Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—D. N.J.: Motion to transfer granted in former franchisee’s suit against Georgia home support services provider, (May 2, 2014)

By Linda O’Brien, J.D., LL.M.

The federal district court in Trenton, New Jersey has granted a motion by a home support services franchisor seeking to transfer venue of a second suit filed by a former franchisee to a federal district court in Georgia, where an action filed by the franchisor against the former franchise was pending (Miller v. CareMinders Home Care, Inc., April 30, 2014, Pisano, J.).

CareMinders Home Care, Inc. operates as a franchisor of home care businesses that provide home support services to elderly, handicapped, convalescing, or dependent individuals in their homes, nursing homes, hospitals, and assisted care facilities. In 2009, Eric Miller, acting on behalf of Platinum Home Care owned by his spouse, Donna Miller, entered into two franchise agreements with CareMinders to operate two CareMinders businesses in New Jersey. The franchise agreements contained a forum selection clause providing that the proper venue for all lawsuits arising out of the agreements would be the Northern District of Georgia. The agreements also included an arbitration clause.

From 2009 to 2013, Platinum operated the CareMinders businesses pursuant to the franchise agreements. In 2013, Platinum ceased operating as a CareMinders franchise, and Eric Miller contacted several current CareMinders franchisees encouraging them to abandon the CareMinders system. CareMinders filed suit against Platinum and Eric Miller in Georgia, alleging breach of the franchise agreements, among other claims. Eric Miller instituted arbitration against CareMinders. The district court granted Miller’s motion to compel arbitration of the breach of contract claims and stayed the action pending arbitration in Georgia. Donna Miller filed suit against CareMinders in New Jersey, alleging misrepresentations regarding the purchase of the CareMinders franchises. CareMinders moved to transfer the action to the Northern District of Georgia.

First-filed rule. The court found that the transfer of the action was warranted. The first-filed rule is a rule of comity requiring that, in all cases of federal concurrent jurisdiction, the court that first has possession of the subject matter must decide it. Although Donna Miller was not a named party to the Georgia action, there was substantial overlap between the two actions, according to the court. CareMinder’s decision to file a lawsuit against Eric Miller and Platinum was based on the alleged breach of the franchise agreements and was filed in the forum designated by the parties in the agreements. Thus, the first-filed ruled applied and weighed in favor of transferring the later-filed action to Georgia.

Transfer. The private and public factors weighed in favor of transfer, and there were no special circumstances to justify giving priority to the later-filed action over the first-filed action in Georgia, according to the court. A court may transfer a civil action to any other district where it might have been brought for the convenience of the parties and witnesses and in the interests of justice. In the later-filed action, Donna Miller’s choice of forum was entitled to less deference, since there was a related action pending in a different forum. She made no argument that she lacked the resources to litigate her claims in Georgia. Moreover, the transfer of the case served the interests of justice because it would eliminate the possibility of inconsistent results. The transfer would promote judicial efficiency and eliminate the unnecessary expense of duplicative litigation. Thus, the court concluded that the first-filed suit should have priority, absent a showing that the balance of inconvenience favored transfer or that special circumstances justified giving priority to the second suit.

The case is No. 13-cv-5678.

Attorneys: Gerald Allen Marks (Marks & Klein, LLP) for Donna Miller. Dante C. Rohr (Marshall, Dennehey, Warner, Coleman & Goggin, PC) for CareMinders Home Care, Inc.

Companies: CareMinders Home Care, Inc.

Cases: FranchisingDistribution NewJerseyNews