Brillhart Abstention: Will Your Declaratory Judgment Action Stay in Federal Court?

The Declaratory Judgment Act, 28 U.S.C. '2201(a) (“DJA”), gives federal courts the right to grant declaratory relief. The DJA only provides that a federal court may make a declaration, not that it shall do so. Thus, the “distinctive feature” that the Supreme Court has highlighted in this “enabling Act” is the “unique and substantial discretion,” which the DJA grants the federal courts. Wilton v. Seven Falls Co., 515 U.S. 277, 286 (1995). Because of this substantial discretion, federal courts have the option to stay or dismiss ' that is, to abstain from deciding ' a federal declaratory action when there is a pending state action involving the same dispute, even if the state action was filed after the federal declaratory judgment action. As a result, the “first filed” rule, generally applicable in federal courts, does not apply in the context of a declaratory judgment action. 12-57 Moore's Federal Practice-Civil '57.42.2.b.i.A & B. In fact, one of the special circumstances warranting exception to the first filed rule is when a party files a declaratory judgment action after receiving notice of a planned suit by another party. See e.g. Federal Ins. Co. v. May Dep't Stores Co., 808 F. Supp. 347, 350 (S.D.N.Y. 1992).