ORDER

LAWRENCE KARLTON, Senior District Judge

Plaintiff General Steel Domestic Sales, LLC ("General Steel") alleges that defendants conspired together in violation of the Racketeering Influenced Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961, to ruin plaintiff's business and force defendant government agencies to prosecute plaintiff for false consumer law violations, and violated plaintiff's civil rights under 42 U.S.C. § 1983. As a result, plaintiff alleges loss of business and seeks $500,000 in compensatory damages and $500,000 in punitive damages against each individual defendant.

General Steel has named some sixty defendants, including individuals from the Colorado Attorney General's Office ("Colorado AG"), the Sacramento County District Attorney's Office ("Sacramento defendants"), and the New Mexico Attorney General's Office ("New Mexico AG"); the Denver/Boulder Better Business Bureau, its individual board of directors, and the corporate Better Business Bureau office (collectively, "BBB"); Gannett Co. TV station and its reporter Chip Yost ("Gannett"); Steelwise LLC and several of its employees ("Steelwise"); and finally General Steel customers Dana Beers, Sue Beers and Kirk Jarvis (collectively, "Nebraska defendants").

Pending before the court are three motions: the Nebraska defendants and Steelwise each have filed motions to dismiss for lack of personal jurisdiction, and BBB has filed a motion to stay under either the Colorado River or Younger abstention doctrines, in which Gannett has joined. The court resolves the matter on the parties' papers and after oral argument. For the reasons set forth below, the court grants the motion to dismiss with respect to the Nebraska defendants and Steelwise, and stays the remainder of the case.

I. Background

The crux of plaintiff's complaint is that defendants allegedly conspired together to create the false impression that General Steel, which is in the business of selling steel buildings, was violating consumer protection laws and engaging in unfair business practices and illegal advertising. According to General Steel, this conspiracy led to its prosecution in various civil actions and injured General Steel's business and reputation.

The relevant facts for purposes of the motion to stay pending before the court concern prior ongoing litigation. Specifically, some of the defendants in this case have either initiated suit against General Steel in state court, or have already previously been sued by General Steel in state court. First, both the Sacramento defendants and the Colorado AG's office have pending suits against General Steel. The Sacramento defendants currently have a quasi-criminal action against plaintiff pending in California Superior Court based on alleged violations of consumer protection and unfair business practice laws. People of the State of California v. General Steel Domestic Sales LLC, et al., 05-AS-03689. In addition, the Colorado AG's office sued General Steel and a number of its employees in Colorado state court in 2004. Colorado v. General Steel, et al., 2004-CV-143. The litigation concerns allegations that General Steel violated the Colorado Consumer Protection Act in connection with its sale of steel buildings to consumers throughout the United States.

Second, General Steel has filed two actions in Colorado state court. The BBB and its employees Jean Herman and Matt Fehling are presently defendants in a pending state court action initiated by General Steel in Colorado district court in 2004. General Steel Domestic Sales LLC v. Denver/Boulder BBB, Jean Herman, and Matt Fehling, 2004-CV-155. The state court action has been stayed pending the outcome of the Colorado AG's case against General Steel. In addition, General Steel is also litigating in Colorado district court against Steelwise LLC and various former General Steel employees. General Steel Domestic Sales LLC v. Donahue et al., 2004-CV-9181.

II. Standard

Motion to Dismiss for Lack of Personal Jurisdiction

When a defendant challenges the sufficiency of personal jurisdiction, the plaintiff bears the burden of establishing that the exercise of jurisdiction is proper. Sinatra v. National Enquirer, Inc., 854 F.2d 1191, 1194 (9th Cir. 1988).

Analysis of the appropriateness of the court's personal jurisdiction over a defendant in a case in which the court exercises diversity jurisdiction is resolved under California's long arm statute. Aanestad v. Beech Aircraft Corp., 521 F.2d 1298, 1300 (9th Cir. 1974). The statute authorizes the court to exercise personal jurisdiction on any basis consistent with the due process clause of the United States Constitution. Cal. Code Civ. Proc. § 410.10; Rocke v. Canadian Auto Sport Club, 660 F.2d 395, 398 (9th Cir. 1981).

