# United States Court **of Appeals**  **f or the Fifth Circuit** 

No. 21

- 20093

**Koch Project Solutions, L.L.C.,**

Plaintiff

— Appellant **,**

versus
**Alliance Process Partners, L.L.C.,** doing business as **International Alliance Group; Triten Corporation,**

Defendants

— Appellees

**.**

Appeal from the United States District Court for the Southern District of Texas USDC No. 4:20

- cv

- 3479

Before **Richman ,**  Chief Judge, and **Clement** and **Duncan** , Circuit Judges

. **Per Curiam :**  *

K och Product Solutions, L.L.C. (KPS) appeals a stay order in its federal declaratory judgment action. The district court granted the stay

* Pursuant to **5th Circuit Rule** 47.5, the court has determined that this opinion should not be published and is not precedent except under the l imited circumstances set forth in **5th Circuit Rule** 47.5.4. United States Court of Appeals Fifth Circuit 

### FILED November 11, 2022 Lyle W. Cayce Clerk Case: 21-20093 Document: 00516542432 Page: 1 Date Filed: 11/11/2022No. 21

- 20093

2 largely because of a related pending stat e court action. Because the district court did not abuse its discretion, we affirm.

I KPS seeks a declaratory judgment that it has not unlawfully drawn employees or business away from Triten Corporation and its subsidiary International Alliance Group (together, Triten). KPS and Triten both provide project management services to clients in the energy sector. KPS leadership includes at least five former Triten employees, including KPS
President , Paul Switzer. While working at Triten, each of the employees entered a contract that included noncompete provisions. The provisions prohibited ind ucing or attempting to induce employees to leave Triten and work for a competitor, and they prohibited soliciting or accepting similar
business from Triten clients for set periods. Between 2018 and 2019, all five employees left their positions at Triten.
In June 2020, Switzer filed a lawsuit in Texas state court against
Triten for breach of contract and various state law torts. These claims arose out of Triten’s alleged failure to pay Switzer compensation and benefits

. Triten responded with counterclaims against Switzer and third

- party claims against two of KPS’s parent companies, Koch Industries and Koch Engineered Solutions, and against Koch officer David Dotson (collectively,
the Koch affiliates). Among other claims, Triten alleged civil conspiracy an d tortious interference with the noncompete provisions. Triten charged that Switzer and the Koch affiliates sought to draw business away from Triten by establishing KPS and recruiting the former Triten employees. Triten referred to KPS in its claims, but it did not name KPS as a third

- party defendant. The state district court dismissed the Koch affiliates from the Case: 21-20093 Document: 00516542432 Page: 2 Date Filed: 11/11/2022No. 21

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3 lawsuit for lack of personal jurisdiction, but that decision was reversed on appeal. In October 2020, KPS filed this federal declaratory judgm ent action against Triten. KPS brought the lawsuit pursuant to the Declaratory Judgment Act 1 “to remove the cloud over its name” cast by Triten’s allegations in state court. The federal action consists of two counts of tortious interference. First, KPS seeks a declaration that it did not interfere with its employees’ contract obligations not to solicit or accept business from Triten clients. Second, KPS seeks a declaration that it did not interfere with its employees’ contract obligations not to induce or attempt to induce Triten employees to leave Triten and work at a competitor.

Triten sought to dismiss or stay the suit under the Supreme Court’s
Brillhart 2 doctrine, whereby federal courts may exercise their discretion to abstain from hearing declarat ory judgment action s

. 3 In January 2021, the
district court denied the motion to dismiss but granted a stay until final judgment in the state court action. The district court reasoned that, although the state court action involved additional claims and p arties, “all of the material questions necessary to decide the issues raised in this declaratory judgment action are governed by state law and can be resolved in the state court action,” since the lawsuit arose out of the same facts and involved the

same c ontractual issues. The district court ordered the parties to submit a joint status report every 60 days until the stay is lifted. KPS timely appealed
the stay order

.

1 28 U.S.C. § 2201

- 02.

