Opinion ID: 3014207
Heading Depth: 1
Heading Rank: 2

Heading: case with prejudice, and, applying the

Text: well-established meaning of the term The District Court had jurisdiction over “final decision,” ruled that such order plainly dispose[s] of the entire case 2 The District Court also held that (1) the DRA’s fee-splitting provision, because 3 9 U.S.C. § 16(a)(3) provides that “an it provided that Lloyd would not have to appeal may be taken from a final decision pay any fees upon demonstrating financial with respect to an arbitration that is subject hardship to the arbitrator, was not to this title.” unconscionable, (2) AAA Rule 7’s 4 d i s c o v e r y p r o c e d u r e s w e r e no t 9 U.S.C. § 16(b)(2) provides that unconscionable, and (3) that the DRA was “[e]xcept as otherwise provided in section not unconscionable solely because of the 1292(b) of title 28, an appeal may not be existence of unequal bargaining power. taken from an interlocutory order . . . These rulings are not at issue in this appeal directing arbitration to proceed under or cross-appeal. section 4 of this title.” 4 on the merits and le[aves] no part of III. it pending before the court. The FAA does permit parties to We first address the issue of whether arbitration agreements to bring a the District Court erred in dismissing separate proceeding in a district Lloyd’s complaint with prejudice rather court to enter judgment on an than staying the proceedings pending arbitration award once it is made (or arbitration. On cross-appeal, Wyatt argues to vacate or modify it), but the that pursuant to § 3 of the FAA, 9 U.S.C. existence of that remedy does not § 3, the District Court was required to vitiate the finality of the District grant Appellees’ motion to stay the Court’s resolution of the claims in litigation of Lloyd’s claims pending the the instant proceeding. 9 U.S.C. §§ outcome of the arbitration and that the 9, 10, 11. The District Court’s order dismissal of Lloyd’s case was therefore was therefore “a final decision with improper.6 respect to an arbitration” within the meaning of § 16(a)(3), and an Courts of Appeals have reached appeal may be taken. different resolutions of the issue of whether a District Court has discretion to 531 U.S. at 86. Accordingly, we have deny a motion for a stay pending before us a final appealable order that we arbitration and dismiss a complaint where may address on the merits.5 it finds all claims before it to be arbitrable. Compare Choice Hotels Intern., Inc. v. 5 BSR Tropicana Resort, Inc., 252 F.3d 707, We note that although the District 709-10 (4th Cir. 2001) (“Notwithstanding Court’s order in this case granted the the terms of § 3, however, dismissal is a dismissal with prejudice, the District proper remedy when all of the issues Court’s opinion stated that the matter presented in a lawsuit are arbitrable.”), and would be dismissed without prejudice. See Green v. Ameritech Corp., 200 F.3d 967, App. at 15, 16. This disparity, however, 973 (6th Cir. 2000) (“The weight of does not affect our appellate jurisdiction. authority clearly supports dismissal of the See Blair v. Scott Specialty Gases, 283 case when all of the issues raised in the F.3d 595, 602 (3d Cir. 2002) (holding that the jurisdictional ruling in Green Tree, where the action had been dismissed with from an order refusing a stay of any action prejudice, applies equally to a case that under section 3 of this title.”). was dismissed without prejudice). 6 Moreover, we note that, while In construing the language of the FAA, Wyatt does not rely on it, appellate our review is plenary. See Shenango Inc. jurisdiction over the cross-appeal may be v. Apfel, 307 F.3d 174, 192 n.19 (3d Cir. exercised pursuant to 9 U.S.C. § 2002) (“The standard of review in cases of 16(a)(1)(A) (“An appeal may be taken statutory construction is plenary.”). 5 district court must be submitted to any issue referable to arbitration.”), and Bercovitch v. Baldwin arbitration under a n School, Inc., 133 F.3d 141, 156 & n.21 agreement in writing for (1st Cir. 1998) (remanding a case to the such arbitration, the court in District Court to decide whether to dismiss which such suit is pending, or stay, depending upon whether all issues upon being satisfied that the before the court are arbitrable), and Alford issue involved in such suit v. Dean Witter Reynolds, Inc., 975 F.2d or proceeding is referable to 1161, 1164 (5th Cir. 1992), and Sparling arbitration under such an v. Hoffman Const. Co., Inc., 864 F.2d 635, a greement, shall o n 638 (9th Cir. 1988), with Adair Bus Sales, application of one of the Inc. v. Blue Bird Corp., 25 F.3d 953, 955 parties stay the trial of the (10th Cir. 1994) (holding that where a action until such arbitration defendant moved for a stay pending has been had in accordance arbitration under 9 U.S.C. § 3, the District with the terms of the court erred in instead entering a dismissal agreement, providing the and the proper course would have been to applicant for the stay is not enter the stay). We have not heretofore in default in proceeding had occasion to resolve the issue.7 Today, with such arbitration. we side with those courts that take the Congressional text at face value. 