State courts have long exercised discretionary power to stay proceedings where a suit involving the same parties and issues is already under way in another forum (see Asher v. Abbott Laboratories, 307 AD2d 211, 211-212 [1st Dept. 2003]).
A New York Commercial Division practitioner seeking to avoid duplicative litigation can either move the court pursuant to CPLR 3211 (a) (4) to dismiss an action where “there is another action pending between the same parties for the same cause of action in a court of any state or the United States” or seek a stay of the state court action, pursuant to CPLR 2201, pending the resolution of the other action. CPLR 3211 (a) (4) specifically states “the court need not dismiss upon this ground but may make such order as justice requires.” Therefore both CPLR 3211 (a) (4) and CPLR 2201 may help a practitioner obtain a stay of a state court action depending on the stage of litigation.
Newly appointed New York County Commercial Division Judge Borrok recently opted to stay an action brought before him in Mahar v General Elec. Co., 2019 NY Slip Op 29322 based on an earlier-filed Federal Action. Judge Borrok candidly gave New York practitioners insight into the considerations that New York Commercial Judges weigh when determining whether a stay should be granted as well as shedding light on two nuances relating to these elements.
New York Courts generally follow the “first-in-time” rule which provides that the court which has taken jurisdiction first, is the one in which the matter should be determined (see Matter of PPDAI Group Sec. Litig. at *5 (2019 NY Slip Op 51075(U)).
The first nuance that Judge Borrok shared is that the “First Department has held that the two actions need not be identical. Rather, a stay is warranted where there is ‘a substantial identity of parties’ and both actions arose out of the ‘same subject matter or series of alleged wrongs’ (Syncora Guarantee Inc. v JP Morgan Sec., LLC, 110 AD3d 87, 95 [1st Dept 2013]).
New York Courts also consider whether granting a stay will further the principles of comity, orderly proceedings (e.g., coordinating discovery), judicial economy by avoiding the risk of inconsistent rulings in the different actions, and avoidance of prejudice to the plaintiffs (See Mook v. Homesafe America, Inc., 144 AD3d 1116, 1117 (2d Dept. 2016).
The second nuance that Judge Borrok shared with respect to staying an action is that “it is inconsequential that different legal theories or claims are set forth in the two actions” (Shah v RBC Capital Mkts. LLC, 115 AD3d 444 [1st Dept 2014]). First Department law simply requires that “both actions seek to recover for the same alleged harm based on the same underlying events” (Syncora, 110 Ad3d at 96).
Takeaway: CPLR 3211(a)(4) and CPLR 2201 are strong and effective litigation tools that are available for a practitioner to utilize in order to avoid duplicative litigation.