Acton Corp. v. Borden, Inc.

• Decision Date: 12 February 1982
• Docket Number: No. 81-1512,81-1512
• Citation: 670 F.2d 377
• Parties: ACTON CORPORATION, et al., Plaintiffs, Appellants, v. BORDEN, INC., Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

Page 377

670 F.2d 377

ACTON CORPORATION, et al., Plaintiffs, Appellants, v. BORDEN, INC., Defendant, Appellee.

No. 81-1512.

United States Court of Appeals, First Circuit.

Argued Dec. 8, 1981.

Decided Feb. 12, 1982.

William A. Zucker, Boston, Mass., with whom Gerald A. Rosenthal and Gadsby & Hannah, Boston, Mass., were on brief, for plaintiffs, appellants.

John J. Curtin, Jr., Boston, Mass., with whom Joseph L. Kociubes, Philip W. Horton and Bingham, Dana & Gould, Boston, Mass., were on brief, for defendant, appellee.

Before COFFIN, Chief Judge, ALDRICH and BREYER, Circuit Judges.

BREYER, Circuit Judge.

Appellants seek review of a Massachusetts district court order that effectively stays their action (brought to compel arbitration) while an Ohio federal district court proceeds with a related case. We find that his order is not appealable. Treating the appeal as a petition for mandamus, we hold that the district court had adequate discretionary authority to enter the challenged order.

I

The underlying dispute in this case concerns the value of certain assets that the appellee Borden bought from the appellant Acton in 1980. Borden claims that under the contract the purchase price should have been adjusted downward. Acton claims the price should have been adjusted upward. The contract sets forth a procedure for resolving this type of dispute. The dispute is to be arbitrated by Acton's accountant, Arthur Young & Co., and by Borden's accountant, Price Waterhouse & Co. If these two firms cannot agree, they are to select jointly a third firm of independent accountants which shall arbitrate the dispute. If they cannot agree upon a third firm, then a firm of independent accountants will be selected by lot. ¹

Borden and Acton both acknowledge that their accountants were unable to resolve the dispute. Borden claims, however, that the two accounting firms agreed upon a third firm, namely Arthur Andersen & Co. to arbitrate the dispute. Acton denies that the two accounting firms agreed upon a third firm as arbitrator, and it seeks the appointment of an arbitrator "by lot."

Federal court proceedings began on April 9, 1981, when Borden sued Acton in Ohio seeking rescission of the sale contract or damages based upon a host of alleged breaches. Among many other matters, the Ohio complaint demanded that, as to the valuation dispute, Acton "be compelled to abide by the determination of Arthur Andersen & Co." Two months later, on June 9, 1981, Acton filed a claim in the federal district court for Massachusetts under the Federal Arbitration Act, 9 U.S.C. § 4, seeking an order to compel arbitration before a "firm of independent accountants selected by lot." Acton sought a speedy determination of this claim, moving separately for "an order to show cause why the prayers to compel arbitration ... should not be granted," and asking for a hearing within ten days. At the same time, Acton filed a motion in Ohio seeking a stay of those proceedings.

Ten days later, on June 19, 1981, Borden responded to Acton's stay motion in Ohio with a "Memorandum in Partial Support of (Acton's) Motion for Stay." In that document, Borden expanded upon the arbitration request in its Ohio complaint by asking the Ohio court either to confirm the selection of Arthur Andersen or to select another arbitrator by lot. And, on June 22 (the day set for hearing on Acton's motion in Massachusetts) Borden moved to stay the Massachusetts proceeding on the ground that the same issue was pending in Ohio.

On July 10, the Massachusetts district court granted Borden's motion for a stay and denied Acton's motion to compel arbitration immediately. The court reasoned that "where, as here, a motion which is in substance, if not in form, a motion to compel arbitration is pending in conjunction with a prior action, the interests advanced by the Arbitration Act would not be served by our proceeding summarily to trial" on the issue of whether there was a "failure, refusal or neglect" to arbitrate. 9 U.S.C. § 4. Acton has appealed from these Massachusetts district court determinations.

II

We first consider whether the district court's two orders are appealable. In an initial order entered in this case in response to Borden's motion to dismiss the appeals, we noted that a final order under 9 U.S.C. § 4 is appealable. See, e.g., New England Power Co. v. Asiatic Petroleum Corp., 456 F.2d 183, 188 (1st Cir. 1972); John Thompson Beacon Windows, Ltd. v. Ferro, Inc., 232 F.2d 366, 367 (D.C.Cir.1956); 9 Moore's Federal Practice, P 110.20(4.-1) at 246 & n.3 (2d ed. 1970). On this basis, we held that the district court's denial of Acton's motion to compel arbitration was appealable. We declined to pass at that time upon the separate appealability of the order staying proceedings.

