Pagano v. Johnson Controls, Inc.

Background

The order addresses three actions: Pagano, Halfter, and Riccitelli. The plaintiffs are commissioned salespersons who sold equipment and projects for Johnson Controls. They allege that they were owed amounts called “earned commissions” for projects booked before the end of fiscal year 2023 but not completed by then. According to the complaints, Johnson Controls later changed its compensation terms through its fiscal year 2024 incentive plan and withheld those alleged fiscal year 2023 commissions.

Pagano and Halfter filed their actions in the Southern District of New York. Riccitelli filed in New York Supreme Court, and Johnson Controls later removed that action to federal court. The order states that Johnson Controls had pending motions to dismiss in all three actions, but it does not decide those motions.

The court also considered an earlier-filed class action, Novin, in the Eastern District of Wisconsin. That action purported to represent Johnson Controls employees subject to the incentive compensation plans.

First-to-File Rule

The first-to-file rule generally favors the court where a substantially similar lawsuit was filed first. It is intended to prevent duplicative litigation and conserve judicial resources. The court explained that a later-filed action may receive priority only if the balance of convenience or special circumstances support that result.

The court found that the balance of convenience favored applying the rule. Johnson Controls is a Wisconsin corporation with executive offices in Milwaukee. The compensation-policy changes underlying the plaintiffs’ claims were implemented there, and the responsible decision-makers were located there. The court therefore found that most relevant evidence and witnesses would be in Wisconsin if the cases proceeded to discovery.

The court recognized that the plaintiffs, whom the order identifies as New York residents, would find New York more convenient. It nevertheless concluded that their preference did not outweigh the location of Johnson Controls’s key documents and witnesses or the Wisconsin location of the operative facts.

Arguments About Special Circumstances

The court found no special circumstances that would justify disregarding the first-to-file rule. It rejected Pagano and Halfter’s argument that individual lawsuits in other jurisdictions were outpacing Novin, explaining that they cited no authority showing that this constituted a special circumstance.

The court also rejected Riccitelli’s argument that the rule applies only when both actions begin in federal court. For a state action later removed to federal court, the court stated that the state filing date is the relevant date for applying the rule. The court did not reach Riccitelli’s arguments concerning the propriety of removal and diversity jurisdiction under the Class Action Fairness Act because it considered those arguments belated and unrelated to the transfer issue.

The court further rejected the argument that the rule did not apply because Pagano and Halfter brought individual claims. It stated that the rule does not require identical parties, only substantially similar parties and claims. The court found the claims and underlying facts essentially identical, with the principal individual differences being the amounts of allegedly unpaid commissions.

Disposition

Judge Margaret M. Garnett directed the Clerk of Court to transfer all three actions to the Eastern District of Wisconsin under the first-to-file rule and to terminate the actions in the Southern District of New York. The order resolved the forum question; it did not determine whether the plaintiffs were owed commissions or otherwise decide the merits of their claims.