Schering Corp. v. Griffo (872 F. Supp. 2d 1220, 2012)

MEMORANDUM OPINION AND ORDER

JAMES O. BROWNING, District Judge.

THIS MATTER comes before the Court on Plaintiff Gina Delfmo’s Motion to Dismiss and, Alternatively, Motion to Stay, filed June 17, 2011 (Doc. 11)(“MTD”). The Court held a hearing on November 16, 2011. The primary issue is whether the Court should stay or dismiss the federal declaratory judgment action, because there is a parallel state proceeding. The Court will grant the Motion to Stay and deny the Motion to Dismiss. The Court concludes that the State Farm Fire & Casualty Company v. Mhoon, 31 F.3d 979 (10th Cir.1994), factors weigh in favor of declining jurisdiction over the declaratory judgment action at this time.

FACTUAL BACKGROUND

Plaintiff Schering Corporation, now known as Merck & Co., Inc. (“Schering Corp.”) is a New Jersey pharmaceutical company with its principal place of business in Kenilworth, New Jersey. Complaint for Declaratory Relief ¶ 1, at 1, filed April 28, 2011 (Doc. l)(“Compl.”). Plaintiff Old Republic Insurance Company (“Old Republic”) is a Pennsylvania corporation with its principal place of business in Illinois. Compl. ¶ 2, at 1.

On April 29, 2005, Alicia Gonzales was driving on Interstate 25 in Albuquerque, New Mexico, when her vehicle collided with another vehicle. Compl. ¶ 4, at 2. The collision fatally injured Manuel Delfino, an occupant of the other vehicle and an eight-year old boy, and injured Defendant Gina Delfino, Manuel’s mother. Compl. ¶ 4, at 2. On April 25, 2008, Gina Delfino, individually, as personal representative of Manuel Delfino’s estate, and as parent and next friend of Dominic Sena and Gabriel Delfino, Manuel Deifino’s minor siblings, filed a lawsuit in the Second Judicial District, Bernalillo County, State of New Mexico, Case No. D-202-CV-2006-03125 (“state lawsuit”) against Defendants Donald J. Griffo and Thomas Gonzales, Schering Corp.’s employees, as well as Schering Corp. and others. Compl. ¶ 5, at 2. The state lawsuit alleges that A. Gonzales was intoxicated at the time of the collision. See Compl. ¶ 6, at 2. The state lawsuit also alleges that, before the collision, A. Gonzales had been drinking alcoholic beverages which Griffo and T. Gonzales purchased for her. See Compl. ¶ 7, at 2. Additionally, the state lawsuit alleges that Griffo and Gonzales were negligent in serving alcohol to A. Gonzales when she was already intoxicated, and in allowing her to drive her vehicle while intoxicated. See Compl. ¶ 8, at 2. In the state lawsuit, Gina Delfino alleges that Griffo and T. Gonzales are liable to her individually, and in her representative capacity, for: (i) her personal injuries; (ii) the death of M. Delfino; (iii) loss of consortium that she, Sena, and Gabriel Delfino suffered; and (iv) punitive damages. See Compl. ¶ 9, at 2.

Schering Corp. employed Griffo and T. Gonzales on April 29, 2005, and the state lawsuit alleges that Griffo and T. Gonzales negligently contributed to A. Gonzales’ intoxication and allowed her to drive while intoxicated. See Compl. ¶¶ 10, 17, at 2-3. Furthermore, the state lawsuit asserts that Griffo and T. Gonzales were with A. Gonzales for a business purpose, because she was an employee of Dr. David Leech, an Albuquerque physician. See Compl. ¶ 11, at 3. It alleges that Griffo and T. Gonzales were acting within the course and scope of their employment with Schering Corp. See Compl. ¶ 12, at 3. The state lawsuit asserts that Schering Corp. is vicariously liable for Griffo and T. Gonzales’ actions, because Schering Corp. was their employer. See Compl. ¶ 13, at 3. The state lawsuit further asserts that Schering Corp. was negligent in hiring, training, and supervising Griffo and T. Gonzales, because it allowed and encouraged them to serve alcohol to physicians or a physician’s staff to the point of obvious intoxication while in the course and scope of their employment without educating its’ employees about the perils of alcohol. See Compl. ¶ 14, at 3.

Old Republic’s general liability insurance Policy No. MWZY 56095 in favor of Schering Corp. was in effect on April 29, 2005 and has a single occurrence limit of $5 million. See Compl. ¶ 18, at 4. The policy covers both Schering Corp. and its employees for negligence claims when an employee acts within the course and scope of his or her employment. See Compl. ¶ 19, at 4. Schering Corp. alleges that Griffo and T. Gonzales were not acting within the course and scope of their employment. See Compl. ¶ 20, at 4. Schering Corp. and Old Republic assert that, because Griffo and T. Gonzales were not acting within the course and scope of their employment on April 29, 2005, Schering Corp. has no duty to defend or indemnify them on the claims brought against them in the state lawsuit. See Compl. ¶¶ 22-23, at 4.

On April 25, 2008, Gina Delfino filed her Third Amended Complaint for Negligence Per Se, Negligence, Negligent Hiring, Retention and Training, Negligent Hiring Retention and Supervision, Prima Facie Tort, Intentional and Negligent Infliction of Emotional Distress, Loss of Consortium, Public Nuisance, and Injunctive Relief (dated April 25, 2008), filed June 17, 2011 (Doc. ll-l)(“State Third Amended Complaint”), in the Second Judicial District, Bernalillo County, State of New Mexico. See Doe. 11-1. Included as Defendants in the state lawsuit were: (i) Cue Inc., a New Mexico Corporation; (ii) 3TM Investments Inc., a New Mexico Corporation doing business as Doc & Eddy’s; (Hi) Brinker International Inc., a foreign corporation, doing business as Chili’s Restaurant & Bar, Brinker Restaurant Corporation, a foreign corporation; (iv) Schering Corp.; (v) Griffo; (vi) T. Gonzales; (vii) Mike Donahue; (viii) James Paz; (ix) Merck & Co., Inc., a New Jersey Corporation; (x) Abbott Laboratories, Inc., a Delaware Corporation; (xi) Kraffty, LLC, a New Mexico Limited Liability Corporation doing business as Uptown Sports Bar & Grill, Uptown Square Venture, a New Mexico General Partnership; (xii) John Whisenant; (xiii) Ronald Nelson; (xiv) John Doe I; (xv) John Doe Company X; and (xvi) John Doe Company Y. See State Third Amended Complaint at 1. On May 19, 2008, Schering Corp. filed Schering Corp.’s Answer to Third Amended Complaint for Negligence Per Se, Negligence, Negligent Hiring, Retention and Training, Negligent Hiring Retention and Supervision, Prima Facie Tort, Intentional and Negligent Infliction of Emotional Distress, Loss of Consortium, Public Nuisance, and Injunctive Relief (dated May 19, 2008), filed June 17, 2011 (Doc. ll-2)(“Schering Corp.’s State Answer”). On May 28, 2008, Defendants in the state lawsuit, Merck & Co. and Paz, filed Merck & Co., Inc. and James Paz’s Original Answer to Plaintiffs’ Third Amended Complaint (dated May 28, 2008), filed June 17, 2011 (Doc. 11-3)(“Merck’s. State Answer”). In Schering Corp.’s State Answer; Schering Corp. denied paragraphs 41 through 44 of the State Third Amended Complaint, which included allegations that: (i) on April 29, 2005 A. Gonzales attended an out-of-office luncheon hosted by T. Gonzales,' Griffo, Donahue, and Paz, as pharmaceutical representatives working for Schering Corp., Abbott Laboratories, Inc., and Merck & Co., Inc.; (ii) Schering Corp. employed Griffo and T. Gonzales, and they were working within the course and scope of their employment; (iii) T. Gonzales, an employee of Schering Corp., hosted a luncheon and purchased alcoholic beverages for A. Gonzales and other members of Dr. Leech’s office at one or more establishments on April 29, 2005; and (iv) Griffo, an employee of Schering Corp., hosted and purchased alcoholic beverages for A. Gonzales and other members of Dr. Leech’s office at one or more establishments. See MTD at 3^; Schering Corp.’s State Answer ¶¶ 41^4, at 7; State Third Amended Complaint ¶¶ 41^14, at 2-3. In Merck’s State Answer, Merck & Co. denied allegations that: (i) on April 29, 2005, A. Gonzales attended an out-of-office luncheon that T. Gonzales, Griffo, Donahue, and Paz, as pharmaceutical representatives working for Schering Corp., Abbott Laboratories, and Merck & Co., hosted; and (ii) Merck & Co. employed Paz, and he was working within the course and scope of his employment. See MTD at 4-5; Merck’s State Answer ¶¶ 9, 11, at 2; State Third Amended Complaint ¶¶ 41, 47, at 2, 4.

