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# United States Court of Appeals For the Seventh Circuit

Nos. 13-2339 & 13-2340

E RI C D. F RE E D, Plaintiff-Appellant,

v.

J.P. M ORG AN C HA S E B AN K , N.A., Defen dant-Appellee.

E RI C D. F RE E D, Plaintiff-Appellant,

v.

P AUL M. W E I S S

, R ONAL D W E I S S

, and C OMPL E X L I T I GAT I O N G R OUP LLC, Defen dants-Appellees.
Appe als fr om the U nited States Di stric t Co urt fo r the Nor thern Distri ct o f Il l i noi s, Eastern Di v i sio n. Nos. 12 C 1 47 7 and 1 2 C 67 20 — Gary S. Fein erma n, Judg e.

A RGU E D N OV E MB E R 7, 2013

— D E C I D E D J UN E 24, 20142 Nos. 13-2339 & 13-2340
Before B AU E R

, M AN I O N

, and S YKE S

, Circ uit Judges.
B AU E R , Cir cui t Judge. Thi s appeal aris es from three separate acti ons fi led by plainti ff- appella nt Eric D. Fr eed (“Freed”) again st numerous defendants: the fi rst case w as fi led in state court; the second fi led in state court and promptly removed to federal court; the thi rd fi led in federal court. The di stric t court found that abstenti on in the tw o federal court cases w as proper under Colorado River W

ater Conservation District v
. United States , 424 U.S. 800 (1976), and stay ed both cases pending the outcome of the state cour t pro ceedings. Free d tim ely appealed the tw o St ay Or ders, consoli dated in thi s appeal, and arg ued that the federal cases should be remanded and pr oceed to tr i al on the merits. W

e find that the di stric t c ourtdi d not abuse i ts di scretion in grant ing the stay s.

I. BACKGRO UND
Fr eed and P aul M. W

ei ss (“W ei ss”) w ere the sole managing mem be r s of a legal practic e or gani zation called Complex Li tigati on Group LLC (“CLG”)

. Fr eed clai ms to hav e prov i ded “virtually all of [CLG’s] oper atin g ca pi tal” thro ugh loans in excess of $12 mil l ion. Pursu ant to the partner shi p agr eement betw een Fr eed and W

ei ss, Fr eed w as entitled to repay ment of the loans before CLG could make di strib uti ons to other members. Accordi ng to Fr eed, shortly after he rec ei v ed a partial repay ment from CLG in Mar ch 2011, W ei ss began taking steps to ter minate Fr eed’s contro l of CLG and to create a new li mi ted li abi li ty company wit hout hi m. Fr eed arg ues that W ei ss, wit hout Fr eed’s authorizati on, mov ed CLG fund s held by J.P . Mor gan Ch ase Bank (“Chase”) into o ther accounts, whi chNos. 13-2339 & 13-2340 3

Fr eed lacked si gnature author i ty to a c c e s s

. Wh e n Fr e e d becam e
aw are of W

ei ss’s mov ement of t he C L G fund s, Fr eed demanded that Chase freeze all of the CLG accounts based on the clai m that W

ei ss w as unauthorized to mov e the fund s wi thout Fr eed’s a pprov al. Fr eed contends that Chase employ ees relay ed the fre e z e r equest to W ei ss, who then removed all fund s from Chase thro ugh chec ks pay able to hi m

. Freed asserts that W ei ss planned t o tr ansfer the fund s, alo ng wi th al l o t he r CLG ass ets, to the new company

. In December 2011, Fr eed, indi vidu ally and deriv ativ ely on behalf of CLG, fil e d a complaint in state court again st W ei ss and hi s wi fe Jami e Saltzman W ei ss (“Saltzman”) alle g ing

v arious bus iness -related i mpropr i eties prim arily reg ardin g acces s to CLG recor ds and fund s (th e “ st a t e court proceeding”). In an amended complaint, Fr eed asserted clai ms again st W ei ss for breach of fi duci ary duti es ow ed to Fr eed and the breach of the partner shi p agr eement betw een Fr eed and W ei ss. Fr eed also requested a declarator y judgment from the court

s ta ting that W

ei ss’s acti ons consti tuted a v oluntary ter m in a ti on of CLG according t o the ter ms of the CLG par tnershi p ag r e ement. Fr eed further claim ed that Saltzman, an employ ee of CLG, breached her fi duci ary d ut y of loy alty to CLG and that both Saltzman and W

ei ss i mproper ly conv ert ed CLG a ss e t s. Fr e e d ’s c om p l a int s ou ght tempor ary and permanent injuncti v e relief again st W

e iss and Saltzman to prev ent any addi tional acti ons in furtherance of their sc heme to push Fr eed out of CLG and to obtain i ts assets. In response, W

