OPINION AND ORDER The parties to this action have filed dueling lawsuits arising out of the Share Purchase Agreement (SPA) by which Pamela Whitaker (Whitaker or the Seller) sold her staffing agency, Key Resources, Inc. (KRI) to Monroe Staffing Services, LLC (Monroe), backed by a guarantee from its parent Staffing 360 Solutions, Inc. (Staffing 360; collectively, with Monroe, the Buyers). In this action, filed on February 26, 2020, the Buyers, as plaintiffs, allege that Whitaker breached various representations and warranties made in the SPA and seek $6 million in damages. In an earlier-filed action commenced in a North Carolina state court on December 5, 2019 (the North Carolina Action), Whitaker, as plaintiff, alleges that the Buyers failed to make two post-closing payments and seeks approximately $4 million in damages, as well as declaratory relief. In the more than two years since both actions were filed, neither has advanced beyond the pleading stage. Instead, the parties have filed dueling motions to determine where their dispute should be litigated. In the North Carolina Action, the Buyers removed the case to the United States District Court for the Middle District of North Carolina (MDNC) and moved to dismiss it pursuant to, inter alia, Rules 12(b)(2) and 12(b)(3) of the Federal Rules of Civil Procedure, or, in the alternative, to transfer the case to the Southern District of New York (SDNY), relying on §8.08 of the SPA, which is a forum selection cause generally providing that any suit “arising out of or related to” the SPA “may be instituted” in the federal or state courts located in New York County, New York, and that “each party irrevocably submits to the exclusive jurisdiction of such courts.” Whitaker opposed the motion and cross-moved to remand her case to state court, also relying on §8.08, which contains a carve-out permitting the Seller to sue in the federal or state courts located in Guilford County, North Carolina, if the suit arises out of or relates to a “Buyer setoff” (the Buyer Setoff Carve-out) and providing that where the Buyer Setoff Carve-out applies, “such forum selection by Seller shall be controlling.” Id. Both motions turned on whether Whitaker’s claims arise out of or relate to a “Buyer setoff,” as that term is used in the SPA, and thus whether her choice of forum controls where the litigation would proceed. On February 19, 2021, the presiding District Judge in the MDNC ruled in Whitaker’s favor, noting the “broad language” used in the Buyer Setoff Carve-out and holding that “the dispute at issue sufficiently relates to a setoff to trigger jurisdiction in [a] North Carolina state or federal court.” Whitaker v. Monroe Staffing Servs., LLC, 2021 WL 663716, at *2 (M.D.N.C. Feb. 19, 2021). Consequently, the District Judge denied the Buyers’ transfer motion and granted Whitaker’s motion to remand the case to the state court. That decision is now pending on appeal before the United States Court of Appeals for the Fourth Circuit. Meanwhile, in this District, Whitaker filed — and I now have before me — a motion to dismiss the Buyers’ Amended Complaint pursuant to Rule 12(b)(2) and 12(b)(3) or, in the alternative, to stay this action pending a decision by the Fourth Circuit and/or disposition of the North Carolina Action in its entirety. Whitaker argues that this action — like the North Carolina Action — arises out of or relates to a Buyer setoff, as that term is used in the SPA, and therefore that her choice of forum controls. She further contends that because both actions involve the same parties and arise out of the same contract, the first-filed rule independently requires that this action be dismissed or stayed in favor of the North Carolina Action. Although both sides devote considerable energy to those questions, the initial inquiry, in a case such as this, is not where the case should proceed; it is “which court should grapple with the issue of where the case should proceed.” MSK Ins., Ltd. v. Emps. Reins. Corp., 212 F. Supp. 2d 266, 267 (S.D.N.Y. 2002) (emphasis in the original). In this District, the answer is clear: “The court before which the first-filed action was brought determines which forum will hear the case.” Id.; see also Reliance Ins. Co. v. Six Star, Inc., 155 F. Supp. 2d 49, 54 n.2 (S.D.N.Y. 2001) (“The court in which the first-filed case was brought decides whether the first-filed rule or an exception to the first-filed rule applies.”). This is a “bright-line rule,” MSK, 212 F. Supp. 2d at 267, which does not provide for any “special exceptions,” Pem Am., Inc. v. Lambert, 2003 WL 22383369, at *1-3 (S.D.N.Y. Oct. 17, 2003), and counsels the court in which the second-filed action was brought to “refrain[] from ruling pending a determination by the court of first-filing.” Citigroup Inc. v. City Holding Co., 97 F. Supp. 2d 549, 556 n.4 (S.D.N.Y. 2000). Consequently, rather than reach the merits of Whitaker’s motion to dismiss, I will grant her alternative motion to stay this action in its entirety (including the motion to dismiss) pending the outcome of the appeal now before the Fourth Circuit.1 I. BACKGROUND A. Pre-Litigation Events Whitaker is a resident of Winston-Salem, North Carolina. Am. Compl. (Dkt. No. 40) 8. Monroe is a Delaware limited liability company with its principal place of business in Shelton, Connecticut. Id. 6. Monroe is wholly-owned by Staffing 360, which is a Delaware corporation with its principal place of business in New York, New York. Id.
7, 22. Pursuant to the SPA, executed on or about August 27, 2018, Whitaker sold 100 percent of the issued and outstanding stock of KRI to Monroe for a total of approximately $12 million, with approximately $8.1 million due on the closing date and two Earnout Payments, of approximately $2 million apiece, due on the first and second anniversaries of the closing. Am. Compl.