On August 25, 2008, the Honorable Nan Nash, District Court Judge for the Second Judicial District Court, Bernalillo County, State of New Mexico, held that the Schering Corp., Merck & Co., and Abbott Laboratories were not social hosts under N.M.S.A.1978, § 41-11-1E, the Liquor Liability Act, and that they did not owe common-law duties. See MTD at 6. Accordingly, Judge Nash dismissed those claims. See MTD at 6. Gina Delfino appealed that decision to the Court of Appeals of New Mexico, and on April 28, 2010, the Court of Appeals of New Mexico certified the appellate issues to the Supreme Court of New Mexico. See MTD at 6. The Supreme Court of New Mexico accepted certification and, on April 28, 2011, reversed Judge Nash’s decision. See MTD at 6. The Supreme Court of New Mexico held that Schering Corp., Merck & Co., and Abbott Laboratories could be social hosts under the N.M.S.A.1978, § 41-11-1E. See MTD at 6 (citing Delfino v. Griffo, 150 N.M. 97, 257 P.3d 917 (2011)). In light of its decision, the Supreme Court of New Mexico remanded the case to Judge Nash for further proceedings. See MTD at 6.

On June 9, 2008, Schering Corp. and Old Republic filed a complaint in the United States District Court for the District of New Mexico. See Schering Corp. v. Griffo, No. CIV 08-550 WJ-LFG, Complaint for Declaratory Judgment, 2008 WL 4397916, filed June 9, 2008 (Doc. l)(“First Declaratory Judgment Complaint”). On July 14, 2008, Gina Delfino filed a motion to dismiss or, in the alternative, to stay the declaratory judgment proceedings. See Schering Corp. v. Griffo, No. CIV 08-550 WJ-LFG, Motion to Dismiss Complaint for Declaratory Judgment or, in the Alternative, Motion to Stay Declaratory Judgment Proceedings and Supporting Memorandum, 2008 WL 5621916, filed July 14, 2008 (Doc. ll)(“First Motion to Dismiss”). The same issues before the Court in this motion to dismiss were presented to the Honorable William P. Johnson, United States District Court Judge for the United States District Court for the District of New Mexico, in the First Declaratory Judgment Complaint and First Motion to Dismiss. See First Declaratory Judgment Complaint at 1; First Motion to Dismiss at 1. On September 9, 2008, the parties stipulated to dismissal without prejudice of the First Declaratory Judgment Complaint under rule 41(a)(l)(A)(ii) of the Federal Rules of Civil Procedure, after the state court entered an order dismissing claims against Griffo, Gonzales, Abbott Laboratories, Merck & Co., and Paz in the state lawsuit. See Schering Corp. v. Griffo, No. CIV 08-550 WJ-LFG, Stipulation of Dismissal Without Prejudice at 1, 2008 WL 5621919, filed September 9, 2008 (Doc. 24)(“Stipulation of Dismissal”).

PROCEDURAL BACKGROUND

On April 28, 2011, Schering Corp. and Old Republic filed their Complaint. See Doc. 1. Schering Corp. and Old Republic assert that they are entitled to a declaratory judgment, because Griffo and T. Gonzales were not acting within the course and scope of their employment. See Compl. ¶¶ 22-23, at 4.

On June 17, 2011, Gina Delfino filed her Motion to Dismiss and, Alternatively, Motion to Stay. See Doc. 11. Gina Delfino argues that the Court should abstain from hearing this matter, or, alternatively, should stay this matter pending the outcome and determination of the previously filed parallel state lawsuit. See MTD at 1. She asserts that Schering Corp. and Old Republic are engaging in “procedural fencing” and are attempting to use the declaratory judgment action before the Court to encroach on the ongoing state court proceeding. See MTD at 2. Gina Delfino asserts that all other factors that courts consider when analyzing a declaratory judgment militate in favor of abstention. See MTD at 2. Gina Delfino argues that Schering Corp. and Old Republic are either attempting to “wrest from the state court the resolution of one of Schering’s affirmative defenses,” “disrupt the state court case entirely, thereby depriving the Delfinos of their choice of forum,” or “obtain a tactical advantage in settlement negotiations.” MTD at 2. Gina Delfino contends that this is a “perversion” of the Declaratory Judgment Act, 28 U.S.C. § 2201. MTD at 2 (citing Morrison v. Parker, 90 F.Supp.2d 876, 880 (W.D.Mich. 2000)). Gina Delfino asserts that Schering Corp. and Old Republic are asking the Court to determine disputed factual issues relevant to an affirmative defense already raised and joined in the state court action. See MTD at 3.

Gina Delfino argues that she has two avenues of recovery against Schering Corp. in the state lawsuit: (i) vicarious liability for the actions of Griffo and T. Gonzales, whom she asserts were acting to further Schering Corp.’s interests; and (ii) direct claims against Schering Corp., which she asserts acted recklessly in adopting its marketing policy of “wine and dine events,” and in failing to train its employees about or in supervising its employees at such events. MTD at 12. Gina Delfino asserts that resolving whether Griffo and T. Gonzales were acting within the course and scope of their employment does not determine whether Schering Corp. is liable for its own allegedly reckless conduct. See MTD at 12. Addressing the matter before the Court, Gina Delfino asserts that, because resolution of this issue will not determine Schering Corp.’s ultimate liability in the state lawsuit, the Court should dismiss or stay the federal ease. See MTD at 13. Furthermore, Gina Delfino argues that: (i) the case before the Court was filed as part of “a race to res judicata”; (ii) determining this issue would permit the improper removal of a factual determination which is before the state court; (iii) the matters raised in the action for declaratory judgment are state law issues and do not involve determinations of federal law; and (iv) the state is already in the process of determining and is better positioned to determine the factual issues that underlie the question whether Griffo and T. Gonzales were acting within the course and scope of their employment. MTD at 13.

