Court Opinion

ID: 4530502
Source: CourtListenerOpinion
Date Created: 2020-04-30 19:04:02.336561+00
Date Added: 2024-06-11T09:24:57.523889
License: Public Domain

IN THE SUPERIOR COURT OF THE STATE OF DELAWARE

NOKIA SOLUTIONS AND                    )
NETWORKS OY,                           )
                                       )
                  Plaintiff,           )
                                       )
            v.                         )   C.A. No.: N19C-10-262 AML CCLD
                                       )
COLLISION COMMUNICATIONS,              )
INC.,                                  )
                                       )
                  Defendant.           )

                           Submitted: January 31, 2020
                             Decided: April 30, 2020

                 Upon Defendant’s Motion to Stay: GRANTED

                         MEMORANDUM OPINION

James J. Freebery, Esquire, Daniel J. Brown, Esquire, Hayley J. Reese, Esquire of
McCARTER & ENGLISH, LLP, Wilmington, Delaware, and David Himelfarb,
Esquire of McCARTER & ENGLISH, LLP, Boston, Massachusetts, Attorneys for
Plaintiff Nokia Solutions and Networks Oy.

Douglas D. Herrmann, Esquire, James H.S. Levine, Esquire of PEPPER
HAMILTON LLP, Wilmington, Delaware, and Tyler E. Chapman, Esq. of TODD
& WELD, LLP, of Boston, Massachusetts, Attorneys for Defendant Collision
Communications, Inc.

LeGROW, J.
      The plaintiff in this action is a large multi-national corporation that seeks a

declaration that it has no contractual obligations to the defendant, which is a small

technology startup. The defendant contends it entered into a binding oral agreement

with the plaintiff and incurred substantial expenses in reliance on the plaintiff’s

representations that the parties had reached a final agreement. Now, the defendant

seeks to stay this action in favor of a similar action the defendant filed in

Massachusetts federal court.

      The defendant’s motion requires this Court to resolve two issues. First, the

Court must decide the threshold question of whether the Delaware action, which was

filed two days before the Massachusetts action and minutes after the plaintiff

terminated the parties’ standstill agreement, is entitled to deference as the “first-

filed” action. Second, if the Delaware action is not first-filed, the Court must

determine whether the forum non conveniens factors weigh in favor of a stay because

litigating in Delaware would expose the defendant to substantial hardship. For the

reasons that follow, I conclude a stay is warranted because the two actions

contemporaneously were filed and the forum non conveniens framework favors a

stay, particularly because of the broader scope of the Massachusetts action, the risk

of inconsistent rulings, the inevitable and substantial waste of party and judicial

resources if both actions proceed simultaneously, and the fact that the parties

naturally are aligned as plaintiff and defendant in the Massachusetts action.
                 FACTS AND PROCEDURAL BACKGROUND

       Unless otherwise noted, the following facts are drawn from the complaint and

the record provided by the parties, which includes the complaint pending in the

United States District Court in Massachusetts. Nokia Solutions and Networks Oy

(“Nokia”) filed this declaratory judgment action in Delaware after the parties’

settlement negotiations broke down. The parties’ dispute relates to an alleged oral

agreement between Nokia and Collision Communications, Inc. (“Collision”), who

is the defendant in this action.

       Collision, which is a small startup company with a “pre-revenue” financial

position,1 is incorporated in Delaware and has a principal place of business in New

Hampshire. Collision owns a proprietary signal processing technology. 2 Nokia,

which is incorporated in and has its principal place of business in Finland, is an

international developer, manufacturer, and supplier of communications and

connectivity solutions.3

       For approximately 18 months, Nokia and Collision negotiated about Nokia’s

interest in purchasing Collision’s technology and incorporating that technology into

Nokia’s wireless platform. Those negotiations included a preliminary “Project

Agreement” through which Collision demonstrated the viability of integrating its

1
  Compl. ¶ 24.
2
  Id. ¶ 12.
3
  Id. ¶ 11.
                                         2
technology with Nokia’s.4 As that Project Agreement was nearing completion, the

parties began discussing a formal, comprehensive contract. Those negotiations

occurred in person in New Hampshire and Finland 5 as well as by phone and email.