Upon further consideration, we have concluded that we were wrong in finding that the district court's denial of Acton's arbitration motion was appealable. ² This denial was not, as we had first believed, final. Rather, it was provisional. The district court made clear in its opinion that it simply did not wish to proceed "summarily" to trial. ³ The district court left itself free to return to Acton's basic complaint, if, for example, the Ohio court should choose not to resolve the factual and legal issues related to arbitration, or, if, say, the Ohio court, accepting Acton's version of the facts, should decide that the "lottery" to select the arbitrator ought to take place in Massachusetts. ⁴ Thus, the dismissal is not "final" and does not give rise to an appeal as of right under 28 U.S.C. § 1291. ⁵ Moreover, the practical effect of the order is simply to stay the Massachusetts proceedings. The appealability of the order should thus be governed by the same considerations that determine the appealability of the order granting Borden's request for a stay.

Ordinarily, a decision by a district court to stay litigation before it pending developments in a different action involving the same issues is not appealable. Such a highly discretionary "stay" decision, Landis v. North American Co., 299 U.S. 248, 254-55, 57 S.Ct. 163, 165-166, 81 L.Ed. 153 (1936), is neither "final" nor equivalent to an "injunction." It thus provides no basis for an appeal under either § 1291 or § 1292(a). Harmon-Kardon, Inc. v. Ashley Hi-Fi, 602 F.2d 21, 22 (1st Cir. 1979); Codex Corp. v. Milgo Electronic Corp., 553 F.2d 735, 737 (1st Cir. 1977); 9 Moore's Federal Practice, P 110.20(4.-2) at 249, 250.

There are certain exceptions in the case law to this general rule of nonappealability. An examination of each of these exceptions suggests, however, that none of them applies here.

First, there are "collateral order" cases, which allow an appeal where there is 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...." New England Power Co. v. Asiatic Petroleum Corp., 456 F.2d at 185 (quoting Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541, 546, 69 S.Ct. 1221, 1225, 93 L.Ed. 1528 (1949)). We find this exception inapplicable because we find no important separable right likely to be lost. The only injury that inability to appeal can inflict upon Acton is the need to litigate the issues of arbitrability in a different federal court. Of course, litigation in a different forum can lead to the appointment of an arbitrator in a different district. ⁶ But, the contract between the parties does not specify where the arbitration is to be held-a fact indicating that the parties did not consider location of the arbitral forum important enough to make it a contractually protected right. Cf. Aaacon Auto Transport, Inc. v. Ninfo, 490 F.2d 83, 84 (2d Cir. 1974). Moreover, we have found nothing in the Federal Arbitration Act or its history sufficient to convince us that "choice of forum," at least where not mentioned specifically in the contract, is an important enough interest to qualify for "collateral order" protection. Cf. Piper Aircraft Co. v. Reyno, --- U.S. ----, 102 S.Ct. 252, 70 L.Ed.2d 419 (1981); USM Corp. v. GKN Fasteners, Ltd., 574 F.2d 17, 20-21 (1st Cir. 1978); New England Power Co. v. Asiatic Petroleum Corp., 456 F.2d at 185. Rather, in this instance, the interest in the speedy, efficient conduct of litigation-which here counsels against interlocutory appeals-outweighs the occasional need to correct speedily a district court decision banishing a litigant to an improper forum.

Second, appeals have sometimes been allowed from stays entered to permit state courts to consider potentially determinative issues of state law. E.g. Druker v. Sullivan, 458 F.2d 1272, 1274 n.3 (1st Cir. 1972). This case, however, involves neither the "delicate federalism considerations," Harmon-Kardon, Inc. v. Ashley Hi-Fi, 602 F.2d at 23, nor the unusually lengthy delays, see Wright, Miller & Cooper, Federal Practice and Procedure: Jurisdiction § 3914 at 566 (1976), likely to be present when so-called "abstention" orders are at issue.

Third, there are a host of cases concerning the appealability of orders staying, or refusing to stay, arbitration proceedings themselves. See, e.g., New England Power Co. v. Asiatic Petroleum Corp., supra; Lummus Co. v. Commonwealth Oil Refining Co., Inc., 280 F.2d 915 (1st Cir. 1960); Lummus Co. v. Commonwealth Oil Refining Co., Inc., 297 F.2d 80 (2d Cir. 1961). We need not explore the complex holdings of these cases in depth, however, for the order appealed from in this case does not involve a decision about whether or not arbitration shall proceed. Rather, the decision here is simply that court proceedings to determine that question shall be held in abeyance while other similar court proceedings related to arbitration proceed.

Fourth, appeals have sometimes been allowed from stay orders entered in suits where a party has sought preliminary injunctive relief. See, e.g., Goldberg v. Carey, 601 F.2d 653 (2d...