IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

JOHN J. KORESKO, V, : CIVIL ACTION

et al., : NO. 05-3800

:

Plaintiffs, :

:

v. :

:

NATIONWIDE LIFE, :

INSURANCE COMPANY, :

:

Defendant. :

M E M O R A N D U M

EDUARDO C. ROBRENO, J. DECEMBER 6, 2005

Before the Court are plaintiffs’ motion to reassign the

case to another Judge of this Court and defendant’s motion to

transfer the case to the Southern District of Ohio. For the

reasons that follow, the motion to reassign will be denied and

the motion to transfer will be granted.

I. BACKGROUND

Plaintiffs, John J. Koresko and Penn-Mont Benefit

Services, Inc. (“Penn-Mont”), consistent with state practice,

filed a praecipe for writ of summons in the Court of Common Pleas

of Montgomery County, Pennsylvania on June 23, 2005 against

Defendant, Nationwide Life Insurance Company (“Nationwide”),

asserting both state and federal claims. On July 22, 2005,

Nationwide removed the case to this Court.

Once in this Court, Koresko and Penn-Mont filed a

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 1 of 25
 This patent, Patent No. 6,963,852, was issued on November 1

8, 2005. 

2

complaint against Nationwide on September 6, 2005, alleging

misappropriation of trade secrets, and breach of agreements. 

Koresko and Penn-Mont contend that between March 2000 and the

present, Koresko developed an alternative methodology for funding

a pension plan called the Variable 412(i) Plan (the “Plan”). The

Plan was to be marketed and distributed exclusively by Penn-Mont. 

Koresko and Penn-Mont state that Koresko met with Nationwide at

Nationwide’s office in Ohio several times in 2001 and 2002

regarding the Plan, and that in June 2002, Nationwide signed a

Confidentiality Agreement regarding the Plan. Koresko and PennMont contend that Nationwide was on written notice that Koresko

had filed a business process patent application for the Plan in

2001. 

1

Koresko and Penn-Mont allege that, in 2005, they became

aware that Nationwide was violating the Confidentiality Agreement

by improperly using and disclosing plaintiffs’ trade secrets. In

June 2005, Koresko notified Nationwide that he believed

Nationwide was violating the Confidentiality Agreement and

misappropriating trade secrets in plaintiff’s patent application,

and, after an email exchange between the parties, sent a ceaseand-desist demand on June 15, 2005. The cease-and-desist demand

stated as follows:

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 2 of 25
 On November 23, 2005, Nationwide filed a second 2

declaratory judgment action in the Southern District of Ohio for

noninfringement and the invalidity of the patent issued to

Koresko on November 8, 2005. Civ. A. No. 05-1066.

3

I would like your people to come to my offices for a

meeting on or before June 30, prepared and authorized

to agree to the license fees. The initial license fee

will be at least $1.5 million, if we decide to honor

our previous quote, and there will be an ongoing fee

based upon the percentage of sales.

The letter also stated that Koresko was prepared to seek

injunctive relief if Nationwide did not comply, and that “[o]ur

complaint is substantially complete.” Nationwide did not meet

with Koresko, but instead filed suit in the Southern District of

Ohio on June 22, 2005, seeking a declaratory judgment that the

information in the patent application filed by Koresko is not

protectable as a trade secret, and that Nationwide has not

misappropriated or infringed Penn-Mont’s or Koresko’s trade

secrets or confidential information.2

Koresko and Penn-Mont seek compensatory and punitive

damages, and attorneys’ fees and costs. Koresko and Penn-Mont

also seek a preliminary injunction requiring Nationwide to cease

and desist using Koresko’s and Penn-Mont’s intellectual property,

to cease and desist using variable contracts in a defined benefit

plan, and to return their materials.

On September 26, 2005, Nationwide filed an answer to

the complaint with affirmative defenses and brought a

counterclaim, requesting a declaratory judgment that: (1) the

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 3 of 25
4

information disclosed in Koresko’s patent application is not

protectable as a trade secret because it is publicly available;

(2) Nationwide has not misappropriated or infringed any of

Koresko’s and Penn-Mont’s trade secrets or confidential

information; and (3) that Nationwide has not breached the

Confidentiality Agreement. Nationwide also requests attorneys’

fees and costs. Koresko and Penn-Mont answered the Counterclaim

Complaint on October 20, 2005, and included affirmative defenses. 

