Cisco, CDW Seek 5th Circuit Mandamus Relief Under First-to-File Rule

Cisco and CDW seek reversal of a district court’s denial of a motion to transfer under the first-to-file rule when a party “asserts claims in a second federal court, having previously asserted the claims in a first federal court where litigation between the parties remains pending.” So said their petition for mandamus relief Tuesday (docket 23-40257) at the 5th U.S. Circuit Court of Appeals.

Cisco sued Dexon, a reseller of computer networking equipment, in the Northern District of California based on Dexon’s alleged sales of counterfeit Cisco equipment, said the petition. Dexon countersued, alleging Cisco wields monopoly power in the market for networking equipment, and that it recruited reseller CDW to help promote its anticompetitive conduct, it said. The California court dismissed Dexon’s counterclaims with leave to amend, it said. But rather than reassert those counterclaims in California, and while the California litigation remained pending, Dexon refiled the claims against Cisco and CDW in the Eastern District of Texas, it said.

Cisco, joined by CDW, moved to transfer the case to the Northern District of California under the first-to-file rule, but the district court denied Cisco’s motion, said the petition. In denying Cisco’s motion to transfer, the Eastern District of Texas “misunderstood both the plain language” of the 5th Circuit’s precedents and the principles of comity and sound judicial administration on which the first-to-file rule rests, it said.

Though the 5th Circuit said the first-to-file rule applies when related cases are pending before two federal courts, the district court said the rule applies only if the specific claim asserted in the second-filed case is pending in the first-filed case, “even if (as here) the only reason the specific claim is no longer pending is that the court in the first-filed case dismissed it,” said the petition. That limitation finds “no support” in 5th Circuit case law, it said.

The district court’s denial “also implicates the precise comity and judicial- administration concerns that animate the first-to-file rule,” said the petition. Allowing Dexon’s lawsuit to proceed in Texas encroaches on the authority of the federal court in California, “which had ruled that Dexon would not be permitted to pursue further amendments of its counterclaims,” it said. By endorsing the “legal sufficiency” of the same allegations that the federal court in California dismissed, the Texas court functioned as a super appellate court, creating the very type of conflict and inconsistency that the first-to-file rule is designed to prevent, it said.

Despite the “high bar” for mandamus, that relief is “warranted here,” said the petition. The 5th Circuit “has often granted mandamus to reverse orders denying transfer, precisely because later review is unlikely to provide a remedy,” it said. “This issue is important not only for the parties but also for the judicial system itself,” it said. If permitted to proceed in Texas, Dexon “has drafted a roadmap for evasion of unfavorable rulings, inviting forum-shopping, ensuring inefficiency, and undermining the authority of the federal courts,” it said.