526 F.2d 537 | 3rd Cir. | 1975
OPINION OF THE COURT
By appeal in No. 75-1451 and by a petition for mandamus in No. 75-1873 Dr. Jerome M. Cotier, the plaintiff below, seeks relief from two orders of the district court. The first order granted defendants’ motion to stay federal proceedings so long as actions pending in the Superior Court of New Jersey, Chancery Division, Cumberland County, Docket Number C-4204 — 73 and Camden County, Docket Number C-4268-73, are outstanding and undecided. The second order directed that the clerk of the district court “administratively terminate the action in his records, without prejudice to the right of the parties to reopen the proceedings for good cause shown for the entry of any stipulation or order, or for any other purpose required to obtain a final determination of the litigation.” We conclude that the court’s actions, which have the effect in this case of depriving the plaintiff of a federal forum for a cause of action over which the jurisdiction of the federal courts is exclusive, were beyond the lawful power
of the district court and are remediable by mandamus.
I. BACKGROUND
The underlying dispute, which now involves three lawsuits all of which are at a standstill, grows out of the affairs of the Inter-County Orthopaedic Association, P.A. (Inter-County), a New Jersey professional corporation. Dr. Cotier, Dr. Basil Ingemi and Dr. Mahaveer Prabhaker practiced their specialty in that form. In March of 1973 Cotier advised Ingemi and Prabhaker that he intended to withdraw from the practice. Negotiations among the doctors to determine a buyout price failed. Acting on instructions from Ingemi, the attorney for Inter-County on July 29, 1974 filed in the Superior Court of New Jersey, Chancery Division, Cumberland County, a complaint naming the three doctors as defendants, seeking a declaratory judgment of the rights of the parties and other relief. The main thrust of the other relief was to compel Cotier to resign as an officer and director and to obtain from him an accounting for professional fees allegedly due Inter-County but received by him. Shortly thereafter Cotier commenced a shareholders’ derivative action in the Superior Court, Chancery Division, Camden County against Inter-County, Prabhaker, Ingemi and several other defendants seeking damages, injunctive relief restraining the defendants from wasting corporate assets, an accounting, the cancellation of stock issued to Prabhaker under questionable circumstances, and the removal of the corporate counsel who had instituted the declaratory judgment action. By an order dated August 23, 1974 the Cumberland County action was consolidated with the Camden County action and venue assigned to Cumberland County. The affidavits suggest that Cotier’s attorney, justifiably or not, is unhappy with the Cumberland County venue.
On August 22, 1974, Cotier filed in the United States district court a complaint
II. APPEALABILITY
(A) Final Judgment
Cotier contends that staying the federal action and administratively terminating it pending the trial of the state court claims has the effect of a final order, 28 U.S.C. § 1291, or of the denial of an injunction, 28 U.S.C. § 1292(a)(1).
This court’s treatment of the appealability under § 1291 of stay orders has not been unwavering. In Arny v. Philadelphia Transportation Co., 266 F.2d 869, 870 (3d Cir. 1959) we held that a stay of federal court proceedings pending the decision of state court litigation between the parties representing the same interests was not a final order and hence was not appealable. In Joffe v. Joffe, 384 F.2d 632 (3d Cir. 1967) (per curiam), cert. denied, 390 U.S. 1039, 88 S.Ct. 1635, 20 L.Ed.2d 300 (1968), on the other hand, without discussing appealability we affirmed an order of a district court granting such a stay. Cotier urges that the indefinite stay of the proceedings has the same practical effect as a final dismissal, and should on the authority of In re Grand Jury Proceedings, 525 F.2d 151 (3d Cir. 1975), be treated as such. In that case, without referring either to Arny or to Joffe, but relying on Amdur v. Lizars, 372 F.2d 103, 105-06 (4th Cir. 1967), we held that an order staying a grand jury proceeding was an appealable final order. But the grand jury whose proceedings were stayed served for a finite term which would in all likelihood expire before the state court action to which the district court deferred could be concluded. Here, no matter how long the state court proceedings take, in the end the same district court must take up the § 10(b) claim, which cannot be disposed of by the state court. That consideration serves to distinguish both In re Grand Jury Proceedings and Amdur v. Lizars upon which we relied, and disposes of Cotier’s reliance on the “death knell” doctrine as well. The § 10(b) claim may be old and feeble at the end of the state court litigation, but it will not be dead. This court has in any event indicated its lack of enthusiasm for the “death knell” rationale for avoiding the final order requirement. Hackett v. General Host Corp., 455 F.2d 618 (3d Cir.), cert. denied, 407 U.S. 925, 92 S.Ct. 2460, 32 L.Ed.2d 812 (1972).