On September 26, 2005, Nationwide filed a motion to

transfer the action to the Southern District of Ohio, or to

dismiss or stay the action in favor of the action currently

pending in the Southern District of Ohio. On October 19, 2005,

Koresko and Penn-Mont filed a motion to reassign the case to

Judge Bruce W. Kauffman in the Eastern District of Pennsylvania. 

Koresko and Penn-Mont allege Judge Kauffman has pending before

him an earlier related matter. 

II. DISCUSSION

A. Motion to Reassign

Koresko and Penn-Mont request the Court grant their

motion for reassignment, and have the Clerk of Court refer the

matter to the Chief Judge for reassignment to Judge Bruce W.

Kauffman as related to a case currently before Judge Kauffman,

pursuant to Local Rule 40.1(c)(2). Local Rule 40.1(b)(3)(A)

defines civil cases as related when a case filed involves: (1)

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 4 of 25
5

property included in another suit; (2) the same issue of fact or

grows out of the same transaction as another suit; or (3) the

validity or infringement of a patent involved in another suit. 

Local Rule 40.1(c)(2) provides for the reassignment of related

cases if the relationship between a case and a previously filed

case is not known until the case is assigned. The Rule states:

If the fact of relationship does not become known until

after the case is assigned, the judge receiving the

later case may refer the case to the Chief Judge for

reassignment to the judge to whom the earlier related

case is assigned. If the Chief Judge determines that

the cases are related, the Chief Judge shall transfer

the later case to the judge to whom the earlier case is

assigned; otherwise, the Chief Judge shall send the

later case back to the judge to whom it was originally

assigned.

Local R. Civ. P. 40.1(c)(2).

The Rule envisions a two-step process. One, the judge

assigned to the later case determines in the first instance

whether the case is “related.” If the judge assigned to the

later case finds it is not related, the judge will deny the

motion to reassign, and that ends the matter. If, on the other

hand, the judge assigned to the later case finds that the case is

related, the judge shall refer the case to the Chief Judge for

possible reassignment. Two, if the Chief Judge concurs with the

assessment of relatedness by the judge assigned to the later

case, the Chief Judge shall reassign the later case to the judge

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 5 of 25
 As a practical matter, reassignment always occurs with the 3

concurrence of the earlier assigned judge.

 On November 8, 2005, defendants in the CJA action filed a 4

declaratory judgment action against Koresko for noninfringement

and the invalidity of the patent issued to Koresko on November 8,

2005. Civ. A. No. 05-5862.

6

presiding over the earlier case. If the Chief Judge disagrees 3

with the assessment that the cases are related, the case shall be

returned to the judge to whom the later case was assigned. In

other words, while the judge assigned to the later case may deny

reassignment on his or her own, reassignment from the later

assigned judge to the earlier assigned judge can only be executed

by the Chief Judge. This procedure protects the integrity of the

court’s random assignment system. See Local Rule 40.1(a),(b). 

Koresko and Penn-Mont contend that the case should be

reassigned because of its relation to Koresko, et al. v.

Bleiweis, et al., Civ. A. No. 04-769 (the “CJA action”), pending

before Judge Kauffman. Koresko and Penn-Mont state that their 4

claims in both cases involve the same intellectual property,

namely the Variable 412(i)Plan. Koresko and Penn-Mont also claim

that each defendant misappropriated trade secrets after viewing

the same presentation (at separate times). Koresko and Penn-Mont

argue that Judge Kauffman should hear both cases in the interest

of judicial economy because the two cases involve the same issues

of fact.

On the other hand, Nationwide argues that the motion

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 6 of 25
7

for reassignment should be denied because the issues of fact

involved are different in both cases. Nationwide notes that the

defendants, the causes of action, and the steps taken by Koresko

and Penn-Mont to maintain the confidentiality of the alleged

trade secrets are different in each case. Nationwide also argues

that judicial economy would not be fostered if the instant case

were reassigned, as discovery in the CJA action is substantially

complete. 

