Reinsurance & Arbitration Focus

The Second Circuit Court of Appeals recently dismissed a plaintiff’s appeal of the trial court’s order compelling arbitration on the grounds that the order was a non-appealable interlocutory order under 9 U.S.C. § 16(b). In dismissing the appeal, the court also extended the reach of its earlier decision in Cheeks v. Freeport Pancake House Inc., 796 F.3d 199 (2d Cir. 2015), with respect to voluntary dismissals in disputes governed by the Fair Labor Standards Act (FLSA).

The relevant facts of Samake v. Thunder Lube Inc. are procedural in nature. In Samake, plaintiff Sekouba Samake filed suit in federal court against his former employer alleging violations of the FLSA and other laws. The employer moved to compel arbitration, and Samake promptly filed a notice of unilateral voluntary dismissal without prejudice pursuant to Federal Rule of Civil Procedure 41(a)(1)(A)(i). The district court entered an order retaining jurisdiction over the case pursuant to Cheeks, in which the Second Circuit held that any FLSA settlement must be reviewed by the district court before the parties may dismiss a case by joint stipulation pursuant to Rule 41(a)(1)(A)(ii). Samake then filed a letter with the trial court indicating that the parties had not settled, and sought to withdraw his notice of voluntary dismissal. The court entered an order effecting Samake’s withdrawal of his notice of voluntary dismissal. Thereafter, the parties briefed the employer’s motion to compel arbitration, and the court ultimately granted the motion. Samake timely filed an appeal of the order compelling arbitration.

On appeal, Samake argued primarily that the trial court did not have jurisdiction to continue the proceedings — and enter an order compelling arbitration — because its jurisdiction was automatically revoked as a result of Samake’s notice of voluntary dismissal pursuant to Rule 41(a)(1)(A)(i). By implication, Samake took the position that the Second Circuit’s holding in Cheeks should be restricted to its facts, such that a trial court retains jurisdiction to review FLSA settlements after the parties filed a joint stipulation of dismissal pursuant to Rule 41(a)(1)(A)(ii) (as the Cheeks court held), but loses jurisdiction if the plaintiff files a unilateral notice of dismissal under Rule 41(a)(1)(A)(i).

In rejecting Samake’s argument, the Second Circuit held that Rule 41(a)(1)(A)(i) and (ii) both provide that voluntary dismissal is automatic “subject to any applicable federal statute,” including the FLSA:

We hold that the same result is warranted when the dismissal is effected unilaterally under Rule 41(a)(1)(A)(i) as when dismissal is effected by stipulation of all parties under (A)(ii). As a matter of grammar and structure, the exception to automatic dismissal for “any applicable federal statute” in subsection (A) applies equally to both subsections (A)(i) and (A)(ii); and Cheeks held that the FLSA is such an “applicable federal statute.” The plain text (set out in the margin) thus extends Cheeks to all dismissals under Rule 41(a)(1)(A).

Thus, the court concluded that the trial court below properly retained jurisdiction over the action under Cheeks, notwithstanding Samake’s prior voluntary dismissal. Based on this, the court further concluded that the trial court had jurisdiction to both effectuate Samake’s withdrawal of his voluntary dismissal and to consider the employer’s motion to compel arbitration. As the resulting order compelling arbitration was itself non-appealable under 9 U.S.C. § 16(b), the court dismissed Samake’s appeal of that order for lack of appellate jurisdiction.

Samake v. Thunder Lube, Inc., No. 21-102 (2d Cir. Jan. 27, 2022).