Opinion ID: 3014944
Heading Depth: 2
Heading Rank: 1

Heading: Is the Stay Entered by the District Court

Text: Appealable? The first issue we must decide is whether we have appellate jurisdiction under 28 U.S.C. § 1291 over the stay entered by the District Court. Section 1291 generally limits our appellate jurisdiction to final orders. The “usual rule” is that a stay is not a final order under § 1291. Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 10 n.11 (1983). A stay is treated as a final order, however, if it “amounts to a dismissal of the suit.” Id. at 10. This is the case when the stay has the effect of putting the plaintiff “out of court” because it “surrender[s] jurisdiction of a federal suit to a state court” by “requir[ing] all or an essential part of the federal suit to be 4 litigated in a state forum.” Id. at 11 n.11 (internal quotation marks omitted). Our Court interprets the Supreme Court’s opinion in Moses H. Cone as holding that stays involving “parallel parties and parallel claims,” in which the state decisions are likely to preclude the federal claims, are typically appealable. Michelson v. Citicorp Nat’l Servs., Inc., 138 F.3d 508, 515 (3d Cir. 1998). At bottom, we look at the effect of a stay to determine whether it is final. Id. at 513. The stay in Michelson was not appealable because the state-court determination was going to have “little or no effect” on the federal suit. Id. at 516. Michelson, the federal plaintiff, was not a party to the state suit and therefore was not subject to res judicata because of the state decision. Id. The state claim was based on Missouri law, while the federal claim was based on federal law, so the state decision was not going to be “determinative of the similar issue” in the federal suit. Id. We therefore held that, because the stay would not put the plaintiff out of federal court, it was not a final judgment and not appealable. Id. at 516–17. In other cases, we have used similar factors to conclude stays were not appealable. In Marcus v. Township of Abington, the causes of action in two proceedings—a state criminal suit and a federal § 1983 suit—were different, and we held the stay was not a final, appealable order. 38 F.3d 1367, 1371–72 (3d Cir. 1994). We also noted in Marcus that stays are not appealable just because they have the effect of delaying a federal suit. Id. Where a stay order required periodic reports on 5 the progress of the state litigation, suggesting the district court’s “intention to monitor the stay periodically,” that order was not final and thus not appealable. Cheney State Coll. Faculty v. Hufstedler, 703 F.2d 732, 736 (3d Cir. 1983). Where a state decision was likely not going to make the federal suit res judicata, the district court’s stay was not appealable. Arny v. Phila. Transp. Co., 266 F.2d 869, 870 (3d Cir. 1959). On the other hand, when a state court decision would render the federal suit subject to res judicata, stays are more likely to be final, appealable orders. See, e.g., Trent v. Dial Med. of Fla., Inc., 33 F.3d 217, 221 (3d Cir. 1994) (finding a stay final and appealable when the state decision would “constitute res judicata as to at least the two major issues” in the federal suit); In re Grand Jury Proceedings (U.S. Steel—Clairton Works), 525 F.2d 151, 155 (3d Cir. 1975) (finding a stay appealable because the state suit was likely to “continue beyond” the expiration of the federal grand jury’s term, with “the practical effect of a dismissal of the proceedings”). Here the Wildermans have clearly conceded that the Texas action will have little, if any, effect on their federal suit. They note that it would be “impossible for [their] declaratory judgment action to duplicate or interfere with the Texas litigation because the issues and parties are different.” Appellants’ Br. at 5. They also note that “the Texas court cannot address the legal relations between [themselves] and Cooper & Scully. No judgment rendered . . . in the Texas 6 litigation will determine [their] liability to Cooper & Scully for attorney’s fees.” Id. at 6. The Wildermans also concede that “a judgment against Baron & Budd in Texas will not operate to bar an action by Cooper & Scully against the Wildermans for predischarge attorney’s fees.” Id. The characteristics of the two different actions also make clear that this action will not be rendered res judicata by the Texas suit. The causes of action are different, and the parties are not parallel. Cooper & Scully sued only Baron & Budd and Summy, claiming interference with contract, usurpation of corporate opportunity, and conversion. The federal claim is between the Wildermans and Cooper & Scully and is a declaratory judgment action for the Wildermans’ attorney’s fee liability to Cooper & Scully. Thus, both suits share the same factual background, but the same facts are not at issue in them. The District Court’s stay order also shows that the effect of its stay is not akin to a dismissal. The Court ordered the stay to ensure that the federal action would not “duplicate or interfere with” the Texas suit and required Cooper & Scully to report on the status of the Texas suit every 60 days. That hardly has the effect of a final determination, as it suggests that the Court will periodically review the stay. The Wildermans claim that the District Court’s stay is appealable “based upon the belief or assumption that the Texas litigation would resolve all issues between the parties and would operate as res judicata to the federal action.” Resp. to Mot. to 7 Dismiss at 1–2. But we look to the effect of the stay, not the hypothetical basis for it: “[O]ur jurisdiction does not turn on the authority cited by the district court. It turns, rather, on the effect of the order that the district court has entered.” Marcus, 38 F.3d at 1372 (emphasis in original). The District Court’s stay does not dismiss; it simply delays the federal suit until the state litigation comes to a clearer resolution. This posture does not confer finality under § 1291, and thus we lack jurisdiction to entertain this appeal.