Abernathy v. Southern California Edison

• Decision Date: 05 September 1989
• Docket Number: No. 88-15105,88-15105
• Citation: 885 F.2d 525
• Parties: 132 L.R.R.M. (BNA) 2326, 58 USLW 2211, 112 Lab.Cas. P 11,449 Richard ABERNATHY, et al., Plaintiffs-Appellees, v. SOUTHERN CALIFORNIA EDISON, Defendant-Appellant.
• Court: U.S. Court of Appeals — Ninth Circuit

Page 525

885 F.2d 525

132 L.R.R.M. (BNA) 2326, 58 USLW 2211,

112 Lab.Cas. P 11,449

Richard ABERNATHY, et al., Plaintiffs-Appellees, v. SOUTHERN CALIFORNIA EDISON, Defendant-Appellant.

No. 88-15105.

United States Court of Appeals Ninth Circuit.

Argued and Submitted June 29, 1989.

Decided Sept. 5, 1989.

Cam Ferenbach and Kirby J. Smith, Las Vegas, Nev., for defendant-appellant.

Eva Garcia, Las Vegas, Nev., for plaintiffs-appellees.

Anthony R. Segall of Reich, Adell & Crost, Los Angeles, Cal., for counterdefendant-appellee.

Appeal from the United States District Court for the District of Nevada.

Before TANG, REINHARDT and WIGGINS, Circuit Judges.

REINHARDT, Circuit Judge:

For over fifty years, the lower federal courts have been required to apply the interlocutory appeal doctrine known as the Enelow-Ettelson rule to orders denying or granting stays pending arbitration and orders compelling arbitration. Although the courts of every circuit have displayed open hostility to the rule, ¹ we have faithfully, if unhappily, applied the dictates of the Supreme Court and allowed parties dissatisfied with a district court's interlocutory order to appeal. ² One of the consequences of this rule has been that arbitrations, favored because of their efficiency in resolving disputed claims, frequently hung in limbo while the parties drearily slogged through the appellate process. ³ Fortunately, in light of the Court's decision in Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 108 S.Ct. 1133, 99 L.Ed.2d 296 (1988), we now have the opportunity to revisit the question of the appealability of stays pending arbitration and orders compelling arbitration. We now hold that, in the ordinary case, we have no jurisdiction to entertain appeals from such stays or orders.

I. Background

In September, 1984, Southern California Edison (Edison) conducted a search of employee locker facilities in its Mohave Generating Station in Laughlin, Nevada. Plaintiffs, several hundred members of Local 246 of the Utility Workers Union of America ("the union"), filed an action in federal district court, detailing an extensive list of legal violations. ⁴ Edison, arguing that the claims should be submitted to arbitration under the Collective Bargaining Agreement, sought dismissal. The district court dismissed a portion of the complaint and stayed the remainder of the action. The court then ordered the parties to arbitrate the remaining claims. Neither party sought immediate appellate review of that order ("the February order").

Five and a half months later, counsel for the plaintiffs, in a letter filed with the trial court, requested the court to supplement the February order. She informed the court that, under the current arbitration procedures agreed upon by the union and Edison, only two arbitrations would be conducted each month. All the "stale" grievances, which included the 82 grievances filed in this case, would be postponed until complaints of more recent origin were arbitrated. Counsel estimated that, under the existing system, it would be between four and six years before the grievance process would be completed for the locker search complaints. The letter also noted that while the union had shown some flexibility in arranging a solution to the mounting backlog, Edison had been intransigent in the face of the plaintiffs' complaints. Consequently, plaintiffs requested that the court order the parties to expedite the arbitration process.

Judge Foley agreed to supplement the February order as follows; "[i]t is hereby ordered that each party shall cooperate in seeking to obtain expedited review of this matter by the arbitrator. Failure to so cooperate will subject the non-cooperating party to sanctions or contempt." Edison now seeks review of this amendment to the order. As we will explain below, Edison's appeal requires us to examine the amended order as a whole.

II. Discussion

After Edison filed its appeal, we asked the parties to brief the question of our jurisdiction over stays pending, and orders compelling, arbitration. Since we are required to raise issues of jurisdiction sua sponte, we requested discussion of our jurisdiction after the 1988 Amendments to the United States Arbitration Act (USAA) and the Supreme Court's decision in Gulfstream. Edison specifically premised jurisdiction over its appeal on 28 U.S.C. Sec. 1292(a)(1), ⁵ which provides the courts of appeals with jurisdiction over interlocutory orders granting or denying injunctions. Under the Enelow-Ettelson rule, ⁶ when a district court stayed a proceeding at law in order to hear an equitable defense or counterclaim, immediate appeal was available. ⁷ The rule served to classify orders granting or denying stays pending arbitration as injunctions and, thus, to permit their immediate appeal under Sec. 1292(a)(1). See Alascom, 727 F.2d at 1421.