It is a question of fact whether cases are related for

the purpose of assignment. See Sellers v. Philadelphia Police

Commissioner John Timoney, et al., 2002 WL 32348499, at *3

(E.D.Pa. 2002). “The rule is intended to foster judicial economy

by allowing one judge to consider all actions arising out of the

same transaction, while avoiding any possible confusion and

prejudice that might befall parties if they were directed to the

same judge but were pursuing dissimilar actions.” Id. 

In Sellers, Judge Pollak was assigned four cases

arising out of events that took place during the 2000 Republican

National Convention in Philadelphia. After the first case was

assigned to Judge Pollak, plaintiffs in the three later cases

designated their cases as “related,” to that case, and the three

later cases were therefore assigned to Judge Pollak. Defendants

in the later three cases then filed submissions denying the

relatedness of the cases and asking that their cases be

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 7 of 25
8

reassigned randomly. Judge Pollak retained two of the three

later-filed cases, but referred one back to the clerk’s office

for random reassignment. The three cases ultimately retained by

Judge Pollak all arose from the same transaction – when arrested,

all plaintiffs in these three cases had been present at a

warehouse at which puppets and floats were being constructed to

protest the RNC. Although the fourth plaintiff was also arrested

on the same day, while preparing to protest the RNC, his arrest

took place at a different time and place, and under different

circumstances than the arrests of the other three plaintiffs. 

Judge Pollak found that the fourth case was not “related” for the

purpose of Local Rule 40.1, because although the fourth plaintiff

may “set forth legal theories similar to those advanced in [the

first case] ... the factual differences between the two cases

render Rule 40.1 inapplicable.” Sellers, 2002 WL 32348499, at

*3.

Similarly, in this case, although the plaintiffs are

the same in both cases, and both actions involve the alleged

misappropriation of the same confidential information, the

defendants are different, the claims are different, and the

circumstances under which the alleged misappropriation of

confidential information took place are different. Consequently,

the facts in both cases do not grow out of the same transaction. 

See Local Rule of Civil Procedure 40.1(b)(3)(A). Nor does the

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 8 of 25
 The patent was issued November 8, 2005. 5

9

fact that Koresko and Penn-Mont allege the violation of a

patent, or that the case revolves around the same intellectual 5

property compel a different result. Neither case is exclusively

a patent or an intellectual property case. Rather, the central

issue in both cases is not whether there is a valid patent or

whether plaintiffs hold any rights in a protectable trade secret,

but whether the defendants’ conduct in each case infringed upon

the alleged patent or otherwise breached a confidentiality

agreement. See id. Accordingly, the cases are not related, and

the motion for reassignment will be denied.

B. Motion to Transfer, Dismiss, or Stay

Nationwide moves to transfer this action to 

the Southern District of Ohio, or, in the alternative, to dismiss

or stay this action in favor of the earlier suit filed by

Nationwide in the Southern District of Ohio. On June 22, 2005,

Nationwide commenced an action in the Southern District of Ohio

against Penn-Mont and Koresko seeking a declaratory judgment that

the information in the patent application filed by Koresko is not

protectable as a trade secret, and that Nationwide has not

misappropriated or infringed Penn-Mont’s or Koresko’s trade

secrets or confidential information. Nationwide Life Ins. Co. v.

Penn-Mont Benefit Servs. and John J. Koresko, V, Civ. A. No. 05-

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 9 of 25
 A complaint and an amended complaint have been filed in 6

the Ohio action. An answer has not yet been filed.

 Penn-Mont and Koresko filed a complaint in this federal 7

action on September 6, 2005, after defendant removed the action

and the Court held an initial pretrial conference and issued a

scheduling order.

10

604. Penn-Mont and Koresko thereafter filed a praecipe for writ 6

of summons in Pennsylvania state court on June 23, 2005.7

Nationwide argues that the Ohio action is the first-filed action,

and that the Court should transfer this action to the Southern

District of Ohio, or, in the alternative, dismiss or stay the

present proceedings.