Consistent with the due process clause, the court may exercise personal jurisdiction over a defendant when the defendant has certain minimum contacts with the forum state such that the maintenance of the suit does not offend traditional notions of fair play and substantial justice. Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945). If the defendant is domiciled in the forum state, or if the defendant's activities there are "substantial, continuous and systematic," a federal court can exercise general personal jurisdiction as to any cause of action involving the defendant, even if unrelated to the defendant's activities within the state. Perkins v. Benguet Consolidated Mining Co., 342 U.S. 437 (1952); Data Disc, Inc. v. Systems Technology Assoc., Inc., 557 F.2d 1280, 1287 (9th Cir. 1977).

If a non-resident defendant's contacts with California are not sufficiently continuous or systematic to give rise to general personal jurisdiction, the defendant may still be subject to specific personal jurisdiction on claims arising out of defendant's contacts with the forum state. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 477-78 (1985); Haisten v. Grass Valley Medical Reimbursement Fund, Ltd., 784 F.2d 1392, 1397 (9th Cir. 1986).

The court employs a three-part test to determine whether the exercise of specific jurisdiction comports with constitutional principles of due process. See Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004). First, specific jurisdiction requires a showing that the out-of-state defendant purposefully directed its activities toward residents of the forum state or purposefully availed itself of the privilege of conducting activities in the forum state, thus invoking the benefits and protections of its laws. Burger King, 471 U.S. at 474-75. Second, the controversy must be related to or arise out of defendant's contact with the forum. Ziegler v. Indian River County, 64 F.3d 470, 473 (9th Cir. 1995). Third, the exercise of jurisdiction must comport with fair play and substantial justice, i.e., it must be reasonable. Haisten, 784 F.2d at 1397.

III. Analysis

A. Motions to Dismiss for Lack of Personal Jurisdiction

Steelwise and the Nebraska defendants have filed a motion to dismiss for lack of personal jurisdiction, which primarily addresses whether jurisdiction is proper in light of RICO. General Steel maintains that personal jurisdiction is premised upon four grounds: (1) RICO, (2) pendant personal jurisdiction, (3) the conspiracy theory of jurisdiction, and, at least with respect to Steelwise, (4) California's long-arm statute. For the reasons set forth below, the court finds that plaintiff has failed to establish personal jurisdiction under any of these grounds.

1. Personal Jurisdiction Under RICO

First, plaintiff argues that personal jurisdiction is proper under RICO. 18 U.S.C. § 1962. A federal court may exercise personal jurisdiction in a civil RICO case pursuant to § 1965(b), which provides that:

In any action under section 1964 of this chapter in any district court of the United States in which it is shown that the ends of justice require that other parties residing in any other district be brought before the court, the court may cause such parties to be summoned, and process for that purpose may be served in any judicial district of the United States by the marshal thereof.

"Congress intended the `ends of justice' provision to enable plaintiffs to bring all members of a nationwide RICO conspiracy before a court in a single trial." Butcher's Union Local No. 498, United Food and Commercial Workers v. SDC Inv., Inc. ("Butcher's Union"), 788 F.2d 535, 539 (9th Cir. 1986). The fatal flaw with plaintiff's position is that it has not sufficiently alleged a single nationwide conspiracy involving Steelwise or the Nebraska defendants.

It is well-established that "the right to nationwide service in RICO suits is not unlimited." Id. at 539. Thus, for instance, the act of "merely naming persons in a RICO complaint does not, in itself, make them subject to section 1965(b)'s nationwide service provisions." Id. Rather, the complaint must reveal factual allegations supporting the existence of a single nationwide conspiracy. The facts of Butcher's Union are instructive on the limits of nationwide service. In that case, it was this very court that initially held that jurisdiction under RICO was improper. The plaintiffs in that case maintained that there was a nationwide conspiracy of "union-busting" among four separate employers that was carried out by their lawyers. Id. at 537. The plaintiffs conceded, however, that the defendant employers had no connection with each other beyond the use of the same lawyers, and that each individual conspiracy was largely independent. Id. at 536.

