IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

EXELON GENERATION COMPANY, LLC, : CIVIL ACTION

Plaintiff :

:

v. :

:

HOOSIER ENERGY RURAL ELECTRIC :

COOPERATIVE, INC., :

Defendant : NO. 04-4592

MEMORANDUM AND ORDER

McLaughlin, J. September 26, 2005

On September 29, 2004 the plaintiff brought this action

against Hoosier Energy Rural Electric Cooperative, Inc.

(“Hoosier”) for breach of contract and sought a declaratory

judgment as to the parties’ contractual obligations under two

1997 Unit Power Sales Agreements (the “Pennsylvania Action”). 

Two days later, on October 1, 2004, Hoosier brought an action

against Exelon Generation Company, LLC (“Exelon”) in Monroe

County Circuit Court for breach of contract of the same two Unit

Power Sales Agreements (the “Indiana Action”). Exelon removed

Hoosier’s state court action to the Southern District of Indiana

on October 26, 2004. At issue in both the Pennsylvania Action

and the Indiana Action is Exelon’s responsibility to Hoosier for

costs incurred by Hoosier in bringing its Indiana coal power

plants into compliance with Indiana and federal regulations

mandating lower nitrogen oxide emissions.

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Hoosier has moved to dismiss the Pennsylvania Action

for lack of personal jurisdiction or, in the alternative, to

transfer it to the Southern District of Indiana pursuant to 28

U.S.C. § 1404(a). In a separate motion, Exelon requested that

this Court enjoin Hoosier from proceeding in the Indiana Action

under the first-filed rule. 

Having weighed all of the private and public factors

set out in Jumara v. State Farm Insurance Co., 55 F.3d 873 (3d

Cir. 1995), the Court concludes that transfer is appropriate. 

The Court also concludes that the first-filed rule does not

require a different result. The Court, therefore, will grant the

defendant’s motion to transfer and deny the plaintiff’s motion to

enjoin the Indiana action. 

I. Transfer Under 28 U.S.C. § 1404(a)

Section 1404(a) of Title 28 states:

For the convenience of parties and witnesses, in the

interest of justice, a district court may transfer

any civil action to any other district or division

where it might have been brought.

28 U.S.C. § 1404(a). The party requesting the transfer has the

burden of establishing that transfer is warranted. Jumara, 55

F.3d at 879. Courts consider private and public factors to

determine the forum in which the interests of justice and

convenience would best be served. Id. Private factors include:

(1) the plaintiff’s forum preference; (2) the defendant’s

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preference; (3) where the claim arose; (4) the relative physical

and financial condition of the parties; (5) the extent to which

witnesses may be unavailable for trial in one of the fora; and

(6) the extent to which books and records could not be produced

in one of the fora. Id.

Public factors include: (1) the enforceability of a

judgment; (2) practical considerations that could make trial

easy, expeditious, or inexpensive; (3) the relative

administrative difficulty resulting from court congestion; (4)

the local interest in deciding the controversy; (5) the public

policies of the fora; and (6) the familiarity of the trial judge

with the applicable state law in diversity cases. Id. at 879-80.

A. Private Factors

1. Plaintiff’s Choice of Forum

The plaintiff’s choice of forum weighs slightly against

transfer. When a plaintiff files in its home forum, as Exelon

did here, that choice ordinarily is entitled to substantial

deference. FMC Corp. v. AMVAC Chem. Corp., No. 05-2593, 2005

U.S. Dist. LEXIS 15499, *49-50 (E.D. Pa. Aug. 1, 2005); Endless

Pools, Inc. v. Wave Tec Pools, Inc., 362 F. Supp. 2d 578, 586

(E.D. Pa. 2005). In this case, however, the operative facts

occurred in Indiana and the plaintiff’s forum choice, therefore,

is entitled to less deference. Gen. Fiber Commc’ns, Inc. v.

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4

Barnes Wentworth, Inc., No. 03-3291, 2004 U.S. Dist. LEXIS 13640,

*6 (E.D. Pa. May 28, 2004).

2. Defendant’s Choice of Forum

The defendant’s preference favors transfer. Hoosier is

based in Indiana and prefers to litigate this matter in the

Southern District of Indiana. 

3. Where the Claim Arose

Where the claim arose weighs strongly in favor of

transfer. This dispute is essentially a disagreement about the

extent to which Exelon is responsible to Hoosier for costs

incurred by Hoosier in bringing its Indiana power plants into

compliance with Indiana and federal emissions standards. 

Specifically, in 1998, the United States Environmental Protection

Agency finalized a rule requiring several states, including

Indiana, to reduce their nitrogen oxide emissions. In response

to the EPA rule, the State of Indiana promulgated rules requiring

reductions of nitrogen oxide emissions from Indiana generators,

including Hoosier.

