Œ On January 11, 2008, this court issued an order dismissing

the appeal for want of appellate jurisdiction and indicated that

an opinion would follow. This opinion explains why that

disposition was required.

In the

United States Court of Appeals

For the Seventh Circuit ____________

No. 07-2475

CONTINENTAL CASUALTY CO., AMERICAN CASUALTY CO.

OF READING, TRANSPORTATION INSURANCE CO., et al.,

Plaintiffs-Appellants,

v.

STAFFING CONCEPTS, INC., STAFFING CONCEPTS INT’L, INC.,

STAFFING CONCEPTS NAT’L, INC., and VENTURE RESOURCES

GROUP, LLC,

Defendants-Appellees.

____________

Appeal from the United States District Court

for the Northern District of Illinois, Eastern Division.

No. 06 C 5473—Ronald A. Guzmán, Judge.

____________

ARGUED JANUARY 7, 2008—DECIDED JANUARY 11, 2008Œ

OPINION ISSUED AUGUST 6, 2008

____________

Before POSNER, ROVNER, and WOOD, Circuit Judges.

WOOD, Circuit Judge. This complex appeal arises from

an order issued by the district court striking a motion to
2 No. 07-2475

compel arbitration. The district court had pending before

it questions relating to personal jurisdiction and venue. It

decided to strike without prejudice the motion to compel arbitration pending resolution of those questions, but

it indicated at the same time that it would welcome a

refiling after the questions were sorted out. We find that

this constitutes a “delay incident to an orderly process,”

Middleby Corp. v. Hussman Corp., 962 F.2d 614, 616 (7th

Cir. 1992), and that we therefore do not have appellate

jurisdiction to hear an interlocutory appeal.

Continental Casualty, American Casualty, Transportation

Insurance, and National Fire are all in the insurance

business, affiliated as CNA. (When referring to them

collectively, we will call them “CNA”; otherwise we

will use the name of the particular corporation.) Continental also has two subsidiaries that figure prominently in

this litigation: CNA ClaimPlus and RSKCo Services, Inc.

RSKCo was the initial claims servicer for the agreements

at stake here; ClaimPlus is, arguably, the successor

claims servicer. Staffing Concepts and its similarly named

affiliates are “professional employer organizations,”

which take clients, employ their client’s employees, and

lease the employees back to the clients. In effect, Staffing

Concepts and its affiliates take care of the human resources

paperwork for the client. We will refer to them collectively

as “Staffing Concepts.” Staffing Concepts purchased

workers’ compensation insurance policies from CNA.

This litigation revolves around two sets of agreements.

The “Financing Agreements” deal with the financial side

of the arrangements between CNA and Staffing Concepts,

including the deductibles of the insurance plans. For

the years relevant to this litigation (2001-03), Financing

Agreements were struck between a subset of the CNA
No. 07-2475 3

affiliates that changed each year and Staffing Concepts

International (only). There is no arbitration clause in any

of the Financing Agreements.

The “Claim Services Agreements” are the second set of

agreements between the two sides; they focus on how

claims are to be dealt with by each party. Unlike the

Financing Agreements, the Claim Services Agreements

have a consistent pair of signatories: RSKCo (a nonparty

subsidiary of CNA) and Staffing Concepts International.

The 2001 and 2002 Claim Services Agreements do contain broadly written arbitration clauses.

The litigation was set in motion when various Staffing

Concepts entities made claims against the insurance

policies. Under the policies, Staffing Concepts was allegedly supposed to reimburse CNA for the deductible

portion of the claims it presented. CNA paid the

claims Staffing Concepts presented, but Staffing Concepts

did not reimburse CNA for the deductibles (which ran,

CNA says, from $250,000 to $750,000 per claim). As a

result, CNA asserts, it has incurred more than $44 million

in losses. At some point, CNA replaced RSKCo with

CNA ClaimPlus as the claims servicer.

On October 10, 2006, the four CNA insurers filed a

complaint against the ten Staffing Concepts insureds for

breach of the policies and Finance Agreements. At the same

time, ClaimPlus (the claims servicer) filed an arbitration

claim against Staffing Concepts International, alleging

a failure to pay claim handling fees. In theory, this had

the effect of bifurcating the overall dispute into arbitrable

claims that were sent to arbitration and nonarbitrable

claims that went to the district court.

On December 7, 2006, Staffing Concepts National filed

a motion to transfer venue to the United States District
4 No. 07-2475

Court for the Middle District of Florida, while all of the

other Staffing Concepts affiliates filed a motion to dismiss

for lack of personal jurisdiction. Then on April 30, 2007,

four of the Staffing Concepts family (Staffing Concepts

International, Staffing Concepts, Inc., Staffing Concepts

National, and Venture Resources Group) filed an answer

to the complaint, containing both defenses and counterclaims against a shifting subset of the CNA insurers, as

well as nonparty RSKCo.