ei ss fi led a counterclai m in state court on behalf of hi mself and CLG requestin g: (1) a judi ci al deter mination to expel Fr eed from CLG; (2) a tempor ary and permanent4 Nos. 13-2339 & 13-2340

injuncti on prev entin g Fr eed from conti nuing t o act or hold hi mself out as a member and manager of CLG; and (3) a decree that Fr eed be di ssoci ated from CLG before August 2012. W ei ss and C L G fi l e d a d d i ti onal counterclai ms arg uing that Fr eed w as di ssoci ated from CLG in Mar ch 2011, when he wi thdrew CLG fund s in violati on of their partner shi p agr eement. How ev er , in the ev ent that the state court deter mined that Fr eed w as not di ssoci ated at that tim e, W ei ss and CLG asked the co ur t to di ssolv e CLG and to aw ard costs, compens ator y damages, and puni tiv e damages agai nst Free d. 1
In Februar y 2012, Fr eed fi led suit again st Chase in state court clai ming that Chase faci li tate d W ei ss’s unauthorized tr ansfer of CLG fund s (the “Chase Laws ui t”). Fr eed asserted tw o clai ms again st Chase: tor tious interfer ence wi t h co ntractual rights a nd a iding and abetting W ei ss’s breaches of fi duci a r y duti es ow ed to Fr eed. Chase tim ely removed the Chase Laws ui t to federal co ur t based on di v ersi ty of ci tizenshi p. Once in feder al court, Chase bro ught thi rd-part y clai ms again st CLG, W

ei ss, and Saltzman for indemni ty o r contr ibution in the ev ent thatFr eed w as able to recover from Chase. On August 21, 2012, Fr eed gav e wri tte n notic e to CLG expr essing hi s v oluntarily di ssoci ation and fi led a motion to di smi ss the sta t e court proceeding wi thout prej udi ce. That
same day

, Fr eed fi led an acti on in federal c ourt again st W ei ss, hi s father Ronald W

ei ss, and CLG asking the court to: (1) force CLG to purch a se F reed’s di strib uti onal intere st in CLG for

To b e cl ear, Wei ss an d C L G’ s f i l i ngs with the state cour t were titl ed 1 “Emer gency Peti tio ns.” Bo th the state cour t and fed eral cour t treated these as countercl aims. Thi s co urt wi l l do the same.Nos. 13-2339 & 13-2340 5
fa i r v alue and set the ter ms for the purchas e and (2) a w a r d damages against W

ei ss an d Ronald W

ei ss, a CLG accoun tant, for breaches of fi duci ary duti es aris ing from the alleged tr a nsfer and theft of CLG fund s (the “Di strib uti onal Inter est Laws ui t”). In the ev ent that Fr eed di d not receiv e hi s di strib utional intere st at the pric e and subject to the ter ms set by the court, Fr eed asked the court to d iss olv e CLG, supervis e i ts winding-up phase, and di strib ute CLG’s assets. CLG r e fu sed to purchas e Fr eed’s di strib uti onal intere st, arg uing that ei ther Fr eed coul d no t di ssoci ate becau se CLG w as a member

managed li mi ted li abi li ty company or becau se Fr e ed already

v oluntarily ter minated hi s membershi p in CLG in Mar ch 2011. The defendants in the Di strib ut ional Inter est Laws ui t, jo ined by Chase, fi led a motion to stay the tw o fede ral cases pending the outcome of the state court proceeding pursuant to the Colorado Riv e r d octr ine. After the defendants fi led their abstenti on motions in federal court, the state co urt gr anted Fr eed’s motion to di smi ss hi s state court clai ms. Ho w ev er , becau se W

ei ss and CLG had fi led counterclai ms again st Fr eed, the state court proceeding w as not ended. The federal cour t
re quested supp lemental bri efing from the parties as to wh e the r the remain ing counterclai ms in the state cour t p r oceedi ng j ustifi ed federal abstenti on in light of the state court gr ant ing Fr eed’s motion to di smi ss. Before the supp lemental br i efings w ere due in federal
co ur t, W

ei ss and CLG fi led a motion in the state court proceeding requestin g i mmedi ate tr i al for t he resolution of their counterclai ms. The motion urged the court t o declare that ei th e r Fr eed di ssoci ated from CLG in Mar ch 2011, or that he di ssoci ated prior to hi s formal, wri tte n dissoci ation6 Nos. 13-2339 & 13-2340
from CLG on August 21, 2012, by behavi or that w ould consti

