Case Title: Snider v. Production Chemical Manufacturing, Inc.

Citation: 

Docket Number: S056494

State: oregon

Court: Oregon Supreme Court

Date: 2010-04-29T00:00:00Z

Document:
FILED:  April 29, 2010
IN THE SUPREME COURT OF THE STATE OF OREGON
GARLAND SNIDER,
Respondent on Review,
v.
PRODUCTION CHEMICAL MANUFACTURING, INC.,
a California corporation,
Petitioner on Review.
(CC 0502-01434; CA
A131621; SC S056494)
En Banc
On review from the Court of Appeals.*
Argued and submitted May 18, 2009.
Timothy R. Volpert, Davis Wright Tremaine LLP,
Portland, argued the cause and filed the brief for petitioner on review.  With
him on the brief was Marlin Ard, Sisters.
Richard A. Carlson, Drakulich & Carlson PC,
Lake Oswego, argued the cause and filed the brief for respondent on review.
Scott A. Shorr, Stoll Stoll Berne Lokting &
Shlachter PC, Portland, filed the brief for amicus curiae Oregon Trial
Lawyers Association.
KISTLER, J.
The
decision of the Court of Appeals and the judgment of the circuit court are affirmed.
*Appeal from Multnomah County Circuit Court, Robert S. Gardner, Judge.  221 Or App 593, 191 P3d 691 (2008).
KISTLER, J.
ORS 36.730 provides
that an appeal "may be taken" from an interlocutory order denying a
petition to compel arbitration.  In this case, defendant did not take an appeal
pursuant to that statute.  Instead, defendant appealed from the general
judgment and, as part of that appeal, assigned error to the trial court's order
denying its petition to compel arbitration.  The Court of Appeals held that it
did not have jurisdiction to consider defendant's assignment of error.  Snider
v. Production Chemical Manufacturing, Inc., 221 Or App 593, 600, 191 P3d
691 (2008).   We allowed defendant's petition for review to consider the effect
of not taking an interlocutory appeal pursuant to ORS 36.730(1) and now affirm the Court
of Appeals decision. 
Plaintiff worked for
defendant as its national sales manager.  The parties entered into a four-year employment
agreement in 1999, which they renewed in 2003.  Section 9.02 of that agreement provided:
"Any controversy between [defendant] and [plaintiff]
involving the construction or application of any of the terms, provisions, or
conditions of this agreement shall on the written request of either party
served on the other be submitted to arbitration.  Arbitration shall comply with
and be governed by the provisions of the California Arbitration Act."
On January 30, 2005,
defendant terminated plaintiff's employment.  Approximately one week later,
plaintiff filed a breach of contract action against defendant in Multnomah
County Circuit Court.  Over the next seven months, defendant challenged
plaintiff's complaint, plaintiff filed amended complaints, defendant answered
and filed affirmative defenses, and the parties engaged in discovery.
Trial was scheduled
for October 6, 2005.  On September 30, defendant moved to postpone the trial. 
The trial court granted the motion on October 3 and rescheduled the trial for
mid-November.  On October 7, defendant asked plaintiff to submit their dispute
to arbitration.  Plaintiff refused and, on October 12, defendant filed a petition
to compel arbitration.  Defendant's petition came approximately eight months
after plaintiff had filed his complaint and approximately five weeks before the
rescheduled trial date.  At no point before October 7 had defendant invoked its
right to arbitration under the employment agreement.
The trial court
denied defendant's petition, reasoning that defendant had unduly delayed in
seeking arbitration and thus waived its right to arbitrate the parties'
dispute.  The court entered an order denying the petition on December 23, 2005,
and the case proceeded to trial on January 17, 2006.  The jury returned a
verdict for plaintiff.  The trial court entered a general judgment in
plaintiff's favor on February 13, 2006.  Defendant filed a timely notice of appeal
from the general judgment and, in its opening brief on appeal, assigned error
to the trial court's order denying its petition to compel arbitration. 
Plaintiff responded that defendant had to file an interlocutory appeal pursuant
to ORS 36.730 if it wanted to challenge that order.  Plaintiff argued
alternatively that defendant's delay in requesting arbitration waived whatever
right it had to arbitrate their dispute.