Accordingly, this court held that the plaintiffs had failed to allege a nationwide pattern of racketeering activity in which the four defendant employees were participants. Specifically, the plaintiffs failed to allege that the defendants had "specific knowledge of or participation in any of the other conspiracies."Id. at 539. This led "inexorably to the conclusion that this `case' is in fact four separate cases each involving an independent conspiracy." Id. at 538. As such, there was only jurisdiction over the conspiracy centered around the California-based defendant employer. Id.

Similarly, here, plaintiff has failed to allege a single nationwide conspiracy. Its conclusory statement to the contrary wholly fails to satisfy plaintiff's burden of proving that personal jurisdiction is proper. The crux of the allegations against Steelwise is that Steelwise stole proprietary information and turned it over to the Colorado AG. There is no allegation that Steelwise consented to a larger agreement implicating individuals in California or the multitude of other defendants in this case (e.g., the Nebraska defendants). While General Steel points out that "[a] formal agreement is not necessary," United States v. Frega, 179 F.3d 793, 893 (9th Cir. 1998), that does not change the requirement that the defendant at least "was aware of the essential nature and scope of the enterprise and intended to participate in it," Baumer v. Pachl, 8 F.3d 1341, 1346 (9th Cir. 1993). Because General Steel has made no such showing, RICO does not provide a basis for jurisdiction over Steelwise.

For substantially similar reasons, RICO does not provide for personal jurisdiction over the Nebraska defendants. The main allegation against the Nebraska defendants, who were former customers of General Steel, is that they provided false information to the Colorado AG. FAC ¶ 124-27. Specifically, according to General Steel, when the Nebraska defendants were unable to obtain a return of deposits paid to General Steel for the purchase of a steel building, they falsely informed the Colorado AG of General Steel's deceptive trade practices. Id. Again, however, there is no allegation linking the Nebraska defendants with any individual in California, such as the Sacramento defendants. Accordingly, General Steel has failed to allege the existence of a single nationwide conspiracy that encompasses the Nebraska defendants.

2. Pendant Personal Jurisdiction

General Steel also argues that jurisdiction is proper under "pendant personal jurisdiction." This doctrine provides that "a court may assert pendent personal jurisdiction over a defendant with respect to a claim for which there is no independent basis of personal jurisdiction so long as it arises out of a common nucleus of operative facts with a claim in the same suit over which the court does have personal jurisdiction." Action Embroidery Corp. v. Atlantic Embroidery, Inc., 368 F.3d 1174, 1180 (9th Cir. 2004). The doctrine is typically applied where a federal claim for which there is nationwide personal jurisdiction is combined with other claims for which there is not nationwide personal jurisdiction. Id. at 1180-81.

General Steel asserts that because personal jurisdiction over the various defendants is proper under RICO, its § 1983 claims may now be brought under the pendant personal jurisdiction doctrine. Given that the court has found that RICO cannot provide a basis for jurisdiction with respect to Steelwise or the Nebraska defendants, pendant jurisdiction over these additional claims is similarly lacking.

3. Conspiracy Theory of Jurisdiction

Alternately, plaintiff contends that personal jurisdiction may be exercised over Steelwise and the Nebraska defendants under a conspiracy theory of jurisdiction. Under this theory, when one co-conspirator is subject to personal jurisdiction in a particular forum, then all of the other co-conspirators are possibly subject to personal jurisdiction in that forum. As an initial matter, the court finds that plaintiff has failed to allege a conspiracy with respect to all defendants and the theory is therefore inapplicable on this basis alone.

Furthermore, the validity of conspiracy theory of jurisdiction in this circuit is in doubt. In Piedmont Label Co. v. Sun Garden Packing Co., 598 F.2d 491 (9th Cir. 1979), the Ninth Circuit expressly rejected "any implication . . . that members of a conspiracy, as agents of one another, `transact business' for venue purposes in any district where one of them transacts business." Id. at 492. The court again had the opportunity to adopt the theory in Underwager v. Channel 9 Australia, 69 F. 3d 361 (9th Cir. 1995), but it did not reach the merits of the theory because the plaintiff there had failed to sufficiently allege conspiracy. Similarly, the court sees no reason to adopt it now.

4. California's Long-Arm Statute

General Steel also maintains that personal jurisdiction is proper with respect to Steelwise under California's long-arm statute. The pertinent facts here are straightforward. The Steelwise defendants are former employees of General Steel. After leaving General Steel and founding Steelwise, a dispute arose over the alleged theft of trade secrets and confidential proprietary data, which were turned over to the Colorado AG, who then gave the information to the Sacramento DA. Steelwise also maintains a website used for advertisement and the sale of steel buildings over the internet.

