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FTI, LLC v. Duffy

Superior Court of Massachusetts, Suffolk, Business Litigation Session

May 3, 2017

FTI, LLC et al.
Robert J. Duffy et al

          Filed May 4, 2017


          Kenneth W. Salinger, Justice.

         Defendants Robert Duffy, Stephen Coulombe, and Elliot Fuhr used to work for FTI, LLC, or its parent FTI Consulting, LLC (collectively " FTI"). These three defendants quit in May 2016 to work for Berkeley Research Group (" BRG"). At around the same time BRG and the individual defendants filed suit in California seeking a declaration that these individuals' non-competition agreements with FTI are void and unenforceable and an injunction barring FTI from seeking to enforce those covenants. FTI filed this Massachusetts lawsuit five months later, in October 2016. FTI claims that: (i) the individual defendants breached their non-competition, non-solicitation, and confidentiality agreements; (ii) Defendants each misappropriated trade secrets belonging to FTI; (iii) the individual defendants breached fiduciary duties by using FTI's resources and corporate opportunities to help BRG compete with FTI; (iv) BRG aided and abetted those alleged breaches of fiduciary duty; (v) all Defendants tortiously interfered with advantageous relationships FTI had with various third parties; and (vi) BRG has engaged in unfair competition and unfair trade practices.

         All four defendants have moved to stay this case pending final resolution of the civil action they filed in California. Separately, Mr. Fuhr has moved to dismiss the claims against him for lack of personal jurisdiction.

         The Court will deny both motions. A stay would be inappropriate because the California action concerns only part of a few claims at issue here and because the California action is on hold until the California Supreme Court decides whether that case should be dismissed. This court can and should exercise personal jurisdiction over Mr. Fuhr because this lawsuit arises directly from Fuhr's constitutionally sufficient contacts with Massachusetts and the exercise of jurisdiction over Fuhr would be reasonable, fair, and just.

         1. Motion to Stay Proceedings

          A trial judge has broad discretion to grant or deny a stay of proceedings pending resolution of the same or similar claims in another forum. Travenol Laboratories, Inc. v. Zotal, Ltd., 394 Mass. 95, 97, 474 N.E.2d 1070 (1985).

         The Court concludes, in the exercise of its discretion, that there is no good reason to stay this action until after final resolution of the related California case. It will therefore DENY Defendants' motion to stay.

         1.1. First-Filed Rule and Exceptions

          When entirely duplicative lawsuits are filed in different jurisdictions at materially different times, typically the later-filed action is stayed pending final resolution of the first-filed action. See, e.g., TPM Holdings, Inc. v. Intra-Gold Industries, Inc., 91 F.3d 1, 4 (1st Cir. 1996).

         Although this principle is often referred to as the first-filed or first-to-file " rule, " a court has broad discretion whether to apply it in any particular case. See, e.g., Chavez v. Dole Food Company, Inc., 836 F.3d 205, 210 (3d Cir. 2016); Baatz v. Columbia Gas Transmission, LLC, 814 F.3d 785, 793 (6th Cir. 2016). " Exceptions to the rule are not rare, " and a judge " has discretion to give preference to a later-filed action when that action will better serve the interests involved." EMC Corp. v. Parallel Iron, LLC, 914 F.Supp.2d 125, 127 (D.Mass. 2012) (Saylor, J.); accord, e.g., Blair v. Equifax Check Srvcs., Inc., 181 F.3d 832, 838 (7th Cir. 1999).

         Where two lawsuits overlap only in part, as in this case, the judgment as to whether to stay the second-filed action must take into account all the relevant circumstances, including " the extent of overlap, the likelihood of conflict, the comparative advantage and the interest of each forum in resolving the dispute." TPM Holdings, supra . And " where there is less overlap" between the two actions, the second court " has considerably more discretion" to decline to stay the second-filed action. In re Telebrands Corp., 824 F.3d 982, 984 (Fed.Cir. 2016).

         1.2. Analysis of Stay Issues

         The overlap between this action and the California lawsuit is rather limited. The California action is concerned only with the individual defendants' non-competition agreements and nothing else. Whatever the end result of the California action, it will not resolve FTI's claims in this case that Defendants violated their non-solicitation and confidentiality agreements, misappropriated trade secrets, breached fiduciary duties (in the case of the individual defendants) or aided and abetted others in doing so (in the case of ...

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