The defendant in Chambers v. Cooney, 2007 U.S. Dist. LEXIS 64932 (S.D. Ala. Aug. 29, 2007), threatened for more than a year to file suit against the plaintiffs, claiming a right to certain merger proceeds. The merger was consummated in January 2005, and negotiations continued on and off through late 2006. On May 9, 2007, the defendant’s lawyer forwarded a draft complaint to plaintiffs’ counsel. Two weeks later, the plaintiffs filed a declaratory judgment action in Alabama alleging that the defendant’s claims were meritless (the ‛Alabama Action“). Two weeks after that, the defendant commenced his unjust enrichment and fiduciary duty suit against the plaintiffs in Minnesota (the ‛Minnesota Action“). The defendant contended that the Minnesota Action should proceed in lieu of the Alabama Action, arguing that the first-filed rule should be disregarded because the Alabama Action was clearly anticipatory in nature. Rejecting these contentions, District Judge William H. Steele concluded that:

1. The Declaratory Judgment Act ‛confers on federal courts unique and substantial discretion in deciding whether to declare the rights of litigants ... rather than an absolute right upon the litigant“ (quoting Wilton v. Seven Falls Co., 515 U.S. 277, 286-87 (1995)).

2. Because the two actions had overlapping (but not identical) issues and parties, this case on its face falls within the boundaries of the so-called ‘first-filed rule,’ which provides that ‘[w]here two actions involving overlapping issues and parties are pending in two federal courts, there is a strong presumption across the federal circuits that favors the forum of the first-filed suit.’"

3. The ‛anticipatory filing“ exception holds that ‛a district court has discretion to ‘decline to entertain a declaratory judgment action on the merits when a pending proceeding in another court will fully resolve the controversy between the parties. ... One equitable consideration in such decision is whether the declaratory judgment action was filed in apparent anticipation of the other pending proceeding.’“

4. That did not apply because, ‛Like the boy who cried wolf, Dr. Cooney's constant threats of litigation ceased being credible long before May 2007.“

5. The plaintiffs were ‛under no obligation to advertise their intentions to [the defendant] ahead of time, and he could not reasonably have relied on their silence to meant that they were not preparing to sue him.“

6. The fact that the plaintiffs were aware of a dispute is not enough to trigger the anticipatory-filing exception: ‛To the contrary, the Eleventh Circuit distinguishes between knowledge of a case or controversy and an imminent threat of litigation.“

Held, the Alabama Action remains intact, with the exception of three claims that the plaintiffs contractually agreed to litigate in Minnesota (which were dismissed in Alabama).