2 Brillhart v. Excess Ins. Co. of Am. , 316 U.S. 491 (1942).

3 Id. at 495. Case: 21-20093 Document: 00516542432 Page: 3 Date Filed: 11/11/2022No. 21

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4 II

We must first determine our jurisdiction over this appeal. 4 KPS seeks appellate review pursuant to 28 U.S.C. § 1291. Under § 1291, “federal courts of appeal s are empowered to review only ‘final decisions of the district
courts.’” 5 “ [ A ] decision is ordinarily considered fina l and appealable under § 1291 only if it ‘ ends the litigation on the merits and leaves nothing for the court to do but execute the judgment. ’” 6 Most stay orders are not
considered final because they do not end litigation ; they postpone it

. 7

In abstentio n and related contexts, however, the Supreme Court has recognized an exception to this general rule

. 8 The Court first identified this exception in Idlewild Bon Voyage Liquor Corp. v. Epstein

. 9 In Idlewild , a liquor
distributor brought a federal suit challenging the constitutionality of a state

statute. 10 The district court stayed the lawsuit under the Pullman 11 doctrine, whereby federal courts abstain from deciding constitutional disputes whe n a

state court ’ s clarification of its law would rende r a constitutional ruling

unnecessary

. 12 The Supreme Court held that the stay order was a final

4 United States v. Shkambi , 993 F.3d 388, 389 (5th Cir. 2021) (“We start, as always, with jurisdicti on.”).

5 Microsoft Corp. v. Baker , 137 S. Ct. 1702, 1707 (2017) (quoting 28 U.S.C. § 1291)).

6 Quackenbush v. Allstate Ins. Co. , 517 U.S. 706, 712 (199 6 ) (quoting Catlin v. United States , 324 U.S. 229, 233 (1945) ).

7 Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp. , 460 U.S. 1, 10 n.11 (1983) ; Kershaw v. Shalala , 9 F.3d 11, 14 (5th Cir. 1993).

8 Moses H. Cone , 460 U.S. at 10 n.11.

9 370 U.S. 713 (1962).

10 Id. at 714.

11 R.R. Comm ’ n of Tex. v. Pullman Co. , 312 U.S. 496 (1941).

12 Id. at 501

- 02

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5 decision appealable under § 1291 but gave limited reasoning

. 13 It sa id only that “[t] he Court of Appeals properly rejected the argument that the order
of the District Court ‘was not final and hence unappealable under 28 U.S.C. §§ 1291, 1292,’ pointing out that ‘ [ a ] ppellant was effectively out of court.’” 14

Two decades later , in Moses H. Cone Memorial Hospital v. Mercury Construction Corp. , 15 the Court relied on Idlewild ’s “effectively out of court” exception and held once again that a stay order was appealable under § 1291

. 16
Moses H. Cone involved a stay entered under the Colorado River 17 doctrine, whereby federal courts may in certain exceptional circumstances abstain from exercising jurisdiction when there are concurrent state court proceedings

. 18 Idlewild secured appellate jurisdiction over the stay order

. 19
I n Idlewild , the “district court stay pursuant to Pullman abstenti on is entered with the expectation that the federal litigation will resume in the event that the plaintiff does not obtain relief in state court on state

- law grounds .” 20 By contrast, i n Moses H. Cone , “ a stay

. . . meant that there would be no further
lit igation in the federal forum ; the state court’s judgment on the issue would

13 Idlewild , 370 U.S. at 715 n.2.

14 Id. (quoting Idlewild Bon Voyage Liquor Corp. v. Rohan , 289 F.2d 426 , 428 ( 2d Cir. 1961)).

15 460 U.S. 1 (1983).

16 Id. at 10.

17 Colo. River Water Conserv ation Dist. v. United States , 424 U.S. 800 (1976)

.

18 Id. at 817

- 19.

19 Moses H. Cone , 460 U.S. at 10.

20 Id. Case: 21-20093 Document: 00516542432 Page: 5 Date Filed: 11/11/2022No. 21

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6 be res judicata. ” 21 As a result, “the argument for finality of the District Court’s order [was] even clearer.” 22

Moses H. Cone emphasized that the “effectively out of court” exception was narrow. “Of course,” the Court explained, “ Idlewild does not disturb the usual rule that a stay is no t ordinarily a final decision for purposes of § 1291, since most stays do not put the plaintiff ‘effect ively out of
court.’ ” 23 The exception was “limited to cases where (under Colorado River , abstention, or a closely similar doctrine) the object of the stay is to require all or an essential part of the federal suit to be litigated in a state forum.” 24

