Opinion ID: 165315
Heading Depth: 1
Heading Rank: 2

Heading: Appealability of Stay Order under the Federal Arbitration Act

Text: 5 The Federal Arbitration Act, 9 U.S.C. § 1 et seq., manifests a liberal federal policy favoring arbitration. Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 25, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991) (quotations omitted). Section 16 of the FAA governs our review of a district court's decision to stay proceedings in favor of arbitration. Under § 16(a)(3), a party may appeal a final decision with respect to an arbitration that is subject to this title. Section 16(b)(1), however, states that an appeal may not be taken from an interlocutory order granting a stay of any action under section 3 of this title. Thus, the issue in this case is whether the district court's order was a final decision with respect to an arbitration under § 16(a)(3) or an interlocutory order granting a stay under § 16(b)(1). The one is immediately appealable, the other is not. 6 Before we reach this question, however, we must first address the Tribe's argument that the FAA does not even apply in this case. 4 The FAA applies to all arbitration agreements involving commerce, 9 U.S.C. § 2, and create[s] a body of federal substantive law of arbitrability, applicable to any arbitration agreement within the coverage of the Act. Moses H. Cone Memorial Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983). The requirement that the underlying transaction involve commerce is to be broadly construed so as to be coextensive with congressional power to regulate under the Commerce Clause. Foster v. C.F. Turley, Jr., 808 F.2d 38, 40 (10th Cir.1986) (citations omitted). The Supreme Court has stated that the FAA's involving commerce requirement reaches not only the actual physical interstate shipment of goods but also contracts relating to interstate commerce. Prima Paint Corp. v. Flood & Conklin Mfg. Co., 388 U.S. 395, 401 n. 7, 87 S.Ct. 1801, 18 L.Ed.2d 1270 (1967) (quoting H.R.Rep. No. 96, 68th Cong., 1st Sess. 1 (1924)); see also Allied-Bruce Terminix Cos., Inc., v. Dobson, 513 U.S. 265, 273-74, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995) (holding that involving commerce is the functional equivalent of affecting commerce). 7 In this case, 49 has its principal place of business in Illinois, while the Tribe is a federally-recognized Indian Tribe located in Oklahoma. The contracts between the parties therefore relate to and affect interstate commerce. This conclusion is bolstered by the statement of 49's counsel at oral argument that the gaming machines it leased to the Tribe originated in California. See, e.g., Allied-Bruce, 513 U.S. at 282, 115 S.Ct. 834 (finding that § 2's involving commerce requirement was met where the parties were from different jurisdictions and the materials at issue came from outside the forum state). We therefore hold that the contracts at issue relate to interstate commerce, and the FAA applies to this dispute. 8 The Tribe argues next that, even if the FAA applies, the district court's order is an appealable final decision under § 16(a)(3). We reject this argument. In Green Tree Financial Corp. — Alabama v. Randolph , the Supreme Court held that the term final decision as used in § 16(a)(3) means a decision that ends the litigation on the merits and leaves nothing more for the court to do but execute the judgment. 531 U.S. 79, 86, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000) (citations and quotations omitted). The district court in Green Tree had dismissed the claims with prejudice, leaving nothing for the court to do except execute judgment, and thus dispos[ing] of the entire case on the merits and [leaving] no part of it pending before the court. Id. In such circumstances an appeal was allowed under § 16(a)(3). The Court noted, however, that [h]ad the District Court entered a stay instead of a dismissal in this case, that order would not be appealable. Id. at 87 n. 2, 121 S.Ct. 513 (citing 9 U.S.C. § 16(b)(1)); see also Apache Bohai Corp., LDC v. Texaco China, B.V., 330 F.3d 307, 309-10 (5th Cir.2003) (interpreting Green Tree and holding that the district court's stay of proceedings pending arbitration was not appealable under § 16(b)(1)). 9 Here, rather than dismissing the case, the district court entered a stay pending arbitration. We therefore have no difficulty in holding that the district court's order is not appealable at this time. Although it is true that the district court made substantive rulings with respect to issues such as IGRA and signatory authority, it did so for the limited purpose of determining whether the arbitration clause in the contracts was valid and enforceable. 5 Having decided that all but one of the contracts were valid, the court then did exactly what it was required to do under the FAA: it stayed the proceedings and compelled arbitration. 9 U.S.C. § 3. 6 In so doing, the district court did not dispose of the entire case on the merits. In fact, the district court specifically stated in its order that it would not consider the Tribe's motion to dismiss 49's counterclaim because it was premature, indicating that the district court understood it was not disposing of the case entirely. The court, moreover, also ruled in the Tribe's favor concerning one of the contracts. Following the arbitrator's determination on the underlying breach of contract claim, the Tribe may return to the district court to seek a review of the award under the criteria laid out 9 U.S.C. § 10. Following such a review, the Tribe (and 49) may appeal to this court and raise challenges to the district court's order, including the Tribe's argument that the arbitration clause is unenforceable because it has not effectively waived its sovereign immunity. See Pioneer Properties, Inc. v. Martin, 776 F.2d 888, 891 (10th Cir.1985).