Opinion ID: 4523975
Heading Depth: 2
Heading Rank: 2

Heading: Jurisdiction Over the District Court’s Orders

Text: Title 28 U.S.C. § 1291 grants this Court general appellate jurisdiction over appeals from a district court’s “final decisions.” This exemplifies the “final judgment rule,” which requires a party to “raise all claims of error in a single appeal following final judgment on the merits.” Flanagan v. United States, 465 U.S. 259, 263 (1984) (quoting Firestone Tire & Rubber Co. v. Risjord, 449 U.S. 368, 374 (1981)). This Court also possesses jurisdiction, pursuant to the Federal Arbitration Act, over orders “denying a petition under section 4 of [the FAA] to order arbitration to proceed.” 9 U.S.C. § 16(a)(1)(B). This includes a “District Court’s refusal to enforce, through dismissal or stay, an agreement to arbitrate.” Simon v. Pfizer Inc., 398 F.3d 765, 772 (6th Cir. 2005). See also Preferred Care of Del., Inc. v. Estate of Hopkins, 845 F.3d 765, 768 (6th Cir. 2017) (affirming that Section 16 “permits review of orders that interfere with arbitration, such as those . . . ‘denying’ petitions to enforce arbitration agreements”) (quoting 9 U.S.C. § 16(a)).
The November 2018 Order does not constitute a refusal “to enforce, through dismissal or stay, an agreement to arbitrate.” Simon, 398 F.3d at 772. It is nothing more than a routine discovery order. As the district court made clear in the text of the Order, “asking the Court to cede authority to the arbitrator before it has been determined that all of these individuals are subject to the agreement in the first place is asking the Court to presuppose the answer. This the Court will not do.” R. 202, PageID # 7690. The purpose of the November 2018 Order was to Nos. 18-6270/19-5410 Taylor v. Pilot Corp., et al. Page 8 furnish Plaintiffs with the information necessary—the employment dates—to fully brief the motion to compel arbitration that Pilot had previously filed, rather than dismiss or stay the motion. The November 2018 Order simply delayed the district court’s ruling. Thus, this Court lacks appellate jurisdiction over the November 2018 Order at this stage in the proceedings. There is no final judgment for us to consider, nor a petition denying a motion to compel arbitration pursuant to section 16 of the FAA. It is true that this Court has not yet held whether an order that incidentally delays a motion to compel arbitration is appealable as an order denying the motion to compel. However, other circuits have held such orders are not appealable. See, e.g., Van Dusen v. Swift Transportation Co. Inc., 830 F.3d 893, 897 (9th Cir. 2016) (finding district court case management order unappealable, in part, because “one cannot construe a case management order designed to lead to a decision on a motion to compel arbitration as a decision to deny the motion”); Continental Cas. Co. v. Staffing Concepts, Inc., 538 F.3d 577, 579 (7th Cir. 2008) (holding unappealable a district court order striking a motion to compel arbitration, without prejudice, while the court adjudicated pending personal jurisdiction and venue motions). In Continental Casualty, the court observed that “the relevant question here is similar to the question that arises when a court is considering an injunction: under what circumstances is a delay of a ruling equivalent to a denial.” 538 F.3d at 580. A party must demonstrate “irreparable damage” from the court’s delay of a decision on the motion to compel, in order for the court’s ruling to constitute a denial under the FAA and support appellate jurisdiction. Id. at 581. While the text of the FAA provides the strongest indication that the November 2018 Order is not appealable, we find the logic of these courts helpful in reaching that result as well. Like the case management order in Van Dusen, the November 2018 Order was “designed to lead to a decision on [the] motion to compel arbitration.” 830 F.3d at 897. It was a “decision-making mechanism” rather than an appealable decision on the merits. Id. Moreover, Pilot has not demonstrated any “irreparable damage” that will result from a delay of a decision on its motion to compel. Continental Cas., 538 F.3d at 581. While Pilot may be mildly inconvenienced by having to produce the employment dates and would clearly prefer to have this case submitted to Nos. 18-6270/19-5410 Taylor v. Pilot Corp., et al. Page 9 arbitration as quickly as possible, neither concern constitutes irreparable harm. Instead, given the district court’s obligation to “determine[] whether a valid arbitration agreement exists,” it would seem that the only irreparable damage could be done to Plaintiffs—by rashly committing this case to arbitration before the district court is certain that the opt-in Plaintiffs are subject to the purported agreements. Henry Schein, 139 S. Ct. at 530.