The Court ascertained the stay’s object based on its legal consequences. It was not enough that a stay “have the practical effect of allowing a state court to be the first to rule on a common issue.” 25 Rather,
the Court “ h [e] ld only that a stay order is fina l when the sole purpose and effect of the stay is precisely to surrender jurisdiction of a federal suit to a
state court.” 26

Since Moses H. Cone , the Court has continued to apply this exception

. 27 In Quackenbush v. Allstate Insurance Co. , 28 the Court deem ed an
abstention

- based remand order appealable under § 1291 b ecause of its

21 Id.

22 Id.

23 Id. at 10 n.11.

24 Id.

25 Id.

26 Id.

27 See Quackenbush v. Allstate Ins. Co. , 517 U.S. 706, 712 (1996); Wilton v. Seven Falls Co. , 515 U.S. 277, 280

- 81 (1995).

28 517 U.S. 706 (1996)

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7 decisions in Moses H. Cone and Idlewild

. 29 Based on those precedents, the
order was appealable as a final decision under § 1291 because it “ put [] the litigants in this case effectively out of court , and its effect [was] precisely to surrender jurisdiction of a federal suit to a state court.” 30 The Court acknowledged that “these standards do not reflect our oft

- repeated definition of finality .” 31 Nevertheless, t he Court concluded that § 1291 appealability was “compelled by precedent. ” 32

P recedent also compels § 1291 appealability in this case

. Like stay orders governed by Pullman and Colorado River , the stay order governed by
Brillhart here concerns the interpla y of federal and state proceedings

. 33 The stay suspends the former in favor of the latter ; its object is “precisely to surrender jurisdiction of a federal suit to a state court. ” 34 Litigation of the
federal suit will not resume, if at all, until final judgment in the state court
action. The district court’s stay puts the litigants in this case “effectively out
of court.” 35 Under these circumstances, the stay is a § 129 1 final decision

. Generall y , when this court has deemed Brillhart stay orders appealable under § 1291, the stay s have suspended federal proceedings until
the resolution of a state court lawsuit with res judicata effect. 36 In those cases,

29 Id. at 712.

30 Id. ( citing Moses H. Cone , 460 U.S. at 10 n.11) (internal citations omitted).

31 Id. at 713.

32 Id.

33 See Brillhart v. Excess Ins. Co. of Am. , 316 U.S. 491, 495 (1942).

34 Moses H. Cone , 460 U.S. at 10 n.11.

35 Id.

36 Granite State Ins. Co. v. Tandy Corp. , 986 F.2d 94, 95 (5th Cir. 1992); see also Am. Guarantee & Liab

. Ins. Co. v. Anco Insulations, Inc. , 408 F.3d 248, 250 (5th Cir. 2005) ; Ford Case: 21-20093 Document: 00516542432 Page: 7 Date Filed: 11/11/2022No. 21

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8 t he stays guaranteed that there would be no further litigation in the federal
forum. In this case , the potential for fu ture litigation is less clear. State law determines the preclusive effect of a state court judgment. 37 Under Texas law, res judicata requires: “(1) a prior final judgment on the merits by a court of competent jurisdiction; (2) identity of parties or those in privity with them; and (3) a second action based on the same claims as were raised or could have
been raised in the first action.” 38 When this court has deemed Brillhart stay s appealable under § 1291, it has not engaged in a detailed res judicata analysis.
That is because res judicata has been self

- evident: the parties have been identical, and the claims in the state and federal court actions have overlapped. 39

Not so her e. A final judgment by the state court on the merits of the tortious interference claims may well satisfy elements one and three, but the parties are not identical, and privity is uncertain. This distinction is crucial to the preclusion analysis. Given the fact

- specific nature of privity , 40 which

Motor Credit Co. v. Lewis , 233 F.3d 575, 2000 WL 1468831, at *4 (5th Cir. 2000) (per curiam) (unpublished).

37 In re 3 Star Properties, L.L.C. , 6 F.4th 595, 604

- 05 (5th Cir. 2021).

38 Cox v. Nueces Cnty. , 839 F.3d 418, 421 (5th Cir. 2016) (quoting Amstadt v. U.S. Brass Corp. , 919 S.W.2d 644, 652 (Tex. 1996)).

