United States District Court, E.D. Texas, Texarkana Division
TRAVELPASS GROUP LLC, PARTNER FUSION INC, RESERVATION COUNTER LLC, Plaintiffs,
CAESARS ENTERTAINMENT CORPORATION, CHOICE HOTELS INTERNATIONAL INC, HILTON DOMESTIC OPERATING COMPANY INC., MARRIOTT INTERNATIONAL INC, RED ROOF INNS INC, SIX CONTINENTS HOTELS INC, WYNDHAM HOTEL GROUP LLC, HYATT CORPORATION, Defendants.
W. SCHROEDER III UNITED STATES DISTRICT JUDGE
above-entitled and numbered civil action was heretofore
referred to United States Magistrate Judge Caroline M. Craven
pursuant to 28 U.S.C. § 636. On May 9, 2019, the
Magistrate Judge issued a Report and Recommendation (Docket
No. 130) (“R&R”), recommending
Defendants’ Motion to Transfer Venue (Docket No. 50) be
denied. Defendants Caesars Entertainment Corporation, Choice
Hotels International, Inc., Hilton Domestic Operating
Company, Inc., Hyatt Corporation, Marriott International,
Inc., Red Roof Inns, Inc., Six Continents Hotels, Inc. and
Wyndham Hotel Group, LLC. (collectively,
“Defendants”) filed objections to the Report and
Recommendation (Docket No. 144). TravelPass Group, LLC,
Reservation Counter, LLC and Partner Fusion, Inc.
(collectively, “Plaintiffs”) filed a response to
Defendants’ objections (Docket No. 145). The Court held
a hearing August 15, 2019 and now conducts a de novo
review of the Magistrate Judge’s findings and
an antitrust case involving an alleged conspiracy among hotel
chains to eliminate interbrand competition for keyword
internet searches. Orig. Compl., Docket No. 1 ¶ 1.
Plaintiffs allege Defendants, conspiring with one another and
“so-called gatekeeper online travel agencies
(‘OTAs’) like Expedia and others,”
“rigged bids and engaged in a group boycott to
eliminate competing paid search advertisements displayed by
internet search engines by agreeing not to bid on one
another’s branded keywords.” Id.
Plaintiffs assert four causes of action against Defendants,
including (1) violation of the Sherman Act, 15 U.S.C. §
1 (per se bid rigging/group boycott/market
division), (2) violation of the Sherman Act, 15 U.S.C. §
1 (unreasonable restraint of trade), (3) violation of related
Utah Antitrust Act § 1 and (4) tortious interference
with prospective business relations. Id.
Plaintiffs allege the agreement orchestrated by Defendants
reflects an unreasonable restraint of trade that is per
se unlawful under Section 1 of the Sherman Act, 15
U.S.C. § 1. Id. ¶¶ 164–75.
According to Plaintiffs, in carrying out their scheme,
Defendants also tortiously interfered with Plaintiffs’
existing and potential economic relations with customers and
potential customers by reducing customers’ ability to
obtain information about available hotel rooms through
branded keyword bidding by TravelPass. Id.
MOTION TO TRANSFER
February 5, 2019, Defendants filed a motion to transfer venue
to the Northern District of Illinois. Docket No. 50.
Defendants’ motion is based on a putative nationwide
class action (Tichy v. Hyatt Hotels Corp., No.
1:18-cv-01959 (N.D. Ill.) (“Tichy
action”)) pending in the proposed transferee court.
According to Defendants, there is substantial similarity
between the Tichy action and this case, and so,
“transfer of this subsequently-filed action is proper
pursuant to 28 U.S.C. § 1404(a) in the interests of
justice and judicial economy, and also is called for under
this Circuit’s first-to-file doctrine.” Docket
No. 50 at 4.
support of their contention that there is substantial overlap
between the cases, Defendants point out the Tichy
action involves five of the hotel companies named as
defendants in this case (Hyatt Corporation, Hilton Domestic
Operating Company, Inc., Six Continents Hotels, Inc.,
Marriott International, Inc. and Wyndham Hotel Group LLC).
Defendants argue the two lawsuits raise substantially the
same allegations against the same hotel chains, arguing they
violated the Sherman Act by engaging in a conspiracy to
eliminate competition for keyword bidding and that they used
their relationships with online travel agencies to further
the alleged conspiracy. Id. at 13. Defendants
further assert the Sherman Act claims involve common factual
allegations that will involve common legal theories and
evidence. Id. at 7–8.
such, Defendants contend this matter should be transferred to
the proposed transferee court that is already acquainted with
the relevant issues, “where most of the Defendants are
already defending overlapping claims, and where the cases,
including discovery and related procedures, may be
coordinated efficiently.” Id. at 4. According
to Defendants, without transfer, “there is a risk of
inconsistent rulings in separate Districts concerning common
issues-including the threshold issue of the existence of the
alleged conspiracy between the Defendants.”
Id. at 8. Defendants further argue maintaining this
case in this district “would, in contrast, require
duplicative time, energy, and resources from this Court, risk
potentially inconsistent rulings, and impose added burden on
litigants and witnesses.” Id. at 4.
their response, Plaintiffs argue Defendants focus on the
so-called “threshold issue” of the existence of
the alleged conspiracy but ignore other “numerous and
complex issues” that differ between the two cases,
including class certification (and whether the requirements
of Rule 23 are met), antitrust injury, damages and the extent
to which the three defendants here who are not defendants in
the Tichy action participated in the alleged
conspiracy. Docket No. 107 at 5.
