United States Court of Appeals

Fifth Circuit



## FILED

April 30, 2003

Charles R. Fulbruge III

Clerk 

## REVISED MAY 2, 2003

In the 

# United States Court of Appeals

for the Fifth Circuit

_______________



### m 02-20489

_______________



### A PACHE 

### B OHAI 

### C ORPORATION



### , LDC,

Plaintiff-Appellant,

VERSUS



### T EXACO 

### C HINA



### , B.V.,

Defendant-Appellee.

__________________________

Appeal from the United States District Court

for the Southern District of Texas

_________________________

* * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * *2 _______________



### m 02-21158

_______________

I N THE M ATTER OF :



### A PACHE 

### B OHAI 

### C ORPORATION



### , LDC,

Petitioner.

__________________________

Petition for Writ of Mandamus to

the United States District Court

for the Southern District of Texas

_________________________

Before G ARWOOD , S MITH , and B ARKSDALE

, Circuit Judges.

J ERRY E. S MITH , Circuit Judge:

Apache Bohai Corporati on, LDC (“Apache

Bohai”) appeals an order staying proceedings

in the district court and compelling arbitration

of its dispute with Texaco China, B.V. (“Texaco”). Because this court’s jurisdiction is contested, Apache Bohai filed a conditional petition for writ of mandamus directing the district

co u rt to vacate its order and enter an appealable fi nal judgment. Concluding that we

lack jurisdiction, we dismiss the appeal. Finding no abuse of discretion, we deny mandamus

relief. I.

On April 2, 1998, Texaco entered into two

written farmin agreements 1 with Apache China

Corporati on (“Apa che China”), according to

which Apache China agreed to drill and pay

for three wells on two of Texaco’s acreage

blocks in the Bohai Bay area of the Peopl e’s

R epublic of China. In December 1998, Apache China assigned its interests i n the farmin

agreements to Apache Bohai, its affiliate. By

June 1999, however, Apache Bohai lost inter1 A farmin agreement is a contract whereby one

company acquires an interest in an exploration or

pr oduction license by paying some of the past or

future cos ts of another company that is relinquishing part of its interest.3

est in the project and sent doc uments re-assigning all of its interests under the agreement

to Texaco. Texaco signed and returned the

relevant documents in January 2000.

These events gave rise to a dispute over the

parties’ respective obligations und er the contract, and in January 2001, Texaco initiated an

arbitration proceed i ng against Apache China.

Apache Bohai was not named in the arbitration

proceeding but took action anyway, filing suit

in Texas state court requesting a de c laratory

judgment that the dispute was not a rbit rable

and that it had no liability to Texaco. Texaco

removed the state court proceeding to federal

district court and moved to dismiss or stay the

l itigation and to compel arbitration. The

district court granted both motions, issuing an

order to compel arbitration and choosi ng to

stay rather than dismiss the litigation.

II.

Section 16 of the Federal Arbitration Act

("FAA"), 9 U.S.C. § 16, governs appe l late

review of arbitration orders. Congress’s intent

in enacting § 16 was to favor arbitration, 2 and

it did so by authorizing immediate appeals

from orders disfavoring arbitration and forbidding immediate appea ls from orders favoring

arbitr ation. A dams v. Ga. Gulf Corp.

, 237

F.3d 538, 540 (5th Cir. 2001) (citing Forsythe

Int'l, S.A. v. Gibbs Oil Co.

, 915 F.2d 1017,

1020 (5th Cir. 1990)). The provisions relevant

to this dispute vest the courts of appeals with

jurisdiction over “final decision[s] with respect

to an arbitration

. . .,” § 16(a)(3), while specifically denying appellate jurisdiction over

nonfinal orders staying proceedings pending arbitration, § 16 (b)(1). Therefore, our

jurisdiction turns on whether the district

court’s order constitutes a final decision.

