## Facts

- Rite-Hite Company, L.L.C. and related entities (Rite-Hite) manufactured loading-dock equipment and sold dock levelers to Niagara Bottling, L.L.C. (Niagara), a California-based company.
- Between 2009 and 2015, Niagara bought hundreds of dock levelers from Rite-Hite for use at multiple facilities, totaling about $7 million in purchases.
- Niagara claimed the dock levelers began failing around 2014 and that the failures caused operational problems and losses.
- In August 2018, Niagara sent Rite-Hite a demand letter seeking more than $3 million, asserting the levelers did not conform to industry standards and raising warranty-related complaints.
- On September 7, 2018, Rite-Hite filed a declaratory-judgment action in the U.S. District Court for the Eastern District of Wisconsin, seeking a declaration that it was not liable on the theories reflected in Niagara’s demand letter (including warranty-related allegations).
- On September 21, 2018, Niagara filed a separate “coercive” action in the U.S. District Court for the Central District of California, asserting affirmative claims (including breach of contract and breach of warranty) based on the same alleged product failures.
- In the Wisconsin action, Niagara moved to dismiss, stay, or transfer, arguing the Wisconsin declaratory suit should not go forward given the parallel California damages case and the nature of Rite-Hite’s filing after receiving the demand letter.

## Issues

1. Whether Rite-Hite’s declaratory-judgment complaint presented a justiciable Article III “case or controversy” sufficient for subject-matter jurisdiction.
2. Whether the court should, in its discretion under the Declaratory Judgment Act, decline to hear the declaratory action in light of Niagara’s related California action seeking damages for the same dispute.
3. Whether dismissal (as opposed to a stay or transfer) was the proper way to resolve the Wisconsin action given the parallel federal proceeding.

## Decision

- The court granted Niagara’s motion to dismiss the Wisconsin declaratory-judgment action.
- The court dismissed the case under Rule 12(b)(1), concluding the declaratory action should not proceed.
- The dismissal left Niagara’s California damages action as the primary vehicle for litigating the parties’ dispute arising from the allegedly failing dock levelers.

## Legal Principles

- The Declaratory Judgment Act does not itself supply subject-matter jurisdiction; the plaintiff must still show an Article III case or controversy and an independent basis for federal jurisdiction.
- A declaratory-judgment plaintiff must plead a concrete, real dispute suitable for judicial resolution; federal courts may not issue advisory rulings about nonliability divorced from a live controversy.
- Even when jurisdictional requirements are met, federal courts have discretion to decline declaratory relief, particularly when a parallel action can resolve the full dispute.
- In deciding whether to entertain a declaratory action, courts consider practical factors such as efficient resolution of the controversy, the risk of duplicative litigation, and whether the declaratory suit functions as a preemptive filing after a demand letter.
- When a declaratory action mirrors a later-filed coercive action between the same parties involving the same core facts, dismissal of the declaratory case may be appropriate to avoid parallel proceedings and inconsistent outcomes.

## Conclusion

The court dismissed Rite-Hite’s Wisconsin declaratory-judgment case arising from Niagara’s dock-leveler complaints, determining the declaratory action should not continue in federal court and leaving the parties to litigate the underlying warranty and contract dispute in Niagara’s California damages suit.


Niagara Bottling, L.L.C. v. Rite-Hite Company, L.L.C., 2019 WL 1768875 (2019)