Corion Corp. v. Chen

• Decision Date: 12 May 1992
• Docket Number: No. 92-1133,92-1133
• Citation: 964 F.2d 55
• Parties: 140 L.R.R.M. (BNA) 2505, 121 Lab.Cas. P 10,157, 23 Fed.R.Serv.3d 396 CORION CORPORATION, Plaintiff, Appellant, v. Gih-Horng CHEN, Defendant, Appellee.
• Court: U.S. Court of Appeals — First Circuit

Page 55

964 F.2d 55

140 L.R.R.M. (BNA) 2505, 121 Lab.Cas. P 10,157,

23 Fed.R.Serv.3d 396

CORION CORPORATION, Plaintiff, Appellant, v. Gih-Horng CHEN, Defendant, Appellee.

No. 92-1133.

United States Court of Appeals First Circuit.

Submitted Feb. 26, 1992.

Decided May 12, 1992.

Richard L. Alfred, Robert A. Bertsche and Hill and Barlow, Boston, Mass., on Response to Order to Show Cause and Reply Memorandum Regarding Appellate Jurisdiction, for plaintiff, appellant.

Ellen J. Messing and Shilepsky, Messing & Rudavsky, P.C., Boston, Mass., on Memorandum in Opposition to Appellant's Response to Show Cause Order and Reply Regarding Appellate Jurisdiction, for defendant, appellee.

Before BREYER, Chief Judge, CAMPBELL, Senior Circuit Judge, and CYR, Circuit Judge.

PER CURIAM.

The question before us is whether the district court's lengthy memorandum and order determining that the parties' dispute is arbitrable is a final appealable order. We conclude that it is not. We turn to the background.

I.

Plaintiff Corion Corporation discharged defendant Gih-Horng Chen. Chen then invoked a provision in Corion's Personnel Policies Manual which provided that "[i]n situations involving ... termination ..., an aggrieved employee who is dissatisfied with top management's decision will be permitted to have the grievance arbitrated by an impartial third party" and demanded arbitration. Corion did not agree to arbitration and instead filed the instant action seeking 1) a declaration that Chen was not entitled to arbitrate the discharge decision (count 1) and 2) a declaration that plaintiff was entitled to discharge Chen (count 2). Corion maintained that the personnel handbook had no contractual force, but, even if it did, Chen had waived any right to arbitrate by failing to attend hearings Corion had scheduled to obtain Chen's input.

Chen responded with two motions. The first asked the court to dismiss count two (Corion's request for a declaration that Corion was entitled to discharge Chen). The second sought both a stay of all court proceedings (including filing an answer) pending arbitration and an order compelling arbitration.

After briefing and argument, the district court issued an opinion concluding that the arbitration provision in the manual was contractually enforceable and applied to termination decisions. As for Corion's argument that Chen had waived any right to arbitrate, the district court ruled that the arbitrator was the one to decide that issue. The court's twenty-one page memorandum and order concluded with the following paragraph:

For the foregoing reasons, Chen's motion to stay and compel arbitration is ALLOWED. For the same reasons, this Court has determined that an enforceable agreement to arbitrate exists. Chen's Motion to Dismiss Count II of the Complaint is ALLOWED. The case is ordered administratively closed pending the outcome of the arbitration.

No separate document embodying the order has entered.

II.

Corion has appealed from the memorandum and order. Corion argues that the memorandum and order is a final decision appealable under 28 U.S.C. § 1291 because Corion's entire lawsuit has been adjudicated. Count 2 (for a declaration that plaintiff was entitled to discharge Chen) has been dismissed, and count 1 (for a declaration that Chen is not entitled to arbitrate the discharge decision) has been effectively resolved against plaintiff by granting the motion to compel arbitration, Corion contends. We disagree that the order is final.

A

First, the district court has not entered a judgment on a piece of paper separate from the underlying opinion as required by Fed.R.Civ.P. 58. Were the absence of a separate document a mere formality, the omission might be overlooked. See Fiore v. Washington County Community Mental Health Center, 960 F.2d 229, 238-39 (1st Cir.1992) (appellant waives the separate document rule by appealing). But cf. Wang Laboratories, Inc. v. Applied Computer Sciences, Inc., 926 F.2d 92, 96 (1st Cir.1991) (case remanded to district court for entry of a separate document where appellee refused to waive separate document requirement).

