Court Opinion

ID: 8991540
Source: CourtListenerOpinion
Date Created: 2022-11-27 12:16:20.384578+00
Date Added: 2024-06-11T17:10:56.350337
License: Public Domain

MAHONEY, Circuit Judge,
concurring:
Since I agree with my colleagues that the appeal should be dismissed, and with much of the majority opinion, I write in concurrence.
I disagree, however, with the majority’s conclusion that a failure by the district court to exercise its jurisdiction upon remand would necessarily be so palpable an error as probably to warrant mandamus. As the majority acknowledges, both “old” Bomar and “new” Bomar have agreed to the entry of an order restraining and enjoining the transfer of the assets of both corporations. Further, any arbitration decision as to “old” Bomar is likely to have collateral estoppel effect as to “new” Bo-mar, the transferee of the assets of “old” Bomar. See C.H. Sanders Co. v. BHAP Hous.Dev.Fund Co., 903 F.2d 114, 121 (2d Cir.1990); 18 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure § 4462, at 548 and 555 (1981). Accordingly, it is not apparent to me that the district court clearly erred, as the majority puts it, in “believfing] that the resolution of issues in arbitration would have some effect on the court proceedings.”
I agree with the majority that the district court did not “tailor its stay so as not to prejudice the non-moving litigant unduly.” Further, it may well be that any arbitration decision will not collaterally estop the individual defendants. See 18 C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure § 4460, at 533-34 (1981); cf. C.H. Sanders Co., 903 F.2d at 121. In sum, the district court may well have erred, and perseverance in its present course might constitute further error, depending upon the status of the litigation and arbitration upon remand. It is not obvious to me, however, that such perseverance would warrant mandamus (which is reserved for “the most egregious of discretionary abuses,” Coastal (Bermuda) Ltd. v. E. W. Saybolt & Co., 761 F.2d 198, 203 (5th Cir.1985)), especially in view of the “strong national policy favoring arbitration,” id. at 203 n. 6.
I also have a somewhat differing view from the majority concerning the relationship of the FAA to this appeal. The majority rules that “[sjection 16 of the FAA does not ... apply to this case because the issues involved in the court action are not referable to arbitration under any agreement,” as required by section 3 of the FAA. The majority cites for this position Nederlandse Erts-Tankersmaatschappij, N.V. v. Isbrandsten Co., 339 F.2d 440, 441 (2d Cir.1964), which it describes as “holding FAA inapplicáble where parties involved in action are not parties to an arbitration agreement under which issues are referable to arbitration.”
*752There is no occasion, however, for us to construe section 3 of the FAA in deciding this appeal. Had the district court invoked section 3 in granting its stay, then section 16(b)(1) of the FAA would explicitly bar any appellate jurisdiction here as to that ruling. Both sections 3 and 16 are inapplicable, however, because the litigants did not seek, and the district court did not purport to provide, relief pursuant to section 3 of the FAA. Rather, as the majority recognizes, the district court acted pursuant to its inherent powers. See Nederlandse, 339 F.2d at 441-42. I note, finally, that despite Nederlandse, it is no longer clear that a section 3 stay is available only where the parties to a litigation are parties to an arbitration agreement, so long as there is presented “any issue referable to arbitration under an agreement in writing for such arbitration” within the meaning of section 3 and the parties to the litigation would be bound by the arbitral resolution of that issue. See Morrie & Shirley Mages Found. v. Thrifty Corp., 916 F.2d 402, 405-08 (7th Cir.1990); McCowan v. Sears, Roebuck & Co., 908 F.2d 1099, 1107-08 (2d Cir.), cert. denied, — U.S --, 111 S.Ct. 250, 112 L.Ed.2d 209 (1990).