Central States, Southeast and Southwest Areas Pension Fund v. Central Cartage Co.

• Decision Date: 28 May 1996
• Docket Number: No. 95-2406,95-2406
• Parties: 20 Employee Benefits Cas. 1297 CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND, Central States, Southeast and Southwest Areas Health and Welfare Fund and Howard McDougall, Trustee, Plaintiffs-Appellees, v. CENTRAL CARTAGE COMPANY, a Michigan Corporation, Defendant-Appellant.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 988

84 F.3d 988

20 Employee Benefits Cas. 1297

CENTRAL STATES, SOUTHEAST AND SOUTHWEST AREAS PENSION FUND Central States, Southeast and Southwest Areas Health and Welfare Fund and Howard McDougall, Trustee, Plaintiffs-Appellees, v. CENTRAL CARTAGE COMPANY, a Michigan Corporation, Defendant-Appellant.

No. 95-2406.

United States Court of Appeals Seventh Circuit.

Argued Jan. 3, 1996.

Decided May 28, 1996.

Albert M. Madden and Thomas M. Weithers (argued), Central States, Southeast & Southwest Areas Pension Fund, Rosemont, IL, for Plaintiffs-Appellees.

Grady B. Murdock, Jr., Neal & Associates, Chicago, IL, Patrick A. Moran (argued), Scott T. Stirling and Eric A. Parzianello, Evans & Luptak, Detroit, MI, for Defendant-Appellant.

Before COFFEY, MANION and KANNE, Circuit Judges.

COFFEY, Circuit Judge.

Central States, Southeast and Southwest Areas Pension Fund (collectively the "Pension Fund") filed suit against Central Cartage Company pursuant to section 515 of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1145, claiming that Central Cartage had failed to fulfill its contractual obligation to pay employer contributions to the plaintiffs' pension fund. Nearly a year after the suit was filed, Central Cartage moved to dismiss the case and compel alternative dispute resolution. The district court denied the motion, finding that Central Cartage had waived its rights to arbitration or alternative dispute resolution. Central Cartage appeals; we dismiss for lack of appellate jurisdiction.

I. Background

Central Cartage is a Michigan corporation engaged in primarily local trucking. The company (along with other trucking companies) entered into a nationwide collective bargaining agreement (known as the National Master Freight Agreement, or "NMFA") with the International Brotherhood of Teamsters, spanning the period April 1, 1991 to March 31, 1994. Central Cartage also entered into a supplemental agreement with the Union specifically covering all "truck drivers, helpers, dockmen, warehousemen, checkers, power-lift operators, hostlers, and such other employees ... engaged in local pickup, delivery and assembling of freight."

The supplemental agreement contains a provision obligating Central Cartage to contribute to the Pension Funds for Central Cartage's employees. The agreement also provides for alternative dispute resolution:

Disputes or questions of interpretation concerning the requirement to make contributions on behalf of particular employees or classifications of employees shall be submitted directly to the Conference Joint Area Committee by either the Employer, the Local Union, or the Trustees.

In February 1994, the Pension Funds filed suit against Central Cartage pursuant to the provisions of ERISA: The Pension Funds alleged that Central Cartage had intentionally misclassified certain employees as "casual" instead of "regular" employees (which lowered the required level of contribution to the pension funds) and had failed to pay employer contributions owed to the Pension Fund on behalf of these employees.

In April 1994, Central Cartage answered the complaint, alleging eleven affirmative defenses, including the Pension Fund's failure to exhaust administrative remedies. In a status report to the district court in July 1994, Central Cartage noted an unresolved issue of whether the Pension Fund had failed to exhaust its administrative remedies.

In anticipation of trial the parties conducted discovery. Although the record is not clear whether discovery proceedings were completed, in January 1995, Central Cartage filed a motion in district court to dismiss the case and compel alternative dispute resolution, as provided for in the supplemental agreement to the collective bargaining agreement. The district court ruled that Central Cartage had waived its contractual right to any alternative dispute resolution because the company had failed to "promptly" invoke the provision in the agreement "until nearly a year after this case was filed," conducting discovery, and filing status reports. See Cabinetree of Wis. v. Kraftmaid Cabinetry, Inc., 50 F.3d 388, 390-91 (7th Cir.1995) (holding that failure of a party to promptly move for arbitration after litigation has been commenced against that party is presumptive evidence that it has waived any contractual right to arbitration). Central Cartage made a motion for reconsideration; the court denied it. Instead of proceeding to trial, Central Cartage appeals the decision of the district court denying its motion to dismiss the lawsuit and compel alternative dispute resolution.