Gina Delfino argues that the primary purpose of the Declaratory Judgment Act is to avoid “accrual of avoidable damages to one not certain of his rights and to afford him an early adjudication without waiting until his adversary should see fit to begin suit, after damage has accrued.” MTD at 14 (citing Cunningham Bros. Inc. v. Bail, 407 F.2d 1165, 1167-68 (7th Cir.1969)). She contends that using the Declaratory Judgment Act to compel personal injury plaintiffs to litigate their claims “at a time and in a forum chosen by the alleged tortfeasor has been deemed a perversion of the Act.” MTD at 14 (citing Cunningham Bros. Inc. v. Bail, 407 F.2d at 1167; Morrison v. Parker, 90 F.Supp.2d at 880; Sun Oil Co. v. Transcontinental Gas Pipe Line Corp., 108 F.Supp. 280, 282 (E.D.Pa.1952); 10B Wright, Miller & Kane § 2765, at 638 (3d ed. 1998)). Arguing that the Court should abstain, Gina Delfino contends that Brillhart v. Excess Insurance Company of America, 316 U.S. 491, 62 S.Ct. 1173, 86 L.Ed. 1620 (1942), applies and that the decision makes clear that district courts possess discretion in determining whether to entertain an action under the Declaratory Judgment Act. See MTD at 15 (citing Wilton v. Seven Falls Co., 515 U.S. 277, 286, 115 S.Ct. 2137, 132 L.Ed.2d 214 (1995); THI of N.M. at Las Cruces, LLC v. Fox, 727 F.Supp.2d 1195, 1203 (D.N.M.2010) (Browning, J.)). Gina Delfino asserts that the United States Court of Appeals for the Tenth Circuit has established a five-factor test for determining abstention under Brillhart v. Excess Insurance Company of America, and that all of the applicable factors weigh in favor of abstention. See MTD at 15-17 (citing State Farm Fire & Cas. Co. v. Mhoon, 31 F.3d 979, 983 (10th Cir.1994)). Those factors include: (i) whether a declaratory judgment would settle the controversy; (ii) whether it would serve a useful purpose in clarifying the legal relations at issue; (iii) whether the declaratory remedy is being used for purposes of procedural fencing or to provide an arena for a race to res judicata; (iv) whether the use of a declaratory judgment would increase friction between federal and state courts; and (v) whether there is an alternative remedy which is better or more effective. See MTD at 16 (citing State Farm Fire & Cas. Co. v. Mhoon, 31 F.3d at 983).

Turning to the five factors, Gina Delfino first argues that the case before the Court will not settle the state lawsuit and will not serve a useful purpose. See MTD at 18. She asserts that, where the only purpose of the declaratory judgment action is the ultimate determination of liability on an already accrued damage claim, the declaratory judgment plaintiffs are not acting at their peril, and the first factor weighs in favor of dismissing the suit. See MTD at 18 (citing AmSouth Bank v. Dale, 386 F.3d 763, 786 (6th Cir.2004)). With respect to the second factor, Gina Delfino contends that, because Old Republic has a duty to defend Schering Corp. even if Griffo and T. Gonzales were not acting within the course and scope of their employment, a declaratory judgment is of no immediate benefit to it. See MTD at 20. Gina Delfino also asserts that Schering Corp. may not benefit from a declaratory judgment, because, currently, there are multiple lawyers on the case who can assist Schering Corp.’s attorneys and the work can be divided among Schering Corp.’s attorneys, and Griffo or T. Gonzales’ attorneys. See MTD at 20. Thus, Gina Delfino argues, “the second factor weighs in favor of abstention as this action would not fully clarify the legal relations, and would interfere with the determination of factual issues in the state court case.” MTD at 21.

Gina Delfino asserts that the third factor also weighs in favor of abstention. She notes that the United States District Court of the Western District of Michigan cautioned against permitting a declaratory judgment action proceed in similar circumstances in Morrison v. Parker. See MTD at 21. She argues that Schering Corp. and Old Republic are attempting to force an early factual determination of the course and scope of Griffo and T. Gonzales’ employment. See MTD at 21. Furthermore, Gina Delfino contends that Schering and Old Republic have nothing to lose, because if the Court issues an adverse ruling, they could still present their arguments to the state court jury. See MTD at 22. Gina Delfino asserts that, if, on the other hand, Schering Corp. and Old Republic are successful, then they could attempt to preclude the state court from entertaining any arguments regarding course and scope of employment. See MTD at 22. Moreover, Gina Delfino argues that exercising jurisdiction in this matter would increase friction between the state and federal judicial systems. See MTD at 23. Gina Delfino argues that the Court’s exercise of jurisdiction would create friction, because the Court would have to determine a disputed fact already at issue in the state lawsuit. See MTD at 23. Gina Delfino asserts that “removing an issue properly before the state court, and preventing the state court from continuing to properly exercise jurisdiction, is sure to increase friction.” MTD at 24. Finally, addressing the fifth factor, G. Delfino contends that the state court action, initiated in 2008, is the best vehicle for completing discovery on the factual issues that she as well as Schering Corp. and Old Republic present. See MTD at 24 (citing Am. Nat’l Prop. v. Wood, No. 07-1048, 2008 WL 2229742, at *11 (D.N.M. Mar. 21, 2008) (Browning, J.); Am. Nat’l Prop. v. Wood, No. 07-1048, 2009 WL 1299797, at *6 (D.N.M. Jan. 29, 2009) (Browning, J.)). Gina Delfino asserts that Schering Corp. will have a full and complete opportunity to seek to prove that its employees were not acting within the course and scope of their employment on April 29, 2005. See MTD at 25. Furthermore, Gina Delfino argues that, regardless of the status of Schering Corp. and Old Republic’s contention that Griffo and T. Gonzales were not acting with the course and scope of their employment, Old Republic will have to continue to defend Schering Corp. in the state lawsuit, because the Supreme Court of New Mexico determined that Schering was . a social host. See MTD at 26 (citing Delfino v. Griffo, 150 N.M. 97, 257 P.3d 917).

On June 24, 2011, Griffo filed Defendant Donald J. Griffo’s Joinder in Motion to Dismiss and, Alternatively, Motion to stay. See Doc. 13 (“Griffo Joinder”). Griffo adopts and incorporates the facts and legal arguments that Gina Delfino raised. See Griffo Joinder at 1. He also represents that Gina Delfino does not oppose his joinder. See Griffo Joinder at 1. On July 5, 2011, T. Gonzales filed Defendant Thomas Gonzales’s Joinder in Motion to Dismiss and, Alternatively, Motion to Stay. See Doc. 16 (“T. Gonzales Joinder”). T. Gonzales also adopts and incorporates the procedural and legal arguments that Gina Delfino raised. See T. Gonzales Joinder at 1.

