RICHARD KYLE, District Judge
IntroductionPlaintiffs Northstar Diamond, Inc. ("Northstar") and William A. Reilly and Defendants Marc Azran and 3636011 Canada Inc., d/b/a Marc Azran Creations ("MAC"), attempted to go into the jewelry business together. After the business relationship disintegrated, Azran and MAC sued Northstar and Reilly in Canada. Thereafter, Northstar and Reilly sued Azran and MAC in this Court. Before the Court is Azran and MAC's Motion to Dismiss. For the reasons set forth below, the Court will grant the Motion and dismiss the Complaint without prejudice.
Background
Northstar, a Minnesota corporation with its principal place of business in Bloomington, Minnesota, is in the jewelry sales business. (Compl. ¶ 1.) Reilly, a Minnesota resident, is a Northstar officer. (Id. ¶ 2.) MAC, a Canadian corporation with its principal place of business in Montreal, Canada, manufactures titanium jewelry. (Azran Aff. ¶¶ 2-3.) Azran, a Quebec resident, is the sole shareholder and President of MAC. (Id. ¶¶ 1-2.)
In April 2003, Reilly traveled to Montreal to meet with Azran and discuss a possible business venture involving the sales of engraved jewelry. (See id. ¶ 4; Compl. ¶ 11.) The idea was to sell titanium rings featuring laser-inscribed logos of National Football League ("NFL") teams. (See Azran Aff. ¶¶ 4-6; Compl. ¶¶ 11-13.) Although Northstar obtained a license agreement from the NFL (Compl. ¶ 14) and MAC delivered numerous jewelry samples to Northstar (see Azran Aff. ¶¶ 9, 16), the parties disagree over whether an agreement to sell jewelry was ever reached. Northstar and Reilly contend that proposals were exchanged throughout the fall of 2003, but no agreement was finalized. (See Compl. ¶¶ 15, 16.) Azran and MAC contend that an oral agreement was reached during Reilly's Montreal visit, whereby MAC would manufacture the jewelry and Northstar and Reilly would market it, but that Reilly subsequently terminated that agreement. (See Azran Aff. ¶¶ 5-6, 19.)
In November 2003, after Northstar rejected a business proposal tendered by Azran, Azran e-mailed Northstar, stating that "[i]f you do not accept my offer or communicate with me a reasonable alternative within 24 hours, I will have no choice but to bring the current situation to the NFL . . . which will certainly jeopardize our business partnership." (Compl. ¶ 17.) Later that month, Azran's attorney wrote a letter to Northstar stating that Azran was "in no way intimidated by revealing the true state of affairs to either the NFL or Harley Davidson [another party with whom a license agreement was discussed], or even, if need be, making them `Interested Parties' in any suit instituted against yourselves. It will be my clients alone who will determine the need to advise the said parties and will do so if they decide that it would be in their benefit to do so." (Id. ¶ 18.)
In May 2004, Azran and MAC sued Northstar and Reilly in Montreal for breach of contract ("the Montreal Action"). (See id. ¶ 19; Azran Aff. ¶ 22, Ex. A.) They also named NFL Properties, Inc. as a party "in order to take cognizance of the present matter and to act accordingly." (Azran Aff. Ex. A ¶ 89; see Compl. ¶ 20.) In their "Motion Introductive of Action In Damages," which is akin to a complaint, Azran and MAC allege, among other things, that:
At oral argument, the parties informed the Court that NFL Properties, Inc. is no longer a party to the Montreal Action.
6. . . . [O]n April 30th, 2003, Defendant Reilly came to Montreal and visited and met Plaintiff Azran and, after various discussions, a verbal agreement upon which both parties shook hands, was arrived at whereby the parties would enter into a joint new business partnership by: —
a) Creating a new corporation of which [Azran and MAC] and [Northstar and Reilly] would each be fifty percent (50%) owners, with equal say and responsibility in the said new corporation;
b) [Northstar and Reilly] was, on behalf of the said corporation, to pursue the National Football League . . . in order to obtain a license from it for the sale of titanium rings bearing the trademark protected logos of its various teams;
c) [Azran and MAC] would produce sample rings to enable the obtaining of the said license for the new corporation;
d) Once such license was obtained, [Azran and MAC] would be responsible for the manufacturing of the rings or any other titanium merchandize [sic] bearing the NFL logo to be sold by the new corporation, while the selling thereof was [Northstar and Reilly's] responsibility.