In resolving defendant's
assignment of error, the Court of Appeals ruled initially that ORS 36.730
applied to the parties' arbitration agreement.  Snider, 221 Or App at
598.(2)  The court then ruled
that an interlocutory appeal pursuant to ORS 36.730 provided the exclusive
means for appealing from a trial court order denying a petition to compel
arbitration.  Id. at 600.  It followed, the court concluded, that it
lacked jurisdiction to consider defendant's assignment of error.  Id.  On
review, defendant challenges both rulings.  We begin with defendant's argument
that ORS 36.730 does not apply to this litigation before turning to the
question whether an interlocutory appeal pursuant to that statute provided the
exclusive means for appealing from an order denying a petition to compel
arbitration.
In 2003, the Oregon
legislature adopted the Revised Uniform Arbitration Act.  Or Laws 2003, ch
598.  Much of that act provides procedures for initiating and conducting
arbitration proceedings.  See Or Laws 2003, ch 598, §§ 9, 11, 15 (providing procedures for
initiating arbitration, appointing arbitrators, and conducting the hearing).  Section
28 of that act, now codified as ORS 36.730, provides that a party may appeal
from an interlocutory order denying a petition to compel arbitration and an
interlocutory order staying arbitration.  Or Laws 2003, ch 598, § 28.  Sections 3 and 31 of that act specify
the agreements to which sections 1 to 30 of the act apply.  Or Laws 2003, ch
598, §§ 3, 31.
Defendant argues
that sections 3 and 31 of the 2003 arbitration act establish that that act
(more specifically, section 28 of that act) does not apply to this litigation. 
Defendant reasons that, because section 28 of that act (codified as ORS 36.730)
does not apply to this litigation, it could not have taken an interlocutory
appeal from the trial court's order denying its motion to compel arbitration.(3)  It follows, defendant
contends, that we need not decide whether, if ORS 36.730 applied, that statute would
have provided the exclusive means for appealing from the trial court's order.  In
analyzing defendant's argument, we begin with section 3 and then turn to
section 31.
Section 3 of the 2003
arbitration act specifies which arbitration agreements are subject to the act. 
It provides:
"(1) Sections 1 to 30 of this 2003 Act
govern an agreement to arbitrate made on or after the effective date of this
2003 Act [January 1, 2004].
"(2) Sections 1 to 30 of this 2003 Act
govern an agreement to arbitrate made before the effective date of this 2003
Act if all the parties to the agreement or to the arbitration proceeding so
agree in a record.
"(3) On or after September 1, 2004,
sections 1 to 30 of this 2003 Act govern an agreement to arbitrate whenever
made."
Or Laws 2003, ch 598, § 3.  Section 3
divides arbitration agreements into two categories.  The first category
consists of arbitration agreements made after the effective date of the act, January
1, 2004.  The 2003 arbitration act governs all those agreements.  Or Laws 2003,
ch 598, § 3(1).  The second category consists of arbitration agreements made
before the effective date of the 2003 arbitration act and divides into two
subcategories.  Between January 1 and August 31, 2004, the 2003 arbitration act
will not govern arbitration agreements made before the act's effective date, unless
the parties agree that the act applies.  Or Laws 2003, ch 598, § 3(2).   Beginning on September 1, 2004, the
2003 arbitration act will govern all arbitration agreements, including those
made before the act's effective date.  Or Laws 2003, ch 598, § 3(3).
In this case, the
parties renewed their employment agreement, which included an agreement to
arbitrate, before January 1, 2004.  Section 3(1) accordingly does not apply;
either section 3(2) or section 3(3) does.  Defendant did not discharge
plaintiff until 2005.  Because the opportunity to arbitrate any dispute arising
out of plaintiff's discharge did not arise until after September 1, 2004,
section 3(3) of the 2003 arbitration act applies and provides that sections 1
to 30 of the act, including the section now codified as ORS 36.730, apply.
