PAUL BARBADORO, District Judge.
In March 2016, PCPA, LLC and Prime Choice Brands, LLC sued The Flying Butcher, LLC and Allan Bald in this court. The plaintiffs and the defendants here are also parties to arbitration proceedings in which, plaintiffs claim, the arbitrator improperly decided that the parties' dispute was not "arbitrable." Plaintiffs therefore brought this action, seeking declaratory relief, and to stay the arbitration proceedings until the court, rather than the arbitrator, can decide whether their claims are arbitrable.
Plaintiffs have since moved to dismiss their complaint without prejudice, pursuant to Federal Rule of Civil Procedure 41(a)(2). The defendants oppose plaintiffs' motion, arguing that a dismissal without prejudice will injure them. Having considered both sides' arguments, I grant plaintiffs' motion.
According to plaintiffs' complaint, defendants Flying Butcher and Allan Bald are former franchisees of Meat House Franchising ("MHF"), the franchisor of The Meat House chain of specialty butcher and grocery shops. In 2012, one or both of the defendants entered into a "Franchise Agreement" to operate a The Meat House store in Amherst, New Hampshire, and also an "Area Development Agreement," agreeing to develop and run six The Meat House franchises in a designated area. Doc. No. 1 at 3. The Franchise Agreement included an arbitration clause, requiring the parties to the agreement to resolve disputes "arising out of or relating to [the] operation of the Franchised Business or this Agreement" by "arbitration [with] the American Arbitration Association in New Hampshire." Doc. No. 1-1 at 35.
In April 2014, MHF's secured creditors entered into an Asset Purchase Agreement with PCPA, one of the plaintiffs in this case. Doc. No. 1 at 3. As a result of that Asset Purchase Agreement, PCPA claims that it acquired the right to enforce MHF's Franchise Agreements and Area Development Agreements, including the agreements with the defendants here.
Soon thereafter, the parties to this lawsuit had a falling out. According to the plaintiffs, the defendants improperly terminated the Franchise Agreement, and then failed to comply with that agreement's post-termination non-competition provisions.
On March 16, 2015, plaintiffs filed a statement of claim with the American Arbitration Association ("AAA") against both Flying Butcher and Bald, asserting claims for breach of contract, trademark infringement, unfair competition and false designation of origin. Doc. No. 1 at 4-5. Plaintiffs asserted that it was appropriate to arbitrate this dispute, because they had validly acquired the right to enforce the Franchise Agreement, including the agreement's mandatory arbitration provision, against the defendants.
Approximately ten months later, in January 2016, defendants filed a "Motion for Pre-Hearing Dispositive Ruling that Claimants Lack Standing" with the arbitrator.
Ten days later, on March 25, plaintiffs commenced this action. Doc. No. 1. Plaintiffs assert that, "[i]n entering the Interim Order the Arbitrator made determinations regarding the `arbitrability' of the disputes between the parties that exceeded the Arbitrator's mandate and which Plaintiffs contend are issues that are solely within the province of the Court." Doc. No. 13 at 1-2. Plaintiffs therefore sought a declaration from the court that the Franchise Agreement was validly transferred to plaintiffs, and that plaintiffs could enforce the terms of the Franchise Agreement, including the arbitration provision. Doc. No. 1 at 8. Plaintiffs also sought an order staying the arbitration proceedings until the court decided whether the dispute should be resolved by arbitration.
Contemporaneous with filing their complaint, plaintiffs submitted a motion to the arbitrator. Doc. No. 13 at 2. In their motion, plaintiffs advised the arbitrator of their complaint, and argued that (1) the arbitrability questions should be decided by a court, not the arbitrator, (2) the arbitrator's Interim Order divested her of jurisdiction to take further action in the arbitration, and (3) the arbitrator should therefore take no further action until the court could decide whether the dispute was arbitrable.
Undeterred, the arbitrator issued another order on April 15, 2016, stating that she had the authority to decide whether the plaintiffs' claims were arbitrable, but giving plaintiffs more time to file supplemental briefs.
That same day, plaintiffs' attorney contacted defense counsel to explain that plaintiffs planned to dismiss their complaint in this case without prejudice.
Plaintiffs have moved, pursuant to Federal Rule of Civil Procedure 41(a)(2), to dismiss their suit without prejudice. In cases, like this one, where (1) the defendants have filed either their answer or a motion for summary judgment, and (2) not all parties stipulate to the dismissal, Rule 41(a)(2) provides that "an action may be dismissed at the plaintiff's request only by court order, on terms that the court considers proper." "Unless the order states otherwise, a dismissal under [Rule 41(a)(2)] is without prejudice." Fed. R. Civ. P. 41(a)(2).
Rule 41(a)(2) allows plaintiffs to dismiss an action voluntarily, "as long as no other party will be prejudiced."
"The district court is responsible . . . for exercising its discretion to ensure that such prejudice will not occur."
The plaintiffs' motion to dismiss comes early in the litigation, which counts in their favor. 9 Charles Alan Wright et al.,
The defendants have, however, submitted a motion for summary judgment, a fact that "may incline [courts] to deny [plaintiffs'] voluntary dismissal motion." Wright et al.,
In sum, this is not a case in which the plaintiffs propose "to dismiss the case at a late stage of pretrial proceedings, or seek[] to avoid an imminent adverse ruling."
There is no evidence that the plaintiffs dawdled in pursuing their case. Plaintiffs filed their complaint here ten days after the arbitrator entered her Interim Order, which forms the basis of plaintiffs' claims.
These facts demonstrate that the plaintiffs did not excessively delay or lack diligence in prosecuting this action. This factor therefore counts in plaintiffs' favor.
Finally, plaintiffs have supplied a plausible explanation for moving to dismiss at this time. Plaintiffs claim that they have moved to dismiss because the arbitrator's orders render many of plaintiffs' claims moot. Doc. No. 21 at 4. Under these circumstances, plaintiffs argue, the appropriate way to challenge the arbitrator's decision — if plaintiffs choose to do so at all — is to petition to vacate the arbitrator's award.
Defendants dispute this explanation, accuse the plaintiffs of improper "gamesmanship," Doc. No. 18 at 6, and argue that plaintiffs are moving to dismiss for "entirely strategic" reasons,
The defendants' additional arguments do not fare any better. Defendants suggest that it would be unfair to allow the plaintiffs to refile their suit "at some later date chosen by Plaintiffs when it suits their needs." Doc. No. 18 at 6. The First Circuit has explained, however, that "[n]either the prospect of a second suit nor a technical advantage to the plaintiff should bar the dismissal."
Accordingly, in light of the factors identified by the First Circuit in
For the foregoing reason, plaintiffs' motion to dismiss without prejudice (Doc. No. 13) is granted. Defendants' motions for summary judgment (Doc. No. 11) and motion for leave to amend their answer (Doc. No. 19) are denied as moot.
SO ORDERED.