support the exercise of federal jurisdiction but rather to determine whether the “clearest
justifications” and “exceptional circumstances” exist to warrant abstention from

jurisdiction. AAR Int’l., Inc. v. Nimelias Enter., 250 F.3d 510, 517 (7th Cir. 2001).

It is an abuse of discretion for the federal court not to exercise its jurisdiction if there
is any doubt that the state litigation will “be an adequate vehicle for the complete

resolution of the issues between the parties.” AAR Int’L, 250 F.3d at 520, quoting

Moses H. Cone Mem’. Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 28 (1983). Any
doubt about the parallel nature must be resolved in favor of exercising jurisdiction. Id.
DISCUSSION

In its motion, Wood asks this court to grant a stay, or in the alternative to
dismiss, these proceedings in favor of the California action.' They argue that this case

exhibits the exceptional circumstances discussed in Colorado River.” 424 U.S. at 817.

‘Although Colorado River specifically addressed the power of the district court to
dismiss an action in the face of a parallel state proceeding, this circuit has held that a
stay, instead of dismissal, is the appropriate procedure. Rosser v. Chrysler, 864 F.2d
1299, 1308 (7th Cir. 1988). A stay keeps the federal forum available if the state court
action does not result in a final judgment. Id.

2In its reply, Wood also raises a second, unrelated argument: that because the original
bottling agreements (contracts between Wood and AAlta) provided that all disputes are
governed by California law and must be heard in California courts, this court has no
jurisdiction to hear the case at all. Even assuming that the forum-selection clause in
the bottling agreements applied to J & A, which was not a party to them and to whom
they were never assigned, arguments raised in a reply brief that were not addressed in
the original motion are waived. Marie O. v. Jim Edgar, 131 F.3d 610, 614 n.7 (7th

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three defendants in the federal case are located in California. In addition, AAlta was
a California corporation; and Wood employees, who may be witnesses, are located in
California. J & A argues that many of the witnesses from J & A’s retail customers are
located throughout the Midwest, making Illinois amore convenient forum. Although
deposing witnesses throughout the Midwest may be more convenient if Illinois is the
forum, it is significantly less convenient to all three defendants in the case. However,
Wood points out that the potential Midwest witnesses will be required to travel
regardless of whether the action is in Illinois or California, across several states in some
cases. Therefore, this factor weighs in favor of staying the present action.

The fifth factor, whether state or federal law governs, would indicate a like
outcome. The parties dispute whether Illinois or California law controls, but one thing
is clear: both complaints are predicated wholly on state law. Although the absence of
a federal question weighs against the exercise of jurisdiction, an action based only on
state law will not be stayed based on this factor alone. Sverdrup, 125 F.3d at 550.

The sixth factor, whether the state court will protect the federal plaintiff's rights,
is related to the fifth, and also weighs in favor ofa stay. These cases are based only in
state tort and contract law and do not involve rights or protections provided only in
federal law. The federal interest is accordingly “far from overwhelming.” Finova, 180

F.3d at 900. Although the parties dispute which forum’s law will apply to this action,

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issues raised by the state action at the time the stay is requested. Parvin E. Day v.

Union Mines, Inc., 862 F.2d 652, 656 (7th Cir. 1988).

At first blush, the parties in this case seem not substantially similar. The federal
action involves J & A, Wood, and two Wood employees, Ronald Vantz and Caroline
Watkins. In contrast, the California action includes Wood, J & A, AAlta, an AAlta
employee named Mark Wolke, and 99 other unnamed defendants. A close look at the
two complaints, however, reveals that their overlapping portions involve mainly J & A
and Wood, despite the nominal presence of other parties. As stated above, exact
replication of the parties is not required. Interstate Material, 847 F.2d at 1288. The
parties in this action, although certainly not identical, are substantially similar. We
therefore turn to the second prong of the parallelism analysis: the similarity of the issues
presented by the two cases.

The instant case involves two causes of action: tortious interference with
prospective economic advantage and tortious interference with contract. Both claims
are based on what J & A perceives as Wood’s interference with J &A’s relationships
with its retail purchasers after it refused to transfer the AAlta contract to J & A.
Overall, the California complaint is much broader, but it primarily focuses on Wood’s
contractual relationship with AAlta, which was never extended to include J & A. Many

of the allegations within that complaint have no application to J & A. The eighth cause

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That case recognized that, in certain narrow circumstances, federal courts should
relinquish their jurisdiction in favor of pending state cases, even though they do not fall
under the ambit of recognized abstention doctrines. Id. at 814.

