Court Opinion

ID: 50385
Source: CourtListenerOpinion
Date Created: 2010-04-26 00:50:46+00
Date Added: 2024-06-11T17:18:49.438852
License: Public Domain

United States Court of Appeals
                                                                          Fifth Circuit
                                                                          F I L E D
                                 In the                                     May 21, 2007
            United States Court of Appeals                             Charles R. Fulbruge III
                      For the Fifth Circuit                                    Clerk
                            _______________

                              m 06-30372
                            _______________

              OMNI HOTELS MANAGEMENT CORPORATION,

                                                 Plaintiff-Appellee,

                                 VERSUS

       PHILIP BAYER; KIM W. BAYER; JOHN PATRICK BLANCANEAUX;
WILLIAM H. COURET, III; VANESSA HARVEY; TAMARA LANG; HAYWOOD BUSH;
     BERNARD AINSWORTH; ARCEAL BUTLER, SR.; ROBERT R. DABNEY;
 CYNTHIA M. DANIELS; ANDREW P. DAVIS; DIANA P. DAVIS; BOBBY HARDY;
        ALIDA JOHNSON; SHEDRICK JOURNEE; MARSHALL POWELL;
  SCHFREDA PATRICE THOMAS; EVERT WILLIAMS; CLEOPHUS BENSON, JR.;
            PRISCILLA CEASAR; JOYCE ROBAIR; BENNIE SCOTT,

                                                 Defendants-Appellants.

                      _________________________

                Appeal from the United States District Court
                   for the Eastern District of Louisiana
                            m 2:05-CV-1883
                     _________________________
Before GARWOOD, SMITH, and DEMOSS,                         employees of OHMC (collectively “state court
  Circuit Judges.                                          plaintiffs”) brought a class action in Louisiana
                                                           state court alleging damages from exposure to
JERRY E. SMITH, Circuit Judge:*                            toxic mold. The complaint listed as defendants
                                                           OHMC, 535 Gravier, L.L.C. (the management
   Present and past employees of the Omni                  company), Decatur, Omni Royal Crescent
Hotels Management Corporation (“OHMC”)                     Corporation, William Sherrer, and Gerard
brought a state court class action against                 Vitrano. Of the defendants, only OHMC had
OHMC and several of its subsidiaries, seeking              complete diversity from the state plaintiffs.
damages for exposure to toxic mold at the                  OHMC and its subsidiaries filed a dilatory
Omni Royal Crescent Hotel. OHMC filed this                 exception of prematurity, claiming that some
declaratory judgment action seeking to enforce             of the employees were bound by arbitration
an arbitration agreement binding its employ-               agreements. Although there was considerable
ees. The district court ruled that the arbitra-            discovery in state court, the issue of the arbitr-
tion agreement was binding, so it compelled                ability of the claims was not resolved.
arbitration and enjoined the defendants from
maintaining a state court action. We affirm.                   In May2005, OHMC brought a declaratory
                                                           judgment action against the state court plain-
                       I.                                  tiffs, seeking to enforce arbitration against any
    Effective May 2003, OHMC adopted a                     employees who were subject to the agreement,
written, mandatory arbitration agreement, for              and to enjoin any state court plaintiff from
all employees nationwide, under which all em-              seeking to represent employees who were
ployment-related claims are to be resolved                 subject to the agreement. The district court
through mandatoryarbitration. The agreement                granted OHMC a declaratory judgment that
explicitly covers “personal injury and employ-             the agreements were enforceable, compelled
ment-related tort claims (including claims for             those employees who were employed by
negligence, gross negligence, and intentional              OHMC after May 2003 to arbitrate their
harm).” Employees were provided a copy of                  claims, and granted a preliminary injunction
the agreement stating both that continued em-              “(1) barring these employee defendants from
ployment was predicated on their agreement to              participating in the state suit against [OHMC],
arbitrate and that continued employment pro-               and (2) barring all defendants from acting as
vided consideration for the agreement. Em-                 class representatives in the state suit for a class
ployees were also given a receipt that they                including such persons.” The state court
were requested to sign as proof of notice.                 plaintiffs appeal that order.
Several employees refused to sign, in some
cases writing “refused” on the receipt.                                           II.
                                                              OMHC claims we have no appellate juris-
   In November 2003, employees and former                  diction, but we disagree. To begin with, we
                                                           have jurisdiction to determine our own juris-
                                                           diction. Cerveceria Cuauhtemoc Moctezuma
   *
     Pursuant to 5TH CIR. R. 47.5, the court has de-       S.A. de C.V. v. Mont. Beverage Co., 330 F.3d
termined that this opinion should not be published         284, 286 (5th Cir. 2003). Beyond that, under
and is not precedent except under the limited cir-         the express appellate jurisdiction provisions of
cumstances set forth in 5TH CIR. R. 47.5.4.                the Federal Arbitration Act (“FAA”),

