Court Opinion

ID: 9409840
Source: CourtListenerOpinion
Date Created: 2023-07-19 17:08:18.711774+00
Date Added: 2024-06-11T17:20:53.881332
License: Public Domain

J-E01003-23

                              2023 PA Super 126

SHANNON CHILUTTI AND KEITH                         IN THE SUPERIOR COURT
CHILUTTI, H/W                                         OF PENNSYLVANIA

                          Appellants

                     v.

UBER TECHNOLOGIES, INC., GEGEN,
LLC, RAISER-PA, LLC, RAISER, LLC,
SARAH’S CAR CARE, INC. AND
MOHAMMED BASHIER

                          Appellees                   No. 1023 EDA 2021

                Appeal from the Order Entered April 26, 2021
            In the Court of Common Pleas of Philadelphia County
                      Civil Division at No: 200900764

BEFORE: BENDER, P.J.E., LAZARUS, J., OLSON, J., STABILE, J., DUBOW, J.,
        NICHOLS, J., McLAUGHLIN, J., McCAFFERY, J., and SULLIVAN, J.

DISSENTING OPINION BY STABILE, J.:                      FILED JULY 19, 2023

      While I do not discount the concerns expressed by the Majority

regarding Internet contracts, I disagree with the Majority’s premise that

Appellants’ right to a jury trial is “central” to our Court’s disposition of this

case. Majority Opinion at 1. What is central to this case is whether we have

jurisdiction over an appeal from the trial court’s collateral order staying the

proceedings and compelling arbitration. Because Appellants have not satisfied

the third prong of the collateral order doctrine, i.e., that their claim will be

irreparably lost if review is postponed, I conclude that this Court lacks

jurisdiction and the appeal should be quashed.        Therefore, I respectfully

dissent.
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      As the Majority observed, the trial court granted Uber’s petition to

compel arbitration and stayed the proceedings with respect to the co-

Appellees.   In its Rule 1925(a) opinion, the trial court did not discuss the

parties’ arguments regarding the agreement to arbitrate (or lack thereof) or

explain its basis for granting the motion to compel arbitration. Rather, the

court appropriately limited its discussion to the appealability of a motion to

compel arbitration and concluded that its order is “not appealable at this time

because the parties have not been forced ‘out of court.’” Trial Court Opinion,

6/2/21, at 2 (citing Maleski v. Mut. Fire, Marine & Inland Ins. Co., 633

A.2d 1143, 1145 (Pa. 1993)).

      Initially, I note that “[a]n order compelling arbitration and staying court

action is not final; rather, it is interlocutory because the parties are not forced

‘out of court.’” Maleski, 633 A.2d at 1145 (citation omitted). As our Supreme

Court stated in Maleski, “[T]here is no express statutory authority providing

for an appeal from an interlocutory order in a case where arbitration is

compelled[.]” Id. at 1146 (footnote omitted).            See also Schantz v.

Dodgeland, 830 A.2d 1265, 1266 (Pa. Super. 2003) ("An order directing

arbitration, whether statutory or common law, is an interlocutory order and is

not immediately appealable. The parties have been forced into, not put out

of court. Thus the order is interlocutory[.]”) (citations omitted). Appellants

nevertheless contend that we have jurisdiction to entertain this appeal as a

collateral order pursuant to Pa.R.A.P. 313(b). As this Court has recognized:

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       Under Pa.R.A.P. 313(b), a collateral order is an order that 1) is
       separable from and collateral to the main cause of action; 2)
       involves a right too important to be denied review; and 3)
       presents a question that, if review is postponed until final
       judgment in the case, the claim will be irreparably lost.

In re Bridgeport Fire Litigation, 51 A.3d 224, 230 n.8 (Pa. Super. 2012)

(citation omitted).1

       In Shearer v. Hafer, 177 A.3d 850 (Pa. 2018), our Supreme Court

reiterated:

