its principal place of business in Washington, uses the same website as Hydroblok Grand to market and sell products in Nevada, imports products from Canada and distributes them in Nevada, and has at least two sales agents responsible for product sales in Nevada. Compl. at ¶¶ 6 & 9-12. These allegations support treating Hydro-Blok as a resident of, and subject to suit in, the District of Nevada. As a result, venue was proper in the District of Nevada. See 28 U.S.C. § 1391(b)(1). Judge Silva correctly concluded that this case could not be transferred pursuant to § 1406 because Nevada was a proper venue and the matter was not filed in the “wrong” district.

B. Section 1404

A case may also be transferred, for “the convenience of parties and witnesses” and “in the interest of justice,” to another district in which “it might have been brought” or as to which “all parties have consented.” 28 U.S.C. § 1404(a). Without evaluating whether this action could have been brought in the Western District of Washington, Judge Silva relied on the first-to-file rule to conclude that transfer was warranted. The Ninth Circuit has, however, expressly rejected the concept that the first-to-file rule negates § 1404(a)'s requirement that a party seeking a transfer must show the case could have been brought in the proposed judicial district. See In re Bozic, 888 F.3d 1048, 1054 (9th Cir. 2018).^[5]In Bozic, which addressed what was then “an issue of first impression in the courts of appeals,” the Ninth Circuit reasoned that allowing the judge-made first-to-file rule to contravene the plain language of a “congressionally enacted statute” was a result it could not “countenance.” Id. The Bozic Court explained that a district court's discretion is cabined by the requirements of § 1404(a), and the first-to-file rule merely “guides” the exercise of discretion in “handling related cases.” See id.; see also In re SK hynix Inc., 847 Fed.Appx. 847, 853-54 (Fed. Cir. 2021) (rejecting the proposition that the first-to-file rule “compel[s] a transfer between federal forums when § 1404(a)'s threshold conditions are not met,” citing Bozic). The Court agrees with wedi that Judge Silva's reliance on the first-to-file rule was inconsistent with Ninth Circuit jurisprudence. The Court must still, however, evaluate whether the transfer to this district was nevertheless proper under § 1404(a).

C. Jurisdiction

Pursuant to § 1404(a), the question before the Court is whether the Western District of Washington is a judicial district in which this case originally might have been brought. The parties do not dispute that this district is a proper venue for wedi's claims against the Washington and Canadian entities, i.e. Hydro-Blok and Hydroblok Grand, respectively. The remaining issue is whether the record supports specific personal jurisdiction over Hydroblok-Nevada.

The Court may exercise specific personal jurisdiction only if a defendant has “sufficient contacts with the forum state in relation to the cause of action.” See Sher v....