(Azran Aff. Ex. A ¶ 6.) In sum, Azran and MAC assert that they had an agreement with Northstar and Reilly to form a new corporation to obtain a license agreement from the NFL and to sell titanium rings bearing NFL logos.
In response, Northstar and Reilly filed a "Plea," which is akin to an answer. (See Wolofsky 11/3/04 Aff. ¶¶ 2, 5, Ex. A.) Although their "Plea" does not assert any "cross-demands," which are akin to counterclaims, it does assert that "when Northstar's Reilly was in Montreal, May 1, 2003, there was no agreement as to any Company and business to be formed and operated by it, there was no agreement as to the organisation of any Company, there was no agreement as to the contributions by each alleged Shareholder and the actual activities of any company . . . was unknown and undecided. . . ." (Id. Ex. A ¶ 6.26.)
In July 2004, two months after the Montreal Action was initiated, Northstar and Reilly sued Azran and MAC in this Court ("the Minnesota Action"). They assert claims of tortious interference with contract (Count I), tortious interference with business expectancy (Count II), and coercion and duress (Count III), and make the following allegations:
12. . . . Northstar independently approached the National Football League ("NFL") and its entity NFL Properties, Inc., about obtaining a license to manufacture and sell titanium jewelry inscribed with the marks and logos of the NFL and its teams. . . .
14. Shortly thereafter, Northstar obtained its license agreement with the NFL. . . .
22. Azran named NFL Properties, Inc. as a party to the Montreal Action, and divulged information in that pleading that is harmful to Northstar's relationship with NFL Properties, Inc., with the intent to harm Northstar's relationship with NFL Properties, Inc. — the same intent Azran and his attorney had stated and threatened previously — and without justification. . . .
24. Azran's actions have harmed, and/or will harm, Northstar's business relationship with NFL Properties, Inc.
25. Azran's actions have harmed, and/or will harm, Northstar's contractual relationship with NFL Properties, Inc.
26. Azran's actions have harmed, and/or will harm, Northstar's ability to obtain an extension or renewal of its license agreement with NFL Properties, Inc.
(Compl. ¶¶ 12, 14, 22-26.)
Azran and MAC then filed the instant Motion to Dismiss on the grounds of (1) lack of personal jurisdiction, (2) international comity, and (3) forum non conveniens.
AnalysisAzran and MAC argue that this case must be dismissed under the doctrine of international comity in deference to the previously commenced Montreal Action. (Defs.' Mem. in Supp. at 9-15.) International comity is "`the recognition which one nation allows within its territory to the legislative, executive or judicial acts of another nation, having due regard both to international duty and convenience, and to the rights of its own citizens or of other persons who are under the protection of its laws.'" Finanz AG Zurich v. Banco Economico S.A., 192 F.3d 240, 246 (2d Cir. 1999) (quoting Hilton v. Guyot, 159 U.S. 113, 164 (1895)). Under this principle, "United States courts ordinarily . . . defer to proceedings taking place in foreign countries . . . so long as the foreign court had proper jurisdiction and enforcement does not prejudice the rights of United States citizens or violate domestic public policy." Id. (citations and internal quotations omitted). "Although Courts in this country have long recognized the principles of international comity and have advocated them in order to promote cooperation and reciprocity with foreign lands, comity remains a rule of practice, convenience, and expediency rather than of law." Pravin Banker Assocs., Ltd. v. Banco Popular Del Peru, 109 F.3d 850, 854 (2d Cir. 1997) (citation and internal quotations omitted).