       [We] construe the collateral order doctrine narrowly, and insist
       that each one of its three prongs be “clearly present” before
       collateral appellate review is allowed. Melvin v. Doe, 575 Pa.
       264, 836 A.2d 42, 47 (2003); Geniviva v. Frisk, 555 Pa. 589,
       725 A.2d 1209, 1214 (1999).          Indeed, “[w]e construe the
       collateral order doctrine narrowly so as to avoid ‘undue corrosion
       of the final order rule[’]”. K.C. v. L.A., 633 Pa. 722, 128 A.3d
       774, 778 (2015) (quoting Pridgen v. Parker Hannifin Corp.,
       588 Pa. 405, 905 A.2d 422, 427 (2006)). . . . Moreover, as
       parties may seek allowance of appeal from an interlocutory order
       by permission, we have concluded that that discretionary process
       would be undermined by an overly permissive interpretation
       of Rule 313. Geniviva, 725 A.2d at 1214 n.5.[2] . . . As noted
       above, the collateral order doctrine permits an appeal as of right
       from a non-final collateral order if the order satisfies the three
       requirements set forth in Rule 313(b)—separability, importance,
       and irreparability.

____________________________________________

1 “The appealability of an order under the Pa.R.A.P. 313 collateral order
doctrine presents a question of law, over which our standard of review is de
novo and our scope of review is plenary.” Brooks v. Ewing Cole, Inc., 259
A.3d 359, 365 (Pa. 2021) (citations omitted).
2 I note that Appellants did not seek an appeal by permission pursuant to
Pa.R.A.P. 312.

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Id. at 858. All three prongs of the collateral order test must be satisfied for

this Court to exercise jurisdiction over an otherwise non-final order. Spanier

v. Freeh, 95 A.3d 342, 345 (Pa. Super. 2014).

      Here, while the first two prongs of the collateral order doctrine are

arguably satisfied, I conclude that the third prong is not.       In the event

Appellants might not be satisfied with the results of their arbitration, they

could seek review of the arbitrator’s decision.

      In this regard, I recognize that Uber’s Terms of Use call for arbitration

pursuant to the Federal Arbitration Act (“FAA”), 9 U.S.C.A., § 1 et seq.

Nevertheless, as the Court of Appeals for the Third Circuit acknowledged:

      Arbitration is fundamentally a creature of contract. The Supreme
      Court has stated: “arbitrators derive their authority to resolve
      disputes only because the parties have agreed in advance to
      submit such grievances to arbitration.” AT & T Techs., Inc. v.
      Communications Workers, 475 U.S. 643, 648–49, 106 S.Ct.
      1415, 1418, 89 L.Ed.2d 648 (1986) (citation omitted). The
      Federal Arbitration Act makes written agreements to arbitrate
      “valid, irrevocable, and enforceable” on the same terms as other
      contracts. 9 U.S.C.A. § 2 (West 1970). There must be evidence
      sufficient to establish the parties’ consent to arbitration. As a
      matter of contract, no party can be forced to arbitrate unless that
      party has entered into an agreement to do so. That agreement
      must be express and unequivocal.

Kaplan v. First Options of Chicago, Inc., 19 F.3d 1503, 1512 (3d Cir.

1994), aff’d, 514 U.S. 938, 115 S.Ct., 1920, 131 L.Ed.2d (1995) (some

citations omitted).   “An arbitrator's decision to assert jurisdiction over

objection is, however, subject to a much broader and more rigorous judicial

review than an arbitral decision on the merits. Because it is a question for the

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court to decide, it is subject to de novo judicial review.”      Id. (internal

quotations omitted).

      In affirming the Third Circuit’s decision, the United States Supreme

Court stated, “Courts should not assume that the parties agreed to arbitrate

arbitrability unless there is ‘clear and unmistakable evidence’ that they did

so.” First Options of Chicago, Inc. v. Kaplan, 514 U.S. 938, 944, 115

S.Ct. 1920, 131 L.Ed.2d (1995) (alterations and citations omitted).

      While Uber’s Terms of Use call for arbitration pursuant to the FAA, this

Court has determined that “the FAA standards of review do not apply to a

state trial court’s review over an arbitration award created and enforced under

the FAA.” Trombetta v. Raymond James Financial Services, Inc., 907

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A.2d 550, 569 (Pa. Super. 2006).3              Therefore, we look to Pennsylvania’s

arbitration laws.4

____________________________________________

3 In Trombetta, the Court explained that, “[t]he language of FAA §10 itself
substantiates this conclusion. Section 10 explicitly states: ‘the United States
court in and for the district where in the award was made . . .’ may vacate an
arbitration award when certain circumstances are present.” Id., 907 A.2d at
568-69 (emphasis and ellipses in original).          “We believe this phrase
constitutes plain language stating that FAA § 10 only applies to proceedings
in United States district courts.” Id. at 569 (emphasis added). Because a
review of the Complaint filed in this action reveals that Appellants as well as
some Appellees are residents of or entities incorporated in Pennsylvania, there
is no diversity of citizenship (or federal question) upon which jurisdiction in
the district court could be based.