 The remaining
question is whether the savings clause in section 31 of the act leads to a
different conclusion.  Section 31 provides:
"Sections 1 to 30 of this 2003 Act do not
affect an action or proceeding commenced or right accrued before the effective
date of this 2003 Act.  Subject to section 3 of this 2003 Act, an arbitration
agreement made before the effective date of this 2003 Act, continues to be
governed by [former] ORS 36.300 to 36.365 [(2001)] as though
those sections were not repealed by section 5[7] of this 2003 Act."
Defendant raises two arguments under that
section.  Defendant argues initially that, under the second sentence of section
31, the former arbitration statutes (former ORS 36.300 to 36.365 (2001))
apply to its dispute with plaintiff.  The second sentence, however, begins with
the phrase, "[s]ubject to section 3."  That introductory phrase makes
clear that the former arbitration statutes will govern agreements to arbitrate
made before January 1, 2004, but will do so only until August 31, 2004, and
only if the parties do not agree that the 2003 arbitration act applies.  See
Or Laws 2003, ch 598, § 3(2) (so providing).  Beginning on September 1,
2004, the 2003 arbitration act governs all agreements to arbitrate without
regard to when they were made.  See Or Laws 2003, ch 598, § 3(3).
Defendant also
relies on the first sentence of section 31, which provides that sections 1 to
30 of the 2003 arbitration act "do not affect an action or proceeding
commenced or right accrued before [January 1, 2004]."  In this case, no
action or proceeding was commenced before January 1, 2004; so, that part of the
first sentence does not advance defendant's position.  Additionally, defendant
has identified no right that accrued to it before January 1, 2004.  Defendant did
not file a petition to compel arbitration until October 2005, and the trial court
did not deny defendant's petition until December 2005.  Defendant's right to
appeal did not arise (or "accrue" in statutory terms) until long
after the effective date of the 2003 arbitration act.
Defendant argues,
however, that some of plaintiff's rights accrued before January 1, 2004, and
that, as a result, the former arbitration statutes apply.  Plaintiff has not
invoked the savings clause of the 2003 arbitration act, and we fail to see how
defendant can invoke the savings clause to protect plaintiff's accrued rights
when plaintiff declines to do so.  We accordingly conclude that, under sections
3 and 31 of the 2003 arbitration act, section 28 of that act (now codified as ORS
36.730) applied and authorized defendant to take an interlocutory appeal from
the trial court's order.
Having concluded
that ORS 36.730 authorized defendant to take an interlocutory appeal, we turn
to the question whether that statute provides the exclusive means for appealing
from an order denying a petition to compel arbitration.  In answering that
question, we think it is helpful initially to put ORS 36.730 in its historical
context.  Before 2003, the Oregon statutes did not authorize a party to take an
interlocutory appeal as a matter of right from an order denying a petition to
compel arbitration.  See Bush v. Paragon Property, Inc., 165 Or App 700,
702, 997 P2d 882 (2000) (so concluding).  Appellate review of an order denying
a petition to compel arbitration was available as a matter of right only on
appeal from the general judgment at the end of the trial.  See Industra/Matrix
Joint Venture v. Pope & Talbot, 341 Or 321, 327-28, 142 P3d 1044 (2006)
(reviewing trial court's order denying a petition to compel arbitration on
appeal from the general judgment).(4)
Specifically, before
2003, a timely appeal from a final judgment gave an appellate court jurisdiction
of the cause.  ORS 19.205(1) (2001) (authorizing an appeal from a judgment); ORS
19.270(1) (providing that an appellate court will have jurisdiction of the cause
when a timely notice of appeal is filed and served properly).  Having acquired
jurisdiction, an appellate court could "review any intermediate order
involving the merits or necessarily affecting the judgment * * * appealed
from."  ORS 19.425 (2001).  Although the issue was not litigated in Industra/Matrix
Joint Venture, that was presumably the basis on which the Court of Appeals
and this court reviewed the trial court's order denying the plaintiff's
petition to compel arbitration in that case; that is, the Court of Appeals and this
court had authority to review the order in Industra/Matrix Joint Venture because
it was "an intermediate order * * * [that] necessarily affect[ed] the
judgment appealed from."  See ORS 19.425 (authorizing review of
intermediate orders).
