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Structural Group, LLC v. Fyfe Co., LLC

United States District Court, D. Maryland

August 11, 2014

STRUCTURAL GROUP, LLC,
v.
FYFE CO., LLC.

MEMORANDUM

CATHERINE C. BLAKE, District Judge.

Plaintiff Structural Group, LLC filed this action for declaratory judgment and breach of contract against Fyfe Co., LLC in connection with a dispute between the parties about their respective rights and obligations under a Private Labeling Agreement ("PLA"). Hours after Structural filed this action, Fyfe brought a parallel action raising the same issues in the U.S. District Court for the Southern District of California ("the Fyfe California Action"). The parties also are engaged in a 2013 lawsuit in this district stemming from the departure of several Fyfe employees to join Structural ("the Fyfe Maryland Action"). The Fyfe Maryland Action includes claims against Structural for violating the PLA as well as various breach of contract and tort claims against the individual defendants.

Now pending before the court are several motions. First, Fyfe moves to dismiss this action for improper venue or, in the alternative, to transfer the lawsuit pursuant to 28 U.S.C. § 1404(a). (ECF No. 8.)[1] Second, Structural moves for summary judgment on the issue that ever since Fyfe revoked a license it had previously granted to Structural, the PLA provision requiring Structural to purchase all its FRP products from Fyfe is no longer binding. (ECF No. 19.) Third, in opposition to Structural's summary judgment motion, Fyfe moves pursuant to Fed.R.Civ.P. 56(d) to deny, defer, or continue Structural's motion for summary judgment until Fyfe has had an opportunity to conduct discovery. (ECF No. 28.)

BACKGROUND

Fyfe manufactures construction strengthening system products, including Fiber Reinforced Polymer ("FRP") systems, used for strengthening, repair, and restoration of masonry, concrete, steel, and wooden structures. Fyfe is organized under the laws of Delaware, and its headquarters is located in San Diego, California. Structural is a Maryland corporation engaged in specialty construction, repair, and maintenance services.

In November 2011, Fyfe and Structural entered into the PLA. The PLA provides in relevant part that:

Structural agrees to exclusively promote, purchase, install the Fyfe tyfo® FRP systems including all system compatible materials only as defined by the terms of this agreement and further agrees not to compete with Fyfe or purchase from other vendors without prior written authorization from Fyfe during the terms of this agreement except where Fyfe Products are specifically excluded or not approved.

(Private Label Agreement, ECF No. 12-1.) The PLA also provides that the term of the agreement is five years unless a different term is expressly noted. (Compl. ¶ 9, ECF No. 1.) The PLA separately grants Structural a license to use Fyfe products and patents to perform work on Water and Waste Water Transmission projects ("WWWT projects"). The PLA expressly notes that the term for the WWWT license is two years and that Fyfe may elect not to renew the license if it gives Structural six months' notice. (Compl. ¶ 8.)

In January 2013, Fyfe and two related companies initiated the Fyfe Maryland Action against Structural and several individual defendants. In that lawsuit, which is still pending before this court, Fyfe asserts various breach of contract and tort claims against Structural and the individual defendants arising from the individual defendants leaving their jobs at Fyfe and related companies to join Structural. One of the claims against Structural arises from the PLA's non-competition provision, which is located in the same paragraph as the exclusive dealing provision referenced above.

In March 2013, while the Fyfe Maryland Action was ongoing, Fyfe notified Structural that it intended to terminate the WWWT license effective October 1, 2013, and Fyfe purportedly terminated the license on that date. (Compl. ¶ 13.) Then in December 2013, Structural notified Fyfe that it believed it could buy its WWWT products from another source because the WWWT license had been revoked. ( Id. ) In response, Fyfe maintained that the other provisions of the PLA remained effective after it revoked the WWWT license, so Structural was contractually obligated for the full five-year term to purchase all its FRP products from Fyfe. ( Id. ) Structural disagreed, however, and proceeded to purchase the materials it needed for WWWT projects from a new supplier. (Compl. ¶ 14.)

Based on the parties' divergent understandings of their obligations under the PLA, Structural filed this action seeking a declaratory judgment or alternatively claiming that Fyfe breached its contractual obligations from the PLA. Just hours after Structural filed the complaint in this case, Fyfe filed its complaint in the Fyfe California Action in the Southern District of California.

On April 30, 2014, the district court in the Fyfe California Action granted Structural's motion to dismiss the complaint pursuant to the first-to-file rule. ( See Thomas Strong Letter to the Court (April 30, 2014), ECF No. 32.) The district court concluded that the first-to-file rule applied to both the Fyfe Maryland Action and to the instant case. The court reasoned that the rule applied to the Fyfe Maryland Action because Fyfe filed the complaint in that case one year prior to the Structural Maryland Action and the parties and issues raised in the two cases were substantially similar. As to the similarity of issues, the court emphasized that both cases required interpretation of the same provision in the PLA that contained the non-competition and exclusivity provisions. The court also held that the first-to-file rule applied to the instant action because Structural filed its complaint in this case first and because declining jurisdiction was in the interest of judicial efficiency and avoiding duplicative litigation.

DISCUSSION

I. ...


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