39 See Am. Guarantee , 408 F.3d at 250 (holding that a stay order was appealable under § 1291 when the parties were the same and the state proceeding encompassed common issues); Granite State , 986 F.2d at 95 (holding that a stay order was appealable under § 1291 when the parties were the same a nd the issues would “undoubtedly be litigated in the state court action”); Ford Motor , 2000 WL 1468831, at *4 (“Since the state court proceeding will resolve the declaratory judgment action’s only issue, the order granting the stay of proceeding is conside red a final judgment for purposes of 28 U.S.C. § 1291.”).

40 EEOC v. Jefferson Dental Clinics, PA , 478 F.3d 690, 694 (5th Cir. 2007) ( citing and then quoting Getty Oil Co. v. Ins. Co. of N. Am. , 845 S.W.2d 794, 800 (Tex. 1992)) Case: 21-20093 Document: 00516542432 Page: 8 Date Filed: 11/11/2022No. 21

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9 the parties have not briefed, we decline to rule on privity or to predict the res judicata effect of an unresolved state court proceeding. 41
In any case, the possibility of f uture litigation does not preclude ou r jurisdiction. Our circuit precedent s also hold that a stay order that causes a

“ protracted and indefinite” delay in federal court proceedings suffices to put plaintiffs “effectively out of court.” 42 This logic derives from Idlewild , in which, as noted, the Supreme Court asserted § 1291 jurisdiction over a stay that was “entered with the expectation that the federal litigation will resume in the event the plaintiff does not obtain relief in state court.” 43 In this case,

t he stay ord er has already delayed proceedings for over eighteen months , and there is no indication that delay will end. Even if federal litigation does ultimately continue, our jurisdiction is secure.

Triten contends that the district court’s order is not final beca use the
order requires the parties to submit periodic status reports. This argument
lacks merit

. Section 1291 finality “ is to be given a practical rather than a
technical construction.” 44 An order is final when “there is no indication that

( “Texas courts have been clea r that there is no categorical rule for privity; instead the courts look to ‘the circumstances of each case.’” ).

41 Cooper v. Harris , 137 S. Ct. 1455, 1470 n.4 (2017) (determining that there was “no occasion to address” a fact

- intensive issue “the parties h ave not briefed or argued”).

42 Hines v. D’Artois , 531 F.2d 726, 7 31 (5th Cir. 1976) ( holding that a stay order that would delay proceedings for at least eighteen months was a final decision under § 1291 ); see also Occidental Chem. Corp. v. La. Pub. Serv. Comm’n , 810 F.3d 299 , 306

- 08 (5th Cir. 2016) (affirming that Hines remains good law and holding that a stay order that had already delayed proceedings for nearly two years was a final decision under § 1291 )

.

43 Moses H. Cone Mem’l Hosp. v. Mercury Con str. Corp. , 460 U.S. 1, 10 (1983) ; see also Occidental , 810 F.2d at 30 6

- 0 7; Hines , 531 F.2d at 73 0

- 3 1.

44 Microsoft Corp. v. Baker , 137 S. Ct. 1702, 1712 (2017) (quoting Eisen v. Carlisle & Jacquelin , 417 U.S. 156, 171 (1974)). Case: 21-20093 Document: 00516542432 Page: 9 Date Filed: 11/11/2022No. 21

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10 the district court intends to revisit its decision to stay the case.” 45 Here, there is no such indication. The district court ordered that “this action should be stayed pending final adjudication in the state court action.” A mere request for updates on the parties’ progress does not evince any interest in lifting the stay before th e state court action concludes.

II I We now turn to the merits of the stay order. Under the Declaratory Judgment Act, federal courts “ may declare the rights and other legal relations of any interested party seeking such declaration.” 46 They are not compelled to do so, however. In declaratory judgment actions, “the normal principle that federal courts should adjudicate claims within their jurisdiction yields to considerations of practicality and wise judicial administration.” 47 The statute has long “been understood to confer on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants.” 48

The B rillhart doctrine governs the district court’s discretion to stay a declaratory judgment action. 49 Under Brillhart , a district court “should ascertain whether the questions in controversy between the parties to the

45 Am. Guarantee & Liab

. Ins. Co. v. Anco Insulations, Inc. , 408 F.3d 248, 250 (5th Cir. 2005) (citing Moses H. Cone , 460 U.S. at 12

- 13).