A. Specific Jurisdiction

First, General Steel argues that specific jurisdiction exists in this case. In analyzing a claim of specific jurisdiction, there must be purposeful availment by the defendant of the forum state; the claim must arise out of the forum-related activities; and the exercise of jurisdiction must be reasonable.Schwarzenegger v. Fred Martin Motor Co., 374 F.3d 797, 802 (9th Cir. 2004). The purposeful direction of activities at a forum state alone can justify a finding of purposeful availment. Id. at 803. The test for purposeful direction requires that the defendant (1) commit an intentional act that is (2) expressly aimed at the forum state and that (3) causes harm that the defendant knows is likely to be suffered in the forum state. Id. at 802.

Here, plaintiff alleges that Steelwise engaged in two forms of purposeful direction of activities at California. Pl.'s Opp'n 13:26-14:13. First, Steelwise is alleged to have provided information stolen from plaintiff to the Sacramento DA. This was allegedly done in order to hurt plaintiff's business in California, and caused harm in California. Second, Steelwise maintains a website advertising its products that can be accessed by California residents. The court disagrees that either of these activities constitutes purposeful direction

Under the purposeful direction test, the intentional act committed by defendant must be "expressly aimed at the forum state." By plaintiff's own allegations, however, Steelwise has not engaged in such conduct. Plaintiff alleges that Steelwise obtained stolen data and provided it to the Colorado AG. The Colorado AG then provided same information to the Sacramento DA. Regardless of whom eventually gained access to the information, defendant's conduct involved only the Colorado AG. This conduct was not expressly aimed at California and is not sufficient to constitute purposefully directed activity.

Also unavailing is the fact that Steelwise operates a website accessible to California residents. For specific jurisdiction to attach, it must be determined that "but for" a defendant's forum-related activities, the plaintiff would not have suffered injury. Callaway Golf Corp v. Royal Canadian Golf Assoc., 125 F. Supp. 2d 1194, 1204 (C.D. Cal. 2000). Plaintiff alleges that Steelwise's website is "evidence of motive for" and "closely related to" conspiracy to harm plaintiff's business. Pl.'s Opp'n at 15. This wholly fails to demonstrate how Steelwise's website gave rise to the current suit. Accordingly, these allegations are insufficient to meet the "but for" test necessary for this court to exercise specific jurisdiction.

B. General Jurisdiction

Second, plaintiff maintains that Steelwise's website also constitutes sufficiently continuous and systematic contacts with California to confer general jurisdiction. General jurisdiction exists if the non-resident's contacts with the forum are continuous and systematic, and the exercise of jurisdiction satisfies "traditional notions of fair play and substantial justice."Reebok Int'l Ltd. v. McLaughlin, 49 F.3d 1387, 1391 (9th Cir. 1995). "The standard for establishing general jurisdiction is fairly high and requires that the defendant's contacts be of the sort that approximate physical presence." Bancroft Masters, Inc. v. Augusta Nat. Inc., 223 F.3d 1082, 1086 (9th Cir. 2000), citing Brand v. Menlove Dodge, 796 F.2d 1070, 1073 (9th Cir. 1986); Gates Learjet Corp. v. Jensen, 743 F.2d 1325, 1331 (9th Cir. 1984).

Plaintiff has neither alleged nor demonstrated sufficient facts to show that Steelwise's internet presence approximates physical presence. Significantly, there is no evidence that Steelwise targets California customers. See Bancroft, 223 F.3d at 1086 (finding no general jurisdiction where defendant did not target advertising toward California). Similarly, there is no evidence as to the volume or frequency of business that Steelwise transacts with California. See Gates Learjet, 743 F.2d at 1331. And even assuming, arguendo, that Steelwise maintains an interactive website (as opposed to a passive one), this would not be enough, without more, to confer general jurisdiction. See Millenium Enterprises, Inc. v. Millenium Music, LLP, 33 F. Supp. 2d 907, 920 (D. Or. 1999) (finding no general jurisdiction where "defendants have done nothing more than publish an interactive Web site").