tute “di ssoci ativ e acts” under the partner shi p ag r eement. W ei ss and CLG renew ed their alter nati v e request that the state court di ssolv e CLG in the ev ent that Fr eed w as found to sti ll be
a member of CLG unti l hi s wri tte n di ssoci ation. Fr eed responded and requested judgment on the pleadings; that since he formally di ssoci ated from CLG on Aug us t 2 1 , 2012, the counterclai ms m ade by W ei ss an d CLG were moo t. On June 13, 2013, the federal di stric t co ur t enter ed St ay Or ders for both the Chase Laws ui t and the Dis t rib uti onal Inter est Laws ui t pending t he outcome of the state court proceeding pursuant to the Colorado R i v e r doctrine. Notably , the di stric t court deter mined that nine of the ten Colorado River factors fav or ed abstenti on. Fr eed tim ely appe a l e d the di stric t court St ay Or ders, whi ch hav e been consoli dat e d fo r thi s appeal. II. DISCUSSION
Pursu ant to Colorado River , a federal court may stay or di smi ss a sui t in federal court when a concu rr ent state court
case i s underw ay

, but only under exceptional ci rcums tances and i f i t w ould promo te “wi se judi ci al admini strat i on.” Colorado River, 424 U.S. at 817–18. The prim ary purpose of the Colorado River doctrine i s to conserv e both state and federal judi ci al resources and prev ent inconsi stent results. Day v
. Union Mines , 862 F .2d 652, 657 (7th Ci r

. 1988); Lum en C on st., Inc. v

. Brant Const. Co., Inc. , 780 F .2d 691, 694 (7th Ci r

. 1985). A d i s tr i c t c ou rt’s d e c i si on to stay federal proceedings pending the resolution of a state court acti on i s rev i ew ed under an abus e of di screti on standard. Id. at 655.Nos. 13-2339 & 13-2340 7

T o d e t ermin e whether a stay i s appropr i ate, the court i s required to conduc t a tw o-part analysi s. First, the court mus t deter mine whet her the state and federal court acti ons are parallel. AAR Int’l Inc. v
. Nimel ias Enterprises S.A. , 250 F .3d 510, 518 (7th Ci r

. 2001). If t he acti ons are not parallel, the Colorado River doctrine do es no t apply and the court need not address the second part of the analysi s. Interstat e Mat erial Corp. v. City of C hicago , 847 F .2d 128 5 , 1 2 87 (7th Ci r

. 1988). I f, ho wev er , the court deter min e s that the proceedings are parallel, the court
mus t deci de whether abstenti on i s proper by carefully w ei ghing ten non-exclus i v e factors. AAR In t’ l Inc. , 250 F .3d at 522. The fac tor s are: (1) whether the state has assu med j uri sdi cti on ov er proper ty; (2) the inconv eni ence of the federal forum; (3) the desi rabi li ty o f av oiding pi ecemeal li tigati on; (4) th e o r d er in whi ch jurisdi cti on w as obtained by the concurrent for ums ; (5) the source of gov ernin g law , state o r federal; (6) the adequacy of state-court acti on to prot ect the federal plainti ff’s ri ghts; (7) the relat i v e prog ress of state and federal proceedings; (8) the presence or absence of concu rr ent jurisdi ction;8 Nos. 13-2339 & 13-2340 (9) the av ai labi li ty o f remov al; and (10) the v exat i ous or contriv ed nature of the federal clai m. T yrer v
. City of South Beloit, Ill. , 456 F .3d 744, 754 (7th Ci r

. 2006) (ci tin g C am initi & Iat arola, Ltd. , 962 F .2d 698, 701 (7th Ci r

. 1992)). As the Supreme Court no t e d in Colorado River, “[n]o one factor i s necess arily de ter minati v e” and the careful w ei ghi ng of all factors i s necess ary to deter mine whether ci rcums tances exis t w arr anting abstenti on. 424 U.S. at818-19; AAR Int’l Inc. , 250 F .3d at 518. A. Paralleli sm of State and Federal C ourt Cases
For a state court case to be par a llel to a federal court case under the Colorado River doctrine, there mus t be “a sub stanti al l ikelih ood that the state li tigati on wi ll di spose of all clai ms presented in the federal cas e

. ” L u m en , 780 F .2d at 695. The
cases need not be i denti cal to fulfi ll the requirement of paralleli sm, but the court mus t exami ne whether “sub stanti ally the

s a m e p a rti e s a re contemporaneo usly l i ti ga tin g s ub s tanti a l l y the
same i ssu es in another forum.” In te r s tate Material Corp. , 847 F .2d at 1288 (quot ing C alve rt Fire Ins. Co. v
. American Mutual Rein suranc e Co. , 600 F .2d 1228, 1229 n.1 (7th Ci r . 1979)). The court s hould also exami ne whether the cases rais e the
same legal allegations or aris e from the same set of facts. T yrer, 456 F .3d at 752. “[A]ny doubt reg ardin g the parallel nature of the [state court] sui t should be resolv ed in fav or of exer ci sing jurisdi cti on.” AAR Int’ l

