Opinion ID: 4523975
Heading Depth: 3
Heading Rank: 2

Heading: The March 2019 Order

Text: 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.