Opinion ID: 2008738
Heading Depth: 2
Heading Rank: 2

Heading: Gulfstream and its Progeny The Collapse of a Legal Fiction.

Text: You have stayed in this place too long, and there is no health in you. In the name of God, go! [10] So spoke Oliver Cromwell with commendable brevity in dismissing the Rump Parliament in 1658. Although Justice Marshall necessarily explained his decision in Gulfstream at somewhat greater length than the plain-spoken and supposedly Right but Repulsive Roundhead, [11] he wrote with equal eloquence for a unanimous Court when what he called the sterile and antiquated [12] Enelow-Ettelson doctrine was finally relegated to the historical oblivion which it so richly deserved. The Court held that, contrary to the assumption on which Enelow-Ettelson was predicated, an order by a federal court that relates only to the conduct or progress of litigation before that court ordinarily is not considered an injunction and therefore is not appealable under § 1292(a)(1). 108 S.Ct. at 1138 (emphasis added). The Court made it clear that § 1292(a)(1) would continue to provide appellate jurisdiction over those orders which really had the practical effect of granting or denying an injunction, provided that the appellant could make a showing of serious or irreparable consequences, as contemplated in Carson. The Court held, however, that a district judge's refusal to stay a suit before him because of the pendency in state court of an action presenting similar issues between the same parties did not satisfy these criteria; it did not involve an injunction, and the consequences were insufficiently severe. Id. 108 S.Ct. at 1142-43. Piecemeal appeals were no longer to be permitted pursuant to the fictitious notion that, under a system in which law and equity have been merged, a judge will be deemed to have issued or denied an injunction against himself if he stays or declines to stay proceedings before him. Although Gulfstream related to the appealability of an order refusing to stay an action pending state court proceedings, rather than to await the results of arbitration, the two situations are obviously analogous. As a result, federal appellate courts have uniformly held since Gulfstream that neither the grant [13] nor the denial [14] of a stay pending arbitration is immediately appealable. Under Gulfstream and its progeny, an order granting or denying a stay pending arbitration is no longer viewed as having the practical effect of an injunction or denial thereof. Similarly, in light of these authorities, a party's obligation to arbitrate or to proceed with the litigation no longer constitutes a sufficient injury to support an interlocutory appeal. In Rauscher Pierce Refsnes, Inc. v. Birenbaum, 860 F.2d 169 (5th Cir.1988), for example, the court explicated the effect of Gulfstream as follows: Appellant argues that the district court's order is appealable because the denial of a stay of proceedings pending arbitration has the same practical effect as the denial of an injunction. This reading of the Gulfstream case would revive the Enelow-Ettelson doctrine under another name and flatly contradict the Supreme Court's holding that stays are not automatically appealable under § 1292(a)(1).       Thus an order termed an injunction that functions merely as a stay of proceedings within the court issuing it is not appealable. Hamilton v. Robertson, 854 F.2d 740 (5th Cir.1988). Id. at 171. In Crist v. Miller, 846 F.2d 1143 (7th Cir.1988) (Posner, J.), the court held that, under Gulfstream, the denial of a stay pending arbitration is not appealable, for the requirement that a party litigate in court, when he claims to be entitled to arbitrate instead, does not constitute the kind of harm justifying immediate appeal: If it turns out that the appellants had a valid contractual right to arbitrate the claims, the judgment will be set aside and the matter referred to arbitration. There will be waste motion, no doubt, but that is always true when a sound defense interposed early in a litigation is erroneously rejected. It is the price we pay for having a final-judgment rule. The exceptions to the rule are narrow, and do not include mere inconvenience to a party wanting to take an interlocutory appeal. The ordinary incidents of litigation  the time and other resources consumed  do not constitute irreparable harm. Id. at 1144. This is true, a fortiori, where a stay has been granted, and where the appellant's only claimed injury is that he is improperly being required to arbitrate when he believes that he has the right to litigate in court. See, e.g., DeFuertes v. Drexel, Burham, Lambert, Inc., 855 F.2d 10, 12 (1st Cir.1988) (if plaintiffs are correct that no valid arbitration agreement existed, then the denial of immediate review will have required them to have incurred the expense of arbitration proceedings, but this ... is the price of the final judgment rule and does not constitute irreparable harm). Moreover, as the court correctly stated in Zosky v. Boyer, 856 F.2d 554, 561 (3d Cir. 1988). Arbitration is an expeditious and inexpensive mode of alternative dispute resolution. Allowing interlocutory appeals of such orders would defeat the attractiveness of arbitration by imposing delay and additional expense. In light of these decisions, we conclude that if this case were being litigated in a federal court, Judge Bowers' order referring Hercules and Shama to arbitration would not be subject to interlocutory appeal pursuant to § 1292(a)(1).