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Collier v. Medcare Investment Corporation

United States District Court, M.D. Tennessee, Nashville Division

May 24, 2018

COLLENE COLLIER, KAREN GROCE and BARRY KUSNICK, on behalf of themselves and all others similarly situated, Plaintiffs,
v.
MEDCARE INVESTMENT CORPORATION d/b/a MEDCARE INVESTMENT FUNDS, CARDIOVASCULAR CARE GROUP, INC., and CCG OF LOUISIANA, LLC, Defendants.

          MEMORANDUM

          ALETA A. TRAUGER, UNITED STATES DISTRICT JUDGE.

         Before the court is the Motion to Transfer Venue and Request for Expedited Relief (Doc. No. 20), filed by defendants MedCare Investment Corporation d/b/a MedCare Investment Funds (“MedCare”), Cardiovascular Care Group, Inc. (“CCG, Inc.”), and CCG of Louisiana, LLC (“CCG, LLC”) (together with CCG, Inc., “CCG”), seeking transfer of this action to the United States District Court for the Eastern District of Louisiana, to be referred to the United States Bankruptcy Court for the Eastern District of Louisiana under 28 U.S.C. § 1404(a) and, alternatively, under the judicially created “first to file” doctrine. The plaintiffs have filed their Opposition to the motion. (Doc. No. 26.) With the court's permission, both a Reply (Doc. No. 29) and Sur-reply (Doc. No. 36) have also been filed.

         For the reasons set forth below, the court will transfer this matter based on the first-to-file rule, without reaching the question of whether transfer under § 1404 is warranted. The request for expedited consideration will be denied as moot.

         I. BACKGROUND

         Plaintiffs Collene Collier, Karen Groce, and Barry Kusnick, represented by local counsel and by attorneys Jack Raisner and René S. Roupinian of the New York firm of Outten & Golden LLP (“Outten & Golden”), filed their Class Action Complaint in this court on April 2, 2018, asserting claims for relief under the Worker Adjustment and Retraining Notification (“WARN”) Act, 29 U.S.C. § 2101 et seq., against MedCare and CCG, the parent entities of the Louisiana Medical Center and Heart Hospital, LLC, a/k/a Louisiana Heart Hospital, LLC (“LHH”) and LMCHH PCP, LLC (“LMCHH”) (together with LHH, the “hospital”) that formerly employed the plaintiffs in Lacombe, Louisiana. The plaintiffs allege that MedCare and CCG, Inc. maintain a place of business in Nashville, Tennessee and that CCG, LLC “was a shell company of [CCG, Inc.] created by MedCare to acquire and hold” the hospital. (Am. Class Action Compl., Doc. No. 25 ¶ 14.) The plaintiffs assert that venue in this jurisdiction is appropriate under the WARN Act's venue provision, 29 U.S.C. § 2104(a)(5).

         As relevant here, the WARN Act forbids an employer of 100 or more full-time employees to “order a plant closing or mass layoff until the end of a 60-day period after the employer serves written notice of such an order.” 29 U.S.C. § 2102(a). The plaintiffs allege that the defendants in this action, as parent employers, qualify as their “employer” under the WARN Act, that the defendants made the decision to close the hospital and put it into Chapter 11 bankruptcy, and that the decision to close the hospital resulted in the termination of the plaintiffs' employment, as well as the termination of their health insurance and other benefits, without the sixty days' advance notice required by the WARN Act. The vast majority of the factual allegations in the Amended Class Action Complaint concern the question of whether the defendants qualify as the plaintiffs' “employer.”

         The plaintiffs seek class certification and a judgment in favor of each affected employee against the defendants equal to the sum of their unpaid wages, accrued holiday and vacation pay, health and life insurance, pension and 401(k) contributions and other ERISA benefits for the sixty days that would have been covered if they had received adequate notice of the closure of the hospital, in addition to the cost of any medical expenses incurred following the loss of employment that took place within the sixty-day notice period.

         The defendants filed their Motion to Transfer on April 12, 2018, arguing that this case should be transferred to the United States District Court for the Eastern District of Louisiana under 28 U.S.C. § 1404(a), “[f]or the convenience of parties and witnesses, in the interest of justice.” In the alternative, the defendants argue that the case should be transferred under the first-to-file doctrine, which provides that, “when actions involving nearly identical parties and issues have been filed in two different district courts, the court in which the first suit was filed should generally proceed to judgment.” Baatz v. Columbia Gas Transmission, LLC, 814 F.3d 785, 789 (6th Cir. 2016). They accuse the plaintiffs of “blatant . . . forum shopping” and intentionally failing to apprise the court of the existence of parallel proceedings in the Eastern District of Louisiana or of the fact that all but 100 former hospital employees previously opted into a settlement (“Employee Settlement”) in the those proceedings, the terms of which also disposed of all claims against the defendants named in this action. (Doc. No. 21, at 18.)