9 U.S.C. § 3 (emphasis added). Section 3 of the FAA provides: In accordance with the Supreme Court’s instruction in Green Tree, we apply the If any suit or proceeding be “the plain language of the statutory text” in brought in any of the courts interpreting the FAA. See 531 U.S. at 88 of the United States upon (holding that the plain meaning of the term “final decision” in 9 U.S.C. § 16(a)(3) 7 must be applied). Here, the plain language We have twice commented on the of § 3 affords a district court no discretion issue in dicta, see Seus v. John Nuveen & to dismiss a case where one of the parties Co., 146 F.3d 175, 179 (3d Cir. 1998) and applies for a stay pending arbitration. The Blair, 283 F.3d at 601. In neither of those directive that the Court “shall” enter a stay cases, however, did a party argue that a simply cannot be read to say that the Court stay rather than a dismissal should have shall enter a stay in all cases except those been entered and the Court accordingly in which all claims are arbitrable and the had no occasion to decide whether Section Court finds dismissal to be the preferable 3 is mandatory. Our comments with approach. On the contrary, the statute respect to that issue are thus not clearly states, without exception, that precedential. Marianna v. Fisher, 338 whenever suit is brought on an arbitrable F.3d 189, 201 (3d Cir. 2003). 6 claim, the Court “shall” upon application arbitration. For example, the FAA allows stay the litigation until arbitration has been arbitrating parties to return to court for concluded. In this case, Wyatt requested a resolution of disputes regarding the stay of the proceeding as part of his motion appointment of an arbitrator or the filling to compel arbitration. Accordingly, we of an arbitrator vacancy, 9 U.S.C. § 5. hold that the District Court was obligated Similarly, parties may ask the court to under 9 U.S.C. § 3 to grant the stay once it compel the attendance of witnesses, or to decided to order arbitration. punish the witnesses for contempt, 9 U.S.C. § 7. Then, after an arbitration We are free to disregard an award is rendered, a party is entitled to unambiguous directive of Congress only in seek relief in the District Court in the form the rare instances where failing to do so of a judgment on the award or an order produces a nonsensical result that could vacating or modifying the award. See 9 not have been intended. Mitchell v. Horn, U.S.C. §§ 9, 10, 11. If the plaintiff’s case 318 F.3d 523, 535 (3d Cir. 2003) (“We do has been dismissed rather than stayed, the not look past the plain meaning [of parties will have to file a new action each statutory language] unless it produces a time the Court’s assistance is required, result ‘demonstrably at odds with the with the attendant risk of having their case intentions of its drafters’ . . . or an assigned to a new judge. On the other outcome ‘so bizarre that Congress could hand, if the court enters a stay of the action not have intended it.’”). This is not one of and retains jurisdiction, then proceedings those rare exceptions. Congress adopted under §§ 5, 7, 9, 10, or 11 may be the FAA to establish, promote and expedited, as the parties may simply return facilitate a national policy strongly the to the same district judge presiding favoring arbitration as a process for over the plaintiff’s case. resolving disputes. Alexander v. Anthony Int’l, L.P., 341 F.3d 256, 263 (3d Cir. There is an even more important reason, 2003). Holding that Congress intended to however, to hold that Congress meant deprive the District Court of discretion to exactly what it said. Whenever a party is deny a stay produces results that subjected to litigation on any issue and is effe ctively prom ote an d fac ilitate found to be entitled to arbitrate that issue, arbitration. § 3 of the FAA, as we have noted, mandates that a stay be entered by the Contrary to Lloyd’s suggestion, the District Court. The effect of that stay is District Court has a significant role to play twofold: it relieves the party entitled to under the FAA even in those instances in arbitrate of the burden of continuing to which the District Court orders the litigate the issue while the arbitration arbitration of all claims. Even in those process is on-going, and it entitles that instances, the parties are entitled to seek party to proceed immediately to arbitration the Court’s assistance during the course of without the delay that