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| Avoid a Surprise Attack in an Inconvenient Venue A typical preliminary step in resolving disputes between parties is for an aggrieved party to send a "notice of suit" letter to an offending party saying that if it does not pay its debts, the aggrieved party will commence suit against the offender. Such letters, however, may result in an unforeseen and unwanted outcome for the aggrieved party because, as a consequence of receiving such letters, an offending party may commence litigation against the aggrieved party in the offending party's home state, and, thereby, force the party who was aggrieved to litigate in a venue that is inconvenient to it. This surprise attack can be particularly costly if the two parties are geographically distant Æ for example, if a New York company is aggrieved by a Hawaiian company, and is forced to litigate in Hawaii. An aggrieved party cannot avoid this tactic by merely commencing subsequent litigation in a more favorable venue, because the traditional "first-filed rule" provides that "the party who commenced the first suit should generally be the party to attain its choice of venue." In effect, this "first-filed rule" can lead to the perverse result of an offending party being permitted to compel an aggrieved party to litigate a dispute in the offending party's home state, when the offender was only made aware of the dispute as a result of the aggrieved party's "notice of suit" letter. There is an exception, however, to the "first-filed rule" when the first-filed action is determined to be "anticipatory", or filed in anticipation of another lawsuit. In such cases, the "anticipatory" actions have been dismissed, and the aggrieved party is able to litigate in a venue convenient to it. The key question, therefore, is: how does a court decide whether or not an action is "anticipatory"? The mere sending of a "notice of suit" letter (or for that matter, a merely verbal "notice of suit") has been found to be insufficient for courts to deem an action by the recipient of such a notice to be "anticipatory." In a recent California federal court decision, for example, the court found that an action would be considered "anticipatory" only if it were in response to a "notice of suit" letter that contained "specific, concrete indications that a suit by defendant is imminent." In that case, though the "notice of suit" letter sent by the aggrieved party was found to have given "specific, concrete indications of a legal dispute", because it did not indicate that suit was "imminent", the court found the action by the recipient of the "notice of suit" letter to not be anticipatory. The court, thus, followed the "first-filed rule". Consequently, the Maryland party in that case that sent the "notice of suit" letter was forced to litigate in the recipient's home state of California. Therefore, to avoid the "anticipatory" surprise attack, an aggrieved party must be cautious about the method by which it notifies an offending party of potential litigation, if it notifies it at all. Based on court decisions, notification to an offending party will protect the aggrieved party from an anticipatory action if it is written and contains a specific, concrete indication that a suit is imminent, such as notice of a definite filing date and a specific forum for the commencing of suit. A written notice with these contents should be adequate to allow the aggrieved party to get relief from a surprise anticipatory action in an inconvenient venue by having the case moved to a more convenient and hopefully, hospitable location. © 2001 Davis & Gilbert LLP |
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