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Stone Clinical Laboratories, LLC v. Agena Bioscience, Inc.

United States District Court, E.D. Louisiana

December 19, 2019

STONE CLINICAL LABORATORIES, LLC
v.
AGENA BIOSCIENCE, INC.

         SECTION: "S" (3)

          ORDER AND REASONS

          MARY ANN VIAL LEMMON, UNITED STATES DISTRICT JUDGE

         IT IS HEREBY ORDERED that defendant Agena Bioscience, Inc's ("Agena's") Motion to Dismiss, Transfer, or Stay in Deference to First-Filed Action (Rec. Doc. 9) is GRANTED, and this matter is hereby TRANSFERRED to the United States District Court for the Southern District of California;

         IT IS FURTHER ORDERED that Agena's Motion to Dismiss Claim for Lack of Personal Jurisdiction and Motion to Dismiss Pursuant to FRCP 12(b)(6) are DENIED as moot.

         BACKGROUND

         Plaintiff, Stone Clinical Laboratories ("Stone"), is a clinical reference laboratory located in Louisiana that performs diagnostic testing. Before Stone uses an instrument to conduct laboratory testing, it must validate the instrument to ensure that the instrument produces valid results. Stone purchased the Agena Mass. Array instrument to conduct laboratory testing and used reagents supplied by Agena to validate and use the instrument for patient testing. Agena is the sole source from which Stone was able to purchase the reagents needed to use the Agena Mass. Array instrument. To purchase the reagents and other testing supplies, Stone's Financial Operations Coordinator would email purchase orders that had been approved by Stone to Agena.

         Between October and December 2018, Stone employee Tiffany Burton Montgomery submitted three purchase orders to Agena, totaling over $130, 000. Stone alleges that these orders were not approved by it, and the purchase amounts were significantly higher than the prior approved purchase orders emailed by its Financial Operations Coordinator. These purchase orders included an upgrade to the Agena Mass. Array instrument, which Agena installed in Louisiana at Montgomery's request, allegedly without the knowledge or authorization of Stone. Once upgraded, the Agena Mass. Array required a new validation and verification before it could be used.

         Stone allegedly learned about Montgomery's unapproved purchases after receiving invoices from Agena for purchases that had not gone through the normal approval and order process. After receiving the invoices for the unapproved purchase orders, Stone contacted Agena and explained that the purchase orders by Montgomery were not authorized and requested to return the products ordered. Agena declined to accept the returns, instead demanding full payment from Stone, and also refused to supply Stone with new reagents for the Agena Mass. Array instrument. As a result, Stone has been unable to revalidate and re-verify that instrument to resume patient testing, and has lost revenue because it has had to retain outside vendors to perform the testing previously performed by the Agena Mass. Array instrument.

         Attempts to resolve the matter between counsel for Stone and Agena's debt collector beginning in September of 2019 were unsuccessful, and eventually, Agena's debt collector demanded immediate payment from Stone by October 2, 2019 to avoid the filing of a lawsuit. No payment having been made, on October 2, 2019, Agena filed suit in the United States District Court for the Southern District of California for breach of contract, breach of the covenant of good faith and fair dealing, and a common law count for goods sold and delivered at an agreed price. See Doc. 9-3. The next day, Stone filed the instant suit in the United States District Court for the Eastern District of Louisiana, against Agena pursuant to Louisiana Civil Code article 2315, alleging that it suffered damages based on Agena's unauthorized upgrade to the Agena Mass. Array instrument.[1] Agena has now moved to transfer, dismiss, or stay the instant suit; Stone opposes the motion.

         In its motion to transfer pursuant to the first-to-file rule, Agena argues that this suit involves the same controversy and parties as those in the California suit. In opposition, Stone contends that the first-to-file rule should not be applied because the California suit was an anticipatory lawsuit filed for purposes of improper forum-shopping.

         DISCUSSION

         In situations in which two cases have been filed involving “substantial overlap” between them, “the court in which the case was last filed may refuse to hear it.” Green Tree Servicing, 689 Fed.Appx. at 367 (quoting Int'l Fid. Ins. Co. v. Sweet Little Mex. Corp., 665 F.3d 671, 677 (5th Cir. 2011) (quoting Cadle Co. v. Whataburger of Alice, Inc., 174 F.3d 599, 603 (5th Cir. 1999)). "[T]he court in which an action is first filed is the appropriate court to determine whether subsequently filed cases involving substantially similar issues should proceed.” Save Power Limited v. Syntek Finance Corp., 121 F.3d 947 (5th Cir. 1997)(citations omitted); see also, Green Tree Servicing, L.L.C. v. Clayton, 689 Fed.Appx. 363, 367 (5th Cir. 2017). Thus, if the district court in the later filed case finds that the issues in the two cases might substantially overlap, "the proper course of action [is] for the court to transfer the case to the [first-filed] court to determine which case should, in the interests of sound judicial administration and judicial economy, proceed." Cadle, 174 F.3d at 606 (5th Cir. 1999).

         This rule is "grounded in principles of comity and sound judicial administration, ” and that “comity requires federal district courts-courts of coordinate jurisdiction and equal rank-to exercise care to avoid interference with each other's affairs.” Id. at 950. The motivation for the rule is "to avoid the waste of duplication, to avoid rulings which may trench upon the authority of sister courts, and to avoid piecemeal resolution of issues that call for a uniform result.” Id. (citing Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817-20 (1976)). In applying the first-to-file rule, the court's focus is not on whether suits are identical, but whether “they overlap on the substantive issues.” Id. (internal citations omitted).

         In the present case, a review of the complaints demonstrates that the suits not only substantially overlap, but arise out of the exact same controversy. Agena has filed suit based on Stone's failure to pay as agreed, and Stone's suit is essentially a defense to Agena's - Stone alleges that it did not pay because the purchase was unauthorized. Because of this substantial overlap, the proper course of action is to transfer this matter to the ...


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