. In c

. , 250 F .3d at 520. A di stric t courtNos. 13-2339 & 13-2340 9
deter minati on that the state and federal court proceedings are parallel i s reviewed by thiscourt de novo

. Id . at 518.
1. The State Court Proceeding and the Dist ributi onal Interest Lawsuit
Sinc e Fr eed i s the pla inti ff in both cases, w e wi ll fi rst exami ne whether the othe r p a rti e s in the state court proceeding and the Di strib uti onal Inter est Laws ui t a re the same or “sub stanti ally the same.” One w ay that p a r ties in separate acti ons are consi dered sub stantia lly the same under the Col or ado River doctrine i s when they hav e “nearly i denti cal” intere sts. Camini ti, 962 F .2d at 700. In the state court proceeding, the defendants are W ei ss and Saltzman. After t he fi ling of counterclai ms, CLG becam e ali gned wi th W

ei ss. In other w or ds, the defendants in the state court proceeding at the tim e of the request for abstenti on w ere W ei ss, CLG, and Saltzman, a thi rd party accompl i ce accu sed of assi sting W

ei ss in hi s acti ons again st Fr eed. The same is tr ue for the Di str i

buti onal Inter est Laws ui t: the defendants are W ei ss, CLG, and Ronald W ei ss, another indi vidu al Fr eed clai ms to hav e assi st e d W ei ss in breaching the partner shi p agr eement and hi s fi duci ary duti es. Mor eov er , whi le the

v arious defendants are not i denti cal in the t w o cases, their interests are nearly i denti cal: to show that nei ther fiduc i ary duti es nor the partner shi p agr eement w ere breached and to hav e the co urt deter mine that Fr eed di ssoci ated from CLG in Mar ch 2011, or in the alter nati v e, to di ssolv e CLG and di strib

ute i ts assets accordingly

. The parties’ intere sts are subst a ntiall y the same.10 Nos. 13-2339 & 13-2340
Next, w e look to see whether the i ssu es in the tw o cases are sub stanti ally the same. As prev i ously detailed, the s tate court proceeding brought by Fr eed centers on a s ch e m e c on c octed by W ei ss to exclude Fr eed from CLG and take CLG assets. In their counterclai ms, W

ei ss and CLG arg ue that Fr eed di ssoci ated from CLG in Mar ch 2011, and ev en i f he had not di ssoci ated at that tim e, hi s acti ons after Mar ch 2 0 1 1 should result in hi s expulsi on from CLG. The counterclai ms further request in the alter nati v e that t he court di ssolv e CLG and deter mine the di strib uti on of i ts assets. Both Fr eed’s Di strib uti onal Inter est Laws ui t and state court proceeding allege that W ei ss breached hi s fi duci ary duti es ow ed to Fr eed and the partner shi p agr eement. Freed’s Di strib uti on a l Inte re s t L a w s u i t a d d i ti on a l l y a s ks the court to asses s the fai r v alue and t e r ms of purchas e of hi s di strib uti onal intere st in CLG at the tim e of hi s di ssoci ation. See 80 5 ILCS 180/35–60(a) (“A li mi ted li abi li ty company shall purchas e a di strib uti onal intere st of a member for i ts fai r v alue deter mined a s of the date of the member’s di ssoci ation.”). Fr eed arg ues that th e r esoluti on of hi s di strib uti onal intere st clai ms w i ll not be resolved in the state court . W e di sagree. Ess ential to Fr eed’s request in the federal court i s hi s clai m that he v oluntarily di ssoci ated fro m CLG on Au gust 21, 2012, not Mar ch 2011, as alleg ed by W ei ss. Thus , t he Di strib uti onal Inter est Laws ui t turns on the deter minatio n of when Fr eed di ssoci ated under the partner shi p agr eement; the preci se subject of the counterclai ms in the state court proceeding. The federal court cannot deter min e t he v alue of Fr eed’s di strib utional intere st unti l the clai ms brought in state court are resolv ed. Sim i larly