On May 21, 2007, the CNA insurers moved to stay the

district court proceedings in favor of the arbitration already

underway between ClaimPlus and Staffing Concepts

International. See 9 U.S.C. §§ 3-4. Two days later, the

district court issued the order that gave rise to this

appeal, stating that the motion “to dismiss or to stay

Defendants’ Affirmative Defenses and Counterclaims in

Favor of Prior Pending Arbitration . . . is stricken without

prejudice and may be refiled after [the] court rules on

pending motions to dismiss for lack of personal jurisdiction and to transfer venue.”

This court immediately expressed its concerns about

appellate jurisdiction and requested briefing on the subject, eventually postponing the issue for oral argument.

Having heard both sides out on the matter, we ruled in

an order issued January 11, 2008, that there is no proper

appellate jurisdiction.

Under the Federal Arbitration Act, an appeal may be

taken from a district court order “refusing a stay of any

action . . . under this title,” or “denying a petition . . . to

order arbitration to proceed.” 9 U.S.C. § 16. The district

court here did neither: it struck the motion without prejudice, and at the same time it expressly invited a later

refiling of the same motion. CNA equates every post-
No. 07-2475 5

ponement with denial, while Staffing Concepts argues

that a more finely tuned analysis is required. This particular order, it says, should be characterized as a “delay

incident to an orderly process,” Middleby, 962 F.2d at 616,

that does not constitute an appealable denial or refusal

of the petition.

Middleby suggests that the relevant question here is

similar to the question that arises when a court is considering an injunction: under what circumstances is a

delay of a ruling equivalent to a denial. “The Supreme

Court’s answer has been: when the passage of time

causes irreparable injury to the person claiming entitlement to relief.” Id. Only if the CNA insurers can show

irreparable harm resulting from the district court’s decision

to take up personal jurisdiction and venue first can it

demonstrate that the district court effectively denied its

petition to compel arbitration, and thus that appellate

jurisdiction exists under 9 U.S.C. § 16.

This court extended Middleby to the very situation

presented to us here in IDS Life Ins. Co. v. SunAmerica, Inc.,

103 F.3d 524, 526-27 (7th Cir. 1996). In IDS, the district

court left ambiguous whether it had granted or denied the

stay on proceedings while it considered a preliminary

injunction, but it invited a refiling after the preliminary

injunction was straightened out. Applying Middleby, the

court in IDS concluded that the district court’s deferral of

consideration of the stay until after the preliminary injunction hearing did not give rise to an appealable order,

explaining when justifiable delay is transformed into

constructive denial of relief as follows:

A showing of unjustifiable delay coupled with irreparable injury if an immediate appeal is not allowed

is enough to make a constructive denial appealable, if
6 No. 07-2475

a formal denial would be. . . . Maybe a showing of

delay at once inordinate and unjustified, . . . —the kind

of thing that would excuse a person challenging

administrative action from having to exhaust his

administrative remedies, . . . or an applicant for federal habeas corpus from having to exhaust his state

remedies, . . . —is also enough. Otherwise the lower

court or agency would have the judicial or administrative equivalent of a pocket veto.

Id. at 526-27 (citations omitted).

Sharif v. Wellness Int’l Network, Ltd., 376 F.3d 720 (7th Cir.

2004), illustrates the other side of this coin. In that case,

the district court never set a schedule for dealing with

the motion to stay court proceedings in favor of arbitration and never even indicated when such a motion might

be appropriate. Instead, the district court denied the

motion, labeling it “superfluous” because of a pending

venue motion. Id. at 726. Here, in contrast, the district

court explicitly set its own affairs in order, indicating

that it wanted to deal first with the venue and personal

jurisdiction issues before turning to the motion to compel

arbitration. In striking the motion with an invitation to

refile, it signaled that it was not going to let the matter

languish.

The only harms to which CNA points are those related

to a then-approaching discovery deadline. This type of

harm is easily averted, however, by a simple request to

the district court for an order extending the deadline or

limiting discovery to threshold issues of arbitrability. CNA

did not do this; it chose to assume that all interim motions

would be futile. More than that is necessary before we

would jump to the conclusion that the district court was

going to allow “inordinate and unjustified” time to pass

before it ruled on the motion to compel arbitration.
No. 07-2475 7

The “delay incident to an orderly process” that occurred

in this case provides no ground for appellate jurisdiction

unless irreparable damage could be shown. CNA has

shown none, and so there is no basis for us to hear its

appeal. This appeal is DISMISSED for want of appellate

jurisdiction.

USCA-02-C-0072—8-6-08