241 F.2d 511 (2nd Cir. 1957), 104, Davenport v. Procter & Gamble Manufacturing Co.

Docket Nº:104, 24220.
Citation:241 F.2d 511
Party Name:Application of Robert W. DAVENPORT, as President of The Procter & Gamble Independent Union of Port Ivory, New York, Petitioner-Appellant, v. The PROCTER & GAMBLE MANUFACTURING COMPANY, Respondent-Appellee.
Case Date:February 04, 1957
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit

Page 511

241 F.2d 511 (2nd Cir. 1957)

Application of Robert W. DAVENPORT, as President of The Procter & Gamble Independent Union of Port Ivory, New York, Petitioner-Appellant,



Nos. 104, 24220.

United States Court of Appeals, Second Circuit.

February 4, 1957

Argued Dec. 13, 1956.

Page 512

Martin J. Loftus, Newark, N.J., and Sabino J. Mastroberardino, New York City, for appellant.

Hale, Stimson, Russell & Nickerson, New York City, for appellee, Eugene H. Nickerson, New York City, James O. Coates, Cincinnati, Ohio, and Eugene C. Brugger, Ridgewood, N.Y., of counsel.

Before SWAN, MEDINA and WATERMAN, Circuit Judges.

SWAN, Circuit Judge.

In March 1956 this proceeding was commenced in the Supreme Court of the State of New York, County of Richmond, by Robert W. Davenport, as president of a labor union with which the respondent had made a collective bargaining agreement, to compel arbitration in accordance with the terms of the agreement. It was brought pursuant to Article 84 of the New York Civil Practice Act, C.P.A. §§ 1448-1469. After removal to the federal court on the ground of diversity of citizenship, Davenport presented a motion to remand, which was denied on May 31, 1956. A subsequent motion to compel respondent to proceed to arbitration was denied on July 12, 1956. Notice of appeal from both orders was filed July 31, 1956.

The appellee questions our appellate jurisdiction. On the assumption that the order of May 31st denying a remand was directly appealable, the notice of appeal on July 31st was filed too

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late. 1 But the order was not directly appealable. It was neither a final judgment, 2 nor was it an interlocutory order of a character immediately reviewable. 3 However, the appellee concedes that if the order of July 12th denying the motion to require arbitration is properly before us, the interlocutory order denying a remand may also be reviewed. Cray, McFawn & Co. v. Hegarty, Conroy & Co., 2 Cir., 85 F.2d 516, 517. But it argues that the July 12th order was not appealable as a final order, because no order has been entered dismissing the proceeding. The point is not well taken. The only relief sought by petitioner was an order to require arbitration. The order denying the motion to require it was a final order, for purposes of appeal, since nothing further was to be done by the court. 4 Dismissal of the complaint would be a pure formality without effect upon the rights of the parties. We hold that both orders are before the court for review.

The first question is the propriety of the order denying the motion to remand. The case was removed to the federal court on the ground that there was diversity of citizenship and the amount in dispute exceeded $3, 000, exclusive of interest and costs. 5 Upon the motion to remand the movant, now the appellant, conceded diversity, but denied the amount in controversy, its position being that the controversy has no ascertainable money value since it is a demand solely to compel arbitration. The motion was heard upon affidavits. Judge Inch's decision is printed in the margin. 6

The appellant's contention that a state court suit to compel arbitration is not removable finds support in the case of In re Red Cross Line, D.C.S.D.N.Y., 277 F. 853, 856. There a petition to remand was granted on the theory that the matter in dispute was 'solely the right of specific performance of the agreement to arbitrate'; and 'No pecuniary value can be given to it, and a breach can only result in nominal damages' because, 'If the arbitration is ordered, the function of the court, so far as the proceeding instituted goes, ceases.' But the view that each step in the state court suit is 'a separate proceeding' within the meaning of the removal statute was repudiated in Marchant v. Mead-Morrison Mfg. Co., 2 Cir., 29 F.2d 40, certiorari denied 278 U.S. 655, 49 S.Ct. 179, 73 L.Ed. 565. At page 43 of 29 F.2d the court said:

'* * * What transpired from the application to state Supreme Court, and the entry of an order appointing an arbitrator, to and including the application for confirmation of the award made by the arbitrators, was a suit for the specific performance of the contract. It was all one arbitration proceeding, to settle the controversies which had arisen between the parties. They were not separable controversies. * * *

'The proceeding from the outset had all the elements of a judicial controversy * * * capable of

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pecuniary estimation, * * *. The appointment of the arbitrator was but a step in the relief sought by the plaintiff from the damages inflicted by the breach of the contract.' (Italics added.)

In considering the jurisdictional amount requirement the court should look through to the possible award resulting from the desired arbitration, since the petition to compel arbitration is only the initial step in a litigation which seeks as its goal a judgment affirming the award. See 42 Harv.L.Rev. 801. The right to arbitration given by the state statute is not just a procedural substitute for a trial but a substantive right. 7

The appellant also contends that, even if a proceeding to compel arbitration is capable of pecuniary estimation, removal in the case at bar was improper, since the petition in the state court did not specify the amount of the award sought. Removability is determined by the allegations of the complaint if it sets up the amount in controversy, and, if it does not, the court may look to the petition for removal. 8 The petition for removal alleged that more than $3, 000 was involved, and the affidavits in opposition to the motion to remand furnish ample support for the finding quoted in note 6, supra. Denial of the motion to remand was correct.

Turning to consideration of the order which denied the appellant's motion to proceed to arbitration, the parties are agreed that correctness of the order is to be determined according to the applicable statutes and case law of the state of New York. Judge Inch's decision is set out in the margin. 9 We think the cases cited by Judge Inch support his conclusion that the issue alleged by the petition is not an arbitrable issue under the agreement.

The collective bargaining agreement made in 1954 and effective to January 27, 1957 covers employees in the employer's Staten Island factory. Article III of the agreement entitled 'Wages' provides the 'the...

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