, Fr eed asserts in both cases that W ei ssNos. 13-2339 & 13-2340 11
breached the partner shi p agr eement as w ell as fi duci ary duti es
ow ed to Fr eed. The factual allegations and legal analyses in the
cases large ly ov erlap, and the i ssu es wi ll be resolv ed large ly by refer encing the s ame facts and evidenc e. Therefore , the i ssu es in the tw o cases, whi le not i denti cal, are sub stanti ally the same. Fr e e d t he n clai ms that since Ronald W ei ss w as not a defendant in the state court proc e e d ing , the resolution of the clai ms in state court wi ll no t di spose o f his “separate ” allegat ions in the Di strib uti onal Inter est Laws ui t again st Ron a l d W ei ss, a CLG accoun tant, who Fr eed contends breached fi duci ary d u ti e s wh e n h e p re p a red fraudulent financi al recor ds t o faci li tate W

ei ss’s tr ansfer of CLG fund s from Chase accounts. W

e di sagree. “[T] he parallel nature of the acti ons cannot be destro y ed by si mply tackin g on a few more defendants, nei t he r ca n i t be di spelled by repackag ing the same i ssu e under di ffe re nt caus es of acti on.” Clark v
. Lacy, 376 F

. 3 d 6 8 2 , 6 86–87 (7th Ci r

. 2004). The deci si on to exclude Ronald W ei ss from the or i gin al state court proceeding w as entirely Fr eed’s choice. As the di stric t court corr ectly deter mined, Fr eed’s acti on again st Rona ld W ei ss i s deriv ative of hi s clai m again st W ei ss. If the state court

w ere to deter mine that W ei ss di d not violate th e partner shi p agr eement or breach fi duci ary duti es ow ed to Fr eed, then Ronald W

ei ss could not be held responsible for assi sting W ei ss in those offenses

. If the state court rules in fav or o f F reed, he wi ll be free to file c lai ms against Ronald W ei ss in the future.
Fr eed addi tionally arg ues that the counterclai ms fi le d by W ei ss and CLG in the s tate court proceeding were mooted by hi s di ssoci ation. Fr eed states that the only basi s for di ssoluti on12 Nos. 13-2339 & 13-2340

a r g ued in the counterclai ms i s a “deadlock” due to the d isagr eement betw een Fr eed and W eiss , the only member

managers of CLG. According to Fr eed, the alter nati v e request for di ssoluti on based on deadlock i s a l egal i mpossi bi li ty becau se he has already di ssoci ated from CLG. How ev e r , as already di scu ssed, the questi on of whether and/or when Fr eed di ssoci ated i s an i ssu e that has y e t to be deter mined by the state court. W

e there fore find that the i ssu es and parties in the sta t e court proceeding are sub stanti ally si mi lar to the i ssu es and parties in the Di strib uti onal Inter est Laws ui t, sati sfying paralleli sm u nder Colorado River

. 2. The State Court Proceedi ng and the Chas e Lawsuit In the Chas e Laws ui t, Freed b ro ught c lai ms again st Chase for interfer ing wi th contract ual obli gations and ai ding and abetting W

e iss in hi s breaches of fi duci ary duti es ow ed to Fr eed. Chase fi led a thi rd-part y complaint again st W ei ss, CLG, and S altzman r epea t ing Fr eed’s clai ms and seeki ng contribu

tion and/or indemni ty based upon their conduc t. In both cases, W ei ss i s again ali gned wi th CLG and an accompl i ce accu sed by Fr eed of assi sting W

ei ss in hi s scheme. The absenc e of Chase from the state court proceeding does not necess arily defeat paralleli sm between the cases fo r t w o
reasons. Clark

, 3 7 6 F .3d at 686 (“T

o be suffi ci ently si mi lar i t i s not necess ary that there be ‘formal symmetry betw een the tw o acti ons’”) (quoti ng Lum en , 780 F .2d at 695). First, Fr eed acti v ely chose to exclude Chase a s a d efendant in the state court proceeding when i t could hav e been jo ined as a party and there appears to be no legiti mate reason for Fr eed to leav e Chase outNos. 13-2339 & 13-2340 13
of the state court acti on. Second, the Chase Laws ui t claim s are deriv ed from the exact sch eme and conduct Fr eed alleges in the state c ourt proceeding: that W ei ss w as taking acti ons to (1) eli minate Fr eed from hi s contro l of CLG and ( 2) take all of CLG’s assets wi thout authorizati on, inclu ding fund s to whi ch Fr eed w as sp eci fi cally enti tled. In or der for Fr eed to bri ng clai ms again st Chase for assi sting W

ei ss, he mus t fi rst prove th a t W ei ss breached the partner shi p agr eement as well as fi duci ary duti es ow ed to Fr eed. If the state court finds that Fr eed di ssoci ated from CLG in Mar ch 2011, as arg ued in W ei ss’s counterclai ms, then W ei ss di d not violate the partner shi p agr eement or breac h any fi duci ary duti es and Fr eed has no ca use of acti on again st Chase. Only after t he st a te court resolv es whether W ei ss violated obli gations to Fr eed can Fr eed tr y to hold Chase li able for assi sting i n that wro ngdoing. In short, the clai ms in both federal cases are premi sed upon the sche me that i s now before the state court. A resolution in state court of tw o i ssu es—wh en Fr e e d di ssoci ated from CLG and whether W

