BAE Sys Info v Mark Storer CV-10-215-PB 1/11/11
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE
BAE Systems Information and
Electronic Systems, Inc.
v. Case N o . 10-cv-00215-PB
Opinion N o . 2011 DNH 007
Mark Storer, Stephen Luker,
Terry Mohn, Duane Pearson,
Thomas Gregg, Allen Zwan,
Catherine Bloom, and Fatima
Abassi
MEMORANDUM AND ORDER
BAE Systems Information and Electronic Systems, Inc.
(“BAE”) has sued the defendants, former employees of BAE,
seeking a declaratory judgment that the defendants were at-will
employees who are not owed any additional compensation based
upon the circumstances of their termination. The defendants
filed a motion to dismiss the complaint.1 For the reasons
discussed below, I grant the defendants’ motion.
I. BACKGROUND
BAE is a subsidiary of one of the nation’s largest defense
contractors. The defendants are all former employees of BAE.
1
Defendants seek a change of venue. I need not resolve the
venue question because I determine that the complaint should be
dismissed for other reasons.
1
In 2007, BAE started a business venture known as the Innovation
and Growth Initiatives (“I&GI”). This program, headed by BAE
executive Larrie Cable, was to act as a “venture capitalist” to
a group of initiatives that would operate like start-up business
entities within BAE. One of those initiatives was known as the
Balance Energy Initiative (“Balance Energy”).
In early 2009, Cable engaged in phone and email
correspondence with Mark Storer, then a BAE employee, regarding
Balance Energy. Cable and Storer eventually met in San Diego,
California, where Storer agreed to head up Balance Energy.
Storer and the other defendants claim that Cable told Storer
during the meeting that he would have at least five years to
execute the proposed business plan for Balance Energy and the
initiative would only be terminated for failure to perform.
From February to July of 2009, Storer recruited the other
seven co-defendants, all of whom began working for Balance
Energy. In March of 2010, however, BAE terminated the
initiative for reasons unrelated to its performance and gave the
defendants sixty days to find alternative employment within BAE.
The defendants retained counsel, who sent correspondence to BAE
in May challenging the company’s decision to terminate the
initiative and issuing a settlement demand. BAE responded with
2
an email requesting a more specific monetary demand and an
extension of time to respond to the defendants’ settlement
demand. Defendants’ counsel added more detail to their demand
and gave BAE until June 4 , 2010 to respond. Instead, on June 3 ,
2010, BAE filed this action seeking a declaratory judgment that
the defendants were at-will employees who are not due any
additional compensation.
The defendants filed their lawsuit against BAE and its
affiliate, BAE Systems Information Solutions, Inc., on July 19
in San Diego County, California Superior Court. The state
action seeks damages against BAE on a variety of state statutory
and common-law claims stemming from their termination.
I I . ANALYSIS
It is apparent that BAE rushed to file this declaratory
judgment action in an effort to stave off threatened litigation
by the defendants. In such circumstances, a federal court has
broad discretion to dismiss a parallel claim for declaratory
relief if the court determines that the dispute “can better be
settled in the proceeding pending in the state court.” Wilton
v . Seven Falls Co., 515 U.S. 277, 282 (1995) (quoting Brillhart
v . Excess Ins. Co.,
316 U.S. 491, 495 (1942)).
3
BAE does not seriously challenge the defendants’
contention that this case and the California state court
case are parallel proceedings. Instead, it argues that the
court lacks discretion to dismiss the federal case because
BAE filed it before the defendants filed the state court
case. I reject this argument because it is foreclosed by
First Circuit precedent. In American Home Assurance C o . v .
Insular Underwriters Corp., 494 F.2d 317 (1st Cir. 1974),
the state court action was filed later in the same day as
the federal action. In rejecting the argument that BAE
presents here, the court stated that “it is irrelevant who
won the race to the courthouse door.” Id. at 320.
Instead, the court noted that “[t]he relevant question i s ,
rather, whether at the time of hearing on the motion to
dismiss, there is such a plain, adequate, and speedy remedy
afforded in the pending action, that a declaratory action
will serve no useful purpose.” Id. (internal quotations
omitted). 2
2
BAE also argues that exercising my discretion to dismiss the
case in light of the California proceeding would “effectively
gut the first-filed rule.” Pl.’s Opp’n to Def.’s Mot. To
Dismiss o r , in the Alternative, Transfer Venue, Doc. N o . 2 5 , 2 5 .
However, the first-filed rule is irrelevant here, as it only
applies when a complaint involving the same parties and issues
has already been filed in a different federal district. See
4
This action raises a question that is worth deciding only
because it may affect the defendants’ entitlement to relief in
the California state court case. Although the state court case
presents additional issues and names an additional defendant,
these facts, if anything, weigh in favor of dismissing this
action. Id. at 320-21 (concluding that additional claims and
parties in the state court proceeding favor dismissal of the
federal action because resolution of the state action is “likely
to still the controversy more completely than in the federal
courts”). In short, there is simply no good reason why BAE
should be permitted to proceed in this court when the issue it
seeks to raise can be expeditiously resolved in the state court
action.3
Coady v . Ashcraft & Gerel,
223 F.3d 1 , 11 (1st Cir. 2000)
(“Where identical actions are proceeding concurrently in two
federal courts . . . the first filed action is generally
preferred in a choice-of-venue decision.”) (emphasis added).
3
A stay is usually the “preferable course” where the basis for
declining to proceed is the pendency of a state court proceeding
because a stay assures that the federal action will not be timebarred if the state case fails to resolve the issues completely.
Wilton,
515 U.S. at 288 n.2. In this declaratory judgment
action, however, the relief BAE seeks is potentially valuable to
BAE only because it may provide an effective response to the
various breach of contract claims that the defendants have
brought in state court. Because the need for declaratory relief
will disappear if the state court action is resolved, there is
no need to keep the case alive to preserve BAE’s ability to
protect itself through declaratory relief. Thus, dismissal
rather than a stay is warranted in this case.
5
III. CONCLUSION
For the reasons stated above, I conclude that moving
forward with the declaratory judgment claim in this case would
be inappropriate in light of the pending state court proceeding,
and I grant the defendants’ motion to dismiss (Doc. N o . 20)
without prejudice to BAE’s right to press the issue it seeks to
raise here in the California state court action.
SO ORDERED.
/s/Paul Barbadoro
Paul Barbadoro
United States District Judge
January 1 1 , 2011
cc: Anthony S . Califano, Esq.
Bret A . Cohen, Esq.
Micha Danzig, Esq.
Dana L. Fleming, Esq.
Daniel B . Klein, Esq.
James R. Patterson, Esq.
Maura M. Pelham, Esq.
Arthur G. Telegen, Esq.
Martha Van Oot, Esq.
Steven L. Winer, Esq.
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