On July 15, 2011, Schering Corp. and Old Republic filed the Plaintiffs’ Response to Defendants’ Motion to Dismiss and, Alternatively, Motion to Stay (Doc. 11). See Doc. 17 (“Response”). Schering Corp. and Old Republic assert that they initiated this action with one intention — to obtain a declaration that they have no duty to defend Griffo and T. Gonzales. See Response at 1. Schering Corp. and Old Republic argue that G. Delfino’s motion is not a motion for summary judgment, and that they would object to the Court converting the motion, to dismiss into a motion for summary judgment. See Response at 2. Schering Corp. and Old Republic assert that they -will soon file a motion for summary judgment, which will demonstrate that Gina Delfino’s allegations cannot properly be characterized as factual allegations for consideration in the duty-to-defend analysis. See Response at 2. They contend that Gina Delfino’s arguments ignore “the longstanding practice of courts in permitting insurers (and like entities) to resolve questions as to their duty to, defend in declaratory judgment actions, and the benefit of this practice in ensuring speedy resolution of duty to defend issues.” Response at 3. Schering Corp. and Old Republic assert that this case is exactly one where a declaratory judgment is appropriate, because there is a morass of parties and issues. See Response at 3. Furthermore, Schering Corp. and Old Republic argue that Gina Delfino’s assertion that Schering Corp. would still have to defend direct claims against it is “flat-out wrong,” because all of Gina Delfino’s common-law claims of negligence against Schering Corp. were dismissed. Response at 3. Addressing this argument, Schering Corp. and Old Republic assert that: (i) in January 2009, Schering Corp., Griffo, and T. Gonzales were dismissed with prejudice from the state lawsuit pursuant to motions to dismiss all claims; (ii) the Supreme Court of New Mexico partially reversed the state trial court’s dismissal of Schering Corp. and other pharmaceutical Defendants, because, taking G. Delfino’s allegations as true, they could be social hosts under N.M.S.A.1978, § 41-11-1E; and (iii) the Supreme Court of New Mexico held that N.M.S.A.1978, § 41-11-1E is Gina Delfino’s exclusive remedy for recovery and thereby affirmed the dismissal of all of Gina Delfino’s other claims against Schering Corp., Griffo, and T. Gonzales. See Response at 4. Schering Corp. and Old Republic argue that a decision in this case that Griffo and T. Gonzales were not within the course and scope of their employment would end Schering Corp.’s participation in the state case. See Response at 4.

Schering Corp. and Old Republic also argue that the Court’s discretion to decline jurisdiction is limited, because there is no parallel proceeding in state court. See Response at 5. They assert that the state court proceeding is not a parallel proceeding, because: (i) Old Republic is not a party to the state case; (ii) the question of coverage is not at issue in the state case; and (iii) the bars, which face liquor liability claims in the state case, are not defendants in this case. See Response at 5. Schering Corp. and Old Republic contend that, when confronted with a similar case, the United States Court of Appeals for the Eighth Circuit found that a district court abused its discretion in dismissing the declaratory judgment action when there was no parallel state case. See Response at 5 (citing Scottsdale Ins. Co. v. Detco Indus., Inc., 426 F.3d 994, 999 (8th Cir.2005)). Schering Corp. and Old Republic point to Scottsdale Insurance Company v. Detco Industries, Inc. and cases from other circuits where courts have found that there was no parallel state action, because the insurer was not a party to the state lawsuit. See 426 F.3d at 997; Agora Syndicate Inc. v. Robinson Janitorial Specialists, Inc., 149 F.3d 371, 373 (5th Cir.1998); Coregis Ins. Co. v. McCollum, 955 F.Supp. 120, 122 (M.D.Fla.1997).

Addressing the Tenth Circuit’s five-factor test, from State Farm Fire & Casualty Company v. Mhoon, Schering Corp. and Old Republic assert that all five factors weigh in favor of retaining jurisdiction. See Response at 7. Schering Corp. and Old Republic argue that they brought this action to determine their duty to defend Griffo and T. Gonzales, which turns on whether Griffo and T. Gonzales were acting within the scope of their employment. See Response at 7. They also note that Gina Delfino does not dispute that this action would settle that question. See Response at 7. Turning to the second factor, Schering Corp. and Old Republic contend that this action will clarify the legal relations at issue, because it would resolve whether they are required to defend Griffo and T. Gonzales. See Response at 7. They assert that their duty to defend is triggered only if Griffo and T. Gonzales were acting within the course and scope of their employment. See Response at 7. Schering Corp. and Old Republic represent that it is “well settled that a declaratory judgment action is useful in clarifying the relationship between an insured and insurer.” Response at 7-8 (citing Cont'l Cas. Co. v. Bowen, No. 09-0810, 2010 WL 3743909, at *2 (D.Utah Sept. 22, 2010); Monticello Ins. Co. v. Kendall, No. 96-2546, 1997 WL 557326, at *1 (D.Kan. Sept. 24, 1997)). Furthermore, they argue that the third factor weighs in their favor, because they did not institute this action for the purposes of procedural fencing; rather, they brought suit to reach an expeditious and efficient resolution whether they have a duty to defend Griffo and T. Gonzales. See Response at 8. Schering Corp. and Old Republic assert that a plaintiff-insurer cannot be characterized as using a declaratory judgment action as a means of procedural fencing, because scope of insurance coverage determinations are “precisely the type of actions” that declaratory judgment actions are intended to resolve. Response at 8 (citing Cont’l Cas. Co. v. Bowen, 2010 WL 3748909, at *2). They argue that they have a substantial interest in resolving this question early, because defending the state lawsuit, set for trial in October 2012, will likely be very expensive. See Response at 7 & n. 5.

With respect to friction between the state and federal judicial systems, Schering Corp. and Old Republic argue that friction will not increase, because this action is not parallel to the state lawsuit. See Response at 9. They concede that the Tenth Circuit has recognized that discretion is properly declined when an insured brings a state action against its insurer alleging that coverage exists and the insurer seeks a declaratory judgment in a separately filed federal case. See Response at 10 (citing St. Paul Fire and Marine Ins. Co. v. Runyon, 53 F.3d 1167, 1169-70 (10th Cir.1995)). They assert, however, that jurisdiction is properly exercised when: (i) the state action involves an injured party against the insured; (ii) the insurer is not a party to the state action; and (iii) the state court is determining tort liability rather than coverage under the insurance contract. See Response at 10 (citing St. Paul Fire and Marine Ins. Co. v. Runyon, 53 F.3d at 1169-70). Furthermore, Schering Corp. and Old Republic argue that the New Mexico state courts, because of their more limited resources and extreme caseloads, are often pleased that a federal court will decide the coverage issue. See Response at 10. Finally, turning to the final factor, they contend that exercising jurisdiction would enable the best and most expeditious resolution of their claims. See Response at 10. Additionally, Schering Corp. and Old Republic assert that there is no “alternative” case in which to address Old Republic’s claims. See Response at 10-11 (citing Hartford v. Gandy Dancer, LLC, No. 10-0137, 2011 WL 1336523, at *12 (D.N.M. Mar. 30, 2011) (Browning, J.)). They argue that this declaratory judgment action is “essentially a coverage case,” where a declaratory judgment action is most effective, because there is a substantial interest in deciding coverage issues without undue delay. Response at 11 (citing State Farm Fire & Cas. Co. v. Mhoon, 31 F.3d at 983-84; Cont’l Cas. Co. v. Bowen, 2010 WL 3743909, at *2; Monticello Ins. Co. v. Kendall, 1997 WL 557326, at *1). Schering Corp. and Old Republic further assert that their interest in a speedy resolution is particularly strong when they will be required to litigate within a “morass of other issues and other parties involved in the state action.” Response at 11. Moreover, Schering Corp. and Old Republic argue that Schering Corp.’s duty to defend Griffo and T. Gonzales mimics the role of an insurer, and that, as such, the case law regarding insurance coverage applies to Schering Corp. See Response at 12.