46 28 U.S.C. § 2201(a).

47 Wilton v. Seven Falls Co. , 515 U.S. 277, 288 (1995).

48 Id. at 286.

49 Sherwin

- Williams Co. v. Holmes Cnty. , 343 F.3d 3 83, 389 (5th Cir. 2003). Although commonly referred to as Brillhart “abstention,” the term is “not entirely accurate.” Med. Assur. Co., Inc. v. Hellman , 610 F.3d 371, 378 (7th Cir. 2010). “Abstention” normally refers to “ judicially

- created doctrines, ” w hereas the discretion to stay or dismiss an action under the Declaratory Judgment Act comes from the statute itself. Id. Case: 21-20093 Document: 00516542432 Page: 10 Date Filed: 11/11/2022No. 21

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11 federal suit

. . . can better be settled in the proceeding pending in the state
court.” 50
We review the district court’s decision to stay federal court proceedings pending the outcome of a state court action for abuse of
discretion

. 51 Although discretion “is broad, it is not unfettered.” 52 A district court abuses its discretion “unless [it] addresses and balances the purposes of the Declaratory Judgment Act and the factors relevant” to the Brillhart
doctrine. 53 In St. Paul Insurance Co. v. Trejo , 54 we identified seven
nonexclusive factors to guide a district court’s exercise of discretion in a
Brillhart stay: (1) whether there is a pending state action in which all of the matters in controversy may be fully litigated; (2) whether the plaintiff filed suit in anticipation of a lawsuit filed by the defendant; (3) whether the plaintiff engaged in forum shopping in bringing the suit; (4) whether possible inequities in allowing the declaratory plaintiff to gain precedence in time or to change forums exist; (5) whether the federal court is a convenient forum for the parties and witnesses;

50 Brillhart v. Excess Ins. Co. of Am. , 316 U.S. 491, 49 5 (1942).

51 Am. Guarantee & Liab

. Ins. Co. v. Anco Insulations, Inc. , 408 F.3d 248, 250 (5th Cir. 2005)

.

52 St. Paul Ins. Co. v. Trejo , 39 F.3d 585, 590 (5th Cir. 1994) ( quoting Travelers Ins. Co. v. La. Farm Bureau Fed’n, Inc. , 996 F.2d 775, 77 8 (5th Cir. 1993))

.

53 Vulcan Materials Co. v. City of Tehuacan a , 238 F.3d 382, 390 (5th Cir. 2001) (quoting Trejo , 39 F.3d at 590).

54 39 F.3d 585 (5th Cir. 1994)

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12 (6) whether retaining the lawsuit would serve the purposes of judicial economy; and (7) whether the federal court is being called on to construe a state judicial decree involving the same parties and entered by the court before whom the parallel state suit between the same parties is pending. 55 Every circuit has a similar test. 56 Across circuits, the Brillhart inquiry is grounded in three fundamen tal concerns: federalism, fairness, and efficiency. 57

A

The first Trejo factor considers “whether there is a pending state court action in which all of the matters in controversy may be fully litigated.” 58 A parallel state court proceeding raises Brillhar t concerns about federalism and efficiency. 59 Duplicative litigation in federal court, especially over matters of state law, should be avoided. 60
The existence of a pending parallel state court proceeding is not dispositive, but it is an “important factor ” in the analysis. 61 When a related state court proceeding “is not ‘parallel’ because it does not involve all the same parties or issues,” the district court must consider “ the extent of

55 Id. at 590

- 91.

56 Sherwin

- Williams Co. v. Holmes Cnty. , 343 F.3d 383, 390 (5th Cir. 2003) (collecting cases).

57 Id. at 390

- 91.

58 Trejo , 39 F.3d at 590.

59 Sherwin

- Williams , 343 F.3d at 394.

60 See id. at 391

- 92.

