103 F.3d 524 (7th Cir. 1996), 96-2314, IDS Life Ins. Co. v. SunAmerica, Inc.

Docket Nº:96-2314, 96-2871.
Citation:103 F.3d 524
Party Name:IDS LIFE INSURANCE CO., Plaintiff-Appellee, Cross-Appellant, and American Express Financial Advisors, Inc., Plaintiff-Appellee, v. SUNAMERICA, INC., and Sun Life Insurance Co. of America, Defendants-Appellants, and Royal Alliance Associates, Inc., and Sunamerica Securities, Inc., Defendants-Appellants, Cross-Appellees.
Case Date:December 18, 1996
Court:United States Courts of Appeals, Court of Appeals for the Seventh Circuit
 
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Page 524

103 F.3d 524 (7th Cir. 1996)

IDS LIFE INSURANCE CO., Plaintiff-Appellee, Cross-Appellant,

and

American Express Financial Advisors, Inc., Plaintiff-Appellee,

v.

SUNAMERICA, INC., and Sun Life Insurance Co. of America,

Defendants-Appellants,

and

Royal Alliance Associates, Inc., and Sunamerica Securities,

Inc., Defendants-Appellants, Cross-Appellees.

Nos. 96-2314, 96-2871.

United States Court of Appeals, Seventh Circuit.

December 18, 1996

        Argued Oct. 28, 1996.

        Rehearing and Suggestion for Rehearing En Banc Denied Feb. 18, 1997.

Page 525

        Gary M. Elden, argued, Gregory C. Jones, Eric D. Brandfonbrener, Margaret E. Rice, Patrick T. Nash, Grippo & Elden, Chicago, IL, for IDS Life Ins. Co., American Express Financial Advisors, Incorporated in No. 96-2314.

        Ronald P. Kane, Chicago, IL, Thomas M. Campbell, argued, Pace Klein, Smith, Campbell & Paduano, New York City, Steven P. Gomberg, Gomberg, Kane & Fischer, Chicago, IL, for SunAmerica, Incorporated, Royal Alliance Associates, Incorporated, SunAmerica Securities, Incorporated, Sun Life Insurance Company of America in Nos. 96-2314 and 96-2871.

        Gary M. Elden, argued, Gregory C. Jones, Eric D. Brandfonbrener, Margaret E. Rice, Patrick T. Nash, Grippo & Elden, Chicago, IL, for IDS Life Insurance Company in No. 96-2871.

        Before POSNER, Chief Judge, and EASTERBROOK and RIPPLE, Circuit Judges.

        POSNER, Chief Judge.

        The plaintiffs, claiming that the defendants have been "raiding" their employees in violation of a host of federal and state laws, brought these two consolidated suits in February of 1995, seeking damages and injunctive relief. The plaintiffs are subsidiaries of American Express. Although one is also an insurance company, both are engaged in the securities business and are members of the National Association of Securities Dealers. The defendants are four affiliated corporations (one an insurance company) that compete with the plaintiffs. Two of the four, Royal Alliance and SunAmerica Securities, are, like the plaintiffs, members of the NASD.

        Simultaneous with the filing of their complaints, the plaintiffs moved for a preliminary injunction to prevent what they contended would be a massive raid by the defendants scheduled for March 1. The judge issued a temporary restraining order, but it expired by its terms on March 10 and the judge refused to extend it. The defendants moved for a stay of the district court proceedings pending arbitration of the parties' dispute. While this motion was pending, the parties engaged in pretrial discovery in the district court with respect to the plaintiffs' motion for a preliminary injunction. A year passed before the district judge ruled, in April 1996, that the plaintiffs' claims against the two

Page 526

defendants that are members of the NASD are within the scope of a provision of the rules of that association that provides for arbitration of certain disputes among members, but that the plaintiffs' claims against the other two defendants are not; the judge rejected the defendants' argument that common ownership made the nonmember defendants "associated persons" within the meaning of the rules. He also ruled that the preliminary injunction proceeding would go forward on all claims. When the appeal was argued to us in October 1996, six months had passed since the judge had made these rulings and he had not yet decided whether to grant a preliminary injunction, even though the plaintiffs claim that they have already lost $10 million as a result of the defendants' raids and the hearing on the motion for a preliminary injunction had long been completed.

        The defendants appeal from the denial of their motion for a stay of the proceedings in the district court pending arbitration. An order denying a motion for a stay pending arbitration is expressly made appealable by the Federal Arbitration Act. 9 U.S.C. § 16(a)(1)(A). But can all four defendants appeal, or just the two defendants who the judge held are not entitled to arbitrate their dispute with the plaintiffs? Have not the other two (the NASD members) gotten what they wanted--a stay pending arbitration? Actually, it is not altogether certain that the judge either denied the stay to the first pair of defendants (the nonmembers) or granted it to the second pair. Remember that the judge has ruled that the proceedings on the plaintiffs' motion for a preliminary injunction shall go forward on all claims against all defendants. Those proceedings are, so far as appears, the only proceedings in the district court in this litigation, so that it is arguable that the motion for a stay has not been ruled on, that at most the judge has indicated an intention, no doubt revisable as the case evolves, to stay further proceedings after he grants or denies the preliminary injunction--and an intention is not an appealable order. The judge invited the defendants that are not members of the NASD to renew their motion for a stay after the preliminary injunction hearing. Maybe the judge's intent was not to deny the stay to the nonmembers but merely to defer consideration of the motion till after the hearing, which was imminent.

        But could not deferral be thought the equivalent of denial? The line between the denial of a motion and deferral of action on it is indeed a hazy one. On the one hand, when someone asks for something...

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