ei ss br e a ched the partner shi p agr eement or fi duci ary duti es ow ed to Fr eed— is ne cess ary before ei ther of the federal cases can be deci ded. For thi s reason, i t w as rat i onal for the di stric t court to deter mine that the “state court li tigati on wi l l be an adequate v ehi cle for the complete and prompt resolution” of the large r di spute betw een W ei ss and Fr eed that rests at the h eart of thi s appeal. The cases rely on the s ame set of facts, present sub stanti ally si mi lar legal i ssu es, and inv olv e sub stanti ally the same parties. W e agr ee wi th t he di stric t
cour t ’ s fin ding that the federal acti ons ar e parallel to those at i ssu e in the state courtproceeding.14 Nos. 13-2339 & 13-2340

B. The T

en Factors of Co lorad o River Abstent ion
W e now turn to the second p art of the Colorado River analysi s, whi ch requires the court to consi der the ten nonexclusi v e factors li sted abov e. The di stric t court i s giv en the di screti on to apply more si gni fi cant w ei ght and analysis to those factors that are most relev ant to the case at hand. Clark , 376 F .3d at 688. “Gi v en the flexibl e na t ure of the ten-factor balanc ing test, w e are reluctant to tinker wit h the di stric t court’s assi gnment of w ei ght to any particu lar factor .” Id

. Here, the di stric t court found nine of the ten factors w ei ghed in fav or of abstenti on. Fr eed arg ues that none of the ten factor s wei gh in fav or of abstenti on. W e rev i ew the di stric t court’s consi der

ation of the ten Colorado River factors for an abus e of di screti on. T yrer , 456 F .3d at 751.
1. Whether the S tate has Assumed Juri sdic tion Over Property The information and arg uments presented to the d i stric t court demonstrate t hat the state court assu med jurisdi cti on
ov er the bank accoun ts in whi ch Fr eed clai ms to hav e proper ty rights. Fr eed concedes that the state court precluded hi m from puttin g holds on CLG accoun ts and restr i ct e d a cc ess to CLG proper ty

. Those acti ons suffi ci ently demonstrate that the state court assu med jurisdi cti on ov e r proper ty relev ant to the clai ms in this a p peal. Therefore , the fi rst factor w ei ghs in fav or of abstenti on. 2. The Inconvenience of the Federal Forum
S ince the federal and state cases in thi s appeal ar e bo t h pending in Chi cago courts, the federal forum i s not inc o nv eni ent and the second fac tor w ei ghs agai nst abs tention.Nos. 13-2339 & 13-2340 15

3. The Desirabi lity ofA voiding Piecemeal Litigation The di stric t court deter mined that the thi rd factor stro ngly

w ei ghs in fav or of abstenti on. W e agr ee. Thi s factor “does not turn on formal i denti ty of i ssu es but on concerns abo ut the effi ci ent use of judi ci al resources and the publi c’s perception of the legiti macy of judi ci al a ut ho r it y .” Id. at 756. When tw o courts are giv en the task to ov ersee si mi lar p r o ce edings such
as pre-tr i al motions, di scov ery matter s, and the c onsi derat i on of si mila r issues, evidenc e, and wi tnesses, i t i s effecti v ely

“ dupli cating the amount of judi ci al resources required t o reach a resolution.” Clark , 376 F .3d at 6 8 7

. Th i s redundancy

w ould caus e w asteful li tigati on, hinderin g judi ci al eco no my

. Camini ti, 9 6 2 F .2d at 701. Mor eov er , as thi s court stated in Interstat e Material Corp. , “i f both state and federal proceedings

w ere allowed to proceed, inconsi stent rulings could jeo pardize the appearance and actuali ty of justic e.” 847 F .2d at 1290. Here, the state and federal forums hav e sub stanti ally the same p a r t ie s before them and are li tigati ng sub stanti ally the same i ssu es aris ing from the same set of facts. St aying the federal
cases w ould there fore co nserv e judi ci al resources and av oid the potent i al for the tw o proceedings to reach inconsi stent results. Clark

, 376 F .3d at 687.
4. The Order in whi ch Juris dict ion was O btained by the Concurrent Forums The di stric t co ur t co r rectly noted that Fr eed fi rst chose to fi le the state court proceeding in December 2 0 1 1

. The Chase Laws ui t w as fi led in Februar y 2012, and the Di strib ut io nal Inter est Laws ui t w as not filed in federal court unti l August16 Nos. 13-2339 & 13-2340

