Is District Court Automatically Divested of Jurisdiction when Party Appeals Order Denying Motion to Compel Arbitration? Circuit Split

Tillman v. Macy’s Inc., 2012 U.S. Dist. LEXIS 510 (E.D. Mich. Jan. 4, 2012):

"Whether an appeal from a denial of a motion to compel arbitration divests the district court of jurisdiction to proceed to the merits is the subject of a circuit split." Weingarten Realty Investors v. Miller, 661 F.3d 904, 907 (5th Cir. 2011).

The Fourth, Seventh and Eleventh Circuits have held that a district court is automatically divested of jurisdiction by the filing of an appeal that alleges that the claims before the district court are subject to mandatory arbitration. Levin v. Alms and Assocs., Inc., 634 F.3d 260 (4th Cir. 2011); Bradford-Scott Data Corp. v. Physician Computer Network, Inc., 128 F.3d 504 (7th Cir. 1997); Blinco v. Green Tree Servicing, LLC, 366 F.3d 1249 (11th Cir. 2004). The Sixth Circuit has not adopted this position.

The Second, Fifth and Ninth Circuits have held that no such divestiture occurs. Motorola Credit Corp. v. Uzan, 388 F.3d 39, 54 (2d Cir. 2004) (holding that, absent an order from the court of appeals imposing a stay, the district court has jurisdiction to proceed with the case after a notice of appeal has been filed); Weingarten Realty Investors v. Miller, 661 F.3d 904, 907 (5th Cir. 2011); Britton v. Co-Op Banking Group, 916 F.2d 1405, 1411-12 (9th Cir. 1990). [*4] Those circuits have concluded that while there is no automatic stay, "the district court nonetheless retains the power to determine, on a case-by-case basis, whether proceedings should be stayed until the appeal regarding arbitrability has been resolved." See, e.g., Weingarten Realty Investors, 661 F.3d at 908.

Because the Sixth Circuit has not joined those circuits who have held that a trial court is automatically divested of jurisdiction upon the filing of a notice of appeal alleging that the claims are subject to arbitration, the Court concludes that it is not automatically divested of jurisdiction. Nevertheless, this Court retains the discretion to determine, on a case-by-case basis, whether the proceedings in this action should be stayed pending the appeal.

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