United States District Court, S.D. New York
OGDEN POWER DEVELOPMENT-CAYMAN, INC., QUEZON GENERATING COMPANY LTD., and GPI QUEZON, LTD., Petitioners,
PMR LIMITED CO. and PMR POWER, INC., Respondents.
MEMORANDUM AND ORDER
P. KEVIN CASTEL, District Judge.
Petitioners, Ogden Power Development - Cayman, Inc. ("OPDCI"), Quezon Generating Co., Ltd. ("QGC") and GPI Quezon, Ltd ("GPI"), move to dismiss without prejudice their Amended Petition to Compel Arbitration and for Anti-Suit Injunction or Alternatively for Preliminary Injunction (the "Petition" (Dkt. No. 30)), and their supporting motion (the "Motion" (Dkt. No. 31)), pursuant to Rule 41(a)(2), Fed.R.Civ.P. (Dkt. No. 48.) Respondents, PMR Limited Co. ("PMR Limited") and PMR Power, Inc. ("PMR Power") oppose petitioners' request and also seek an award of attorneys' fees and costs if petitioners' motion to dismiss is granted. (Dkt. No. 51.) For reasons to be explained, petitioners' motion is granted with respect to PMR Limited but denied with respect to PMR Power. Respondents' request for attorneys' fees is denied.
Beginning in 1994, petitioners and respondents, or their respective predecessors, participated in the development, financing, construction, and operation of a coal-fired power plant in the Quezon Province of the Philippines (the "Quezon Power Project"). (Amended Petition ("Petition"), ¶ 17 (Dkt. No. 30.)) The terms of the Quezon Power Project were set forth in a Development and Shareholders Agreement, which was amended several times. (Id.) The current and operative version of the agreement is the Third Amended and Restated Development and Shareholders Agreement ("Third D&S Agreement"), dated October 18, 2004. (Id.)
The Third D&S Agreement contains an arbitration provision that applies "[i]n the event a dispute arises among the Shareholders." (Third D&S Agreement, § 10.1 (Petition, Ex. B (Dkt. No. 30-2.))) The agreement provides that petitioners, OPDCI, QGC, and GPI, and respondent PMR Limited, are referred to individually as a "Shareholder" and collectively as "Shareholders." (Id. § 2.1.) Respondent PMR Power is not defined as a "Shareholder, " but rather is a "signatory" to the agreement "solely for the purposes of acknowledging that its consent hereto is not required... and to acknowledge receipt... of the PMR Closing Payment." (See id. § 15.20.)
The present controversy arises from the development of a new power plant (the "San Buenaventura Project") in the vicinity of the Quezon Power Project. (Petition, ¶ 22.) On October 10, 2014, petitioners initiated an arbitration with the American Arbitration Association ("AAA") in New York, seeking to resolve certain disputes with respondents relating to the San Buenaventura Project. (MTD, p. 1 (Dkt. No. 48.)) Concurrently, petitioners commenced proceedings in this Court "to protect themselves from Respondents' sustained efforts to have the matters in dispute heard in fora other than in arbitration." (Petitioners' Reply in Support of MTD ("Pet. Reply"), p. 1 (Dkt. No. 54.)) Respondents opposed the Petition, arguing, inter alia, that PMR Power is not bound by the arbitration provision and that the dispute between petitioners and PMR Limited does not arise under the Third D&S Agreement. (See Respondent's Response (Dkt. No. 35.))
An arbitral tribunal (the "Tribunal") was constituted on March 10, 2015, and the arbitration is now underway. (MTD, p. 1.) On March 25, 2015, petitioners and respondents appeared before the Tribunal for a preliminary hearing. (Id.) A briefing and argument schedule was agreed upon, including a timetable for respondents to file any motions. (See Tribunal's Procedural Order No. 1 (Declaration of David G. Hille, April 13, 2015 ("Hille Decl."), Ex. B (Dkt. No. 53.)))
Petitioners argue that "[b]ecause the Arbitration is proceeding and because of developments in the proceedings in the Philippines, the relief requested in the Petition and Motion has been largely mooted and all of the issued raised in this action can be fully addressed by the Tribunal." (Pet. Reply, p. 1.) Respondents, however, oppose dismissal of this action primarily because they contend that they have a right for this Court, and not the AAA, to decide the gateway issue of arbitrability. (Respondent Opp., p. 2 (Dkt. No. 51.))
I. Rule 41(a)(2) Motion to Dismiss
a. Legal Standard
Rule 41(a)(2), Fed. R. Civ. P., provides that except where all parties agree to a stipulation of dismissal, "an action may be dismissed at the plaintiff's request only by court order, on terms that the court considers proper." Voluntary dismissal without prejudice is "not a matter of right." Zagano v. Fordham Univ., 900 F.2d 12, 14 (2d Cir. 1990). However, generally "a voluntary dismissal without prejudice under Rule 41(a)(2) will be allowed if the defendant will not be prejudiced thereby." Catanzano v. Wing, 277 F.3d 99, 109 (2d Cir. 2001) (quoting Wakefield v. N. Telecom, Inc., 769 F.2d 109, 114 (2d Cir. 1985)). Ultimately, a dismissal pursuant to Rule 41(a)(2) is left to the sound discretion of the district court. D'Alto v. Dahon Cal., Inc., 100 F.3d 281, 283 (2d Cir. 1996).
In the Second Circuit, courts follow two lines of authority to determine whether dismissal without prejudice should be granted. See Kwan v. Schlein, 634 F.3d 224, 230 (2d Cir. 2011). Under the first line of authority, "dismissal would be improper if the defendant would suffer some plain legal prejudice other than the mere prospect of a second lawsuit." Id. (quoting Camilli v. Grimes, 436 F.3d 120, 123 (2d Cir. 2006) (internal quotation marks omitted)). The second line of authority "involves consideration of various factors, known as the Zagano factors." Id. (quoting Camilli, 436 F.3d at 123). The Zagano factors include:
(1) the plaintiff's diligence in bringing the motion, (2) any undue vexatiousness on the plaintiff's part, (3) the extent to which the suit has progressed, including the defendant's efforts and expense in preparation for trial, (4) the duplicative expense of relitigation, and (5) the adequacy of the plaintiff's explanation for the need to dismiss.
Id. (citation omitted). "These factors are not necessarily exhaustive and no one of them, singly or in combination ...