Fifth Circuit Dismisses Case Against Texas Energy Company Due to Man’s Refusal to Arbitrate

The United States Court of Appeals for the Fifth Circuit has upheld a Texas federal court’s order dismissing a putative class action lawsuit after a plaintiff failed to pursue arbitration. In Griggs v. S.G.E. Management, L.L.C., et al., No. 17-50655 (5th Cir. September 27, 2018), a man named Griggs began working for a Texas-based energy company’s wholly owned subsidiary, Ignite, as an Independent Associate (“IA”). As part of the hiring process, Griggs agreed to arbitrate any claims that may arise between himself and the energy company or another IA. In addition, the arbitration agreement required that any questions related to the arbitrability of such disputes would be determined by an arbitrator.

Later, Griggs filed a putative class action lawsuit accusing Ignite of operating an illegal pyramid scheme and violating the Racketeer Influenced and Corrupt Organizations Statute in the Western District of Texas. The district court then issued a stay and compelled the case to arbitration. Because Griggs did not to pursue arbitration for more than one-year and failed to show adequate cause why the case should not be dismissed “for want of prosecution,” the Western District of Texas ultimately dismissed the lawsuit without prejudice. After that, Griggs filed an appeal with the nation’s Fifth Circuit.

On appeal, the court first discussed a similar case in which the Fifth Circuit declared an earlier version of the same company’s arbitration provision unenforceable. In that case, the court certified a class of IAs who began working for the energy company before Ignite amended its arbitration clause. Griggs, however, began his employment with Ignite approximately one-year after the amendment took effect and filed his lawsuit more than three years later.

Next, the court discussed whether appellate court jurisdiction existed in the case. The Fifth Circuit stated:

The district court made clear over the course of a year and a half that it would take no action in this case. If Griggs took the court’s dismissal without prejudice as an invitation simply to re-file, he would have obtained the same result. The district court’s action “ended the litigation on the merits, by sending all the issues to arbitration and leaving the district court nothing more to do than execute the judgment. Thus, its order was a final decision, and we have appellate jurisdiction.”

The Court of Appeals then addressed “whether the district court was within its discretion to dismiss the case for failure to prosecute.” According to the court:

After the district court granted Defendants’ motion to compel arbitration and stayed the case, 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.

Finally, the United States Court of Appeals for the Fifth Circuit affirmed the district court’s order dismissing the case.

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