Westerman v. FTI Consulting, Inc.

Background

FTI Consulting, Inc. and FTI Consulting LLC sued Edward Westerman in the District of Columbia on April 12, 2024. FTI alleged that Westerman breached non-compete and non-solicitation provisions in his employment agreement after resigning and accepting employment with Secretariat, which the opinion describes as a competing company. FTI sought monetary damages and a declaration that those provisions were valid and enforceable. Westerman’s motion to dismiss that case for lack of personal jurisdiction remained pending when this order was issued.

Westerman later filed this action in San Francisco Superior Court. After removal to the Northern District of California, he asserted claims under California Business and Professions Code sections 16600, 16600.5, and 17200 concerning FTI’s efforts to enforce the non-compete provision and alleged unlawful competition. FTI moved to transfer the case to the District Court for the District of Columbia under 28 U.S.C. § 1404(a), or alternatively to stay it under the first-to-file rule.

First-to-File Rule

The first-to-file rule allows a federal court to dismiss, transfer, or stay a later-filed action when a similar action was filed earlier in another federal court. Courts consider the chronology of the actions, the similarity of the parties, and the similarity of the issues. The rule is discretionary rather than automatic, and a court may decline to apply it for equitable reasons such as bad faith, an anticipatory lawsuit, or improper forum shopping.

The court found that all three threshold requirements were met. FTI’s District of Columbia action was filed almost two months before Westerman filed this case, and the parties and issues were substantially similar. The court acknowledged that this case was slightly more advanced, but found the difference negligible because both cases were still at an early stage. The court also rejected Westerman’s fairness and efficiency arguments and found no evidence that FTI acted in bad faith or engaged in improper forum shopping.

Ruling

The court granted FTI’s motion and stayed this case pending resolution of the District of Columbia action. It did not transfer the case. The court denied Westerman’s motion for a preliminary injunction without prejudice to refiling after the stay is lifted. It also required a joint status report on the District of Columbia action by July 16, 2025, and set a case-management conference for July 23, 2025.

Classification Basis

This is a procedural order because the court paused the later-filed case under the first-to-file rule and ruled on a preliminary-injunction motion without deciding the underlying statutory dispute on the merits.