On August 2, 2011, Gina Delfino filed her Reply in Support of Motion to Dismiss and, Alternatively, Motion to Stay. See Doc. 18 (“Reply”). Gina Delfino argues that New Mexico law governs the duty to defend and does not relieve Old Republic from its duty to defend when factual issues are presented. See Reply at 3. She asserts that, under New Mexico law, an insurer’s duty to defend arises out of the nature of the allegations of the complaint and an insurer may only refuse to defend when the obligations are “completely outside the policy coverage.” Reply at 3 (citing Hartford v. Gandy Dancer, LLC, 2011 WL 1336523, at *17; Knowles v. United Servs. Auto Ass’n, 113 N.M. 703, 704, 832 P.2d 394, 395 (1992); City of Albuquerque v. BPLW Architects & Eng’rs, Inc., 146 N.M. 717, 721, 213 P.3d 1146, 1150 (Ct. App.2009); SW Steel, Coil, Inc. v. Redwood Fire & Cas. Ins. Co., 140 N.M. 720, 726, 148 P.3d 806, 812 (Ct.App.2006)). Gina Delfino asserts that the duty to defend is determined at the beginning of litigation, because it arises from the allegations of the complaint. See Reply at 3 (citing Pendleton v. Pan Am. Fire and Cas. Co., 317 F.2d 96, 100 (10th Cir.1963); Am. Gen’l Fire and Cas. Co. v. Progressive Cas. Co., 110 N.M. 741, 744, 799 P.2d 1113, 1116 (1990)). She also contends that the State Third Amended Complaint’s factual allegations triggered Old Republic’s duty to defend Schering Corp.’s employees and that there are factual issues that need to be resolved in state court. See Reply at 4. She argues that Schering Corp. and Old Republic cannot, through the guise of a declaratory judgment action, change the venue in which that “course and scope” determination is to be made. Reply at 4.

Additionally, Gina Delfino asserts that, because the course and scope of employment and coverage issues are the same, the case does not present a purely legal issues that can or mil be resolved through examining the insurance policy. See Reply at 4. She argues that, unlike the Court’s analysis in Hartford v. Gandy Dancer, LLC, the duty-to-defend analysis in this case is not based on the language of the insurance policy. See Reply at 4. Gina Delfino contends that, in Hartford v. Gandy Dancer, LLC, a declaratory judgment action was allowed to proceed only because: (i) the coverage issues were “distinct from the issues before the state court”; and (ii) could be resolved by examining the allegations of the complaint, the insurance contract, and a legal question that the parties agreed was dispositive. Reply at 5. She asserts that the Declaratory Judgment Act does not permit parties to use the federal courts to remove an issue that will be addressed in the underlying state action and resolve it “by way of a mini-trial.” Reply at 5 (citing Cunningham Bros., Inc. v. Bail, 407 F.2d at 1167; Int’l Ass’n of Entrepreneurs v. Angoff, 58 F.3d 1266, 1270 (8th Cir.1995); Morrison v. Parker, 90 F.Supp.2d at 880). She argues that, if Schering Corp.- and Old Republic believe they are in a position to address this question through a motion for summary judgment, the proper venue in which to file that motion is the state court action. See Reply at 5.

Gina Delfino contends that this case resembles St. Paul Fire and Marine Insurance Co. v. Runyon and Progressive Specialty Insurance Co. v. Thakur, No. 06-542, 2006 U.S. Dist. LEXIS 97895 (D.N.M. Nov. 14, 2006) (Baldock, J.). See Reply at 7. Gina Delfino argues that here, as in St Paul Fire and Marine Insurance Co. v. Runyon, the state court action includes the issue on which the plaintiffs are seeking a declaratory judgment. See Reply at 7. Furthermore, she asserts that, as in Progressive Specialty Insurance Co. v. Thakur, the state proceeding encompassed the entire controversy, while the federal action might lead to piecemeal litigation. See Reply at 7. Gina Delfino argues that the cases upon which Schering Corp. and Old Republic rely are distinguishable, because here the insurance carrier and the insured have identical interests. See Reply at 7. She contends that Old Republic’s absence as a named party in the state case does not equate to its absence as a practical matter or to an inability to protect its interests. See Reply at 7. Additionally, Gina Delfino asserts that the unusual alignment of Schering Corp. and Old Republic’s interests means that Old Republic’s absence as a named party in the state court action does not divest the state proceeding of “parallel proceeding” status. Reply at 8. Gina Delfino further asserts that actions do not have to be the mirror image of each other to be parallel, and that neither identity of parties nor of issues is required for a state proceeding to parallel a federal proceeding. See Reply at 8 (citing Phoenix Assurance PLC v. Marimed Found, for Island Health Care Training, 125 F.Supp.2d 1214, 1223 (D.Haw.2000)). She contends that where, as here, the declaratory-judgment plaintiffs are asking a federal district court to decide a question already pending before the state court, and the interests of the declaratory-judgment plaintiffs are protected in the state court proceeding, the actions are parallel and “usurpation of the question by the federal court would inappropriately interfere with a state court proceeding.” Reply at 9 (citing Brillhart v. Excess Ins. Co. of Am., 316 U.S. at 495, 62 S.Ct. 1173).

Moreover, Gina Delfino asserts that a declaratory judgment is unlikely to settle the controversy or to serve a useful purpose, because such a result will not resolve the claims against Schering Corp. or absolve Old Republic of its duty to defend. See Reply at 10. She argues that the Supreme Court of New Mexico held that Schering Corp., as one of the pharmaceutical defendants in the state lawsuit, was a social host, and it is therefore directly liable for the implementation of its marketing policy. See Reply at 10 (citing Delfino v. Griffo, 150 N.M. 97, 257 P.3d 917). She asserts that this claim is separate from her vicarious liability claims against Schering Corp. for the actions of Schering Corp.’s employees and that the practical effect is that regardless of this action Schering Corp. will remain in the state lawsuit. See Reply at 10. Gina Delfino argues that this action is being used as a race to res judicata or collateral estoppel, and would increase friction between the federal and state courts, because it improperly encroaches on the New Mexico state courts’ jurisdiction. See Reply at 11. She contends that Schering Corp. and Old Republic’s assertion, that they wish to extract the course-and-scope issue from the state court and obtain summary judgment in federal court, is an admission that this action is being used for procedural fencing. See Reply at 11. Gina Delfino asserts that Schering Corp. could just as easily move for summary judgment in the state court action. See Reply at 11.

