Griggs v. S.G.E. Management, L.L.C., 092718 FED5, 17-50655

Docket Nº:17-50655
Opinion Judge:WIENER, Circuit Judge.
Party Name:JERNARD GRIGGS, Plaintiff - Appellant v. S.G.E. MANAGEMENT, L.L.C.; STREAM GAS & ELECTRIC, LIMITED, doing business as Stream Energy; STREAM S.P.E. G.P., L.L.C; STREAM S.P.E., LIMITED; IGNITE HOLDINGS, LIMITED, formerly known as Ignite Energy, Limited, doing business as Ignite, doing business as Ignite Powered by Stream Energy; CHRIS DOMHOFF; RO...
Judge Panel:Before STEWART, Chief Judge, and WIENER and HIGGINSON, Circuit Judges.
Case Date:September 27, 2018
Court:United States Courts of Appeals, Court of Appeals for the Fifth Circuit

JERNARD GRIGGS, Plaintiff - Appellant


S.G.E. MANAGEMENT, L.L.C.; STREAM GAS & ELECTRIC, LIMITED, doing business as Stream Energy; STREAM S.P.E. G.P., L.L.C; STREAM S.P.E., LIMITED; IGNITE HOLDINGS, LIMITED, formerly known as Ignite Energy, Limited, doing business as Ignite, doing business as Ignite Powered by Stream Energy; CHRIS DOMHOFF; ROB SNYDER; PIERRE KOSHAKJI; DOUGLAS WITT; STEVE FLORES; MICHAEL TACKER; DONNY ANDERSON; STEVE FISHER; RANDY HEDGE; LOGAN STOUT; PRESLEY SWAGERTY, Defendants - Appellees

No. 17-50655

United States Court of Appeals, Fifth Circuit

September 27, 2018

Appeal from the United States District Court for the Western District of Texas

Before STEWART, Chief Judge, and WIENER and HIGGINSON, Circuit Judges.

WIENER, Circuit Judge.

When Plaintiff-Appellant Jernard Griggs began working as an Independent Associate ("IA") for Ignite, he agreed to Ignite's Policies & Procedures, which includes an arbitration clause covering all claims between (1) any two or more IAs and (2) any IA and Ignite. The arbitration clause also gives the arbitrator the "sole power" to decide questions of arbitrability.

Despite that, Griggs brought a class action in federal court, asserting RICO claims against Defendants-Appellees Ignite, Stream, their related entities, and several other IAs (collectively, "Defendants"). The district court (1) ruled that the parties had agreed to arbitrate arbitrability; (2) compelled arbitration; and (3) stayed the case pending arbitration. After the case had been stayed for a year without Griggs having submitted his claims to arbitration, the court dismissed the case without prejudice. Griggs appealed; we have appellate jurisdiction; we affirm.

I. Facts and Proceedings

Stream is a Texas electricity provider that markets its services through Ignite, its wholly owned subsidiary. Ignite is a multi-level marketing program that Griggs contends is an illegal pyramid scheme in which the participants (the IAs) are destined to lose money.1 This court, sitting en banc, recently described these entities: Stream's marketing arm, Ignite, operates a multi-level marketing program in which IAs (1) sell energy to customers, and (2) recruit other individuals to join as IAs who in turn sell energy to customers and recruit individuals to join as IAs. Under the IA program, Ignite charges individuals for the right to sell Stream services to customers and to recruit IAs.2

In that case, Torres v. S.G.E. Management, several IAs brought a class action against Stream, Ignite, and several particularly successful IAs.3 The district court compelled arbitration, but this court reversed, holding that the arbitration agreement was unenforceable.[4] The district court, on remand, certified a class, but only for those IAs who had joined Ignite between January 1, 2005 and April 2, 2011.5 The court explained that Ignite had amended the arbitration clause required for new IAs, effective April 3, 2011, eliminating the defect.6 This court upheld class certification en banc.7

Griggs joined Ignite as an IA on March 22, 2012, obviously after the amended arbitration clause took effect. When Griggs became an IA, he agreed to Ignite's "Policies & Procedures" and "Terms & Conditions." Those two documents and a third one titled the "Compensation Plan," were parts of the Independent Associate Agreement ("Agreement"). The Compensation Plan is not in the record. The Policies & Procedures states that if it conflicts with another part of the Agreement, the Policies & Procedures controls.

