James Webb v. Farmers of North America, Inc. , 925 F.3d 966 ( 2019 )

United States Court of Appeals
For the Eighth Circuit
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No. 17-3456
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James Webb
lllllllllllllllllllllPlaintiff - Appellee
v.
Farmers of North America, Inc., A Delaware Company
lllllllllllllllllllllDefendant - Appellant
James Mann
lllllllllllllllllllllDefendant
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Appeal from United States District Court
for the Western District of Missouri - Kansas City
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Submitted: December 11, 2018
Filed: May 31, 2019
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Before SMITH, Chief Judge, WOLLMAN and GRASZ, Circuit Judges.
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SMITH, Chief Judge.
Farmers of North America, Inc. (“Farmers”) brings this interlocutory appeal of
the district court’s1 rulings interpreting an arbitration agreement in an employment
contract. As discussed herein, we do not reach the merits of the appeal and dismiss
for lack of jurisdiction.
I. Background
James Webb sued Farmers for an alleged breach of the employment contract
that he and Farmers had signed, along with some other related employment matters.
Webb’s employment contract with Farmers included an arbitration clause. The district
court, upon review of the contract, found that the parties’ dispute is subject to
arbitration pursuant to the arbitration clause. Accordingly, the district court granted
Farmers’s motion compelling arbitration and stayed the proceeding pending the
outcome of that arbitration.
The arbitration clause states that the American Arbitration Association (AAA)
rules will govern the arbitration. The parties agree to that general statement, but they
disagree as to the effect of designating the AAA rules. Farmers asserts that the
contract’s inclusion of the AAA rules mandates that the AAA must also administer
the arbitration.2 Webb disagrees. He avers that the contract only requires AAA rules
be applied, which a non-AAA arbitrator could do consistent with the contract.
Reaching an impasse, Webb’s lawyer wrote a letter to the district court (copying
opposing counsel) seeking clarification on this question. The district court agreed
with Webb’s position and found that agreeing to arbitrate by AAA rules did not
necessitate that AAA itself arbitrate the dispute. The court decided the contractual
language in the arbitration clause was ambiguous “at the very least.” Webb v.
Farmers of N. Am., Inc., No. 4:16-cv-00080, 2017 WL 6813709, at *1 (W.D. Mo.
1
The Honorable Fernando J. Gaitan, Jr., United States District Judge for the
Western District of Missouri.
2
There is no question the AAA could administer the arbitration.
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Oct. 10, 2017). If Farmers “intended for all disputes to be presented to the AAA for
arbitration,” the district court explained, “[Farmers] ought to have used such language
in the contract.” Id. The district court then ordered the parties “to work together to
find a mutually acceptable arbitrator.” Id. at *2.
Farmers filed this interlocutory appeal, arguing that the AAA rules, as applied
through its contract with Webb, mandate that the AAA administer this arbitration. We
decline to weigh in on the merits of Farmers’s argument, however, because we lack
jurisdiction over the appeal. Subject matter jurisdiction is a prerequisite for every
appeal. For the reasons explained below, none of Farmers’s asserted bases for
jurisdiction suffice to enable this court’s jurisdiction.
II. Discussion
Farmers asserts three bases for our jurisdiction: (1) the district court’s order
compelling arbitration was a final order pursuant to the Federal Arbitration Act
(FAA), 9 U.S.C. § 16(a)(3); (2) the district court’s denial of Farmers’s petition to
arbitrate pursuant to the parties’ agreement creates jurisdiction under 9 U.S.C.
§ 16(a)(1)(B); and (3) the collateral order doctrine applies. We address each in turn.
A. 16(a)(3) “Final Decision”
Farmers first asserts jurisdiction exists pursuant to §16(a)(3) of the FAA, which
states “[a]n appeal may be taken from . . . a final decision with respect to an
arbitration that is subject to this title.” The Supreme Court has ruled that a “final
decision with respect to an arbitration” under this statute is “a decision that ends the
litigation on the merits and leaves nothing more for the court to do but execute the
judgment.” Green Tree Fin. Corp.–Ala. v. Randolph, 531 U.S. 79, 86 (2000) (cleaned
up). When a district court enters a stay instead of a dismissal, that order is not
appealable. Id. at 87 n.2. Here, the district court’s decision stayed the case pending
arbitration, but it did not dismiss the claims. See, e.g., ON Equity Sales Co. v. Pals,
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528 F.3d 564, 569 (8th Cir. 2008). This appeal, like Pals, is not from a final decision.