"A court has inherent power to dismiss or stay an action based on the pendency of a related proceeding in a foreign jurisdiction." MLC (Bermuda) Ltd. v. Credit Suisse First Boston Corp., 46 F. Supp. 2d 249, 251 (S.D.N.Y. 1999) (citations and internal quotations omitted). In determining whether to grant a dismissal in deference to a pending foreign action, a court considers the similarity of parties and issues, the adequacy of the alternative forum, the convenience of the parties, the promotion of judicial efficiency, the possibility of prejudice, and the temporal sequence of filing. See id. (dismissing New York action in favor of previously commenced English litigation); Caspian Inv., Ltd. v. Vicom Holdings, Ltd., 770 F. Supp. 880, 884 (S.D.N.Y. 1991) (dismissing New York action in favor of previously commenced Irish litigation); Continental Tire Corp. v. Swiss Credit Bank, 543 F. Supp. 408, 410 (S.D.N.Y. 1982) (dismissing New York action in favor of previously commenced Swiss litigation); see also Boushel v. Toro Co., 985 F.2d 406, 410 n. 2 (8th Cir. 1993) (considering similar factors enumerated by Southern District of New York cases and stating that, had it reached the issue, a stay in favor of a previously commenced Canadian litigation was not error or an abuse of discretion). Applying the above factors to the instant case, the Court concludes that dismissal of the Minnesota Action in deference to the Montreal Action is warranted. A. Similarity of Parties and Issues
This is the only factor that Northstar and Reilly appear to contest. (See Pls.' Mem. in Opp'n at 9-11.)
The parties in the two cases are identical and while at first blush it may not appear that the issues overlap, as the Minnesota Action involves tortious interference and the Montreal Action involves breach of contract, close consideration of the allegations made in each case reveals substantial similarity. At the center of the Minnesota Action is whether, in naming NFL Properties, Inc. as a party in the Montreal Action, Azran and MAC tortiously interfered with Northstar's license agreement with the NFL and its expectation that the agreement would be extended. (See Compl. ¶¶ 22, 24-36.) At the center of the Montreal Action is whether the parties agreed to form a corporation to obtain the NFL license agreement. (See Azran Aff. Ex. A. ¶ 6.) This central issue in the Montreal Action — the presence or absence of an agreement between the parties — necessarily overlaps with the central issue in the Minnesota Action.
The first area of overlap concerns whether Azran and MAC's alleged tortious interference in naming NFL Properties Inc. as a party in the Montreal Action was justified. See Kjesbo v. Ricks, 517 N.W.2d 585, 588 (Minn. 1994) (identifying lack of justification as one element of tortious interference with contract); Harbor Broad., Inc. v. Boundary Waters Broadcasters, Inc., 636 N.W.2d 560, 569 (Minn.Ct.App. 2001) (identifying lack of justification as one element of tortious interference with business expectancy). One basis for justification is the assertion of a legally protected interest, asserted in good faith, through proper means. See Guerdon Indus., Inc. v. Rose, 399 N.W.2d 186, 188 (Minn.Ct.App. 1987); Restatement (Second) of Torts § 773 cmt. a. "There is no wrongful interference with a contract where one asserts `in good faith a legally protected interest of his own.'" Kjesbo, 517 N.W.2d at 588 (quoting Restatement (Second) of Torts § 773). Thus, determinations made in the Montreal Action as to whether the parties agreed to form a corporation to obtain the NFL license and whether Azran and MAC have a contractual interest in the license Northstar obtained will impact the determination made in the Minnesota Action as to whether Azran and MAC's naming of NFL Properties, Inc. as a party in the Montreal Action was justified as the assertion of a legally protected interest, in good faith, through proper means.
There is some question as to whether tortious interference with business expectancy is a valid tort claim under Minnesota law. See Harbor Broad., 636 N.W.2d at 569 n. 4. This is not a question that the Court must answer.
Restatement (Second) of Torts § 773 provides:
One who, by asserting in good faith a legally protected interest of his own or threatening in good faith to protect the interest by appropriate means, intentionally causes a third person not to perform an existing contract or enter into a prospective contractual relation with another does not interfere improperly with the other's relation if the actor believes that his interest may otherwise be impaired or destroyed by the performance of the contract or transaction.
The second, and related, area of overlap is whether Azran and MAC tortiously interfered with their own contract. "The general rule is that a party cannot [tortiously] interfere with its own contract." Nordling v. Northern States Power Co., 478 N.W.2d 498, 505 (Minn. 1991) (citation omitted). Thus, the determination made in the Montreal Action as to whether Azran and MAC have a contractual interest in the NFL license agreement Northstar obtained will impact the determination made in the Minnesota Action as to whether Azran and MAC could be liable for interfering with that agreement.