A final decision is one that “end s the

litigation on the merits and leaves nothing

more for th e court to do but execute the

judgment.” G reen Tree Fin. Corp.-Alabama

v. Randolph

, 531 U.S. 79, 86 (2000) (citations

and internal quotati on marks omitted). Under

this definition, a dismissal is a final decision.

Id. at 89. The district court, however, did not

dismiss the claims, but entered a stay pending

arbitration. An arbitration order entering a

sta y, as opposed to a dismissal, is not an

appealable final order. 3

Apache Bohai contends that when a district

court enters an order staying an action and referring all disputed matters to arbitration, leaving no live issues before the district court, this

court should consider the order to be, in effect,

a de facto dismissal and thus a final decision

appealable und e r § 16(a)(3). Unlike a

dismissal, however, a stay, by definition, constitutes a postponement of proceedings, not a

termination, and thus lacks finalit y. Further, as

other courts have noted, entry of a stay rather

than a dismissal “suggests that the district

court perceives that it might have more to do

than execute the judgment once arbitration has

been completed.” A TAC Corp. v . Arthur

Treacher’s, Inc.

, 280 F.3d 1091, 1099 (6th

2 Gilmer v. Interstate/Johnson Lane Corp.

, 500

U.S. 20, 25 (199 1) (citing M oses H. Cone Mem.

Hos p

. v. Mercury Constr. Corp.

, 460 U.S. 1, 24

(1983))

. 3 See Cargill Ferrous Int’l v. Sea Phoenix MV

, No. 01-31193, 2003 WL 1524466, at *5 (5th Cir.

Apr. 9, 2003); see also Green Tree

, 531 U.S. at 87

n.2 (“Had the district court e n tered a stay instead

of a dismissal in this case, that order would not be

appealable.”); Saturn Distrib. Corp. v. Paramount

Saturn, Ltd.

, No. 02-20 431, 2003 WL 1561908,

a t *1 (5th Cir. Apr. 10, 2003) (finding distri c t

court order to be a final decision, in part because it

was not accompanied by a stay of proceedings).4

Cir. 2002). Consequently, although it may be

true that in some instances the entry of a stay

disposes of m

o st or all issues, that fact alone

does not render it the functional equivalent of

a dismissal. 4

Apache Bohai cites two cases in which we

fo u nd appellate jurisdiction despite the plain

absence of a dismissal; neither contradicts our

con clusion that a stay is not a final decision.

In Am. Heritage Life Ins. Co. v. Orr

, 294 F.3d

702 (5th Cir. 2002), we held that an order

compe lling arbitration and “closing” the case

was a reviewable final decision. 5 The district

court in that case had issued an order staying

st ate court proceedings, compelling

arbitration, and closing the case, leaving

nothing to do but execute the judgment. I d

. In that context, we held that “closing” the case

was functiona lly indist inguishable from

dismissal. 6 In this case, by contrast, the court

did n ot purport to close the case

administratively, nor did it attempt in any other

way to terminat e its involvement in the

proceedings. Apache Bohai also ci tes G ulf Guar. Life

Ins. Co. v. Conn. Gen. Life Ins. Co. , 304 F.3d

476 (5th Cir. 2002), as an example of this

court’s willingness to find the existence of an

appealable final decision despite the lack of an

explicit dis missal. In G ulf Guaranty

, id. at

480-81, the district court reopened a suit for

the express purpose of consolidating it with a

later a ct ion. The order forming the basis for

the appeal in Gulf Guaranty explicitly

dismissed the later action but failed to mention

the claims from the earlier suit. Id . We

concluded, in

light of the various indications

that the court intended to dismiss both suits,

that the order was a final decision.

Far from expanding the definition of final

decision for purposes of § 16(a)(3), we merely

recognized that “the intention, as well as th e

effe ct [of the order], was to dismiss [the

action]." I

d. at 483. 7 Here, there is no

indication that the district court int ended to

dismiss the case but failed to do so through an

oversight. Rather, it entered an order

expressly granting a stay of the proceedings

pending arbitration.

III.

