PCPA, LLC et al v. The Flying Butcher, LLC et al

Filing 25

ORDER denying as moot 19 Motion for Leave to File ; denying as moot 11 Motion for Summary Judgment; granting 13 Motion to Dismiss. So Ordered by Judge Paul J. Barbadoro.(jna)

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW HAMPSHIRE

PCPA, LLC, et al.
v.

Civil No. 16-cv-112-PB
Opinion No. 2016 DNH 119

The Flying Butcher, LLC, et al.

MEMORANDUM AND ORDER
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.

I.

BACKGROUND

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.
3.

Doc. No. 1 at

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.

Id.

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
2

with that agreement’s post-termination non-competition
provisions.

Id. at 4.

Plaintiffs further claim that the

defendants violated plaintiffs’ Lanham Act rights by continuing
to use The Meat House’s mark without legal authority.
defendants dispute these allegations.

Id.

The

Doc. No. 9 at 2.

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.1

Id.

Approximately ten months later, in January 2016, defendants
filed a “Motion for Pre-Hearing Dispositive Ruling that

Bald objected to arbitrating plaintiffs’ claims, and filed
an action in state court seeking a declaration that he, in his
individual capacity, was not contractually bound by the
arbitration provision. That action was removed to this court,
and Bald subsequently moved for summary judgment. By order
dated April 19, 2016, Judge McAuliffe granted Bald’s motion,
concluding that “Bald is entitled to judgment as a matter of law
given the undisputed facts, as it is clear that he is neither a
party to, nor personally bound by, the terms of the Franchise
Agreement.” Bald v. PCPA, LLC, 2016 DNH 081, 13. That matter,
15-cv-219-SM, is now closed.
3
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Claimants Lack Standing” with the arbitrator.

Id. at 5.

In

their motion, defendants argued that the Franchise Agreement was
not validly transferred to the plaintiffs, that plaintiffs
therefore had no right to enforce the agreement’s mandatory
arbitration clause, and that the arbitrator thus lacked
jurisdiction.

Id.

The arbitrator apparently agreed.

In a

March 15, 2016 Interim Order, the arbitrator found that the
Franchise Agreement had not been lawfully transferred to the
plaintiffs, and, therefore, that the plaintiffs “have no claim
to arbitration.”

See Doc. Nos. 1 at 7-8; 13 at 1.

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.
4

Id. at

9.
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.

Id.

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.

Id. at 2-3.

Pursuant to

that invitation, plaintiffs submitted additional materials to
the arbitrator on April 22.

Id. at 3.

On May 23, however, the

arbitrator issued an order in which she again rejected the
plaintiffs’ arguments, and then closed the case.

Id.

That same day, plaintiffs’ attorney contacted defense
counsel to explain that plaintiffs planned to dismiss their
complaint in this case without prejudice.

Id.

Defendants

nonetheless filed their answer later that afternoon.
9.

Doc. No.

Then, two days later, defendants submitted a motion for
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summary judgment.

Doc. No. 11.

Plaintiffs moved to dismiss

their complaint without prejudice on June 2.

Doc. No. 13.

On

June 20, defendants requested leave to amend their answer to add
counterclaims.

Doc. No. 19.
II.

ANALYSIS

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.”
Doe v. Urohealth Sys., Inc., 216 F.3d 157, 160 (1st Cir. 2000)
(quoting Puerto Rico Maritime Shipping Auth. v. Leith, 668 F.2d
46, 50 (1st Cir. 1981) (internal quotation marks omitted)); see
Grover by Grover v. Eli Lilly & Co., 33 F.3d 716, 718 (6th Cir.
1994) (“The primary purpose of the rule in interposing the
requirement of court approval is to protect the nonmovant from
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unfair treatment.”).

“[D]ismissal without prejudice is the

norm, unless the court finds that the defendant will suffer
legal prejudice.”

Colon Cabrera v. Esso Standard Oil Co.

(Puerto Rico), 723 F.3d 82, 87 (1st Cir. 2013) (citation and
internal punctuation omitted).

“The mere prospect of a

subsequent lawsuit does not constitute [legal] prejudice.”

Id.

“The district court is responsible . . . for exercising its
discretion to ensure that such prejudice will not occur.”
216 F.3d at 160.

Doe,

In deciding whether to grant a plaintiff’s

Rule 41(a)(2) motion, courts typically consider the “defendant's
effort and expense of preparation for trial, excessive delay and
lack of diligence on the part of the plaintiff in prosecuting
the action, insufficient explanation for the need to take a
dismissal, and the fact that a motion for summary judgment has
been filed by the defendant.”

Id.

Courts need not analyze each

of these factors, however, “or limit their consideration to
these factors.”
A.

Id.

Defendants’ Efforts and Summary Judgment Motion
The plaintiffs’ motion to dismiss comes early in the

litigation, which counts in their favor.

9 Charles Alan Wright

et al., Fed. Prac. & Proc. Civ. § 2364 (3d ed.) (“Quite
naturally, if the motion is made at an early stage of the case,
before much has happened and only limited human and financial
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resources have been invested in the matter by the defense, a
Rule 41(a)(2) dismissal is more likely to be granted by the
district court.”).

Plaintiffs brought their motion about two

months after filing their complaint.

Cf. MBRO Capital, LLC v.

Stolzar, No. 3:09-cv-1688(CSH), 2011 WL 65913, *3 (D. Conn.
2011) (granting motion where “only eight months had elapsed
since the filing of the complaint” and “[t]he case had not
progressed far”).