On November 16, 2011, the Court held a hearing. The Court explained that it has sometimes stayed cases similar to the one before the Court and has sometimes pulled out a legal issue to decide. See Transcript of Hearing at 4:18-22 (November 16, 2011) (Court) (“Tr.”). The Court stated that the line it has drawn in past cases is that, when it can extract a distinct legal issue, the Court will do so; when, on the other hand, the issue is one which the state court may have to resolve anyways, the Court will not decide it. See Tr. at 4:22-5:5 (Court). The Court further stated that whether Griffo and T. Gonzales were acting in the course and scope of their employment with Schering Corp. appears to be a factual issue, and asked whether the Court should reach that question. See Tr. at 5:5-11 (Court).

Speaking in support of her motion, Gina Delfino represented that, while the case was on appeal in the state court, she settled with the Brinker and Kraffty defendants pursuant to confidential settlement agreements. See Tr. at 5:25-6:9 (Aguilar). She also stated that, in the state court case, she had stipulated that the only cause of action remaining, after the Supreme Court of New Mexico’s recent deci- • sion, was the liquor liability social host cause of action against Schering Corp., Abbott Laboratories, and Merck & Co. See Tr. at 6:10-24 (Court, Aguilar). Gina Delfino informed the Court that Donahue, as well as state defendants Paz and Merck & Co., have filed motions for summary judgment in that proceeding. See Tr. at 6:25-7:5 (Court). She asserted that discovery in the state lawsuit has shown that Griffo, T. Gonzales, and Paz were working for a joint venture comprised of Merck & Co. and Schering Corp. See Tr. at 7:6-8 (Aguilar). She represented that the state court had denied her motion to join the joint venture as a party and that she is currently appealing that decision to the Court of Appeals of New Mexico. See Tr. at 7:9-11 (Aguilar). Gina Delfino also stated that at this point Merck & Co. has acquired Schering Corp., even though Schering Corp. remains a separate defendant in the state case. See Tr. at 7:12-18 (Aguilar).

Turning to her motion to dismiss, Gina Delfino conceded that, to the extent that she argued that she had a direct cause of action against Schering Corp. and its employees, her motion was incorrect in light of the Supreme Court of New Mexico’s decision. See Tr. at 7:19-20 (Aguilar). She stated that she intends to file a Fourth Amended Complaint in the state proceeding, which will allege liability against the pharmaceutical Defendants only in connection with the Liquor Liability Act. See Tr. at 7:25-8:3 (Aguilar). Gina Delfino asserted that she has evidence of Schering Corp.’s reckless conduct, in terms of policies and procedures that it implemented which go to whether Schering Corp. is liable as a social host under the Liquor Liability Act. See Tr. at 8:4-10 (Aguilar). She maintained, however,’ that whether Griffo or T. Gonzales acted within the course and scope of their employment is a factual issue that the state court will need to resolve in the state proceeding. See Tr. at 8:11-18 (Aguilar). After a question from the Court, Gina Delfino clarified that her Fourth Amended Complaint in the state lawsuit will also still contain claims against Griffo and T. Gonzales. See Tr. at 8:22-9:2 (Court, Aguilar). The Court then asked whether Gina Delfino could sue individuals under the Liquor Liability Act. See Tr. at 9:3-5 (Court). She responded that Griffo and T. Gonzales were named in their individual capacity as well as in their capacity as representatives of Schering Corp. See Tr. at 9:6-8 (Aguilar). She stated that one of the issues that will be tried in state court is whether Griffo and T. Gonzales were acting in their individual capacity, and that she believes that Schering Corp. will take the position that they were on their own time. See Tr. at 9:9-16 (Aguilar). Gina Delfino also asserted that she and Schering Corp. disagree on what the Supreme Court of New Mexico meant when it stated that, taking all the facts of the Third Amended Complaint as true, that Schering Corp. was a social host. See Tr. at 9:23-10:5 (Aguilar).

Next, Griffo spoke in support of the Motion to Dismiss, which he joined. See Tr. at 10:13 (Court). Griffo asserted that there is a factual issue whether Griffo and T. Gonzales were acting within the course and scope of their employment. See Tr. at 10:14-20 (Yenson). Griffo stated that the events of April 29, 2005 were three separate incidents. See Tr. at 10:21-22 (Yen-son). First, the initial event, which the Brinker defendants have settled, was at Chili’s Restaurant. See Tr. at 10:22-23 (Yenson). Griffo asserted that there is no dispute that he and T. Gonzales arranged for this out-of-office event, and that it was Schering Corp.’s policy to take doctors and their employees out for a lunch. See Tr. at 10:24-11:2 (Yenson). He asserted that these events are part of Schering Corp.’s marketing and client development program. See Tr. at 11:2-3 (Yenson). Griffo argued that there is no doubt that he and T. Gonzales were acting within the course and scope of their employment while at Chili’s, and that they put the tab on their corporate credit cards. See Tr. at 11:3-7 (Yenson). Griffo asserted that the course- and-scope issue becomes more questionable when they moved to Uptown Sports Bar & Grill, where at least a couple of beers were purchased. See Tr. at 11:8-16 (Yenson). Next, Griffo stated that the group went to Doc & Eddy’s, and that discovery has not yet revealed whether any alcohol was purchased there. See Tr. at 11:17-20 (Yenson). He argued that there is probably a factual question whether he was still in the course and scope of his employment at Doc & Eddy’s, and that Doc & Eddy’s was the last stop the group made before A. Gonzales drove on 1-25. See Tr. at 11:21-24 (Yenson). Griffo asserted that the jury in the state case will have to determine whether the employees were acting in the course and scope of their employment or on a frolic of their own, which is a question of fact. See Tr. at 12:8-15 (Yenson). T. Gonzales argued that this case does not present a pure legal issue, and that whether they were acting in the course and scope of their employment is a factual question that the jury should decide. See Tr. at 12:18^-24 (Stand-ridge).

Schering Corp. and Old Republic argued that this case is one in which the Court should exercise its discretion to hear the declaratory judgment action and do so in an expeditious manner. See Tr. at 13:5-7 (Gulley). Schering Corp. and Old Republic asserted that, although Griffo and T. Gonzales were employees at the time of the accident, they were not acting in the course and scope of their employment. See Tr. at 13:8-11 (Gulley). Consequently, Schering Corp. and Old Republic argued that Old Republic has no duty to defend Griffo and T. Gonzales, because they were never in the course and scope of their employment. See Tr. at 13:11-13 (Gulley). Schering Corp. and Old Republic conceded that there are factual issues; they asserted that the state case is a morass of factual issues. See Tr. at 13:UU16 (Gulley). Schering Corp. and Old Republic argued that there will be legal issues before the Court, and noted that the Old Republic insurance policy is not before the Court. See Tr. at 13:16-17 (Gulley).