In any event, the only legal authority cited by plaintiff speaks to internet commerce creating specific, rather than general, jurisdiction. See, e.g., Stomp, Inc. v. NeatO, LLC, 61 F. Supp. 2d 1074, 1077 (C.D. Cal. 1999) ("Since the assertion of specific jurisdiction requires a lower threshold of contacts than does general jurisdiction, the Court addresses only the issue of whether it can assert specific jurisdiction . . ."). In short, plaintiff has wholly failed to meet its burden of proving that the exercise of jurisdiction is proper.

B. Motion to Stay

BBB has filed a motion to stay under either the Younger orColorado River abstention doctrines. Because the court finds that abstention is proper under Younger for the reasons set forth below, it need not address whether abstention under Colorado River is warranted.

The Younger abstention doctrine provides that federal courts should not interfere with pending state proceedings under certain circumstances. Younger v. Harris, 401 U.S. 37, 46 (1971). Although Younger originated in the context of a request to enjoin a pending criminal prosecution, it has been extended to encompass proceedings in the civil context, Huffman v. Pursue, Ltd., 420 U.S. 592, 607 (1975), and requests for declaratory relief,Samuels v. Mackell, 401 U.S. 66, 72 (1971).

The doctrine is animated by concerns of comity, federalism, and equity. Younger, 401 U.S. at 43-44. Moreover, "[w]hen a case falls within the proscription of Younger, a district court must dismiss [or stay] the federal action." Fresh Int'l Corp. v. Agricultural Labor Relations Bd., 805 F.2d 1353, 1356 (9th Cir. 1986). This is true despite the "virtually unflagging obligation of federal courts to exercise the jurisdiction given to them."Smith v. Central Ariz. Water Conservation Dist., 418 F.3d 1028, 1033 (9th Cir. 2005) (internal quotation marks omitted).

1. Middlesex Test Younger abstention is appropriate when the three requirements of the Middlesex test are satisfied: (1) there must be ongoing state judicial proceedings, (2) the proceedings must implicate important state interests, and (3) there must be an adequate opportunity in the state proceedings to raise federal questions.Middlesex County Ethics Committee v. Garden State Bar Ass'n, 457 U.S. 423, 432 (1982); Delta Dental Plan of Cal., Inc. V. Mendoza, 139 F.3d 1289, 1294 (9th Cir. 1998). The first two requirements address the concerns of comity and federalism, while the last requirement addresses the concern of equity. While all three concerns are important, "comity is the main reason for federal court restraint in the face of ongoing state judicial proceedings." Gilbertson v. Albright, 381 F.3d 965, 975 (9th Cir. 2004).

a. Ongoing State Proceedings

Here, the first element of the Middlesex test is satisfied. The dispositive issue is whether the state proceedings were underway prior to initiation of the federal proceedings. Wiener v. County of San Diego, 23 F.3d 263, 266 (9th Cir. 1994). At the time that General Steel filed the present lawsuit, it was already the defendant in two ongoing state court actions: one filed by the Colorado AG's office and another filed by the Sacramento DA's office. Furthermore, General Steel's suit against the BBB in Colorado district court, filed in 2004, was initiated prior to the present suit. Accordingly, the first prong of the Middlesex test is satisfied.

b. Important State Interests

The second requirement of the Middlesex test, that there be important state interests implicated, is also met. "The importance of the interest is measured by considering its significance broadly, rather than focusing on the state's interest in the resolution of an individual case." Baffert v. Cal. Horse Racing Bd., 332 F.3d 613, 618 (9th Cir. 2003). The pending state cases clearly implicate important state interests, and General Steel does not seriously dispute otherwise. See Williams v. Washington, 554 F.2d 369, 370 (9th Cir. 1977) (abstaining under Younger because the state's interest in prosecuting a consumer protection law was an important governmental interest).

