Third Circuit Affirms Dismissal of Complaint With Prejudice After Plaintiff Failed to Initiate Arbitration Proceedings

Plaintiff R&C Oilfield Services appealed from an order of the U.S. District Court for the Western District of Pennsylvania. The district court granted defendant American Wind Transport Group’s motion to compel R&C to arbitrate the parties’ commercial dispute, having determined that the arbitration clause was not a contract of employment between the parties as R&C contended and was thus enforceable. The district court stayed the case pending arbitration and denied R&C’s motion for reconsideration. More than a year later, the district court ordered the parties to submit a joint status report. The report included confirmation that “Plaintiff had not commenced an arbitration, and did not plan to do so.” American Wind then moved to dismiss R&C’s complaint with prejudice pursuant to Federal Rule of Civil Procedure 41(b) based on R&C’s refusal to initiate arbitration proceedings. The district court weighed the factors for dismissal with prejudice set forth in Poulis v. State Farm Fire & Casualty Co. and granted the motion to dismiss R&C’s complaint with prejudice.

The Third Circuit Court of Appeals affirmed the district court’s dismissal order, noting that “[c]ourts possess inherent power to manage their own affairs so as to achieve the orderly and expeditious disposition of cases.” The court observed that R&C had “multiple avenues to seek appeal of the District Court’s order to stay the proceedings and compel arbitration” and did not seek interlocutory review under the Federal Arbitration Act. The court further noted that R&C failed to initiate arbitration proceedings and instead “sat on its rights for a year and a half and told the District Court that it did not intend to comply with the order, leaving the Court no choice but to involuntarily dismiss the complaint.” The Third Circuit concluded that the district court did not abuse its discretion in dismissing the case with prejudice pursuant to Rule 41(b) under these circumstances, and the district court “soundly exercised its discretion in dismissing this case.”

R&C Oilfield Services, LLC v. American Wind Transport Group, LLC, No. 21-2742 (3d Cir. Aug. 15, 2022).