         Just before filing their Opposition to the Motion to Transfer, the plaintiffs filed their Amended Class Action Complaint, in which they expressly acknowledge that the Bankruptcy Court for the Eastern District of Louisiana had entered an order approving a Chapter 11 Plan providing for a settlement amount to be distributed to approximately 600 former hospital employees “in return for the release of all of their claims, including their WARN Act claims against” the defendants in this action. (Doc. No. 25 ¶ 70.) They clarify, however, that 103 individuals, including the plaintiffs, opted out of the Employee Settlement and that the named plaintiffs now bring their claims in this court on their own behalf and on behalf of the other 100 “similarly situated, non-settling employees.” (Id.)

         In their Opposition, the plaintiffs vigorously dispute that the § 1404(a) factors weigh in favor of transfer and further argue that application of the first-to-file doctrine in this case would be inequitable. In the Reply and Sur-reply, the parties return to these themes. The defendants also argue that, in filing this lawsuit, the plaintiffs deliberately ignored the intervention deadline established in the Louisiana lawsuit and that they have misstated the record in the Louisiana lawsuit. In their Sur-reply, the plaintiffs object that the defendants mischaracterize the record and have introduced evidence that was not incorporated into their original motion documents.

         II. DISCUSSION

         A. The First-to-File Rule

         A motion to transfer venue under the first-to-file doctrine is distinct from a motion to transfer under 28 U.S.C. § 1404(a). The Sixth Circuit has recognized the “first-to-file rule” as a “well-established doctrine that encourages comity among federal courts of equal rank.” Zide Sport Shop of Ohio, Inc. v. Ed Tobergte Assocs., 16 Fed.Appx. 433, 437 (6th Cir. 2001). “The rule provides that when actions involving nearly identical parties and issues have been filed in two different district courts, the court in which the first suit was filed should generally proceed to judgment.” Baatz, 814 F.3d at 789 (internal quotation marks and citation omitted).

         The rule is not strict, AmSouth Bank v. Dale, 386 F.3d 763, 791 n.8 (6th Cir. 2004), and it is within the discretion of the district court to decline to enforce it “where equity so demands, ” such as when the record contains evidence of forum shopping, bad faith, or inequitable conduct. Zide Sport Shop, 16 Fed.Appx. at 437. When the first-to-file rule is properly raised, a district court presiding over the second-filed case has many options for proceeding, including dismissing the case without prejudice, staying the suit before it, allowing both suits to proceed, or, in some cases, enjoining the parties from proceeding in the other suit. Baatz, 814 F.3d at 793.

         The rule is “a prudential doctrine that grows out of the need to manage overlapping litigation across multiple districts.” Baatz, 814 F.3d at 789; see Colo. River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976) (“As between federal district courts, . . . the general principle is to avoid duplicative litigation.”). This rule “encourages comity among federal courts of equal rank.” Zide Sport Shop, 16 Fed.Appx. at 437; West Gulf Maritime Ass'n v. ILA Deep Sea Local 24, 751 F.2d 721, 728-29 (5th Cir.1985). It also conserves judicial resources by minimizing duplicative or piecemeal litigation and protects the parties and the courts from the possibility of conflicting results. Baatz, 814 F.3d at 789. An action is considered duplicative under this doctrine when the “determination in one action leaves little or nothing to be determined in the other.” Smith v. SEC, 129 F.3d 356, 361 (6th Cir. 1997) (internal citations omitted). A court ruling on a motion to transfer under the first-to-file doctrine can consider convenience in its decision, but it should focus its analysis on comity and economy between courts with cases that have substantially similar issues. NCR Corp. v. First Fin. Computer Servs., Inc., 492 F.Supp.2d 864, 868 (S.D. Ohio 2007).

         The Sixth Circuit has recognized a “paucity of Sixth Circuit case law explaining how to apply the first-to-file rule, ” but that “courts generally evaluate three factors: (1) the chronology of events, (2) the similarity of the parties involved, and (3) the similarity of the issues or claims at stake.” Baatz, 814 F.3d at 789 (citing Alltrade, Inc. v. Uniweld Prods., Inc., 946 F.2d 622, 625 (9th Cir. 1991)). If these factors support application of the rule, the court must also evaluate whether equitable considerations, “such as evidence of inequitable conduct, bad faith, anticipatory suits, [or] forum shopping, merit not applying the first-to-file rule in a particular case. Id. (internal quotation marks and citation omitted).

         B. Chronology of Events

         The Sixth Circuit has instructed that “[t]he dates to compare for chronology purposes of the first-to-file rule are when the relevant complaints are filed.” Id. at 790. There is no dispute that the first-filed lawsuit in Louisiana, as discussed below, predates the filing of the original Class Action Complaint in this court by more than a year. This factor obviously favors transfer, assuming the other factors are met. However, because the chronology of the events in Louisiana also sheds light on the other relevant factors, some detail regarding those proceedings is warranted.

         On January 30, 2017, the two entities that make up the hospital, LMCHH and LHH (“Debtors”) commenced voluntary cases for relief under Chapter 11 of the United States Bankruptcy Code in the United States Bankruptcy Court for the District of Delaware. These cases were consolidated for joint administration on February 3, 2017 and transferred to the United States Bankruptcy Court for the Eastern District of Louisiana (“Bankruptcy Court”) on February 14, 2017. See In re LMCHH PCP, LLC / In re Louisiana Med. Ctr. & Heart Hosp., LLC (“Bankruptcy ...


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