B

Here, however, we think more than informality is involved. The court did not enter a separate document labelled final judgment, which would have signalled its view that the case had concluded. Nor did it dismiss the entire action. Rather, it granted defendant's motion to stay proceedings pending arbitration. This suggests that the district court itself did not intend to terminate its role or to enter a final judgment, but rather acted in a manner to retain jurisdiction pending the outcome of arbitration. To be sure, the district court directed that the case be "administratively closed" pending arbitration. In the circumstances of this case, however, we do not think this is equivalent to a final judgment of dismissal. See Quinn v. CGR, 828 F.2d 1463 (10th Cir.1987) (dismissing appeal from order compelling arbitration and ordering the case "closed, to be reopened upon a showing of good cause" entered in a breach of contract action); Campbell v. Dominick & Dominick, Inc., 872 F.2d 358 (11th Cir.1989) (dismissing appeal from order directing arbitration, staying judicial proceedings, and closing the case for statistical purposes entered in an action seeking damages under the securities act); 15B C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure § 3914.17 at p. 13 n. 11 (1992) (concluding that the result in the Campbell case "implies that an order closing the case for statistical purposes does not make a final judgment"). Rather, it is a reflection of the fact that the case is likely to be dormant until arbitration concludes. In short, we conclude that the district court has retained jurisdiction.

In previous cases where a district court has retained jurisdiction pending the outcome of arbitration, we have concluded that an order staying proceedings pending arbitration or directing arbitration is not final or immediately appealable. De Fuertes v. Drexel, Burnham, Lambert, Inc., 855 F.2d 10 (1st Cir.1988), is instructive. There, the plaintiff sought to compel defendant to deliver securities. Defendant moved to refer the controversy to arbitration. Plaintiffs opposed arbitration, arguing the agreement to arbitrate was not valid but forged. Plaintiffs lost on that point in the district court, and the court ordered arbitration, but specifically retained jurisdiction pending the outcome of arbitration. Plaintiffs appealed. This court concluded that the order compelling arbitration and retaining jurisdiction was not appealable as a final decision because

no judgment determining the entire controversy between the parties has entered. Contrary to appellant's assertion, the litigation has not ended. Rather, it has moved to another forum with the expectation that it will return to the [district court] for entry of a final judgment.

Id. at 11. The opinion then went on to say that the arbitration order was not immediately appealable under any exception to the final judgment rule and dismissed the appeal.

Corion contends that De Fuertes is not controlling and relies on a different line of cases for appealability. It points out that most courts have accepted that an order adjudicating an action which seeks nothing more than an order to compel arbitration is a final appealable order. See, e.g., Abernathy v. Southern California Edison, 885 F.2d 525, 530 n. 18 (9th Cir.1989) ("[A]n order compelling arbitration may be immediately appealed if it is the full relief sought. However, when the order staying the proceeding or compelling arbitration is only one step in the judicial proceedings and the case can be expected to return to the district court, the order is nonfinal and not subject to immediate appeal.") (citations omitted); 15C C. Wright, A. Miller, & E. Cooper, Federal Practice and Procedure, § 3914.17 at pp. 10 n. 7 and 15-19 (1992) ("an order granting or denying arbitration in an action that seeks only to compel arbitration ordinarily is appealable as a final judgment; if the same order is entered in an action seeking other relief, ordinarily it is not appealable as a final judgment"). It then argues that because the district court dismissed count two (the count seeking a declaration that Corion was entitled to discharge Chen) and effectively disposed of count one (seeking a declaration of non-arbitrability) by deciding that the dispute was arbitrable, Corion's action is now analogous to one in which the sole issue is arbitrability and the same finality rules should apply. In other words, just as a litigant desiring arbitration obtains a final judgment by structuring a lawsuit to seek no more than an order compelling arbitration, so too should a litigant who believes a dispute is not arbitrable obtain a final judgment by phrasing his action to seek no more than a declaration that the dispute is not arbitrable. Now that, through dismissal of count two, Corion is in the position of the latter, finality should not be defeated by the district court's reaching out prematurely to assert jurisdiction over post-arbitration proceedings, or so the argument would run.

We leave for another day the question whether, had Corion's action been limited to the request in count one for a declaration that the dispute was not arbitrable, finality could be defeated by the district court's purported retention of jurisdiction pending the outcome of arbitration, see University Life Ins. Co. v. Unimarc Ltd., 699 F.2d 846, 848-50 (7th Cir.1983) (finality of order directing arbitration in an independent action seeking only an arbitration order was not defeated by court's retention of jurisdiction to resolve any future disputes or to enforce any future award); Cincinnati Gas & Elec. Co. v. Benjamin F. Shaw Co., 706 F.2d 155, 157-58 (6th Cir.1983) (order compelling arbitration, but retaining jurisdiction pending the outcome of arbitration, entered in an action seeking a...