The March 2019 Order appears to formally deny Pilot’s motion to compel arbitration. This suggests it is appealable under the FAA as an order “denying a petition . . . to order arbitration to proceed.” 9 U.S.C. § 16. However, the March 2019 Order was only issued because Pilot’s pending appeal of the November 2018 Order prevented the district court from “appropriately address[ing] the issues raised by Defendants,” and it was issued without prejudice. R. 207, PageID # 7707. Under these facts, it was a purely ministerial order, serving housekeeping or docket management purposes. See ACLU of Ky. v. McCreary Cnty., Ky., 607 F.3d 439, 451 (6th Cir. 2010) (holding that “a district court has broad discretion to manage its docket”). As a result, it is not appealable at this stage of the proceedings. Indeed, Pilot even concedes that the March 2019 Order “does not independently create jurisdiction over this appeal.” Reply Br. of Defs. at 11–12 n. 10. It is true that the district court was not obligated to dismiss the motion without prejudice. It could have retained Defendant’s motion to compel on its docket, and simply deferred ruling on it pending resolution of Pilot’s appeal of the November 2018 Order. That would have obviated the need to parse the nature and context of the March 2019 Order. Nevertheless, Pilot’s invitation to elevate form over substance in order to find jurisdiction over its appeal of the March 2019 Order is unpersuasive. Pilot is seeking this Court’s review of the formation issue before the district court has ruled on the merits of the motion to compel arbitration and before discovery has fully concluded. As held above, the November 2018 Order is not an order denying a motion to compel arbitration appealable under section 16 of the FAA. Thus, Pilot is attempting to manufacture jurisdiction by appealing the March 2019 Order—which, again, was only issued because of Pilot’s spurious appeal of the November 2018 Order—and is prematurely seeking this Court’s ruling on the formation issue. Nos. 18-6270/19-5410 Taylor v. Pilot Corp., et al. Page 10 Moreover, the March 2019 Order can be distinguished from the orders in cases in which our sister circuits have held that denials of a motion to compel arbitration are immediately appealable under section 16 of the FAA. For example, in Sandvik AB v. Advent International Corp., 83 F. Supp. 2d 442 (D. Del. 1999), the district court denied the defendant’s motion to compel arbitration because it was not yet satisfied that the signature on the purported arbitration agreement “serves to bind [defendant] to the terms of the [arbitration agreement].” Id. at 446. On appeal, the Third Circuit held that “even if a district court does not feel itself ready to make a definitive decision on whether to order arbitration and therefore denies a motion to compel, an appeal may be heard of its denial order.” Sandvik AB v. Advent Intern. Corp., 220 F.3d 99, 103 (3d Cir. 2000). In the present case, by contrast, the district court dismissed the motion to compel without prejudice, noting that “[b]ecause of the pending appeal, the Court cannot appropriately address the issues raised by Defendants. Defendants are free to file this Motion again, if necessary, once the Sixth Circuit has reached its conclusion.” R. 207, PageID # 7707. The district court in Sandvik denied the motion to compel arbitration because it had not yet determined whether Advent was bound by the arbitration agreement. Sandvik, 83 F. Supp. 2d at 446. The district court in the present case denied Pilot’s motion to compel because of the pending appeal of the November 2018 Order, not because of its uncertainty over the validity of the arbitration agreements. While the purpose of both the order compelling discovery of the employment dates and the November 2018 Order was to resolve that uncertainty, the district court here has—until Pilot noticed its first appeal—maintained the motion to compel arbitration on its docket. Thus, the decision to deny the motion to compel, without prejudice, reflects the district court’s purely ministerial, docket management intentions. Unlike the district court’s order in Sandvik, the denial did not signal a judgment on the merits of the motion. The express recognition that Pilot may file the motion again, following resolution of the appeal of the November 2018 Order, reinforces this conclusion. Nos. 18-6270/19-5410 Taylor v. Pilot Corp., et al. Page 11 Additionally, because the district court has reserved judgment on the merits of the Defendant’s motion to compel arbitration pending this appeal, the Third Circuit’s concern that the defendant would face “the possibility of enduring a full trial on the underlying controversy before it can receive a definitive ruling on whether it was legally obligated to participate in such a trial in the first instance” is not present here. Sandvik, 220 F.3d at 104. Because Pilot may refile its motion to compel arbitration following this appeal, and then appeal any denial on the merits thereof to this Court, it will have the opportunity to receive a “definitive” ruling on whether it must endure a full trial. In Koveleskie v. SBC Capital Markets, Inc., 167 F.3d 361 (7th Cir. 1999), the Seventh Circuit held that the district court’s order refusing to compel arbitration pending discovery pertinent to the issue of arbitrability was an appealable order under FAA § 16(a)(1)(c) because “there is no doubt from the record