The Policies & Procedures contains a provision requiring 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."

In May 2015, Griggs sued the various entities comprising Stream and Ignite, as well as several individuals who were either employees of Stream and Ignite or "Presidential Directors." Presidential Directors are IAs "at the very top of the pyramid" who have been financially successful as a result of Ignite. Griggs alleged violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961 et seq. Defendants moved to compel arbitration, and the magistrate judge issued a report and recommendation concluding that the arbitration agreement was valid and that the parties had agreed to arbitrate arbitrability.8 The district court granted the motion to compel arbitration and stayed the case pending arbitration.9

The case remained stayed for more than a year, during which time Griggs refused to arbitrate. The district court ordered Griggs to show cause why the case should not be dismissed for want of prosecution. Griggs responded: Griggs anticipated that this Court would have already dismiss[ed] this case for want of prosecution because this Court left him only an arbitration which he has not pursued. So, Griggs states the following for the Court's consideration:

1. Griggs understands and appreciates this Court's order compelling arbitration. Griggs believes that the Court cons[idered] all arguments before it ruled.

2. However, Griggs disagrees with this Court's conclusion that this matter must go to arbitration.

3. Griggs will not pursue arbitration.

4. Griggs stands ready to litigate this case before this Court to a conclusion.

Griggs and his counsel mean no offense to this Court. However, they respectfully disagree with the Court's arbitration order and Griggs will either litigate this matter now before this Court or will appeal when dismissed.

The district court then dismissed the case without prejudice, and Griggs appealed.

II. Analysis

Two issues are presented in this appeal: (1) whether there is appellate jurisdiction and (2) whether the district court was within its discretion to dismiss the case for failure to prosecute. We address each issue in turn.

A. Appellate Jurisdiction

A plaintiff seeking to appeal an order compelling arbitration may only do so if that order is a "final decision with respect to an arbitration."10 A final decision is one that "ends the litigation on the merits and leaves nothing more for the court to do but execute the judgment."11 When "the District Court has ordered the parties to proceed to arbitration, and dismissed all the claims before it, that decision is 'final' within the meaning of § 16(a)(3), and therefore appealable."12 In contrast, if a district court orders that a case be stayed pending arbitration instead of dismissing it, that order is not appealable.[13]Some circuits have held that district courts must stay a case when all claims are submitted to arbitration, but this circuit allows district courts to dismiss such claims outright.14

1. Voluntary Dismissal Under Rule 41(a)

Defendants contend that Griggs voluntarily dismissed the case under Federal Rule of Civil Procedure 41(a). A voluntary dismissal of a case without prejudice is not a final appealable decision.15 Griggs contests whether the dismissal was voluntary, explaining that he never invoked Rule 41(a).

There are three forms of voluntary dismissal under that Rule. The record does not indicate that all parties stipulated to dismissal.16 Defendants had not answered or moved for summary judgment, so a court order was not required for Griggs to dismiss the case.17 The question then is whether Griggs's response to the show-cause order amounts to a voluntary dismissal under Rule 41(a)(1)(i), which allows a plaintiff to dismiss an action by filing a notice of dismissal.

There is limited authority describing the notice requirements for a plaintiff to dismiss a case under Rule 41(a)(1)(i).18 It is clear, however, that "[a] notice of dismissal is self-effectuating and terminates the case in and of itself; no order or other action of the district court is required."19 In Bierman v.

Tampa Electric Co., the district court ordered the plaintiff to file quarterly status reports, warning that if he did not, the court would dismiss the complaint.20 After the plaintiff failed to comply and the court dismissed the case, the plaintiff insisted that his failure to file the reports amounted to a Rule 41(a) notice of dismissal.21 This court disagreed, explaining that the order specifically stated that the case was dismissed for want of prosecution and therefore was not voluntary.22

In Vincent v. A.C. & S., Inc., the plaintiff informed the district court that he had settled with the defendants. After...

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