Court Opinion

ID: 6924985
Source: CourtListenerOpinion
Date Created: 2022-07-23 23:16:18.781218+00
Date Added: 2024-06-11T16:06:54.320497
License: Public Domain

DUNIWAY, Circuit Judge
(dissenting).
I dissent. I have no quarrel with most of Judge POPE’S careful and scholarly opinion. However, much of it seems irrelevant to the case before us, and it does not convince me that Judge Zirpoli did not have discretion to do what he did.
The order that was actually entered reads as follows:
“It is therefore ordered that all further proceedings in this action be and hereby are stayed until completion of all proceedings in the trial court in the action entitled Ampex Corporation v. Mach-Tronics, Incorporated et al, Docket No. 99838, now pending in the Superior Court of the State of California, in and for the County of San Mateo, or until further order of this court.” (Emphasis added.)
It is important to note what the court did not do as well as what it did do. It did not refuse to exercise its jurisdiction. On the contrary, it merely postponed that exercise, not until the California state court decision might become final, but only until the conclusion of proceedings in that case in the trial court. Moreover, it did not make an order which purported to shut off any application by Mach-Tronics for leave to proceed sooner if the circumstances warranted it. On the contrary, the stay recites that it is until the further order of the court. This is no abandonment of the court’s control over the conduct of the case.
The court’s order also indicates that the court was not applying the doctrine of abstention with which so much of Judge POPE’S opinion is concerned. It did not relegate Mach-Tronics to the state court for the determination of some unsettled state constitutional question or question of state law. Judge POPE seems to me to have erected a straw man and then proceeded very effectively to demolish him. To me, it does not follow that the various cases cited by Judge POPE embody the only situations in which a district judge may stay proceedings temporarily, pending decision of a state court action. Exceptions to the general rule, that a federal court should proceed with a case of which it has jurisdiction, are necessarily worked out case *836by case. Thus, the lack of a prior reported case just like the one before us is not, to me, at all persuasive that here the judge either lacked or abused discretion.
Judge Zirpoli had before him the pleadings in the state case and the com-1 ¡plaint in the federal case. It is unverified, and contains some four pages of the usual boiler plate that appears in antitrust suits, all of which can readily be constructed by any competent attorney from the precedents. It charges a conspiracy between Ampex and Radio Corporation of America to monopolize, worldwide, the manufacture and distribution of video tape recorders. However, it does not name Radio Corporation of America as a defendant. The sole defendant is Ampex. The only allegation as to any way in which the alleged worldwide conspiracy affects MachTronics is a charge that Ampex conspired to destroy Mach-Tronics by agreeing to bring and actually instituting baseless litigation against Mach-Tronics falsely alleging that Mach-Tronics had appropriated Ampex’s research and ideas. There is a further charge that Ampex, (but not, so far as is alleged, Radio Corporation of America) has “contacted” plaintiff’s potential customers and suppliers and falsely represented that the courts had decided the litigation in favor of Ampex, and has threatened them with economic reprisal if they dealt with Mach-Tronics. Nowhere in the complaint, or in the affidavits filed in opposition to the motion to stay proceedings, is there any allegation of any facts supporting the charge that a conspiracy of the type described in the complaint actually exists. All of the allegations have to do with the conduct of Ampex alone in bringing the state action and.with certain statements claimed to have been made by some of its representatives, or in newspaper articles, as to Ampex’s claimed success in the state litigation.
The nature of the state case is fully set out in Judge POPE’S opinion. The circumstances stated in the complaint and admitted in the answer indicate that there is a real possibility that the case is anything but “baseless.”
Nothing is easier than to draw an unverified complaint charging a nationwide or worldwide conspiracy by two large corporations to violate the antitrust laws. I think that the court, from an examination of the pleadings, could well have had a feeling that the probability is that there is nothing to the antitrust charges, contained in the federal complaint, however well pleaded they may be, and that the filing of the antitrust complaint in the federal court was merely a device to get into that court and to prevent the state court from proceeding with the state case, of which it admittedly had jursidiction. By this I do not mean that the federal court would enjoin the prosecution of the state case. I mean that prosecution of the federal case, with the elaborate and expensive discovery proceedings typical in such cases, would, as a practical matter, stop the state case. Under the theory of Judge POPE’S opinion, it is obvious that complaints to the federal court about the effect of such procedures upon the state case would have to be given short shrift by the federal court. A federal court is not, in my judgment, compelled to allow itself to be used in that manner. All that the court did was to postpone proceedings in the federal case until the state case is tried. What better method can there be-of determining whether that case is-“baseless” as it is alleged to be in the' antitrust complaint? A trial of that issue by a court before which the action is not pending is a peculiar way to determine whether the action has merit.
This is not the first case, nor will it be the last, in which a trial court may feel that it is being used for purely tactical purposes in order to defeat what may be a perfectly legitimate action pending in another court. I think that it is strange doctrine to say that a trial court cannot protect itself from being so used by postponing action until the court be-, fore which the litigation was first instituted has a chance to try the case. It may happen that, following decision in *837the state court, the pending antitrust case will be quietly dropped. The only way to find out is to abide the event in the state court.1
I do not think that any case cited in Judge POPE’S opinion holds that a court does not have discretion to order a postponement under these circumstances, and there are a number of cases which, although not squarely in point, seem to me, on principle, to support what Judge Zirpoli did.
