Opinion ID: 186062
Heading Depth: 2
Heading Rank: 2

Heading: NGTL's Motion to Stay

Text: 15 NGTL argues that this court has jurisdiction to hear its appeal of the district court's denial of its motion to stay the litigation pending arbitration under Section 16(a)(1)(A), because that provision authorizes interlocutory appeals from the denial of stay motions under Section 3 of the FAA. Section 3 states that district courts shall stay litigation until the completion of arbitration upon being satisfied that the issue involved in such suit or proceeding is referable to arbitration under ... an agreement [in writing].... 9 U.S.C. § 3. NGTL contends that the arbitration agreement in its contract with DSMC allows it to seek to stay this action under Section 3, because the action involves an issue that is referable to arbitration under a written agreement. See Reply Br. at 26. We disagree. 16 In IDS Life Insurance Co. v. SunAmerica, Inc., 103 F.3d 524 (7th Cir.1996), the Seventh Circuit faced a similar claim. Two defendants were parties to an arbitration agreement with the plaintiff; two defendants were not. The defendants without an arbitration agreement appealed from the district court's denial of their motion to stay the litigation pending arbitration. The court held that there was no jurisdiction under Section 16(a)(1) to hear the appeal because the issues involved were not referable to arbitration under an agreement in writing pursuant to Section 3, even though largely indistinguishable issues involving the other two defendants were subject to arbitration. See id. at 530. 17 Similarly in this case, NGTL — which does have an arbitration agreement with DSMC — seeks to stay an action between parties that have no such agreement. That this is the focus of NGTL's effort is clear from its original desire to intervene in litigation to which it was not a party solely for the purpose of seeking to stay that litigation. There are no issues referable to arbitration under an agreement in writing between Convera and DSMC because there is no arbitration agreement between those two parties. Even assuming that the issues involved in the DSMC/Convera litigation and the DSMC/NGTL arbitration are identical, intertwined, closely related, whatever — a matter of hot dispute — the litigation may not be stayed under Section 3 because the issues in the litigation are not referable to arbitration under an agreement. See Adams, 237 F.3d at 540 (The denial of the benefit of the mandatory stay provision to non-signatories has been grounded in the recognition that the non-signatory's litigation with an arbitrating party cannot be referred to arbitration.); Sierra Rutile Ltd. v. Katz, 937 F.2d 743, 748 (2d Cir. 1991) (holding Section 16 does not provide jurisdiction when the parties to an action had no agreement to arbitrate, because no issue was referable to arbitration under an agreement pursuant to Section 3). As the Seventh Circuit explained in IDS Life, [t]he issues in the suits against the nonmembers may be substantively related to the issues in the other suits, but they are not referable to arbitration `under an agreement in writing for such arbitration,' because there is no such agreement between these parties.... The statute has no application to `issues' in cases between different parties. 103 F.3d at 529. 18 NGTL is a signatory, to be sure, but its issues with DSMC are already subject to arbitration. There is no arbitration agreement between DSMC and Convera, and so Section 3 does not apply in this case. District courts may certainly consider stays in circumstances such as these as a matter of discretionary control of their docket. See Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 20 n. 23, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983); IDS Life, 103 F.3d at 530. We simply conclude that the mandatory stay provision of Section 3 does not apply to litigation involving parties not subject to a written arbitration agreement, and therefore hold that this court lacks jurisdiction under Section 16(a)(1)(A) to hear NGTL's appeal.