2012. At best, thi s factor could be consi dered neutral, but
more li kely fav or s abstention. See, e.g., Lum en , 780 F .2d at 697 (holding that thi s factor fav o r ed abstenti on when the state acti on w as fi led fi v e months before the feder al acti on). Relying on Huon v
. Johnson & Bell, Ltd. , 657 F .3d 641 (7th Ci r

. 2011), Fr eed contends that the di stric t co ur t gav e insu ffi

ci ent c onsi derat i on to thi s factor

. Thi s arg ument mi scons tr ues
our holding

. In Huon , w e remanded a di stric t court’s stay of
an a ct i on in or der to deter mine i f abstenti on w as w arr anted under Colorado River

. Id. at 6 4 9

. N oting that thi s form of abstenti on requires “rigoro us standards,” thi s co ur t found inadequate explanation for abstenti on when the di stric t court cit e d only three of the ten Colorado River factors and ov erlook ed the other sev en. Id. at 646–48. Thi s case i s dis tin gui shable becau se the di stric t courtcarefully addressed each of the ten factors and prov i ded suffi ci ent e xp l an a ti on s for i ts fin d in gs

. 5. The Source of Gov erning Law , State or Federal As conceded by Fr eed, all clai ms at i ssu e in thi s appeal are governed by state law

. Thi s court has no t e d t hat “a state court’s exper tis e in applying i ts own law fav or s a Colorado River stay .” Day, 862 F .2d at 660. Thus, the fi fth factor also wei ghs in fav or of abstenti on. 6. The Adequacy of State-Court Act ion to Protect the Federal Plai ntiff’s R ights
Fr eed arg ues that forci ng hi m to li tigate hi s clai ms in state court w o ul d inconv eni ence hi m and rais e the possi bi li ty of prej udi ce again st hi m becau se he i s a Flor i da ci tizen. How ev er , Fr eed chose the forum when he fi led both t he st ate courtNos. 13-2339 & 13-2340 17 proceeding and the Chase Laws ui t in the Ci rcui t Court of Coo k County

. W e agr ee wi th the di stric t court that Fr eed effecti v ely undermined hi s own arg ument of prej udi ce when he chose the sta t e court forum for both the state court proceeding and the Chase Laws ui t. W

e there fore cannot share Fr eed’s conc e r ns that his clai ms w i ll not be fai rly adj udi cated in state court

. I t i s also i mport ant to note that the di stric t court did no t dismiss Fr eed’s federal c lai ms, but rat her stayed them pending the resolution of the state court proceeding. “[T] he circum

stance s p e rmi tting the di smi ssal of a federal sui t due to the presence of a concu rr ent state proceeding

... are consi derably
more li mi ted than the ci rcums tances appropr i ate for abstention.” Colorado River, 424 U.S. at 818. As thi s court explain ed in Lum en : A d i smi ssal, ev en wi thout prejudic e, creates a risk that the federal plainti ff wi ll be tim e-barred from reins tating hi s federal sui t i f the state proceeding does not result in a final deci si on on the merits. A stay , by contrast, permi ts the federal court to ret ain jurisdi cti on in case the state court acti on does not meet i ts anti ci pated end.
7 8 0 F .2d at 698 (internal ci tations omi tte d). Here, Fr eed’s sub stanti al rights are prot ected by gr ant ing a stay becau se i t allows hi m the possi

bi li ty to re v ive hi s federal li tigati on depending on the outcome in sta t e co ur t or in the unli kely
ev ent that the state court acti on i s ina d e quate

. Therefore , the si xth factor also fav or s abs tention.18 Nos. 13-2339 & 13-2340

7. The Relati ve Pro gress of State and Federal Proceedings
Fr eed arg ues that the prog ressi on of the state and federal proceedings are “about the sa me ” becau se they are both “stalled.” W

e d isagree. In the federal court cases, li ttle has occurred asi d e from fi ling the complaints, Chase’s answer to Fr eed’s Second Amended Complaint, and Chase fi ling a thi rdparty complaint. By contrast, the state court ca se ha d been in prog ress for almost tw o y ears: the judge already i ssu ed sev eral rulings and or dered di scov ery , num ero us appeals hav e been fi led, and the c ounter clai ms are set for tr i al. It is clear that the state court has expended si gni fi cantly more judi ci al resources than the federal court at thi s poin t. The di stric t court corr ectly found that the sev enth factor also fav or s abs tention.
8. The Presence or Absenc e of Concurrent Jurisdi cti on Fr eed clai ms that thi s factor w ei ghs again st abstenti on becau se hi s di strib uti onal intere st clai m i s solely gov erned by the federal court. Fr eed’s arg ument i s flawed for the sa me
reasons hi s arg um e nt again st paralleli sm betw een the state court proceeding and the Di strib uti onal Inter est Laws ui t fai ls. Fr eed relies o n t he assu mpti on that he di ssoci ated from CLG in August 2012, and so the counterclai ms for the di ssoluti on of CLG and a di strib uti on of i ts assets fi led by W ei ss and CLG are moot