Summarizing the allegations in the state case, Schering Corp. and Old Republic asserted that the gathering began around 2:00 p.m. or so at Chili’s on a Friday. See Tr. at 13:20-22 (Gulley). Schering Corp. and Old Republic stated that there is no dispute that Griffo and T. Gonzales initiated the gathering, but argued that they were social friends with the office staff. See Tr. at 13:22-24 (Gulley). Schering Corp. and Old Republic represented that there were three office staff members at the luncheon, but that Dr. Leech did not attend because he was in Oregon. See Tr. at 13:24-14:1 (Gulley). Schering Corp. and Old Republic asserted that both of the two staff members who were deposed stated that they were not aware of a business purpose for the luncheon. See Tr. at 14:1— 4 (Gulley). Schering Corp. and Old Republic further asserted that Donahue, the Abbott Laboratories representative, stated that he was there for a Friday afternoon happy hour, and Paz, the Merck & Co. representative, stated that he was there to talk about scheduling issues involving a joint drug venture. See Tr. at 14:4-9 (Gulley). Sehering Corp. and Old Republic stated that by 4:00 p.m. lunch had been served and that T. Gonzales paid for it, charging $198.00 for an in-office lunch with a Dr. Ramo. See Tr. at 14:11-14 (Gulley). They represented that T. Gonzales’ accounting to Sehering Corp. of his expenditures were not for this lunch and that, although Griffo charged it to his company credit card, he paid for the lunch as a personal expense. See Tr. at 14:15-18 (Gulley). They contended that there is significant evidence that there was never any business purpose for the meeting. See Tr. at 14:19-20 (Gulley).

Sehering Corp. and Old Republic asserted that, if they have to litigate this issue in state court, they will be caught up in the morass of Liquor Liability Act issues, even though the two bars have settled the case. See Tr. at 14:21-25 (Gulley). As evidence of the complexity of the state case, Schering Corp. and Old Republic stated that they have been attempting to schedule forty depositions of witnesses, only two of whom relate to the course-and-scope issues. See Tr. at 15:2-8 (Gulley). Sehering Corp. and Old Republic argued that there are a huge number of issues and large amount of discovery that will occur in state court, none of which relate to Griffo and T. Gonzales’ actions in relation to the course and scope of their employment. See Tr. at 15:16-19 (Gulley). They argued that Old Republic in particular is entitled to file a declaratory action in federal court to have the issue of course and scope of employment expeditiously determined. See Tr. at 15:19-24 (Gulley). Sehering Corp. and Old Republic contended that the Court could extract the issue of course and scope of employment, even though it is a factual issue, from the morass of issues in the state case to give Sehering Corp. and Old Republic their day in court. See Tr. at 16:4-9 (Gulley).

Turning to arguments made in the Motion to Dismiss and Reply, Sehering Corp. and Old Republic asserted that the Supreme Court of New Mexico eliminated all of the state claims expect for the social host liability claims, for which the standard is recklessness. See Tr. at 16:12-19 (Gulley). They asserted that the only way that Sehering Corp. can be held liable in the state lawsuit is through the conduct of its employees, Griffo and T. Gonzales. See Tr. at 16:20-22 (Gulley). Sehering Corp. and Old Republic argued that, if Sehering Corp. was not a reckless social host, it will not be liable for any claims. See Tr. at 16:22-24 (Gulley). Sehering Corp. and Old Republic also argued that Griffo and T. Gonzales are asserting that they were within the course and scope of their employment only because that entitles them to a free lawyer in the state case. See Tr. at 17:2-4 (Gulley). They asserted that, if Griffo and T. Gonzales were being truthful, this Friday afternoon happy hour was unrelated to a business purpose, and then, under the Supreme Court of New Mexico’s decision, neither Griffo and T. Gonzales nor Sehering Corp. and Old Republic would be liable. See Tr. at 17:9-13 (Gulley). They contended that, if the Court does not hear this case, then Sehering Corp. and Old Republic will be tied up in all of the other issues involved in the state case until the end. See Tr. at 17:16-19 (Gulley). Sehering Corp. and Old Republic also argued that the state lawsuit is not a parallel proceeding, because: (i) Old Republic is only a party to the federal case; and (ii) they have not joined the bars as parties to the federal case. See Tr. at 17:20-23 (Gulley). They argued that it would be relatively simple and expeditious for the Court to address the issue of course and scope of employment. See Tr. at 17:23-25 (Gulley). Schering Corp. and Old Republic asserted that, if the Court were to address this one issue, then they believe the end result would be that Griffo and T. Gonzales were not acting in the course and scope of their employment, which would allow Schering Corp. to get out of the state case, and that Old Republic would not have to pay for the defense of Schering Corp., Griffo, or T. Gonzales. See Tr. at 18:1-6 (Gulley).

The Court asked whether Schering Corp. and Old Republic intended to use a judgment from the Court as collateral estoppel in the state case. See Tr. at 18:7-9 (Court). Schering and Old Republic stated that they so intended to use the Court’s decision in state court. See Tr. at 18:10 (Gulley). The Court then asked whether this case would also involve a jury trial. See Tr. at 18:13-14 (Court). Schering Corp. and Old Republic responded that it would depend on whether the defendants asked for a jury. See Tr. at 18:15-16 (Gulley). The Court asked whether Schering Corp. and Old Republic agreed that the only issue that their pleadings raise is the course-and-seope-of-employment question. See Tr. at 18:17-19 (Court). Schering Corp. and Old Republic agreed, and stated that this issue also indirectly raises Old Republic’s duty to defend Schering Corp.’s employees in the state lawsuit. See Tr. at 18:20-22 (Gulley). The Court asked whether the duty-to-defend question is a legal issue that requires any analysis, or if the answer to the legal issue follows from a finding that Griffo and T. Gonzales were not acting in the course and scope of their employment. See Tr. at 18:23-19:1 (Court). Schering Corp. and Old Republic answered that Old Republic’s duty to defend would follow from the Court’s ruling on the course-and-scope-of-employment question, because, although the policy is not before the Court, the policy is clear that if employees are not acting in the course and scope of their employment, there is no duty to provide them with a defense. See Tr. at 19:2-8 (Gulley). Responding to the Court, Schering Corp. and Old Republic acknowledged that eventually the state court would reach the same issue. See Tr. at 19:9-11 (Court, Gulley). Schering Corp. and Old Republic asserted that they want to have this one issue decided, so that they are not embroiled in a multidefendant and multi-claim case which involves complex questions about the comparative fault of other defendants who have settled the state case. See Tr. at 19:15-24 (Gulley). The Court asked whether Judge Nash has given any indication what she thinks of this case. See Tr. at 20:4-5 (Court). Schering Corp. and Old Republic.stated that, as far as they were aware, Judge Nash is unaware of this suit, especially because the state case was on appeal for a few years. See Tr. at 20:12-14 (Gulley). They also noted that Gina Delfino has appealed Judge Nash’s ruling that she cannot add the Merck & Co. and Schering Corp. joint venture as a defendant. See Tr. at 20:15-17 (Gulley). They stated that there has been no motion to stay in the state case during that appeal. See Tr. at 20:18-20 (Court, Gulley). The Court then asked whether any discovery had been done in the state case while it was on appeal. See Tr. at 20:24-25 (Court). Schering Corp. and Old Republic replied that some discovery took place while the state lawsuit was on appeal. See Tr. at 21:2-14 (Gulley).