Jared Fry, Collision’s Chief Operating Officer, conducted those phone and email

negotiations on Collision’s behalf from his office in Boston, Massachusetts. 6 Draft

agreements that the parties exchanged in May 2017 contained Delaware choice of

law provisions.7

       Collision alleges the parties reached a verbal agreement in June 2017 as to all

material terms of an agreement whereby Nokia would license Collision’s technology

and Collision would develop a software solution to integrate that technology with

Nokia’s cellular base station products.8 Among the material terms that Collision

contends the parties agreed upon was a $20 million license fee and a $3 million

payment for the integration software. In addition, Collision contends Nokia insisted

that Collision refrain from licensing its technology to Nokia’s competitors.

       In reliance on that verbal agreement, Collision avers it began developing the

agreed upon software while abiding by the parties’ exclusivity agreement. 9 For

4
  Id. ¶¶ 25-28. The Project Agreement was governed by the laws of Finland. This dispute does
not involve the Project Agreement.
5
  Mass. Compl. ¶¶ 28, 54; Compl. ¶ 34.
6
  Aff. of Jared Fry (hereinafter “Fry Aff.”) ¶ 4.
7
  Pl.’s Answering Br. in Opp’n to Def.’s Mot. to Dismiss or Stay (hereinafter “Answering Br.”),
Exs. C, D.
8
  Mass. Compl. ¶ 3.
9
  Id. ¶¶ 5, 8.
                                              3
several months, Nokia allegedly continued to reassure Collision that Nokia’s top

level executives had approved the deal terms and the parties’ agreement soon would

be reduced to writing. Collision maintains that its work on the Nokia project

consumed all its limited resources for more than a year.10 The contract Nokia

ultimately drafted, however, differed from Collision’s understanding of the parties’

agreement. When Collision refused to agree to Nokia’s terms, Nokia walked away

from the negotiations, taking the position that the parties never entered into a binding

agreement.

       For a period of months, Collision threatened Nokia with litigation and

ultimately sent a demand letter in July 2019 claiming that Collision incurred

damages in excess of $1 million after Nokia breached the parties “‘binding

agreement to become technology partners.’”11               Collision offered to engage in

mediation in an effort to resolve the parties’ dispute. Nokia agreed, and the parties

entered into a standstill agreement in which both agreed not to file any lawsuit while

settlement discussions were ongoing. 12             The standstill agreement terminated

“immediately after any unsuccessful mediation between the [p]arties[.]”13

10
   Id. ¶ 9.
11
   Compl. ¶¶ 55-56.
12
   Opening Br. in Supp. of Def.’s Mot. to Dismiss or Stay (hereinafter “Opening Br.”), Ex. 4.
13
   Id. ¶ 2.
                                                4
       Both sides retained Massachusetts counsel and engaged in mediation in New

York City on October 24, 2019. Although the mediation concluded without a

resolution, the parties agreed to continue their settlement efforts. Nokia avers that it

conditioned its continued participation on Collision dropping a particular settlement

demand. On October 30, 2019, Nokia’s counsel emphasized to Collision the need

for an immediate answer as to whether Collision would drop that demand. Shortly

before 5:00 p.m., the parties’ attorneys spoke by phone, and Collision’s attorney

indicated it would not drop that demand. Nokia’s attorney then stated that Nokia

considered the mediation unsuccessfully concluded. 14

       Approximately two minutes later, Nokia filed this action seeking a declaratory

judgment “that neither party has any further obligations to the other.” 15 Nokia also

emailed Collision’s counsel minutes after the filing, confirming that Nokia

considered the mediation concluded and was withdrawing all settlement offers

previously made.16 Nokia did not at that time, however, alert Collision to the

Delaware filing. Nokia did not serve Collision with the Delaware complaint until

November 7, 2019.

       Meanwhile, on November 1, 2019, before it was aware of the Delaware action,

Collision filed suit in Massachusetts federal court (the “Massachusetts Action”). In

14
   Aff. of David Himelfarb, Esq. (hereinafter “Himelfarb Aff.”) ¶¶ 11-16.
15
   Compl. ¶ 64.
16
   Opening Br., Ex. 5.
                                               5
that action, Collision advanced several claims against Nokia, including claims for

breach of contract, detrimental reliance, misrepresentation, quantum meruit, and an

unfair trade practices claim under Massachusetts law. Collision’s original complaint

in the Massachusetts action inadvertently named Nokia Corporation and Nokia, Inc.

as defendants. When it realized it had named the wrong parties, Collision filed an

amended complaint on December 12, 2019, which named the correct defendant,

Nokia Solutions and Networks Oy.

