e-Journal Summary

e-Journal Number : 64367
Opinion Date : 01/11/2017
e-Journal Date : 01/27/2017
Court : U.S. Court of Appeals Sixth Circuit
Case Name : Preferred Care of DE, Inc. v. Estate of Marilyn Hopkins
Practice Area(s) : Litigation Alternative Dispute Resolution
Judge(s) : Sutton, Batchelder, and Kethledge
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Issues:

Appellate jurisdiction under the Federal Arbitration Act (the Act); 9 USC § 16(a) & (b); Jurisdiction over the district court’s injunction of a state-court action; Moglia v. Pacific Employers Ins. Co. (7th Cir.); AT&T Mobility LLC v. Concepcion; ConArt, Inc. v. Hellmuth, Obata + Kassabaum, Inc. (11th Cir.); Johnson v. Consumerinfo.com, Inc. (9th Cir.); Gulfstream Aerospace Corp. v. Mayacamas Corp.; 28 USC § 1292; Whether the district court’s orders were appealable as a “final decision” under the “final-judgment rule”; Green Tree Fin. Corp.–AL v. Randolph; ATAC Corp. v. Arthur Treacher’s, Inc.; Fed.R.Civ.P. 58; Fed.R.App.P. 4(a); Kraus v. Taylor; Great Earth Cos., Inc. v. Simons; Whether the court had pendant jurisdiction; AmSouth Bank v. Dale

Summary

The court held that it lacked appellate jurisdiction over the district court’s orders compelling the parties to arbitrate their claims, staying the federal case until the arbitration concluded, and enjoining the defendant-estate from proceeding against plaintiff-Preferred Care in the state-court action. The district court first ordered the parties to arbitrate their state-law claims under the terms of the arbitration agreement contained in the parties’ admission agreement. Review of this action is expressly forbidden by § 16(b)(2), which “remov[es] jurisdiction over orders ‘directing arbitration.’” Section 16(b)(1) prohibits jurisdiction “over orders ‘granting a stay’ of the federal court action until the arbitration end[s].” Section 16(b)(2) also barred review of the district court’s order enjoining the estate’s state-court action. The court noted that even though § 1292(a) provides for immediate appeals of injunctions, “§ 16 specifically forecloses appeals of pro-arbitration interlocutory orders[,] . . . § 16 is the more specific provision because it directly addresses the issue—arbitration-related appeals—and because its exception for § 1292(b) shows that the statute reflects (and limits) the pre-existing rules for appeals.” Thus, “the existence of an injunction does not give . . . appellate jurisdiction.” The court concluded that when “a district court directs arbitration and stays the proceedings, ‘[t]he only exception to § 16(b) is an appeal by permission under § 1292(b).’” Interlocutory orders are generally not appealable. The court rejected the estate’s argument that the injunction order was “structurally a final decision,” and held that under Green Tree, “if the district court enters a stay instead of a dismissal, ‘that order [is] not . . . appealable’ under § 16(b)(1).” The court could not exercise pendant jurisdiction over the other issues raised on appeal because in the absence of jurisdiction over the injunction, it had no “jurisdiction over anything potentially pendent to it.” It dismissed the estate’s appeal.

Full PDF Opinion