We conclude that neither the per curiam disposition in Joffe which is silent on appealability, nor the holding on appealability of In re Grand Jury Proceedings, which deals with a distinguishable set of circumstances, has diminished the precedential value of Arny. The grant of a stay in this case was not a final order appealable under § 1291.
(B) Interlocutory Order
If the stay order is not appealable under § 1291, Cotier urges it is nevertheless the equivalent of an injunction, and thus appealable under § 1292(a)(1). But we have held that the stay by the district court of its own action pending conclusion of a proceeding before the National Railroad Adjustment Board, Day v. Pennsylvania R.R., 243 F.2d 485 (3d. Cir. 1957), or of its own equitable action
Alternatively, Cotier urges that the district court’s action should be treated, in substance if not in form, as the denial of his request for an injunction against the waste of corporate assets. He would have us embrace the constructive order doctrine originated in such Fifth Circuit cases as United States v. Lynd, 301 F.2d 818 (5th Cir. 1962) and N.A.A.C.P. v. Thompson, 321 F.2d 199 (5th Cir. 1963), and more recently applied in the Second Circuit, Weiss v. Duberstein, 445 F.2d 1297 (2d Cir. 1971), and Seventh Circuit, Clean Air Coordinating Committee v. Roth-Adam Fuel Co., 465 F.2d 323 (7th Cir. 1972), cert. denied, 409 U.S. 1117, 93 S.Ct. 895, 34 L.Ed.2d 701 (1973). There is much to be said for defining the term “injunction” for purposes of § 1292(a)(1) in such a functional manner. Certainly a refusal to rule with respect to injunctive relief often will leave a plaintiff in the position of continuing to suffer the effect of the conduct of which he complains. The alleviation of such situations was one purpose for the enactment of the first interlocutory appeals statute in 1891. See Baltimore Contractors, Inc. v. Bodinger, 348 U.S. 176, 181, 75 S.Ct. 249, 99 L.Ed. 233 (1955).
But not inconsiderable difficulties attend upon such an approach. At the threshold, it must be determined when a trial court’s silence can be deemed to have matured into a refusal to rule. In a difficult case, where the issues are numerous and complex, the court must be given reasonable latitude timewise. Cf. N.A.A.C.P. v. Thompson, supra, 321 F.2d at 202. Moreover, treating a refusal to rule as the functional equivalent of the denial of an injunction may result in the appellate court making the initial determination without the benefit of district court consideration of the ease and without the benefit of a complete record. Certainly that would be the result here. In an analogous context this court has declined to adopt a functional approach to the meaning of injunction for purposes of § 1292(a)(1), even when some form of order was entered. United States v. Estate of Pearce, 498 F.2d 847, 850-51 (3d Cir. 1974) (en banc) (Gibbons, J., dissenting). We declined in Rodgers v. United States Steel Corp., 508 F.2d 152, 160 (3d Cir. 1975), cert. denied, 423 U.S. 832, 96 S.Ct. 54, 46 L.Ed.2d 50 (1975), to treat the postponement of class action determination and the stay of discovery as the equivalent of the denial of injunctive relief. There, as here, the alternative of mandamus relief was available. Reviewing the- district court’s action pursuant to 28 U.S.C. § 1651 seems preferable to adopting what would for this circuit be a new interpretation of § 1292(a)(1). Without suggesting that we would never under any circumstances find merit in the constructive order doctrine, we decline to hold in this case that the district court’s action in staying all proceedings should be treated as equivalent to the denial of an injunction.
III. MANDAMUS RELIEF UNDER § 1651
McClellan v. Carland, 217 U.S. 268, 281-82, 30 S.Ct. 501, 54 L.Ed. 762 (1910) holds that a federal court having jurisdiction over a cause of action concurrent with a state court by virtue of diversity of citizenship may not stay its action so as to permit a state court action to be completed first, and that the court of appeals should by a writ of mandamus vacate the stay. See also County of Allegheny v. Frank Mashuda Co., 360 U.S. 185, 79 S.Ct. 1060, 3
A writ of mandamus will issue directing the district court to vacate the order dated February 24, 1975 staying this action and the order dated February 25, 1975 directing the Clerk to administratively terminate the action in his records.
The appeal at No. 75-1451 will be dismissed.
. The American Law Institute proposes that the exclusive federal jurisdiction under the Securities Exchange Act of 1934, 15 U.S.C. § 78aa, be made concurrent with the state courts. See ALI, Study of the Division of Jurisdiction Between State and Federal Courts § 1311(b), Commentary at 183-84 (1969). Whether in a case of fully concurrent jurisdiction — for example, a claim under the Securities Act of 1933, 15 U.S.C. § 77v(a) — a stay of the federal case which deprives a litigant of the choice of a federal forum would be proper in light of McClellan v. Carland, supra, is an issue we do not here decide.