In 2003, the Oregon legislature
provided for the first time that "[a]n appeal may be taken from [a]n order
denying a petition to compel arbitration."  Or Laws 2003, ch 598, § 28.  The legislature, however, did not
specify what consequences would follow from declining to take an interlocutory
appeal.  Specifically, the legislature did not expressly state whether the
failure to take an interlocutory appeal pursuant to ORS 36.730 would preclude a
party from later appealing from the general judgment and assigning error, as
part of that appeal, to the trial court's order.
In addressing that
issue, defendant argues that the legislature's use of the word "may"
implies permission to take an appeal and that, without some clear evidence of a
contrary legislative intent, we should not assume that the legislature intended
to require parties to pursue what is phrased only as a permissive appeal.  Plaintiff,
for his part, responds that an order denying a petition to compel arbitration
must be appealed within 30 days and that, after the passage of ORS 36.730, an
order denying a petition to compel arbitration is not an "intermediate
order" within the meaning of ORS 19.425.  Implicit in plaintiff's argument
is the proposition that there would have been little reason for the legislature
to permit an interlocutory appeal as a matter of right if it did not intend to
require that the question of arbitrability be finally resolved before the
parties went to the expense and effort of a trial.
It is true, as
defendant argues, that the phrase "may be taken" is permissive, but the
legislature could have used that phrase in one of two ways.  On the one hand, the
legislature could have used "may," as defendant argues, to signal its
intent to permit an interlocutory appeal without foreclosing a party's right to
raise the issue on a later appeal from a general judgment.  See Salsitz v.
Kreiss, 198 Ill 2d 1, 761 NE2d 724 (2001) (interpreting "may" that
way).   On the other hand, the legislature could have used
"may" merely to signal that it did not intend to require an appeal
from an order denying a petition to compel arbitration; that is, a party may
but need not appeal from such an order.  See ORS 19.205(1) (a "general
judgment * * * may be appealed as provided in this chapter").  Put
differently, providing that an interlocutory appeal "may be taken"
does not reveal the consequences of failing to do so.
The Court of Appeals
found more guidance in the text of ORS 36.730(2).  Snider, 221 Or App at
600.  That subsection provides that "[a]n appeal under this section
must be taken as provided in ORS chapter 19."  That means, among other
things, that a notice of appeal pursuant to ORS 36.730 must be filed within 30
days of the date that an order denying a petition to compel arbitration is entered
in the register.  See ORS 19.255(1) (stating the time for filing a
notice of appeal).  ORS 36.730(2) makes clear that the time to take an interlocutory
appeal pursuant to ORS 36.730 is limited.  Defendant's position is at odds with
that time limitation.  If a party were free to wait until the entry of the
general judgment to challenge an order denying a petition to compel
arbitration, as defendant argues, it would undercut the legislature's directive
that an appeal from that order must be taken within 30 days. 
Another aspect of
the text points in the same direction.  ORS 36.730 authorizes an appeal from
two interlocutory orders:  an order denying a petition to compel arbitration
and an order granting a petition to stay arbitration.  It does not authorize an
appeal from an interlocutory order granting a petition to compel arbitration or
an interlocutory order staying a trial pending arbitration.  Textually, ORS
36.730 is a one-way street.  It authorizes an interlocutory appeal if a trial
court rejects arbitration in favor of trial, but it does not authorize an interlocutory
appeal if a trial court sends the case to arbitration instead of trial.  We
infer from that choice that the legislature wanted to have the issue of
arbitrability be decided quickly and finally before the parties went to the
expense and effort of trying their case in court.  There would be little point
in waiting until the trial was over before finding out that the case should
have been arbitrated rather than tried.
Defendant does not
identify any context that supports its position, other than the general right
to appeal from the judgment, which we have already considered, and there is no
legislative history that bears on this issue.  See State v. Gaines, 346
Or 160, 172, 206 P3d 1042 (2009) ("Legislative history may be used to
confirm seemingly plain meaning and even to illuminate it * * *.").  As
noted, the 2003 legislature enacted what is now codified as ORS 36.730 as part
of a larger bill adopting the Revised Uniform Arbitration Act.  See Or
Laws 2003, ch 598, § 28.  The
Oregon State Bar sponsored that bill.  See Testimony, House Judiciary
Committee, HB 2279, Jan 30, 2003, Ex B (statement of James Damis).  In discussing
the need for the bill, a representative from the Bar explained that the bill,
modeled on the Revised Uniform Arbitration Act, was necessary to modernize
Oregon's arbitration procedures.(5) 
Id.