As a threshold issue in a Colorado River-type case, the court must determine
whether the state and federal actions are so similar that they can be deemed parallel.
Caminiti & Jatarola, Ltd. v. Behnke Warehousing, Inc. 962 F.2d 698, 700 (7th Cir.
1992). To be considered parallel, actions must be contemporaneous litigations of
substantially the same issues by substantially the same parties. Id. However, the suits

need not be perfectly identical. Interstate Material Corp. v. City of Chicago, 847 F.2d

1285, 1288 (7th Cir. 1988). The court may also consider whether the state action is
more comprehensive, such that granting of relief in the state forum would dispense

with the claims in the federal forum. Finova Capital Corp. v. Ryan Helicopters U.S.A.

Inc., 180 F.3d 896, 898 (7th Cir. 1999); Lumen Constr., Inc. v. Brant Constr. Co., Inc.,

780 F.2d 691, 695 (7th Cir. 1985). The court is limited in its consideration to the

Cir. 1997). The notion supporting this rule is that the opposing party should be given
an opportunity to respond to new arguments. Wilson v. Giesen, 956 F.2d 738, 741 (7th
Cir. 1992). Wood did not raise the issue of the forum-selection clause in its original
memorandum in support of the motion to stay, and we will not consider any argument
they may have based upon it. See Hentosh v. Herman M. Finch Univ.. of Health
Sciences, 167 F.3d 1170, 1173 (7th Cir. 1999).

-5-


the federal forum; (3) the desirability of avoiding piecemeal litigation; (4) the order in
which jurisdiction was obtained; (5) the source of governing law, state or federal;
(6) whether the state court will protect the federal plaintiff's rights; (7) the relative
progress of state and federal proceedings; (8) the presence or absence of concurrent
jurisdiction; (9) the availability of removal; and (10) the vexatious or contrived nature

of the federal claim. Caminiti, 962 F.2d at 701. The weight given any one factor

depends on the case, Cone, 460 U.S. at 16, and no one factor is outcome-determinative.
Caminiti, 962 F.2d at 701. Finally, the balance should be heavily weighted in favor of

exercising jurisdiction. Cone, 460 U.S. at 16.

The first and tenth factors have no application here given the facts of this case.
There is no indication that the California court has assumed jurisdiction over property
nor that it would have occasion to do so. The partiesare not engaged in a battle over
the existing bottles of KOGEE; they seek only damages and injunctive relief. Neither
is there evidence that the federal claim is either vexatious or contrived. In fact, the
almost simultaneous filings of the respectivecomplaints speaks to the genuineness of
the dispute by both parties.

Three of the remaining eight factors-the second, fifth, and sixth—favor the grant
of a stay. The second factor looks to the convenience of the federal forum for the

parties. AAR Int’]., 250 F.3d at 523. J & A is the only party located in Illinois. All

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‘Minute Order Form (06/97)

United States District Court, Northern District of Illinois

Name of Assigned Judge Charles P. Kocoras Sitting Judge if Other
or Magistrate Judge . than Assigned Judge
CASE NUMBER 01 C 6749 DATE 4/18/2002
CASE J & A Sales and Marketing vs. J.R. Wood, Inc. et al
TITLE
[In the following box (a) indicate the party filing the motion, ¢.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
(dl) oO Filed motion of [ use listing in “Motion” box above.]
(2) im Brief in support of motion due
(3) im Answer brief to motion due . Reply to answer brief due.
(4) Qo Ruling/Hearing on set for at .
(5) a Status hearing set for 5/13/2002 at 9:45 A.M..
(6) ao Pretrial conference[held/continued to] [set for/re-set for] on set for at
(C) im Trial[set for/re-set for] on at
(8) Oo [Bench/Jury trial] [Hearing] held/continued to at
(9) o This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
OOFRCP4¢m) OGeneral Rule21 CIFRCP4i(a)(1) COFRCP41(a)(2).
qo [Other docket entry) ENTER MEMORANDUM OPINION: Defendants’ motion (Docs 6-1 &
6-2) to dismiss or stay this federal action is denied.
(il) [For further detail see order attached to the original minute order.]
No notices required, advised in open court.
No notices required. umber of notices
Notices mailed by judge’s staff, APR 19 2002
Notified counsel by telephone, date docketed
ov | Docketing to mail notices. \
Mail AO 450 form. gn docketng deputy initials
Copy to [Adge/magistrate judge.

