New England Power v. Asiatic Petroleum Corp.

• Decision Date: 17 February 1972
• Docket Number: No. 71-1334.,71-1334.
• Citation: 456 F.2d 183
• Parties: NEW ENGLAND POWER COMPANY, Plaintiff-Appellant, v. ASIATIC PETROLEUM CORPORATION, Defendant-Appellee.
• Court: U.S. Court of Appeals — First Circuit

456 F.2d 183 (1972)

NEW ENGLAND POWER COMPANY, Plaintiff-Appellant, v. ASIATIC PETROLEUM CORPORATION, Defendant-Appellee.

No. 71-1334.

United States Court of Appeals, First Circuit.

Heard January 4, 1972.

Decided February 17, 1972.

Lane McGovern, Boston, Mass., with whom Ropes & Gray, Boston, Mass., was on brief, for appellant.

James D. St. Clair, Boston, Mass., with whom Richard L. Levine and Hale & Dorr, Boston, Mass., were on brief, for appellee.

Before ALDRICH, Chief Judge, Mc-ENTEE and COFFIN, Circuit Judges.

COFFIN, Circuit Judge.

This case, but not this opinion, involves the efforts of a major oil supplier, Asiatic Petroleum Corporation ("Asiatic") to exact, because of events allegedly beyond its control, increased prices from its customer, the New England Power Company ("New England"). Upon New England's resisting such increases, Asiatic sought to initiate arbitration. Although the contract between the parties contains a commercial arbitration clause which covers the subject matter of the present dispute, New England argues that the potential impact of oil price increases on consumers of electrical energy is charged with such "public significance" that the issue is not properly one for decision by arbitrators. Asiatic contends that arbitration is required by the Federal Arbitration Act, 9 U.S.C. § 1 et seq.

This appeal is from the district court's denial of New England's motion for a stay of arbitration and granting Asiatic's motion for a stay of court proceedings pending arbitration. We do not reach the merits of the district court's action, however, since New England has not poured enough oil to quiet the troubled waters of appellate jurisdiction.

Our jurisdiction of the present appeal depends initially on whether either order of the district court is "final" within the meaning of 28 U.S.C. § 1291. Although entered in proceedings still pending before the court, an order may be final and therefore appealable (1) if its substantial effect is to dispose of an important claim of right "separable from, and collateral to" rights asserted in the main cause of action which may be lost if appellate consideration is delayed for a decision on the whole case, Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546-547, 69 S.Ct. 1221, 93 L.Ed. 1528 (1949); Swift & Co. Packers v. Compania Columbiana Del Caribe, 339 U.S. 684, 688-689, 70 S.Ct. 861, 94 L.Ed. 1206 (1950), or (2) if immediate review of the order would settle issues "fundamental to the further conduct of the case", Gillespie v. United States Steel Corp., 379 U.S. 148, 154, 85 S.Ct. 308, 312, 13 L.Ed.2d 199 (1964).

The district court's suspension of court proceedings and its refusal to stay arbitration in the present case meet neither of these standards. No important right, other than the "right" to stay arbitration, will be irreparably lost by our declining to review the district court's action at this juncture. The issue sought to be raised here by New England, viz, whether considerations of public policy preclude a decision by arbitrators on the merits of its dispute with Asiatic, is not foreclosed from ultimate judicial determination by the district court's decision to allow the arbitration to proceed. 9 U.S.C. § 10(d); M.G.L. c. 251, §§ 10 and 12; cf. In re States Marine Corp. of Delaware, 127 F.Supp. 943, 944 (S.D.N.Y.1954). Nor will the district court's action "fundamentally" affect the further conduct of the case. The only really adverse consequences of an erroneous decision not to stay the impending arbitration until a decision can be rendered on the issues raised in New England's complaint are the expense and irritation of securing what may be an unenforceable arbitration award. While we agree that these consequences, were they to occur, would indeed be unfortunate, they are not sufficiently serious to justify our departing from the longstanding federal rule against piecemeal review.¹ See, e. g., Shanferoke Coal & Supply Corp. v. Westchester Service Corp., 293 U.S. 449, 451, 55 S.Ct. 313, 79 L.Ed. 583 (1935); Baltimore Contractors, Inc. v. Bodinger, 348 U.S. 176, 179, 75 S.Ct. 249, 99 L.Ed. 233 (1955); Greater Continental Corp. v. Schechter, 422 F.2d 1100, 1102 (2d Cir. 1970).