61 Id. at 394

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13 similarity between the pending state court and federal court cases.” 62 The greater the overlap, the more likely that a stay will promote federalism and efficiency. 63
The district court ruled that the first factor favored a stay. The court reasoned that the factual and legal issues coincided because “ the state court action arises out of the same facts and circumstances, and involves the same
contractual issues as this declaratory judgment action.” The court recognized that KPS was not a party to the state court proceeding but did not deem this distinction significant because KPS had the same interests as Switzer and the Koch affiliates.
The district court correctly det ermined that the federal and state court proceedings are connected. Both involve claims of tortious interference
based on the same set of noncompete provisions in the same set of contracts.
The related state court proceeding governing state law issues ra ise s concerns about federalism and efficiency that favor a stay

. B

The next three Trejo factors consider whether the declaratory judgment plaintiff filed suit in anticipation of a lawsuit filed by the defendant, engaged in forum shopping in bringing the action, and would create potential

62 Id. at 394 n.5.

63 See id. at 390, 394. Case: 21-20093 Document: 00516542432 Page: 13 Date Filed: 11/11/2022No. 21

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14 inequities by gaining precedence in time or changing fo rums. 64 These factors
raise Brillhart concerns about fairness. 65
The district court ruled that, on the whole, these fairness factors favored a stay. As to the second factor, the court correctly recognized that the federal proceeding was “not filed in ant icipation of, but in response to” the state proceeding. Nevertheless, the court concluded that this response was unfair. Because “KPS’s interests in this declaratory action are the same as the interests of [its] president, Switzer, and [its] parent compa nies in the state court action,” the declaratory action was “in fact, an effort by KPS not only to forum shop, but also to gain precedence by having this court instead of the state court decide the issues raised by the tortious interference claims
asserted in both actions.”

The district court did not abuse its discretion in concluding that KPS sought to forum shop and to gain unfair precedence. It is true that a mere preference for a federal forum “does not necessarily demonstrate impermissible forum selec tion.” 66 An out

- of

- state plaintiff may properly invoke federal jurisdiction to avoid the potential bias of a state forum. 67 Protecting out

- of

- state defendants like KPS is “the traditional justification for diversity jurisdiction.” 68 In this case, howeve r, the record adequately supports the district court’s determination that the declaratory action was not a mere effort to avoid state court bias. The overlap between the state and federal proceedings suggests that KPS intends to reassign adjudication of

64 St. Paul Ins. Co. v. Trejo , 39 F.3d 585, 590

- 91 (5th Cir. 1994).

65 Sherwin

- Williams , 343 F.3d at 391.

66 Id. at 399.

67 Id.

68 Id

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15 s hared legal and factual issues to the federal cour t . KPS says as much in its federal complaint. In KPS’s words, “ [t] his declaratory judgment action arises from Defendants’ public and erroneous allegations that KPS is unlawfully competing with Defendants. ” KPS seeks declarations of non

interference “so that it may fairly compete in the marketplace without the
distraction and harm associated with Defendants’ meritless contentions.” The purpose of its lawsuit is to have the federal court declare Triten’s s tate court allegations wrong.

This court has previously drawn a connection between the degree of overlap in state court proceedings and procedural inequity

. 69 When federal and state court actions are related, the federal action risks “changing forums

or s ubverting the real plaintiff’s advantage in state court.” 70 These risks dissipate when the federal action pertains to separate claims. In this case, the relationship between the state and federal proceedings threatens impermissible meddling with Triten’s lawsuit. This threat supports the district court’s conclusion that, in sum, the fairness factors favor a stay.

69 See Sherwin

- Williams , 343 F.3d at 399 (rejecting unfairness when there was no “race to res judicata ”); Ironshore Specialty Ins. Co. v. Tractor Supply Co. , 624 F. App’x 159, 167

- 68 (5th Cir. 2015) (per curiam) (unpublished) (denying procedural inequity when “th e state court action did not involve the same parties or the same legal issues,” thereby negating the risk of preclusion).

70 Sherwin

- Williams , 343 F.3d at 399 (quoting Travelers Ins. Co. v. La. Farm Bureau Fed’n, Inc. , 996 F.2d 775, 77 7 (5th Cir. 1993) ). Case: 21-20093 Document: 00516542432 Page: 15 Date Filed: 11/11/2022No. 21

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16 C

The fifth Trejo factor considers “whether the federal court is a convenient forum for the parties and witnesses.” 71 This factor “primarily

a ddress [ es ] efficiency considerations.” 72 The district court ruled that the federal and state courts were equally convenient, so this factor was neutral. KPS does not dispute the convenience of the federal court, but it argues that this convenience militat es in its favor.
We are not rigid in prescribing the role that convenience must play in the district court’s analysis. 73 The district court did not abuse its discretion in ruling this factor neutral.

