The first-to-file rule is a doctrine that has grown out of the need to manage overlapping litigation across multiple courts. The doctrine provides that when actions involving nearly identical parties and issues have been filed in two different district courts, the court that first acquires jurisdiction usually retains the suit to the exclusion of the other court. Courts generally evaluate three factors when applying the first-to-file rule: 1) the chronology of the events, 2) the similarity of the parties involved, and 3) the similarity of the issues or claims at stake. In addition to the three factors, courts will also determine if equitable considerations merit not applying the first-to-file rule.
Last week, the Sixth Circuit reviewed the application of the first-to-file rule in Baatz, et al. v. Columbia Gas Transmission. A group of almost 40 landowners in Medina, Ohio brought suit against Columbia Gas Transmission in the Northern District of Ohio. Just over a year and a half earlier, another group of landowners, who have not yet been certified as a class, brought a class action against Columbia in the Southern District of Ohio. Both the Medina case and the class action include claims of inverse condemnation under the Natural Gas Act. Due to the similarities between the two claims, Columbia moved to dismiss the Medina claim, arguing that the class action was the first filed and that the Medina landowners should litigate their claims in that action. The district court agreed and dismissed the case.
The Sixth Circuit reviewed the district court’s decision under an abuse of discretion standard. While acknowledging that all three factors of the first-to-file rule were satisfied in this case and that there were no equitable considerations that justified not applying the first-to-file rule, the Sixth Circuit nevertheless found that the dismissal of the Medina claim was an abuse of discretion. While the Sixth Circuit recognized that the district court has the discretion to dismiss a duplicative action, it agreed with the Seventh Circuit that “a district court can abuse its discretion by dismissing a case under the first-to-file rule when doing so could adversely affects the party’s interest.”
The Sixth Circuit’s decision in Baatz that a dismissal is not appropriate under the first-to-file rule when the party will be adversely affected by the decision is in line with both the Fifth Circuit and the Seventh Circuit. The decision represents an interesting interpretation moving forward because the Sixth Circuit made it very clear that “this is not one of those rare cases” where equitable considerations justify not applying the first-to-file rule. However, the decision to vacate the district court’s dismissal was based on the separate equitable considerations, namely the realization that dismissal would adversely affect the Medina landowner’s interests. The court’s decision seems to represent a conscious desire to avoid unnecessarily inequitable consequences of the application of the first-to-file rule, whether that may be the actual application of the rule or when determining how a duplicative case should be handled.