New England contends that even if the district court has not taken final action affecting any important claim of right within the meaning of 28 U.S.C. § 1291, its refusal to stay arbitration is an interlocutory order refusing an application for an injunction and as such falls within the grant of jurisdiction conferred by 28 U.S.C. § 1292(a) (1).² The two courts of appeals which have directly confronted this contention have taken opposing positions. The Second Circuit has consistently adhered to the view that such requests do not amount to applications for an injunction within the meaning of the statute and are therefore not appealable. Greater Continental Corp. v. Schechter, supra; Greenstein v. National Skirt & Sportswear Ass'n, Inc., 274 F.2d 430 (2d Cir. 1960); Armstrong-Norwalk Rubber Corp. v. Local Union No. 283, 269 F.2d 618 (2d Cir. 1959); Wilson Bros. v. Textile Workers Union, 224 F.2d 176 (2d Cir.), cert. denied, 350 U.S. 834, 76 S.Ct. 70, 100 L. Ed. 745 (1955). In justifying this conclusion, the Second Circuit noted in Greater Continental Corp. v. Schechter that appellate consideration of a district court's refusal to stay impending arbitration would, by forcing a delay, destroy one of the primary advantages of arbitration, that is, the speed of the proceedings, and that such interference would be unwarranted since arbitration does not produce an enforceable result without further judicial action. Id. 422 F.2d at 1102-1103. In arriving at a contrary conclusion, the Ninth Circuit characterized a request that a court invoke its equity powers to stay proceedings in another forum as involving the "classic form of injunction". A. & E. Plastik Pak Co. v. Monsanto Co., 396 F.2d 710, 713 (9th Cir. 1968).³See also Power Replacements, Inc. v. Air Preheater Co., 426 F.2d 980 (9th Cir. 1970).

Without cavilling at the correctness of the label, we are of the opinion that whether an injunction is "classic" or not does not resolve the question when strong countervailing policies are involved. It is one thing to hold, as we have, Lummus Co. v. Commonwealth Oil Refining Co., Inc., 280 F.2d 915, 917 (1st Cir.), cert. denied, 364 U.S. 911, 81 S.Ct. 274, 5 L.Ed.2d 225 (1960), that an order enjoining arbitration is appealable, but quite another to hold that a refusal to so order may be immediately reviewed on motion of one of the parties. A decision to stay impending arbitration may well be an injunction in the "classic" sense since it effectively deprives at least one of the parties to the dispute of one of the principal objects for which he has contracted—that is, a relatively expeditious and inexpensive preliminary resolution of any controversy.⁴ See 9 Moore's Federal Practice ¶ 110.201 (2d ed. 1970). A refusal to stay arbitration, on the other hand, has no such potentially adverse impact on the ultimate rights of the parties. The effect of a refusal to intervene is either to permit arbitration to run its course, with the mutual—albeit reluctant—consent of the parties, or if one of the parties persists in refusing to submit to arbitration, to require the party favoring arbitration to move under 9 U.S.C. § 4 for a court order compelling the objecting party to go to arbitration.

This rejection of what has been called a "broad literal interpretation of `injunction'", Lummus Co. v. Commonwealth Oil Refining Co., Inc., 297 F.2d 80, 86 (2d Cir. 1961), cert. denied sub nom. Dawson v. Lummus Co., 368 U.S. 986, 82 S.Ct. 601, 7 L.Ed.2d 524 (1962), is amply supported by the history of 28 U.S.C. § 1292(a) (1). It has the additional advantages, moreover, of maximizing the possibility that the purposes sought to be furthered by the Arbitration Act, 9 U.S.C. § 1 et seq., will be realized in practice. As the Supreme Court stated in Baltimore Contractors, Inc. v. Bodinger, supra, 348 U.S. at 181, 75 S.Ct. 252, the provisions of § 1292(a) (1) allowing appeal from certain interlocutory orders was meant only as a limited exception to the long-standing federal commitment to the principle of finality and stemmed "from a developing need to permit litigants to effectually challenge interlocutory orders of serious, perhaps irreparable, consequences." Cf. Switzerland Cheese Ass'n v. Horne's Mkt., 385 U.S. 23, 87 S.Ct. 193, 17 L.Ed.2d 23 (1966); see also 9 Moore's Federal Practice ¶¶ 110.16 and 110.201 (2d ed. 1970), for a short history of interlocutory appeals in federal practice. New England has simply failed to convince us that our refusal to accept an interlocutory appeal from the district court's order declining to stay arbitration would on balance have such "serious, perhaps irreparable, consequences", especially in light of the effect of such "preliminary skirmishing" on the congressional policies embodied in the Arbitration Act. 9 Moore's Federal Practice ¶ 110.20 4.-1 (3), at 249 (2d ed. 1970).

New England also argues that even if the district court's refusal of its application for a stay of arbitration is not appealable as a refusal of an injunction under 28 U.S.C. § 1292(a) (1), its order granting Asiatic's application for a stay of court proceedings pending arbitration is appealable as a grant of an injunction within the terms of that statute. This argument must be measured against what is known as the Enelow-Ettelson rule, which allows an appeal from an adverse decision on a motion to stay court proceedings only (1) when the first cause of action filed could, prior to the merger of law and equity, have been maintained only at law and (2) the stay was sought to permit the prior determination of an equitable defense or counterclaim. Enelow v. New York Life Insurance Co., 293 U.S. 379, 55 S.Ct. 310, 79 L.Ed. 440 (1935); Ettelson v. Metropolitan Life Insurance Co., 317...