Six Years after Arbitration Compelled, Dismissal for Failure to Arbitrate (Web)

Windward Agency v. Cologne: Dismissal for failure to arbitrate upheld where plaintiff failed to appoint his member of the arbitral panel for over six years.
 
Six Years after Arbitration Compelled, Dismissal for Failure to Arbitrate
 
On February 3rd, 2005, the Third Circuit announced its non-precedential opinion in Windward Agency v. Cologne Life Reinsurance Co. affirming a District Court’s dismissal for failure to arbitrate.  2005 WL 256048.  The arbitration agreement called for a three arbitrator panel, and plaintiff took over six years to appoint its arbitrator.
 
In November of 1996, the plaintiff filed its suit alleging breach of a reinsurance contract.  After removal, the District Court stayed the action and ordered that the claim be arbitrated pursuant to the contract’s arbitration agreement.  The plaintiff, after inquiries by the District Court, appointed its arbitrator on August 12, 2003.  No third arbitrator was ever appointed, and in October, 2003, defendant moved to dismiss for failure to prosecute under Fed.R.Civ.P. 41(b). 
 
The panel’s opinion, authored by Judge Wan Antwerpen, held that the District Court retained authority to dismiss the action despite the arbitration clause.  In doing so, the court accepted the proposition that “a stay of proceedings pending arbitration contemplates continuing supervision by a court to ensure that arbitration proceedings are conducted within a reasonable amount of time, and jurisdiction over a Rule 41(b) motion [for failure to prosecute] properly serves this end.”  Id. at *1, citing Morris v. Morgan Stanley & Co., 942 F.2d 648, 654 (9th Cir. 1991) and Meyer v. Dans un Jardin, S.A., 816 F.3d 533, 538-39 (10th Cir. 1987). 
 
Plaintiffs argued that the parties intended for the arbitral panel to decide this dispute.  However, the Court quickly observed: “[i]t cannot be that the arbitration agreement demands the submission of [plaintiff’s] failure to appoint an arbitrator to an arbitration panel which has not yet been constituted.”  Id. at *2.  Notably, the arbitration agreement allowed the defendant to appoint an arbitrator if plaintiff failed to do so, but the Court held the provision insufficient to demonstrate that the parties expected the arbitrators to decide the failure to arbitrate issue.    
 
The opinion, which may not be cited as precedent, is available at 2005 WL 256048.