The Court then asked why Schering Corp. and Old Republic thought that the course-and-scope issue needed to be resolved expeditiously. See Tr. at 21:15-19 (Court). Schering Corp. and Old Republic stated that they would prefer that the issue be resolved quickly, because there are forty witnesses that will be deposed between January and March of 2012. See Tr. at 21:20-23 (Gulley). Schering Corp. and Old Republic argued that Schering Corp. will be involved in the depositions of all those witnesses, because Schering Corp. cannot currently ignore the issue of damages. See Tr. at 22:1-8 (Gulley). Additionally, Schering Corp. and Old Republic pointed out that Paz, Merck & Co., and Abbott Laboratories all have pending motions for summary judgment before the state court. See Tr. at 22:9-11 (Gulley). Schering Corp. and Old Republic agreed that their primary motivation for desiring an expeditious resolution of this issue is the impending discovery that will take place in the state lawsuit. See Tr. at 23:5-8 (Court, Gulley). Once again, however, Schering Corp. and Old Republic conceded that whether Griffo and T. Gonzales were in acting in the course and scope of their employment is predominately a factual issue. See Tr. at 25:2-4 (Gulley). Schering Corp. and Old Republic also reiterated their argument that the state lawsuit is not a parallel proceeding, because Old Republic is not a party to the state case and there are state defendants who are not parties to the case before the Court. See Tr. at 25:18-26:1 (Court, Gulley).

Gina Delfíno emphasized Schering Corp. and Old Republic’s concession that the issue before the Court is a factual one. See Tr. at 26:7-12 (Aguilar). Gina Delfino also reiterated that it is a factual issue which has been raised as an affirmative defense in the state court case. See Tr. at 26:12-15 (Aguilar). Gina Delfino asserted that Schering Corp. will likely file a motion for summary judgment in the state case and that Judge Nash will likely deny that motion, requiring the state case to proceed to a jury trial. See Tr. at 26:16-23 (Aguilar). She further asserted that it is equally likely that the case before the Court will proceed to a jury trial. See Tr. at 26:24-27:4 (Aguilar). She argued that this case would require extensive discovery on Schering Corp.’s corporate policies. See Tr. at 27:8-15 (Aguilar). Gina Delfino contended that she would have to put those witnesses on twice. See Tr. at 28:5-7 (Court, Aguilar). Gina Delfino represented that the federal case will require the parties to expend more money and try the issue twice. See Tr. at 28:16-23 (Aguilar). The Court then asked what case most closely resembled the case before the Court. See Tr. at 28:24-29:1 (Court). Gina Delfino responded that this case most closely resembles the THI of New Mexico at Las Cruces, LLC v. Fox case. See Tr. at 29:2-6 (Aguilar). G. Delfino also reiterated that the parties do not have to be identical to the state case for there to be a parallel proceeding. See Tr. at 29:25-30:4 (Aguilar).

Griffo asserted that the case before the Court would likely have to go to trial, because of the many factual issues in the case. See Tr. at 30:8-14 (Yenson). Griffo represented that the trial before the Court would be limited, but that this case would require a trial and that Judge Nash would likely determine that the state case would also require a trial. See Tr. at 30:16-19 (Yenson). Griffo also emphasized that the issues before the Court and the state court involve factual issues, and that he believes that those factual issues would preclude a grant of summary judgment in the state case. See Tr. at 31:7-11 (Yenson). Griffo represented that several senior supervisors at Schering Corp. were “toeing the company line” in their depositions, but that several Schering Corp. representatives consistently stated that they were allowed to take people to Chili’s on behalf of the company. Tr. at 31:12-20 (Yenson).

Schering Corp. and Old Republic represented that the amount of discovery needed in this case would be limited. See Tr. at 32:14-15 (Gulley). Schering Corp. and Old Republic stated that Griffo and T. Gonzales had already been deposed. See Tr. at 32:15-17 (Gulley). They argued that the most important witness is A. Gonzales and that she has not yet been deposed. See Tr. at 32:18-23 (Court, Gulley). Schering Corp. and Old Republic represented that, in speaking with A. Gonzales, because her case is before the Supreme Court of New Mexico, she would likely assert her rights under the Fifth Amendment in any deposition. See Tr. at 33:3-12 (Gulley). They asserted that it was unlikely that the parties would be able to depose A. Gonzales if the Court were to take the case and set an expeditious discovery schedule. See Tr. at 33:17-21 (Gulley). Schering Corp. and Old Republic agreed that the state case would likely go to trial, but did not want to foreclose the possibility of a summary judgment motion. See Tr. at 35:9-11 (Gulley).

LAW REGARDING EXERCISE OF DISCRETIONARY JURISDICTION OVER DECLARATORY JUDGMENT ACTIONS

In Brillhart v. Excess Insurance Co. of America, the Supreme Court of the United States explained that district courts are “under no compulsion to exercise ... jurisdiction” under the Federal Declaratory Judgment Act, 28 U.S.C. §§ 2201 to 2202. 316 U.S. at 494, 62 S.Ct. 1173. The Supreme Court explained:

Ordinarily it would be uneconomical as well as vexatious for a federal court to proceed in a declaratory judgment suit where another suit is pending in a state court presenting the same issues, not governed by federal law, between the same parties. Gratuitous interference with the orderly and comprehensive disposition of a state court litigation should be avoided. Brillhart v. Excess Ins. Co. of Am., 316 U.S. at 495, 62 S.Ct. 1173. A court should determine whether the lawsuit “can be better settled in the proceeding pending in the state court.” Brillhart v. Excess Ins. Co. of Am., 316 U.S. at 495, 62 S.Ct. 1173.

The Tenth Circuit has adopted a five-factor test for evaluating whether a district court should exercise its discretionary jurisdiction over a declaratory judgment action. See St. Paul Fire and Marine Ins. Co. v. Runyon, 53 F.3d at 1169. These factors include:

whether a declaratory action would settle the controversy; [2] whether it would serve a useful purpose in clarifying the legal relations at issue; [3] whether the declaratory remedy is being used merely for the purpose of “procedural fencing” or “to provide an arena for a race to res judicata”; [4] whether use of a declaratory action would increase friction between our federal and state courts and improperly encroach upon state jurisdiction; and [5] whether there is an alternative remedy which is better or more effective.

St. Paul Fire and Marine Ins. Co. v. Runyon, 53 F.3d at 1169 (alterations original)(quoting State Farm Fire and Cas. Co. v. Mhoon, 31 F.3d at 983). In St. Paul Fire and Marine Insurance Co. v. Runyon, the plaintiff, an insurance company, sought a declaratory judgment holding that it had no obligation to defend the defendant under the terms of a professional-liability insurance policy. See 53 F.3d at 1168. The defendant sought indemnification and argued that the plaintiff had a duty to defend him against, claims brought by his coworkers. See St. Paul Fire and Marine Ins. Co. v. Runyon, 53 F.3d at 1168. The insurance-company plaintiff refused to provide a defense. See St. Paul Fire and Marine Ins. Co. v. Runyon, 53 F.3d at 1168. Aft