A recent United States Supreme Court decision confirms that review of an
arbitral award in this case would be governed by state law. In Badgerow v.
Walters, 142 S.Ct. 1310 (2022), the Court held that “Congress has not
authorized a federal court to adjudicate a Section 9 or 10 application just
because the contractual dispute it presents grew out of arbitrating different
claims, turning on different law, that (save for the parties’ agreement) could
have been brought in federal court.” Id. at 1318. Further, “[t]he statutory
plan . . . makes Section 9 and 10 applications conform to the normal—and
sensible—judicial division of labor: The applications go to state, rather than
federal, courts when they raise claims between non-diverse parties involving
state law. Id. at 1321.
4 I note that Uber’s arbitration provisions reference applicability of California
law in the event the FAA rules are found not to apply. If Appellants should
attempt to vacate an award of the arbitrator, and if it is determined that
California law applies, the court could look to Cal. Code Civ. Proc.
§ 1286.2(a)(4), which provides for vacating an award in the event “arbitrators
exceeded their powers and the award cannot be corrected without affecting
the merits of the decision upon the controversy submitted.” See Cable
Connection, Inc. v. DIRECTV, Inc., 190 P.3d 586, 600 (Ca. 2008) (“The
powers of an arbitrator derive from, and are limited by, the agreement to
arbitrate. Awards in excess of those powers may, under section[] 1286.2 and
1286.6 be corrected or vacated by the court”) (citations omitted).

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       As this Court explained in Sage v. Greenspan, 765 A.2d 1139 (Pa.

Super. 2000), appeal den’d, 784 A.2d 119 (Pa. 2001):

       Chapter 73 of the Pennsylvania Judicial Code governs statutory,
       common law and judicial arbitration. 42 Pa.C.S.A. §§ 7301–
       7362. Sections 7301–7320 of Subchapter A apply to statutory
       arbitration proceedings and are known collectively as the
       Pennsylvania Uniform Arbitration Act (“UAA”).              Sections
       7341 and 7342 of Subchapter B apply to common law arbitration
       proceedings. 42 Pa.C.S.A. §§ 7341–7342[.] Whether an
       arbitration agreement is subject to the UAA (Sections 7301–
       7320 of Subchapter A) or common law (Sections 7341–7342 of
       Subchapter B) arbitration principles depends on whether the
       agreement is in writing and expressly provides for arbitration
       under the UAA. 42 Pa.C.S.A. § 7302(a)[.] Absent an express
       statement in the arbitration agreement, or a subsequent
       agreement by the parties which calls for the application of the UAA
       statutory provisions in Subchapter A, an agreement to arbitrate is
       conclusively presumed to be at common law and subject to the
       provisions of Subchapter B.

Id. at 1141 (citations omitted).5 Because the arbitration provisions in Uber’s

Terms of Use make no reference to the UAA, the standards of review for

common law arbitration should apply in the event of a challenge to an award

of the FAA arbitrator.

       In Sage, we recognized that “[t]he standard of review for a common

law arbitration is very limited.” Id. at 1142. However, as this Court held in

____________________________________________

5 Because Appellants’ Uber registrations and the accident giving rise to
Appellants’ claim predated July 1, 2019, the effective date of the Revised
Statutory Arbitration Act, 42 Pa.C.S.A. § 7321.1-31, the provisions of that Act
are not implicated.

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Civan v. Windemere Farms, Inc., 180 A.3d 489 (Pa. Super. 2018), “the

narrow standard of review derived from section 7341 is not applicable when

reviewing a petition to vacate based upon a claim that the parties do not have

a valid agreement to arbitrate.” Id. at 499. Further, as this Court recognized

in Sage, the award of an arbitrator “is binding and may not be vacated or

modified unless it is clearly shown that a party was denied a hearing or that

fraud, misconduct, corruption or other irregularity caused the rendition of an

unjust, inequitable or unconscionable award.” Id. (quoting Prudential Prop.