Penn-Mont and Koresko argue that the case should not be

transferred because: (1) the parties signed a Confidentiality

Agreement containing a forum selection clause choosing the

Eastern District of Pennsylvania and a choice of law clause

choosing Pennsylvania law in the event of litigation; (2) the

case should be reassigned to Judge Kauffman in the Eastern

District of Pennsylvania as related to the CJA action; and (3)

Nationwide’s filing was an improper anticipatory filing to which

the first-filed rule should not apply.

The first-filed rule dictates that “in cases of federal

concurrent jurisdiction involving the same parties and same

issues, the court of first-filing must proceed to decide the

matter.” Southampton Sports Zone v. Probatter Sports, 2003 WL

22358439, at *4 (E.D.Pa. 2003) (citing Zelenkofske v. Stevenson,

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 10 of 25
 As used in the context of the first-filed rule, forum 8

shopping refers to the selection of a forum based on the

favorableness of the forum’s substantive law, not merely based on

considerations of convenience. See EEOC v. University of

Pennsylvania, 850 F.2d 969.

11

1999 WL 592399, at *2 (E.D.Pa. 1999)); see also Crosley Corp. v.

Hazeltine Corp., 122 F.2d 925, 929-30 (3d Cir. 1941) (“In all

cases of concurrent jurisdiction, the court which first has

possession of the subject must decide it.” (citation omitted)).

Courts have discretion to depart from the first-filed

rule in certain circumstances. For example, a departure may be

warranted if extraordinary circumstances are present, or a party

has acted inequitably, acted with an eye to forum shopping, or 8

acted with bad faith. See EEOC v. University of Pennsylvania,

850 F.2d at 972; IMS Health, Inc. v. Vality Technology Inc., 59

F. Supp.2d 454, 462-63 (E.D. Pa. 1999). Courts have also granted

exceptions to the rule when the second-filed action is further

along than the first action, and “when the first-filing party

instituted suit in one forum in anticipation of the opposing

party’s imminent suit in another less favorable forum.” EEOC v.

University of Pennsylvania, 850 F.2d at 976. There is some

disagreement among district courts regarding the deference courts

should pay to the first-filed rule. Compare Southampton Sports

Zone, Inc. v. Probatter Sports, LLC, 2003 WL 22358439, at *4

(E.D. Pa. 2003) (Departures from the first-filed rule are rare,

and “the second action should proceed only in unusual or

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 11 of 25
12

exceptional circumstances”), with FMC Corp. v. Amvac Chemical

Corp., 379 F. Supp.2d 733, 744 (E.D. Pa. 2005) (exceptions to the

first-filed rule are not rare and are made where justice or

expediency so requires (citing Drugstore Direct, Inc. v. The

Cartier Div. of Richemont North America, Inc., 350 F. Supp.2d

620, 623 (E.D. Pa. 2004)). On balance, due consideration to the

orderly administration of justice counsels in favor of ordinarily

respecting the first-filed rule.

Here, it is uncontested that the Ohio action is the

first-filed action. Nationwide’s Complaint was filed in the Ohio

action on June 22, 2005, and Koresko and Penn-Mont filed their

praecipe and writ of summons in the Pennsylvania state action on

June 23, 2005. Although there is some issue whether Koresko and

Penn-Mont were properly served in the Ohio action, “the firstfiled rule, as its name indicates, is premised upon a priority of

filing the complaint--not upon a priority of serving the

complaint.” Peregrine Corp. v. Peregrine Industries, Inc., 769

F. Supp. 169, 172 (E.D. Pa. 1991). The question here, therefore,

is whether the Court should depart from the first-filed rule and

maintain jurisdiction over this action, as opposed to

transferring it to Ohio, or dismissing or staying the action in

favor of the first-filed case.

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 12 of 25
13

1. The forum selection clause

First, Koresko and Penn-Mont argue that the Court

should depart from the first-filed rule because the

Confidentiality Agreement signed by Nationwide and Koresko in

June 2002 contains a clause selecting Pennsylvania as the forum

in which litigation would take place. The clause in the

Confidentiality Agreement reads as follows:

This Agreement and performance hereunder shall be

governed by the law of the Commonwealth of

Pennsylvania. The parties agree to venue and personal

jurisdiction in the state or federal courts located in

the Eastern District of Pennsylvania.