date mailed notice

courtroom pet Ae
deputy’s :
initials

scr \

£, . <, Dateltimesredeived in

~ central Clerk's Office railing deputy initials



The Seventh Circuit has stated that the fourth factor, the order in which
jurisdiction was obtained has little independentrelevance. Evans Transp. Co. v. Scullin
Steel Co., 693 F.2d 715, 718 (7th Cir. 1982). This isespecially true in cases like this
one, in which the respective complaints are filed within hours of each other, making
priority of filing mostly serendipitous. In fact, theEvans court reversed the dismissal
of an action when the state court action had been filed a month before the federal action.
Id. Thus, this factor counsels in favor of an exercise of jurisdiction.

The seventh factor considers the relative progress of the state and federal cases.
It is closely linked to the fourth factor, and it likewise indicates that we should not stay

this action. Cone, 460 U.S. at 21 (stating that “priority should not be measured

exclusively by which complaint was filed first, but rather in terms of how much
progress has been made in the two actions”). The California suit was not even two
hours old when the federal suit was filed; at the time the stay was requested, J & A had
not even been served in the California case. The state case simply did not have enough
time to be “well underway” when the federal action commenced. Evans, 693 F.2d at
718. Our consideration ofthis case cannot duplicate or set back progress that has not
yet been made.

The eighth factor, the presence or absence of concurrent jurisdiction, weighs
against a stay. Caminiti, 962 F.2d at 703. Subject matter jurisdiction is clearly
concurrent in these cases: the California court has jurisdiction based on the state law

-1ll-


where all of the actions are based on state law claims the federal court’s interest is not
as significant as it is when a plaintiff asserts a federal right. In addition, we note that
California has a significant interest in a dispute involving corporations doing business
within the state, and where many of the witnesses are located within the state.
Therefore, this factor weighs in favor of a stay.

Consideration of the remaining five factors, however, directs against staying this
action. The third factor emphasizes the desirability of avoiding piecemeal litigation.
The Seventh Circuit has adopted the definition of piecemeal litigation from the Ninth
Circuit, stating that “piecemeal litigation occurs when differenttribunals consider the
same issue, thereby duplicating efforts and possibly reaching different results.” Day,

862 F.2d at 659, quoting Am. Int’], Underwriters (Philippines), Inc., v. Continental Ins,

Co., 843 F.2d 1253, 1258 (9th Cir. 1988). The California and federal actions do overlap,

and there is some risk that the courts may arrive at conflicting results. However, J &
A’s complaint focuses not on the AAlta agreements but on its own contracts with its
retail customers and Wood’s actions, which allegedly caused breaches of those
independent agreements. Because the two complaints only partially coincide, even a
complete resolution of the state action would not dispose of all of the claims of the

federal action. Lumen, 780 F.2d at 695.

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of action, however, is directly implicated by the federal case, in that it seeks relief for
interference by the defendants, including J & A, with contracts or relationships with
Wood customers in connection with payments Wood claims are due under its bottling
agreements with AAlta. J & A’s complaint, by contrast, goes beyond the disputes over
payments allegedly owed under the AAlta agreements. It includes allegations that
Wood’s actions soured any relationship that J& A had with these customers, whether
in connection with the AAlta products or not. Although both actions to some degree
involve the Wood—AAlta contract, the federal action is not a complete subset of the
state action, and the resolution of the state case in its current posture will not address
all the issues involved in the federal action. Cf. Day, 862 F.2d at 659. Therefore, even
though the two cases share some common issues, they do not bear the substantial
resemblance necessary to render them parallel.

Furthermore, even if Wood could get past the threshold requirement of
parallelism, an analysis of the factors enumerated in Colorado River and its progeny
show that this case does not involve the exceptional circumstances that would
necessitate a stay of the federal action. Sverdrup Corp. v. Edwardsville Cmty. Sch.
Dist., 125 F.3d 546, 549-50 (7th Cir. 1997) (tracing the development of the ten factors
used to determine whether exceptional circumstances are present). The factors are:

(1) whether the state has assumed jurisdiction over property;(2) the inconvenience of

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Based on the above facts, J & A seeks recovery under two tort causes of action:
tortious interference with prospective economic advantage and tortious interference
with contract.