REPORT AND RECOMMENDATION
9, 2019, the Magistrate Judge issued her R&R regarding
proposed findings of fact and recommendation that
Defendants’ motion to transfer venue be denied. Docket
No. 130. The Magistrate Judge considered the first-to-file
rule before addressing Defendants’ request to transfer
pursuant to § 1404(a). Id. at 3 (citing
Needbasedapps, L.L.C. v. Robbins, No. 5:12cv527,
2013 WL 656169 (W.D. Tex. Feb. 20, 2013) (declining to
address a motion to transfer pursuant to 28 U.S.C. §
1404(a) because transfer pursuant to the first-to-file rule
was proper)). The Magistrate Judge set forth numerous cases
addressing the first-to-file rule, many of which were
considered in the context of the Fair Labor Standards Act
(“FLSA”). Docket No. 130 at 8–14.
Magistrate Judge found that due to critical differences
between this case and the Tichy action, the
first-to-file rule does not compel transfer. Although both
cases contain similar allegations regarding the existence of
an unlawful agreement between the five hotel companies in
violation of antitrust laws, the Magistrate Judge concluded
the cases do not substantially overlap, noting this case
involves different claims, issues and three additional
defendants. Docket No. 130 at 14–17.
Magistrate Judge then applied the traditional rules of §
1404(a). After finding the case could have been brought in
the Northern District of Illinois, the Magistrate Judge
considered the applicable private and public interest
factors. Id. at 21–32. She found one public
interest factor favored transfer (local interest) and one
public interest factor weighed against transfer (court
congestion). She found all other factors are neutral.
Balancing the factors, the Magistrate Judge concluded
Defendants had not shown that transfer to the Northern
District of Illinois is clearly more convenient. Id.
their objections, Defendants assert that transfer of this
case to the Northern District of Illinois “is required
by the first-to-file doctrine and 28 U.S.C. § 1404(a) to
prevent the risk of inconsistent rulings concerning the
common core issue, ensure judicial efficiency, and avoid
needless duplication of discovery.” Docket No. 144 at
1. As argued by Defendants, the determination of whether
there is sufficient evidence to demonstrate the existence of
an unlawful agreement among the defendants “will entail
a complex analysis given . . . the summary judgment framework
for antitrust conspiracy cases” and “what will
almost certainly be a formidable discovery record given the
number of defendants and non-parties involved.”
Id. Defendants argue the R&R erred in relying on
“ancillary differences between this case and
Tichy.” Id. at 2.
the § 1404(a) analysis, Defendants argue the R&R
erred in finding the private interest factor regarding the
cost of attendance for parties and witnesses is neutral.
Defendants maintain this conclusion fails to account for the
burden to witnesses, including non-party witnesses, who will
be required to travel twice and to different districts.
Defendants further assert the R&R errs in finding the
interest of justice and judicial economy factor neutral,
despite acknowledging the overlap on the issue of the alleged
conspiracy in the two cases. Finally, Defendants contend the
R&R errs in finding the issue of court congestion weighs
against transfer. According to Defendants, after adjusting
for these errors, “there are at least three convenience
factors favoring transfer, with the rest neutral; transfer is
thus warranted under 28 U.S.C. § 1404(a).”
Id. at 5.
their response to the objections, Plaintiffs state “the
sole basis” for Defendants’ objections
(and the underlying motion to transfer) is the pendency of
the Tichy action involving an antitrust claim
against some of the defendants in this case. Docket No. 146 at
1 (emphasis in original). Plaintiffs assert the Magistrate
Judge correctly found this case involves different claims and
threshold issues, in addition to different parties, key third
parties, witnesses and documents located throughout the
country, with no “center of gravity” in any other
district. Id. Plaintiffs maintain Defendants have
not met their evidentiary burden of showing transfer would
not be “clearly more convenient.”
“Fifth Circuit adheres to the general rule that the
court in which an action is first filed is the appropriate
court to determine whether subsequently filed cases involving
substantially similar issues should proceed.”
Stannard v. Nat’l Indoor RV Centers, LLC, No.
4:18-CV-00366, 2018 WL 3608560, at *1 (E.D. Tex. July 27,
2018) (quoting Huntsman Corp. v. Int’l Risk Ins.
Co., No. 1:08-CV-029, 2008 WL 1836384, at *5 (E.D. Tex.
Apr. 22, 2008) (citing Save Power Ltd. v. Syntek Fin.
Corp., 121 F.3d 947, 950 (5th Cir. 1997))). A
second-filed court plays a limited role when presented with a
motion to transfer or stay based on the first-to-file rule.
Stannard, 2018 WL 3608560, at *1 (citing Cadle
Co. v. Whataburger of Alice, Inc., 174 F.3d 599, 605
(5th Cir.1999)). This role is to decide whether the moving
party in the second-filed court has demonstrated a
“substantial overlap” between the two suits.
Id. If the moving party satisfies this overlap
requirement, the second-filed court allows the first-filed
court to “resolve the question of whether both [cases]
should be allowed to proceed.” Id.
“Therefore, the first-to-file rule not only determines
which court may decide the merits of substantially similar
issues, but also establishes which court may decide whether
the second suit filed must be dismissed, stayed or
transferred and consolidated.” Huntsman, 2008
WL 1836384, at *5 (citations omitted).
rule does not require the cases to be identical. Instead, the
crucial inquiry is one of substantial overlap.”
Cirk Tek, LLC v. Ong Investments, LC, 212 F. Supp.
3d 709, 712 (W.D. Tex. 2016) (quoting Int’l
Fidelity Ins. Co. v. Sweet Little Mexico Corp., 665 F.3d
671, 678 (5th Cir. 2011)). The two actions only need
“involve closely related questions or common subject
matter.” Sirius Computer Sols., Inc. v.
Sparks, 138 F. Supp. 3d 821, 827 (W.D. Tex. 2015)
(quoting Rooster Prods. Int’l, Inc. v. Custom
Leathercraft Mfg. Co., ...