Is Denial of a Motion to Dismiss based on Arbitration Clause Appealable as Tantamount to Denial of a Motion to Compel Arbitration? Circuit Split
The defendant/appellant in Wabtec Corp. v. Faiveley Transortation Malmo AB, 2008 U.S. App. LEXIS 9518 (2d Cir. May 2, 2008), unsuccessfully moved to dismiss based on the existence of an arbitration clause in its contract with the plaintiff/appellee, then filed an appeal in the Second Circuit. The appellee moved to dismiss the appeal for lack of appellate jurisdiction on the ground that denial of the dismissal motion was an interlocutory order. The appellant first cited the collateral order doctrine, but the Second Circuit rejected that argument based on the Supreme Court's decision in Lauro Lines S.R.L. v. Chasser, 490 U.S. 495 (1989), a forum selection clause decision. (The Second Circuit pointed out that "[a]n agreement to arbitrate before a specified tribunal is, in effect, a specialized kind of forum-selection clause that posits not only the situs of suit but also the procedure to be used in resolving the dispute," quoting Scherk v. Alberto-Culver Co., 417 U.S. 506, 519 (1974).)
The appellant also contended that appellate jurisdiction existed under 9 U.S.C. § 16(a)(1)(C), which states that "an appeal may be taken from an order denying an application under section 206 of this title to compel arbitration." But the appellant had simply moved to dismiss in the district court, not to compel arbitration, although it argued that "referral to the arbitral forum is part of the relief it sought from the District Court." The Second Circuit declined to equate the two:
The question of whether a motion to dismiss based on an arbitration clause can be construed as a motion to compel arbitration, and therefore as falling within the parameters of § 16(a)(1)(C), is one of first impression for this court. As the First Circuit has noted, "[t]he courts are divided as to whether a request to dismiss a case based on an arbitration clause should be treated as a request for an order compelling arbitration." Fit Tech, Inc. v. Bally Total Fitness Holding Corp., 374 F.3d 1, 5 (1st Cir. 2004). But "[c]ircumstances vary and one rule may not suit all cases." Id. at 6.
On the facts before it, the First Circuit in Fit Tech construed the appellant's motion to dismiss as a motion to compel arbitration and held that it had jurisdiction over the appeal of the district court order denying the motion. See id. The court found that the appellant had "clearly argued to the district court" that the agreement required all claims to be submitted for arbitration and that the designated arbitrator "had sole authority to resolve all issues." Id.
Presented with different facts, the District of Columbia Circuit in Bombardier Corp. v. Nat'l R.R. Passenger Corp., 333 F.3d 250 (D.C. Cir. 2003), declined to construe a motion to dismiss as a motion to compel arbitration and held that it did not have jurisdiction under the FAA to hear the appeal of the denial of that motion. The court noted that, in the case before it,
[appellant] did not base its motion to dismiss on the FAA's requirement that arbitration agreements be strictly enforced. It sought an outright dismissal . . . on the grounds that [appellee] failed to comply with the dispute resolution procedures. . . . [U]nlike a motion to compel . . . under the FAA, [appellant's] motion exhibited no intent to pursue arbitration - indeed, it sought outright dismissal with no guarantee of future arbitration.
Id. at 254.
On the facts presented here, we decline to treat Wabtec's motion to dismiss as a motion to compel arbitration. As an initial matter, the Supreme Court has "emphasized that statutes authorizing appeals are to be strictly construed." Perry Educ. Ass'n v. Perry Local Educators' Ass'n, 460 U.S. 37, 43 (1983).
Under the plain language of 9 U.S.C. § 16(a), the denial of a motion to dismiss based on an arbitration clause is not an order from which an appeal may be taken. Cf. Bombardier Corp., 333 F.3d at 253 (conducting a similar analysis).
More importantly, [appellant’s] motion does not fall within the terms of 9 U.S.C. § 206. It did not explicitly request the district court to "direct that arbitration be held," 9 U.S.C. § 206; it requested only the dismissal of [apellee’s] application for preliminary injunction and expedited discovery. Nor did the motion implicitly petition the district court to compel arbitration. Rather than affirmatively seek arbitration in accordance with the agreement, [appellant’s] motion focused on preventing [appellee] from resolving any dispute in the courts, in accordance with the agreement's provision that disputes would be settled "without recourse to the courts." In other words, [appellant] did not frame its arguments in terms of mandatory arbitration but in terms of judicial preclusion. ***
We further note that [appellee] had already commenced arbitration in Stockholm pursuant to the license agreement's competent jurisdiction clause, one week before [appellant] filed its motion to dismiss. Thus, there was no reason to compel [appellee] to arbitrate. Moreover, there is evidence that, far from seeking to compel arbitration, [appellant] had requested that the International Chamber of Commerce Court dismiss [appellee’s] request for arbitration on the ground that [appellee’s] claims were not covered by any arbitration agreement between the parties.
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