Almost simultaneous to the filing of this action, Wood filed a complaint against
AAlta on August 29, 2001 in the Merced County Superior Court in California (“the
California action”). Wood later amended the complaint to add J & A as a named
defendant. That complaint concerned a dispute over money owed to Wood under the
contract between Wood and AAlta for the production of KOGEE. Wood’s complaint
in California state court alleged breach of contract, common counts, conversion, and
interference with economic relationship. Wood now moves to stay or dismiss this
proceeding pending the outcome of the California state court action.

LEGAL STANDARD

Federal courts have an “unflagging obligation” to exercise the jurisdiction
granted to them. Colorado River Water Conservation District v. United States, 424
U.S. 800, 817 (1976). However, in exceptional circumstances a federal court may
decline to exercise jurisdiction when a parallel action in state court is also pending,
considering “wise judicial administration, giving regard to conservation of judicial
resources and comprehensive disposition of litigation.” Id. A stay is only appropriate

in limited circumstances; therefore, the task for the court is not to find reasons to

-3-


(“AAlta”) had a contractual relationship with Wood, by which Wood manufactured the
KOGEE/KOGI (“KOGEE”) product for AAlta and acted as its agent by distributing
the product and collecting payments due from purchasers. KOGEE is a coffee drink
sold to many large grocery chains including Kroger, Dominick’s, Whole Foods, and
Jewel, among others.

In July 2001, J & A purchased the assets of AAlta. J & A notified Wood of the
purchase the day it took place. Some time after the purchase, J & A contacted Wood
in order to negotiate a transfer of the AAlta contract to J & A. Wood refused to
transfer the contract. J & A then made requests to Wood asking the company to cease
contact with J & A’s KOGEE customers. Wood refused this request and informed J
& A that it would continue to contact KOGEE purchasers.

Despite repeated requests from J & A, Wood continued to contact KOGEE
customers. For instance, Wood allegedly contacted Kroger claiming that Wood was
due funds that J & A had claimed. As a result, Kroger stopped payment on a check to
J & A. Kroger then canceled several orders with J & A and ultimately stopped
purchasing KOGEE products altogether. Wood made similar contacts with
Allegro/Whole Foods and KEHE, other J & A customers, ultimately causing both

purchasers to terminate relationships with J & A.


UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION
J & A SALES AND MARKETING, INC.,
Plaintiff,
vs. 01 C 6749
J.R.WOOD, INC., a California corporation,
RONALD VANTZ, a California resident,

and CAROLINE WATKINS, a California
resident,

)
)
)
)
)
)
)
)
)
)
)
)

Defendants.
MEMORANDUM OPINION
CHARLES P. KOCORAS, District Judge:

This matter comes before the court on the motion of Defendant, J.R. Wood, Inc.,
to either dismiss or stay this federal action. For the reasons discussed below, the
motion is denied.

BACKGROUND

J& A Sales (“J & A”), the plaintiff, filed a complaint in this action on August
29, 2001. The complaint alleges the following facts. J & A is an Illinois corporation
in the business of manufacturing and selling organic food products. J.R. Wood
(“Wood”) is a California corporation in the business of bottling, manufacturing, and

producing food products. From 1999 to August 2001, AAlta Organic Food Company

A\


claims and the federal court has jurisdiction by virtue of the parties’ diversity. Whether
California has personal jurisdiction over J & A, on the other hand, is not as clear.
Therefore, this factor supports our exercise of jurisdiction.

Finally, we consider the ninth factor: the availability of removal. If this court
stays or dismisses this action in favor of the California state court, both parties agree
that J & A will be barred from removing the case to federal court. The California action
includes plaintiffs and defendants who share California residency, destroying the
possibility of diversity jurisdiction in that case. If this case is stayed, J & A will be

precluded from adjudicating in a federal forum. Evans, 693 F.2d at 719.

In sum, the majority of factors involved and their relative relevance to this case,
combined with the heavy presumption in favor of exercising jurisdiction, swing the
balance away from granting a stay in this case. We conclude that even if the actions
were parallel, Wood has not shown that this case involves the exceptional circumstances

contemplated in Colorado River, and we remain obligated to exercise our jurisdiction.

CONCLUSION

For the aforementioned reasons, the motion to stay is denied.

Chere P bees g,

Charles P. Kocoras
United States District Court

Dated: April 18, 2002

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