MEDIVAS, LLC, a California limited liability company, Plaintiff-Appellant, and Kenneth W. Carpenter; Joseph D. Dowling; T. Knox Bell; Dari Darabbeigi; Lindy Hartig; Sachio Okamura; William Summer; Paul Teirstein; William G. Turnell, individuals, Plaintiffs, v. MARUBENI CORPORATION, a Japanese corporation, Defendant-Appellee.
No. 12-55375
United States Court of Appeals, Ninth Circuit
January 27, 2014
Petition DENIED.
Stephen L. Schreiner (argued), Solomon Ward Seidenwurm & Smith, LLP, San Diego, CA, for Plaintiff-Appellant.
Before: ALFRED T. GOODWIN, RAYMOND C. FISHER and RICHARD R. CLIFTON, Circuit Judges.
OPINION
FISHER, Circuit Judge:
We address whether an order compelling arbitration is appealable when the district court neither explicitly dismisses nor explicitly stays the action. We hold that such an order implicitly stays the action and thus is not “a final decision with respect to an arbitration” under the Federal Arbitration Act,
BACKGROUND
MediVas is a small biomedical company based in San Diego, California, that specializes in developing new methods for pharmaceutical drug delivery. Marubeni is a Japanese multinational trading corporation. Between April 2004 and October 2007, Marubeni and MediVas executed various contracts in connection with a $5 million loan from Marubeni to MediVas. One of these contracts required the parties to submit contractual disputes to interna-
After MediVas defaulted on the loan, Marubeni foreclosed on promissory notes held by MediVas and threatened to fore-close on additional MediVas assets. In response, MediVas and several individual plaintiffs filed suit against Marubeni in San Diego Superior Court, raising numerous state law claims arising out of this series of transactions. Invoking the contractual arbitration clause, Marubeni re-moved the action to federal court under the Convention on the Recognition and Enforcement of Foreign Arbitral Awards, also known as the New York Convention, moved to compel arbitration and initiated arbitration against the plaintiffs. See
In an August 2011 order, the district court ruled that many of MediVas’ claims against Marubeni were subject to the arbitration clause and ordered arbitration of those claims. Because it concluded that federal jurisdiction rested solely on the New York Convention, the court remanded the remaining claims, including all claims brought by the individual plaintiffs, to state court.1 Neither the August 2011 or-der nor any other order explicitly stayed or dismissed the arbitrable claims, and no judgment was entered in the action.
The arbitration panel ruled in favor of Marubeni on all claims save one, which the panel concluded fell outside its jurisdiction. Marubeni then filed a second action in district court to confirm the arbitration award, which action was assigned to the same district judge as the original action. In February 2012, a few days after Maru-beni filed the final award in the confirma-tion action, MediVas filed in the original action its notice of appeal from the district court‘s August 2011 order. Then, also in the original action, Marubeni moved to remand the unarbitrated claim to state court. The district court stayed proceed-ings in both actions in light of MediVas’ pending appeal, which the court believed may have divested it of jurisdiction to pro-ceed.
DISCUSSION
A.
The Federal Arbitration Act permits immediate appeal of “a final decision with respect to an arbitration,”
In Green Tree, the district court had ordered the parties to arbitrate their dis-pute and dismissed the underlying claims with prejudice. See 531 U.S. at 83, 86. The Supreme Court acknowl-edged that the parties could bring a sepa-rate proceeding to confirm, vacate or mod-ify any award made in the arbitration, but held that the district court‘s order was final and appealable because it disposed of the entire action then pending before the district court. See id. at 86-87. Significantly, the Court noted that an appeal would not have been allowed had the district court stayed the action instead of dismissing it. See id. at 87 n. 2 (citing
In Interactive Flight Technologies, Inc. v. Swissair Swiss Air Transport Co., 249 F.3d 1177 (9th Cir.2001), we extended Green Tree to an order compelling arbitra-tion and dismissing the underlying claims without prejudice. See id. at 1179. Be-cause the district court had dismissed the action without prejudice solely to allow the parties to “bring[] a new action after com-pleting arbitration,” we held that the dis-tinction was not sufficient “to show that the dismissal was interlocutory rather than an appealable final decision.” Id.
Since Interactive Flight, we have con-sistently treated orders compelling arbi-tration but not explicitly dismissing the underlying claims as unappealable inter-locutory orders. In Dees v. Billy, 394 F.3d 1290 (9th Cir.2005), for example, we held that a district court order compelling arbitration, staying the proceedings and administratively closing the case was not final because the plaintiffs claim for relief was still pending before the district court. See id. at 1293-94. Similarly, Sanford v. MemberWorks, Inc., 483 F.3d 956 (9th Cir.2007), held that an order directing ar-bitration, denying the defendant‘s motion to stay and stating that the case would be terminated if arbitration was not complet-ed within a year was not final, again be-cause the plaintiff‘s claims remained be-fore the trial court. See id. at 961-62. Most importantly for this appeal, in Bush-ley, when the district court ordered sever-al claims to arbitration, dismissed a nonar-bitrable claim for failure to state a claim and did not enter judgment or rule on the defendant‘s motions to stay or dismiss the proceedings, we concluded that the order compelling arbitration was not final be-cause the action was effectively stayed pending the conclusion of the arbitration. See 360 F.3d at 1151-53.