There is no merit in Northstar and Reilly's argument that each action involves separate issues resulting from separate facts. (Pls.' Mem. in Supp. at 10.) In their view, "[t]he pertinent facts of the Montreal Action concern the meetings in Montreal, the preliminary contract discussions, and their subsequent breakdown," while the pertinent facts of the Minnesota Action "do not involve Northstar and Azran's business relationship, but rather the events occurring immediately thereafter which include Azran filing its Complaint which wrongfully included NFL Properties, Inc. . . ." (Id. at 10-11.) Such a myopic view of the facts, however, ignores the factual interrelatedness of the two actions. As explained above, Northstar and Azran's business relationship, especially any agreement they had regarding the formation of a corporation to obtain the NFL license agreement, is pertinent to the Minnesota Action. It is critical in determining whether Azran and MAC are justified in naming NFL Properties, Inc. as a party in the Montreal Action and in determining whether Azran and MAC have any contractual interest in the NFL license agreement with which they purportedly interfere. As such, both the Canadian court and this Court will be asked to discern the legal consequences of the same facts.
Even if the issues did not overlap, "claims need not be identical in order for one action to be stayed or dismissed in deference to an earlier action." Caspian, 770 F. Supp. at 884 (citing cases); see MLC (Bermuda) Ltd., 46 F. Supp. 2d at 252-53.
In sum, a careful examination of the issues raised in both cases reveals substantial similarity and overlap. Determinations made in the Montreal Action will have an impact on the outcome of the Minnesota Action and vice versa. Moreover, while Northstar and Reilly do not explicitly assert tortious interference claims against Azran and MAC in the Montreal Action, it is undisputed that claims similar to those alleged in the Minnesota Action could be raised in Canada under Canadian law. (See Wolofsky 9/3/04 Aff. ¶¶ 8, 11, 12; Wolofsky 11/3/04 Aff. ¶¶ 2, 5-8.)
Northstar and Reilly contend that international comity "applies only where two cases involve the same parties, same issues, same subject matter, and the same rights." (Pl.'s Mem. in Opp'n at 10.) They rely on Gavel v. Little Six, Inc., in which the Minnesota Supreme Court observed that "comity between courts will resolve instances `[w]here two actions between the same parties, on the same subject, and to test the same rights, are brought in different courts having concurrent jurisdiction. . . .'" 555 N.W.2d 284, 290 (Minn. 1996) (quotingState ex rel. Minnesota Nat'l Bank of Duluth v. District Court, 262 N.W. 155, 157 (Minn. 1935)). Their reliance on Gavel is misplaced. First, neither Gavel nor Minnesota Nat'l Bank dealt with the unique issues of international comity. Rather, Gavel dealt with comity between state and tribal courts, whileMinnesota Nat'l Bank dealt with comity between state trial courts. See Gavel, 555 N.W.2d at 288, 290; Minnesota Nat. Bank, 262 N.W. at 157. Second, even if Gavel controlled, the Minnesota and Montreal Actions involve the same parties and, in part, involve the same subject to test the same rights (i.e., whether Azran and MAC have a contractual interest in the NFL license agreement).
B. Adequacy of the Alternative Forum
A forum will be considered adequate if "`(1) the defendants are subject to service of process there; and (2) the forum permits litigation of the subject matter of the dispute.'" MLC (Bermuda) Ltd., 46 F. Supp. 2d at 253 (quoting Capital Currency Exchange, N.V. v. Nat'l Westminster Bank PLC, 155 F.3d 603, 609 (2d Cir. 1998)). Given that Azran and MAC are parties to the Montreal Action and have consented to jurisdiction in the Canadian court, the first requirement is satisfied. As to the second requirement, the question of whether the parties agreed to form a corporation to obtain an NFL license agreement is in front of the Canadian court and claims similar to tortious interference may be asserted there as "cross-demands." (See Wolofsky 9/3/04 Aff. ¶¶ 8, 11, 12; Wolofsky 11/3/04 Aff. ¶¶ 2, 5-8.) Given the common law lineage this country shares with Canada, see Theunissen v. Matthews, 935 F.2d 1454, 1462 (6th Cir. 1991); Clarkson Co. v. Shaheen, 544 F.2d 624, 630 (2d Cir. 1976), "if this court cannot extend comity to Canada, the comity principle has little vitality in our jurisprudence," EFCO Corp. v. Aluma Sys., USA, Inc., 983 F. Supp. 816, 824 (S.D. Iowa 1997) (citations and internal quotations omitted). Thus, the Canadian court is clearly an adequate forum to resolve Northstar and Reilly's claims.