D

The sixth Trejo factor considers “whether retaining the lawsuit would serve the purposes of judicial economy.” 74 Federal courts “should avoid duplicative or piecemeal litigation where possible.” 75 Judicial economy corresponds primarily to Brillhart ’s concern about efficiency. 76 Judicial economy may also implicate concerns about federalism and comity,

71 St. Paul Ins. Co. v. Trejo , 39 F.3d 585, 591 (5th Cir. 1994)

.

72 Sherwin

- Williams , 343 F.3d at 391.

73 See, e.g. , Ironshore Specialty Ins. Co. v. Tractor Supply Co. , 624 F. App’x 159, 168 (5th Cir. 2015) (per curiam) (unpublished) (holding that this fact or “weighs against dismissal” when there was no indication that the federal court was inconvenient) ; RLI Ins. Co. v. Wainoco Oil & Gas Co. , 131 F. App’x 970, 973 (5th Cir. 2005) (per curiam) (unpublished) (finding no abuse of discretion when the federal and state forums were both of “relative convenience” and the district court ruled this factor “neutral” ).

74 Trejo , 39 F.3d at 591.

75 Sherwin

- Williams , 343 F.3d at 391.

76 Id. Case: 21-20093 Document: 00516542432 Page: 16 Date Filed: 11/11/2022No. 21

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17 especially when duplicative litigation could produce conflicting judgments on
matters of state law. 77 The district court held that this factor favored a stay

. The court reasoned that the declaratory judgment action would produce inefficient piecemeal litigation because the state lawsuit involve s claims besides tortious
interference that the federal lawsuit would not resolve. By contrast, “all issues raised by the claims asserted in this declaratory judgment action can be resolved in the state court proceeding.”

The district court correct ly conclud ed that a stay would s erve judicial economy. The resolution of the state lawsuit may or may not resolve the
claims in the federal lawsuit

. As the district court noted, however, there is no question that the federal lawsuit will not resolve the claims in the state
lawsuit . Fo r example, the federal lawsuit will not resolve claims by Switzer against Triten for compensation that Triten allegedly failed to pay him. When state court proceedings involve claims or parties beyond those in the federal declaratory judgment action, this court has held that efficiency concerns counsel against asserting jurisdiction. 78 A stay may not avoid piecemeal or duplicative litigation, but proceeding with the federal action
ensures it.
The federal action also raises concerns about federalism. Dupl icative litigation in the federal court about state law matters

— tortious interference

77 Id.

78 See id. (“A federal cour t should be less inclined to hear a case if necessary parties are missing from the federal forum, because that leads to piecemeal litigation and duplication of effort in state and federal courts.”); Am. Emps.’ Ins. Co. v. Eagle Inc. , 122 F. App’x 700, 703

- 04 (5th Cir. 2004) (per curiam) (unpublished) (affirming a stay order when “a federal court cannot rule conclusively” on all the issues raised in the state court proceedings so “it would not be more efficient for a federal court to initially hear the claim s”). Case: 21-20093 Document: 00516542432 Page: 17 Date Filed: 11/11/2022No. 21

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18 with Triten’s contracts

— creates “the potential for inconsistent state and federal court judgments.” 79 A stay reduces this risk. For reasons of efficiency as well as fed eralism, this factor favors a stay.

E

The seventh Trejo factor considers “whether the federal court is being called on to construe a state judicial decree involving the same parties and entered by the court before whom the parallel state suit between the s ame parties is pending.” 80 This factor addresses Brillhart ’s concern about
federalism. 81 Because this case does not involve the construction of a state judicial decree, the district court deemed this factor “not relevant.” KPS contends
that the absence of a state decree is not irrelevant but rather disfavors a stay. This court has not dictated the weight that district courts must place on the absence of a state decree. One decision held that it “weighs strongly” in favor of the declaratory judg ment plaintiff, 82 while another approved of the district court’s determination that this factor was “not implicated.” 83 KPS does not give any reason why the absence of a state judicial decree warrants special significance in this case. In fact, KPS conce des that there is “no meaningful dispute” on this point. Given the variation in acceptable

79 Sherwin

- Williams , 343 F.3d at 391.

