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Dismissal Of Suit Seeking Class Action Against Retail Supplier Affirmed

October 1, 2018

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Copyright 2010-17 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

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The United States Court of Appeals for the Fifth Circuit has affirmed the dismissal, without prejudice, of a lawsuit, which had sought class action status, against Stream Gas & Electric, Limited, and various affiliates including Ignite.

The suit had been brought by a plaintiff who had alleged, under Stream's network marketing model, violations of the Racketeer Influenced and Corrupt Organizations Act (RICO)

Notably, the plaintiff had joined Ignite as an Independent Associate (IA) after the date an amended arbitration clause had been implemented, which cured an earlier arbitration clause that another Court had found contained a "defect"

The amended arbitration clause requires arbitration of any claim, dispute or other difference between two or more IAs or between any IA(s) and Ignite or its affiliates, or any other claim or dispute of any kind arising under or in any way related to these Policies & Procedures or any other part of the agreement. Its arbitration clause incorporates the rules of the American Arbitration Association and states that "the arbitrator will have the sole power to decide any question about the arbitrability of any claim."

As a result, a District Court granted Stream's motion to compel arbitration and stayed the case pending arbitration.

The case remained stayed for more than a year, during which time the plaintiff refused to arbitrate. In response to a show cause order, the plaintiff said that plaintiff disagreed with the District Court's order and will not pursue arbitration.

That prompted the District Court to dismiss the case without prejudice.

Plaintiff appealed such decision

The Fifth Circuit Court of Appeal affirmed the dismissal.

While dismissal was without prejudice, the Fifth Circuit said that defendants would have prevailed even under the standard of a dismissal with prejudice.

"Dismissal with prejudice is appropriate only when there is 'a showing of (a) a clear record of delay or contumacious conduct by the plaintiff, and (b) where lesser sanctions would not serve the best interests of justice.' 'In most cases, a plain record of delay or contumacious conduct is found if one of the three aggravating factors is also present: (1) delay caused by the plaintiff; (2) actual prejudice to the defendant; or (3) delay as a result of intentional conduct.' Here, there is a clear record of intentional delay and contumacious conduct," the Fifth Circuit said

"After the district court granted Defendants’ motion to compel arbitration and stayed the case, [plaintiff] Griggs persistently refused to arbitrate as ordered. Specifically, a status report submitted three months after the arbitration order stated: 'Plaintiff has not submitted the case to arbitration.' More than a year after that, another status report explained that 'plaintiff has not submitted the dispute to arbitration.' When the district court ordered Griggs to show cause why the case should not be dismissed 'for want of prosecution' he responded that he 'disagree[d] with this Court’s conclusion that this matter must go to arbitration,' '[would] not pursue arbitration,' and '[stood] ready to litigate this case before this Court to a conclusion.' The district court was well within its discretion to dismiss this case for want of prosecution in response to Griggs’s disobedience to its prior order," the Fifth Circuit said in affirming the dismissal

No. 17-50655

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