Id.
B. 16(a)(1)(B) Denial of Petition to Arbitrate
Second, Farmers argues appellate jurisdiction exists under “9 U.S.C.
§ 16(a)(1)(B) because the district court denied the petition to arbitrate pursuant to the
parties' agreement, i.e., their agreed method of selecting an arbitrator.” Appellant’s
Br. at 1. This argument misconstrues the statute. Section 16(a)(1)(B) is plain: “An
appeal may be taken from . . . an order . . . denying a petition under section 4 of this
title to order arbitration to proceed.” The district court did not deny a petition to
arbitrate. To the contrary, the court ordered arbitration conducted in accordance with
AAA rules.
Farmers relies heavily on Luigino’s Inc. v. Kostal, 68 F.3d 478, 1995 WL
620108 (8th Cir. 1995) (unpublished per curiam). Kostal is not precedential. 8th Cir.
R. 32.1A (“Unpublished opinions . . . . are not precedent.”). We also do not find it
persuasive because the facts of the two cases are not analogous.3 Section 16(a)(1)(B)
simply cannot supply jurisdiction without an order denying arbitration. This
conclusion is consistent both with the decision of every circuit that has considered
this issue and with the purpose of Section 16 to move parties into arbitration rapidly
and without obstruction. See Al Rushaid v. Nat’l Oilwell Varco, Inc., 814 F.3d 300,
303–04 (5th Cir. 2016) (declining to consider an appeal of a party whose “motion to
compel was granted, albeit not in the first-choice forum.” (internal quotation
omitted)) (collecting cases). We therefore lack jurisdiction under § 16(a)(1)(B) absent
an order denying arbitration outright.
3
In Luigino’s, a panel of this court determined who should arbitrate a matter
when the employee and employer had two separate arbitration provisions in the
employment agreement based on the nature of the dispute. 1995 WL 620108, at *1.
Here, by contrast, the parties have one arbitration provision that the district court has
already interpreted.
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C. Collateral Order Doctrine
Lastly, Farmers asserts that the collateral order doctrine provides jurisdiction
to appeal the district court’s October 10th order instructing the parties to work
together to select an arbitrator, even if that arbitrator does not come from the AAA.
The collateral order doctrine confers appellate jurisdiction to review interlocutory
“decisions ‘which finally determine claims of right separate from, and collateral to,
rights asserted in the action, too important to be denied review and too independent
of the cause itself to require that appellate jurisdiction be deferred until the whole
case is adjudicated.’” Midland Asphalt Corp. v. United States, 489 U.S. 794, 798
(1989) (quoting Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949)).
We apply a three-factor test to determine whether this “practical construction of the
final judgment rule” will lend immediate appellate review of an otherwise
unappealable decision. Alpine Glass, Inc. v. Country Mut. Ins. Co., 686 F.3d 874, 877
(8th Cir. 2012) (internal quotation omitted). Jurisdiction is only proper under this
narrow doctrine “if the order appealed from (1) conclusively determines a disputed
issue; (2) which is an important issue completely separate from the merits; and (3) is
effectively unreviewable on appeal from a final judgment.” Id. (internal quotation
omitted).
Although we suspect that the district court’s October 10th order fails to qualify
under any of the three prongs of our test, it need only fail one. See Lauro Lines s.r.l.
v. Chasser, 490 U.S. 495, 498 (1989). Regarding the third prong, “the general rule [is]
that an order is effectively unreviewable only where the order at issue involves an
asserted right the legal and practical value of which would be destroyed if it were not
vindicated before trial.” Id. at 498–99 (cleaned up). A “right . . . that is essentially
destroyed if its vindication must be postponed until trial is completed” is effectively
unreviewable. Id. at 499.
The district court’s order sending the parties to arbitration is not effectively
unreviewable. If Farmers is dissatisfied with the final result of arbitration and an
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order confirming that award by the district court, it would at that time have an
appropriate remedy to seek review on appeal through 9 U.S.C. § 16(a)(3). The district
court’s order confirming an arbitration award is reviewable on appeal. We decline to
apply the collateral order doctrine to find jurisdiction in this case.
III. Conclusion
Accordingly, we dismiss Farmers’s interlocutory appeal for lack of jurisdiction
under any of the three raised grounds.
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