In 1941, this Court, in Butler v. Judge of United States District Court, 9 Cir., 116 F.2d 1013, held that a district judge has discretion to postpone trial of an action, of which the federal court admittedly had jurisdiction, until decision in a prior action in the state courts, involving substantially the same question. The federal case was a diversity case, to quiet title. The state action was to enjoin trespass upon the same property, in which the defendants (one of whom was plaintiff in the federal action) had cross-complained to quiet title. We held that the trial court did have discretion to postpone, emphasizing the fact that title to real property, peculiarly a local matter, was involved. We also emphasized the duty of the federal courts to avoid unseemly conflict with state courts. In this respect, we followed the views of Justice Cardozo in Landis v. North American Co., 1936, 299 U.S. 248, 254-255, 57 S.Ct. 163, 81 L.Ed. 153. We said:
“We hold that the trial court had the discretion to stay proceedings before it pending the prompt determination of the same issue in the state court in an action brought prior to the action in the federal court.” (Id. 116 F.2d at 1016)
We also held that discretion had not been abused, pointing out, among other things, the duplication in effort and expense that would arise if both actions were to proceed simultaneously because the rights involved “depend in part upon the conditions hundreds and even thousands of feet underground.” And we emphasized the fact that the trial court can “modify its order to meet the situation as it develops.”
The situation in Butler is analogous to the situation here, in that a question to be decided in both courts is whether Mach-Tronics has stolen Ampex’s trade secrets, in a highly technical field in which inspection of devices and much detailed scientific evidence would be required. The duplication of expense and effort in proceedings for discovery and inspection and trial could be very great. Discovery proceedings, which are substantially the same under California law (see Cal.Code Civ.Proc. §§ 2016-2035) as under the Federal Rules of Civil Procedure, were well under way in the state court, having been carried by MachTronics through the California Supreme Court in an endeavor to prevent inspection of its devices, when Mach-Tronics undertook discovery proceedings in the federal court. The situation in Butler differs from the situation here in that the federal court has exclusive jurisdiction of an action for treble damages under the antitrust laws. But I think a rule that this, in and of itself, deprives the trial court of discretion to postpone action, is a bad rule, and may encourage the bringing of strike suits for the sole purpose of defeating legitimate actions in state courts. Yet this is what I think Judge POPE’S opinion requires.
*838Butler cites and follows a comparable decision of this Court in 1916, Wolf v. District Court, 9 Cir., 235 F. 69. See also Hennessy v. Tacoma Smelting & Ref. Co., 9 Cir., 1904, 129 F. 40; In re Lasserot, 9 Cir., 1917, 240 F. 325; compare: CMAX, Inc. v. Hall, 9 Cir., 1962, 300 F.2d 265.
Another pertinent decision is United States v. Adamant Co., 9 Cir., 1952, 197 F.2d 1, 12-13, in which we remanded with directions to stay execution of a judgment until certain litigation between the parties in the state courts was completed, although both actions were in personamT’scTTirat admittedly the "state" and federal courts both had jurisdiction. We based our decision on considerations of comity, saying:
“Despite the right of federal courts to deal concurrently with personal rights, as a matter of comity, when the state court has acquired jurisdiction there should be no interference by the federal courts until the state action has been disposed of.”
Other circuits have handed down similar decisions. In Mottolese v. Kaufman, 2 Cir., 1949, 176 F.2d 301, it was held proper for the district court to stay proceedings in a stockholder’s derivative suit, pending the determination of a prior state action. The court cited our decision in Butler. The Mottolese decision was later followed in P. Beiersdorf & Co. v. McGohey, 2 Cir., 1951, 187 F.2d 14, a trademark case. In Milk Drivers Union v. Dairymen’s League Co-op. Ass’n, 2 Cir., 1962, 304 F.2d 913, a similar result was reached in an action to compel arbitration, when a prior state action seeking similar relief was pending. See also dicta in Ballantine Brooks, Inc. v. Capital Distrib. Co., 2 Cir., 1962, 302 F.2d 17, 19, and Ferguson v. Tabah, 2 Cir., 1961, 288 F.2d 665, 672.
Jewell v. Davies, 6 Cir., 1951, 192 F.2d 670, upheld a stay because of pendency of a prior state action in a case involving title to church property. The court said:
“The district court of course had jurisdiction over petitioner’s case and it therefore had the power to make the stay order. This is true because the power to make the order is incidental to the power of the court to control the disposition of the case on its docket. This power is not affected by the fact that the parties in the two causes are not exactly the same or that the issues in each were not identical.”
Compare: Ray v. Hasley, 5 Cir., 1954, 214 F.2d 366; Southern Pac. Co. v. Klinge, 10 Cir., 1933, 65 F.2d 85.
I cite the foregoing authorities, not because they are factually in point, but because they all stand for the proposition that a federal district court does have some discretion to postpone proceedings in a case of which it has jurisdiction, pending the prosecution of a pending state court case involving at least some of the same parties and some of the same facts. Unlike the majority, I think that such discretion exists here, and that the judge did not abuse that discretion.
I would deny the writ.

. It may be argued that my views would permit the trial court to pre-judge the merits of both cases upon the pleadings alone, or that I, too, am so pre-judging. But this is not so. A competent trial judge often gets a “feel” of the case at an early stage. I think that he can act upon it, if he does so in a way that is well calculated to determine whether his hunch is well founded while at the same time preserving all parties’ rights. That is what Judge Zirpoli’s action does. It permits determination, on the merits, of a key question, namely, is the state action “baseless,” in the most appropriate manner, by a trial of that action. At the same time, it retains jurisdiction of the federal ease for ultimate determination on its merits, at a time to be determined in the light of developments, by the federal court.