In response to these federal and state rules, Hoosier

began to study strategies to reduce the emissions from its

Indiana generators. The defendant decided to install selective

catalytic reduction technology in two of its Indiana generating

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units at a cost of approximately $73 million and then attempted

to impose this cost increase on the plaintiff under the two 1997

Unit Power Sales Agreements. Exelon objected to paying the full

cost of Hoosier’s Indiana environmental compliance strategy and

over the next four years the parties attempted to resolve the

dispute informally. During this time, Exelon representatives

traveled to Indiana, but Hoosier representatives never traveled

to Pennsylvania.

The plaintiff argues that this dispute is best viewed

as a Pennsylvania dispute because the 1997 agreements were

partially negotiated in Pennsylvania and Exelon authorized

payment under protest of the disputed cost increases in

Pennsylvania. Although the two 1997 Unit Power Sales Agreements

were negotiated in both Pennsylvania and Indiana, all of the

performance under these contracts took place in Indiana. Hoosier

generates the energy it supplies to Exelon exclusively in Indiana

and title to that energy passes to Exelon in Indiana. 

Furthermore, all relevant efforts by Hoosier to comply with

Indiana and federal regulations took place in Indiana. 

4. The Convenience of the Parties

The convenience of the parties as indicated by their

relative physical and financial condition is neutral. Exelon

claims that it has overpaid under the two 1997 agreements and

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Hoosier claims it is owed money under the same agreements. 

Either Exelon would incur additional expenses by litigating in

Indiana, or Hoosier would incur additional expenses by litigating

in Pennsylvania. Thus, the convenience factor does not weigh

heavily in favor of either party. 

5. Witness Availability

Witness availability weighs in favor of transfer. The

defendant has identified Hoosier’s seventeen rural Indiana member

distribution cooperatives as well as several state of Indiana

employees who were involved with creating the Indiana regulations

concerning nitrogen oxide and implementing the compliance

schedule as non-party witnesses subject to the subpoena power of

the Indiana court but not this one. Although, as the plaintiff

argues, members of the Hoosier cooperative will likely be willing

to attend trial in Pennsylvania to defend their interests, it is

likely that the Indiana governmental employees would be unwilling

or unable to travel to Pennsylvania and this weighs strongly in

favor of transfer. Because this dispute deals in large measure

with Hoosier’s response to Indiana and federal emissions

regulations, it is likely that the Indiana governmental officials

will be able to offer relevant testimony at trial. 

Witness availability has a lesser impact on the

plaintiff. The plaintiff has identified only two non-party

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witnesses who would be subject to this Court’s subpoena power,

Antonella Lynch and Christian Colton. Both these individuals are

former Exelon employees who were involved in negotiating the two

1997 Unit Power Sales Agreements. The plaintiff did argue that

these former employees “may be unavailable for trial in Indiana”

but did not state why it might be inconvenient or impossible for

its former employees, who were involved in negotiating the 1997

agreements with the Indiana based defendant, to travel to Indiana

for trial. 

6. The Books and Records

The books and records issue weighs in favor of

transfer. Both parties are in possession of the relevant

contractual documents. The defendant has identified additional

documents, including documents related to its nitrogen oxide

emissions studies and documents relating to the selective

catalytic reduction technology used to reduce emissions that are

located in Indiana. The plaintiff has not identified any records

which are located exclusively in Pennsylvania.

The defendant also argues that it may introduce

cumbersome pieces of equipment, such as the selective catalytic

reduction filters it installed, which are located in Indiana. 

The plaintiff disputes the practicality and necessity of

introducing this equipment into evidence. The Court will not

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decide this dispute, but notes the possibility of introducing

this Indiana based equipment into evidence favors transfer.

B. Public Factors

The public factors also favor transfer. Most of the

public factors are neutral, but public factor four weighs in

favor of transfer. The parties agreed in both 1997 Unit Power

Sales Agreements that those agreements would be governed by

Indiana law. The plaintiff argues that this dispute is simply a

breach of contract action and thus the choice of Indiana law is

not significant. However, in this case, not only are the

relevant contracts governed by Indiana law, the dispute revolves

primarily around actions taken by Hoosier in response to Indiana

and federal emissions regulations. Because of the underlying

issue in this case regarding the appropriateness of efforts taken

by the defendant to comply with Indiana environmental

regulations, Indiana has a strong local interest in deciding this

dispute.

Additionally, public factor six weighs slightly in

favor of transfer. Given the parties’ choice of Indiana law as

the governing law, and the presence of the Indiana environmental

regulations, an Indiana court would likely be more familiar with

the applicable state law than this Court.