& Cas. Ins. Co. v. Stein, 683 A.2d 683, 684 (Pa. Super. 1996)). Because a

party cannot be forced to arbitrate absent an agreement to do so, see First

Options, supra, if a court determines there was no agreement to arbitrate,

and that Appellants submitted to arbitration only because they were compelled

to do so, I believe the court could properly vacate an award based on either

the lack of an agreement to arbitrate or a finding that the resulting award was

“unjust, inequitable or unconscionable.” Therefore, postponing review until

final judgment in this case will not result in irreparable loss of Appellants’ claim

as it can be reviewed in accordance with the applicable Pennsylvania

arbitration statutes. Appellants have failed to demonstrate that postponing

review until final judgment in the case will result in irreparable loss of their

claim. Therefore, they have not satisfied the third prong of the collateral order

test.

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      In its discussion of the collateral order doctrine, the Majority quotes our

Supreme Court’s decision in Commonwealth v. Wells, 719 A.2d 729 (Pa.

1998), in which the Court recognized that Rule 313 “sets forth a narrow

exception to the general rule that only final orders are subject to appellate

review.”   Majority Opinion at 7 (quoting Wells, 719 A.2d at 730).         After

identifying the three prongs, including the third prong, i.e., that “the question

presented is such that if review is postponed until final judgment in the case,

the claimed right will be irreparably lost,” id. (emphasis added), the Court

in Wells observed that “[t]his third prong requires that the matter must

effectively be unreviewable on appeal from final judgment.”        Id.   Quoting

Commonwealth v. Myers, 322 A.2d 131, 133 (Pa. 1974), the Court in Wells

also noted that an “order is not immediately appealable if it cannot be said

‘that denial of immediate review would render impossible any review

whatsoever of [the] individual's claim.’” (quoting United States v. Ryan, 402

U.S. 530, 533, 91 S.Ct. 1580, 1582 (1971)).

      To demonstrate the nature of irreparable loss that satisfies the third

prong of the collateral order test, in Brooks, supra, our Supreme Court held

that the third prong was satisfied because a defendant’s sovereign immunity

defense would be irreparably lost. Id., 259 A.3d at 373, 375 (“a sovereign

immunity defense is irreparably lost if appellate review of an adverse decision

on sovereign immunity is postponed until after final judgment” because “the

bell has been rung, and cannot be unrung by a later appeal.”) (citations

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omitted). The protection is from a lawsuit itself not simply a mere shield from

judgment or liability, as Pennsylvania courts have recognized.      Id. at 372

(citing cases).   Because sovereign immunity protects government entities

from a lawsuit itself, the Court concluded that a sovereign immunity defense

is irreparably lost if appellate review of an adverse decision on sovereign

immunity is postponed until after final judgment. Id. at 373. Subjecting a

governmental entity, which claims it is immune, to the legal process

undermines the purposes of sovereign immunity. Id.

      Unlike Brooks, Appellants here cannot demonstrate the irreparable loss

of any such right. Appellants’ claim essentially concerns the forum in which

they will litigate their claim, not the loss of a forum whereby they would be

out of court. If they are not pleased with the results of an arbitration, they

have avenues open to them, whether based on an assertion that they did not

agree to arbitrate, or a contention that “fraud, misconduct, corruption or other

irregularity caused the rendition of an unjust, inequitable or unconscionable

award.” Sage, supra, 765 A.2d at 1142 (citation omitted). In other words,

the bell can be “unrung.”    Although the Majority speaks in terms of legal

hurdles facing Appellants should they attempt to seek judicial review of an

arbitration award, Majority Opinion at 13, the Majority nevertheless stops

short of contending the matter would “effectively be unreviewable,” stating

instead that the third prong of the test is satisfied “because postponing review

until final judgment in this case may result in the irreparable loss of

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Appellant’s claims.” Id. (emphasis added). I submit that the mere possibility

of losing a claim falls short of a claim being “irreparably lost,” in light of the

Supreme Court’s stated insistence “that each one of its three prongs be ‘clearly

present’ before collateral appellate review is allowed.” Shearer, 177 A.3d at

858 (citation omitted).

      Again, the issue before this Court is not whether Appellants are being

deprived of a right to a jury trial.     The issue is whether this Court has

jurisdiction over this appeal from an interlocutory order compelling arbitration.

“Because there is no express statutory authority providing for an appeal from

an interlocutory order in a case where arbitration is compelled,” Maleski, 633

A.2d at 1146, and because Appellants cannot satisfy the third prong of the

collateral order test, I would quash the appeal.

      Judge Olson and Judge Sullivan join the Dissenting Opinion.

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