II. Analysis

A threshold issue raised by the Pension Funds is our jurisdiction to review the appeal. Normally, only final judgments may be appealed. 28 U.S.C. § 1291; Carson v. American Brands, Inc., 450 U.S. 79, 83, 101 S.Ct. 993, 996, 67 L.Ed.2d 59 (1981). However, Central Cartage has asserted two grounds for appellate jurisdiction: 28 U.S.C. § 1292(a)(1) (jurisdiction to review certain interlocutory decisions) or in the alternative 9 U.S.C. § 16 (appellate jurisdiction under the Federal Arbitration Act). Each will be considered in turn.

A. Review of Interlocutory Decisions

Central Cartage asserts that the district court's action, denying the motion to compel arbitration, constituted in effect a refusal to order an injunction. Title 28 U.S.C. § 1292(a)(1) provides, with emphasis added:

(a) [T]he courts of appeals shall have jurisdiction of appeals from:

(1) Interlocutory orders of the district courts of the United States, ... or of the judges thereof, granting, continuing, modifying, refusing or dissolving injunctions, or refusing to dissolve or modify injunctions, except where a direct review may be had in the Supreme Court;

However, "[a]n 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 § 1292(a)(1)." Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 279, 108 S.Ct. 1133, 1138, 99 L.Ed.2d 296 (1988).

Historically, district court orders refusing to compel alternative dispute resolution (most commonly arbitration) could fall within the ambit of section 1292(a)(1) under one of two theories: the Enelow-Ettelson doctrine, or the rationalization that the order had the practical effect of ruling upon an injunction. See Matterhorn, Inc. v. NCR Corp., 727 F.2d 629, 630 (7th Cir.1984).

Initially arising from the old division between courts of law and courts of equity, the Enelow-Ettelson doctrine provided that an order staying legal proceedings (such as a suit for damages for a contract breach) in district court so as to rule upon an equitable defense (such as fraud in the formation of the contract) is analogous to an equity chancellor enjoining the proceedings before a law judge; thus orders refusing to stay the legal proceeding in favor of an equitable defense is analogous to an equity court's refusal to grant an injunction: which provides the grounds for appeal under § 1292(a)(1). Enelow v. New York Life Ins. Co., 293 U.S. 379, 55 S.Ct. 310, 79 L.Ed. 440 (1935); Ettelson v. Metropolitan Life Ins. Co., 317 U.S. 188, 63 S.Ct. 163, 87 L.Ed. 176 (1942). Some courts reasoned that a district court's refusal to stay litigation in favor of arbitration is equivalent to a court of equity refusing to enjoin a legal proceeding; the refusal of the injunction thus provides a basis for appellate jurisdiction. See e.g. B & R Assoc. v. Dependable Ins. Co., 835 F.2d 526, 528 (4th Cir.1987) (citing cases). However, our court refused to extend the doctrine to include orders refusing to compel arbitration. Ohio-Sealy Mattress Mfg. Co. v. Duncan, 714 F.2d 740, 743 (7th Cir.1983), cert. denied, 464 U.S. 1044, 104 S.Ct. 712, 79 L.Ed.2d 176 (1984). The conflict over the application of the doctrine was rendered moot by Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 108 S.Ct. 1133, 99 L.Ed.2d 296 (1988), which abolished the Enelow-Ettelson doctrine.

Apart from the Enelow-Ettelson doctrine, appellate review of interlocutory orders may be obtained under § 1292(a)(1) if the order has both the effect of an injunction and has "serious, perhaps irreparable, consequences." Carson v. American Brands, Inc., 450 U.S. 79, 83-84, 101 S.Ct. 993, 996-97, 67 L.Ed.2d 59 (1981) ("Unless a litigant can show that an interlocutory order of the district court might have a 'serious, perhaps irreparable, consequence,' and that the order can be effectively challenged only by immediate appeal, the general congressional policy against piecemeal review will preclude interlocutory appeal.").

However, this court has refused to extend this theory to orders refusing to stay or dismiss district court proceedings in favor of arbitration. Ohio-Sealy, 714 F.2d at 743 ("The effect of the order in this case [refusing to stay district court proceedings in favor of arbitration] was merely to determine in which forum the claims would be heard. Thus, because [the appellant] has failed to establish that the denial is likely to have 'serious, perhaps irreparable' consequences as required in Carson v. American Brands, Inc., 450 U.S. 79, 101 S.Ct. 993, 67 L.Ed.2d 59 (1980), this order is non-appealable at this stage of the litigation."); Matterhorn, Inc. v. NCR Corp., 727 F.2d 629, 631 (7th Cir.1984) ("the denial of a motion to compel arbitration pending a trial on the existence of an arbitration agreement does not have serious or irreparable consequences."); Matterhorn, Inc. v. NCR Corp., 763 F.2d 866, 870 (7th Cir.1985) ("Despite its resemblance to a mandatory injunction, an order to arbitrate is assimilated rather to a procedural order, such as a discovery order. Hence making or refusing to make such an order is not appealable under § 1292(a)(1).").

The appellant, Central Cartage, argues that Gulfstream altered the face of appellate jurisdiction and requires us to ignore our prior...