In discussing the
bill, no one mentioned that, in adopting the Revised Uniform Arbitration Act,
the legislature would authorize an interlocutory appeal as a matter of right,
nor was there any discussion of what the consequences would be if a party
failed to take an interlocutory appeal pursuant to the bill.  Not only was
there no discussion of that issue in the legislative history, but there is no
commentary to that section of the Revised Uniform Arbitration Act that might
shed light on what the legislature intended.  Cf. Datt v. Hill, 347 Or
672, 682, 227 P3d 714 (2010) (looking to the commentary to another uniform act
that Oregon had adopted to determine the Oregon legislature's intent).
Considering the text
and context of ORS 36.730, we hold that the legislature intended that ORS
36.730 would provide the exclusive means for appealing from an order denying a
petition to compel arbitration.  The Court of Appeals reached the same conclusion
but reasoned that, as a result of ORS 36.730, it lacked jurisdiction to
consider defendant's assignment of error.  Snider, 221 Or App at 600. 
In our view, defendant's failure to take an interlocutory appeal did not
deprive the Court of Appeals of jurisdiction to consider defendant's assignment
of error.  Rather, defendant's timely appeal from the general judgment gave the
Court of Appeals jurisdiction "of the cause," which included all
requests for relief incorporated in the general judgment.  See ORS
19.270 (defining appellate jurisdiction); ORS 18.005(7) (defining general
judgment).  Under ORS 36.730, defendant's failure to take an interlocutory
appeal from the trial court's order meant that the order was not reviewable on
appeal.  In effect, ORS 36.730 reflects the legislature's intent to remove orders
denying petitions to compel arbitration from the category of intermediate
orders that otherwise would be reviewable on appeal from the general judgment.
Although we view the
effect of ORS 36.730 differently from the Court of Appeals, we agree that
defendant's challenge to the trial court's order was not properly before that
court on appeal from the general judgment.  Accordingly, we do not reach the
question whether the trial court correctly held that defendant's delay in
invoking the arbitration provisions in its agreement waived its right to
arbitrate.
The decision of the
Court of Appeals and the judgment of the circuit court are affirmed.
1. In
its petition for review, defendant asked us to consider other issues that the
Court of Appeals decided.  We decline that request and limit review to the
issue stated above and to a related issue that defendant raises.
2. ORS 36.730
provides, in part:
"(1) An appeal may be taken from:
"(a) An order denying a petition to compel
arbitration.
"(b) An order granting a petition to stay
arbitration.
"* * * * *
"(2) An appeal under this
section must be taken as provided in ORS chapter 19."
3. The
parties' agreement provides that "[a]rbitration shall comply with and be
governed by the provisions of the California Arbitration Act."  It may be
that, under the parties' choice-of-law provision, the California Arbitration
Act, not Oregon's 2003 arbitration act, would govern the procedures by which
any arbitration between them would be conducted.  It does not follow, however,
that California law also governs the procedures for taking an appeal from an
Oregon circuit court's ruling, nor have the parties argued that it would.  See
Equitable Life Assurance v. McKay, 306 Or 493, 760 P2d 871 (1988)
(recognizing that, even when foreign law applies, the law of the forum will
govern judicial procedures).  Rather, both parties' arguments on this point
start from the proposition that Oregon law applies.
4. When
the plaintiff filed the action in Industra/Matrix Joint Venture, the
2001 version of the Oregon Arbitration Act was in effect and continued to apply
to that action because of the savings provision in section 31 of the 2003
arbitration act.  See 341 Or at 326 n 2 (so stating).
5. The
Oregon legislature had adopted the previous arbitration provisions in 1925.  Peter
Kiewit v. Port of Portland, 291 Or 49, 54, 628 P2d 720 (1981).  It did not
adopt the Uniform Arbitration Act, which the Commissioners on Uniform State
Laws had promulgated in 1955.   Id. at 56.