would be occasioned 7 by an appeal of the District Court’s order While it is true that the suggested to arbitrate. Under § 16 of the FAA, 9 exception would extend only to cases U.S.C. § 16, whenever a stay is entered where the claim subject to arbitration is under § 3, the party resisting arbitration is not asserted along with other nonexpressly denied the right to an immediate arbitrable claims – that is, where all appeal.8 The legislative scheme of the asserted claims are arbitrable – none of the FAA thus reflects a policy decision that, if courts that have been willing to endorse it a district court determines that arbitration has suggested a reason why Congress of a claim is called for, the judicial might have wanted a party entitled to system’s interference with the arbitral arbitration to be subjected to an immediate process should end unless and until there is appeal or not depending on how his a final award. adversary has chosen to draft his complaint. If an exception to the mandate of § 3 were to be fashioned, thus giving the In short, a literal reading of § 3 of the District Court discretion to dismiss the FAA not only leads to sensible results, it action rather than enter a stay, a party who also is the only reading consistent with the has been held entitled to arbitration would statutory scheme and the strong national be deprived of an important benefit which policy favoring arbitration. Accordingly, the FAA intended him to have – the right the District Court erred in refusing to enter to proceed with arbitration without the a stay order. substantial delay arising from an appeal. Stated conversely, the effe ct of Although we agree with Wyatt that the recognizing an exception to the mandatory District Court’s order dismissing Lloyd’s directive of § 3 is to give the District Court case must be reversed, we reject the the power to confer a right to an argument that reversal would, in turn, immediate appeal that would not otherwise deprive us of jurisdiction to hear the merits exist. of Lloyd’s appeal. Relying in part on Green Tree, 531 U.S. at 87 n.2, Wyatt suggests that if we vacate the District 8 Court’s dismissal, we would be left with Under 9 U.S.C. § 16(a)(1)(A) & (B), a an unappealable interlocutory order. This party may seek immediate appeal of an argument misconstrues Green Tree. In order refusing a to grant a stay under § 3 that case, the Supreme Court noted that of the FAA or an order denying a petition “[h]ad the District Court entered a stay to compel arbitration under § 4. Under 9 instead of a dismissal . . . , that order U.S.C. § 16(b)(1) & (2), however, an would not be appealable.” Id. (emphasis appeal may not be taken (except as added). In this case, however, the District provided by 28 U.S.C. § 1292(b)) from an Court did not enter a stay. Wyatt’s interlocutory order granting a stay under § argument assumes that a conclusion that 3 or compelling arbitration under § 4. 8 the District Court should have entered a agreement. Failure to raise these matters stay is tantamount to the conclusion that in the District Court should be excused, the District Court did enter a stay. This is Lloyd insists, because “standing” to simply not the case. As we have noted arbitrate is a jurisdictional matter that can supra, the order before us is a final be raised at any stage of the proceedings decision that is appealable under 9 U.S.C. and because, in any event, finding a waiver § 16(a)(3). would result in manifest injustice.9 We are unpersuaded. While it is clear that a court in this procedural context has jurisdiction to It is true that our case law, as well as the address the merits of the appeal, it may decisions of other courts, has often choose to defer to the FAA’s policy referred to a party’s “standing” to compel f a v o r i n g e x p e d i t i o u s ar b i t r a t i o n arbitration. See, e.g., In re Prudential Ins. proceedings and decline to do so when it Co. of Am. Sales Practice Litig. All Agent believes addressing the merits will prolong Actions, 133 F.3d 225, 229 (3d Cir. 1998); the ultimate resolution of the dispute. See, Britton v. Co-op Banking Group, 916 F.2d e.g., Adair Bus Sales, 25 F.3d at 955. 1405, 1413 (9th Cir. 1990). Lloyd is Here, however, we are called upon to mistaken, however, in equating the exercise our discretion after this appeal has doctrine of Article III constitutional been fully briefed and argued, and in a standing with the “standing” required to context where resolution of the merits is compel arbitration in this case. In order likely to advance, rather than prolong, the for there to be Article III standing, there ultimate resolution of the dispute by must be a “case or controversy.” That is, arbitration. We will therefore proceed to the following three elements must be consider the merits of Lloyd’s appeal. present: