The Colorado River Doctrine provides a means for courts to avoid trying the same case in two separate courts simultaneously.
Occasionally, litigants will bring a case in both the federal court system and the state court system. The reasons for doing so are usually strategic based on the judges and jurisdictions in the federal and state system. In those instances, federal courts have found that when the simultaneous litigation of the claims would be duplicative or otherwise inefficient they may stay the action pending the outcome of the state court case. This principle has come to be known as the Colorado River Doctrine.
The Colorado River doctrine allows a federal court to dismiss or stay a federal action in deference to pending parallel state court proceedings, based on “considerations of wise judicial administration, giving regard to conservation of judicial resources and comprehensive disposition of litigation.” Colorado River Water Conservation Dist. v. United States, 424 U.S. 800, 817 (1976) (citation omitted) (internal quotation marks omitted); see also Rienhardt v. Kelly, 164 F.3d 1296, 1302 (10th Cir. 1999) (“In other words, the Colorado River Doctrine was adopted to avoid duplicative litigation.”).
To determine whether to dismiss or stay a federal court action based on a parallel state court case, courts consider the following factors: “(1) whether either court has assumed jurisdiction over property; (2) whether the federal forum is inconvenient;[1] (3) the avoidance of piecemeal litigation; (4) the order in which the courts obtained jurisdiction and the progress of the two cases; (5) which forum’s substantive law governs the merits of the litigation; and (6) the adequacy of the state forum to protect the rights of the parties.[2]” Health Care & Ret. Corp. of Am. v. Heartland Home Care, Inc., 324 F. Supp. 2d 1202 (D. Kan. 2004) (footnotes added) (citing Colorado River, 424 U.S. at 819; Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 23 (1983)).
These factors are “to be applied in a pragmatic, flexible manner with a view to the realities of the case at hand.” Moses H. Cone, 460 U.S. at 21.But before applying the Colorado River factors, the court must first determine “whether the state and federal proceedings are parallel.” Allen v. Bd. of Educ., Unified Sch. Dist. No. 436, 68 F.3d 401, 402 (10th Cir. 1995).
For example, in Heartland, Health Care and Retirement Corporation of America (“HCRCA”) filed suit against Heartland Home Care, Inc., (“Heartland”) for trademark infringement, false designation of origin, and trademark dilution under the Lanham Act. 324 F. Supp. 2d at 1203. HCRCA’s claims in the federal court came after Heartland had filed claims against HCRCA in the state district court, alleging that HCRCA was soliciting business under Heartland’s name in violation of Kansas law. Id. When HCRCA filed its claims in federal court, Heartland sought dismissal under the Colorado River doctrine based on the previously filed—and then-pending—state court action. Id. at 1204.
The Heartland court first looked to whether the two cases were sufficiently parallel by looking to the nature of the parties. Id. The court held that the parties in the state and federal cases were substantially the same, even though HCRCA’s “affiliate” and not HCRCA itself was a party in the state case. Id. HCRCA’s affiliate was arguing the same claims, was represented by the same law firm, and shared the same interests as HCRCA. Id. The court then looked to the nature of the issues. Id. at 1205. It held that although the pending claims in the state court were not the same as the pending issues in the federal court, they were substantially similar because the issues both arose out of the same set of facts. Id. Accordingly, the court held, the cases were sufficiently similar to apply the Colorado River doctrine, and applied each of the doctrine’s six factors. Id. at 1205–08.
The court determined that neither of the first two factors weighed in favor of either party. Id. at 1205–06. Then, turning to the third factor (avoidance of piecemeal litigation), the court noted that: the parties “currently are litigating virtually identical . . . claims in two courts;” inconsistent results were possible; and “if the state court enters a judgment before one is entered in the federal case, the federal action likely will be barred under res judicata principles.” Id. at 1206. Accordingly, the court held, “[a]llowing both cases to proceed to a race to judgment would cause duplicative litigation and waste the resources of the parties and the Court. Judicial economy is best promoted by staying the instant action.” Id. at 1206.
Turning to the fourth factor, the court held that because the state action had been filed some three months before the federal action, this factor also weighed in favor of staying the federal action. Id. The fifth factor weighed slightly in favor of not staying the action, because federal law governed both actions. Id. at 1207. After considerable analysis of the sixth factor, the court held that the state forum was an adequate vehicle to protect the parties. Id. at 1207–08. After a holistic balancing of all the factors, the court concluded: “Three of the above factors favor staying the case, two factors are neutral and one factor slightly favors retaining the case. After carefully considering each factor, the Court finds that exceptional circumstances justify a stay of the instant action.” Id. at 1208.[3]
In conclusion, bringing a case in both the state and federal court systems may be a wise course of action for your case, but be prepared to have the federal case stayed if the court deems that such a stay would be in the best interest of judicial economy.
The Colorado River Doctrine bears no relation to its namesake, the Colorado River.
[1] “Whether the federal forum is inconvenient depends on the ‘physical proximity of the federal forum to the evidence and witnesses.’” Health Care & Ret. Corp. of Am. v. Heartland Home Care, Inc., 324 F. Supp. 2d 1202, 1206 (D. Kan. 2004) (citing Am. Bankers Ins. Co. v. First State Ins. Co., 891 F.2d 882, 885 (11th Cir. 1990).
[2] The Court may enter a stay under the Colorado River doctrine only if it has “full confidence” that the parallel state litigation will end the parties’ dispute. Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 277 (1988).
[3] Heartland is one of several 10th Circuit decisions to apply, or uphold the application of, the Colorado River doctrine to stay a federal proceeding. E.g., Nationwide Mut. Ins. Co. v. C.R. Gurule, Inc., 148 F. Supp. 3d 1206 (D.N.M. 2015); D.A. Osguthorpe Family P’ship v. ASC Utah, Inc., 705 F.3d 1223 (10th Cir. 2013); Foxfield Villa Assocs., LLC v. Regnier, 918 F. Supp. 2d 1192 (D. Kan. 2013); Big O Tires, LLC v. Felix Bros., No. 10-CV-00362-PAB-KLM, 2011 WL 6181448 (D. Colo. Dec. 13, 2011); Gray v. Parry, No. 2:07-CV-113, 2008 WL 821592 (D. Utah Mar. 27, 2008); Robertson v. Red Rock Canyon Sch., LLC, No. 2:05-CV-758 TC, 2006 WL 3041469 (D. Utah Oct. 24, 2006); Blue Rhino Corp. v. Stockgrowers State Bank of Ashland, Kansas, 220 F.R.D. 369 (D. Kan. 2004); Fox v. Maulding, 16 F.3d 1079 (10th Cir. 1994).