In the alternative, Apache Bo hai seeks a

writ of mandamus directing the di s trict court

to vacate its order and enter an appealable final

judgment. Mandamus is a drastic remedy

reserved only fo r t ruly extraordinary situations. W

ill v. United States

, 389 U.S. 90,

106 (1967). The district court must have

committed a “clear abuse of discretion” or 4 See ATAC Corp.

, 280 F.3d at 1099. In G reen

Tree , 531 U.S. at 87 n.2, the Court noted that had

the district court entered a stay rather than a dismissal, the order would have been una ppealable.

Thus, even where dismissal is appropriate, i.e., all

claims have been referred to arbitration, the entry

of a s tay rather than a dismissal bars appellate

jurisdiction.

5 Am. Heritage

, 294 F.3d at 708; but see ATAC

Corp.

, 28 0 F.3d at 1099 (holding that order to

compel arbitration and close proceedings is not an

appealable final decision).

6 Am. Heritage

, 294 F.3d at 708 (“[T]here is no

practical distinction between ‘dismiss’ and ‘close’

for purposes of this appeal.”). 7 Indeed, our consideration in Gulf Guaranty of

the intent u nder lying the district court’s order directly undercuts Apache Bohai’s position. If the

primary consideration were the practical effect of

the order, as Bohai contends, there would have

been no need to evaluate the district court’s intent.5

engaged in “condu ct amounting to the usurpation of power.” M

allard v. United States

Dist. Ct. , 490 U.S. 296, 309 (1989) (citations

and internal quotati on marks omi t ted). This

burden is particularly heavy in the context of

mandamus review of a decision to enter a stay

pending arbitration, “because Congr e ss has

expressly limit

ed interlocutory review of a district court decision on arbitration.” M cDermott Int’l, Inc. v. Underwriters at Lloyds

, 981

F.2d 744, 748 (5th Cir. 1993). “Moreover, it

is more than wel l settled that a writ of

mandamus is not to be used as a substitute for

appeal[.]” Id

.

To establish its entitlement to mandamus

relief, Apache Bohai is required to show clearly an d indisputably that the district court did

not have the discretion to stay the proceedings

pendi ng arbitration. 8 It has not made this

showing. Apache Bohai is unable to cite a single case in which we held that a district court

abused it s discretion by staying rather than

dismissing proceedings pending arbitration. 9 Indeed, we have held that a decision, under

s imilar circumstances, to issue a stay rather

than a dismissal was not an abuse of discretion

warranting mandamus. 10

The appeal in No. 02

- 20489 is

DISMISSED, and the peti tion for wri t of

mandamus in No. 02-21158 is DENIED.

8 See McDermott

, 981 F.2d at 748 (citing Gulfstream Aerospace v. Mayacamas Corp.

, 485 U.S.

271, 289 (1988)).

9 Apache Bohai relies primarily on Alfor d v.

Dean Witter Reynolds, Inc.

, 975 F

. 2d 1161 (5th

Cir. 1992), to support its contention that the district court’s order constitutes an abuse of discretion. In A lford

, we concluded that “ the weight of

authority clearly supports dismissal of a case when

all of the issues raised in the district court must be

submitte d to arbitration.” I d

. at 1164 (emphasis

omitted). In other words, Alford held merely that

dismissal was not an abuse of discretion. I d. The

court did not hold tha t dismissal was required

under the circumstances, much less that failure to

dismiss would have be en an abuse of discretion.

See id .; see also Fedmet Corp. v. M/V Buyalyk

, (continued...) 9 (...continued)

194 F.3d 674, 676 (5th Ci r

. 1999) (holding that

“district courts have discretion to dismiss cases in

favor of arbitration,” but not implying any

obligation to do so).

10 See McDerm ott , 981 F.2d at 748 (“[Petitioner] has failed to satisfy this most demanding

standard [mandamus standard]. The district court

did not clearly overstep its authority when it granted the order compelling arbitration and s tayed

further proceedings pending that arbitration.”).