(Compl., Ex. A.) Nationwide argues that this forum selection

clause is permissive – providing for consent to jurisdiction –

not exclusive, which would preclude jurisdiction in all other

courts. 

It is clear from the language of the clause that the

parties did not intend to vest exclusive jurisdiction in the

Pennsylvania courts. “Where parties enter into a contract and

merely consent to jurisdiction in a particular forum, they do not

preclude the jurisdiction of other forums.” Polsky v. Hall City

Centre Associates Ltd. P’ship, 1989 WL 48109, at *3 (E.D.Pa.

1989). See Pep Boys - Manny, Moe & Jack v. American Waste Oil

Servs. Corp., 1997 WL 367048, at *7 (E.D.Pa. 1997) (forum

selection clause consenting to jurisdiction in Pennsylvania did

not provide exclusive jurisdiction). Koresko and Penn-Mont

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 13 of 25
14

conflate the concept of forum selection with that of consent to

venue and personal jurisdiction. Where the former provides that

all litigation under the contract must be brought in the selected

forum, the latter permits but does not compel that the action be

brought in a particular jurisdiction. 

Koresko and Penn-Mont argue, however, that the clause

was intended to be exclusive. They support their argument with

an affidavit by Koresko that avers that it “was intended that the

forum clause in the Confidentiality Agreement vest exclusive

jurisdiction and venue in this [E.D.Pa.] district.” Koresko Aff.

¶ 37. If an issue is raised that a seemingly unambiguous

contractual clause is actually unclear, “the court ‘should hear

the evidence presented by both parties and then decide whether

‘there is objective indicia that, from the linguistic reference

point of the parties, the terms of the contract are susceptible

of different meanings’.” Compass Technology, Inc. v. Tseng

Laboratories, Inc., 71 F.3d 1125, 1131-32 (3d Cir. 1995) (quoting

Mellon Bank, N.A. v. Aetna Business Credit, 619 F.2d 1001, 1011

n. 12 (3d Cir. 1980)). The burden is on the party claiming the

existence of the ambiguity to “show that a contract is reasonably

or fairly susceptible of different constructions and is capable

of being understood in more senses than one and is obscure in

meaning through indefiniteness of expression or has a double

meaning.” Compass Technology, 71 F.3d at 1132. “In ascertaining

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 14 of 25
 To the extent that Koresko and Penn-Mont argue that 9

jurisdiction would lie in the Eastern District of Pennsylvania

regardless of the forum selection clause, and therefore the

clause would have been superfluous if it did not intend to vest

Pennsylvania with exclusive jurisdiction, this argument has

slight probative value. 

15

the intent of parties, ‘it is their outward and objective

manifestations of assent, as opposed to their undisclosed and

subjective intentions, that matter.’” Prusky v. Prudential

Insurance Co. of America, 2001 WL 34355665 (E.D.Pa. 2001)

(quoting Espenshade v. Espenshade, 729 A,2d 1239, 1243 (Pa.

Super. Ct. 1999). 

An affidavit by a party that it was his subjective

intent to vest Pennsylvania with exclusive jurisdiction is not

admissible to prove the parties’ intent. See, e.g., Williams v. 9

Metzler, 132 F.3d 937, 947 (3d Cir. 1997) (an inquiry into the

intent of the parties “does not require a search for the

subjective intent of the parties”). Given the relatively

unambiguous language in the forum selection clause here, and the

lack of objective evidence suggesting an agreement as to

exclusive jurisdiction, Koresko and Nationwide have failed to

satisfy their burden that the Confidentiality Agreement vests

Pennsylvania with exclusive jurisdiction.

2. The anticipatory nature of Nationwide’s filing

Next, Koresko and Penn-Mont ask the Court to depart

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 15 of 25
 “The lines between forum shopping, bad faith and 10

anticipatory lawsuit are often blurred because bad faith cases

typically include a race to the courthouse, and anticipatory

lawsuits invariably involve a dispute over choice of forum. In

fact, some courts view anticipatory lawsuits as an ‘aspect of

forum shopping.’” Russell B. Hill, Should Anticipation Kill

Application of the Declaratory Judgment Act?, 26 T. Jefferson L.