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II. The First-Filed Rule

The plaintiff has argued that because the Pennsylvania

Action was filed two days before the defendant filed the Indiana

Action, the Court should apply the first-filed rule and enjoin

the Indiana Action. 

The first-filed rule gives a court the power to enjoin

subsequent proceedings involving the same parties and issues

already before another district court. EEOC v. Univ. of Pa., 850

F.2d 969, 971 (3d Cir. 1988). The rule is grounded on equitable

principles and its primary purpose is to avoid conflicting

judgments and to avoid burdening the federal judiciary. Id. at

977. In this case, the Court has determined that transfer is

appropriate under § 1404(a) and, therefore, there will be no risk

of conflicting judgments. Furthermore, the federal judiciary

will not be burdened by having to consider identical issues in

two separate courts. 

If this Court were, after determining transfer is

appropriate, to then rely on the first-filed rule and ultimately

deny the defendant’s transfer request, such a result would

essentially punish the defendant for filing the Indiana Action. 

Although the presence of the Indiana Action may not favor

transfer, it would not be in the interests of justice to place

the defendant in a worse position with respect to its transfer

request because of the presence of the Indiana Action. 

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Other district courts in this circuit have reached

similar conclusions and also stated that the first-filed rule

does not apply when transfer is appropriate. See, e.g., Lawrence

v. Xerox Corp., 56 F. Supp. 2d 442, 454 (D.N.J. 1999); Salperto

v. Pohlad, No. 93-167, 1994 U.S. Dist. LEXIS 161, *16 (D. Del.

Jan. 6, 1994); Ricoh Co., Ltd. v. Honeywell, Inc., 817 F. Supp.

473, 487 (D.N.J. 1993). Such a result is especially appropriate

in this case because the parties entered into a tolling agreement

on July 27, 2004 to toll the applicable statute of limitations

through October 1, 2004 so that settlement negotiations could

continue. Prior to the expiration of that agreement, the

plaintiff filed this action on September 29, 2004 and then two

days later, on October 1, without knowledge of the plaintiff’s

filing, the defendant filed the Indiana Action. 

The first-filed rule “is not a mandate directing wooden

application.” EEOC, 850 F.2d at 972. Instead, district courts

have discretion under appropriate circumstances to depart from

the rule. Id. The fact that this Court has found transfer to be

appropriate under the Jumara factors, combined with the short

time period between the filings, the presence of the tolling

agreement and the defendant’s lack of knowledge of the

Pennsylvania Action, leads to the conclusion that a departure

from the first-filed rule is justified in this case.

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III. Personal Jurisdiction Over the Defendant

Because the Court has found that the Jumara factors

favor transfer, there is no need to reach the defendant’s

argument that personal jurisdiction does not exist in

Pennsylvania. Even if it would be improper for this Court to

exercise personal jurisdiction over the defendant, transfer would

still be appropriate under § 1404(a). United States v.

Berkowitz, 328 F.2d 358, 361 (3d Cir. 1964). 

An appropriate Order follows.

Case 2:04-cv-04592-MAM Document 24 Filed 09/26/05 Page 11 of 13
IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

EXELON GENERATION COMPANY, LLC, : CIVIL ACTION

Plaintiff :

:

v. :

:

HOOSIER ENERGY RURAL ELECTRIC :

COOPERATIVE, INC., :

Defendant : NO. 04-4592

ORDER

AND NOW, this 26th day of September, 2005, upon

consideration of the defendant’s Motion to Dismiss or, in the

Alternative, Transfer to the Southern District of Indiana (Docket

No. 16), the plaintiff’s opposition, and the defendant’s reply,

as well as the plaintiff’s Motion to Enjoin Defendant from

Proceeding in the Later-Filed Indiana Action (Docket No. 18), the

defendant’s response, and the plaintiff’s reply, IT IS HEREBY

ORDERED that for the reasons stated in a memorandum of this date:

1. The Motion to Dismiss or, in the Alternative,

Transfer to the Southern District of Indiana is

GRANTED IN PART AND DENIED IN PART. It is granted

with respect to the defendant’s request to

transfer this action to the Southern District of

Indiana; and denied as moot with respect to the

defendant’s request to dismiss for lack of

personal jurisdiction.

Case 2:04-cv-04592-MAM Document 24 Filed 09/26/05 Page 12 of 13
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2. The Motion to Enjoin Defendant from Proceeding in

the Later-Filed Indiana Action is DENIED.

IT IS FURTHER ORDERED that this case shall be

transferred to the United States District Court for the Southern

District of Indiana.

BY THE COURT:

 

 /s/ Mary A. McLaughlin

MARY A. McLAUGHLIN, J.

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