Opinion ID: 177174
Heading Depth: 4
Heading Rank: 1

Heading: Correctness of the Ripeness Standard Applied

Text: The district court granted Dub Herring Ford's motion to dismiss DCS's motion to confirm the class arbitration award for lack of ripeness. The court considered the ripeness factors set forth in DCS-I : (1) the likelihood that the harm alleged by the party will ever come to pass; (2) the hardship to the parties if judicial relief is denied at this stage of the proceedings; and (3) whether the factual record is sufficiently developed to produce a fair adjudication of the merits. R. 43, Order, p. 3-4 (quoting DCS-I, 547 F.3d at 560). The district court's determination that the factual record is sufficiently developed to permit judicial review is not challenged. As to the other two factors, however, the court found that DCS could not establish that it would suffer harm or a hardship if judicial review is denied at this stage of the proceedings. Id. at 4. The court reasoned that because Dub Herring Ford failed to obtain class certification, the potential harm to DCS involved in defending against class arbitration would never occur. Id. at 5. The district court's analysis is faithful to the direction provided in DCS-I, where we observed, in holding that DCS's motion to vacate the clause construction award was unripe, that the absence of hardship for DCS at this juncture renders DCS's motion to vacate the sort of premature adjudication the ripeness doctrine seeks to avoid. DCS-I, 547 F.3d at 563. The district court even parroted our reiteration of Judge Posner's colorful admonition that courts should remain reluctant to invite a judicial proceeding every time the arbitrator sneezes. Id. (quoting Smart v. Int'l Bhd. of Elec. Workers, Local 702, 315 F.3d 721, 725 (7th Cir.2002)). DCS contends the district court should not have applied this ripeness test, noting that other circuits apply a less rigid standard and that the Supreme Court itself has applied a two-part ripeness test, sans the likelihood-of-harm factor. The three-factor test set forth in DCS-I is essentially the law of the case and DCS has not presented any persuasive reason to abandon it in favor of any other circuit's standard. We acknowledge, however, that the Supreme Court, in Stolt-Nielsen, applied a two-factor ripeness test in a context practically identical to the situation faced in DCS-I. Is the two-factor test materially different? If it were applied here, would it produce a different result? In Stolt-Nielsen, the Court reversed a Second Circuit decision. The Second Circuit had ordered that the district court's order vacating an arbitration panel's clause construction award be vacated. The Supreme Court ultimately held that the arbitration panel exceeded its powers by imposing class arbitration on parties whose contractual arbitration agreement was silent on the issue. Stolt-Nielsen, 130 S.Ct. at 1768-70. This substantive holding is not relevant to the present appeal. However, the Court had the occasion to consider the ripeness of the motion to vacate the clause construction award. Responding to objection by the dissent, the Stolt-Nielsen majority summarily held the matter was ripe based on two ripeness factors: the fitness of the issues for judicial decision, and the hardship of withholding judicial consideration. Id. at 1767 n. 2 (quoting National Park Hospitality Assn. v. Dep't of Interior, 538 U.S. 803, 808, 123 S.Ct. 2026, 155 L.Ed.2d 1017 (2003)). This test is nominally different from the three-factor standard we employed in DCS-I, but in practical effect, the distinction is one without a difference. In Stolt-Nielsen, the Court focused on the hardship element. The Court observed that [t]he arbitration panel's award means that petitioners must now submit to class determination proceedings before arbitrators who, if petitioners are correct, have no authority to require class arbitration absent the parties' agreement to resolve their dispute in that way. Id. (emphasis added). The Court went on to hold that it was clear on these facts that petitioners have demonstrated sufficient hardship. Id. In other words, the Court found sufficient hardship in the imminent reality that, as a result of the arbitration panel's ultra vires clause construction award, the petitioners would have to participate in class determination proceedings. Although the Court did not explicitly mention the likelihood that the identified hardship would come to pass, the imminence of the hardship was manifestly critical to the Court's holding, distinguishing the majority's view of the issue from the dissent's, which viewed the arbitrator's partial award as the most preliminary decision the Supreme Court had ever approved for immediate judicial review. Id. at 1779 (Ginsburg, J., dissenting). The facts and procedural posture of the case presented in Stolt-Nielsen are materially indistinguishable from those presented in DCS-I. Yet, what Stolt-Nielsen found to be ripe, we found not to be ripe. In this respect (i.e., the merits of the ripeness determination), the two decisions may be deemed in conflict. [4] What is important for present purposes, however, is that the two decisions are substantially consistent in their determinations: (1) that an interim arbitration award is subject to judicial review under the FAA, 9 U.S.C. §§ 9 and 10, only if jurisdictional requisites, including ripeness, are otherwise satisfied; and (2) that the ripeness inquiry necessitates evaluation of the hardship posed to the movant in the event immediate judicial review were to be denied. It is therefore DCS's burden to identify cognizable hardshipunder either standardto establish its entitlement to immediate judicial review of the class determination award.