United States District Court, D. New Hampshire
PCPA, LLC, et al.
The Flying Butcher, LLC, et al. Opinion No. 2016 DNH 119
MEMORANDUM AND ORDER
Barbadoro Paul Barbadoro United States District Judge
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.
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
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
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.
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. 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. Id. The defendants dispute these
allegations. Doc. No. 9 at 2.
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. Id.
ten months later, in January 2016, defendants filed a
“Motion for Pre-Hearing Dispositive Ruling that
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.
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. Id. at 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.
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.
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. Doc. No. 9. Then, two days later,
defendants submitted a motion for 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.
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.” ...