WSP USA Buildings Inc. v. Coon

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF NEW YORK - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - WSP USA BUILDINGS INC., Plaintiff, -v- 1:24-CV-076 STEPHEN COON, Defendant. - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - - APPEARANCES: OF COUNSEL: Holland & Knight LLP SEAN C. SHEELY, ESQ.

Attorneys for Plaintiff West 52 Street New York, NY 10019 DAVID N. HURD United States District Judge DECISION and ORDER I. INTRODUCTION On January 17, 2024, plaintiff WSP USA Buildings Inc. (“WSP” or “plaintiff”), a national engineering firm, filed this action against one of its former employees, defendant Stephen Coon (“Mr. Coon” or “defendant”).

That same day, plaintiff filed an emergency motion seeking a temporary restraining order (“TRO”) and preliminary injunction that would prevent defendant from allegedly violating certain restrictive covenants contained in his employment agreement (“the Agreement”).1 Mr. Coon worked as a professional electrical engineer and managing principal of kW Mission Critical Engineering’s (“KW”) Phoenix, Arizona office for eight years prior to WSP’s acquisition of KW in 2020. Dkt. No. 1. When KW was acquired by plaintiff, defendant and other senior leadership signed the Agreement as part of plaintiff’s acquisition of KW and its employees. Id. Mr. Coon later resigned in late 2023. Dkt. No. 1. What began as the ordinary departure of a key employee has since turned sour. Both parties have initiated parallel lawsuits contesting the validity of the Agreement.

According to plaintiff, the Agreement—which contains both non-compete and non-solicitation language—prevents defendant from competing with plaintiff’s engineering business anywhere in the country. Dkt. No. 1-1.

But Mr. Coon acted first. On January 2, 2024, defendant filed a lawsuit in the California Superior Court in Sonoma County against WSP seeking declaratory relief. Dkt. No. 1. That case was removed by plaintiff to the Northern District of California on January 17, 2024—the same day that it sought relief in this district. See CG Enter. Holdings, LLC v. WSP USA, Inc., No. 24-CV-0292 (CRB).

Resolution of this case, however, does not require a discussion of the merits. This is because there are several procedural hurdles, discussed below, that plaintiff has not cleared which permit dismissal of this case.

II. DISCUSSION First, dismissal of WSP’s case is proper under the so-called “first-to-file” rule. Adam v. Jacobs, 950 F.2d 89, 92 (2d Cir. 1991) (quoting First City Nat’l Bank & Trust Co. v. Simmons, 878 F.2d 76, 79 (2d Cir. 1989) (“Where there are two competing lawsuits, the first suit should have priority, absent the showing of balance of convenience or special circumstances giving priority to the second.”). While ordinarily the district court hearing the original suit will enjoin the second suit, the court being posed the second lawsuit must also exercise its “judicial self-restraint” to decline to hear the second suit while the first remains pending elsewhere. Id. (citing Semmes Motors, Inc. v. Ford Motor Co., 429 F.2d 1197, 1202–03 (2d Cir. 1970)). Thus, it is not only within a district judge’s discretion, but his duty to conserve judicial resources which permits dismissing or staying the second action when an earlier, identical case remains pending elsewhere. Id. at 92.

This rule permits dismissal of WSP’s case here on account of Mr. Coon’s earlier lawsuit pending before the Northern District of California. Compl. ¶ 58; Pl.’s Mem. at 8.2 Like this lawsuit, Mr. Coon’s lawsuit also contests the enforceability of, and alleged violation of, the Agreement. Critically, as noted, defendant was the first to file. As a result, his case takes priority over this case.

There are, of course, exceptions to the first-to-file rule. Emps. Ins. of Wausau v. Fox Ent. Grp., Inc., 522 F.3d 271, 275 (2d Cir. 2008) (citations omitted) (“We have recognized only two exceptions to the first-filed rule: (1) where the “balance of convenience” favors the second-filed action . . . and (2) where “special circumstances” warrant giving priority to the second suit[.]”).

Upon review, however, neither exception applies in this case.3 Therefore, dismissal of WSP’s suit is proper to give way to Mr. Coon’s earlier action in the Northern District of California. Yet, even assuming that the first-to-file rule is somehow inapplicable, there are more procedural hurdles that remain.

Second, in addition to losing the race to the courthouse, WSP appears to have mislaid venue. Applying the federal venue statute correctly, venue Pagination corresponds to CM/ECF.

In filing this case, WSP claims that venue is proper pursuant to § 1391(b)(2) on account that “a substantial part of the events of omissions giving rise to the claims occurred within the Northern District[.]” Compl. ¶ 13. Yet, the only fact WSP has alleged that might support venue in the Northern District is that Mr. Coon solicited one of its employees who happens to work in its Troy, New York office. Compl. ¶¶ 39, 43. Plaintiff does not allege that defendant has ever traveled to, or is currently operating a competing business in this district.4 Plaintiff makes only speculative claims that that defendant plans to do so. Id. ¶ 38.

In sum, it is not clear how this dispute should or will be resolved.

However, it is clear that it must be resolved elsewhere.® Therefore, it is ORDERED that 1. Plaintiff's complaint is DISMISSED, without prejudice; and 2. Plaintiff's motion for a TRO and a preliminary injunction is DENIED without prejudice as moot.

The Clerk of the Court is directed to terminate the pending motion, enter a judgment accordingly, and close the file.

IT IS SO ORDERED.

David N Hurd U.S. Disfrict Judge Dated: January 25, 2024 Utica, New York.