. As prev i ously explain ed, how ev er , the deter minati on of F reed’s date of di ssoci ation i s unresolv ed. The resolut io n o f that key fact in state court i s necess ary before any di strib uti on of CLG intere sts can occur

. Thus, the eighth fac tor also fav or s abstenti on.Nos. 13-2339 & 13-2340 19

9. The A

vailabil ity of Removal The ninth factor int e nds to prev ent a federal court from hearin g clai ms that are closely relat ed to state proceedings that cannot be removed. Day, 862 F .2d at 66 0. The di stric t court conclu ded that the state court proceeding w as non-remov able under 28 U.S.C. § 1441(b)(2) b ecaus e di v ersi ty w ould prov i de the only basi s for federal jurisdi ct io n. Fr eed arg ues that the court i gnor ed hi s clai ms again st Chase, whi ch w e re removed to federal court. As detailed abov e, Fr eed had ev ery oppor tuni ty to jo in Chase as a defendant in the state court proceeding, eli minating Chase’s abi l i ty to remove based on di v ersi ty

. W e agr ee wi th the di stric t court that the ninth factor also w ei ghs in fav or of abstenti on. 10. The V

exatious or Contrived Nat ure of the Federal Clai m The di stric t court deter mined that the tenth factor w ei ghed in fav or of abstenti on due to the “ov erwhelming evidenc e that Fr eed behav e d v exat i ously by bri ngi ng [the Di strib uti onal Inter est Laws ui t] in federal court and [the Chase Laws ui t] as a separate sui t in state court.” The recor d d e mo nstrates that Judge P antle in the state court proceeding has made a numb er of rulings unfav or able to Fr eed, su ch as gr anti ng W ei ss’s motion to enjo in Fr eed from fi ling or pursuing other r e lated
a ct io ns in state court. Judge P antle stated that she w as “v e r y concerned about an abus e of process here and a mani pulati on
o f the system” and conclu ded that Fr eed w as “seeking t o li tigat e matter s at the heart of [the state court proceeding] before other judges in an atte mpt to ev ade [ Judge P a ntle’s]
or ders.” In fact, Judge P antle ev en ini tiated contempt proceed-20 Nos. 13-2339 & 13-2340

ings again st Fr eed based on what s he beli ev ed to be instances of mi scondu ct and unl awfu l li tigati on tactic s. Indeed, Fr eed’s fi ling of v ariou s a cti ons in federal court that aris e from the same di spute betw een Fr eed and W ei ss concerning C L G i s indi cati v e of an atte mpt to ev ade the state court. How ev er

, e ven setting asi de these presumpti ons, thi s factor
can w ei gh in fav or of abst e nti on when the clai ms and parties in the federal sui t could hav e been incl ud e d in the or i gin al state co ur t proceeding. See, e.g., Interstat e Material Corp. , 847 F .2d at 1289 (finding that t he federal sui t could be consi dered contriv ed and v exat i ous when there w as “no reason why all clai ms an d all parties could not hav e been, and still c ould not be, part of one sui t”). Thus, the tenth fa ct o r also w ei ghs in fav or of abstenti on. In sum, sev eral factors stro ngly fav or abstenti on wh i le
numerous other s w ei gh in i ts fav or

. Fr eed ha s not presented persuasi v e arg uments to e st abli sh why any of the factors stro ngly w ei gh a g ainst abstenti on. Sinc e the factors more heavily w ei gh in favo r o f a stay , we respectfully suggest that the state court should fi rst resolv e when Fr eed d iss oci ated from CLG and whether he has stated a cla im fo r breaches of
co ntract or fi duci ary duty again st W ei ss before any of th e deriv ativ e federal sui ts can g o fo rw ard. Accordi ngly , we find that the di stric t court di d not abus e i ts di screti on in finding that the nature and ci rcums tances of the state and federal proceedings w arr anted a stay

. III. CONCLUSION
For the foreg oin g reasons, w e find that the concu rr ent state and federal proceedings at i ssu e in thi s appeal are parallel andNos. 13-2339 & 13-2340 21
that th e ten Colorado River factors carefully consi dered by the di stric t c ourt wei gh in fav or of abstenti on. The di stric t c ourt ’s
or ders to stay the federal case s pending the outcome of the state courtproceeding are AFF IRM ED.