950 F.3d 491
7th Cir.2020Background
- Investors in commodity futures maintained accounts with INTL FCStone Financial Inc. (FCStone); extreme market volatility in Nov. 2018 wiped out accounts and produced debts.
- Defendants (investors) filed FINRA arbitrations alleging Commodity Exchange Act violations; FCStone filed a declaratory judgment/Federal Arbitration Act (FAA) action seeking to compel arbitration before the National Futures Association (NFA) and to declare FINRA unavailable.
- FCStone relied on account arbitration clauses and CFTC regulation (17 C.F.R. §166.5) requiring a four-step forum-selection process, arguing FINRA was not a permitted forum; FCStone invoked its futures-division registration with the CFTC.
- Defendants argued FINRA Rule 12200 (and FCStone’s FINRA-registered securities division) required arbitration before FINRA and contended FCStone had repudiated the arbitration agreements.
- The district court ruled that FINRA Rule 12200 did not apply, that the parties agreed to NFA arbitration (and FCStone validly selected NFA after defendants failed to timely choose), denied defendants’ motions, directed arbitration before the NFA, then stayed the case while leaving several arbitration-related issues unresolved.
- Defendants appealed; the Seventh Circuit dismissed the appeal for lack of appellate jurisdiction because the district court’s order was non-final and FAA §16(b) bars interlocutory appeals from pro-arbitration orders in stayed suits.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the district court’s order compelling NFA arbitration is an "anti-arbitration injunction" appealable under FAA §16(a)(2) or 28 U.S.C. §1292(a)(1) | FCStone (plaintiff below) argued it sought a declaratory judgment and to compel NFA arbitration, not an injunction against arbitration. | Defendants argued the order effectively enjoined their pending FINRA arbitrations and so is appealable as an anti-arbitration injunction. | Court held no injunction existed; the order enforced arbitration agreements (pro-arbitration), so §16(a)(2)/§1292(a)(1) do not supply jurisdiction. |
| Whether the arbitration order is a final decision under 28 U.S.C. §1291 / FAA §16(a)(3) | FCStone argued the court’s order directing arbitration was final enough to appeal. | Defendants argued the order was final and appealable. | Court held the order was not final—district court left issues (venue, permanent injunction, compliance timing, fees) open and issued no separate Rule 58 judgment—so §16(a)(3)/§1291 provide no jurisdiction. |
| Whether FAA §16(b) supersedes §1292(a)(1) (i.e., whether specific FAA appellate provisions preclude broader injunction appeals) | FCStone relied on FAA’s restrictions on appeals from orders directing arbitration. | Defendants relied on §1292(a)(1) for interlocutory appeals of injunctions. | Court held §16(b) is the specific statute controlling arbitration orders and displaces §1292(a)(1); without §1292(b) certification, defendants cannot appeal. |
| Whether the district court retained jurisdiction to resolve remaining arbitration-related issues after the premature notice of appeal | N/A (district court acts to manage the case). | Defendants argued the notice of appeal divested the district court of jurisdiction. | Court held a premature appeal from a non-appealable order does not necessarily divest the district court; it may finish necessary work and enter a proper final decision. |
Key Cases Cited
- Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79 (2000) (defines final decision for appellate jurisdiction)
- Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983) (FAA embodies a federal policy favoring enforcement of arbitration agreements)
- Moglia v. Pac. Employers Ins. Co. of N. Am., 547 F.3d 835 (7th Cir. 2008) (appeal barred for pro-arbitration decision in a stayed suit)
- Microsoft Corp. v. Baker, 137 S. Ct. 1702 (2017) (disfavors repeated interlocutory appeals; explains finality principle)
- Preferred Care of Del., Inc. v. Estate of Hopkins, 845 F.3d 765 (6th Cir. 2017) (§16(b) controls arbitration-related appeals over general injunction provisions)
- Griggs v. Provident Consumer Disc. Co., 459 U.S. 56 (1982) (notice of appeal generally divests district court of jurisdiction)
- Stolt-Nielsen S.A. v. AnimalFeeds Int'l Corp., 559 U.S. 662 (2010) (FAA’s central purpose is to enforce arbitration agreements according to their terms)