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   except as otherwise provided in 28 U.S.C.           ate appeal.
   § 1292, an appeal may not be taken from an
   interlocutory orderSS (1) granting a stay of            We observed that when “the district court
   any action under section 3 of this title; (2)       granted the sole remedy sought by the plaintiff
   directing arbitration to proceed under              in the Federal ActionsSSan order compelling
   section 4 of this title; (3) compelling arbi-       arbitration,” that order was not interlocutory,
   tration under section 206 of this title;            but rather final. Id. at 391. Because there was
                                                       “nothing left for the court to do but execute
9 U.S.C. § 16(b). The FAA’s appellate provi-           the judgment . . . the order compelling arbitra-
sions reflect the Congressional preference for         tion in the Federal Actions ended the litigation
arbitration as a way of resolving disputes “by         in federal court on the merits and was a final
authorizing immediate appeals from orders dis-         appealable decision under 9 U.S.C. § 16-
favoring arbitration and forbidding immediate          (a)(3).” Id. Turning to the federal injunction,
appeals from orders favoring arbitration.”             we strictly interpreted § 16(b) only to deprive
Apache Bohai Corp. v. Texaco China, B.V.,              this court of jurisdiction over appeals from
330 F.3d 307, 309 (5th Cir. 2003). If the              stays granted under 9 U.S.C. § 3, which, “by
original state lawsuit had been filed in federal       its terms, does not authorize a federal court to
court, and the district court had stayed the           enjoin state proceedings. . . . Such a stay
proceedings while compelling arbitration, we           could not be properly issued pursuant to sec-
would lack jurisdiction over the appeal. See           tion 3.” Id. at 392. The district court’s order
Mire v. Full Spectrum Lending, Inc., 389 F.3d          in Brown was immediately appealable in full.
163 (5th Cir. 2004); Apache Bohai, 330 F.3d            Brown, 462 F.3d at 393.
at 309-10.
                                                          OHMC’s declaratory judgment action re-
   Here, however, the order compelling arbi-           quested that the district court compel arbitra-
tration was obtained in an independent federal         tion and issue an injunction barring certain
proceeding and was coupled with an injunction          state court plaintiffs from participation in the
barring several of the state court plaintiffs          state class action. When the court compelled
from proceeding with their state suit. We ex-          arbitration, OHMC received all the relief it
amined appellate jurisdiction in this procedural       sought in the district court, so, under Brown,
posture in Brown v. Pac. Life Ins. Co., 462            that order was a final appealable order under
F.3d 384.                                              9 U.S.C. § 16(a). The injunction against Bay-
                                                       er affecting the state court action could not
   There, plaintiffs brought a fiduciary duty          have been issued under § 3, and thus it is ap-
suit in state court against Smith Barney and a         pealable under 28 U.S.C. § 1292(a), which
non-diverse investment representative. Smith           authorizes appeals from interlocutory orders
Barney removed to federal court, although the          “granting, continuing, modifying, refusing or
case was remanded for improper removal                 dissolving injunctions.” It follows that this
procedure. Smith Barney then filed a separate          court has jurisdiction over the state court
federal action seeking to stay all state court         plaintiffs’ appeal.
proceedings, and to compel arbitration of all
claims. The district court ruled for Smith Bar-                             III.
ney, staying the state court action and compel-           On the remaining issues, after considering
ling arbitration. The Browns sought immedi-            the written and oral arguments of the parties

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and the pertinent portions of the record com-
piled for this appeal, we affirm the judgment,
essentially for the reasons assigned in the dis-
trict court’s Order and Reasons: The threat of
piecemeal and inconsistent litigation does not
make those state court defendants who are not
diverse to the state court plaintiffs indispens-
able parties under Federal Rule of Civil Proce-
dure 19. See Brown, 462 F.3d at 393; Snap-
On Tools Corp. v. Mason, 18 F.3d 1261 (5th
Cir. 1994); Moses H. Cone Mem. Hosp. v.
Mercury Constr. Corp., 460 U.S. 1, 19-21
(1983). Abstention is inappropriate in the
arbitration setting where a balancing of the
Colorado River factors does not weigh very
heavily against the exercise of jurisdiction. See
Brown, 462 F.3d at 396; Moses H. Cone, 460
U.S. at 25-26. Control of discovery is com-
mitted to the sound discretion of the trial
court, and it did not err by ruling on the mo-
tion to compel arbitration without deferring
for further discovery, particularly given the
Federal Arbitration Act’s requirement of “an
expeditious and summary hearing, with only
restricted inquiry into factual issues.” Id. at
22. The district court was correct that the em-
ployees were bound by the agreement under
Louisiana law even if they refused to sign it,
and the state court plaintiffs have failed to
demonstrate the requisite knowledge on the
part of OHMC to establish error or fraud that
could vitiate consent.

   The order appealed from is AFFIRMED.

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