       Collision then moved to stay or dismiss this action on the basis of forum non

conveniens.17 The parties briefed and argued that motion. Shortly before oral

argument on Collision’s motion, Nokia moved to dismiss the Massachusetts Action

for lack of personal jurisdiction, failure to state a claim, and on the basis of forum

non conveniens. For the reasons set forth below, I hereby stay this action pending

resolution of the Massachusetts Action.

                                          ANALYSIS

       In its motion, Collision argues this action should be stayed or dismissed in

favor of the “more comprehensive” Massachusetts Action because Nokia filed the

Delaware action preemptively, Collision is the natural plaintiff in the parties’

17
  Collision also moved to stay discovery. The Court entered an order on February 11, 2019 staying
discovery until the motion to stay or dismiss was resolved. Having now concluded that this action
should be stayed, the parties may proceed with discovery as permitted by the United States District
Court for the District of Massachusetts.
                                                6
dispute, and litigating both actions simultaneously would cause Collision undue

hardship. Nokia, on the other hand, argues dismissal or a stay is not appropriate

because the Massachusetts federal court has no jurisdiction over Nokia, and there is

no compelling reason to depart from Delaware’s policy of deferring to the first-filed

proceeding under McWane Cast Iron Pipe Corp. v. McDowell-Wellman Engineering

Co.18

        This Court may, in its discretion, stay or dismiss an action in favor of an action

pending in another jurisdiction. 19 When considering such a motion, the Court first

considers which action was filed first. When a Delaware action was filed first, the

courts in this state generally uphold the plaintiff’s choice of forum unless litigating

in Delaware presents an overwhelming hardship to the defendant. 20 Conversely, if

a foreign action was first-filed, principles of comity and fairness generally favor

staying or dismissing the later-filed Delaware action. 21               When the actions

contemporaneously were filed, this Court evaluates a motion to dismiss or stay under

18
   263 A.2d 281 (Del. 1970).
19
   Lincoln Benefit Life Co. v. Wilmington Trust, N.A., 2019 WL 1307870, at *2 (Del. Super. Apr.
4, 2019); BP Oil Supply Co. v. ConocoPhillips Co., 2010 WL 702382, at *2 (Del. Super. Feb. 25,
2010).
20
   United Phosphorus, Ltd. v. Micro-Flo, LLC, 808 A.2d 761, 764 (Del. 2002).
21
   McWane, 263 A.2d at 283; Dura Pharm., Inc. v. Scandipharm, Inc., 713 A.2d 925, 928 (Del.
Ch. 1998).
                                              7
the established forum non conveniens framework, without applying McWane’s

preference for one action over the other. 22

     I.   The Delaware and Massachusetts Action were filed contemporaneously.

          Under McWane, and in recognition of principles of comity and the need for

an orderly and efficient administration of justice, Delaware courts abide by the

general rule that “litigation should be confined to the forum in which it is first

commenced[.]”23        McWane and the cases that follow it “establish a strong

preference” for litigating disputes in the forum in which the first action was filed. 24

That preference applies when (1) there is a prior action pending elsewhere, (2) in a

court capable of providing prompt and complete justice, (3) involving the same

parties and issues.25 The Court, however, does not give preference to either side’s

choice of forum when two actions are considered contemporaneously filed. 26

          Collision argues the Delaware and Massachusetts actions were filed

contemporaneously, and the Delaware action only was filed before the

Massachusetts action because Nokia raced to the courthouse within minutes of

terminating the mediation and the parties’ standstill agreement. Collision contends

Nokia’s filing is an anticipatory declaratory judgment action, and the parties are

22
   Nat’l Union Fire Ins. Co. of Pittsburgh, PA v. Turner Constr. Co., 2014 WL 703808, at *2 (Del.
Super. Feb. 17, 2014).
23
   McWane, 263 A.2d at 283.
24
   LG Elecs., Inc. v. InterDigital Commc’ns, Inc., 114 A.3d 1246, 1252 (Del. 2015).
25
   McWane, 263 A.2d at 283.
26
   HFTP Invs., L.L.C. v. ARIAD Pharm., Inc., 752 A.2d 115, 122 (Del. Ch. 1999).
                                               8
more naturally situated with Collision bringing a claim and Nokia defending it.

Nokia, on the other hand, argues the Delaware action was filed first, the McWane

factors are satisfied, and there is no compelling reason to deviate from McWane’s

presumption in favor of the first-filed action.

       In order to determine whether an action is first-filed, the Court must consider

the circumstances surrounding both filings.27 There is no bright line rule the Court

follows in performing this analysis.                Rather, the Court must consider its

“complementary objectives of discouraging both forum shopping and contrived

races to the courthouse.” 28

       Generally, the Court considers matters filed within a couple days to be filed

contemporaneously in order to avoid rewarding a party merely for winning a race to

the courthouse.29 This result particularly is appropriate in cases where the party that

won the race to the courthouse filed an anticipatory declaratory judgment action that

reverses the parties’ natural alignment as plaintiff and defendant. 30 In other words,

if the party that naturally is defending a claim files an action for declaratory

27
   In re Bay Hills Emerging Partners I, L.P., 2018 WL 3217650, at *7 (Del. Ch. July 2, 2018).
28
   Rapoport v. Litig. Tr. of MDIP Inc., 2005 WL 3277911, at *2 (Del. Ch. Nov. 23, 2005) (internal
citations omitted).
29
   Lincoln Benefit, 2019 WL 1307870, at * 3; In re Citigroup Inc. S’holder Deriv. Litig., 964 A.2d
106, 116 (Del. Ch. 2009).
30
   Lincoln Benefit, 2019 WL 1307870, at *3; Nat’l Union Fire Ins. Co. of Pittsburgh, PA v.
Crosstex Energy Servs., L.P., 2013 WL 6598736, at *4 (Del. Super. Dec. 13, 2013) (hereinafter
“Crosstex”); Playtex, Inc. v. Columbia Cas. Co., 1989 WL 40913, at *4-5 (Del. Super. Apr. 25,
1989).
                                                9
judgment within days of the natural plaintiff filing an action elsewhere, Delaware

courts are inclined to find the actions were filed contemporaneously. For example,

in Bay Hills Emerging Partners I, L.P., the court concluded that actions filed within

eight days of each other were filed contemporaneously because the parties filing the

Delaware action were acting in anticipation of a claim being brought against them,

and the timing of the filing was “suspicious.”31 As the Court of Chancery has

explained, Delaware courts “take[] a rather dim view of tactical maneuvers and

improper manipulation of the litigation process by parties seeking to invoke the

principles of comity and efficiency underlying the McWane doctrine.”32

       Nokia endeavors to resist this line of cases by arguing (1) the Massachusetts

Action was not properly filed until several weeks after the Delaware action, and (2)

Collision filed the Massachusetts Action in response to the Delaware action. As to

the first argument, Nokia relies upon Dura Pharmaceuticals, Inc. v. Scandipharm,

Inc., in which the Court of Chancery found that an Alabama action was first-filed

even though it was initiated only four days before a Delaware action.33 In Dura,

however, there was no race to the courthouse because the parties had been free to

file suit for several weeks, and the Delaware action was filed in reaction to the

31
   2018 WL 3217650, at *7-8.
32
   Rapoport, 2005 WL 3277911, at *4 (internal quotations omitted).
33
   713 A.2d at 927-28.
                                              10
Alabama action. 34 Unlike the facts in Dura, it is evident from the record here that

Collision did not delay at all in filing its action. Collision filed the Massachusetts

Action two days after the parties’ standstill agreement expired. Although Collision

initially named the incorrect defendant, Collision’s conduct indicates it was acting

promptly to pursue its claim. As to Nokia’s argument that the Massachusetts Action

was “reactive,” the record simply does not support this contention. To the contrary,

Collision filed the original Massachusetts complaint on November 1, 2019, several

days before it was served with or aware of the Delaware Action.

         Here, the actions were filed within two days of each other and immediately

after the standstill agreement expired. Nokia plainly engaged in a race to the

courthouse by filing the Delaware action within minutes of withdrawing from the

mediation and the parties’ standstill agreement.               The Delaware action is an

anticipatory declaratory judgment action, while the parties naturally are aligned in

the Massachusetts action. Collision filed the Massachusetts action promptly after

the standstill agreement was lifted and before it received any notice that the

Delaware action was filed. In addition, Nokia is neither a resident of Delaware nor

incorporated here, so the Court’s traditional deference to the plaintiff’s choice of

forum is not as strong as it is in the case of a plaintiff who resides here. 35

34
     Id. at 929.
35
     Martinez v. E.I. DuPont de Nemours & Co., Inc., 86 A.3d 1102, 1108 (Del. 2014).
                                                11
Accordingly, considering the circumstances of the parties’ interactions and both

actions’ filing, the Delaware action is not entitled to McWane’s deference to first-

filed actions.

II.       The forum non conveniens factors weigh in favor of staying this action in
          favor of the Massachusetts Action.

          Having concluded the two actions were filed contemporaneously, the Court

applies the traditional forum non conveniens framework to determine whether to stay

the Delaware action. The party seeking a stay bears the burden of showing it is

entitled to that extraordinary relief. Where, as here, a stay likely will have the same

effect as a dismissal, Collision must show that one or more of the forum non

conveniens factors weigh so heavily in Collision’s favor that it will face

overwhelming hardship if the Delaware action proceeds.36 The “overwhelming

hardship” standard is “not intended to be preclusive,” but rather is a “stringent

standard that holds defendants who seek to deprive a plaintiff of her chosen forum

to an appropriately high burden.”37

          The forum non conveniens factors require the Court to weigh the following

considerations: (i) the relative ease of access to proof, (ii) the availability of

compulsory process for witnesses, (iii) the possibility of a view of the premises, (iv)

whether the controversy depends on the application of Delaware law that the

36
     See id. at 1104; Citigroup, 964 A.2d at 117 & n.16.
37
     Martinez, 86 A.3d at 1105.
                                                  12
Delaware courts properly should decide, (v) the pendency or non-pendency of a

similar action in another jurisdiction, and (vi) all other practical problems that would

make trying the case easy, expeditious, and inexpensive. 38 Collision argues the

factors weigh heavily in its favor because (i) Nokia filed the Delaware action

preemptively in anticipation of Collision filing an action, (ii) the two actions involve

the same parties and facts, (iii) none of the facts or legal issues implicate Delaware

in any way, and (iv) allowing both actions to proceed would risk inconsistent rulings.

Nokia, on the other hand, argues none of the forum non conveniens factors favor

Massachusetts, and Collision therefore cannot possibly meet the overwhelming

hardship standard.

       Two of the forum non conveniens factors have no relevance in this particular

action: the availability of compulsory process and the possibility of viewing the

premises. There are no premises relevant to the issues in this litigation, and Collision

has not identified any witnesses or third parties whose appearance this Court could

not compel.39 Additionally, the relative ease of access of proof does not favor either

party in this case. Collision argues all its documents and witnesses are located in or

near Boston, but has not identified why it would be substantially more difficult to

38
   HFTP Invs., 752 A.2d at 122-23 (citing Gen. Foods Corp. v. Cryo-Maid, Inc., 198 A.2d 681,
684 (Del. 1964)).
39
   Playtex, 1989 WL 40913, at *8 (“[I]n order to prevail on a forum non conveniens motion to
dismiss, [movant] must identify the inconvenienced witnesses and the specific substance of their
testimony.”).
                                              13
access that proof in Delaware. Without any particular explanation why accessing

proof would be more or less difficult in a particular location, the Court assumes that

“modern methods of information transfer” will permit access to documents without

substantial effort and thereby virtually negate this factor of the analysis. 40

       The other factors in the analysis, however, favor Collision, particularly the

pendency and scope of the Massachusetts action and the other practical

considerations relevant to the Court’s analysis.             First, other than Collision’s

incorporation in this state, neither the parties nor the dispute have any apparent

connection to Delaware. Collision seeks to enforce an oral agreement between the

parties. That agreement was negotiated in various locations, but never in Delaware.