In Gulfstream, ⁸ the Supreme Court decisively rejected the Enelow-Ettelson rule. "The case against perpetuation of this sterile and antiquated doctrine seems to us conclusive.... [O]rders granting or denying stays of 'legal' proceedings on 'equitable' grounds are not automatically appealable under Sec. 1292(a)(1)." 108 S.Ct. at 1142. The Court reasoned that, in the absence of the fiction created by the Enelow-Ettelson rule, the stay in Gulfstream would not be considered an injunction because it related only to the conduct of litigation before the district court and did not affect the substantive issues of the case. "An order by a federal court that relates only to the conduct or progress of litigation before that court ordinarily is not considered an injunction and therefore is not appealable under Sec. 1292(a)(1)." Gulfstream, 108 S.Ct. at 1138 (citing Switzerland Cheese Ass'n, Inc. v. E. Horne's Market, Inc., 385 U.S. 23, 25, 87 S.Ct. 193, 195, 17 L.Ed.2d 23 (1966)). Although Gulfstream did not involve an arbitration issue, the rule it announced has clear applicability here. In the wake of Gulfstream, every circuit that has considered the issue has concluded that an order granting a stay pending arbitration ⁹ is not directly appealable in the ordinary case. ¹⁰ In light of the rationale of Gulfstream, the universal criticism of the prior rule, and the unanimous decisions of those circuits which have considered the question post-Gulfstream, we feel no need to belabor the point. ¹¹ We hold that an order granting a stay pending arbitration is not ordinarily an injunction within the meaning of Sec. 1292(a)(1), and is not ordinarily appealable under that section. ¹²

We also, in agreement with the First and Third Circuits, conclude that an order compelling arbitration is not ordinarily appealable under Sec. 1292(a)(1). See Zosky, 856 F.2d at 560-61; VDA, 855 F.2d at 11. The definition of injunction does not include "restraints or directions in orders concerning the conduct of the parties or their counsel, unrelated to the substantive issues in the action, while awaiting trial." International Prods. Corp. v. Koons, 325 F.2d 403, 406 (2d Cir.1963) (Friendly, J.) (cited favorably in Gulfstream, 108 S.Ct. at 1138). A court ruling, like the February order, staying litigation and compelling arbitration principally relates to the procedural staging of the pending case and establishes the order in which the proceedings will be conducted. Moreover, any other conclusion would breed a curious and, in light of the Gulfstream Court's attempt to impose some order on Sec. 1292(a)(1), unjustified result. A stay pending arbitration forces a plaintiff either to arbitrate the dispute or to forego his legal remedies. Since the second option is almost always unacceptable, the stay has the same practical effect as an order compelling the party to arbitrate. We think it unlikely that the meaning of injunction within Sec. 1292(a)(1) would turn not on the substance but on the form of the trial court order. See In re Bowoon Sangsa Co., 720 F.2d 595, 597 (9th Cir.1983) ("[c]ourts examine the effect of an interlocutory order rather than its terminology ..."). ¹³

The fact that the order compelling arbitration is not an injunction within the meaning of Sec. 1292(a)(1) may not end our inquiry. There is still the question of irreparable injury. In Gulfstream, 108 S.Ct. at 1142, the Supreme Court said:

"Section 1292(a)(1) will, of course, continue to provide appellate jurisdiction over orders that grant or deny injunctions and orders that have the practical effect of denying injunctions and have ' "serious, perhaps irreparable, consequences." ' ... As for orders that were appealable under Sec. 1292(a)(1) solely by virtue of the Enelow-Ettelson doctrine, they may, in appropriate circumstances, be reviewed under the collateral-order doctrine of Sec. 1291." (citations omitted). ¹⁴

However, it seems clear that an order compelling arbitration does not ordinarily harm the losing party irreparably. Zosky, 856 F.2d at 561. If the party claiming the case is not arbitrable also loses the arbitration, he can be expected to return to the district court to challenge the award after it is issued. Following a final judgment in the district court, the aggrieved litigant may then seek appellate review of the entire case, including plenary review of the initial order compelling arbitration. Of course, if the litigant was justified in contending that arbitration was incorrectly ordered in the first place, he will have needlessly incurred the cost of arbitration. However, "this type of inconvenience resulting 'when a sound defense interposed early in a litigation is erroneously rejected' is the price of the final judgment rule and does not constitute irreparable harm." VDA, 855 F.2d at 12 (quoting Crist v. Miller, 846 F.2d 1143, 1144 (7th Cir.1988)). Thus, considerations regarding irreparable injury in no way change our conclusion that Edison could not have sought immediate review of the order compelling arbitration. ¹⁵

Edison argues, however, that even if the stay...