Here, the Colorado AG action is enforcing the Colorado Consumer Protection Act, a remedial statute that protects consumers from consumer fraud and ensures fair competition. As the Colorado Supreme Court noted, the statute was "clearly enacted to control various deceptive trade practices in dealing with the public and as such is obviously designed to both declare and enforce an important public policy." People ex rel. Dunbar v. Gym of America, 493 P.2d 660, 665 (Colo. 1975). Likewise, the law being enforced by the Sacramento DA addresses the important state interest of prohibiting unfair business practices. Indeed, the violation of one of the statutes constitutes a misdemeanor. Cal. Bus. Professions Code § 17500. Finally, because the court in the action against BBB ordered a stay of proceedings pending resolution of the Colorado AG's case, allowing this suit to proceed would undermine the important state interest of preventing circumvention of judicial orders. Thus, the court finds that the second prong of the Middlesex test is met.

c. Adequate Opportunity to Raise Federal Claims

The third prong of the Middlesex test is whether an adequate opportunity exists to raise the federal claims in the ongoing state court proceedings. Notably, the issue is not whether General Steel actually raised its federal claims in the state court proceedings. Rather, the issue is whether it was afforded the opportunity to do so. See Gilbertson, 381 F.3d at 983 (holding that a party's "failure to avail himself of the opportunity does not mean that the state procedures are inadequate"); Dubinka v. Judges of Superior Court, 23 F.3d 218, 224 (9th Cir. 1994) (finding the third prong of the Middlesex test met because parties "had an adequate opportunity to raise their constitutional challenges in the state proceedings");Lebbos v. Judges of Superior Court, 883 F.2d 810, 815 (9th Cir. 1989) (noting that the "pertinent inquiry is whether the state proceedings afford an adequate opportunity to raise the constitutional claims") (internal quotation marks omitted).

The burden rests with plaintiffs to show that they are procedurally barred from raising their federal claims in the state court proceedings. Pennzoil Co. v. Texaco, Inc., 481 U.S. 1, 14 (1987). There is a presumption that state courts provide an adequate forum for the adjudication of federal claims. Id. at 15. Moreover, with respect to the particular claims at issue, there is no dispute that state and federal courts have concurrent jurisdiction over RICO and § 1983 claims. See Tafflin v. Levitt, 493 U.S. 455 (1990) (concurrent jurisdiction over civil RICO actions); Maine v. Thiboutot, 448 U.S. 1, 3 n. 1 (1980) (concurrent jurisdiction over § 1983 claims).

i. Colorado AG Suit

General Steel argues that it could not have raised its federal claims in the state court actions. As an example, it points to the allegation that the Colorado AG and Sacramento DA caused a manufacturer to cease doing business with General Steel via threats and intimidation, which is purportedly cognizable under § 1983 but, according to General Steel, could never have been raised in the Colorado AG action. As support, it cites the case of Genzler v. Longanbach, 410 F.3d 630 (9th Cir. 2005), which held that absolute immunity attaches to quasi-judicial activity, such as evaluating evidence, but not to police-like activity, such as evidence gathering. This case does not appear relevant except to suggest, albeit very obliquely, that the alleged misconduct of the Colorado AG and Sacramento DA constitutes a different transaction or occurrence than the one giving rise to the Colorado AG's case against General Steel.

General Steel maintains that the applicable state rules of civil procedure barred its federal claims. As support, it recites Rule 14(a) of the Colorado Rules of Civil Procedure, which limits cross-claims made by the defendant to a "person not a party to the action who is or may be liable to him for all or part of plaintiff's claims against him." Co. Rule Civ. P. 14(a). In other words, General Steel argues that even if the Colorado AG's office engaged in unconstitutional conduct, this would not mean that the AG would be liable for General Steel's violation of Colorado's consumer protection law — thereby foreclosing General Steel's ability to raise its federal claims under Rule 14(a).

Plaintiff's argument ignores two critical considerations. First, General Steel could have challenged the constitutionality of the Colorado AG's actions in the state proceedings outside the context of Rule 14(a). Improper investigative techniques and evidence gathering, for instance, can be litigated in opposition to the admissibility of evidence. Indeed, General Steel in fact did raise certain constitutional arguments in the state proceedings, although these were rejected on the merits. See Nelson Decl., Ex. 5 (September 27, 2004 Order) at 2-7 (rejecting due process claim based on Gore v. BMW).

