Plaintiff is a distributor of industrial safety products and operates a chain of retail outlets under the “Safety Zone” brand. Defendants are various Ohio corporations that manufacture, distribute, and operate retail stores under the “Lehigh Outfitters” brand. After various acquisitions, plaintiff became the successor in interest or assignee of an exclusive distribution agreement of Georgia Boot and Dickies products in Puerto Rico.
Defendants’ sales of products within the exclusive territory of Puerto Rico provoked a Puerto Rico distributor to file an action in federal court in Puerto Rico for impairment and termination damages under Law 75 and a claim for abuse of process under the Civil Code. New York Wiping and Industrial Product Company v. Rocky Brands, Inc., 2009 WL 2843336 (D.P.R. Aug. 31, 2009)(JAF).
One day later, defendants aggressively countered plaintiff’s lawsuit with a notice of termination of the agreement and a few days later with an action for trademark infringement and unfair business practices filed in Ohio state court and since removed to Ohio federal court.
In the Puerto Rico action, defendants moved for dismissal or transfer, and the court denied the motion. “Where the parties have filed two actions in separate districts, however, and the actions are nearly identical, the first-filed action is generally preferred in a choice of venue decision." The court noted an exception to the first-filed rule in special circumstances when one party misleads the other not to file suit in anticipation of negotiation, an exception which defendants relied upon. The court, however, found no basis to apply the rule or the exception as the two cases were not identical. Thus, defendants were unable to rebut the strong presumption under federal law favoring plaintiff’s choice of forum in Puerto Rico, noting that “[d]efendants' ownership and operation of retail businesses within Puerto Rico precludes the possibility of inconvenience in litigating here.” On another note, the court dismissed sua sponte and with prejudice plaintiff’s abuse of process claim presumably from the litigation in Ohio as unripe and conjectural.