The pre-trial conference has not yet been

scheduled, the parties have not submitted a discovery plan, and
it appears that no meaningful discovery has occurred.

See Doc.

No. 17 at 1.
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.,

supra, § 2364; see, e.g., Phillips USA, Inc. v. Afflex USA,
Inc., 77 F.3d 354, 357-58 (10th Cir. 1996) (affirming denial of
plaintiff’s voluntary dismissal motion, relying largely on fact
that summary judgment motion was pending).

Yet, a summary

judgment motion “is only a single factor within the Court's
analysis and does not, in and of itself, preclude dismissal.”
Glascock v. Prime Care Seven, L.L.C., No. SA-08-CA-334-FB, 2008
WL 2600149, *2 (W.D. Tex. 2008); see Pontenberg v. Boston
Scientific Corp., 252 F.3d 1253, PIN (11th Cir. 2001) (rejecting
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per se rule that a pending motion for summary judgment motion
bars courts from granting Rule 41(a)(2) motion without
prejudice); Doe, 216 F.3d at 160 (describing pendency of summary
judgment motion as one of several factors that courts may
consider).

Moreover, the timing of defendants’ motion here

makes this case unusual -- defendants filed their motion only
two months after plaintiffs brought their complaint, two days
after defendants filed their answer, after learning that
plaintiffs planned to dismiss the case, and before the pretrial
conference or any meaningful discovery.

As such, I do not lend

this factor much significance.
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.”
F.3d at 88 (1st Cir. 2013).

Colon Cabrera, 723

Although defendants claim that they

have already invested “significant time and effort” in the
litigation, Doc. No. 18 at 2, 4, those efforts do not appear
extraordinary, and are largely a product of the defendants’ own
aggressive litigation strategy.

These factors therefore weigh

in favor of granting plaintiffs’ motion.
B.

Plaintiffs’ Diligence or Delay
There is no evidence that the plaintiffs dawdled in

pursuing their case.

Plaintiffs filed their complaint here ten
9

days after the arbitrator entered her Interim Order, which forms
the basis of plaintiffs’ claims.

See Doc. No. 13 at 1.

Less

than two months later, on May 23, the arbitrator issued an order
reaffirming her belief that she had the authority to determine
whether the dispute was arbitrable, and closed the arbitration.
Id. at 3.

That same day, plaintiffs’ counsel contacted counsel

for the defendants, and explained their intention to dismiss the
suit.

Id.

Plaintiffs then filed their motion to dismiss about

a week later, on June 2.

Id.

These facts demonstrate that the plaintiffs did not
excessively delay or lack diligence in prosecuting this action.
This factor therefore counts in plaintiffs’ favor.
C.

Explanation for Dismissal
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.
Id. at 4 n.2.

According to the plaintiffs, this approach will

promote efficiency and avoid piecemeal litigation, without
prejudicing the defendants.

Id. at 8; cf. Canadian Nat. Ry. Co.
10

v. Montreal, Maine & Atl. Ry., Inc., 275 F.R.D. 38, 42 (D. Me.
2011) (“From the Court's perspective, its resources are better
directed to controversies that all parties, particularly the
plaintiff, wish to litigate, rather than to controversies that
the parties, who initially sought relief, wish to dismiss.”).
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, id. at 4-5.2

Not to be outdone, plaintiffs complain

that the defendants are guilty of “procedural maneuvering,” Doc.
No. 21 at 1, and have their own unsavory “ulterior motives,” id.
at 6.

See id. at 7 (“[T]here is reason to believe that

Plaintiffs here have filed a petition in the District of
Massachusetts to confirm an arbitration award in their favor
against another former The Meat House franchisee. See Doc. No.
11-15. In that matter, the arbitrator determined that PCPA and
Prime Choice Brands had validly acquired the rights under the
franchise agreement, and therefore had standing to enforce the
franchise agreement’s arbitration clause against the franchisee.
Id. at 13-14. In response, the franchisees in the Massachusetts
action have apparently raised the same argument that PCPA and
Prime Choice Brands are pressing here -- that arbitrability is a
question for the court, not the arbitrator. See Doc. No. 18 at
5. As the defendants here see it, PCPA and Prime Choice Brands
seek to dismiss their complaint in this case in order to avoid
the awkward position of arguing “in this action that the
Arbitrator exceeded her authority to resolve the question of
Plaintiffs’ standing while at the same time seek[ing] to confirm
an award in the Massachusetts action by arguing that the
arbitrator acted within his authority to decide the question of
Plaintiffs’ standing.” Id.
11
2

Defendants are being influenced by third parties also engaged in
arbitrations with Plaintiffs concerning similar issues and
claims.”).

Neither side’s argument on this point is compelling.

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.”

Leith, 668 F.2d at 50.

Defendants also assert that they want a “final and full
resolution of the arbitration proceeding, which has endured more
than a year,” and claim that their summary judgment motion here
might provide that resolution.

Doc. No. 18 at 3.

Although this

desire for finality is commendable, it appears that defendants
can achieve this same result in the arbitration proceedings.
Accordingly, in light of the factors identified by the
First Circuit in Doe, 216 F.3d at 160, and given the totality of
the circumstances of this case, it is appropriate to grant
plaintiffs’ motion to dismiss without prejudice here.

III.

CONCLUSION

For the foregoing reason, plaintiffs’ motion to dismiss
12

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.

/s/ Paul Barbadoro
Paul Barbadoro
United States District Judge
July 18, 2016
cc:

James Goniea, Esq.
Steven Reingold, Eq.
Jonathan Shirley, Esq.
Matthew Johnson, Esq.

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