80 St. Paul Ins. Co. v. Trejo , 39 F.3d 585, 591 (5th Cir. 1994).

81 Sherwin

- Williams , 343 F.3d at 392.

82 AXA Re Prop

. & Cas. Ins. Co. v. Day , 162 F. App’x 316, 321 (5th Cir. 2006) (per curiam) (unpublished).

83 RLI Ins. Co. v. Wainoco Oil & Gas Co. , 131 F. App’x 970, 973 (5th Cir. 2005) (per curiam) (unpublished). Case: 21-20093 Document: 00516542432 Page: 18 Date Filed: 11/11/2022No. 21

- 20093

19 interpretations, the district court did not abuse its discretion in rejecting the
relevance of this factor.

F

The seven Trejo factors are “nonexclusive.” 84 KPS ass erts additional
concerns about unfairness that would result if the state court action were to preclude the federal court action

. As explained above, however, the preclusive effect of the state court’s ruling is unknown. This unsubstantiated
fear does not bear on the analysis.
In addition to considering the Trejo factors, a district court must also “address[] and balance[] the purposes of the Declaratory Judgment Act.” 85 KPS argues that the stay order defies the purposes of the statute by obstructing KPS’ s attempt to clarify its rights. It is true that “[a] proper purpose of section 2201(a) is to allow potential defendants to resolve a dispute without waiting to be sued.” 86 However, the district court reasonably concluded that a stay was consistent with that purpose. Triten had already sought to resolve the dispute in some measure by asserting
related claims in state court.

In sum , we conclude that t he district court did not abuse its discretion in granting the stay. The presence of a related pending ac tion in state court implicates Brillhart ’s concerns about federalism, fairness, and efficiency that support the district court’s stay decision.

84 Sherwin

- Williams , 343 F.3d at 388

.

85 Vulcan Materials Co. v. City of Tehuacana , 238 F.3d 382, 390 (5th Cir. 2001) (quoting St. Paul Ins. Co. v. Trejo , 39 F.3d 585, 590 (5th Cir. 1994) ).

86 Sherwin

- Williams , 343 F.3d at 397. Case: 21-20093 Document: 00516542432 Page: 19 Date Filed: 11/11/2022No. 21

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20 IV Finally, we turn to the parties’ motions for judicial notice. Both
concern documents from the related state court proceedings. Under Federal Rule of Evidence 201, a court “may judicially notice a fact that is not subject to reasonable dispute.” 87 Such facts include those that “can be accurately and readily determined from sources whose accuracy
cannot reasonabl y be questioned.” 88 An appellate court may take judicial notice of facts, “even if such facts were not noticed by the trial court.” 89 On several occasions, this court has taken judicial notice of court proceedings relevant to the case being decided. 90
We grant both motions. The state court proceedings are relevant to this action because they elucidate the nature of the claims the part ies have made and the defenses they have raised, and they show the status of those proceedings. Of course, our notice of these documents does not mean that we accept the assertions in the state court pleadings as true. Rule 201 permits judicial notice only of facts that are “not subject to reasonable dispute.” 91 The test for indisputability is stringent. Assertions in pleadings that are not otherwise obvious cannot clear Rule 201’s “‘indisputability’ hurdle.” 92

87 **Fed. R. Evid.** 201(b).

88 Id. 201(b)(2).

89 United States v. Herrera

- Ochoa , 245 F.3d 495, 501 (5th Cir. 2001); see also **Fed. R. Evid.**  201( d ) (“The court may take judi cial notice at any stage of the proceeding.”).

90 See, e.g. , Alexander v. Verizon Wireless S ervs. , L.L.C. , 875 F.3d 243, 248 n.8 (5th Cir. 2017); United States v. Verlinsky , 459 F.2d 1085, 1089 (5th Cir. 1972); Paul v. Dade Cnty. , 419 F.2d 10, 12 (5th Cir. 1969).

91 **Fed. R. Evid.** 201(b).

92 Taylor v. Charter Med. Corp. , 162 F.3d 827, 830 (5th Cir. 1998). Case: 21-20093 Document: 00516542432 Page: 20 Date Filed: 11/11/2022No. 21

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21 * * *

For the r easons stated, we **AFFIRM** the district court’s stay order
and **GRANT** the parties’ motions for judicial notice. Case: 21-20093 Document: 00516542432 Page: 21 Date Filed: 11/11/2022