C. Convenience
Because Northstar and Reilly's tortious interference claims are based upon the naming of NFL Properties Inc. as a party in the Montreal Action, a preponderance of the key documents and witnesses regarding those claims are in Montreal. See MLC (Bermuda) Ltd., 46 F. Supp. 2d at 253. Moreover, because the Montreal Action will proceed regardless of the outcome of this case, the balance tips in favor of the Montreal Action due to the inconvenience and expense of litigating two actions involving overlapping subject matter in different forums. See id. Thus, Montreal is the most convenient forum.
D. Judicial Efficiency
"Maintaining two concurrent and simultaneous proceedings . . . consume[s] a great amount of judicial, administrative, and party resources for only speculative gain," EFCO Corp., 983 F. Supp. at 824, and "simultaneous adjudications regarding identical facts and highly similar legal issues creates the risk of inconsistent judgments," Nat'l Union Fire Ins. Co. v. Kozeny, 115 F. Supp. 2d 1243, 1247-48 (D. Colo. 2000). Thus, "[w]here a single court is capable of fairly and competently adjudicating an entire controversy, there is little reason to divide the task between two courts." MLC (Bermuda) Ltd., 46 F. Supp. 2d at 254. These observations have special resonance in this case: the sole basis for the Minnesota Action is the existence of the Montreal Action, it consumes a great deal of resources to maintain the two actions, there is a risk that simultaneous adjudications of whether the parties agreed to form a corporation to obtain an NFL license agreement may lead to inconsistent judgments, and there is little reason to divide this task between Montreal and Minnesota when the Canadian court is capable of adjudicating the entire controversy. Thus, dismissal of this action will promote judicial efficiency.
E. Possibility of Prejudice
There is nothing to indicate that Northstar and Reilly will be prejudiced by the dismissal of this action.
F. Temporal Sequence of Filing
The Montreal Action was filed two months before the Minnesota Action. "When as in this case the foreign action is pending rather than decided, comity counsels that priority generally goes to the suit first filed." Ronar, Inc. v. Wallace, 649 F. Supp. 310, 318 (S.D.N.Y. 1986) (citations omitted); see Caspian, 770 F. Supp. at 884 ("Under the principles of comity, priority is generally given to the suit first filed." (citation omitted)).
G. Summary
Under the principles of international comity, which promote cooperation and reciprocity with foreign courts and embody a rule of convenience and expediency, the Minnesota Action will be dismissed. The Court recognizes that federal courts have traditionally been reluctant to decline jurisdiction in view of the "virtually unflagging obligation of the federal courts to exercise the jurisdiction given to them." Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976) (citations omitted). This obligation, however, is not absolute.See EFCO Corp., 983 F. Supp. at 824; Caspian, 770 F. Supp. at 884. As the Southern District of New York has observed, "While Colorado River and its progeny may be instructive in the present context, the considerations involved in deferring to state court proceedings [as was the issue in Colorado River] are different from those involved in deferring to foreign proceedings, where concerns of international comity arise and issues of federalism and federal supremacy are not in play." Evergreen Marine Corp. v. Welgrow Int'l Inc., 954 F. Supp. 101, 104 n. 1 (S.D.N.Y. 1997); see EFCO Corp., 983 F. Supp. at 824 n. 5.
Because dismissal is warranted under the doctrine of international comity, the Court does not reach Azran and MAC's other asserted grounds for dismissal.
ConclusionBased on the foregoing, and all of the files, records, and proceedings herein, IT IS ORDERED that Marc Azran and MAC's Motion to Dismiss (Doc. No. 3) is GRANTED. Northstar Diamond, Inc. and William A. Reilly's Complaint (Doc. No. 1) is DISMISSED WITHOUT PREJUDICE.
LET JUDGMENT BE ENTERED ACCORDINGLY.
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