Our conclusion that the proceedings were implicitly stayed pending arbitration is bolstered by the procedural history of this case. The district court‘s August 2011 order ruled on Marubeni‘s “motion to com-pel arbitration and stay litigation,” which explicitly requested that the district court stay the proceedings. Because the district court granted the motion as to the claims it decided were arbitrable, the most rea-sonable inference is that the court intend-ed to stay, not to dismiss, those claims. See McCaskill v. SCI Mgmt. Corp., 298 F.3d 677, 679 (7th Cir.2002) (holding that the district court dismissed the action without prejudice because, among other facts, “the district court granted [the de-fendant]‘s motion which actually requested the court to compel arbitration and dismiss the case“). Indeed, in this sense the infer-ence of an implicit stay is stronger here than in Bushley, where the defendant moved to stay proceedings or to dismiss the action.3
The parties’ actions also support our conclusion that the August 2011 order im-plicitly stayed the arbitrated claims. Me-diVas, which asserts that it “anxiously awaited the first opportunity to appeal” the court‘s decision, did not file a notice of appeal until after the arbitration had fin-ished and the award had been finalized. Moreover, in its application for leave to file a motion for reconsideration, MediVas re-quested as an alternative an order certify-ing an appeal under
For its part, Marubeni originally argued that this appeal was premature because the district court had not issued a final order in either the original action or in the confirmation action. Only after we or-dered supplemental briefing to address ap-pellate jurisdiction, including “whether the notice of appeal was timely filed,” did Ma-rubeni argue that the August 2011 order was a final decision for which the time to appeal had expired.
Finally, it would be difficult to conclude that the August 2011 order “end[ed] the litigation on the merits and le[ft] nothing more for the court to do but execute the judgment,” Green Tree, 531 U.S. at 86, when even now, after the arbi-tration has ended, one of MediVas’ claims for relief remains pending before the dis-trict court. Moreover, the district court will at some point have to rule on Marube-ni‘s pending motion to remand that claim to state court. Under these circum-
B.
We decline MediVas’ invitation to follow the approach once taken by the Second Circuit by putting this appeal on hold while the parties request a clarifying order from the district court. See Cap Gemini Ernst & Young, U.S., L.L.C. v. Nackel, 346 F.3d 360, 363 (2d Cir.2003) (per curiam). The Cap Gemini court itself noted that although the procedure was necessitated by the ambiguity in the record, it would not again be permitted. See id. Because the record here is not ambiguous for the reasons explained above, we conclude that no clarifying order is necessary.
We fully endorse the Second Circuit‘s statement that “parties and district courts have an obligation to ensure that the finali-ty of the district court‘s decision is evident from the record, so that no further recon-struction of the district court‘s intent need be attempted on appeal.” Id. We again urge district courts to be as clear as possi-ble about whether they intend to dismiss, stay or “do something else entirely” when they order arbitration. Bushley, 360 F.3d at 1153 n. 1 (quoting Salim Oleochemicals v. M/V Shropshire, 278 F.3d 90, 93 (2d Cir.2002)). Had MediVas requested a clarifying order from the district court be-fore taking this appeal, the substantial time and effort expended on this procedur-al issue could have instead been spent advancing this litigation toward its ulti-mate resolution.
Moreover, though we decline to follow the Second Circuit and “require an official dismissal of all claims before re-viewing an order to compel arbitration,” Cap Gemini, 346 F.3d at 363, we adopt a rebuttable presumption that an order com-pelling arbitration but not explicitly dis-missing the underlying claims stays the action as to those claims pending the com-pletion of the arbitration. This presump-tion accords with our preference for stay-ing an action pending arbitration rather than dismissing it. See Bushley, 360 F.3d at 1153 n. 1.4 Indeed, the wisdom of this preference is underlined here, where the arbitration panel left undecided a claim that the district court had ordered to arbi-tration. Cf. Coopers & Lybrand, 437 U.S. at 468 (noting that the pur-pose of the final judgment rule “is to com-bine in one review all stages of the pro-ceeding that effectively may be reviewed and corrected if and when final judgment results” (quoting Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949))). Ас-cordingly, the finality of an order compel-ling arbitration is determined by the con-text in which it was issued, but our review of that context is weighted against finality.
C.
Finally, we reject the argument that the issuance of the arbitral award somehow “finalized” the district court order,” mak-ing this appeal both proper and timely. Dannenberg v. Software Toolworks Inc., 16 F.3d 1073, 1075 (9th Cir.1994). Had the August 2011 order been final, it was
CONCLUSION
The circumstances surrounding the dis-trict court‘s August 2011 order show that the arbitrated claims were implicitly stayed pending the conclusion of the arbi-tration. To simplify the analysis in cir-cumstances that are less clear, we adopt a rebuttable presumption that an order com-pelling arbitration but not explicitly dis-missing the underlying claims stays the action as to those claims pending the com-pletion of the arbitration. Because the district court‘s August 2011 order was not “a final decision with respect to an arbitra-tion,”
DISMISSED.