Rev. 239, 248 (2004).

 In EEOC v. University of Pennsylvania, the Equal 11

Employment Opportunity Commission (“EEOC”) brought an action in

16

from the first-filed rule because Nationwide’s Ohio filing was an

improper anticipatory filing to which the first-filed rule should

not apply. Koresko and Penn-Mont argue that the improperly

anticipatory nature of the Ohio lawsuit is evidenced by: (1) the

use of a declaratory judgment action, and (2) the fact that the

suit was filed within the response period of plaintiff’s cease

and desist letter.10

The fact that the Ohio action is a declaratory judgment

action does not in and of itself merit a departure from the

first-filed rule. Although the “use of a declaratory judgment

action may demonstrate the anticipatory and preemptive nature of

a first-filed suit,” the first-filed rule has “routinely been

applied to cases where the first-filed case is an action for

declaratory judgment.” Pep Boys, 1997 WL 367048, at *6. Some

evidence that a first-filed case was filed for the purpose of

forum shopping or in bad faith is necessary before courts find it

was improperly anticipatory, and therefore warranted a departure

from the first-filed rule.11

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 16 of 25
the Eastern District of Pennsylvania to enforce a subpoena

against an employer, the University of Pennsylvania (the

“University”), after the University refused to release

confidential peer review materials. 850 F.2d 969 (3d Cir. 1988),

aff’d, University of Pennsylvania v. EEOC, 493 U.S. 182 (1990). 

The University requested the district court in Pennsylvania to

dismiss the enforcement suit in favor of a suit filed earlier by

the University in the United States District Court for the

District of Columbia. The University’s earlier filed suit

challenged the EEOC’s nationwide policy of requiring disclosure

of confidential peer review materials under the First and Fifth

Amendments, and was filed during the grace period the EEOC had

given the University to respond to its subpoena. 

The Third Circuit affirmed the decision of the district

court to deny the motion to dismiss and to maintain jurisdiction

over the enforcement action. Recognizing that “exceptions to the

[first-filed] rule are rare,” the Third Circuit then proceeded to

list circumstances in which exceptions should be made: 

“Bad faith ... and forum shopping have always been

regarded as proper bases for departing from the rule. 

Similarly, courts have rejected the rule when the

second-filed action had developed further than the

initial suit ... and when the first-filing party

instituted suit in one forum in anticipation of the

opposing party’s imminent suit in another, less

favorable forum.”

850 F.2d at 977. The Pennsylvania district court did not abuse

its discretion, held the Third Circuit, because the timing of the

University’s action evidenced a desire to preempt an imminent

subpoena action, and the University admitted it believed the law

of the District of Columbia would be more favorable to its

position than that of the Eastern District of Pennsylvania. Id. 

17

Here, no substantive advantage would inure to

Nationwide from litigating the case in Ohio. The parties agree

that Pennsylvania substantive law applies whether the case is

litigated in Ohio or Pennsylvania. Therefore, Ohio is not a less

favorable forum than Pennsylvania for plaintiffs. 

Koresko and Penn-Mont also argue that the fact that

Nationwide brought its suit within the response time of Koresko’s

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 17 of 25
 This patent was issued on November 8, 2005. 12

18

cease-and-desist letter evidences an improper anticipatory

filing. On June 8, 2005, Koresko wrote to an employee of

Nationwide, John Keenan, informing Keenan that Nationwide may be

infringing claims found in Koresko’s patent application. There 12

was some email communication between employees at Nationwide and

Koresko, and on June 10, 2005, John T. Harmon, the Assistant

General Counsel for Nationwide, sent a letter to Koresko

informing him that he had begun an analysis of Koresko’s patent

claims. On June 15, 2005, Koresko sent a cease-and-desist letter

to Nationwide stating his intention to seek injunctive relief

against Nationwide unless the matter was resolved before June 30,

2005. Nationwide then filed its Ohio suit on June 23, 2005. 

Courts may consider whether a filing preemptively

foreclosed settlement negotiations when determining if a firstfiled suit was commenced in bad faith. See, e.g., IMS Health,

Inc. v. Vality Technology Inc., 59 F. Supp.2d 454, 463 (E.D.Pa.

