Betty's Best, Inc. v. The Facebook Advertisers Listed on Schedule A

Background

Betty’s Best, Inc. sued 592 Facebook Advertisers for intellectual-property infringement. Certain Defendants moved to dismiss the action or, alternatively, asked the court to stay it. They argued that the action duplicated an earlier Florida action, was not the first-filed case, and was barred by the anti-claim-splitting doctrine. They also requested a stay under the court’s inherent authority.

The court vacated the scheduled video hearing after concluding that oral argument was unnecessary.

First-to-File Rule

The court explained that the first-to-file rule gives a federal court discretion to stay, dismiss, or transfer a case when a similar case involving substantially similar parties and issues was filed earlier in another federal district. Courts consider three factors: the order in which the lawsuits were filed, the similarity of the parties, and the similarity of the issues.

The court found that the Florida action was filed before this case and that the two actions involved the same issues. Betty’s Best disputed whether the parties were sufficiently similar because the identities of the Facebook Advertisers were unknown. The court rejected that argument because Betty’s Best had filed a list matching Facebook Advertisers in this case to websites named in the Florida action.

The court found substantial similarity between the parties. Betty’s Best was the plaintiff in both actions, and at least 54 of the 85 Certain Defendants were also defendants in the Florida action. The court noted that it was unknown whether the remaining 31 Certain Defendants were named there. The court also found the issues substantially similar because both cases involved alleged infringement of the same intellectual property. The distinction was that the Florida action concerned websites offering counterfeit goods, while this action concerned advertisers who posted advertisements linking to those websites.

Why the Court Ordered a Stay

The court concluded that all three first-to-file factors favored a stay. It found that a stay, rather than dismissal, was appropriate because the Florida action included motions to dismiss for lack of personal jurisdiction and insufficient service. If the Florida action were dismissed, the court noted, statute-of-limitations issues might arise in this case.

The court also found that a stay would promote judicial efficiency and reduce the possibility of conflicting judgments. Discovery would likely be duplicated because the cases involved overlapping claims and parties. This case was in its early stages, while the parties in the Florida action were already engaged in discovery. The court also noted that Betty’s Best had not argued that a stay would cause prejudice.

The court rejected Betty’s argument that Certain Defendants could not seek a stay before being served. It explained that defendants may move to dismiss for failure to serve and found no reason why a defendant must wait for service before seeking a first-to-file stay.

Order

The court granted Certain Defendants’ motion to stay the action in its entirety. The court ordered a status report about the Florida action by September 19, 2024, with Certain Defendants responsible for taking the lead in preparing and filing it. The court stated that Betty’s Best could move to lift the stay earlier if circumstances warranted. The order disposed of Docket No. 59.