that the district court denied the defendant’s motion and clearly meant to foreclose arbitration.” Id. at 363. In the present case, however, the March 2019 Order was not meant to “foreclose arbitration,” nor is it like the denial in Koveleskie; as here, it was without prejudice, expressly pending the instant appeal of the November 2018 Order. Careful review of the record in the present case reveals that the district court did not intend to “foreclose arbitration,” but rather to delay a decision on Pilot’s motion to compel pending acquisition of the facts necessary to reach an appropriate disposition. Finally, in McLaughlin Gormley King Co. v. Terminix International Co., L.P., 105 F.3d 1192 (8th Cir. 1997), the court considered an appeal of a grant of a preliminary injunction prohibiting the defendant from continuing to assert its demand to arbitrate and the district court’s denial of a motion to compel arbitration because the court’s order is “‘an order that favors litigation over arbitration’ and is immediately appealable under § 16(a).” Id. at 1193 (quoting Stedor Enters., Ltd. v. Armtex, Inc., 947 F.2d 727, 730 (4th Cir. 1991)). In the present case, there is no preliminary injunction preventing Pilot from further asserting its demand to arbitrate, nor does the March 2019 Order favor “litigation over arbitration.” Instead, the March 2019 Order serves a docket-management function, while the case is on appeal from the district court’s unappealable November 2018 Order. And, as noted above, the March 2019 Order even Nos. 18-6270/19-5410 Taylor v. Pilot Corp., et al. Page 12 acknowledges that Pilot may re-file its motion after this appeal has concluded. Thus, this analogy also misses the mark.2 Pilot has also not shown how the March 2019 Order has caused any “irreparable damage.” Continental Cas., 538 F.3d at 581. This is unsurprising, as it was issued without prejudice and only because the district court determined that it could not rule on the motion to compel until Pilot’s appeal of the November 2018 Order was resolved. Neither order “interfere[d] with arbitration,” Preferred Care of Delaware, 845 F.3d at 765, nor partially denied a petition for arbitration appealable under section 16 of the FAA. See Smith v. Altisource Solutions, 726 F. App’x 384, 389–93 (6th Cir. 2018) (reviewing district court’s decision denying in part defendant’s motion to compel arbitration). Instead, both orders are akin to the case management orders in Continental Casualty and Van Dusen and as such, are unappealable. Thus, Pilot is once again attempting to “use [a] denial as a smuggling route for otherwise nonappealable issues.” Taylor, 697 Fed. App’x at 859. This leaves two points raised by the parties worth addressing. First, Pilot’s argument that the November 2018 Order is within a category of orders for which FAA section 16 provides an immediate right of appeal is unavailing. The Supreme Court held in Arthur Andersen LLP v. Carlisle, 556 U.S. 624 (2009), that jurisdiction “must be determined by focusing upon the category of order appealed from, rather than upon the strength of the grounds for reversing the order.” Id. at 628 (quoting Behrens v. Pelletier, 516 U.S. 299, 311 (1996)). In Pilot’s prior appeal in this case, this Court gave examples of such appealable categories: “an order ‘denying a petition under section 4’ or an order ‘refusing to grant a stay under section 3.’” Taylor, 697 F. App’x at 861. As the foregoing analysis demonstrates, the November 2018 Order is not a denial order under section 4 of the FAA, and thus no immediate right of appeal attaches to it. 2 The McLaughlin court also found that the order favored litigation over arbitration because if the defendant was correct and its dispute must be committed to an arbitrator, then “the order being appealed will have improperly and unnecessarily delayed the arbitration process.” 105 F.3d at 1193. As discussed above, we find that orders that merely delay the arbitration process, as oppose to foreclose it, are not appealable under section 16(a)(1)(B) of the FAA and thus the Eight Circuit’s logic is unpersuasive. Nos. 18-6270/19-5410 Taylor v. Pilot Corp., et al. Page 13 Similarly, Pilot fails in its argument that the “district court exercised authority beyond what the FAA provides to it,” by refusing to dismiss Plaintiffs whom Pilot claims signed arbitration agreements mandating arbitration outside of the district court’s judicial district. Br. of Defs. at 28. Pilot argues that a district court has no power to compel arbitration outside of its own judicial district. Id. This argument is contradictory inasmuch as Pilot is contesting the district court’s authority over the opt-in Plaintiffs for purposes of arbitration, while at the same time Pilot has repeatedly moved the district court to compel them to arbitrate their claims (presumably within the district court’s district). Moreover, as noted above, it is not yet clear that “the Arbitration Opt-Ins have agreed to arbitrate [their] claims” at all. The district court has expressly withheld judgment on the application of the arbitration agreements pending the disclosure of the employment dates necessary to deciding whether the opt-in Plaintiffs are in fact bound by the alleged agreements. Until this threshold issue of contract formation is decided by the district court, there is no need to address Pilot’s argument regarding the scope of the district court’s authority.