1999). “[A] second-filing party may have a strong case that the

initial filing was improper if the first-filing party initiated

its suit within the response period provided in a recent ceaseand-desist letter.” FMC Corp., 379 F. Supp.2d 733, 744 (E.D.Pa.

2005); see also Kim v. Kim, 324 F. Supp.2d 628, 636 (E.D.Pa.

2004). 

In FMC Corp., the court declined to apply the firstCase 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 18 of 25
 The types of inequitable conduct listed in FMC are 13

extraordinary circumstances, inequitable conduct, bad faith,

forum shopping, and anticipatory filing. 379 F. Supp.2d at 745.

 In his June 15, 2005 letter, Mr. Koresko requested “at 14

least $1.5 million” for an initial license fee, and an ongoing

fee based on a percentage of sales.

19

filed rule, finding that numerous exceptions applied. The court

determined that the first-filer “wished to circumvent the Court’s

jurisdiction over the instant matter as a ‘related action,’” and

had engaged in inequitable conduct and bad faith by filing suit

during ongoing settlement discussions, within the response time

of the opposing side’s cease-and-desist letter. 379 F. Supp.2d

at 745. The court also noted that the first-filer filed on the

day before the Memorial Day holiday weekend, and did not inform

the lawyers with whom it had been negotiating of its commencement

of an action. Id. at 748. In departing from the first-filed

rule, the court in FMC found that “the facts establish that each

of the types of inequitable conduct from [EEOC v. University of

Pennsylvania] exist within the instant record.” Id. at 749. 13

The exceptions to the first-filed rule present in

FMC are absent here. Here, Mr. Koresko’s demand letter of June

15, 2005 contained a large financial demand, a short time-frame 14

for resolution, and a threat of litigation. The letter was sent

in response to a communication from Nationwide’s counsel that

Nationwide was beginning an assessment of the situation and Mr.

Koresko’s claim of misappropriation. Under these circumstances,

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 19 of 25
20

the party at the receiving end of a financial ultimatum is not

required to unilaterally disarm and allow the party asserting the

demand to control the choice of forum. This is particularly so,

given that Nationwide’s choice of forum is reasonable and will

not unduly vex or burden plaintiffs’ ability to litigate this

matter. Nationwide filed its declaratory judgment action in the

Southern District of Ohio, where Nationwide has its principal

place of business and where the contested events regarding the

disclosure of plaintiffs’ alleged trade secrets took place. 

Under these circumstances, unlike in FMC, Nationwide’s conduct

does not add up to bad faith or inequitable conduct.

Once it is determined that the first-filed rule

applies, and no exceptions counsel against its application, the

court must determine an appropriate remedy. First, the case may

be dismissed without prejudice or stayed for the duration of the

first-filed matter. See Kerotest Mfg. Co. v. C-O-Two Fire

Equipment Co., 342 U.S. 180, 183-84 (affirming decision to stay

second-filed action by district court where second action was

brought; the disposition of the conduct of multiple litigation in

the federal judicial system is up to discretion of the trial

judge) (cited in Adam v. Jacobs, 950 F.2d 89, 92 (2d Cir. 1991)

(the “decision whether or not to stay or dismiss a proceeding

[pursuant to the first-filed rule] rests within a district

judge’s discretion.”); see also Stone Creek Mechanical, Inc. v.

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 20 of 25
21

Carnes Co., Inc., 2002 WL 31424390, at *4 (E.D.Pa. 2002) (secondfiled case dismissed without prejudice). 

Alternately, the second-filed case can be transferred

to the forum where the first-filed case was brought, consistent

with the requirements of 28 U.S.C. § 1404(a). See Southampton

Sports Zone, Inc. v. Probatter Sports, LLC, 2003 WL 22358439, at

*5 (E.D.Pa. 2003) (under first-filed rule, presence of related

case in another forum warrants transfer under § 1404(a));

Zelenkofske v. Stevenson, 1999 WL 592399, at *4 (E.D.Pa. 1999)

(under first-filed rule, “existence of a prior related action in

the transferee district is a strong factor weighing in favor of

transfer in the interest of judicial economy.”).