Second, there are other procedural options available to General Steel. Aside from impleading a third-party defendant, plaintiffs may, and indeed must, assert any compulsory counterclaims arising out of the same transaction or occurrence that is the subject matter of the opposing party's claim. Co. Rule Civ. P. 13(a) ("A pleading shall state as a counterclaim any claim . . . the pleader has against any opposing party, if it arises out of the transaction or occurrence"). The purpose of the rule is to avoid multiple lawsuits among the parties to a transaction or occurrence. In re Estate of Kroitiuk, 12 P.3d 302 (Colo.App. 2000). Here, General Steel could have raised its federal claims in the state suit under Rule 13(a). For example, one of the underlying claims in the present action against the Colorado AG is that they wrongfully initiated suit based on false reports and complaints. These alleged acts plainly arise out of the same transaction or occurrence that gave rise to the Colorado AG's suit.

Moreover, General Steel's initial reliance on Rule 13(a), limiting the scope of cross-claims, is misplaced. Rule 20(a) allows permissive joinder of any third parties against whom there is a right to relief arising out of the same transaction or occurrence, or series of transactions or occurrences. Co. Rule Civ. P. 20(a). Particularly in light of the liberal "series of transactions or occurrences" language, it appears that General Steel could have asserted its federal claims against the defendants now seeking abstention.

In sum, General Steel has not met its burden of proving that, under either Rule 13(a) or under Rule 20(a), it did not have the opportunity to raise its federal claims against the defendants now seeking abstention.

ii. Sacramento DA Suit

In addition, General Steel has the opportunity to raise its federal claims in the Sacramento DA's case. The claims against the Sacramento DA in that case are similar to those against the Colorado AG: they include, for instance, allegations that the Sacramento DA wrongfully initiated suit based on false information. As described above, however, these claims can be raised in the state court proceedings.

Nevertheless, General Steel argues that because the underlying claim in the Sacramento DA case was California's Unfair Competition Law, which imposes strict liability, it could not implead a third-party defendant. As support, it notes that Cal. Code Civ. P. § 428.10(b) only permits the filing of a cross complaint against anyone, whether a party to the action or not, where the cause of action arises out of the same transaction, occurrence, or series of transactions or occurrences as the underlying action.

Again, this argument is incomplete for the same reasons as described above. First, General Steel again overlooks the fact that, as in Colorado, a defendant in California may file any counter-claim against the plaintiff, whether or not it arises out of the same transaction or occurrence as the underlying action. Cal. Code Civ. P. § 428.10(a). See, e.g., Kajima Eng'g Constr., Inc. v. City of Los Angeles, 95 Cal. App. 4th 921 (2002) (approving of a RICO counterclaim).

Second, it is doubtful that even under the rules for filing a cross-complaint, General Steel's claims against the Sacramento DA (or any of the other defendants, such as the BBB) would not arise from the same "series of transactions or occurrences" giving rise to the Sacramento DA's action in state court. See, e.g., People v. Rath Packing Co., 85 Cal. App. 3d 308 (1978) (company sued by district attorney filed counterclaim and cross-claim against third party alleging violations of federal law, including due process).

Again, General Steel has not met its burden of proving that the state forum is inadequate, and certainly not by reference to "unambiguous authority." Baffert, 332 F.3d at 619 (holding that the court "must assume that state procedures afford an adequate remedy, in the absence of unambiguous authority to the contrary").

iii. Other State Court Actions

Moreover, while General Steel focuses on why it allegedly could not raise its federal claims in the two state-initiated consumer protection actions, it tellingly avoids any real discussion of why it could not have raised these claims in the other two state court actions, which it initiated. In addition, General Steel has failed to refute the BBB's paragraph-by-paragraph analysis explaining why each of the allegations in its federal complaint parallel those already made in the four separate state court proceedings. Accordingly, the court finds that plaintiff could have raised its federal claims through these state court proceedings.

2. Interference with State Proceedings

Even if the three requirements of the Middlesex test are met, General Steel urges the court to exercise jurisdiction because doing so "would have no effect at all" on any of the pending state court cases. Pl.'s Opp'n at 16. The requisite level of interference required for Younger abstention is not altogether clear, but the Ninth Circuit has retreated from its previous position that "direct interference" is required. Cf. Green v. City of Tucson, 255 F.3d 1086 (9th Cir. 2001). In Gilbertson, the court clarified:

If a state-initiated proceeding is ongoing, and if it implicates important state interests (as refined by NOPSI), and if the federal litigant is not barred from litigating federal constitutional issues in that proceeding, then a federal court action that would enjoin the proceeding, or have the practical effect of doing so, would interfere in a way that Younger disapproves.