Although some of the draft contracts the parties exchanged identified Delaware in a

choice of law provision, those agreements never were signed, and there does not

appear to be any issue in this case over which Delaware law presumably will govern,

let alone an issue the Delaware courts have a substantial interest in deciding.

       Second, the pending Massachusetts Action involves the same parties and facts

but is broader and involves statutory and common law claims in addition to the

contractual claims pending here. 41          Moreover, if both the Massachusetts and

Delaware actions proceed simultaneously, there is a real risk that the parties could

40
  Rapoport, 2005 WL 3277911, at *5 (alterations omitted).
41
  See Crosstex, 2013 WL 6598736, at *9 (the fact that the foreign action involved claims under a
foreign statute was relevant to the forum non conveniens analysis).
                                              14
receive inconsistent rulings, presenting an irreconcilable conflict that principles of

comity are intended to avoid. 42       Although Nokia argues forcefully that the

Massachusetts federal court lacks jurisdiction over Nokia, that issue squarely is

presented in the pending motions to dismiss in Massachusetts and is better reserved

for the Massachusetts court to decide in the first instance. If the Massachusetts court

determines it has jurisdiction, that action will move forward and will involve the

same parties and factual issues as this case, along with additional claims not pending

here. Conversely, if the Massachusetts federal court dismisses that case for lack of

personal jurisdiction, the parties easily could return to Delaware and lift the stay. On

balance, the breadth of the Massachusetts Action and the risk of inconsistent rulings

favors Collision.

      Finally, the last factor is the “other practical considerations” relevant to

promoting the efficient administration of justice. The Delaware Supreme Court

recently explained that this factor is “neither hollow in meaning nor rigid in

application.”43 The Court may weigh the efficient administration of justice and

analogous considerations and determine whether it would be “extraordinarily

expensive and cumbersome for a defendant to litigate a case in Delaware[.]”44 As

42
    See Lisa, S.A. v. Mayorga, 993 A.2d 1042, 1048 (Del. 2010); Lincoln Benefit, 2019 WL
1307870, at *3.
43
   Martinez, 86 A.3d at 1112.
44
   Id.
                                          15
the Court of Chancery found in Bay Hills, allowing two substantially overlapping

actions to proceed simultaneously would require two courts to adjudicate the same

contractual dispute, risking a significant waste of judicial resources and inconsistent

resolution of the issues. 45 Moreover, although Collision technically could litigate

this action in Delaware and compel its employees to testify here, the Court is

cognizant of Collision’s status as a small startup with limited resources. The

expenses Collision will incur attending and participating in proceedings and trial in

this state will be more substantial than those it will incur in Massachusetts. Allowing

the Massachusetts Action to move forward alone allows Collision to pursue its

claims more economically and places both the parties in their natural alignment as

plaintiff and defendant. 46 Finally, the Court is unconvinced by Nokia’s argument

that the fact that Collision is incorporated here weighs in favor of denying the

motion. As noted above, Delaware has no substantial interest in adjudicating this

action, unlike an action implicating a Delaware corporation’s internal affairs. 47

       To summarize, the factors relevant to the Court’s analysis either are neutral or

weigh in favor of granting Collision’s motion to stay this action in favor of the

Massachusetts Action. The Court finds that requiring Collision to litigate two

45
   2018 WL 3217650, at *9.
46
   See Crosstex, 2013 WL 6598736, at *10 (reasoning that the practical considerations relevant to
the Court’s inquiry include the parties natural alignment as claimant and defendant).
47
   See Rapoport, 2005 WL 3277911, at *7.
                                               16
duplicative actions simultaneously would present an overwhelming hardship, and

the Massachusetts Action should proceed because (i) it is more comprehensive and

more economical from Collision’s perspective, 48 and (ii) Massachusetts has a

stronger connection than Delaware to the facts of the case.

                                     CONCLUSION
       For the foregoing reasons, Defendant’s Motion to Stay is GRANTED. This

action shall be stayed pending resolution of the Massachusetts Action. The stay shall

be lifted upon motion or stipulation of the parties. IT IS SO ORDERED.

48
  From Nokia’s perspective, the costs of litigating in Delaware or Massachusetts should be the
same.
                                             17