Section 1404(a) provides for a case to be transferred

in the interest of justice to any other district or division

where it might have been brought “[f]or the convenience of

parties and witnesses.” A § 1404(a) analysis includes an

assessment of the public and private interests involved in the

choice of forum. The private interests to be considered may

include: (a) the plaintiff’s forum preference; (b) the

defendant’s preference; (c) where the claim arose; (d) the

convenience of the parties; (e) the convenience of the witnesses

to the extent the witnesses may be unavailable in one of the

fora; and (f) the location of necessary books and records. 

Jumara v. State Farm Ins. Co., 55 F.3d 873, 879 (3d Cir. 1995). 

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 21 of 25
 Koresko and Penn-Mont also argue that the first-filed 15

rule should not apply for reasons of judicial economy because the

case should be reassigned to Judge Kauffman. This issue was

decided adversely to Koresko and Penn-Mont above.

22

The public interests to be considered may include: (a) the

enforceability of the judgment; (b) practical considerations; (c)

the administrative difficulty in each fora resulting from court

congestion; (d) the local interest; (e) the public policies of

the fora; and (f) the familiarity of the trial judge with the

applicable law. Id. Although the plaintiff’s choice of forum

should not be lightly disregarded, the Third Circuit has

emphasized that “there is no definite formula or list of the

factors to consider.” Id. 

Here, neither dismissal nor a stay would serve the

interest of the parties in having their issues resolved promptly. 

Transfer, on the other hand, is warranted. Nationwide has its

principal place of business in Ohio, the events surrounding

Koresko’s and Penn-Mont’s claims took place in Ohio, and there is

already pending a declaratory judgment case involving the same

parties and issues in Ohio which is in its very preliminary

stages. The fact that a prior related action is before the

Southern District of Ohio weighs heavily in the Court’s § 1404(a)

determination. Therefore, both the private and public factors 15

counsel in favor of transfer.

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 22 of 25
23

III. CONCLUSION

For the foregoing reasons, the Court will deny the

motion to reassign the case to Judge Kauffman and grant the

motion to transfer the case to the Southern District of Ohio,

pursuant to the first-filed rule.

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 23 of 25
24

IN THE UNITED STATES DISTRICT COURT

FOR THE EASTERN DISTRICT OF PENNSYLVANIA

JOHN J. KORESKO, V, : CIVIL ACTION

et al., : NO. 05-3800

:

Plaintiffs, :

:

v. :

:

NATIONWIDE LIFE, :

INSURANCE COMPANY, :

:

Defendant. :

O R D E R

AND NOW, this 6th day of December 2005, upon consideration

of Plaintiffs’ Motion to Reassign Case (doc. no. 15) and Defendant’s

Motion to Transfer, Dismiss, or Stay (doc. no. 11), and after a

hearing at which counsel for both parties participated, it is hereby

ORDERED that:

1. Plaintiffs’ Motion to Reassign (doc. no. 15) is 

DENIED;

2. Defendant’s Motion to Transfer, Dismiss, or Stay (doc.

no. 11) is GRANTED;

3. Defendant’s Motion for Leave to File Reply Brief (doc.

no. 17) is GRANTED;

4. Plaintiffs’ Motion for Leave to File Sur-Reply

Memorandum of Law (doc. no. 24) is GRANTED; and

5. Plaintiffs’ Motion for Leave to File Reply Memorandum

of Law (doc. no. 25) is GRANTED.

IT IS FURTHER ORDERED that the case shall be TRANSFERRED to

the Southern District of Ohio (Columbus), and the Clerk shall deliver

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 24 of 25
 The case should be marked as related to Nationwide Life 16

Insurance Co. v. Penn-Mont Benefit Services, et al., Civ. A. No.

05-604.

25

the case file and a certified copy of the docket to the Clerk for the

Southern District of Ohio (Columbus).

16

AND IT IS SO ORDERED.

 

EDUARDO C. ROBRENO, J.

Case 2:05-cv-03800-ER Document 29 Filed 12/07/05 Page 25 of 25