Gilbertson undermines, rather than supports, General Steel's position. Gilbertson signaled an expansion of the types of federal court intervention that were sufficiently intrusive to justify application of Younger abstention. Previously, Ninth Circuit law held that Younger abstention was only appropriate in actions seeking "to enjoin, declare invalid, or otherwise involve the federal courts in terminating or truncating the state court proceedings." Green, 255 F.3d at 1098. Gilbertson clarified that this requirement of "direct interference" had no basis in Supreme Court precedent. Instead, Gilbertson held that federal court action having the same "practical effect" as an injunction triggered application of the Middlesex test.

The "practical effect" of an injunction or declaratory relief in the face of pending state proceedings is that:

It would frustrate the state's interest in administering its judicial system, cast a negative light on the state court's ability to enforce constitutional principles, and put the federal court in the position of prematurely or unnecessarily deciding a question of federal constitutional law. Therefore, a determination if the federal plaintiff's constitutional rights were violated would be just as intrusive as a declaratory judgment.

Similarly, in the present case, even if federal court involvement would not stop pending state proceedings in Colorado and California, it would nevertheless cast aspersion on the competence of these state courts to adjudicate plaintiff's federal claims. Indeed, so strong is this concern that whenever there is some rational connection between the state court action and the federal court damages suit, sufficient interference exists to trigger the Middlesex test. See Gilbertson, 381 F.3d at 980 n. 14 (finding insufficient interference only where the underlying federal claims are "wholly unrelated" to the issues in the pending state proceeding). Here, General Steel's federal claims are intricately related to the claims made in state court. See Decl. of Thomas Kelley ¶¶ 13-21. Furthermore, as noted above, concerns regarding comity are not alleviated simply when the federal plaintiff chooses not to litigate its federal claim in state court even though it could have done so. A contrary rule would allow plaintiffs to bypass Younger and federal court action would ratify plaintiffs' circumvention.

3. No Exception to Younger Applies

Even where Younger is implicated, the court is not required to abstain where (1) the state proceeding was motivated by bad faith, (2) the challenged statute is flagrantly unconstitutional, or (3) when exceptional circumstances are present. Gilbertson, 381 F.3d at 983 ; Ohio Civil Rights Comm'n v. Dayton Christian Schs., 477 U.S. 619, 626 (1986). General Steel argues that the first exception applies, because the investigations culminating in the Sacramento DA and Colorado AG actions were conducted in bad faith, having as their "sole purpose to drive plaintiff out of business and leave the 150 Colorado citizens employed by General Steel, unemployed." Pl.'s Opp'n at 20.

Bad faith "generally means that a prosecution has been brought without a reasonable expectation of obtaining a valid conviction." Baffert, 332 F.3d at 621 (citation omitted). Here, the court in the Colorado AG action has already found that General Steel was liable for violating state consumer protection law in "Phase I" of the lawsuit. Accordingly, it cannot be said that there was no reasonable expectation on the part of the Colorado AG in obtaining a favorable ruling. Moreover, as the Sacramento DA's action concerns substantially similar claims, it also cannot be said that the plaintiffs in that case have acted in bad faith.

4. Stay v. Dismissal

A final consideration is whether a stay or dismissal is appropriate in this case. In most cases, once it is determined that Younger abstention applies, "dismissal (and only dismissal) is appropriate." Gilbertson, 381 F.3d at 981. However, when only damages are sought, "it makes sense for the federal court to refrain from exercising jurisdiction temporarily by staying its hand until time as the state proceeding is no longer pending."Id. This allows the plaintiff to pursue its federal claims in the state proceedings while preserving its choice of forum with regard to compensation. Given that General Steel has only requested damages in this case, a stay is appropriate.

IV. Conclusion

For the reasons set forth above, the Nebraska defendants' and Steelwise's motions to dismiss are GRANTED, and BBB's motion to stay is GRANTED.

IT IS SO ORDERED.